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Agreement And Plan Of Merger

Agreement and Plan of Merger

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CIFC LLC | CIFC ACQUISITION, LLC | Corporate Organization | FAB FINANCIAL INVESTMENTS GP LIMITED | FAB HOLDINGS I LP

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware     Date: 8/19/2016
Law Firm: Dechert;Latham Watkins;Weil Gotshal    

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Exhibit 2.1

 

Execution Version

 

 

 

AGREEMENT AND PLAN OF MERGER

 

among

 

F.A.B. HOLDINGS I LP

 

CIFC ACQUISITION, LLC

 

and

 

CIFC LLC

 

Dated as of August 19, 2016

 

 

 



 

ARTICLE I. THE MERGER

 

2

 

 

 

 

 

Section 1.1.

 

The Merger

 

2

Section 1.2.

 

Closing

 

2

Section 1.3.

 

Effective Time

 

3

Section 1.4.

 

Effects of the Merger

 

3

Section 1.5.

 

Limited Liability Company Agreement

 

3

Section 1.6.

 

Directors; Officers

 

3

 

 

 

 

 

ARTICLE II. EFFECT OF MERGER ON CAPITAL STOCK

 

3

 

 

 

 

 

Section 2.1.

 

Effect on Capital Stock

 

3

Section 2.2.

 

Treatment of Equity Awards

 

4

Section 2.3.

 

Dissenting Shares

 

5

Section 2.4.

 

Payment Fund and Payment Procedures

 

6

Section 2.5.

 

Lost Certificates

 

8

Section 2.6.

 

Withholding Rights

 

8

Section 2.7.

 

Contribution and Issuance

 

8

Section 2.8.

 

Further Assurances

 

8

Section 2.9.

 

Stock Transfer Books

 

9

 

 

 

 

 

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

9

 

 

 

 

 

Section 3.1.

 

Corporate Organization

 

9

Section 3.2.

 

Qualification to Do Business

 

9

Section 3.3.

 

No Conflict or Violation

 

10

Section 3.4.

 

Consents and Approvals

 

10

Section 3.5.

 

Authorization and Validity of Agreement

 

11

Section 3.6.

 

Capitalization and Related Matters

 

11

Section 3.7.

 

Subsidiaries

 

13

Section 3.8.

 

Company SEC Reports; Related Matters

 

14

Section 3.9.

 

Absence of Certain Changes or Events

 

15

Section 3.10.

 

Tax Matters

 

15

Section 3.11.

 

Undisclosed Liabilities

 

17

Section 3.12.

 

Company Real Property

 

17

Section 3.13.

 

Funds; Clients; Assets Under Management

 

17

Section 3.14.

 

Intellectual Property

 

21

Section 3.15.

 

Licenses and Permits

 

22

 



 

Section 3.16.

 

Compliance with Law

 

22

Section 3.17.

 

Foreign Corrupt Practices Act

 

26

Section 3.18.

 

Litigation

 

26

Section 3.19.

 

Contracts

 

27

Section 3.20.

 

Employee Plans

 

29

Section 3.21.

 

Insurance

 

31

Section 3.22.

 

Affiliate Transactions

 

31

Section 3.23.

 

Labor Matters

 

31

Section 3.24.

 

Environmental Matters

 

32

Section 3.25.

 

No Brokers

 

33

Section 3.26.

 

State Takeover Statutes

 

33

Section 3.27.

 

Opinion of Financial Advisor

 

33

Section 3.28.

 

Information Supplied

 

33

Section 3.29.

 

Board Approval

 

33

Section 3.30.

 

Vote Required

 

34

Section 3.31.

 

No Other Representations or Warranties

 

34

 

 

 

 

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

34

 

 

 

 

 

Section 4.1.

 

Organization

 

34

Section 4.2.

 

Qualification to Do Business

 

34

Section 4.3.

 

No Conflict or Violation

 

34

Section 4.4.

 

Consents and Approvals

 

34

Section 4.5.

 

Authorization and Validity of Agreement

 

35

Section 4.6.

 

Information Supplied

 

35

Section 4.7.

 

Operations of Merger Sub

 

35

Section 4.8.

 

No Brokers

 

36

Section 4.9.

 

Equity Commitment Letter; Equity Financing; Sufficiency of Funds; Guarantee

 

36

Section 4.10.

 

Ownership of Company Stock

 

37

Section 4.11.

 

Acknowledgement of Disclaimer of Other Representations and Warranties

 

37

 

 

 

 

 

ARTICLE V. CERTAIN COVENANTS OF THE COMPANY

 

37

 

 

 

 

 

Section 5.1.

 

Conduct of Business Before the Closing Date

 

38

 

ii



 

Section 5.2.

 

Rule 16b-3

 

41

 

 

 

 

 

ARTICLE VI. CERTAIN COVENANTS OF PARENT AND MERGER SUB

 

41

 

 

 

 

 

Section 6.1.

 

Employee Benefits

 

41

Section 6.2.

 

D&O Indemnification Continuation

 

43

Section 6.3.

 

Tax Matters

 

45

 

 

 

 

 

ARTICLE VII. ADDITIONAL COVENANTS OF THE PARTIES

 

45

 

 

 

 

 

Section 7.1.

 

Preparation of Proxy Statement; Company Shareholders Meeting

 

45

Section 7.2.

 

Investment Advisory Arrangement Consents and Investor Waivers

 

46

Section 7.3.

 

Access to Information

 

48

Section 7.4.

 

Reasonable Best Efforts

 

49

Section 7.5.

 

Acquisition Proposals

 

51

Section 7.6.

 

Shareholder Litigation

 

53

Section 7.7.

 

Public Announcements

 

54

Section 7.8.

 

Takeover Statutes

 

54

Section 7.9.

 

Certain Notices

 

54

Section 7.10.

 

Stock Exchange Delisting

 

54

 

 

 

 

 

ARTICLE VIII. CONDITIONS PRECEDENT

 

55

 

 

 

 

 

Section 8.1.

 

Conditions to Each Party’s Obligation to Effect the Merger

 

55

Section 8.2.

 

Additional Conditions to Obligations of Parent and Merger Sub

 

55

Section 8.3.

 

Additional Conditions to Obligations of the Company

 

56

Section 8.4.

 

Frustration of Closing Conditions

 

57

 

 

 

 

 

ARTICLE IX. TERMINATION

 

57

 

 

 

 

 

Section 9.1.

 

Termination

 

57

Section 9.2.

 

Notice of Termination; Effect of Termination

 

59

Section 9.3.

 

Amendment

 

61

Section 9.4.

 

Extension; Waiver

 

61

 

 

 

 

 

ARTICLE X. MISCELLANEOUS

 

61

 

 

 

 

 

Section 10.1.

 

Non-Survival of Representations, Warranties and Agreements

 

61

Section 10.2.

 

Successors and Assigns

 

61

Section 10.3.

 

Governing Law; Jurisdiction; Waiver of Jury Trial

 

61

 

iii



 

Section 10.4.

 

Expenses

 

63

Section 10.5.

 

Severability; Construction

 

63

Section 10.6.

 

Notices

 

64

Section 10.7.

 

Entire Agreement

 

66

Section 10.8.

 

Parties in Interest

 

66

Section 10.9.

 

Specific Performance

 

66

Section 10.10.

 

Disclosure Letter

 

67

Section 10.11.

 

Non-Recourse

 

67

Section 10.12.

 

Counterparts

 

67

Section 10.13.

 

Definitions

 

67

 

Exhibits

 

 

Exhibit A

 

Surviving Company LLC Agreement

 

 

 

Annexures

 

 

Annex A

 

Management Fees

Annex B-1

 

CLOs/CDOs

Annex B-2

 

Company Funds (other than CLOs/CDOs)

Annex B-3

 

Managed Accounts

Annex B-4

 

Sub-advisory Relationships

 

iv



 

AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER, dated as of August 19, 2016 (as the same may be amended from time to time in accordance with its terms, this “ Agreement ”), among F.A.B. HOLDINGS I LP, a limited partnership organized and existing under the laws of Delaware (“ Parent ”), CIFC ACQUISITION, LLC, a Delaware limited liability company and a direct wholly owned Subsidiary of Parent (“ Merger Sub ”), and CIFC LLC, a Delaware limited liability company (the “ Company ”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Section 10.13 hereof.

 

W I T N E S S E T H :

 

WHEREAS, the parties intend that Merger Sub be merged with and into the Company, with the Company surviving that merger on the terms and subject to the conditions set forth herein (the “ Merger ”), and subject to the provisions of the Limited Liability Company Act of the State of Delaware (the “ Act ”);

 

WHEREAS, in the Merger, upon the terms and subject to the conditions of this Agreement, each limited liability company interest (each a “ Common Share ”) in the Company having the rights and obligations specified with respect to Common Shares specified in the Amended and Restated Limited Liability Company Agreement of the Company, effective as of December 31, 2015 (the “ LLC Agreement ”), other than Excluded Shares, will be converted into the right to receive the Merger Consideration;

 

WHEREAS, the Board of Directors of the Company has (i) determined that it is in the best interests of the Company and its Shareholders (as defined in the LLC Agreement, each a “ Shareholder ” and, collectively, the “ Shareholders ”), and declared it advisable, to enter into this Agreement with Parent and Merger Sub, (ii) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend adoption of this Agreement by the members of the Company;

 

WHEREAS, as a condition to Parent entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, Parent is entering into a Voting Agreement with a Shareholder of the Company (the “ Voting Agreement ”) pursuant to which, among other things, such Shareholder has agreed, subject to the terms thereof, to vote all Common Shares owned by such Shareholder in accordance with the terms of the Voting Agreement;

 

WHEREAS, concurrently with the execution of this Agreement, certain holders of Company Shares have agreed (or may agree after the date hereof) (the “ Rollover Holders ”) to contribute certain Common Shares to Parent and/or have Parent assume certain Company Share Awards (such Common Shares and Company Share Awards, collectively, the “ Rollover Shares ”), pursuant to one or more Rollover Agreements (each, a “ Rollover Agreement ” and collectively, the “ Rollover Agreements ”, and such contributions and assumptions, collectively, the “ Rollover Contributions ”) between each such Rollover Holder and Parent, pursuant to which the parties thereto have agreed that, in connection with the Merger and subject to the

 



 

terms and conditions thereof, immediately prior to the Effective Time, the Rollover Holders shall effect the Rollover Contributions and Parent shall issue to each Rollover Holder equity interests in Parent determined in accordance with such Rollover Holder’s Rollover Agreement (such transactions, collectively, the “ Contribution and Issuance ”);

 

WHEREAS, the Board of Directors of Parent has unanimously approved this Agreement and declared it advisable for Parent to enter into this Agreement;

 

WHEREAS, the Board of Directors of Merger Sub has unanimously approved this Agreement and declared it advisable for Merger Sub to enter into this Agreement; and

 

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition to the willingness of the Company to enter into this Agreement, Parent and Merger Sub have delivered to the Company (a) the Equity Commitment Letter of the Sponsor, dated as of the date of this Agreement, pursuant to which the Sponsor has agreed to fund, subject to the terms and conditions contained in the Equity Commitment Letter, the Equity Financing and (b) the guarantee of Sponsor (the “ Guarantor ”), dated as of the date hereof, in favor of the Company (the “ Guarantee ”) pursuant to which the Guarantor is guaranteeing the obligations of Parent and Merger Sub in connection with this Agreement as specified therein; and

 

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated hereby and also to prescribe various conditions to the transactions contemplated hereby.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I.

 

THE MERGER

 

Section 1.1.            The Merger .  Upon the terms and subject to the conditions hereof, at the Effective Time, Merger Sub shall be merged with and into the Company and the separate existence of Merger Sub shall thereupon cease, and the Company, as the surviving entity in the Merger (the “ Surviving Company ”), shall, by virtue of the Merger, continue its existence under the laws of the State of Delaware.

 

Section 1.2.            Closing .  Unless this Agreement shall have been terminated pursuant to the provisions of Section 9.1, the closing of the Merger (the “ Closing ”) will take place at 10:00 a.m., New York City time, on the third Business Day after the satisfaction or waiver (subject to applicable Law) of the conditions to Closing set forth in ARTICLE VIII hereof (excluding conditions that, by their terms, cannot be satisfied until the Closing Date, but subject to the satisfaction or, where permitted, waiver of those conditions as of the Closing), unless another time or date is agreed to in writing by the parties hereto (the actual date of the Closing, the “Closing Date”).  The Closing shall be held at the offices of Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, unless another place is agreed to in

 

2



 

writing by the parties hereto provided, however, that any party may participate remotely by electronic delivery of documents and/or funds.

 

Section 1.3.            Effective Time .  Upon the Closing, the parties shall file with the Secretary of State of the State of Delaware a certificate of merger (the “ Certificate of Merger ”).  The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such subsequent time as Parent and the Company shall agree and as shall be specified in the Certificate of Merger (the date and time the Merger becomes effective is referred to herein as the “ Effective Time ”).

 

Section 1.4.            Effects of the Merger .  The Merger shall have the effects set forth in the Act.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers, and franchises of the Company and Merger Sub shall vest in the Surviving Company, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Company.

 

Section 1.5.            Limited Liability Company Agreement .  The LLC Agreement of the Company will be amended in connection with the Merger to read in its entirety as set forth on Exhibit A hereto, shall be the limited liability company agreement of the Surviving Company and thereafter may be amended as provided therein or by Law, subject to Section 6.2.

 

Section 1.6.            Directors; Officers .  The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Company and the officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Company, in each case, until their respective successors are duly elected and qualified or until their death, resignation or removal in accordance with the Act and the limited liability company agreement of the Surviving Company.

 

ARTICLE II.

 

EFFECT OF MERGER ON CAPITAL STOCK

 

Section 2.1.            Effect on Capital Stock .  At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company or the holder of any capital stock of Parent, Merger Sub or the Company:

 

(a)           Cancellation of Certain Common Shares .  Each Common Share that is owned by Parent, Merger Sub or the Company (as treasury stock or otherwise) or any of their respective direct or indirect wholly owned Subsidiaries (other than shares held by any Subsidiary of the Company, which shall remain outstanding with appropriate adjustment to the number thereof to preserve its relative interest in the Company, and other than shares held on behalf of third parties) will automatically be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor.

 

(b)           Conversion of Common Shares .  Each Common Share that is issued and outstanding immediately prior to the Effective Time (other than (i) shares described in Section 2.1(a), (ii) Dissenting Shares and (iii) Rollover Shares (each, an “ Excluded Share ” and collectively, the “ Excluded Shares ”)) will automatically be converted into solely the right to

 

3



 

receive, in cash, the Merger Consideration, payable upon surrender of such shares in the manner provided in Section 2.4.

 

(c)           Cancellation of Common Shares .  All Common Shares shall cease to be outstanding and shall be cancelled and retired and shall cease to exist, and, in the case of book-entry shares (“ Book-Entry Shares ”), the names of the former registered holders shall be removed from the registry of holders of such shares, and, subject to Section 2.1(a) and Section 2.3, each holder of Book-Entry Shares and each holder of a certificate which immediately prior to the Effective Time represented any such Common Shares (each, a “ Certificate ”) shall thereafter cease to have any rights with respect to such Common Shares, except, in the case of the Company Shares that are not Excluded Shares, the right to receive the Merger Consideration in accordance with Section 2.4.

 

(d)           Conversion of Merger Sub Capital Stock .  Each common share of Merger Sub that is issued and outstanding immediately prior to the Effective Time will automatically be converted into one (1) common share representing one membership interest of the Surviving Company.

 

(e)           Adjustments to Prevent Dilution .  If prior to the Effective Time, the Company should, subject to and in accordance with Section 5.1, split, combine, or otherwise reclassify the Common Shares or any rights, warrants or options to acquire any Company Securities, or pay a dividend or other distribution in Common Shares or otherwise change the Common Shares into any other securities, or make any other such dividend or distribution in equity interests of the Company in respect of the Common Shares, then any number or amount contained herein which is based upon the price or the number of Common Shares will be appropriately adjusted to reflect such split, combination, reclassification, dividend or other distribution or change.

 

Section 2.2.            Treatment of Equity Awards .

 

(a)           Company Share Options .  The Company shall take all actions as may be necessary so that, at the Effective Time, each option to acquire Common Shares (each, a “ Company Share Option ”) that has not been forfeited (or if previously forfeited, is required to be reinstated if a change in control event or sale event occurs within a specified period following such forfeiture) shall become fully vested to the extent not then fully vested, and each Company Share Option shall be cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (x) the aggregate number of Common Shares subject to such Company Share Option, multiplied by (y) the excess, if any, of the Merger Consideration over the per share exercise price of such Company Share Option; provided, however, that if the result in clause (y) equals or is less than zero, such Company Share Option shall be cancelled and forfeited with no payment due the holder thereof.  Parent shall cause the Surviving Company or one of its Subsidiaries to pay, through the Company’s regular payroll system on a special payroll date which shall have been established by Company with its payroll provider prior to Closing, the holders of Company Share Options the amounts due under this Section 2.2(a) (less all applicable withholding Taxes and deductions) as promptly as practicable (but in any event no later than three (3) days) after the Effective Time.

 

4



 

(b)           Company Share Awards .  The Company shall take all actions as may be necessary so that, at the Effective Time, each Company Share Award (other than any Company Share Award to be assumed by Parent pursuant to the Rollover Agreements) that has not been forfeited (or if previously forfeited, is required to be reinstated if a change in control event or sale event occurs within a specified period following such forfeiture) shall become fully vested if not already fully vested (and if such Company Share Award is subject to performance based vesting, such Company Share Award shall become vested based on the maximum level of performance for such Company Share Award except to the extent provided in Section 2.2(b) of the Disclosure Letter), and all Company Share Awards (other than any Company Share Award to be assumed by Parent pursuant to the Rollover Agreements) shall be cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (x) the aggregate number of Common Shares in respect of such Company Share Award (if such Company Share Award is subject to performance based vesting, such aggregate number of Common Shares shall be determined assuming the maximum level of performance for such Company Share Award except to the extent provided in Section 2.2(b) of the Disclosure Letter) multiplied by (y) the Merger Consideration.  Parent shall cause the Surviving Company or one of its Subsidiaries to pay the holders of Company Share Awards (other than any Company Share Award to be assumed by Parent pursuant to the Rollover Agreements), through the Company’s regular payroll system on a special payroll date which shall have been established by Company with its payroll provider prior to Closing, the amounts due under this Section 2.2(b) (less all applicable withholding Taxes and deductions) as promptly as practicable (but in any event no later than three (3) days) after the Effective Time (or at such later date as may be required to comply with Code Section 409A).

 

(c)           Company Warrant .  The Company shall take all actions as may be necessary so that, at the Effective Time, each warrant to acquire Common Shares (each, a “ Company Warrant ”) that has not been exercised shall be redeemed or cancelled in exchange for the right to receive (i) an amount in cash, without interest, equal to the product of (x) the aggregate number of Common Shares for which such Company Warrant is exercisable into, multiplied by (y) the excess, if any, of the Merger Consideration over the per share exercise price of such Company Warrant and (ii) dividends pursuant to Section 4.03 of the Warrant Agreement in an amount equal to $1.59 per Common Share, plus any dividends paid after the date hereof and prior to the Closing Date.  Parent shall cause the Surviving Company or one of its Subsidiaries to pay the holders of Company Warrants the amounts due under this Section 2.2(c) (less all applicable withholding Taxes and deductions) at the Closing.

 

Section 2.3.            Dissenting Shares .  Notwithstanding anything in this Agreement to the contrary, Common Shares that are issued and outstanding immediately prior to the Effective Time and that are owned by Shareholders that have properly perfected their rights of appraisal within the meaning of Section 262 of the General Corporation Law of the State of Delaware (the “ DGCL ”) (as applicable to the Company pursuant to the LLC Agreement (the “ Dissenting Shares ”)) shall not be converted into the right to receive the Merger Consideration, unless and until such Shareholders shall have failed to perfect any available right of appraisal thereunder, but, instead, the holders thereof shall be entitled to payment of the appraised value of such Dissenting Shares in accordance with Section 262 of the DGCL (as applicable to the Company pursuant to the LLC Agreement).  If any such holder shall have failed to perfect or shall have effectively withdrawn or lost such right of appraisal, the Common Shares held by such

 

5



 

Shareholder shall not be deemed Dissenting Shares for purposes of this Agreement and shall thereupon be deemed to have been converted into the Merger Consideration at the Effective Time in accordance with Section 2.1(b).  The Company shall give Parent (a) prompt written notice of any demands for appraisal filed pursuant to Section 262 of the DGCL (as applicable to the Company pursuant to the LLC Agreement) received by Company, withdrawals of such demands and any other instruments served or delivered in connection with such demands pursuant to Section 262 of the DGCL (as applicable to the Company pursuant to the LLC Agreement) and received by the Company, and (b) the opportunity to participate in all negotiations and proceedings with respect to demands made pursuant to Section 262 of the DGCL (as applicable to the Company pursuant to the LLC Agreement).  The Company shall not, except with the prior written consent of Parent, (i) make any payment with respect to any such demand, (ii) offer to settle or settle any such demand, or (iii) waive any failure to timely deliver a written demand for appraisal or timely take any other action to perfect appraisal rights in accordance with Section 262 of the DGCL (as applicable to the Company pursuant to the LLC Agreement).

 

Section 2.4.            Payment Fund and Payment Procedures .

 

(a)           Prior to the Effective Time, for the benefit of the holders of the Common Shares (other than Excluded Shares), Parent will designate, or cause to be designated, a bank or trust company that is reasonably acceptable to the Company (the “ Paying Agent ”) to act as agent for the payment of the Merger Consideration in respect of Certificates upon surrender of such Certificates (or effective affidavits of loss in lieu thereof that comply with the requirements of Section 2.5) and Book-Entry Shares in accordance with this ARTICLE II from time to time after the Effective Time.  At or prior to the Effective Time, Parent or Merger Sub will deposit, or cause to be deposited, with the Paying Agent sufficient cash in U.S. dollars to pay the aggregate Merger Consideration that is payable in respect of all of the issued and outstanding Common Shares, other than amounts to be paid through the Company’s payroll system, which shall be paid to the Company (the “ Payment Fund ”).  The Payment Fund shall not be used for any purpose other than to fund payments pursuant to Section 2.1(b).  Parent shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of Common Shares for the Merger Consideration.  Parent will enter into a paying agent agreement on customary terms, which terms shall be in form and substance reasonably acceptable to the Company, prior to the Effective Time.

 

(b)           As promptly as practicable after the Effective Time and in any event no later than the second (2nd) Business Day following the Closing, Parent shall send, or cause the Paying Agent to mail to each holder of record of Common Shares (other than Excluded Shares) a letter of transmittal in customary form as reasonably agreed by the parties specifying that delivery will be effected, and risk of loss and title to Certificates and Book-Entry Shares will pass, only upon proper delivery of Certificates (or customary effective affidavits of loss in lieu thereof that comply with the requirements of Section 2.5) or Book-Entry Shares, as the case may be, to the Paying Agent and instructions for use in effecting the surrender of the Certificates (or customary effective affidavits of loss in lieu thereof that comply with the requirements of Section 2.5) and Book-Entry Shares in exchange for the Merger Consideration.

 

6



 

(c)           Upon the proper surrender of a Certificate (or customary effective affidavit of loss in lieu thereof that comply with the requirements of Section 2.5) or Book-Entry Share to the Paying Agent, together with a duly executed and properly completed letter of transmittal, and such other documents as may reasonably be requested by the Paying Agent, the holder of such Certificate or Book-Entry Share will be entitled to receive as promptly as practicable in exchange therefor cash in the amount (after giving effect to any required tax withholdings) that such holder has the right to receive pursuant to this ARTICLE II, and the Certificate (and the Common Shares represented thereby) or Book-Entry Share so surrendered will forthwith be cancelled; provided that , with respect to any Shareholder who surrenders Certificates or Book-Entry Shares at least three (3) Business Days prior to the Effective Time together with a properly completed letter of transmittal and such other proper documentation as the Paying Agent reasonably requests (which letter of transmittal and other documentation Parent will cause the Paying Agent to provide promptly upon request of a Shareholder, but in no event later than five (5) Business Days prior to the Effective Time) the Paying Agent shall pay to such Shareholder by wire transfer of immediately available funds on the Closing Date the amount such Shareholder has the right to receive pursuant to this ARTICLE II.

 

(d)           Until such Certificates (or customary effective affidavits of loss in lieu thereof that comply with the requirements of Section 2.5) or Book-Entry Shares, as the case may be, are so properly delivered, each such Certificate or Book-Entry Share, as the case may be, shall represent after the Effective Time for all purposes only the right to receive the Merger Consideration payable in respect thereof, subject to the terms set forth in Section 2.3.  No interest will be paid or accrued on any amount payable upon due surrender of the Certificates or Book-Entry Shares.

 

(e)           In the event of a transfer of ownership of the Common Shares that is not registered in the transfer records of the Company, cash to be paid upon due surrender of the Certificate or Book-Entry Share may be paid to such a transferee if the Certificate or Book-Entry Share formerly representing such Common Shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer Taxes have been paid or are not applicable.

 

(f)            Any funds included in the Payment Fund may be invested by the Paying Agent, as directed by Parent; provided that such investments shall be limited to direct short-term obligations of, or short-term obligations fully guaranteed by, the United States of America and backed by the full faith and credit of the United States of America.  Any interest and other income resulting from such investments shall promptly be paid to Parent. Nothing contained herein and no investment losses resulting from investment of the Payment Fund shall diminish the rights of any holder of Certificates or Book-Entry Shares to receive the Merger Consideration as provided herein. If for any reason (including losses) the Payment Fund is at any time inadequate to pay the amounts to which holders of Common Shares shall be entitled under Section 2.1(b), Parent shall take all steps necessary to promptly deposit additional cash in U.S. dollars with the Paying Agent sufficient to make all payments required under this Agreement, and Parent and the Surviving Company shall in any event be liable for the payment thereof.

 

(g)           Any portion of the Payment Fund that remains undistributed to the holders of the Certificates or Book-Entry Shares twelve (12) months after the Effective Time will be

 

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delivered to the Surviving Company, on demand, and any holder of a Certificate or Book-Entry Share who has not theretofore complied with this ARTICLE II will thereafter look only to the Surviving Company for payment of his or her claims for Merger Consideration.  Notwithstanding the foregoing, none of Parent, Merger Sub, the Company, the Surviving Company, the Paying Agent or any other Person will be liable to any Person in respect of any Merger Consideration from the Payment Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

 

Section 2.5.            Lost Certificates .  If any Certificate shall have been lost, stolen or destroyed, upon (a) the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Company, (b) the posting by such Person of a bond in such reasonable amount as the Surviving Company may direct as indemnity against any claim that may be made against it with respect to such Certificate and (c) the delivery of any other documentation (including an indemnity in customary form) reasonably requested by Parent, the Paying Agent will deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration with respect to the Common Shares formerly represented thereby.

 

Section 2.6.            Withholding Rights .  Each of the Paying Agent, the Surviving Company and Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Common Shares or any holder of a Company Equity Award or Company Warrant such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax Law.  To the extent that amounts are so withheld by the Surviving Company or Parent, as the case may be, and duly paid to the applicable Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Common Shares or the holder of a Company Equity Award or Company Warrant in respect of which such deduction and withholding was made by the Surviving Company or Parent, as the case may be.

 

Section 2.7.            Contribution and Issuance .  Immediately prior to the Effective Time, the Rollover Holders and Parent shall effectuate the Contribution and Issuance in accordance with the Rollover Agreements, pursuant to which each such Rollover Holder shall receive equity interests in Parent determined in accordance with such Rollover Holder’s Rollover Agreement.  The Company shall take such actions as are necessary and reasonably requested by Parent in order to allow the consummation of the transactions contemplated by the Rollover Agreements, including the assumption by Parent of certain Company Share Awards, provided , that such actions shall not have an adverse effect on the Company or its equityholders (other than delaying the deductibility of such Company Share Awards upon vesting).

 

Section 2.8.            Further Assurances .  At and after the Effective Time, the officers and directors of the Surviving Company will be authorized to execute and deliver, in the name and on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Company any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Company as a result of, or in connection with, the Merger.

 

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Section 2.9.            Stock Transfer Books .  At the close of business, New York time, on the day the Effective Time occurs, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Common Shares thereafter on the records of the Company.  From and after the Effective Time, the holders of Certificates or Book-Entry Shares shall cease to have any rights with respect to such Common Shares formerly represented thereby, except as otherwise provided herein or by Law.

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to Parent and Merger Sub as of the date hereof and as of the Closing Date, subject to exceptions and all matters set forth in (a) the corresponding sections or subsections of the Disclosure Letter delivered by the Company to Parent and Merger Sub concurrently with the execution of this Agreement (the “ Disclosure Letter ”) (it being understood that any matter disclosed in any section of the Disclosure Letter will be deemed to be disclosed in any other section of the Disclosure Letter to the extent that the applicability of such matter so referenced is reasonably apparent upon a reading of the disclosure without any independent knowledge on the part of the reader regarding the matter disclosed), or (b) the Company SEC Reports filed since January 1, 2014 and prior to the date hereof (but excluding any forward-looking disclosures set forth in any “risk factors” section, any disclosure in any “forward-looking statements” section and any other disclosures included therein to the extent they are primarily predictive or forward-looking in nature (other than those disclosures with respect to specific historical facts or events affecting the Company)), but excluding in the case of this clause (b) the representations and warranties of the Company set forth in Section 3.5 (Authorization and Validity of Agreement), Section 3.9(b) (Absence of Certain Changes or Events), Section 3.25 (No Brokers) and Section 3.26 (State Takeover Statutes), as follows:

 

Section 3.1.            Corporate Organization .  The Company and each of its Subsidiaries is a legal entity, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite corporate, limited liability company, limited partnership or other entity power (as the case may be) to own, lease and operate all of its properties and assets and to conduct its business as currently conducted, except where the failure to be in good standing or have such power and authority would not, individually or in the aggregate, have a Company Material Adverse Effect.  Copies of the Company Organizational Documents and the organizational documents of each Subsidiary of the Company, in each case, with all amendments thereto to the date hereof, have been made available to Parent or its Representatives, and such copies are accurate, true and complete as of the date hereof.

 

Section 3.2.            Qualification to Do Business .  The Company and each of its Subsidiaries is duly qualified to do business as a foreign corporation, limited liability company, partnership or other entity (as the case may be) and is in good standing in every jurisdiction in which the character or location of the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

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Section 3.3.            No Conflict or Violation .  The execution, delivery and performance by the Company of this Agreement and each Ancillary Agreement (including the consummation of the Merger) do not and will not, directly or indirectly, (i) violate, conflict with or result in a breach of any provision of any Company Organizational Document or the organizational documents of any of its Subsidiaries, Controlled Funds or, to the Knowledge of the Company, Non-Controlled Funds, (ii) subject to compliance with the requirements set forth in Section 3.4(c) and, in the case of the consummation of the Merger, obtaining the Required Company Vote, violate any provision of Law applicable to the Company or any Subsidiary thereof or any of their respective assets or properties, (iii) violate, conflict with or result in a breach of or constitute (with due notice or lapse of time or both) a default under or result in or give to others any rights of termination, modification, amendment, vesting or cancelation of or under, acceleration, revocation or suspension of any Material Contract (but only with respect to Material Contracts not otherwise terminable by the other party thereto on 90 days’ or less notice), or (iv) result in the creation or imposition of any Lien (other than any Permitted Lien) upon any of the assets, properties or rights of the Company or any of its Subsidiaries, except, in the case of each of clauses (ii) through (iv) above, as would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

Section 3.4.            Consents and Approvals .  No Consent is required in connection with the execution and delivery of this Agreement and each Ancillary Agreement by the Company or the performance by the Company of its obligations hereunder (including the consummation of the Merger) and thereunder, except for: (a) the filing of the Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “ HSR Act ”); (b) applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”) and as may be required under applicable state securities or “blue sky” Laws of the United States; (c) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware; (d) the filing with the SEC of a proxy statement (together with all customary proxy or other materials delivered in connection therewith, the “ Proxy Statement ”) relating to the meeting of the Shareholders of the Company to be held to consider the adoption of this Agreement (the “ Company Shareholders Meeting ”); (e) the Consents required or contemplated under the Advisers Act and any Investment Advisory Arrangements; (f) the filings or notices required by, and any approvals required under the rules and regulations of, any self-regulatory organization, including the NASDAQ Stock Market LLC (the “ NASDAQ ” and, each, a “ Self-Regulatory Organization ”); and (g) such Consents which if not obtained or made would not, individually or in the aggregate, have a Company Material Adverse Effect.  Section 3.4 of the Disclosure Letter contains a true and complete list as of the date hereof of (x) each Consent (including the party from whom such Consent must be obtained) required pursuant to any Investment Advisory Arrangement (each such Consent, an “ Advisers Act Consent ”), and (y) each Consent required to prevent or waive any put right, right of redemption, termination of the investment period, termination of the fund, default or other consequence materially adverse to the Company or any of its Subsidiaries pursuant to any Fund Document (each such Consent, an “ Investor Waiver ”), in the case of each of (x) and (y), in connection with the execution and delivery of this Agreement and each Ancillary Agreement by the Company or the performance by the Company of its obligations hereunder and thereunder (including the consummation of the Merger).

 

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Section 3.5.            Authorization and Validity of Agreement .  The Company has the requisite limited liability company power and authority to execute, deliver and perform its obligations under this Agreement and each Ancillary Agreement and, subject to, in the case of the consummation of the Merger, adoption of this Agreement by the affirmative vote or consent of the holders of a majority of the outstanding Common Shares (the “ Required Company Vote ”), to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and each Ancillary Agreement by the Company and the performance by the Company of its obligations hereunder and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized and approved by the Board of Directors of the Company and all other necessary limited liability company action on the part of the Company, subject only, in the case of consummation of the Merger, to the receipt of the Required Company Vote, and no other corporate proceedings on the part of the Company (subject only, in the case of consummation of the Merger, to the receipt of the Required Company Vote) are necessary to authorize this Agreement and each Ancillary Agreement and the transactions contemplated hereby and thereby.  This Agreement and each Ancillary Agreement is, or when executed will be, duly and validly executed and delivered by the Company and, assuming due execution and delivery by Parent and Merger Sub, shall constitute a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to (a) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting the enforcement of creditors’ rights generally, (b) general equitable principles (whether considered in a proceeding in equity or at law) and (c) an implied covenant of good faith and fair dealing.

 

Section 3.6.            Capitalization and Related Matters .

 

(a)

 

(i)            The authorized share capital of the Company consists of 600,000,000 shares, consisting of (i) 500,000,000 Common Shares and (ii) 100,000,000 Preferred Shares.

 

(ii)           As of the close of business on August 15, 2016 (the “ Capitalization Date ”), 23,624,014 Common Shares were issued and outstanding, and there were no Preferred Shares issued or outstanding.

 

(iii)          As of the Capitalization Date, Company Share Awards representing 2,319,471 Common Shares not subject to performance based vesting were issued and outstanding, Company Share Awards representing 659,800 Common Shares subject to performance based vesting (based on the maximum level of performance) were issued and outstanding, Company Share Options representing 3,185,313 Common Shares were issued and outstanding, of which 2,995,414 were vested and exercisable as of the Capitalization Date, and Company Warrants convertible into 2,000,000 Common Shares were exercisable.

 

(iv)          Section 3.6(a)(iv) of the Disclosure Letter sets forth as of the close of business on the Capitalization Date a list of each outstanding Company Equity Award and Company Warrant and (A) the name of the holder of such Company Equity Award and Company Warrant, (B) the number of Common Shares subject to such outstanding Company

 

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Equity Award (based on the maximum level of performance for each Company Share Award that is subject to performance based vesting), (C) the date on which such Company Equity Award and Company Warrant was granted or issued, (D) the exercise price of each Company Share Option and Company Warrant, (E) the expiration date of each Company Share Option and Company Warrant, (F) the extent to which such Company Equity Award is vested as of such date, (G) if such Company Equity Award has performance-vesting criteria and (H) the amount of accrued dividend equivalents with respect to each Company Share Award and Company Warrant.

 

(v)           Section 3.6(a)(v) of the Disclosure Letter sets forth as of the close of business on the Capitalization Date the aggregate exercise price of all Company Share Options that have a per share exercise price that is less than the Merger Consideration.

 

(b)

 

(i)            The outstanding Common Shares have been, and all Common Shares which may be issued pursuant to the exercise or settlement of outstanding Company Equity Awards and Company Warrants are or will be when issued, duly authorized and validly issued and are fully paid, and an acquirer of Common Shares has no obligation to make further payments for its purchase of Common Shares or contributions to the Company solely by reason of the Common Shares or its status as a member of a limited liability company.

 

(ii)           Except for the Common Shares issued and outstanding as of the Capitalization Date as set forth in Section 3.6(a) (and any Common Shares issued following such date and prior to the date hereof upon the settlement or exercise of Company Equity Awards or Company Warrants), and the Company Equity Awards and Company Warrants listed on Section 3.6(a) of the Disclosure Letter, as of the date hereof, except as set forth on Section 3.6(b) of the Disclosure Letter, no equity interests of the Company are outstanding and neither the Company nor any Subsidiary thereof has outstanding (A) any securities convertible into or exchangeable for any shares of equity interests of the Company, (B) any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any warrants, calls, repurchase rights, voting rights, commitments or claims of any other character relating to the issuance of, any equity interests of the Company or any stock or securities convertible into or exchangeable for any such equity interests, or (C) any stock appreciation rights, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any equity interests of the Company (the items in clauses (A), (B) and (C) immediately above, together with the Common Shares, being referred to herein collectively as the “ Company Securities ”).

 

(iii)          Neither the Company nor any Subsidiary thereof is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, to grant any Person a right to subscribe for or acquire, or to register under the Securities Act, any Company Securities.

 

(iv)          Neither the Company nor any Subsidiary thereof has outstanding any bonds, debentures, notes or other similar debt obligations the holders of which have the right

 

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to vote (or are convertible into or exercisable for securities having the right to vote) with the Shareholders of the Company or any such Subsidiary on any matter.

 

Section 3.7.            Subsidiaries .

 

(a)           Section 3.7(a) of the Disclosure Letter sets forth a complete and correct list, as of the date hereof, of (i) each Subsidiary of the Company, (ii) its place and form of organization and (iii) the owner(s) of its capital stock, membership interests or other ownership interests, as applicable, to the extent such owner is not the Company or another wholly-owned Subsidiary of the Company, together with the amount and/or percentage of ownership interests owned by each such Person.  Except as set forth on Section 3.7(a) of the Disclosure Letter, the Company does not, directly or indirectly, own or hold any capital stock, membership interests or other ownership interests in any other Person.

 

(b)

 

(i)            All of the outstanding shares of capital stock, or membership interests or other ownership interests, of each Subsidiary of the Company, as applicable, are validly issued, fully paid and nonassessable.

 

(ii)           The Company or a Subsidiary thereof has, as of the date hereof and shall have on the Closing Date, valid and marketable title to all of the shares of capital stock of, or membership interests or other ownership interests in, each Subsidiary of the Company, free and clear of any Liens other than Liens arising under applicable federal and state securities Laws or, in the case of any non-wholly-owned Subsidiary, the restrictions contained in the organizational documents of such Subsidiary as in effect on the date hereof.

 

(iii)          Neither the Company nor any Subsidiary thereof has outstanding (A) any securities convertible into or exchangeable for any capital stock of, or membership interests or other ownership interests in, any Subsidiary of the Company, (B) any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any warrants, calls, repurchase rights, voting rights, commitments or claims of any other character relating to the issuance of, any capital stock of, or membership interests or other ownership interests in, any Subsidiary of the Company, or any stock or securities convertible into or exchangeable for any capital stock of, or membership interests or other ownership interests in, any Subsidiary of the Company, or (C) any stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or membership interests or other ownership interests in, any Subsidiary of the Company (the items in clauses (A), (B) and (C) immediately above, together with any capital stock of, or membership interests or other ownership interests in, any Subsidiary of the Company, being referred to herein collectively as the “ Company Subsidiary Securities ”).

 

(iv)          Neither the Company nor any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, to grant any

 

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Person a right to subscribe for or acquire, or to register under the Securities Act, any Company Subsidiary Securities.

 

Section 3.8.            Company SEC Reports; Related Matters .

 

(a)           Except as disclosed on Section 3.8(a) of the Disclosure Letter, the Company or its predecessor registrant CIFC Corp. has timely filed or furnished, as applicable, each report, proxy statement, registration statement, prospectus, schedule, form, statement, certification and other document (including exhibits and all other information incorporated by reference therein) required to be filed or furnished by it with the SEC since January 1, 2014 (the “ Company SEC Reports ”).  As of their respective dates, after giving effect to any amendments or supplements thereto filed prior to the date hereof, the Company SEC Reports (including any schedules or exhibits included or incorporated by reference therein) (i) complied as to form in all material respects with the requirements of the Exchange Act, the Securities Act and the Sarbanes-Oxley Act, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(b)           The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each case, the notes, if any, thereto) included in the Company SEC Reports (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto as of their respective dates, (ii) were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by the SEC), and (iii) fairly presented (subject, in the case of the unaudited interim financial statements included therein, to normal and recurring year-end adjustments as permitted by GAAP and the applicable rules and regulations of the SEC and the absence of notes thereto) in all material respects the consolidated financial position of the Company (or its predecessor entities) and its consolidated Subsidiaries as of the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended.

 

(c)           As of the date hereof, the Company has delivered or made available to Parent all material written correspondence between the Company or any of its Subsidiaries, on the one hand, and the SEC, on the other hand since January 1, 2014, including any requests for information.  As of the date hereof, there are no material unresolved comments from SEC staff in comment letters with respect to Company SEC Reports.  As of the date hereof, the Company has not received any written notice that the SEC or any other Governmental Entity is conducting any review of any Company SEC Report.

 

(d)           Except as would not have a Company Material Adverse Effect, the Company has established and maintains a system of disclosure controls and procedures (as such term is defined in paragraph (e) of Rule 13a-15 promulgated under the Exchange Act) as required by Rule 13a-15 promulgated under the Exchange Act.  Such disclosure controls and procedures are designed to ensure that material information required to be disclosed by the Company in periodic reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

 

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The Company’s internal controls over financial reporting provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of Company financial statements for external purposes in accordance with GAAP. Since January 1, 2014, the Company’s principal executive officer and its principal financial officer have disclosed to the Company’s auditors and the audit committee of the Company’s Board of Directors (i) all known significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information, and (ii) any known fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls. The Company has made available to Parent all such disclosures made by management to the Company’s auditors and audit committee from January 1, 2014 to the date hereof.

 

(e)           The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated under such act (the “ Sarbanes-Oxley Act ”) or the Exchange Act and the applicable listing and corporate governance rules of the NASDAQ.

 

Section 3.9.            Absence of Certain Changes or Events .  Since December 31, 2015 through the date of this Agreement, except in connection with the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (a) the business of the Company and each of its Subsidiaries has been conducted, in all material respects, in the ordinary course of business, (b) there has not been or occurred any Company Material Adverse Effect, (c) the Company has not taken any action that if taken after the date hereof and prior to Closing would require consent of Parent pursuant to Section 5.1(a)(iii) (sub-clauses (B)-(D)), Section 5.1(a)(iv), Section 5.1(a)(v), Section 5.1(a)(vi), Section 5.1(a)(ix), Section 5.1(a)(x), Section 5.1(a)(xi), Section 5.1(a)(xii), Section 5.1(a)(xiii), Section 5.1(a)(xiv), Section 5.1(a)(xv), and Section 5.1(a)(xvi), and (d) no executive officer or portfolio manager of the Company or its Subsidiaries has given written notice of his or her intention to resign from the Company and to the Company’s Knowledge there is no pending Governmental Investigation of any executive officer or portfolio manager of the Company or its Subsidiaries that would reasonably be expected to result in his or her debarment.

 

Section 3.10.         Tax Matters .

 

(a)           The Company and each of its Subsidiaries have filed when due all Tax Returns required by applicable Law to be filed with respect to the Company, each of its Subsidiaries and each of the Funds; all such Tax Returns are true, correct and complete in all material respects; and all Taxes owed by or on behalf of the Company, each of its Subsidiaries, and each of the Funds, whether or not shown due on any Tax Return, have been fully and timely paid.

 

(b)           Except as set forth in Section 3.10(b) of the Disclosure Letter, (i) there is no action, suit, proceeding, investigation, audit or claim now pending with respect to the Company, any of its Subsidiaries or the Funds in respect of any Tax, nor has any material claim for additional Tax been asserted by any taxing authority; (ii) there is no deficiency, refund litigation, proposed adjustment or matter in controversy with respect to any Taxes due and owing

 

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by the Company, any of its Subsidiaries or the Funds; (iii) each deficiency resulting from any completed audit or examination relating to Taxes of the Company, any of its Subsidiaries or the Funds by any taxing authority has been timely paid; (iv) no issues relating to Taxes were raised by the relevant taxing authority in any such completed audit or examination that would reasonably be expected to recur in a later taxable period, and (v) neither the Company, nor any of its Subsidiaries, nor any of the Funds have granted any requests, agreements consents or waivers to extend the statutory period of limitation applicable to the assessment of any Taxes with respect to any Tax Returns.

 

(c)           No written claim has been made by any Tax authority in a jurisdiction where the Company, any of its Subsidiaries, or any of the Funds does not currently file a Tax Return that the Company, any of its Subsidiaries or any of the Funds is or may be subject to any Tax in such jurisdiction, nor has any such assertion been threatened or proposed in writing by any Tax authority.

 

(d)           Neither the Company, nor any of its Subsidiaries, nor any of the Funds is (i) a member of an affiliated group (within the meaning of Section 1504(a) of the Code) or any other group that has filed a combined, consolidated or unitary income Tax Return, (ii) a party to any Tax sharing, indemnification or allocation agreement (other than any such agreement with service providers, customers, vendors, creditors or lessors entered into in the ordinary course of business, the principal purpose of which is not to address Tax matters), nor does the Company or any of its Subsidiaries owe any amount under any such agreement or (iii) liable for the Taxes of any Person under Treas. Reg. § 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor or by Contract.

 

(e)           Neither the Company nor any of its Subsidiaries has participated in a “reportable transaction” described in Section 6707A(c)(1) of the Code.

 

(f)            Neither the Company, nor any of its Subsidiaries, nor any of the Funds has constituted either a “distributing corporation” or a “controlled” corporation (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (or so much of Section 356 as relates to Section 355) (i) in the two (2) years prior to the Closing Date or (ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

 

(g)           Each Fund that is intended to be treated as a partnership for U.S. Federal income Tax purposes pursuant to the applicable Fund Documents is treated as such for U.S. Federal income Tax purposes.

 

(h)           None of the Company, any of its Subsidiaries (to the extent such entities are treated as transparent for U.S. federal income tax purposes), any of the Controlled Funds, or, to the Knowledge of the Company, any Non-Controlled Funds (in each case, to the extent such entities are treated as transparent for U.S. federal income tax purposes) generate any income that is “effectively connected with the conduct of a trade or business within the United States” within the meaning of Section 882 of the Code, including income that is treated as effectively connected under Section 897 of the Code.

 

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(i)            For purposes of this Section 3.10, references to the Company, any of its Subsidiaries, or any of the Funds shall include any entity that was merged with or liquidated or converted into the Company, such Subsidiary or such Fund.

 

Section 3.11.         Undisclosed Liabilities .  The balance sheet of the Company dated as of December 31, 2015 contained in the Company SEC Documents is hereinafter referred to as the “ Company Balance Sheet .” Except as set forth in Section 3.11 of the Disclosure Letter, neither the Company nor any of its Subsidiaries has any Liabilities other than Liabilities that (i) are reflected or recorded on the Company Balance Sheet (including in the notes thereto), (ii) were incurred since the date of the Company Balance Sheet in the ordinary course of business, (iii) are incurred in connection with the transactions contemplated by this Agreement or any other transaction or agreement contemplated by this Agreement whether due or to become due, (iv) would not have, individually or in the aggregate, a Company Material Adverse Effect, (v) arise from an existing Contract, or a Contract entered into in compliance with this Agreement, except to the extent such Liabilities arose or resulted from a breach or a default of such Contract, or (vi) are of a nature not required to be reflected on the consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP.  Neither the Company nor any of its Subsidiaries is a party to, or has any commitment or agreement to become a party to, any joint venture, off-balance sheet partnership or any similar contract (including any contract or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the purpose or intended effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s or such Subsidiary’s published financial statements or other Company SEC Reports.

 

Section 3.12.         Company Real Property .

 

(a)           Neither the Company nor any of its Subsidiaries own any real property.

 

(b)           Section 3.12(b) of the Disclosure Letter lists all of the Material Leases or a sublease of an interest thereunder.  The Company has provided or made available to Parent copies of all Material Leases as of the date hereof, including all material amendments thereto.  Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Company and each of its Subsidiaries has good leasehold title to the Company Real Property free and clear of any Liens other than Permitted Liens.

 

Section 3.13.         Funds; Clients; Assets Under Management .

 

(a)           Section 3.13(a) of the Disclosure Letter lists the name of each Subsidiary of the Company that is registered, licensed or qualified, or required to be registered, licensed or qualified, as an investment adviser under applicable Law as of the date hereof, as well as the Governmental Entity or Self-Regulatory Organization with which each such Subsidiary is (or is required to be) registered, licensed or qualified (each such registered Subsidiary, an “ Investment Adviser Subsidiary ”).

 

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(b)           Prior to the execution of this Agreement, the Company has delivered or made available to Parent a true, correct and complete list of each Client as of June 30, 2016 (the “ Base Date ”), including with respect to each such Client whether the applicable Investment Adviser Subsidiary acts in a sub-advisory capacity, the assets under management and fee rate of such Client as of the Base Date (including the annualized investment management fees attributable to each Client as of the Base Date and any fee adjustments implemented since such date or proposed to be instituted) and for each such Client that is a Fund its jurisdiction of organization and jurisdiction in which it is licensed or qualified to or registered to do business.  Except as set forth in Section 3.13(b) of the Disclosure Letter, as of the date hereof, (i) no Client (or investor or trustee thereof) has given written or, to the Knowledge of the Company, other notice to the Company or any Subsidiary of its intention to terminate or materially reduce its relationship with the Company or any Subsidiary or to adjust the fee schedule with respect to any Investment Advisory Arrangement in a manner that would materially reduce the fee under such Investment Advisory Arrangement and (ii) except for the transactions contemplated by this Agreement, to the Knowledge of the Company no event has occurred that would permit the removal or termination of the Company or any Subsidiary with respect to any Investment Advisory Arrangement (whether now cured or uncured) and no event (whether now cured or uncured) that with the giving of notice or the passage of time or both would constitute any such event has occurred in connection with any Client and no allegation that any such event has occurred has been made in writing to the Company or its Subsidiaries.  No Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund is registered or required to be registered as an “investment company” pursuant to the Investment Company Act.

 

(c)           Each Fund is, and at all times since its launch date has been, duly organized, validly existing and, with respect to entities in jurisdictions that recognize the concept of “good standing,” in good standing under the laws of the jurisdiction of its organization and has the requisite corporate, trust, company or partnership power and authority to own its properties and to carry on its business as currently conducted, and is qualified to do business in each jurisdiction where it is required to be so qualified under applicable Law, except where failure to do so would not, individually or in the aggregate, have a Company Material Adverse Effect.  Except as set forth on Section 3.13(c) of the Disclosure Letter, each Fund has no Subsidiaries.  True, correct and complete copies of the Fund Documents (other than custody agreements, administration agreements, administrative services agreements, escrow agreements, subscription agreements, purchase agreements, underwriting agreements, insurance agreements, loan agreements, participation agreements, security agreements), due diligence questionnaires, investor reports, as applicable, or any other similar written agreements of a material nature, in any case pertaining to the Funds have been made available to Parent. All such documents, to the extent applicable, are valid and binding obligations of the applicable Controlled Fund, and, to the Knowledge of the Company, the applicable Non-Controlled Fund, and, to the Knowledge of the Company, are in full force and effect and enforceable against the other party or parties thereto in accordance with their terms (subject to (a) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting the enforcement of creditors’ rights generally, (b) general equitable principles (whether considered in a proceeding in equity or at law) and (c) an implied covenant of good faith and fair dealing), and each Controlled Fund and, to the Knowledge of the Company, each Non-Controlled Fund is in compliance with such documents, as applicable, in all material respects.  All marketing activities performed by the Company, its Subsidiaries, the Controlled Funds and, to the Knowledge of the

 

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Company, the Non-Controlled Funds, and all sales of Fund interests to investors (to the Knowledge of the Company with respect to Non-Controlled Funds), have been conducted substantially as contemplated in the relevant offering documents, if any, and in compliance in all material respects with applicable Law, and no document used to offer Controlled Fund interests or, to the Knowledge of the Company, interests of a Non-Controlled Fund, contained, as of its date, any untrue statement of material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  True, correct and complete copies of any audited and unaudited financial statements (including, in each case, the notes, if any, thereto) for each of the Funds for each year or other fiscal period beginning on January 1, 2014 and ending on or before June 30, 2016 have been made available to Parent.  Each such financial statement (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto as of its date, (ii) was prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by the SEC), and (iii) fairly presented (subject, in the case of the unaudited interim financial statements included therein, to normal and recurring year-end adjustments as permitted by GAAP and the applicable rules and regulations of the SEC and the absence of notes thereto) in all material respects the financial position of the applicable Fund as of the date thereof and the results of its operations and changes in net asset value for the period then ended.  As of the date hereof, none of the Controlled Funds or, to the Knowledge of the Company, the Non-Controlled Funds has suspended investor redemptions or imposed any “gates” or currently contemplates taking any such actions.

 

(d)           Each existing Investment Advisory Arrangement is in compliance with the Advisers Act and applicable Law, and since January 1, 2014 (or its inception, if later), has been performed by the applicable Investment Adviser Subsidiary in accordance with its terms and applicable Law, in each case, in all material respects.  Each Client account has been managed and advised (and the fees and expenses payable thereunder have been calculated and charged) in compliance with the terms of the applicable Investment Advisory Arrangement, its investment guidelines and restrictions, any other Fund Document, the Advisers Act and applicable Law, in each case, in all material respects.  Section 3.13(d) of the Disclosure Letter sets out, as of the date hereof, each side letter or similar arrangement with any investor in a Fund, and since January 1, 2014, each side letter or similar arrangement has been performed by the Company or applicable Subsidiary in accordance with its terms and applicable Law, in each case, in all material respects.

 

(e)           With respect to each Fund, to the Knowledge of the Company, there are no errors (other than those which have been corrected and notified to the recipients of such reports) in any financial report delivered or made available to its investors (each, a “ Fund Report ”) pursuant to the applicable Fund Document that have resulted in or would result in distributions to investors other than in material compliance with such Fund Document.  Since the date of each Fund’s most recently delivered Fund Report, no occurrence, change or event that, individually, or in the aggregate with any such other occurrences, changes or events, has had a material adverse effect on the ability of the Company or its Subsidiaries or any such Fund to perform any of their respective obligations under any Fund Document. Except as set forth in Section 3.13(e) of the Disclosure Letter, with respect to each Controlled Fund (other than any CDO), and, to the Knowledge of the Company, each Uncontrolled Fund, since January 1, 2014,

 

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no event of default, termination event, collateral quality test failure, coverage test failure, concentration limit breach, over-collateralization trigger, interest coverage trigger or early amortization event (in each case whether now cured or uncured) and no event (in each case whether now cured or uncured) that with the giving of notice or the passage of time or both would constitute any such event of default, trigger or other event listed in this sentence, the occurrence of which would materially limit reinvestment activity (other than, in each case, those limitations which intrinsically occur (i) as the time remaining in the reinvestment period is reduced and (ii) after the completion of the reinvestment period) by the Company or its Subsidiaries or any such Fund under any applicable Fund Document or would materially and adversely impact the application of the funds of any such Fund has occurred and, to the Knowledge of the Company, no allegation that any such event of default, trigger or other event has occurred has been made in writing to the Company or its Subsidiaries.

 

(f)            Except as set forth in Section 3.13(f) of the Disclosure Letter, there is no judicial or administrative or arbitral action, cause of action, suit, investigation or audit, whether civil, criminal or regulatory, in law or in equity, in each case by, on behalf of, before or involving any court, tribunal, arbitrator or other Governmental Authority pending or, to the Knowledge of the Company, threatened against any Fund, or to which any Fund is otherwise a party.

 

(g)           Except as set forth in Section 3.13(g) of the Disclosure Letter, for any security issued pursuant to any CLO/CDO (other than any CDO) that was assigned a rating by any rating agency upon issuance thereof and such security remains outstanding as of July 31, 2016, (i) the rating assigned by each such rating agency to such security as of July 31, 2016 is not lower than the rating assigned to such security upon issuance thereof and no such rating has been withdrawn, and (ii) such security is not on a negative “watchlist” or similar rating agency status or, to the Knowledge of the Company, under review by any rating agency for possible downgrade.

 

(h)           Except as set forth in Section 3.13(h) of the Disclosure Letter, (i) there is no joint venture, strategic alliance, distribution, partnership, revenue share, settlement or similar Contract with a party other than the Company and its Subsidiaries, which involves a sharing of profits or expenses by or on behalf of the Company or its Subsidiaries, or payments by or on behalf of the Company or its Subsidiaries based on revenues, profits or assets under management of the Company or its Subsidiaries (including side arrangements to such effect) and (ii) there is no Contract, arrangement or understanding pursuant to which the Company or any of its Subsidiaries have undertaken or agreed to cap, discount, waive or reimburse any or all fees or charges payable by any of the Clients.

 

(i)            Except as set forth in Section 3.13(i) of the Disclosure Letter, no Fund is: (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. Each such Fund has been managed by the Company such that the Company has used commercially reasonable efforts to be in compliance in all material respects with the applicable requirements of ERISA and Section 4975 of the Code.  The Company is a qualified professional asset manager (a “ QPAM ”) (as such term is used in Prohibited Transaction Class Exemption 84-14) (the “ QPAM

 

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Exemption ”) and, to the extent the Company has relied upon the QPAM Exemption for any transaction negotiated by or under the authority and general direction of the Company as a QPAM, to the Knowledge of the Company, is not disqualified from relying on the QPAM Exemption with respect to such transactions due to the application of Section I(g) of the QPAM Exemption.

 

Section 3.14.         Intellectual Property .

 

(a)           Company-Owned IP .  Section 3.14(a) of the Disclosure Letter contains a true and complete list, as of the date hereof, of all Company-Owned IP that is the subject of any issuance, registration, certificate, or application therefor by, to or with any Governmental Entity or domain name registrar, including registered trademarks, registered copyrights, issued patents, domain name registrations and pending applications for any of the foregoing.

 

(b)           Title .  The Company or one of its Subsidiaries is the sole owner of all Company-Owned IP, and no Company-Owned IP at Closing will be subject to any Liens other than Permitted Liens, except as would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

(c)           Use .  Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, the Company or one of its Subsidiaries owns or has the right to use all Intellectual Property used in the Company’s or its Subsidiaries’ respective businesses as currently conducted.

 

(d)           Non-Infringement .  To the Knowledge of the Company, (i) the products and services and the business of the Company or any of its Subsidiaries as currently conducted do not infringe, misappropriate or violate the Intellectual Property rights of any third party; (ii) in the past two (2) years, the Company has not received any written cease and desist or other written notice alleging that the Company’s or its Subsidiaries’ products or services or business infringes, misappropriates or violates the Intellectual Property rights of any third party, (iii) no third party is infringing upon, violating or misappropriating any Company-Owned IP in any manner that is likely to result in a Company Material Adverse Effect; and (iv) in the past two (2) years neither the Company nor any of its Subsidiaries has sent any written notice to any Person alleging that such Person is infringing, misappropriating or violating any Company-Owned IP.  Notwithstanding anything to the contrary in this Agreement, this Section 3.14(d) constitutes the sole representation and warranty of the Company under this Agreement with respect to infringement, misappropriation and violation of Intellectual Propriety rights.

 

(e)           Privacy .  Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, the Company and all of its Subsidiaries have complied in all material respects with (i) all of their privacy policies, (ii) all applicable privacy Laws and (iii) all contractual commitments that the Company or any of its Subsidiaries have entered into with respect to information from or about a Person, including information which is used or intended to be used by the Company or any of its Subsidiaries to identify, contact or precisely locate an individual (“ Personal Information ”). Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company and its Subsidiaries, since January 1, 2014, there have been no

 

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violations of any privacy Laws or privacy policies, and no data breaches involving any Personal Information, and there are no pending or, to the Knowledge of the Company, threatened claims against the Company or any of its Subsidiaries by any Person challenging the Company’s policies or practices with respect to privacy and data security. Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have commercially reasonable measures in place to safeguard the security, confidentiality, and integrity of Personal Information in their possession or control from unauthorized access, and since January 1, 2014, neither the Company, any of its Subsidiaries, nor to the Company’s Knowledge, any other Person, has made any illegal or unauthorized use of Personal Information collected by or on behalf of the Company or any of its Subsidiaries.

 

Section 3.15.         Licenses and Permits .  Except as has not, individually or in the aggregate, had a Company Material Adverse Effect, (i) (A) the Company and its Subsidiaries, and (B) to the Knowledge of the Company, their officers and employees with respect to their direct participation in the Company’s and its Subsidiaries’ business, each own or possess all right, title and interest in and to, and are in compliance in all material respects with all requirements under, each of their respective licenses, permits, franchises, registrations, authorizations, approvals and exemptions issued or granted to any of them by any Governmental Entity or any Self-Regulatory Organization (the “ Licenses and Permits ”) and have taken all necessary action to maintain such Licenses and Permits in full force and effect, (ii) each License and Permit has (with respect to officers and employees of the Company and its Subsidiaries, to the Knowledge of the Company) been duly obtained, is valid and in full force and effect, and is not subject to any pending or, to the Knowledge of the Company, threatened administrative or judicial proceeding to revoke, cancel, suspend, modify or declare such License and Permit invalid in any respect, and (iii) the Licenses and Permits are sufficient and adequate to permit the continued lawful conduct of the business of the Company and its Subsidiaries as conducted as of the date hereof, and none of the operations or activities of (A) the Company or its Subsidiaries or (B) to the Knowledge of the Company, their officers and employees with respect to their direct participation in the Company’s and its Subsidiaries’ business, are being conducted in a manner that violates any of the terms or conditions under which any License and Permit was granted.

 

Section 3.16.         Compliance with Law .

 

(a)           The operations of the business of the Company, its Subsidiaries and the Funds are, and since January 1, 2014, have been, conducted in accordance with all applicable Laws and other requirements of all Governmental Entities or Self-Regulatory Organizations having jurisdiction over such entity or its assets, properties and operations, except where the failure to so conduct such operations has not had, individually or in the aggregate, a Company Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is registered or required to be registered as an “investment company” pursuant to the Investment Company Act.

 

(b)           Except as set forth on Section 3.16(b) of the Disclosure Letter, since January 1, 2014, none of the Company, its Subsidiaries, the Controlled Funds, or, to the Knowledge of the Company, any Non-Controlled Funds have received written notice from a Governmental Entity or Self-Regulatory Organization of any violation (or any investigation with respect thereto) of any Law or other requirement and none of the Company, its Subsidiaries, any Controlled Funds or, to the Knowledge of the Company, any Non-Controlled Funds is in default

 

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with respect to any Order applicable to any of its assets, properties or operations, except for such violations or defaults as would not be material to the Company and its Subsidiaries taken as a whole.

 

(c)           Each Investment Adviser Subsidiary is, and has been at all times since January 1, 2014, registered as an investment adviser under the Advisers Act.  No Subsidiary except the Investment Adviser Subsidiaries is or has been an “investment adviser” within the meaning of the Advisers Act since January 1, 2014.

 

(d)           No Investment Adviser Subsidiary or any officer, director or employee thereof is prohibited by any provision of the Advisers Act or the Investment Company Act from acting as an investment adviser or in a similar capacity and in a manner not generally applicable to other investment advisers.

 

(e)           Each Investment Adviser Subsidiary and its officers, directors and employees is duly registered, licensed or qualified as an investment adviser or investment adviser representative, as applicable, in each jurisdiction where the conduct of its business requires such registration, licensing or qualification and is in compliance with all U.S. federal and state and non-U.S. Laws requiring any such registration, licensing or qualification, except, in each case, as would not have, individually or in the aggregate, a Company Material Adverse Effect.  There is no Action by any Governmental Entity or Self-Regulatory Organization pending or, to the Knowledge of the Company, threatened, to terminate, suspend, limit or adversely modify any such registration, licensing or qualification.

 

(f)            Since January 1, 2014, (i) each Investment Adviser Subsidiary has timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that were required to be filed under any applicable Law, with (A) any applicable Governmental Entity and (B) any Self-Regulatory Organization, including all required Form PFs and Form ADVs and amendments to Form PF and Form ADV (including any amendment required under applicable Law to be filed to make the disclosure set out therein not inaccurate), and (ii) each Form ADV or amendment to Form ADV of each Investment Adviser Subsidiary, as of the date of filing with the SEC (and with respect to Form ADV Part 2B or its equivalent, its date) did not, as of such respective date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except, in the case of (i) and (ii), as would not, individually or in the aggregate, have a Company Material Adverse Effect.  True, correct and complete copies of each Investment Adviser Subsidiary’s most recent Form ADV (Parts 1 and 2), reflecting all amendments thereto, have been made available to Parent.  At all times since January 1, 2014, the Investment Adviser Subsidiaries have been in compliance in all material respects with Rule 206(4)-2 under the Advisers Act.  Since January 1, 2014, none of the Company, any Subsidiary or any officer, director or employee thereof has paid, nor will any such Person pay, directly or indirectly, a cash fee to any Person for soliciting business of any kind, except for payments made in compliance in all material respects with applicable Law, including, without limitation, Rule 206(4)-3 under the Advisers Act.  At all times since January 1, 2014, the Company, its Subsidiaries and each officer, director and employee thereof has complied in all material respects with Rule 206(4)-5 under the Advisers Act (and any other applicable “pay-to-play” Laws) and the related record keeping

 

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requirements set forth in Rule 204-2 thereof.  None of the Company, its Subsidiaries or any of their “covered associates” has made a “contribution” to an “official” of a “government entity” (each as defined in Rule 206(4)-5) that has triggered or will trigger the ban on the receipt of compensation contained in Rule 206(4)-5(a)(1).

 

(g)           Except for such matters that would not, individually or in the aggregate, have a Company Material Adverse Effect, each Investment Adviser Subsidiary has implemented written policies and procedures as required by applicable Law (including Rules 204A-1 and 206(4)-7 under the Advisers Act), complete, current and correct copies of which (including any written reviews or reports under such policies and procedures documenting identified internal failures to comply with such policies and procedures since January 1, 2014 relating to compliance by each Investment Adviser Subsidiary and its employees subject thereto) have been delivered or made available to Parent and, except as otherwise noted in any such reviews or reports, to the Knowledge of the Company, since January 1, 2014, each Investment Adviser Subsidiary has been in material compliance with such policies and procedures.

 

(h)           None of the Company, any of its Subsidiaries, any officer, director or employee thereof or, to the Knowledge of the Company, any other “associated person” (as defined in the Advisers Act) thereof has been convicted of any crime or is, or has been subject to, any disqualification that, in either case, would be a basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) of the Advisers Act, nor is there any proceeding or investigation pending or, to the Knowledge of the Company, threatened, by any Governmental Entity or Self-Regulatory Organization, which would reasonably be expected to become the basis for any such disqualification, denial, suspension or revocation, other than ordinary investigations by the SEC’s Office of Compliance Inspections and Examinations or Division of Investment Management (such investigations, “ Ordinary Examinations ”).  To the Knowledge of the Company, none of the Company or any of its Subsidiaries is currently subject to any Ordinary Examination.

 

(i)            The Company has made available to Parent a true and correct copy of each material no-action letter and exemptive order issued by any Governmental Entity or Self-Regulatory Organization, to any of the Company or its Subsidiaries that remains applicable to its respective business as conducted on the date of this Agreement.  To the Knowledge of the Company, the Company and its Subsidiaries are in compliance in all material respects with any such no-action letters and exemptive orders.

 

(j)            None of the Company or any of its Subsidiaries is, or since January 1, 2014, has been, (i) a bank, trust company, introducing broker, broker, dealer, futures commission merchant, real estate broker, insurance company or insurance broker within the meaning of any applicable Law, (ii) required to be registered, licensed or qualified as a bank, trust company, introducing broker, broker, dealer, futures commission merchant, real estate broker, insurance company or insurance broker under any applicable Law, or (iii) subject to any material liability by reason of any failure to be so registered, licensed or qualified.  Since January 1, 2014, none of the Company or any of its Subsidiaries has received written notice of, and to the Knowledge of the Company there is no pending of threatened proceeding concerning, any failure to obtain any bank, trust company, introducing broker, broker, dealer, futures commission merchant, real estate broker, insurance company or insurance broker registration, license or qualification.  No

 

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officer, director or employee of the Company or any Subsidiary is required to be registered as a registered representative of a broker or dealer with any Governmental Entity or Self-Regulatory Organization.  Other than as disclosed in Section 3.16(j) of the Disclosure Letter, neither the Company nor any Subsidiary is or has been required to be registered as a commodity pool operator or commodity trading advisor under the Commodity Exchange Act or has filed any notice with the National Futures Association claiming an exemption from such registration.

 

(k)           None of the Company, any of its Subsidiaries, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund has received, since January 1, 2014, any written notification or written communication (or, to the Company’s Knowledge, any other communication) from any Governmental Entity or Self-Regulatory Organization (i) asserting non-compliance with any applicable Law or Order, (ii) threatening to revoke any license, franchise, seat on any exchange, permit, or governmental authorization, (iii) requiring or requesting any of them (including any of the Company’s, its Subsidiaries’ or any Fund’s directors or controlling persons) to enter into a cease-and-desist order, agreement, or memorandum of understanding (or requiring the board of directors or similar governing body thereof to adopt any resolution or policy), or (iv) restricting or disqualifying them from engaging in their activities (except for restrictions generally imposed by rule, regulation or administrative policy on investment advisers generally).

 

(l)            None of the Company, any of its Subsidiaries, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund is subject to any pending, or, to the Company’s Knowledge, threatened investigation, review or disciplinary proceedings by any Governmental Entity or Self-Regulatory Organization against the Company, any of its Subsidiaries or any Fund, or any officer, director or employee thereof.

 

(m)          None of the Company, any of its Subsidiaries, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund is subject to any cease-and-desist or other order issued by, or a party to any written agreement, consent agreement or memorandum of understanding with, or a party to any commitment letter or similar undertaking to, subject to any order or directive by, a recipient since January 1, 2014 of any supervisory letter from, or has adopted since January 1, 2014 any board resolutions at the request of, any Governmental Entity or Self-Regulatory Organization, or been advised, since January 1, 2014, by any Governmental Entity or Self-Regulatory Organization that it is considering issuing or requesting any such agreement or other action or has pending or, to the Company’s Knowledge, threatened, regulatory investigation or review.  True and correct copies of all correspondence relating to any investigation, examination, review or inquiry by any Governmental Entity or Self-Regulatory Organization of (i) the Company, any of its Subsidiaries or any Controlled Fund or (ii) any Non-Controlled Fund to the extent in the possession of the Company or any Subsidiary, from January 1, 2014 through the date of this Agreement, have been made available to Parent or its Representatives, and all requests, recommendations or comments provided to the Company by a Governmental Entity or Self-Regulatory Organization in connection with any such investigation, examination, review or inquiry have been appropriately addressed or responded to, as the case may be, by the Company and/or its Subsidiaries and the Controlled Funds and, to the Knowledge of the Company, any Non-Controlled Fund, except as would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

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(n)           Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, (A) since January 1, 2014, the Company, each of its Subsidiaries, each of the Controlled Funds and, to the Knowledge of the Company, each of the Non-Controlled Funds has filed all reports, registrations and statements in a reasonably timely manner, together with any amendments required to be made with respect thereto, that were required to be filed under any applicable Law, with (i) any applicable Governmental Entity and (ii) any Self-Regulatory Organization (collectively, the “ Reports ”) and (B) as of their respective dates, the Reports (and to the Knowledge of the Company with respect to Reports of any Non-Controlled Fund) complied with the applicable Laws and Orders enforced or promulgated by the Governmental Entity or Self-Regulatory Organization with which such Reports were filed.

 

(o)           None of the Company, any Subsidiary or any executive officer of the Company or any Subsidiary, nor, to the Knowledge of the Company, any other officer or employee of the Company or any Subsidiary (i) has been indicted for or convicted of any felony or any crime involving fraud, misrepresentation or insider trading or (ii) is subject to any outstanding Order barring, suspending or otherwise limiting the right of such Person to engage in any activity conducted as part of the Company’s or any Subsidiary’s business as currently conducted.

 

(p)           None of the Company, any Subsidiary, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund or any officer or director of any such Person has been subject to any event specified in Rule 506(d)(1) under the Securities Act or any proceeding or event that would reasonably be expected to result in any such event that would either require disclosure under the provisions of Rule 506(e) under the Securities Act or result in disqualification under Rule 506(d)(1).

 

Section 3.17.         Foreign Corrupt Practices Act .  Since January 1, 2014, neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any Person acting on behalf of the Company or any of its Subsidiaries, has taken or failed to take any action that would cause it to not be in material compliance with the Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act, or any similar anti-bribery or anti-corruption Law applicable to the Company, or any rules or regulations thereunder.

 

Section 3.18.         Litigation .  Except as set forth on Schedule 3.18 of the Disclosure Letter, as of the date hereof there is no claim, action, suit, arbitration, proceeding or, to the Knowledge of the Company, governmental investigation (each, an “ Action ”) pending, or, to the Knowledge of the Company, threatened, before any Governmental Entity or Self-Regulatory Organization, or before any arbitrator of any nature, against the Company, any of its Subsidiaries, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund or any of their respective assets or properties, except as would not, individually or in the aggregate, have a Company Material Adverse Effect.  Except as set forth on Schedule 3.18 of the Disclosure Letter, as of the date hereof there is no material Order of any Governmental Entity or Self-Regulatory Organization or any arbitrator of any nature outstanding, or, to the Knowledge of the Company, threatened, against the Company, any of its Subsidiaries, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund, except for any such Order that is generally applicable to Persons engaged in the line of business to which the Company and its

 

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Subsidiaries, any Controlled Fund or, to the Knowledge of the Company, any Non-Controlled Fund are engaged.

 

Section 3.19.         Contracts .

 

(a)           Except (x) as set forth on Section 3.19 of the Disclosure Letter, (y) for Contracts filed as exhibits to Company SEC Reports (“ Filed Contracts ”) or (z) for the Employee Benefit Plans, neither the Company nor any of its Subsidiaries is a party to or bound by any of the following Contracts as of the date hereof:

 

(i)            Any Contract which is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the Securities Act);

 

(ii)           Any Contract which materially limits the ability of the Company or any of its Subsidiaries to conduct its business for the benefit of a third party, or which, following the consummation of the Merger, would materially limit the ability of the Surviving Company to conduct its business, or that purports to restrict in any material respect the right of the Company or any of its Subsidiaries to compete with any Person or operate in any geographic area or location in which any Company or any Subsidiary of the Company may conduct business (other than (x) confidentiality agreements entered into by the Company or any of its Subsidiaries in the ordinary course of business and (y) Investment Advisory Arrangements containing any such provisions in the ordinary course of business that address the allocation of investment opportunities or the formation of successor funds);

 

(iii)          Any Contract that contains an exclusivity provision, “most favored nation” provision, provisions granting a right of first refusal, a right of first negotiation or similar rights or any similar term for the benefit of a third party, in each case involving revenues or expenses of the Company or any of its material Subsidiaries of more than $5,000,000 in the fiscal year ended December 31, 2015;

 

(iv)          Any Contract that contains a put, call, right of first refusal or similar right pursuant to which the Company or any of its Subsidiaries would be required to purchase or sell, as applicable, any equity interests of any Subsidiary of the Company or Fund, or which grant a right to sell to the Company or purchase from the Company any material asset (other than in the ordinary course of business);

 

(v)           Any Contract which contains a “clawback” or similar undertaking requiring the reimbursement or refund of any fees (whether performance based or otherwise) paid to the Company or any of its Subsidiaries;

 

(vi)          Any Contract relating to “soft-dollar” arrangements (i.e., providing for benefits relating to commissions generated from financial transactions executed by broker-dealers on behalf of any Funds);

 

(vii)         Any Contract for borrowed money (whether current, short-term or long-term and whether secured or unsecured, or any financial guarantee) incurred by the Company or any of its Subsidiaries or pursuant to which the Company or any of its Subsidiaries has any obligations as guarantor, surety, co-signer, endorser or co-maker in respect of any

 

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obligation of any Person, or any capital maintenance, keep well or similar agreements or arrangements, other than (A) Contracts solely among the Company or any of its wholly owned Subsidiaries and/or (B) Contracts not involving amounts in excess of $500,000;

 

(viii)        Any Contract which is a mortgage, security agreement, capital lease or similar agreement, in each case, that creates or grants a Lien on any property or assets that are material to the Company and its Subsidiaries, taken as a whole;

 

(ix)          Any Contract relating to any swap, forward, futures, warrant, option, cap, floor or collar financial contract, or any other interest-rate, commodity price, equity value or foreign currency protection contract or other hedging or derivative transaction involving net revenues or expenses by the Company or any of its Subsidiaries of more than $5,000,000 in the fiscal year ended December 31, 2015;

 

(x)           Any Contract that restricts payment of dividends or any distributions in respect of the equity interests of the Company or any of its Subsidiaries;

 

(xi)          Any Contract pursuant to which the Company or any of its Subsidiaries has continuing material indemnification obligations or other contingent payments to any Person that would reasonably be expected to result in payments in excess of $1,000,000, except for (x) any vendor or content licensing Contract entered into in the ordinary course of business or (y) non-disclosure agreements;

 

(xii)         Any Contract, except for this Agreement, relating to the acquisition or disposition of any business by the Company or its Subsidiaries (whether by merger, sale of stock, sale of assets or otherwise) or pursuant to which any material earn-out, deferred or contingent payment obligations remain outstanding (excluding any such Contract for which all such rights and obligations have been satisfied);

 

(xiii)        Any Contract entered into since January 1, 2014 involving any resolution or settlement of any actual or threatened Action (A) with a value of greater than $1,000,000 or (B) which imposes material continuing obligations on the Company or any of its Subsidiaries or that provides for any continuing injunctive or other non-monetary relief, in each case, other than confidentiality obligations;

 

(xiv)        (1) Any Contract pursuant to which the Company or any of its Subsidiaries has been granted any option, license or similar right relating to the Intellectual Property of a third party, in each case that is material to the business or assets of the Company and its Subsidiaries, taken as a whole (but excluding any non-exclusive “click-through” or similar end-user license for commercially available software), and (2) any Contract pursuant to which any option, license or similar right relating to Company-Owned IP has been granted to a third party, in each case that is material to the business or assets of the Company and its Subsidiaries, taken as a whole (but excluding any non-exclusive licenses granted in the ordinary course of business);

 

(xv)         Any other Contract (or group of related Contracts), except for Investment Advisory Arrangements, the performance of which requires aggregate payments to or from the Company or any of its Subsidiaries during the 12 month period ending June 30, 2016 in

 

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excess of $5,000,000 that is not terminable with less than sixty (60) days’ notice without material penalty by the Company or any of its Subsidiaries or that is otherwise material to the Company and its Subsidiaries, taken as a whole;

 

(xvi)        Any Contract between the Company or any of its Subsidiaries on the one hand, and any affiliate of the Company (other than any Subsidiary of the Company) on the other hand;

 

(xvii)       (A) any Investment Advisory Arrangement or any Contract which sets forth, governs or in any way modifies any fee, charge or other amount payable to the Company or any of its Subsidiaries in connection with such Investment Advisory Arrangement, including any fee, revenue or expense sharing, settlement, cap, discount, waiver or reimbursement or similar arrangement with any Person or (B) any Fund Document requiring the Company or any of its Subsidiaries to invest in any Person; or

 

(xviii)      Any Fund Document containing change in control provisions or “key person” provisions.

 

Each such Contract in clauses (i) through (xviii) above and each Filed Contract is referred to herein as a “ Material Contract ”.

 

(b)           The Company has made available or provided to Parent or its Representatives copies that are true and correct in all material respects of all Material Contracts.

 

(c)           Each Material Contract is a valid and binding obligation of the Company or one of its Subsidiaries, as applicable, and, to the Knowledge of the Company, is in full force and effect and enforceable against the other party or parties thereto in accordance with its terms (except to the extent that any Material Contract has expired in accordance with its terms), except as would not, individually or in the aggregate, have a Company Material Adverse Effect, subject to (a) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting the enforcement of creditors’ rights generally, (b) general equitable principles (whether considered in a proceeding in equity or at law) and (c) an implied covenant of good faith and fair dealing.  Neither the Company nor any Subsidiary of the Company is in breach of or default under the terms of any Material Contract where such breach or default will have, individually or in the aggregate, a Company Material Adverse Effect.  To the Knowledge of the Company, no other party to any Material Contract is in material breach of or default under the terms of any Material Contract except as would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 3.20.         Employee Plans .

 

(a)           Section 3.20(a) of the Disclosure Letter sets forth a correct and complete list of each material Employee Benefit Plan.  “ Employee Benefit Plan ” shall mean all written employee or director compensation and/or benefit plans, programs, agreements or other arrangements, including any employee welfare plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA), and any bonus, incentive, equity or equity related, deferred compensation, vacation, stock purchase, stock option, equity-based, retention,

 

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severance, change of control transaction, sale bonus or fringe benefit plan, program or agreement, in each case, that are sponsored, maintained or contributed to by the Company or any of its Subsidiaries for the benefit of current or former employees, directors or consultants (who are natural persons) of the Company or any of its Subsidiaries or for which the Company or any of its Subsidiaries has any liability, contingent or otherwise.

 

(b)           The Company has provided or made available to Parent or its counsel with respect to each material Employee Benefit Plan a true and complete copy of all plan documents, if any, including related trust agreements, funding arrangements, and insurance contracts and all material amendments thereto, and, to the extent applicable: (i) the most recent determination letter, if any, received by the Company or Subsidiary from the IRS regarding the tax-qualified status of such Employee Benefit Plan; (ii) the most recent financial statements for such Employee Benefit Plan, if any; (iii) the most recent actuarial valuation report, if any; (iv) the current summary plan description and any summaries of material modifications; and (v) Form 5500 Annual Returns/Reports, including all schedules and attachments, including the certified audit opinions, for the most recent plan year.

 

(c)           Except as would not have, individually or in the aggregate, a Company Material Adverse Effect:  (i) each Employee Benefit Plan has been maintained and administered in compliance with its terms and with applicable Law, including ERISA and the Code; (ii) there are no pending or, to the Knowledge of the Company, threatened claims (other than claims for benefits in the ordinary course of business) by, on behalf of or against any of the Employee Benefit Plans; and (iii) there are no audits or proceedings pending or, to the Knowledge of the Company, threatened, by the IRS, the Department of Labor or other Governmental Entity with respect to any Employee Benefit Plan.

 

(d)           Each of the Employee Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code, has received a favorable determination letter from the IRS or is entitled to rely upon a favorable opinion issued by the IRS.  No Employee Benefit Plan is subject to Title IV of ERISA, and none of the Company, its Subsidiaries or any of their respective ERISA Affiliates has any Liability for any plan subject to Title IV of ERISA, (including any Multiemployer Plan) maintained, contributed to, or required to be contributed to, by any of them.

 

(e)           Except as would not reasonably be expected to result in a material liability to the Company or any of its Subsidiaries, no Employee Benefit Plan provides medical, dental, or vision benefits with respect to current or former employees or directors of the Company or its Subsidiaries, or any spouse or dependent of any such person, beyond their retirement or other termination of service, other than coverage mandated by applicable Law or paid for in full by the employee or director (or spouse or dependent).

 

(f)            Neither the Company nor any Subsidiary thereof contributes to, or is required to contribute to, a Multiemployer Plan.

 

(g)           Except as set forth on Section 3.20 of the Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will, either alone or in connection with any other events, (i) entitle any current

 

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or former employee, officer or director of the Company or any of its Subsidiaries to any payment or employee benefit, (ii) accelerate the time of payment, funding or vesting of any employee benefits or compensation of, or increase the amount of employee benefits or compensation due to, any current or former employee, officer or director of the Company or any of its Subsidiaries or (iii) give rise to any “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

 

(h)           Each grant of a Company Share Option was duly authorized no later than the date on which the grant of such Company Share Option was by its terms to be effective by all necessary corporate action, and each grant of a Company Equity Award was made in accordance with the terms of the CIFC Corp. 2011 Stock Option and Incentive Plan.  The per share exercise price of each Company Share Option was not less than the fair market value of a Common Share on the applicable grant date determined in accordance with Section 409A of the Code.

 

Section 3.21.         Insurance .  As of the date hereof, Section 3.21 of the Disclosure Letter sets forth a list of all material surety bonds, fidelity bonds and all material policies of title, liability, fire, casualty, business interruption, errors and omissions coverage, directors and officers liability coverage, workers’ compensation and other forms of insurance insuring each of the Company and its Subsidiaries and their assets, properties, operations and personnel, including the deductions and coverage limits for each policy.  As of the date hereof the Company has made available to Parent true, complete and accurate copies of all such policies and bonds, and all such policies and bonds are in full force and effect.  Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, none of the Company or its Subsidiaries is in default under any provisions of any such policy of insurance nor, as of the date hereof, has any of the Company or its Subsidiaries received written notice of cancellation of or cancelled any such insurance.  This Section 3.21 does not apply to insurance provided under any employee benefit plan.

 

Section 3.22.         Affiliate Transactions .  Except as set forth on Section 3.22 of the Disclosure Letter, no executive officer or director of the Company or any of its Subsidiaries or DFR Holdings (or any such Person’s immediate family members or Affiliates or associates) (a) is a party to any Contract with, or binding upon, the Company or any of its Subsidiaries or any of their respective assets or properties, (b) receives, directly or indirectly through its Affiliates (other than the Company and its Subsidiaries) any payment or other economic benefit from any Client, in its capacity as such, (c) has any interest (other than as an owner of Company Securities) in any property owned by the Company or any of its Subsidiaries or (d) has engaged in any transaction involving the Company, any of its Subsidiaries, or any of their respective assets or properties within the last twelve (12) months, in each case, that is of the type of transaction that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act, other than, in each case, ordinary course of business employment and compensation arrangements.

 

Section 3.23.         Labor Matters .

 

(a)           As of the date hereof neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to their employees and, to the Knowledge of the Company, no labor union is attempting to organize any

 

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such employees for the purpose of representation.  Except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole: (i) there is no unfair labor practice charge or complaint pending before any applicable Governmental Entity relating to the Company or its Subsidiaries or any employee thereof; (ii) there is no labor strike, slowdown or work stoppage or lockout pending or, to the Knowledge of the Company, threatened against or affecting the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries has experienced any strike, slowdown or work stoppage, or lockout by or with respect to its employees; (iii) there is no representation petition or proceeding pending or, to the Knowledge of the Company, threatened before any applicable Governmental Entity relating to the employees of the Company or its Subsidiaries; (iv) the Company and its Subsidiaries are in material compliance with all Laws relating to employment or labor, relating to the terms and conditions of employees, former or prospective employees and other labor-related matters, including all Laws relating to discrimination, fair labor standards and occupational health and safety, or wrongful discharge (“ Employment Laws ”) and (v) no investigation by any Governmental Entity responsible for the enforcement of Employment Laws is in progress and neither the Company nor any of its Subsidiaries has received written notice from any Governmental Entity responsible for the enforcement of Employment Laws of an intention to conduct an investigation of the Company or its Subsidiaries following the date hereof.

 

(b)           Since January 1, 2014, there has been no “mass layoff” or “plant closing” as defined by the Worker Adjustment and Retraining Notification Act of 1988 or any similar state or local “plant closing” law, with respect to the current or former employees of the Company or its Subsidiaries.

 

Section 3.24.         Environmental Matters .

 

Except as would not, individually or in the aggregate, have a Company Material Adverse Effect:

 

(a)           Each of the Company and its Subsidiaries is, and has been since January 1, 2014, in compliance with all applicable Laws relating to pollution, protection of the environment, protection of natural resources or workplace health and safety (“ Environmental Laws ”).  Each of the Company and its Subsidiaries has in effect all licenses, permits and other authorizations required under all Environmental Laws and is in compliance with all such licenses, permits and authorizations.

 

(b)           The Company and its Subsidiaries have not received any written notice of violation or potential liability under any Environmental Laws from any Person or any Governmental Entity inquiry, written request for information, or demand letter under any Environmental Law relating to operations or properties of the Company or its Subsidiaries which would reasonably be expected to result in the Company or any of its Subsidiaries incurring liability under Environmental Laws.  None of the Company or its Subsidiaries is subject to any Orders arising under Environmental Laws nor have the Company or its Subsidiaries received written notice of any pending or threatened administrative, civil or criminal actions, suits, proceedings or investigations, against the Company or its Subsidiaries under any Environmental Law which would reasonably be expected to result in the Company or any of its Subsidiaries incurring liability under Environmental Laws.  None of the Company or its Subsidiaries has

 

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entered into any agreement pursuant to which the Company or its Subsidiaries has assumed or will assume any liability under Environmental Laws, including any obligation for costs of remediation, of any other Person.

 

(c)           The representations and warranties in this Section 3.24 and in Section 3.4 (Consents and Approvals) and Section 3.11 (Undisclosed Liabilities) shall be the sole and exclusive representations and warranties of the Company related in any way to Environmental Laws.

 

Section 3.25.         No Brokers .  No broker, finder or similar intermediary is entitled to any broker’s, finder’s or similar fee or other commission from the Company or its Subsidiaries in connection with this Agreement or the transactions contemplated hereby, other than J.P. Morgan Securities LLC (“ JP Morgan ”).  The Company has disclosed to Parent the approximate amount of the fee payable to JP Morgan as a result of the Merger proposed by this Agreement.

 

Section 3.26.         State Takeover Statutes .  No “fair price”, “moratorium”, “control share acquisition” or other similar anti-takeover statute or regulation or any anti-takeover provision in the Company Organizational Documents is applicable to the Merger or the other transactions contemplated by this Agreement.

 

Section 3.27.         Opinion of Financial Advisor .  The Board of Directors has received the opinion of JP Morgan, dated as of the date hereof, to the effect that, as of such date, and based upon and subject to the qualifications and assumptions set forth therein, the Merger Consideration to be received by the holders of the Common Shares pursuant to the Merger is fair from a financial point of view to the holders of such Common Shares.

 

Section 3.28.         Information Supplied .  The Proxy Statement shall not, on the date the Proxy Statement is first mailed to the Shareholders of the Company or at the time of the Company Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Merger Sub in connection with the preparation of the Proxy Statement for inclusion or incorporation by reference therein.  The Proxy Statement will, when filed, comply as to form in all material respects with the requirements of Law.

 

Section 3.29.         Board Approval .  The Board of Directors of the Company, at a meeting duly called and held, by requisite vote, has, as of the date hereof (i) determined that this Agreement and each Ancillary Agreement and the transactions contemplated hereby and thereby, including the Merger, are advisable and fair to, and in the best interests of, the Company and its Shareholders, (ii) approved this Agreement and each Ancillary Agreement and the transactions contemplated hereby and thereby, including the Merger, and (iii) resolved, subject to Section 7.5, to recommend that the holders of the Common Shares approve and adopt this Agreement and the transactions contemplated hereby, including the Merger (clauses (i), (ii) and (iii) are collectively referred to as, the “ Company Board Recommendation ”).

 

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Section 3.30.         Vote Required .  The Required Company Vote is the only vote of the holders of any class or series of the Company’s capital stock necessary to approve and adopt this Agreement and the transactions contemplated hereby, including the Merger.

 

Section 3.31.         No Other Representations or Warranties .  Except for the representations and warranties contained in this ARTICLE III, neither the Company nor any other Person makes any other express or implied representation or warranty on behalf of the Company or any of its Subsidiaries.

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company as of the date hereof and as of the Closing Date as follows:

 

Section 4.1.            Organization .  Each of Parent and Merger Sub is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite limited partnership or limited liability company power, as applicable, to own its properties and assets and to conduct its businesses as now conducted and to enter into and perform its obligations under this Agreement and each Ancillary Agreement.

 

Section 4.2.            Qualification to Do Business .  Each of Parent and Merger Sub is duly qualified to do business as a foreign entity and is in good standing in every jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

Section 4.3.            No Conflict or Violation .  The execution, delivery and performance by Parent and Merger Sub of this Agreement and each Ancillary Agreement (including the consummation of the Merger) does not and will not, directly or indirectly, (i) violate or conflict with any provision of any Parent Organizational Document or the organizational documents of any Subsidiary of Parent, including Merger Sub, (ii) subject to compliance with the requirements set forth in Section 4.4(c), violate any provision of Law applicable to Parent or any Subsidiary thereof, including Merger Sub, or any of their respective assets or properties, (iii) violate or result in a breach of or constitute (with due notice or lapse of time or both) a default under or result in or give to others any rights of termination, modification, amendment, vesting or cancelation of or under, acceleration, revocation or suspension of any material Contract (but only with respect to material Contracts not otherwise terminable by the other party thereto on 90 days’ or less notice),


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