Exhibit 2.1
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEERFIELD TRIARC CAPITAL CORP.,
DFR MERGER COMPANY, LLC,
DEERFIELD & COMPANY LLC
AND
TRIARC COMPANIES, INC.
AS SELLERS' REPRESENTATIVE
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DATED AS OF APRIL 19, 2007
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
<S>
<C>
ARTICLE I
DEFINITIONS....................................................................................2
1.1
Defined
Terms........................................................................2
ARTICLE II THE
MERGER...................................................................................13
2.1
The
Merger..........................................................................13
2.2
Effective
Time......................................................................14
2.3
Closing.............................................................................14
2.4
Effects of the
Merger...............................................................14
2.5
Organizational
Instruments..........................................................14
2.6
Directors and
Officers..............................................................14
2.7
Buyer Board Designation
Rights......................................................15
2.8
Further
Assurances..................................................................15
ARTICLE III CONVERSION OF MEMBERSHIP INTERESTS AND MERGER
CONSIDERATION.................................15
3.1
Calculation of Aggregate Merger
Consideration.......................................15
3.2
Effect on Membership
Interests......................................................16
3.3
Closing Payments; Exchange of Membership
Interests..................................17
3.4
Member Written
Consent..............................................................19
3.5
Allocation of Aggregate Merger
Consideration........................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................................................21
4.1
Due Organization;
Qualification.....................................................21
4.2
Subsidiaries;
Investments...........................................................21
4.3
Authorization; Enforceability; Voting
Requirements..................................21
4.4
Capitalization......................................................................22
4.5
Financial Statements; Cash on
Hand..................................................23
4.6
No Material Adverse Change; Ordinary
Course.........................................23
4.7
No Undisclosed
Liabilities..........................................................23
4.8
Compliance with
Laws................................................................24
4.9
Permits.............................................................................24
4.10
Regulatory
Compliance...............................................................24
4.11
Environmental
Compliance............................................................25
4.12
Clients.............................................................................25
4.13
Non-Contravention; Consents and
Approvals...........................................29
4.14
Contracts...........................................................................30
4.15
Property............................................................................32
4.16
Intellectual
Property...............................................................33
4.17
Litigation..........................................................................33
4.18
Taxes...............................................................................34
4.19
Employee Benefit
Plans..............................................................34
4.20
Employees...........................................................................35
4.21
Brokers.............................................................................36
4.22
Related Party
Transactions..........................................................36
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4.23
Information
Provided................................................................36
4.24
Insurance...........................................................................37
4.25
Books and
Records...................................................................37
4.26 Code
of
Ethics......................................................................37
4.27
Anti-Money Laundering
Policy........................................................38
4.28
Disclaimer Regarding Estimates and
Projections......................................38
4.29
Exclusivity of
Representations......................................................38
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER AND BUYER
SUB....................................38
5.1
Due Incorporation;
Qualification....................................................38
5.2
Subsidiaries;
Investments...........................................................39
5.3
Authorization;
Enforceability.......................................................39
5.4
Capitalization......................................................................40
5.5
SEC Reports and Financial
Statements................................................40
5.6
REIT Qualification; Investment Company
Act..........................................41
5.7
Non-Contravention...................................................................41
5.8
Information
Provided................................................................42
5.9
Opinions of Buyer's Financial
Advisors..............................................43
5.10
Financing...........................................................................43
5.11
Brokers.............................................................................43
5.12
Investment
Intent...................................................................43
5.13
Independent
Investigation...........................................................44
5.14
Exclusivity of
Representations......................................................44
ARTICLE VI COVENANTS AND
AGREEMENTS.....................................................................44
6.1
Conduct of Business of the
Company..................................................44
6.2
Conduct of Business of the
Buyer....................................................47
6.3
Access to Information;
Confidentiality..............................................49
6.4
Expenses............................................................................50
6.5
Publicity...........................................................................50
6.6
Further
Actions.....................................................................51
6.7
Required Consents and Notices from Governmental
Authorities.........................51
6.8
Client
Consents.....................................................................52
6.9
Proxy Statement; Stockholders Meeting; NYSE
Listing.................................55
6.10
Preservation of Records; Post-Closing Access to Information and
Cooperation.........56
6.11
Termination of Related Party
Transactions...........................................57
6.12
Employee
Matters....................................................................57
6.13
Officers and
Directors..............................................................58
6.14
Release.............................................................................60
6.15 Tax
Matters.........................................................................60
6.16
Financing...........................................................................61
6.17
Escrow Agreement; Registration Rights Agreement; REIT Qualification
Opinion.........63
6.18
Modification of Existing Restrictions on Transfer and Ownership of
Shares...........63
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6.19 No
Shop.............................................................................63
6.20
Non-Competition;
Non-Solicitation...................................................64
6.21
Distribution and Vesting of Buyer Common
Stock......................................65
6.22 DFP
Transaction.....................................................................66
6.23
Permissible
Activities..............................................................66
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BUYER AND
BUYER SUB TO CLOSE..................67
7.1
HSR Act
Filings.....................................................................67
7.2
Stockholder
Approval................................................................67
7.3
Proxy
Statement.....................................................................67
7.4
No
Orders...........................................................................67
7.5
Accuracy of Representations and
Warranties..........................................67
7.6
Performance of
Covenants and
Agreements.............................................67
7.7
Certificate.........................................................................68
7.8
No Company Material Adverse
Effect..................................................68
7.9
Client
Consents.....................................................................68
7.10
Escrow
Agreement....................................................................68
7.11
Financing...........................................................................68
7.12
Satisfaction of Put
Right...........................................................68
7.13
Investment Banking Firm
Determination...............................................68
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
TO CLOSE.............................69
8.1
HSR Act
Filings.....................................................................69
8.2
Stockholder
Approval................................................................69
8.3
NYSE
Listing........................................................................69
8.4
Proxy
Statement.....................................................................69
8.5
No
Orders...........................................................................69
8.6
Accuracy of Representations and
Warranties..........................................69
8.7
Performance of Covenants and
Agreements.............................................70
8.8
Certificate.........................................................................70
8.9
No Buyer Material Adverse
Effect....................................................70
8.10
Registration
Statement..............................................................70
8.11 REIT
Qualification
Opinion..........................................................70
8.12
Modification of Existing Restrictions on Transfer and Ownership of
Shares...........70
8.13 Name
Change.........................................................................71
8.14
Escrow
Agreement....................................................................71
8.15
Satisfaction of Put
Right...........................................................71
8.16
Investment Banking Firm
Determination...............................................71
ARTICLE IX SELLERS'
REPRESENTATIVE......................................................................71
9.1
Appointment of Sellers'
Representative..............................................71
9.2
Authority...........................................................................72
9.3
Limitation of
Liability.............................................................72
9.4
Reliance............................................................................72
9.5
Successor to Sellers'
Representative................................................73
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9.6
Expenses............................................................................73
ARTICLE X TERMINATION OF
AGREEMENT......................................................................73
10.1
Termination.........................................................................73
10.2
Survival After
Termination..........................................................74
ARTICLE XI SURVIVAL; INDEMNIFICATION;
MISCELLANEOUS.....................................................74
11.1
Survival of Representations and
Warranties..........................................74
11.2
Indemnification.....................................................................75
11.3
Indemnification
Procedures..........................................................76
11.4
Limitations on
Indemnification......................................................78
11.5
Indemnity
Escrow....................................................................79
11.6 Tax
Matters.........................................................................80
11.7
Non-Recourse........................................................................80
11.8
Exclusivity of
Indemnity............................................................80
11.9
Consent to Jurisdiction; Service of Process; Waiver of Jury
Trial...................80
11.10
Notices.............................................................................81
11.11 Entire
Agreement....................................................................82
11.12 Waivers
and
Amendments..............................................................83
11.13 Governing
Law.......................................................................83
11.14 Binding
Effect;
Assignment..........................................................83
11.15
Usage...............................................................................83
11.16 Articles
and
Sections...............................................................83
11.17
Interpretation......................................................................83
11.18
Disclosure..........................................................................84
11.19
Severability of
Provisions..........................................................84
11.20
Counterparts........................................................................84
11.21 No Third
Party
Beneficiaries........................................................84
11.22 Specific
Performance................................................................85
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 19, 2007 (this
"AGREEMENT"), by and among Deerfield Triarc Capital Corp., a
Maryland
corporation (the "BUYER"), DFR Merger Company, LLC, an Illinois
limited
liability company and an indirect wholly owned subsidiary of Buyer
("BUYER
SUB"), Deerfield & Company LLC, an Illinois limited liability
company (the
"COMPANY"), and solely for the purposes of Article IX and Sections
2.7, 3.3,
3.5, 6.5, 6.10, 6.15, 6.16, 6.17 and 6.20, Triarc Companies, Inc.,
a Delaware
corporation (in such capacity, the "SELLERS' REPRESENTATIVE").
WHEREAS, the Buyer and Deerfield Capital Management LLC, a
Delaware limited liability company and a wholly owned subsidiary of
the Company
("DCM"), are parties to that certain Management Agreement, dated
December 23,
2004 (as amended, supplemented or otherwise modified from time to
time, the
"MANAGEMENT AGREEMENT");
WHEREAS, a special committee comprised of members of the Board
of Directors of the Buyer who are not directors, officers,
employees or
affiliates of the Company or any of its Subsidiaries (the "SPECIAL
COMMITTEE")
has unanimously determined that this Agreement and the transactions
contemplated
hereby are in the best interests of the Buyer and those
stockholders of the
Buyer that are not also, directly or indirectly, beneficial owners
of equity
interests of DCM, and has unanimously recommended to the Board of
Directors of
the Buyer that the Board of Directors of the Buyer adopt this
Agreement and the
transactions contemplated hereby;
WHEREAS, the Board of Directors of the Buyer and the sole
member of Buyer Sub each have determined that this Agreement and
the
transactions contemplated hereby, including the merger of Buyer Sub
with and
into the Company (the "MERGER"), are advisable and in the best
interests of the
Buyer and those stockholders of the Buyer that are not also,
directly or
indirectly, beneficial owners of equity interests of DCM and have
adopted or
approved this Agreement and the transactions contemplated hereby,
including the
Merger, and resolved to recommend that stockholders of the Buyer
approve the
issuance of shares of common stock of the Buyer pursuant to this
Agreement;
WHEREAS, the Board of Directors of the Company has determined
that this Agreement and the transactions contemplated hereby,
including the
Merger, are advisable and in the best interest of the members of
the Company and
have adopted or approved this Agreement and the transactions
contemplated
hereby, including the Merger, and resolved to recommend that
members of the
Company approve this Agreement;
WHEREAS, the parties intend that this Agreement constitute a
"plan of merger" within the meaning of Section 37-20 of the
Illinois Limited
Liability Company Act, as amended (the "ILLCA");
<PAGE>
WHEREAS, concurrently with the execution and delivery by the
parties hereto of this Agreement, the Buyer, the Sellers'
Representative and
certain persons who are entitled to receive shares of capital stock
of the Buyer
pursuant to the Merger or as otherwise contemplated by this
Agreement, are
executing and delivering a Registration Rights Agreement
substantially in the
form attached hereto as Annex A (the "REGISTRATION RIGHTS
AGREEMENT"), which
Registration Rights Agreement also contemplates the execution and
delivery from
time to time after the date hereof by any other person who is
entitled to
receive such shares; and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger
and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements entered into herein, and
intending to
be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms.
(a) For all purposes of this Agreement, the following terms
shall have the respective meanings set forth in this Section 1.1
(such
definitions to be equally applicable to both the singular and
plural forms of
the terms herein defined):
"ADVISORY CONTRACT" shall mean any Contract pursuant to which
the Company or any of its Subsidiaries provides Investment
Management Services
to any Person, excluding the Management Agreement.
"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. Notwithstanding the
foregoing, for the
avoidance of doubt, no Client (including, prior to the Closing, the
Buyer and
its Subsidiaries) shall be deemed to be an Affiliate of the Company
or any of
its Subsidiaries.
"ANCILLARY DOCUMENT" means the Escrow Agreement and the
Registration Rights Agreement.
"BENEFIT PLAN" means any employee benefit plan, arrangement or
policy (whether or not an employee benefit plan within the meaning
of Section
3(3) of ERISA), including any employment, consulting or deferred
compensation
2
<PAGE>
agreement, executive compensation, change in control, severance,
retention,
bonus, incentive, pension, profit-sharing, savings, retirement,
equity, stock
option, restricted stock, stock purchase or severance pay plan, any
life,
health, disability or accident insurance plan or any holiday or
vacation
practice, other than any multiemployer plan within the meaning of
Section 3(37)
of ERISA ("MULTIEMPLOYER PLAN"), as to which the Company or any of
its
Subsidiaries (or any trade or business, whether or not
incorporated, which is or
has ever been treated as a single employer with any of them under
Section
414(b), (c), (m) or (o) of the Code ("ERISA AFFILIATE")) has, or in
the future
may have, any material liability.
"BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banks located in New York, New York are authorized or
obligated by
Law to close.
"BUYER COMMON STOCK" means the common stock, par value $0.001
per share, of the Buyer.
"BUYER MATERIAL ADVERSE EFFECT" means any effect, change,
event, circumstance, impairment, condition, development, occurrence
or state of
facts (i) that would reasonably be expected to prevent or
materially impair the
ability of the Buyer or Buyer Sub to consummate the transactions
contemplated
hereby or (ii) that has been or would be materially adverse to the
financial
condition, business, results of operations, liabilities (contingent
or
otherwise), properties or assets of the Buyer or Buyer Sub, taken
as a whole
(after taking into account any insurance or other third party
recourses
available in respect thereof), except that events, circumstances,
changes,
developments, impairments or conditions resulting from (A) events,
changes,
developments, conditions or circumstances in worldwide, national or
local
conditions or circumstances (political, regulatory or otherwise,
but not
economic or related to the financial markets) but only to the
extent such
events, changes, developments, conditions or circumstances are not
specifically
relating to, or disproportionately affecting, the Buyer or Buyer
Sub, (B) an
outbreak or escalation of war, armed hostilities, acts of
terrorism, political
instability, natural catastrophe or other national or international
calamity,
crisis or emergency, or any governmental or other response to any
of the
foregoing, in each case, whether occurring within or outside the
United States,
(C) the announcement of this Agreement and the transactions
contemplated hereby
or other communication by or on behalf of the Company or the
Sellers'
Representative of their plans or intentions with respect to any
aspect of the
business of the Company, the Buyer and their Subsidiaries, (D) any
change in Law
or GAAP, or (E) any action or omission of the Buyer or Buyer Sub
taken or
omitted (x) in connection with the performance of the Buyer's or
Buyer Sub's
obligations under this Agreement or the consummation of the
transactions
contemplated hereby, (y) to comply with any Law or Order or (z)
with the prior
written consent of the Company, in each case of clauses (A) through
(E), shall
not be deemed to constitute or give rise to, and shall not be
considered in
determining whether there has occurred, a Buyer Material Adverse
Effect.
3
<PAGE>
"BUYER PREFERRED STOCK" means the preferred stock, par value
$0.001 per share, of the Buyer.
"CDO" means each of the issuers of collateralized debt
obligations to which the Company or any of its Subsidiaries
currently provides
Investment Management Services.
"CDO DOCUMENTS" shall mean each final or supplemental offering
memorandum, indenture, 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 CDO.
"CLASS A-1 INTERESTS" has the meaning set forth in the
Existing Operating Agreement.
"CLASS A-2 INTERESTS" has the meaning set forth in the
Existing Operating Agreement.
"CLASS B INTERESTS" has the meaning set forth in the Existing
Operating Agreement.
"CLASS C PROFITS ONLY INTERESTS" has the meaning set forth in
the Existing Operating Agreement.
"CLIENT" means any Person to whom the Company or any of its
Subsidiaries provides Investment Management Services; provided,
that no investor
in any such Person shall be deemed a Client; provided, further,
that any
Pipeline Fund or other prospective hedge fund or collateralized
debt obligation
the closing of which has not yet occurred shall not be deemed a
Client.
"CLOSING PAY-OFF DEBT" means the Closing Debt incurred by the
Company and its Subsidiaries under the Revolving Note, dated
February 2, 2006,
by and between DCM and Fifth Third Bank, as amended, supplemented
or otherwise
modified from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended
(including any successor code), and the rules and regulations
promulgated
thereunder.
"COMMODITY EXCHANGE ACT" shall mean the Commodity Exchange Act
of 1936, as amended, and the rules and regulations promulgated
thereunder.
"COMPANY EXPENSES" means all costs, fees and expenses incurred
by Triarc Companies, Inc. on behalf of all Members generally or by
the Company
or any of its Subsidiaries, in each case in connection with the
consummation of
the transactions contemplated hereby or other possible transactions
(including
the potential spin-off of the Company) considered previously by
such Persons in
connection with the Company or its Subsidiaries (in each case,
whether incurred
4
<PAGE>
prior to or after the date hereof) including (i) the fees and
expenses of
Goldman, Sachs & Co. and Jefferies & Co., (ii) the fees and
expenses of Paul,
Weiss, Rifkind, Wharton & Garrison LLP and other legal counsel
engaged by Triarc
Companies, Inc., the Company or any of its Subsidiaries in
connection with the
transactions contemplated by this Agreement, (iii) the fees and
expenses of
Skadden, Arps, Slate, Meagher & Flom LLP in connection with the
potential
spin-off of the Company, (iv) the fees and expenses of the
Investment Banking
Firm (as defined in the Existing Operating Agreement) incurred by
the Company or
any of its Subsidiaries in connection with an Investment Banking
Firm
Determination, if applicable, and (v) any retention bonus,
"stay-put," "change
of control" or other similar payments made to employees of the
Company or any of
its Subsidiaries in contemplation of the transactions contemplated
hereby and
the employer portion of any employment Taxes payable with respect
thereto. For
the avoidance of doubt, Other Expenses shall not be considered
Company Expenses
for any purpose under this Agreement.
"COMPANY MATERIAL ADVERSE EFFECT" means any effect, change,
event, circumstance, impairment, condition, development, occurrence
or state of
facts (i) that would reasonably be expected to prevent or
materially impair the
ability of the Company to consummate the transactions contemplated
hereby or
(ii) that has been or would be materially adverse to the financial
condition,
business, results of operations, liabilities (contingent or
otherwise),
properties or assets of the Company and the Subsidiaries, taken as
a whole
(after taking into account any insurance or other third party
recourses
available in respect thereof), except that events, circumstances,
changes,
developments, impairments or conditions resulting from (A) events,
changes,
developments, conditions or circumstances in worldwide, national or
local
conditions or circumstances (political, regulatory or otherwise,
but not
economic or related to the financial markets) but only to the
extent such
events, changes, developments, conditions or circumstances are not
specifically
relating to, or disproportionately affecting, the Company or any of
its
Subsidiaries, (B) an outbreak or escalation of war, armed
hostilities, acts of
terrorism, political instability, natural catastrophe or other
national or
international calamity, crisis or emergency, or any governmental or
other
response to any of the foregoing, in each case, whether occurring
within or
outside the United States, (C) the announcement of this Agreement
and the
transactions contemplated hereby or other communication by or on
behalf of the
Buyer or Buyer Sub of their plans or intentions (including in
respect of
employees and Clients) with respect to any aspect of the businesses
of the
Company and its Subsidiaries or the identity of or involvement of
the Buyer or
its Affiliates, (D) any change in Law or GAAP, or (E) any action or
omission of
the Company or any of its Subsidiaries taken or omitted (x) in
connection with
the performance of the Company's obligations under this Agreement
or the
consummation of the transactions contemplated hereby, (y) to comply
with any Law
or Order or (z) with the prior written consent of the Buyer, in
each case of
clauses (A) through (E), shall not be deemed to constitute or give
rise to, and
shall not be considered in determining whether there has occurred,
a Company
Material Adverse Effect.
5
<PAGE>
"CONTRACT" means any written contract, agreement, lease,
license, indenture, note, bond, mortgage, loan, instrument,
commitment or other
arrangement, understanding, undertaking or obligation.
"DEBT" means, as to any Person, without duplication (i) all
obligations of such Person for borrowed money, excluding any notes
payable
issued by, or repurchase agreements entered into by, the Company or
any of its
Subsidiaries in connection with a CDO Financing, and (ii) all
guarantees of such
Person in respect of any obligations of any other Person for
borrowed money; for
the avoidance of doubt, an obligation of a Person which is
accounted for as a
guarantee in accordance with GAAP shall be deemed "Debt" only if it
is in
respect of any obligations of any other Person for borrowed
money.
"DFP" means Deerfield Financial Products LLC or any other
Person formed by or on behalf of the Company as a credit derivative
products
company.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" means Wilmington Trust Company, a Delaware
corporation, or such other Person mutually determined by the Buyer
and the
Sellers' Representative in its capacity as Escrow Agent under the
Escrow
Agreement.
"ESCROW AGREEMENT" means the escrow agreement to be dated as
of the Closing Date by and among the Company, the Buyer and the
Escrow Agent
substantially in the form of Exhibit A hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXISTING OPERATING AGREEMENT" means the Fourth Amended and
Restated Operating Agreement of Deerfield & Company LLC, dated
as of June 26,
2004, by and among the Members and the Company, as supplemented by
(i) the First
Supplement to the Fourth Amended and Restated Operating Agreement
of Deerfield &
Company LLC, dated as of July 22, 2004, (ii) the Second Supplement
to the Fourth
Amended and Restated Operating Agreement of Deerfield & Company
LLC, dated as of
August 16, 2004 and (iii) the Third Supplement to the Fourth
Amended and
Restated Operating Agreement of Deerfield & Company LLC, dated
as of August 20,
2004.
"GOVERNMENTAL AUTHORITY" means any foreign, federal, state or
local governmental, judicial, legislature, regulatory or
administrative agency
or, commission or authority, court, arbitral authority or national
securities
exchange.
"HEDGE FUND" shall mean each of the private investment funds
to which the Company or any of its Subsidiaries currently provides
Investment
Management Services and identified as a Hedge Fund in Section
4.12(a) of the
Company Disclosure Letter.
6
<PAGE>
"HEDGE FUND DOCUMENTS" shall mean each final or supplemental
offering memorandum, management agreement, organizational
instrument, and side
letter with an investor entered into, or used in connection with an
offering of
securities, by a Hedge Fund.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"INDEMNITY ESCROW FUND" means the Share Indemnity Escrow
Amount, together with all dividends or distributions declared and
paid thereon
(and any income or interest earned or accrued thereon) in
accordance with the
Escrow Agreement.
"INTELLECTUAL PROPERTY" means all right, title and interest in
or relating to intellectual property, whether protected, created or
arising
under the laws of the United States or any other jurisdiction,
including: (i)
all patents and applications therefor, including all continuations,
divisionals,
and continuations-in-part thereof and patents issuing thereon,
along with all
reissues, reexaminations and extensions thereof; (ii) all
trademarks, service
marks, trade names, service names, brand names, trade dress rights,
logos,
corporate names, trade styles, logos and other source or business
identifiers
and general intangibles of a like nature, together with the
goodwill associated
with any of the foregoing, along with all applications,
registrations, renewals
and extensions thereof; (iii) all Internet domain names; (iv) all
copyrights and
all mask work, database and design rights, whether or not
registered or
published, all registrations and recordations thereof and all
applications in
connection therewith, along with all reversions, extensions and
renewals
thereof; (iv) all trade secrets; (v) all other intellectual
property rights
arising from or relating to Technology; (vi) all financial models
or analyses,
proprietary formulae or strategies, ratings agency analysis; and
(vii) all
Contracts granting any right relating to or under the
foregoing.
"INVESTMENT ADVISERS ACT" means the Investment Advisers Act of
1940, as amended, and the rules and regulations promulgated
thereunder.
"INVESTMENT COMPANY ACT" means the Investment Company Act of
1940, as amended, and the rules and regulations promulgated
thereunder.
"INVESTMENT MANAGEMENT SERVICES" means any services (including
sub-advisory services) which involve (i) the management of an
investment account
or fund (or portions thereof or a group of investment accounts or
funds) of any
third party for compensation, and performing activities related or
incidental
thereto, or (ii) the rendering of advice with respect to the
investment and
reinvestment of assets or funds (or any group of assets or funds)
of any third
party (including any "business development company" under the
Investment Company
Act of 1940, as amended, or any "real estate investment trust")
for
compensation, and performing activities related or incidental
thereto; provided,
that with respect to a third party that is a legal organization,
Investment
Management Services shall not be deemed provided to any owner of
the third party
unless the services in (i) or (ii) above are provided to such owner
separate and
apart from such services provided to the third party.
7
<PAGE>
"KNOWLEDGE OF THE BUYER" means the actual knowledge (without
independent investigation) of any of the individuals whose names
are set forth
on Section 1.1(a) of the Buyer Disclosure Letter.
"KNOWLEDGE OF THE COMPANY" means the actual knowledge (without
independent investigation) of any of the individuals whose names
are set forth
on Section 1.1(a)(i) of the Company Disclosure Letter.
"LAW" means any statute, code, Order, law, ordinance, rule,
regulation or other requirement of any Governmental Authority.
"LEGAL PROCEEDING" means any judicial, legislative,
administrative or arbitral actions, suits, investigations, claims
or other
proceedings by or before a Governmental Authority.
"LIEN" means any lien, pledge, encumbrance, mortgage, deed of
trust, security interest, claim, lease, license, charge, option,
adverse right,
right of first refusal, easement or transfer restriction of any
kind or nature
whatsoever.
"LOSS" means any and all judgments, liabilities, amounts paid
in settlement, damages, fines, penalties, deficiencies, diminution
in value,
losses and expenses (including interest, court costs, reasonable
fees of
attorneys, accountants and other experts or other reasonable
expenses of
litigation or other proceedings or of any claim, default or
assessment), but
only to the extent such losses are not covered by a payment from
some third
party or by insurance or otherwise recoverable from third parties;
provided,
that in no event shall Losses include any lost profits,
consequential, indirect,
incidental, punitive, special or other similar damages, other than
any such
damages awarded to any third party against an indemnified
party.
"MEMBER WRITTEN CONSENT" means a written consent executed by
Members holding a majority of the Voting Membership Interests in
accordance with
the Existing Operating Agreement, approving the Merger upon the
terms and
subject to the conditions set forth in this Agreement.
"MEMBERS"
has the meaning set forth in the Existing Operating
Agreement.
"MEMBERSHIP INTERESTS" has the meaning set forth in the
Existing Operating Agreement.
"NYSE" means The New York Stock Exchange.
"ORDER" means any judgment, order, injunction, decree, writ,
doctrine, ruling, assessment or arbitration award of any
Governmental Authority.
"OTHER EXPENSES" means all costs, fees and expenses incurred
by the Company or any of its Subsidiaries or by the Company or any
of its
Subsidiaries on behalf of any Member, in each case, in connection
with the
8
<PAGE>
previously contemplated repurchase by the Company of the Membership
Interests
held by Triarc Deerfield Holdings, LLC. For the avoidance of doubt,
Other
Expenses shall not include any costs, fees and expenses incurred by
the Company
or any of its Subsidiaries in connection with the previously
contemplated
spin-off of the Company, including the fees and expenses of
Skadden, Arps,
Slate, Meagher & Flom LLP.
"PERMITTED LIENS" means (i) Liens incurred by the Company or
any of its Subsidiaries in connection with the financing (the "CDO
FINANCING")
of any purchase by the Company or its Subsidiaries of any debt or
equity
securities of a CDO on the closing date of the related CDO
transaction, Liens
incurred in connection with a CDO Financing in respect of any such
debt or
equity securities and future distributions on any such debt or
equity
securities, and Liens incurred in connection with a CDO Financing
in respect of
future management fees payable to the Company or any of its
Subsidiaries for
providing Investment Management Services to such CDO, (ii) Liens
relating to
purchase money security interests entered into in the ordinary
course of
business, (iii) statutory Liens of mechanics, materialmen, workmen,
repairmen,
warehousemen and carriers, (iv) Liens for Taxes (and assessments
and other
governmental charges) not yet due and payable or that are being
contested in
good faith by appropriate proceedings and for which adequate
reserves have been
established on the Company Financial Statements in accordance with
GAAP, (v) all
defects, exceptions, restrictions, easements, rights of way and
encumbrances
disclosed in policies of title insurance that have been delivered
to the Buyer,
(vi) Liens in respect of pledges or deposits under workers'
compensation Laws or
similar legislation, unemployment insurance or other types of
social security,
(vii) municipal by-laws, facility costs, sharing and servicing
contracts, and
zoning, building, planning, entitlement and other land use and
environmental
regulations by any Governmental Authority, (viii) minor defects
or
irregularities in title that do not, in the aggregate, materially
affect the
value or current use of the underlying asset and (ix) restrictions
on transfer
or assignment, including those imposed by Federal or state
securities Laws.
"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.
"PIPELINE FUNDS" means each of the hedge funds and
collateralized debt obligations set forth in Section 1.1(a)(ii) of
the Company
Disclosure Letter.
"PREFERRED MEMBERSHIP INTERESTS" has the meaning set forth in
the Existing Operating Agreement.
"RATINGS AGENCY" means each of Moody's, Standard & Poor's
or
Fitch, Inc. or any other Person providing ratings to any securities
issued in
connection with any CDO to which the Company or any of its
Subsidiaries provides
Investment Management Services.
"SEC" means the United States Securities and Exchange
Commission.
9
<PAGE>
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SHARE INDEMNITY ESCROW AMOUNT" means 2,504,817 shares of
Buyer Common Stock.
"SPECIFIED PERSONS" means the Sellers' Representative and one
or more Persons that beneficially own more than 25% of the total
voting power of
the outstanding capital stock of the Sellers' Representative as of
the date
hereof.
"SPECIFIED VALUE PER SHARE" means $15.051.
"STRATEGIC FINANCING AGREEMENT" means any side letter
agreement, trust agreement, confirmation, pledge agreement,
guaranty or any
other agreement and/or instrument pursuant to which the Company
and/or any of
its Subsidiaries is obligated to pay, pledge, subordinate or, in
any other
manner, relinquish its rights to receive compensation (whether in
the form of
management fees, incentive fees, equity dividends or otherwise)
under any
Advisory Contract in respect of any investment.
"STOCKHOLDER APPROVAL" shall mean (a) the approval of the
Stock Issuance by the affirmative vote of a majority of the total
votes cast by
the holders of Buyer Common Stock at a Stockholders Meeting (or any
adjournment
or postponement thereof) and (b) the approval of the Stock Issuance
by the
affirmative vote of a majority of the total votes cast by the
holders of Buyer
Common Stock who are not Affiliates of the Company, the Sellers'
Representative
or their respective Subsidiaries at a Stockholders Meeting (or any
adjournment
or postponement thereof).
"SUBSIDIARY" means, with respect to any Person, a corporation
or other Person of which more than 50% of the voting power of the
outstanding
voting equity securities or more than 50% of the outstanding
economic equity
interest is held, directly or indirectly, by such Person; provided,
for the
avoidance of doubt, that no Client (including the Buyer and its
Subsidiaries)
shall be deemed to be a Subsidiary of the Company or any of its
Subsidiaries.
"TAX RETURNS" means any and all reports, returns,
declarations, claims for refund, elections, disclosures, estimates,
information
reports or returns or statements supplied or required to be
supplied to a taxing
authority in connection with Taxes, including any schedule or
attachment thereto
or amendment thereof.
"TAXES" means (i) any and all federal, state, provincial,
local, foreign and other taxes, levies, fees, imposts, duties, and
similar
governmental charges (including any interest, fines, assessments,
penalties or
additions to tax imposed in connection therewith or with respect
thereto)
including, without limitation (x) taxes imposed on, or measured by,
income,
franchise, profits or gross receipts, and (y) ad valorem, value
added, capital
gains, sales, goods and services, use, real or personal property,
capital stock,
license, branch, payroll, estimated withholding, employment, social
security (or
similar), unemployment, compensation, utility, severance,
production, excise,
stamp, occupation, premium, windfall profits, transfer and gains
taxes, and
10
<PAGE>
customs duties, and (ii) any liability in respect of any items
described in
clause (i) above as a transferee or successor, pursuant to Treasury
Regulation
ss. 1.1502-6 (or any similar provision of state, local or foreign
Law), or as an
indemnitor, guarantor, surety or in a similar capacity under any
contract,
arrangement, agreement, understanding or commitment (whether oral
or written).
"TECHNOLOGY" means, collectively, all software, information,
designs, formulae, algorithms, procedures, methods, techniques,
ideas, know-how,
research and development, technical data, programs, subroutines,
tools,
materials, specifications, processes, inventions (whether
patentable or
unpatentable and whether or not reduced to practice), apparatus,
creations,
improvements, works of authorship and other similar materials, and
all
recordings, graphs, drawings, reports, analyses, and other
writings, and other
tangible embodiments of the foregoing, in any form whether or not
specifically
listed herein, and all related technology, that are used in,
incorporated in,
embodied in, displayed by or relate to, or are used in connection
with the
foregoing.
"TRIARC RELATED PARTIES" means each of Triarc Companies, Inc.
and each of its Subsidiaries (other than the Company or any of its
Subsidiaries
or any Client of the Company or any of its Subsidiaries).
"VOTING MEMBERSHIP INTERESTS" has the meaning set forth in the
Existing Operating Agreement.
(b) The following capitalized terms are defined in the
following Sections of this Agreement:
TERM
SECTION
----
-------
Acquisition Transaction
6.19
Aggregate Cash Consideration
3.1(a)
Aggregate Merger Consideration
3.1(a)
Aggregate Share Consideration
3.1(a)
Agreement
Preamble
Allocation Objection Notice
3.5
Allocation Schedule
3.5
Alternative Debt Financing
6.16(a)
Antitrust Authorities
6.7(c)
Articles of Merger
2.2
Base Date
4.12
Base Date AUM
4.12
Basket
11.4(a)
Bear Stearns Confidentiality Agreement
6.3(a)
Board Recommendation
6.9(b)
Buyer
Preamble
Buyer Consents and Notices
5.7(b)
Buyer Disclosure Letter
4.29
11
<PAGE>
TERM
SECTION
----
-------
Buyer Financial Statements
5.5(b)
Buyer Indemnified Parties
11.2(a)
Buyer SEC Reports
5.5(a)
Buyer Sub
Preamble
CDO Consent Parties
6.8(a)
CDO Financing
1.1(a)
Client Consents
4.13(b)
Closing
2.3
Closing Date
2.3
Closing Date Aggregate Cash Consideration
3.2(a)(i)
Closing Date Aggregate Share Consideration
3.2(a)(i)
Closing Debt
3.1(a)
Code of Ethics
4.26
Company
Preamble
Company Consents and Notices
4.13(b)
Company Disclosure Letter
3.5
Company Financial Statements
4.5
Company Indemnified Parties
11.2(b)
Confidentiality Agreement
6.3(a)
DCM
Recitals
Debt Commitment Letter
6.16(a)
Director and/or Officer Indemnified Party
6.13(b)
DOJ
6.7(b)
Effective Time
2.2
Environmental Laws
4.11
ERISA Affiliate
1.1(a)
ERISA Client
4.12
Exchange Agent
3.3(b)(i)
Exchange Fund
3.3(b)(i)
Final Allocation Schedule
3.5
Financing
6.16(a)
Follow-Up CDO Consent Request Letter
6.8(b)
Follow-Up Client Consent Request Letter
6.8(b)
Follow-Up Hedge Fund Consent Request
6.8(b)
FTC
6.7(b)
Fully Diluted Percentage Interests
3.3(b)(iii)(B)
GAAP
4.5
Hedge Fund Resolutions
6.8(a)
ILLCA
Recitals
Indemnifiable Expenses
11.2(a)(vi)
Indemnification Claim
11.3(a)
Initial CDO Consent Request Letter
6.8(a)
Initial Client Consent Request Letter
6.8(a)
Initial Hedge Fund Consent Request
6.8(a)
Investment Banking Firm Determination
3.3(b)(iii)
12
<PAGE>
TERM
SECTION
----
-------
Management Agreement
Recitals
Material Contracts
4.14(a)
Merger
Recitals
Most Recent Balance Sheet Date
4.5
Multiemployer Plan
1.1(a)
New CDO Consent Party
6.8(d)
New Client
6.8(d)
Outside Date
10.1(b)
Permits
4.9
Plan Asset Regulation
4.12
Policies
4.24
Pre-Closing Statement
3.1(b)
Proxy Statement
5.7(b)
Real Property Lease
4.15
Real Property Leases
4.15
Registration Rights Agreement
Recitals
REIT
5.6
Releasee
6.14
Releasor
6.14
Representatives
6.19
Required Consents and Notices
5.7(b)
Restricted Business
6.20(a)(i)
Restricted Period
6.20(a)
Restricted Persons
6.20(a)
Sellers' Representative
Preamble
Sellers' Representative Expense Fund
3.3(a)(iii)
Special Committee
Recitals
Stock Issuance
5.3
Stockholders Meeting
5.3
Straddle Period
11.2(a)(v)
Survival Period
11.1
Surviving LLC
2.1
Unpaid Expenses
3.1(b)(ii)
Unresolved Claims
11.5
WARN
4.20
ARTICLE II
THE
MERGER
2.1 The Merger. At the Effective Time, upon the terms and
subject to the conditions of this Agreement, and in accordance with
the ILLCA,
Buyer Sub shall be merged with and into the Company, the separate
limited
liability company existence of Buyer Sub shall cease and the
Company shall be
the surviving limited liability company in the Merger (the
"SURVIVING LLC"). As
a result of the Merger, all of the respective outstanding
membership interests
13
<PAGE>
of the Company and Buyer Sub shall be converted or cancelled in the
manner
provided in Article III.
2.2 Effective Time. As soon as practicable on the Closing
Date, articles of merger in the form reasonably agreed to by the
Buyer and the
Company (the "ARTICLES OF MERGER") shall be duly prepared and
executed by the
Company and Buyer Sub and thereafter delivered to the Secretary of
State of the
State of Illinois for filing, as provided in Section 37-25 of the
ILLCA. The
Merger shall become effective at the time of the filing of the
Articles of
Merger with the Secretary of State of the State of Illinois, or at
such later
time as may be agreed by the Buyer and the Company and stated in
the Articles of
Merger (the date and time of such filing (or stated later time, if
any) being
referred to herein as the "EFFECTIVE TIME").
2.3 Closing. The closing of the Merger (the "CLOSING") shall
take place at 10:00 a.m. (New York City time) at the offices of
Paul, Weiss,
Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas,
New York, New York
10019 on the third Business Day following the satisfaction or
waiver of each of
the conditions set forth in Articles VII and VIII hereof (other
than those
conditions that can only be satisfied on the Closing Date, but
subject to the
satisfaction or waiver of such conditions), or at such other time
and place as
may be mutually agreed to by the parties hereto. Such time and date
are referred
to in this Agreement as the "CLOSING DATE."
2.4 Effects of the Merger. At the Effective Time, the effects
of the Merger shall be as provided in this Agreement, the Articles
of Merger and
in the applicable provisions of the ILLCA. Without limiting the
generality of
the foregoing and subject thereto, at the Effective Time, all the
property,
rights, privileges, immunities, powers and franchises of the
Company and Buyer
Sub shall vest in the Surviving LLC, and all debts, liabilities,
obligations,
restrictions, disabilities and duties of the Company and Buyer Sub
shall become
the debts, liabilities, obligations, restrictions, disabilities and
duties of
the Surviving LLC.
2.5 Organizational Instruments. The articles of organization
of Buyer Sub in effect immediately prior to the Effective Time
shall be, from
and after the Effective Time, the articles of organization of the
Surviving LLC
until thereafter changed or amended as provided therein or by the
ILLCA. The
limited liability company agreement of Buyer Sub in effect
immediately prior to
the Effective Time shall be, from and after the Effective Time, the
limited
liability company agreement of the Surviving LLC until thereafter
changed or
amended as provided therein or by the ILLCA.
2.6 Directors and Officers. Each of the parties hereto shall
take all necessary action to cause the directors of Buyer Sub
immediately prior
to the Effective Time to be the directors of the Surviving LLC
immediately
following the Effective Time, until their respective successors are
duly elected
or appointed and qualified or their earlier death, resignation or
removal in
accordance with the limited liability company agreement of the
Surviving LLC.
The officers of the Company immediately prior to the Effective Time
shall be the
officers of the Surviving LLC until their respective successors are
duly
14
<PAGE>
appointed and qualified or their earlier death, resignation or
removal in
accordance with the limited liability company agreement of the
Surviving LLC.
2.7 Buyer Board Designation Rights. The Buyer shall, subject
to compliance with the fiduciary duties of the Board of Directors
of the Buyer
and applicable Law, take such actions as are necessary and
appropriate to
nominate one individual designated by the holders of a majority of
the shares of
Buyer Common Stock held by the Specified Persons for election to
serve as a
Class I director on the Board of Directors of the Buyer in
connection with the
2008 annual meeting of stockholders of the Buyer.
2.8 Further Assurances. Each party hereto shall execute such
further documents and instruments and take such further actions as
may
reasonably be requested by one or more of the others to consummate
the Merger,
to vest the Surviving LLC with full title or interest in, to or
under any of the
rights, privileges, powers, franchises, properties or assets of
Buyer Sub or the
Company, as applicable, or to otherwise effect the purposes of this
Agreement.
ARTICLE III
CONVERSION OF MEMBERSHIP INTERESTS AND
MERGER CONSIDERATION
3.1 Calculation of Aggregate Merger Consideration.
(a) As used herein, "AGGREGATE MERGER CONSIDERATION" means an
amount equal to (i) 9,635,192 shares of Buyer Common Stock (the
"AGGREGATE SHARE
CONSIDERATION") and (ii) an amount in cash (the "AGGREGATE CASH
CONSIDERATION")
equal to the sum of $145,000,000 minus the principal amount of Debt
outstanding
(together with all accrued and unpaid interest thereon) as of the
close of
business on the date immediately prior to the Closing Date, as
reflected in the
Pre-Closing Statement ("CLOSING DEBT").
(b) No later than one Business Day prior to the Closing Date,
the Company shall cause to be prepared and delivered to the Buyer a
statement
(the "PRE-CLOSING STATEMENT") setting forth in reasonable detail
the following:
(i) the amount of the Closing Debt which, in the case of the
Closing Pay-Off Debt, shall be as reflected in the customary
pay-off
letters received by the Company from the lender under such
Closing
Pay-Off Debt related to the payment in full of such Closing
Pay-Off
Debt at the Closing;
(ii) the amount of the Company Expenses and Other Expenses, in
each case to the extent they remain unpaid as of 5:00 p.m. (New
York
City time) on the date immediately prior to the Closing Date
(the
"UNPAID EXPENSES"); and
15
<PAGE>
(iii) the calculation of the Closing Date Aggregate Cash
Consideration.
3.2 Effect on Membership Interests. At the Effective Time, by
virtue of the Merger and without any action on the part of the
holder of any
membership interest of the Company or Buyer Sub:
(a) the Membership Interests issued and outstanding
immediately prior to the Effective Time shall be converted into the
right to
receive in the aggregate the following:
(i) (A) a number of shares of Buyer Common Stock equal to the
Aggregate Share Consideration (subject to the payment of cash in
lieu
of
fractional shares as provided in Section 3.3(b)(iv)) minus the
Share
Indemnity Escrow Amount (such number, the "CLOSING DATE AGGREGATE
SHARE
CONSIDERATION") and (B) an amount of cash equal to the
Estimated
Aggregate Cash Consideration, minus the Unpaid Expenses that
are
Company Expenses, minus the Sellers' Representative Expense Fund
(such
amount, the "CLOSING DATE AGGREGATE CASH CONSIDERATION") (and
the
amount calculated in accordance with this clause (i) shall be
allocated
among the Members that hold such Membership Interests in
accordance
with Section 3.3(b)(iii)); plus
(ii) the amount of cash, if any, payable to the holders of
such Membership Interests pursuant to Section 3.3(a)(iii) (and
the
amount calculated in accordance with this clause (ii) shall be
allocated among the Members that hold such Membership Interests
in
accordance with Section 3.3(a)(iii)); plus
(iii) the amount of cash and the number of shares of Buyer
Common Stock, if any, payable or issuable (as applicable) to
the
holders of such Membership Interests pursuant to the Escrow
Agreement
(and the amount and number calculated in accordance with this
clause
(iii) shall be allocated among the Members that hold such
Membership
Interests in accordance with Section 11.5).
(b) the membership interests of Buyer Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into a
corresponding amount of membership interests of the Surviving
LLC;
(c) all Membership Interests shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to
exist, and
the Members shall cease to have any rights with respect thereto,
except the
right to receive the cash payments and shares of Buyer Common Stock
set forth in
this Section 3.2; and
(d) the membership interest transfer books of the Company will
be closed and thereafter there will be no further registration of
transfers on
the membership interest transfer books of the Surviving LLC of any
membership
interests of the Company.
16
<PAGE>
3.3 Closing Payments; Exchange of Membership Interests.
(a) Closing Payments. At the Closing, in addition to the
deposits required to be made by the Buyer pursuant to Section
3.3(b)(i), the
Buyer shall pay, or cause to be paid, cash in the following amounts
and to the
following Persons, by wire transfer of immediately available funds
to a bank
account designated in writing by the Person receiving such payment
at least two
Business Days prior to the Closing Date:
(i) an amount equal to the Closing Pay-Off Debt, on behalf of
the Company and its Subsidiaries, to the holders of the Closing
Pay-Off
Debt;
(ii) an amount equal to the Unpaid Expenses that are Company
Expenses to the Persons entitled to be paid such expenses; and
(iii) an amount equal to $250,000 (the "SELLERS'
REPRESENTATIVE EXPENSE FUND") to the Sellers' Representative to
fund
the fees, costs and expenses incurred after the Effective Time by
or at
the direction of the Sellers' Representative for the benefit of
the
Members under this Agreement and, to the extent any portion of
the
Sellers' Representative Expense Fund remains after payment in full
of
any amounts owed under Section 3.4, disbursed at such time to
each
Member that held issued and outstanding Membership Interests as
of
immediately prior to the Effective Time in accordance with such
Member's Fully Diluted Percentage Interests.
(b) Exchange of Membership Interests.
(i) Exchange Agent. At the Effective Time, the Buyer shall (x)
deposit with the Escrow Agent a number of shares of Buyer Common
Stock
equal to the Share Indemnity Escrow Amount and (y) deposit with
its
transfer agent for its shares of Buyer Common Stock, or with such
other
bank or trust company mutually agreed by the Buyer and the
Sellers'
Representative prior to the Effective Time (the "EXCHANGE AGENT"),
for
the benefit of the holders of Membership Interests issued and
outstanding immediately prior to the Effective Time and for
exchange in
accordance with this Article III, (A) certificates representing
the
Closing Date Aggregate Share Consideration issuable pursuant to
Sections 3.2(a)(i) and 3.3(b)(iii) and (B) immediately available
funds
in an amount equal to the Closing Date Aggregate Cash
Consideration
(such certificates and funds being hereinafter referred to as
the
"EXCHANGE FUND") in exchange for such Membership Interests.
(ii) Letter of Transmittal. Promptly (and in any event no
later than two Business Days) after the Effective Time, the Buyer
shall
cause the Exchange Agent to deliver to each Member that held issued
and
outstanding Membership Interests as of immediately prior to the
Effective Time a letter of transmittal in customary form,
specifying
(i) that delivery shall be effected, and title thereto shall pass,
only
upon returning such letter of transmittal duly executed by such
Member
17
<PAGE>
to the Exchange Agent and (ii) that by signing such letter of
transmittal, such Member (x) agrees to and confirms acknowledgment
of
the terms and conditions of this Agreement and the Escrow
Agreement,
including such Member's obligations (if any) under Sections 3.5,
6.4(b)
and 6.10(b) and Article IX, and the rights of the Sellers'
Representative under this Agreement, the Escrow Agreement and
the
Registration Rights Agreement, (y) certifies that such Member is
not a
foreign person within the meaning of Section 1445 of the Code and
(z)
represents and warrants that such Member qualifies as an
"accredited
investor," as such term is defined in Rule 501(a) promulgated
pursuant
to the Securities Act.
(iii) Payments In Respect Of Membership Interests. Upon
execution and delivery to the Exchange Agent of the duly
executed
letter of transmittal, the Buyer shall cause the Exchange Agent
to
deliver promptly (and in any event no later than two Business Days)
to
each Member that held issued and outstanding Membership Interests
as of
immediately prior to the Effective Time the portion of the
certificates
representing the Closing Date Aggregate Share Consideration and
the
Closing Date Aggregate Cash Consideration allocable to each such
Member
determined as follows:
(A) first, deliver pro rata to each such Member that
held issued and outstanding Class A-1 Interests, Class A-2
Interests or Class B Interests as of immediately prior to the
Effective Time a portion of the shares of Buyer Common Stock
included in the
Closing Date Aggregate Share Consideration and
a portion of the Closing Date Aggregate Cash Consideration
based on the percentages set forth next to each such Member's
name under the heading "Initial Percentage Interests" in
Section 4.4(a) of the Company Disclosure Letter until the
aggregate value of the shares of Buyer Common Stock (based
upon the Specified Value Per Share) and cash so delivered
equals the amount set forth in Section 3.3(b)(iii) of the
Company Disclosure Letter; and
(B) second, deliver the remaining amount of the
Closing Date Aggregate Share Consideration and the Closing
Date Aggregate Cash Consideration, pro rata to each Member
that held issued and outstanding Membership Interests as of
immediately prior to the Effective Time, based on the
percentages set forth next to each such Member's name under
the heading "Fully Diluted Percentage Interests" in Section
4.4(a) of the Company Disclosure Letter (the "FULLY DILUTED
PERCENTAGE
INTERESTS");
provided that Members shall receive payments of cash in lieu of
fractional shares as provided in Section 3.3(b)(iv); provided,
further,
that, notwithstanding the foregoing, if the Company becomes
obligated
under the Existing Operating Agreement to have the allocation of
the
payment of the Closing Date Aggregate Share Consideration and
Closing
Date Aggregate Cash Consideration to the Members be determined by
the
Investment Banking Firm (as defined in the Existing Operating
Agreement) selected in accordance with the Selection Procedures
(as
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defined in the Existing Operating Agreement), such allocation and
the
payments to be made to the Members under this Section 3.3(b)(iii)
shall
instead be made as determined by such Investment Banking Firm
(the
"INVESTMENT BANKING FIRM DETERMINATION").
(iv) Fractional Shares. Each holder of Membership Interests
issued and outstanding immediately prior to the Effective Time
who
would otherwise have been entitled to receive a fraction of a share
of
Buyer Common Stock issuable pursuant to Section 3.2(a)(i) shall
receive
from the Exchange Agent, in accordance with the provisions of
this
Article III, a cash payment in lieu of such fractional share
interest
based upon the Specified Value Per Share. The Buyer shall pay to
the
Exchange Agent simultaneously with the payment made pursuant to
Section
3.3(b)(i) an amount in cash sufficient for the Exchange Agent to
pay
each holder of Membership Interests issued and outstanding
immediately
prior to the Effective Time an amount in cash equal to the
product
obtained by multiplying (A) the fraction of a share of Buyer
Common
Stock issuable pursuant to Section 3.2(a)(i) to which such holder
would
otherwise have been entitled by (B) the Specified Value Per
Share.
(v) Investment of Exchange Fund. The Exchange Agent shall
invest the cash portion of the Exchange Fund as directed by the
Buyer
in one or more Permitted Investments (as defined in the agreement
to be
entered into among the Buyer, the Company and the Exchange Agent
prior
to the Closing Date). Any interest and other income resulting from
such
investment shall become a part of the Exchange Fund, and any
amounts in
excess of the amounts payable under Section 3.2(a)(i) shall be
paid
promptly to the Buyer.
(vi) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains unclaimed by the holders of Membership
Interests
issued and outstanding immediately prior to the Effective Time 180
days
after the Effective Time shall be delivered by the Exchange Agent
to
the Buyer upon demand. Any holder of Membership Interests issued
and
outstanding immediately prior to the Effective Time who has not
complied with this Article III shall look thereafter only to the
Buyer
for payment or issuance of the portion of the certificates
representing
the number of shares of Buyer Common Stock issuable pursuant to
Section
3.2(a)(i) and the amount of cash payable pursuant to Section
3.2(a)(i)
allocable to such holder.
3.4 Member Written Consent. Immediately after the execution of
this Agreement, the Member Written Consent shall be executed and
delivered by
Members holding a majority of the Voting Membership Interests and a
copy thereof
shall be delivered to the Company and the Buyer.
3.5 Allocation of Aggregate Merger Consideration. The
Aggregate Merger Consideration, as adjusted, plus the amount of any
liabilities
of the Company and its Subsidiaries for Tax purposes as of the
Effective Time
shall be allocated consistent with past practice among the assets
of the Company
19
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and its Subsidiaries (including the Management Agreement) as
reasonably proposed
by the Sellers' Representative in good faith and shall be set forth
in a
schedule produced by the Sellers' Representative and delivered to
the Buyer
within seventy-five (75) days following the Closing Date (the
"ALLOCATION
SCHEDULE"). The Buyer shall have an opportunity to review the
proposed
Allocation Schedule for a period of 20 days after receipt of the
proposed
Allocation Schedule. If the Buyer disagrees with any aspect of the
proposed
Allocation Schedule, the Buyer shall notify the Sellers'
Representative, in
writing, prior to the end of such 20-day period (an "ALLOCATION
OBJECTION
NOTICE"), setting forth the Buyer's proposed Allocation Schedule
and specifying,
in reasonable detail, any good faith dispute as to the Sellers'
Representative's
Allocation Schedule. If prior to the conclusion of such 20-day
period, the Buyer
notifies the Sellers' Representative in writing that it will not
provide any
Allocation Objection Notice or if the Buyer does not deliver an
Allocation
Objection Notice within such 20-day period, then the proposed
Allocation
Schedule shall be deemed final and conclusive and binding upon each
of the
parties hereto (a "FINAL ALLOCATION SCHEDULE"). The Sellers'
Representative and
the Buyer shall use commercially reasonable efforts to resolve any
objection by
the Buyer to the proposed Allocation Schedule and to agree upon a
Final
Allocation Schedule. If within 10 days after the Sellers'
Representative
receives an Allocation Objection Notice the Buyer and the
Sellers'
Representative have not resolved all objections and agreed upon a
Final
Allocation Schedule, the Buyer and the Sellers' Representative
shall engage a
mutually acceptable independent accounting firm of national
recognition (the
"INDEPENDENT ACCOUNTING FIRM") to determine whether the
Sellers'
Representative's position with respect to any remaining disputed
items, as set
forth in the proposed Allocation Schedule, are reasonable. Any
disputed items
that are so determined by the Independent Accounting Firm to be
reasonable shall
be included in the Final Allocation Schedule as proposed by the
Sellers'
Representative. Any disputed items that are so determined by the
Independent
Accounting Firm not to be reasonable shall be adjusted by the
Independent
Accounting Firm to be reasonable, and such adjusted amounts shall
be included in
the Final Allocation Schedule. The Buyer and the Sellers'
Representative shall
have the opportunity to present their position with respect to any
disputed
items to the Independent Accounting Firm and shall use commercially
reasonable
efforts to cause the Independent Accounting Firm, within 20 days
after its
selection, to make the above-described determinations and to
prepare a Final
Allocation Schedule in accordance therewith. Unless the Buyer and
the Sellers'
Representative otherwise agree, such Final Allocation Schedule
shall not modify
items previously agreed. The fees and disbursements of the
Independent
Accounting Firm shall be shared equally by the Buyer, on the one
hand, and the
Members that held issued and outstanding Membership Interests as of
immediately
prior to the Effective Time (pro rata in proportion to the
respective amounts
paid to such Members pursuant to Section 3.2(a)), on the other
hand; provided,
however, that the Buyer may (but shall not be obligated to) elect,
at any time,
to withdraw all (but not less than all) of the aggregate amount of
such fees and
disbursements allocable to such Members from the Indemnity Escrow
Fund in
accordance with the Escrow Agreement. The parties shall, and shall
cause their
respective Affiliates to, use the allocations set forth in the
Final Allocation
Schedule for all Tax purposes, file all Tax Returns in a manner
consistent with
20
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such Final Allocation Schedule and take no position contrary
thereto, in each
case, unless required to do so by a change in applicable Tax Laws
or a good
faith resolution of a Tax contest.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Letter which is being
delivered to the Buyer concurrently herewith (the "COMPANY
DISCLOSURE LETTER"),
the Company represents and warrants to the Buyer and Buyer Sub as
follows:
4.1 Due Organization; Qualification.
(a) The Company is a limited liability company duly organized
and validly existing and in good standing under the laws of the
State of
Illinois and has all requisite limited liability company power and
authority to
own, lease and operate its properties and to carry on its business
as now being
conducted.
(b) The
copies of the certificate of formation of the Company
and the Existing Operating Agreement that previously have been made
available to
the Buyer are true and correct copies of such documents as in
effect on the date
of this Agreement.
(c) The Company and each of its Subsidiaries is duly qualified
or licensed to do business and is in good standing in all
jurisdictions where
the Company or such Subsidiary, as applicable, currently conducts
business that
requires such qualification or licensing, except where the failure
to be so
qualified or licensed would not have a Company Material Adverse
Effect.
4.2 Subsidiaries; Investments.
(a) Section 4.2(a) of the Company Disclosure Letter hereto
sets forth the name and jurisdiction of organization of each
Subsidiary of the
Company. Each of the Company's Subsidiaries is an entity duly
organized, validly
existing and (to the extent the concept of good standing exists in
the
applicable jurisdiction) in good standing under the laws of its
jurisdiction of
organization. Each of the Company's Subsidiaries has all requisite
corporate or
other similar organizational power and authority to own, lease and
operate its
properties and to carry on its business as now being conducted. The
copies of
the articles of incorporation, bylaws and similar governing
documents of each of
the Company's Subsidiaries that previously have been made available
to the Buyer
are true and correct copies of such documents as in effect on the
date of this
Agreement.
(b) Other than any interests in the Company's Subsidiaries,
except as set forth in Section 4.2(b) of the Company Disclosure
Letter, neither
the Company nor any of its Subsidiaries owns any capital stock or
other equity
interests in any Person.
4.3 Authorization; Enforceability; Voting Requirements.
21
<PAGE>
(a) The Company has all requisite limited liability company
power and authority to execute and deliver this Agreement and each
applicable
Ancillary Document and to perform its obligations hereunder and
thereunder. The
execution and delivery by the Company of this Agreement and each
applicable
Ancillary Document and the performance by the Company of its
obligations
hereunder and thereunder have been duly authorized by all requisite
limited
liability company action of the Company other than the adoption of
this
Agreement by the requisite vote of the Members (which shall be
obtained pursuant
to the Member Written Consent immediately following the execution
and delivery
of this Agreement). Except as provided for in the preceding
sentence, no other
limited liability company action on the part of the Company is
necessary to
authorize the execution, delivery and performance by the Company of
this
Agreement and each applicable Ancillary Document and the
consummation by it of
the transactions contemplated hereunder and thereunder. This
Agreement and each
applicable Ancillary Document has been duly executed and delivered
by the
Company and, assuming this Agreement and each applicable Ancillary
Document has
been duly authorized, executed and delivered by the other parties
hereto,
constitutes the legal, valid and binding obligation of the Company,
enforceable
against the Company in accordance with its terms, subject to
bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
similar laws,
laws of general applicability relating to or affecting creditors'
rights and to
general equity principles.
(b) The affirmative vote of the Members pursuant to the Member
Written Consent is the only vote or approval of the holders of any
class or
series of capital stock of the Company or any of its Subsidiaries
which is
necessary to adopt this Agreement and approve the Merger.
4.4 Capitalization.
(a) Section 4.4(a) of the Company Disclosure Letter sets forth
a list as of the date hereof of the authorized, issued and
outstanding Class A-1
Interests, Class A-2 Interests, Class B Interests and Class C
Profits Only
Interests and each registered holder thereof. All of such
authorized, issued and
outstanding Membership Interests are duly authorized and validly
issued, fully
paid and non-assessable. No other class or series of Membership
Interests or
other equity interests in the Company is authorized, issued or
outstanding,
except for the Preferred Membership Interests (of which none is
issued or
outstanding). Except as provided in the Existing Operating
Agreement or in any
grant agreement related to the Class C Profits Only Interests or as
may be
required in connection with a CDO Financing, there are no
outstanding
securities, options, warrants, calls, rights, commitments,
agreements,
arrangements or undertakings of any kind to which the Company is a
party or by
which the Company is bound, obligating the Company to issue,
deliver or sell, or
cause to be issued, delivered or sold, additional Membership
Interests or other
ownership interests of the Company or obligating the Company to
issue, grant,
extend or enter into any such security, option, warrant, call,
right,
commitment, agreement, arrangement or undertaking. Except as
provided in the
Existing Operating Agreement or in any grant agreement related to
the Class C
Profits Only Interests or as may be required in connection with a
CDO Financing,
there are no outstanding contractual obligations of the Company to
repurchase,
22
<PAGE>
redeem or otherwise acquire any Membership Interests or other
ownership
interests in the Company or make any material investment (in the
form of a loan,
capital contribution or otherwise) in any Person.
(b) The Company's Subsidiaries are as set forth in Section
4.4(b) of the Company Disclosure Letter. All of the outstanding
shares of
capital stock of or other equity interests in each of the Company's
Subsidiaries
are duly authorized and validly issued, fully paid and
nonassessable. All shares
of capital stock of or other equity interests in each Subsidiary of
the Company
are owned by the Company or another Subsidiary of the Company free
and clear of
any Liens, other than Permitted Liens.
4.5 Financial Statements; Cash on Hand. The Company has
previously made available to the Buyer copies of audited
consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 2006
(the "MOST
RECENT BALANCE SHEET DATE") and December 31, 2005 and the related
audited
consolidated statements of operations, members' equity and cash
flows of the
Company and its Subsidiaries, for the fiscal years ended December
31, 2006,
December 31, 2005 and December 31, 2004, together with all related
notes and
schedules thereto, accompanied by the corresponding audit reports
of Deloitte &
Touche LLP, independent auditors of the Company (collectively, the
"COMPANY
FINANCIAL STATEMENTS"). The Company Financial Statements fairly
present in all
material respects the consolidated financial position of the
Company and its
Subsidiaries as of the respective dates thereof, and the
consolidated results of
the operations of the Company and its Subsidiaries for the
respective fiscal
periods covered thereby, in each case in accordance with United
States generally
accepted accounting principles ("GAAP") consistently applied during
the periods
involved, except as indicated in any notes thereto (and except in
the case of
the Unaudited Financial Statements, for the absence of footnotes
otherwise
required by GAAP and subject to year-end audit adjustments). As of
the date
hereof, the Company and its Subsidiaries have cash and cash
equivalents of at
least $5,997,000 in the aggregate.
4.6 No Material Adverse Change; Ordinary Course. Since the
Most Recent Balance Sheet Date, (a) except as set forth in Section
4.6(a) of the
Company Disclosure Letter, each of the Company and its Subsidiaries
has
conducted its business only in the ordinary course and consistently
with past
practice (except for actions taken in connection with the
transactions
contemplated by this Agreement or the Ancillary Documents) and (b)
neither the
Company nor any of its Subsidiaries has suffered any event, change,
occurrence
or circumstance in the financial condition, business, results of
operations,
properties or assets of the Company or any of the Subsidiaries
that,
individually or in the aggregate with any such events, changes,
occurrences or
circumstances, has had or would reasonably be expected to have a
Company
Material Adverse Effect.
4.7 No Undisclosed Liabilities. Neither the Company nor any of
its Subsidiaries has any liabilities or obligations of any kind
(whether
accrued, absolute, contingent or otherwise), except for any such
liabilities or
obligations (a) reflected or reserved against in the Company
Financial
23
<PAGE>
Statements, (b) set forth in Section 4.7 of the Company Disclosure
Letter, (c)
incurred in the ordinary course of business since the Most Recent
Balance Sheet
Date or in connection with the transactions contemplated by this
Agreement and
the Ancillary Documents, (d) that are the subject of any other
representation or
warranty contained in this Article IV and are disclosed pursuant to
such other
representation or warranty or are not required to be disclosed
because such
other representation or warranty is limited or qualified with
respect to time,
dollar amount, Knowledge of the Company, materiality, Company
Material Adverse
Effect or any similar qualification or (e) that, individually or in
the
aggregate, are not material to the Company and its Subsidiaries,
taken as a
whole.
4.8 Compliance with Laws. The Company and its Subsidiaries are
in compliance in all material respects with all Laws applicable to
their
respective operations or assets. Except as set forth in Section 4.8
of the
Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has
received any written notice from a Governmental Authority of the
material
violation of any Laws. Neither the Company nor any of its
Subsidiaries is in
violation of any Order or Law which violations would have a Company
Material
Adverse Effect; provided, however, that nothing in this Section 4.8
is intended
to address any compliance issues that are the subject of any
other
representation or warranty contained in this Article IV and are
disclosed
pursuant to such other representation or warranty or are not
required to be
disclosed because such other representation or warranty is limited
or qualified
with respect to time, dollar amount, Knowledge of the Company,
materiality,
Company Material Adverse Effect or any similar qualification.
4.9 Permits. Each of the Company and its Subsidiaries has all
licenses, franchises, permits and authorizations of any
Governmental Authorities
(collectively, "PERMITS") as are necessary for the lawful conduct
of the
business of the Company and the Subsidiaries, except where the
failure to have
such Permits would not have a Company Material Adverse Effect;
provided,
however, that nothing in this Section 4.9 is intended to address
any permit
issues that are the subject of any other representation or warranty
contained in
this Article IV and are disclosed pursuant to such other
representation or
warranty or are not required to be disclosed because such other
representation
or warranty is limited or qualified with respect to time, dollar
amount,
Knowledge of the Company, materiality, Company Material Adverse
Effect or any
similar qualification.
4.10 Regulatory Compliance. DCM is duly registered as an
investment adviser under the Investment Advisers Act and is in
material
compliance with its obligations under the Investment Advisers Act.
The Company
has made available to the Buyer true and complete copies of DCM's
most recent
Form ADV (in the case of ADV Part II, either the brochure in lieu
of Part II
pursuant to Investment Advisers Act rule 204-3 or the form version
of Part II),
as amended to the date of this Agreement. DCM has made all material
amendments
to its Form ADV (or brochure, as applicable) as it is required to
make prior to
the date of this Agreement under the Investment Advisers Act. DCM
is duly
registered as a commodity trading adviser and a commodity pool
operator under
the Commodity Exchange Act. The Company has made available to the
Buyer true and
24
<PAGE>
complete copies of all material documents related to such
registrations. DCM is
not a "broker" or "dealer" within the meaning of the Exchange
Act.
4.11 Environmental Compliance. Each of the Company and its
Subsidiaries is in compliance with all applicable Laws relating to
pollution or
protection of the environment (collectively, "ENVIRONMENTAL Laws"),
except as
would not have a Company Material Adverse Effect. There are no
material Orders
outstanding, or any actions, suits, proceedings, or investigations
pending or,
to the Knowledge of the Company, threatened relating to the
compliance by the
Company or any of its Subsidiaries with, or the liability of the
Company or any
of its Subsidiaries under, any Environmental Law, except for any
such Orders
that would not have a Company Material Adverse Effect.
4.12 Clients.
(a) The aggregate assets under management by DCM, (x) for each
Client other than a Client that is a CDO, as of the most recent
practicable date
prior to the date hereof as calculated by DCM consistent with past
practice, (y)
for each Client that is a CDO (other than any CDO for which no
trustee report is
available prior to the date hereof), as of the date set forth in
the most
recently available trustee report for such CDO prior to the date
hereof and (z)
for each Client that is a CDO for which no trustee report is
available prior to
the date hereof, as of the date on which the closing occurs for
such Client
(each applicable date in (x), (y) and (z) above with respect to
such Client, the
"BASE DATE") are accurately set forth in Section 4.12(a) of the
Company
Disclosure Letter (the "BASE DATE AUM"). Set forth in Section
4.12(a) of the
Company Disclosure Letter is a list as of the date hereof of all
Advisory
Contracts and Strategic Financing Agreements, setting forth with
respect to each
such Advisory Contract and Strategic Financing Agreement, as
applicable:
(i) the name of each Client to which the Company or any of its
Subsidiaries provides Investment Management Services (except to
the
extent that the disclosure of any such name is restricted by a
confidentiality agreement), indicating (A) any such Client that is
the
Company, its Subsidiaries, a holder of Membership Interests or
an
Affiliate of the Company or a holder of Membership Interests, and
(B)
in the case of any Client that is a pooled investment vehicle, any
of
the foregoing Persons described in clause (A) that had an
investment in
such Client as of the Base Date (indicating the amount of such
investment);
(ii) the amount of assets under management pursuant to such
Advisory Contract at the Base Date, and the nature of the
Investment
Management Services provided (i.e., discretionary or
non-discretionary);
(iii) with respect to each Client that is a Hedge Fund, the
amount of each investor's investment in such Hedge Fund as of the
Base
Date (without revealing the identity of such investor);
25
<PAGE>
(iv) the
fee schedule in effect with respect to such Advisory
Contract (including identification of any applicable sub-components
of
such fees, e.g., investment management fees, performance fees, fees
for
any other fiduciary services, etc., as applicable), and a
description
of any fees payable by the underlying Client in connection with
Investment Management Services (or other services) provided by
the
Company or any of its other Subsidiaries other than pursuant to
such
Advisory Contract;
(v) as of the applicable date specified in this Section
4.12(a)(v) and not as of the date hereof, (x) for each Client
other
than a Client that is a CDO, as of the most recent practicable
date
prior to the Closing Date as calculated by DCM consistent with
past
practice, (y) for each Client that is a CDO (other than any CDO
for
which no trustee report is available prior to the Closing Date), as
of
the date set forth in the most recently available trustee report
for
such CDO prior to the Closing Date and (z) for each Client that is
a
CDO for which no trustee report is available prior to the Closing
Date,
as of the date on which the closing occurs for such Client (it
being
understood that the Company shall be permitted to provide the
Buyer
with a supplement to Section 4.12(a)(v) of the Company
Disclosure
Letter solely for purposes of making the representation and
warranty
specified in this Section 4.12(a)(v) as of the applicable dates
specified in this Section 4.12(a)(v)), (A) a description of any
material fee changes (including any caps, waivers, offsets or
reimbursements)
under such Advisory Contract or Strategic Financing
Agreement and (B) a description of any material changes in the
amount
of assets in any Client's account as a result of deposits
(including
reinvestments of dividends and distributions) or withdrawals,
or
redemptions or repayments, made by such Client or, based solely on
the
contents of the most recently available trustee report prior to
the
Closing Date, defaults (as defined under the applicable
indentures
relating to the assets) in assets owned by such Client that is a
CDO,
in each case from the Base Date to (x) for each Client other than
a
Client that is a CDO, as of the most recent practicable date prior
to
the Closing Date as calculated by DCM consistent with past
practice,
(y) for each Client that is a CDO (other than any CDO for which
no
trustee report is available prior to the Closing Date), as of the
date
set forth in the most recently available trustee report for such
CDO
prior to the Closing Date and (z) for each Client that is a CDO
for
which no trustee report is available prior to the Closing Date, as
of
the date on which the closing occurs for such Client, and a
description
of any such changes as of such date (it being understood and
agreed
that, solely for purposes of this clause (v), net deposits or
withdrawals, or redemptions or repayments, with respect to any
one
Client account or defaults (as defined under the applicable
indentures
relating to the assets) in assets owned by such Client in the
aggregate
in excess of $5,000,000 shall be deemed material); and
(vi) the manner of consent required for the "assignment" (or
deemed assignment) under applicable Law, including the
Investment
Advisers Act and relevant state law, by the Company or its
Subsidiaries, as applicable, of such Advisory Contract in
connection
with the transactions contemplated by this Agreement and the
Ancillary
Documents, for those Advisory Contracts which will be assigned
(or
26
<PAGE>
deemed assigned) in connection with such transactions (which
contracts
are so identified), in each case so that any such consent or
approval
(as applicable) will be duly and validly obtained in accordance
with
all applicable Law and the terms of any contracts, agreements and
other
instruments relating thereto.
(b) Except as set forth in Section 4.12(b) of the Company
Disclosure Letter and expressly described thereon, as of the date
hereof, there
are no Contracts pursuant to which either the Company or any of its
Subsidiaries
has undertaken or agreed to cap, waive, offset, reimburse or
otherwise reduce
any or all fees or charges payable by or with respect to any of the
Clients set
forth in Section 4.12(a) of the Company Disclosure Letter or
pursuant to any of
the contracts set forth in Section 4.12(a) of the Company
Disclosure Letter (it
being understood that the Company shall be permitted to provide the
Buyer with a
supplement to Section 4.12(b) of the Company Disclosure Letter to
reflect any
such understanding or agreement after the date hereof and prior to
the Closing
Date entered into in compliance with this Agreement). As of the
date hereof,
except as set forth in Section 4.12(b) of the Company Disclosure
Letter, (i)
since the date that is one year prior to the date hereof, (x) no
Client of the
Company or any of its Subsidiaries (or, in the case of any Clients
that are
pooled investment vehicles (other than any CDOs), underlying
investors therein,
as applicable) has stated in writing to the Company or any of its
Subsidiaries
an intention to terminate or reduce its investment relationship
with the Company
or any of its Subsidiaries, or make an adjustment to the fee
schedule with
respect to any contract in a manner which would reduce the fees to
the Company
or any of its Subsidiaries (including after giving effect to the
Closing) in
connection with such Client relationship, and (y) no investor in
any CDO has
stated in writing to the Company or any of its Subsidiaries an
intention to
cause, either individually or collectively with others, an optional
redemption
of any securities issued by such CDO, and (ii) (x) no Client of the
Company or
any of its Subsidiaries (or, in the case of any Clients that are
pooled
investment vehicles (other than any CDOs), underlying investors
therein, as
applicable) has stated in writing to the Company or any of its
Subsidiaries such
an intention described in clause (i)(x) of this Section 4.12(b)
prior to the
date that is one year prior to the date hereof that is expected to
become
effective on or prior to the date that is one year after the date
hereof, and
(y) no investor in any CDO has stated in writing to the Company or
any of its
Subsidiaries an intention to cause, either individually or
collectively with
others, an optional redemption of any securities issued by such
CDO.
(c) Section 4.12(c) of the Company Disclosure Letter
identifies, with an appropriate footnote, each Client to which the
Company or
any of its Subsidiaries provides Investment Management Services
that is, to the
Knowledge of the Company, (i) an employee benefit plan, as defined
in Section
3(3) of ERISA, that is subject to Title I of ERISA; (ii) a person
acting on
behalf of such a plan; or (iii) an entity whose assets include the
assets of
such a plan, within the meaning of ERISA and applicable regulations
(hereinafter
referred to as an "ERISA CLIENT"). To the Knowledge of the Company,
the Company
and its Subsidiaries have complied in all material respects with
ERISA, Section
4975 of the Code and the regulations promulgated under either ERISA
or Section
4975 of the Code in connection with the provision of Investment
Management
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Services to any ERISA Client. The assets of any partnership, trust,
or
investment fund managed by the Company or any of its Subsidiaries,
or of which
the Company or any of its Subsidiaries is the general partner or
managing
member, that are not intended to constitute "plan assets" under 29
C.F.R.
2510.3-101 (the "PLAN ASSET REGULATION") are, to the Knowledge of
the Company,
not reasonably likely to be determined to be "plan assets" for
purposes of the
Plan Asset Regulation.
(d) To the Knowledge of the Company, neither the Company nor
any of its Subsidiaries provides Investment Management Services to
(i) any
issuer or other Person that is required to be registered as an
investment
company (within the meaning of the Investment Company Act) under
the Investment
Company Act, or (ii) any issuer or other Person that is or is
required to be
registered under the laws of the appropriate securities regulatory
authority in
the jurisdiction in which the issuer is domiciled, which is or
holds itself out
as engaged primarily in the business of investing, reinvesting or
trading in
securities. Neither the Company nor any of its Subsidiaries is
required to be
registered as an investment company (within the meaning of the
Investment
Company Act) under the Investment Company Act.
(e) Except as
set forth in Section 4.12(e) of the Company
Disclosure Letter, no exemptive orders, "no-action" letters or
similar
exemptions or regulatory relief have been obtained, nor are any
requests pending
therefor, by or with respect to either of the Company or its
Subsidiaries, any
holder of Membership Interests or any employee of any such Person
in connection
with the business of the Company and its Subsidiaries, or to the
Knowledge of
the Company, by any Client of the Company and its Subsidiaries in
connection
with the provision of Investment Management Services to such Client
by the
Company and its Subsidiaries.
(f) Section 4.12(f) of the Company Disclosure Letter sets
forth a true, correct and complete list of (i) the Hedge Fund
Documents (it
being understood that the Company shall be permitted to provide the
Buyer with a
supplement to Section 4.12(f) of the Company Disclosure Letter to
reflect the
entering into, or amendment, supplement or other modification of,
any Hedge Fund
Document after the date hereof and prior to the Closing Date in
compliance with
this Agreement) and (ii) the CDO Documents (it being understood
that the Company
shall be permitted to provide the Buyer with a supplement to
Section 4.12(f) of
the Company Disclosure Letter to reflect the entering into, or
amendment,
supplement or other modification of, any CDO Document after the
date hereof and
prior to the Closing Date in compliance with this Agreement). The
Company
provided the Buyer with true and correct copies of all CDO
Documents and Hedge
Fund Documents as of the date hereof (and as of the Closing will
have provided
true and correct copies of any CDO Documents and/or Hedge Fund
Documents entered
into after the date hereof and prior to the Closing Date in
compliance with this
Agreement), and the offering circulars or memoranda included in
such CDO
Documents and Hedge Fund Documents did not at the time such CDO or
Hedge Fund
issued any securities related to such CDO Documents and Hedge Fund
Documents
contain any untrue statement of a material fact concerning the
Company or any of
its Subsidiaries or omit to state a material fact concerning the
Company or any
of its Subsidiaries necessary in order to make the statements
contained therein,
in the light of the circumstances under which they were made, not
misleading.
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<PAGE>
Each of the CDO Documents and the Hedge Fund Documents to which the
Company or
its Subsidiaries is a party, to the extent applicable, is in full
force and
effect and binding upon the Company or its Subsidiary party thereto
and, to the
Knowledge of the Company, the other parties thereto, except as (i)
limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent
conveyance and other similar laws of general application affecting
enforcement
of creditors' rights generally and (ii) the availability of the
remedy of
specific performance or injunctive or other forms of equitable
relief may be
subject to equitable defenses and would be subject to the
discretion of the
court before which any proceeding therefor may be brought. None of
the Company
or any of its Subsidiaries is in material default under any CDO
Document or
Hedge Fund Document to which it is a party, nor, to the Knowledge
of the
Company, has any event occurred which, with the giving of notice or
the passage
of time, or both, would give rise to such a material default.
Except as set
forth in Section 4.12(f) of the Company Disclosure Letter, to the
Knowledge of
the Company, each of the CDOs was in compliance as of the Base Date
with each of
its overcollateralization tests and interest coverage tests.
(g) Each of the Client Consents obtained in accordance with
Section 6.8 (including each of the Consents included in the
determination of
whether the condition contained in Section 7.9 has been satisfied)
will, as of
the Closing Date, have been duly obtained under all applicable Law
and the
requirements of the applicable Advisory Contract.
(h) Nothing in this Section 4.12 (other than the calculation
of the Base Date AUM) is intended to address any matters with
respect to the
Buyer or any of its Subsidiaries.
4.13 Non-Contravention; Consents and Approvals. The execution
and delivery by the Company of this Agreement and each applicable
Ancillary
Document, the consummation of the transactions contemplated hereby
and thereby,
and the performance by the Company of this Agreement and each
applicable
Ancillary Document in accordance with its terms will not:
(a) except as set forth in Section 4.13(a) of the Company
Disclosure Letter, violate the Existing Operating Agreement or any
comparable
organizational instruments of any of the Company's
Subsidiaries;
(b)
require the Company to obtain any consents, approvals,
authorizations or actions of, or make any filings with or give any
notices to,
any Governmental Authorities or any other Person, except for (i)
the
notification requirements of the HSR Act, (ii) the filing of the
Articles of
Merger with the Secretary of State of the State of Illinois, (iii)
as set forth
in Section 4.13(b) of the Company Disclosure Letter (the "COMPANY
CONSENTS AND
NOTICES"), (iv) as contemplated by Section 6.8 (the "CLIENT
CONSENTS") or (v)
any such consents, approvals, authorizations or actions of, or
filings with or
notices to any Person (other than a Governmental Authority) the
failure to
obtain or make which would not have a Company Material Adverse
Effect;
29
<PAGE>
(c) assuming all of the Client Consents and the Company
Consents and Notices are obtained or made, violate or result in the
breach of
any of the material terms and conditions of, cause the termination
of or give
any other contracting party the right to terminate, or constitute
(or with
notice or lapse of time, or both, constitute) a default under, or
result in the
acceleration of any monetary liabilities under, any Material
Contract or
material Permit to which the Company or any of its Subsidiaries is
a party or by
which any of their respective properties or assets are bound, or
result in the
creation of any Lien, other than a Permitted Lien, upon any of the
properties or
assets of the Company or any of its Subsidiaries pursuant to the
terms of any
Material Contract or material Permit to which the Company or any of
its
Subsidiaries is a party or by which any of their respective
properties or assets
are bound, except for any such violations, breaches, terminations,
defaults,
accelerations or creations under any Material Contracts that would
not have a
Company Material Adverse Effect; or
(d) assuming all of the Client Consents and the Company
Consents and Notices are obtained or made, violate or result in the
breach of
any applicable Orders or Laws of any Governmental Authorities.
4.14 Contracts.
(a) Section 4.14 of the Company Disclosure Letter sets forth a
list of all of the following Contracts to which the Company or any
of its
Subsidiaries is a party or is bound by and that remain in effect as
of the date
hereof (collectively, the "MATERIAL CONTRACTS"):
(i) any Advisory Contract or Strategic Financing Agreement;
(ii) any Contract relating to (x) the engagement of any
financial institution (other than with any rating agency, trustee
or
routine service provider) in respect of engagements not yet
completed
or (y) the warehousing of securities, in each case, in connection
with
the formation or offering of any securities of any CDO the closing
of
which has not yet occurred under which it is reasonably likely that
the
Company or any of its Subsidiaries has any continuing material
obligations;
(iii) any Contract for the purchase of any data, assets,
material or equipment, other than any such Contract entered into in
the
ordinary course of business or in an amount not exceeding
$250,000
annually;
(iv) any other Contract under which the Company and its
Subsidiaries have paid or are required to pay in excess of
$250,000
annually;
(v) any Contract for the sale of all or any material assets of
the Company or any of its Subsidiaries other than in the
ordinary
course of business;
30
<PAGE>
(vi) any Contract relating to the acquisition (by merger,
purchase of stock or assets or otherwise) by the Company or any of
its
Subsidiaries of any operating business or material assets or
the
capital stock or other equity interests of any other Person;
(vii) any partnership, strategic alliance, sharing of profits
or joint venture agreements or other similar Contracts;
(viii) any Contracts containing covenants of the Company or
any of its Subsidiaries not to compete in any line of business or
with
any Person in any geographical area or covenants of any other
Person
not to compete with the Company or any of its Subsidiaries in any
line
of business or in any geographical area;
(ix) any Contract relating to Debt of the Company or any of
its Subsidiaries;
(x) any Contracts, excluding any Benefit Plan, with any (A)
current officer, director, stockholder or Affiliate of the Company
or
any of its Subsidiaries or (B) any former officer, director,
stockholder or Affiliate of the Company or any of its
Subsidiaries
pursuant to which the Company or any of its Subsidiaries has
any
material continuing obligations thereunder;
(xi) any Contracts with any labor union or association
representing any Employee of the Company or any of its
Subsidiaries;
(xii) any Contracts imposing a Lien (other than Permitted
Liens) on any of the assets of the Company or any of its
Subsidiaries;
(xiii) any Contracts, excluding any Benefit Plan, under which
the Company or any of its Subsidiaries has made advances or loans
to
any other Person;
(xiv) any outstanding Contracts of guaranty, direct or
indirect, by the Company or any of its Subsidiaries under which
the
Company or any of its Subsidiaries may be required to pay in excess
of
$250,000; or
(xv) any Contracts with any investment or research consultant,
solicitor or sales agent, or otherwise with respect to the referral
of
business to either of the Company or any of its Subsidiaries
(including
any agreement with respect to solicitation of prospective investors
in
any CDOs or Hedge Funds).
(b) Except as would not have a Company Material Adverse Effect
or as disclosed in Section 4.14(b) of the Company Disclosure
Letter, (i) each
Material Contract, assuming such Material Contract has been duly
authorized,
executed and delivered by the other parties thereto, constitutes
the legal,
valid and binding obligation of the Company or the applicable
Subsidiary of the
Company, enforceable against the Company or the applicable
Subsidiary of the
31
<PAGE>
Company in accordance with its terms, subject to bankruptcy,
insolvency,
fraudulent transfer, reorganization, moratorium or similar laws,
laws of general
applicability relating to or affecting creditors' rights and to
general equity
principles and (ii) neither the Company nor any of the Subsidiaries
has received
written notice of any uncured or unwaived material default by the
Company or any
of the Subsidiaries.
(c)
Nothing in this Section 4.14 is intended to address any
matters with respect to the Buyer or any of its Subsidiaries.
4.15 Property.
(a) Neither the Company nor any of its Subsidiaries owns any
real property. Section 4.15(a) of the Company Disclosure Letter
sets forth a
list of all real property and interests in real property leased by
the Company
and the Subsidiaries (individually, a "REAL PROPERTY LEASE" and
collectively,
the "REAL PROPERTY LEASES") as lessee or lessor, including a
description of each
such Real Property Lease (including the name of the third party
lessor or lessee
and the date of the lease or sublease and all amendments thereto).
Except as set
forth in Section 4.15(a) of the Company Disclosure Letter, the Real
Property
Leases constitute all interests in real property currently used,
occupied or
currently held for use in connection with the business of the
Company and the
Subsidiaries and which are necessary for the continued operation of
the business
of the Company and the Subsidiaries as the business is currently
conducted. Each
of the Company and the Subsidiaries, as applicable, has a valid,
binding and
enforceable leasehold interest under each of the Real Property
Leases under
which it is a lessee, free and clear of all Liens other than
Permitted
Exceptions. Each of the Real Property Leases is in full force and
effect. Except
as would not have a Company Material Adverse Effect or as disclosed
in Section
4.15(a) of the Company Disclosure Letter, (i) each Real Property
Lease, assuming
such Real Property Lease has been duly authorized, executed and
delivered by the
other parties thereto, constitutes the legal, valid and binding
obligation of
the Company or the applicable Subsidiary of the Company,
enforceable against the
Company or the applicable Subsidiary of the Company in accordance
with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization,
moratorium or similar laws, laws of general applicability relating
to or
affecting creditors' rights and to general equity principles and
(ii) neither
the Company nor any of the Subsidiaries has received written notice
of any
uncured or unwaived material default by the Company or any of the
Subsidiaries.
The Company has delivered to Purchaser true, correct and complete
copies of the
Real Property Leases, together with all amendments, modifications
or supplements
thereto.
(b) The Company and the Subsidiaries have good title to all of
the material items of tangible personal property used in the
business of the
Company and the Subsidiaries, free and clear of any and all Liens,
except (i) as
set forth in Section 4.15(b) of the Company Disclosure Letter and
(ii) Permitted
Liens; provided, however, that nothing in this Section 4.15 is
intended to
address any intellectual property matters, which are the subject of
Section
4.16. All such items of tangible personal property which,
individually or in the
aggregate, are material to the operation of the business of the
Company and the
32
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Subsidiaries are in good condition and in a state of good
maintenance and repair
(ordinary wear and tear excepted) and are suitable for the purposes
used.
4.16 Intellectual Property.
(a) Section 4.16(a) of the Company Disclosure Letter sets
forth a true and complete list of all (i) registrations for
material
Intellectual Property, (ii) applications to register material
Intellectual
Property and (iii) material unregistered trademarks or service
marks, in each
case owned by the Company or one of its Subsidiaries. Except as
listed in
Section 4.16(a) of the Company Disclosure Letter, to the Knowledge
of the
Company, the Company or one of its Subsidiaries is the sole and
exclusive owner
of all right, title and interest in and to such Intellectual
Property listed in
Section 4.16(a) of the Company Disclosure Letter, free and clear of
all Liens
other than Permitted Liens.
(b) Except as set forth in Section 4.16(b) of the Company
Disclosure Letter, each of the Company and its Subsidiaries owns or
has the
right to use all material Intellectual Property to the extent
necessary to
conduct the business of the Company and its Subsidiaries as
presently conducted.
(c) No actions, suits or proceedings are pending nor to the
Knowledge of the Company, is any claim threatened in writing
against the Company
or any of its Subsidiaries that challenges the Company's or any
such
Subsidiary's ownership or right to use any material Intellectual
Property that
is necessary to conduct the business of the Company and its
Subsidiaries as
presently conducted.
(d) To the Knowledge of the Company, neither the Company nor
any of its Subsidiaries are infringing any material intellectual
property rights
of any third party.
