0000950123-11-038728.txt : 20110425 0000950123-11-038728.hdr.sgml : 20110425 20110425170712 ACCESSION NUMBER: 0000950123-11-038728 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20110425 DATE AS OF CHANGE: 20110425 GROUP MEMBERS: CB OFFSHORE EQUITY FUND VI, L.P. GROUP MEMBERS: CHARLESBANK CAPITAL PARTNERS, LLC GROUP MEMBERS: CHARLESBANK CIFC HOLDINGS, LLC GROUP MEMBERS: CHARLESBANK COINVESTMENT PARTNERS, LIMITED PARTNERSHIP GROUP MEMBERS: CHARLESBANK EQUITY COINVESTMENT FUND VI, LIMITED PARTNERSHIP GROUP MEMBERS: CHARLESBANK EQUITY FUND V, LIMITED PARTNERSHIP GROUP MEMBERS: CHARLESBANK EQUITY FUND VI, LIMITED PARTNERSHIP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CIFC Deerfield Corp. CENTRAL INDEX KEY: 0001313918 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 202008622 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-81573 FILM NUMBER: 11778012 BUSINESS ADDRESS: STREET 1: 250 PARK AVENUE STREET 2: 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10177 BUSINESS PHONE: 212-624-1200 MAIL ADDRESS: STREET 1: 250 PARK AVENUE STREET 2: 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10177 FORMER COMPANY: FORMER CONFORMED NAME: Deerfield Capital Corp. DATE OF NAME CHANGE: 20071226 FORMER COMPANY: FORMER CONFORMED NAME: Deerfield Triarc Capital Corp DATE OF NAME CHANGE: 20050110 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CIFC Parent Holdings LLC CENTRAL INDEX KEY: 0001477486 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 250 PARK AVENUE STREET 2: 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10177 BUSINESS PHONE: 212-624-1200 MAIL ADDRESS: STREET 1: 250 PARK AVENUE STREET 2: 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10177 SC 13D 1 b86186sc13d.htm SCHEDULE 13D sc13d

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-102)

INFORMATION INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

(Amendment No.     )*

CIFC DEERFIELD CORP.
(Name of Issuer)
Common Stock, $0.001 par value per share
(Title of Class of Securities)
125471102
(CUSIP Number)
CIFC Parent Holdings LLC
Attention: Peter Gleysteen
c/o Charlesbank Capital Partners, LLC
200 Clarendon Street, 54th Floor
Boston, MA 02116
(617) 619-5400
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
April 13, 2011
(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 
 

 

                     
CUSIP No.
  
125471102 
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2 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

CIFC Parent Holdings LLC
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Delaware
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  OO
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
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3 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

Charlesbank CIFC Holdings, LLC
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Delaware
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  OO
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
125471102 
 13D  Page  
4 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

Charlesbank Equity Fund V, Limited Partnership
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Massachusetts
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  PN
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
125471102 
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5 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

Charlesbank Equity Fund VI, Limited Partnership
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Massachusetts
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  PN
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
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6 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

CB Offshore Equity Fund VI, L.P.
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Cayman Islands
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  PN
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
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7 
   of   
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  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

Charlesbank Coinvestment Partners, Limited Partnership
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Massachusetts
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  PN
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
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8 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

Charlesbank Equity Coinvestment Fund VI, Limited Partnership
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Massachusetts
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  PN
* See Item 5 of this Schedule 13D.

 

                     
CUSIP No.
  
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9 
   of   
26 
  Pages

 

           
1.   NAMES OF REPORTING PERSONS.
I.R.S. Identification Nos. of above persons (entities only)

Charlesbank Capital Partners, LLC
     
     
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
  (a)   þ 
  (b)   o 
     
3.   SEC USE ONLY
   
   
     
4.   SOURCE OF FUNDS (SEE INSTRUCTIONS)
   
  AF
     
5.   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6.   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  Massachusetts
       
  7.   SOLE VOTING POWER
     
NUMBER OF   9,090,909
       
SHARES 8.   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY  
       
EACH 9.   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   9,090,909
       
WITH 10.   SHARED DISPOSITIVE POWER
     
   
     
11.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  9,090,909*
     
12.   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
   
  o
     
13.   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
   
  44.9%
     
14.   TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
   
  OO
* See Item 5 of this Schedule 13D.

 

                     
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ITEM 1.   SECURITY AND ISSUER.
This Statement on Schedule 13D relates to shares of common stock, $0.001 par value per share (the “Shares”), of CIFC Deerfield Corp. (formerly known as Deerfield Capital Corp.), a Delaware corporation (the “Issuer”). The address of the Issuer’s principal executive office is 250 Park Avenue, 5th Floor, New York, New York 10177.
ITEM 2.   IDENTITY AND BACKGROUND.
Item 2 (a) — (c). This statement is being filed by the following persons:
  (i)   CIFC Parent Holdings LLC, a Delaware limited liability company (“CIFC Parent”);
 
  (ii)   Charlesbank CIFC Holdings, LLC, a Delaware limited liability company (“CB CIFC Holdings”);
 
  (iii)   Charlesbank Equity Fund V, Limited Partnership, a Massachusetts limited partnership (“CB V”)
 
  (iv)   Charlesbank Equity Fund VI, Limited Partnership, a Massachusetts limited partnership (“CB VI”);
 
  (v)   CB Offshore Equity Fund VI, L.P., a Cayman Islands exempt limited partnership (“CB Offshore”);
 
  (vi)   Charlesbank Coinvestment Partners, Limited Partnership, a Massachusetts limited partnership (“CB Coinvestment Partners”);
 
  (vii)   Charlesbank Equity Coinvestment Fund VI, Limited Partnership, a Massachusetts limited partnership (“CB Coinvestment VI” and, together with CB V, CB VI, CB Offshore and CB Coinvestment Partners, the “CB Funds”); and
 
  (viii)   Charlesbank Capital Partners, LLC, a Massachusetts limited liability company (“CB GP”).
CIFC Parent, CB CIFC Holdings, each of the CB Funds and CB GP are sometimes individually referred to herein as a “Reporting Person” and collectively as the “Reporting Persons.”
CIFC Parent is principally engaged in the business of owning the Shares and cash consideration issued to CIFC Parent pursuant to the Merger Agreement (as defined in Item 4), owning securities in collateralized loan obligations and all matters relating thereto. The executive officers of CIFC Parent are Peter Gleysteen, the President and Chief Executive Officer, and Robert Milton, the Secretary. The directors of CIFC Parent are Peter Gleysteen (Chairman), Samuel P. Bartlett, Michael Eisenson, Tim Palmer, William Park and Frank Puleo. The business address and principal executive offices of CIFC Parent and its executive officers and directors are c/o Charlesbank Capital Partners, LLC, John Hancock Tower, 200 Clarendon Street, 54th Floor, Boston, Massachusetts 02116.
CB CIFC Holdings, each of the CB Funds and CB GP (collectively, “Charlesbank”) are all principally engaged in the business of investing in securities. The business address and principal executive offices of Charlesbank are c/o Charlesbank Capital Partners, LLC, John Hancock Tower, 200 Clarendon Street, 54th Floor, Boston, Massachusetts 02116.
Item 2 (d) — (e). During the last five years, none of the persons identified in this Item 2 has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors), or has been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws.
Item 2 (f). Each natural person identified in this Item 2 is a citizen of the United States.
ITEM 3.   SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On April 13, 2011 (the “Closing Date”), pursuant to the Merger Agreement (as defined in Item 4), the Merger (as defined in Item 4) of Commercial Industrial Finance Corp., a Delaware corporation and wholly-owned subsidiary of CIFC Parent (“CIFC”), with and into a wholly-owned subsidiary of the Issuer was consummated. Pursuant to the terms of the Merger Agreement, as consideration for the Merger, (i) on the Closing Date, CIFC Parent received 9,090,909 Shares and cash payment of $2.5 million and (ii) CIFC Parent will receive (a) additional payments totaling $5 million in cash payable in two equal installments of $2.5 million (subject to certain adjustments) on the first and second anniversaries of the Closing Date and (b) the first $15 million of incentive fees received by the combined company from certain CLOs currently managed by CIFC (the “CIFC Incentive Fee CLOs”), and 50% of any incentive fees in excess of $15 million in the aggregate received by the combined company over the next ten years from the CIFC Incentive Fee CLOs, plus, pursuant to the Put/Call Agreement (as defined in Item 4), payments relating to the present value of any such incentive fees that remain payable to the combined company after the tenth anniversary of the Closing Date. In addition, the Issuer has the obligation to pay or reimburse CIFC Parent for expenses incurred by CIFC Parent and CIFC in connection with the transactions pursuant to the Merger Agreement. For a description of the Merger Agreement and the Put/Call Agreement, see Item 4 below, which description is incorporated by reference into this Item 3.

 

 

                     
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ITEM 4.   PURPOSE OF TRANSACTION.
The Merger Agreement
On April 13, 2011, pursuant to that certain Agreement and Plan of Merger, dated as of December 21, 2010 (as amended, the “Merger Agreement”), by and among the Issuer, CIFC Parent, CIFC, Bulls I Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of the Issuer, and Bulls II Acquisition LLC, a Delaware limited liability company and direct wholly-owned subsidiary of the Issuer, the merger of CIFC with and into a wholly-owned subsidiary of the Issuer (the “Merger”) was consummated. As consideration for the Merger, CIFC Parent received, among other things, 9,090,909 Shares.
The Stockholders Agreement
In connection with the Merger Agreement and the transactions contemplated thereby, CIFC Parent entered into the Amended and Restated Stockholders Agreement, (the “Stockholders Agreement”) dated as of April 13, 2011, by and among the Issuer, DFR Holdings, LLC, a Delaware limited liability company (“DFR Holdings”) (as assignee of Bounty Investments, LLC (“Bounty”) pursuant to the Assignment and Contribution Agreement, dated as of April 13, 2011 (the “Contribution Agreement”), by and among Bounty, DFR Holdings, the Issuer and CIFC), and CIFC Parent (together with DFR Holdings, the “Investors” and each individually an “Investor”). Pursuant to the Amended and Restated Stockholders Agreement, the size of the Board of Directors of the Issuer (the “Board”) was increased by two directors so that the Board now consists of eleven directors, comprised of (i) three directors designated by each of DFR Holdings and CIFC Parent, (ii) three directors nominated by the Nominating Committee of the Board and who must qualify as independent directors, (iii) Peter Gleysteen, who became the Issuer’s Chief Executive Officer as a result of the consummation of transactions contemplated by the Merger Agreement, and (iv) Jonathan Trutter, for so long as he remains an employee of the Issuer, provided that any director replacing Mr. Trutter as a director will have to be nominated by the Nominating Committee of the Board and meet the same independence standards as the other independent directors of the Issuer. The following directors designated by CIFC Parent were appointed to the Board: Samuel P. Bartlett, Michael R. Eisenson and Tim R. Palmer. The following directors designated by DFR Holdings were appointed to the Board: Andrew Intrater, Jason Epstein and Paul Lipari. In connection with the Merger Agreement, Robert E. Fischer, Richard A. Mandell and Stuart I. Oran on February 10, 2011, Daniel K. Schrupp on February 11, 2011, and Peter H. Rothschild on February 15, 2011, each of whom was previously a director of the Issuer, tendered their resignations from the Board which resignations were effective upon the completion of the Merger on the Closing Date.
Pursuant to the Stockholders Agreement, so long as an Investor owns at least 25%1 of the outstanding Common Stock of the Issuer, par value $0.01 per share (“Common Stock”), it has the right to designate three directors to the Board. So long as an Investor owns at least 15% and 5% of the outstanding Common Stock, such Investor has the right to designate two directors and one director, respectively. If an Investor owns less than the minimum percentage necessary for the designation of directors as set forth above as a result of dilution of the Common Stock (other than dilution resulting from new issuances of equity interests or securities for which such Investor has certain preemptive rights), the Issuer must provide the Investor the opportunity to purchase an amount of Common Stock to cure such deficiency.
Each Investor has the right to designate one director to the Nominating Committee of the Board so long as it has the right to designate at least two directors to the Board. In addition, the Strategic Committee of the Board was dissolved upon the consummation of the transactions contemplated by the Merger Agreement. CIFC Parent’s designee to the Nominating Committee is Mr. Bartlett.
So long as any Investor owns at least 5% of the outstanding Common Stock, if the Issuer proposes to issue any securities (subject to specified exceptions), including shares of Common Stock, other capital stock or convertible securities, then each Investor has the right to purchase in such issuance the number of securities up to its current ownership percentage of the Issuer at the same purchase price as the Issuer’s proposed issuance to other purchasers.
Each Investor has a consent right with respect to the following actions until the earlier of (a) three years from the date of the Stockholders Agreement, (b) the date on which the Investors, collectively, own less than 35% of the outstanding Common Stock and (c) the date on which such Investor owns less than 20% of the outstanding Common Stock: (i) the acquisition or disposal of any corporation, entity, division or other business concern having a value in excess of $10,000,000 in a single transaction or series of related transactions, (ii) the dissolution, liquidation, reorganization or recapitalization or bankruptcy of the Issuer, (iii) the replacement of the chief executive officer of the Issuer, (iv) the maintenance of the Issuer’s headquarters outside of New York, New York, (v) the
 
1   All percentages under the Stockholders Agreement assume the conversion of the Issuer’s Senior Subordinated Convertible Notes, due December 9, 2012 (the “Convertible Notes”) and issued pursuant to the Senior Subordinated Convertible Notes Agreement, dated as of March 22, 2010 (the “Convertible Notes Agreement”), by and between the Issuer and DFR Holdings (as assignee of Bounty pursuant to the Contribution Agreement).

 

 

                     
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issuance of any new shares of Common Stock, equity interests or convertible securities of the Issuer in a registration under the Securities Act of 1933, as amended (subject to certain exceptions) and (vi) the incurrence, assumption or guarantee of any indebtedness for borrowed money, except for (A) indebtedness incurred in the ordinary course of business not in excess of $20,000,000 in the aggregate and (B) repurchase obligations pursuant to the Issuer’s investments in residential mortgage-backed securities, provided that such repurchase obligations do not exceed $275,000,000 or such other amount as is established by the Board from time to time.
The Stockholders Agreement includes a standstill provision which caps both Investors’ aggregate beneficial ownership of Common Stock and other voting securities at 80% of the shares of Common Stock, and their individual beneficial ownerships at 39.28% for CIFC Parent and 37.58% for DFR Holdings. Subject to certain exceptions (including, without limitation, any acquisitions consented to by a majority of the independent directors of the Board), the Investors cannot acquire Common Stock or other voting securities that would result in their ownership of Common Stock and other voting securities exceeding the applicable caps. Subject to the aggregate 80% cap, the Investors may transfer shares of Common Stock among themselves. In addition, each Investor is required to cause any transferee of more than 15% of the Common Stock to agree to be bound by the terms of the standstill provisions. The standstill provisions remain in effect until the earliest to occur of (i) entry by the Issuer into a definitive agreement providing for a change of control transaction, and (ii) in respect of an Investor, the date that such Investor owns less than 5% of the outstanding Common Stock.
Each Investor was granted a right of first refusal in the event that the other Investor entertains a bona fide offer from any third party to purchase all or any portion of the Convertible Notes held by such Investor. Following receipt of the bona fide offer from the third party, the Investor must offer to sell such number of Convertible Notes to the other Investor on the same terms and conditions and at the same price offered to such third party.
Each Investor was granted a right of first offer in the event that the other Investor proposes to transfer all or any portion of the shares of Common Stock held by such Investor. In such case, the transferring Investor must first offer to transfer such shares to the other Investor. However, in no event will an Investor be required to offer its shares of Common Stock to the other Investor if such offered shares (together with all shares transferred by such Investor in the preceding twelve month period) constitute less than the lesser of (i) 4.99% of the outstanding Common Stock and (ii) 10% of the shares of Common Stock held by such Investor immediately prior to such transfer.
Pursuant to the Stockholders Agreement, the Investors agreed to form a “group” holding over 50% of the outstanding Common Stock of the Issuer thereby allowing the Issuer to elect to become a “controlled company” as defined by Rule 5615(c) of the NASDAQ Marketplace Rules. In addition, pursuant to the Stockholders Agreement, the Issuer agreed to elect to be a “controlled company,” and agreed that it will continue to elect to be a controlled company for so long as the Investors hold over 50% of the outstanding Common Stock and satisfy the “group” requirements. In connection with the Stockholders Agreement, and for so long as the Investors hold over 50% of the outstanding Common Stock, each Investor is required to take all action necessary for the Issuer to be able to be treated as a “controlled-company” and make all necessary filings and disclosures associated therewith. See Item 5 below for more information regarding the Investors’ “group” designation.
The Stockholders Agreement continues in effect until the earlier of (i) termination by written agreement of the Issuer and each Investor holding at least 20% of the outstanding Common Stock (assuming conversion of the Convertible Notes), and (ii) as to any Investor, such time as such Investor holds less than 5% of the outstanding Common Stock (assuming conversion of the Convertible Notes) after giving effect to any cure purchase rights.
The Registration Rights Agreement
In connection with the closing of the transactions contemplated by the Merger Agreement, CIFC Parent entered into an Amended and Restated Registration Rights Agreement, dated as of April 13, 2011 (the “Registration Rights Agreement”), with DFR Holdings (as assignee of Bounty pursuant to the Contribution Agreement), pursuant to which the Issuer granted registration rights to CIFC Parent and DFR Holdings with regard to the shares of Common Stock held by each Investor, including the shares of Common Stock issuable upon the conversion of the Convertible Notes (the “Conversion Shares”). Under the Registration Rights Agreement, CIFC Parent and DFR Holdings have two demand registration rights each and unlimited piggyback rights, subject to customary underwriter cutbacks and issuer blackout periods. The Issuer will pay all fees and expenses relating to the registration of the Common Stock pursuant to the Registration Rights Agreement.
Ancillary Agreements
In connection with the closing of the transactions contemplated by the Merger Agreement, CIFC Parent entered into a Management Agreement, dated as of April 13, 2011 (the “Management Agreement”), with the Issuer. Pursuant to the Management Agreement, the

 

 

                     
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Issuer will provide support and assistance to CIFC Parent in the form of certain administrative and support services related to the business and operations of CIFC Parent. In connection with the Management Agreement, the Issuer will receive an annual management fee equal to (i) $50,000 plus (ii) $15,000 for each issuer of collateralized loan obligations in which CIFC Parent holds securities during such annual period (pro rated as applicable). CIFC Parent will also reimburse the Issuer for reasonable documented out-of-pocket expenses (subject to certain caps) in connection with the performance of the services during the term of the Management Agreement.
In connection with the closing of the transactions contemplated by the Merger Agreement, CIFC Parent entered into a Put/Call Agreement, dated as of April 13, 2011 (the “Put/Call Agreement”), with the Issuer, pursuant to which CIFC Parent will receive payments in respect of certain management incentive fees payable to CIFC after the tenth anniversary of the Closing Date (the “Put/Call Date”). The Put/Call Agreement provides that between 30 and 60 days prior to the Put/Call Date, the Issuer must deliver to CIFC Parent a statement setting forth the Issuer’s calculation of all of management incentive fees payable to CIFC from and after the Put/Call Date. On the Put/Call Date, the Issuer will pay to CIFC Parent a lump sum amount equal to the present value of such future incentive fees (based on a discount rate of 15% for Tier I incentive fees and 20% for Tier II incentive fees). All such payments will be deemed to be ''Contingent Cash Consideration’’ as defined in the Merger Agreement.
The foregoing descriptions of the Merger Agreement, the Stockholders Agreement, the Registration Rights Agreement, the Management Agreement and the Put/Call Agreement are not complete and are qualified in their entirety by the terms of each such document, which are attached hereto as Exhibit 2, Exhibit 3, Exhibit 4, Exhibit 5 and Exhibit 6, respectively, and are incorporated herein by reference.
Except as set forth herein, CIFC Parent does not have any contracts, arrangements, understandings or relationships with respect to any securities of the Issuer.
ITEM 5.   INTEREST IN SECURITIES OF THE ISSUER.
Item 5 (a). As of the date hereof, CIFC Parent directly owns 9,090,909 Shares, representing approximately 44.9%2 of the outstanding Shares of the Issuer.
Due to their relationship with each other and with CIFC Parent, each of CB, CIFC Holdings, each of the CB Funds and CB GP may also be deemed to beneficially own the 9,090,909 Shares directly held by CIFC Parent, representing approximately 44.9% of the outstanding Shares of the Issuer.
As required under the terms of the Stockholders Agreement, the Reporting Persons and the Bounty Persons (as defined below) acknowledge that they are acting as a “group” for the purpose of causing the Issuer to qualify as a “controlled company” under applicable NASDAQ Marketplace Rules. The aggregate number of Shares beneficially owned collectively by the Reporting Persons and the Bounty Persons is 17,768,595, which represents approximately 72.9%3 of the outstanding Shares of the Issuer. The share ownership reported herein by the Reporting Persons does not include any Shares owned by the Bounty Persons, and the Reporting Persons disclaim beneficial ownership of Shares of the Issuer except as disclosed herein. The Reporting Persons take no responsibility for any filings made by the Bounty Persons in connection with the foregoing or the completeness or accuracy of any information contained therein. The “Bounty Persons” referenced in this Schedule 13D are DFR Holdings, Bounty, Santa Maria Overseas Ltd., Mayflower Trust and TZ Columbus Services Limited.
Item 5 (b). Each Reporting Person has the sole power to vote or to direct the vote or the sole power to dispose or to direct any of 9,090,909 Shares.
 
2   Based on 20,255,430 Shares outstanding, which include (i) 11,164,521 Shares outstanding as of March 28, 2011 as reported in the Issuer’s annual report on Form 10-K filed on March 31, 2011 (the “Annual Report”) and (ii) 9,090,909 issued pursuant to the Merger Agreement.
 
3   Based on 24,387,661 Shares outstanding, which include (i) 11,164,521 Shares outstanding as of March 28, 2011, as reported in the Annual Report, (ii) 9,090,909 Shares issued on April 13, 2011 pursuant to the Merger Agreement, and (iii) 4,132,231 Shares issuable to DFR Holdings upon the conversion of $25 million in aggregate principal amount of the Convertible Notes based upon an initial conversion rate of 165.29 shares per $1,000 principal amount of such Convertible Notes that are subject to certain adjustments from time to time for specified events pursuant to the Convertible Notes Agreement (as reported in the Schedule 13D Amendment filed by DFR Holdings on April 15, 2011).

 

 

                     
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Item 5 (c). Except for the issuance of 9,090,909 Shares to CIFC Parent pursuant to the Merger Agreement, none of the Reporting Persons, and, to the knowledge of each of the Reporting Persons, none of the directors or executive officers of CIFC Parent, has effected any transaction in the Shares in the last 60 days.
Item 5 (d). Each of the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares owned by CIFC Parent and reported by this statement.
Item 5 (e). Not Applicable.
ITEM 6.   CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Except as otherwise set forth in this Schedule 13D, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 or between such persons and any other person with respect to any securities of the Issuer.
ITEM 7.   MATERIAL TO BE FILED AS EXHIBITS.
     
Exhibit   Description
 
    
1
  Joint Filing Agreement as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended.
 
    
2
  Agreement and Plan of Merger, dated as of December 21, 2010, by and among Issuer, Bulls I Acquisition Corporation, Bulls II Acquisition LLC, CIFC Parent and CIFC (incorporated by reference to Exhibit No. 2.1 to the Issuer’s Current Report on Form 8-K filed on December 22, 2010).
 
    
3
  Amended and Restated Stockholders Agreement, dated as of April 13, 2011, by and among Issuer, CIFC Parent and DFR Holdings (incorporated by reference to Exhibit No. 10.1 to the Issuer’s Current Report on Form 8-K filed on April 14, 2011).
 
    
4
  Amended and Restated Registration Rights Agreement, dated as of April 13, 2011, by and among Issuer, CIFC Parent and DFR Holdings (incorporated by reference to Exhibit No. 10.2 to the Issuer’s Current Report on Form 8-K filed on April 14, 2011).
 
    
5
  Management Agreement, dated as of April 13, 2011, by and between Issuer and CIFC Parent.
 
    
6
  Put/Call Agreement, dated as of April 13, 2011, by and between Issuer and CIFC Parent (incorporated by reference to Exhibit No. 10.3 to the Issuer’s Current Report on Form 8-K filed on April 14, 2011).

 

 

                     
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SIGNATURES
     After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this Statement is true, complete and correct.
Dated: April 25, 2011
         
  CIFC PARENT HOLDINGS LLC
 		  
  By:   /s/ Samuel P. Bartlett    
    Name:   Samuel P. Bartlett   
    Title:   Director   
         
  CHARLESBANK CIFC HOLDINGS, LLC
 		  
  By:   Charlesbank Equity Fund V, Limited Partnership, its
Managing Member  		  
     
  By:   Charlesbank Equity Fund V GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK EQUITY FUND V, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Equity Fund V GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK EQUITY FUND VI, LIMITED
PARTNERSHIP
 		  
  By:   Charlesbank Equity Fund VI GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   

 

 

                     
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  CB OFFSHORE EQUITY FUND VI, L.P.
 		  
  By:   Charlesbank Equity Fund VI GP, Limited Partnership, its Managing General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK COINVESTMENT PARTNERS, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK EQUITY COINVESTMENT FUND VI, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Equity Coinvestment Fund VI GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK CAPITAL PARTNERS, LLC
 		  
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   

 

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Exhibit 1
JOINT FILING AGREEMENT
     In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree that this Statement on Schedule 13D relating to the beneficial ownership of Common Stock, $0.001 par value per share, of CIFC Deerfield Corp. is being filed with the Securities and Exchange Commission on behalf of each of them. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Dated: April 25, 2011
         
  CIFC PARENT HOLDINGS LLC
 		  
  By:   /s/ Samuel P. Bartlett    
    Name:   Samuel P. Bartlett   
    Title:   Director   
         
  CHARLESBANK CIFC HOLDINGS, LLC
 		  
  By:   Charlesbank Equity Fund V, Limited Partnership, its
Managing Member  		  
     
  By:   Charlesbank Equity Fund V GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK EQUITY FUND V, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Equity Fund V GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   

 

 

                     
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  CHARLESBANK EQUITY FUND VI, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Equity Fund VI GP, Limited Partnership, its General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CB OFFSHORE EQUITY FUND VI, L.P.
 		  
  By:   Charlesbank Equity Fund VI GP, Limited Partnership, its Managing General Partner    
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK COINVESTMENT PARTNERS, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK EQUITY COINVESTMENT FUND VI, LIMITED PARTNERSHIP
 		  
  By:   Charlesbank Equity Coinvestment Fund VI GP, Limited Partnership, its General Partner  
     
  By:   Charlesbank Capital Partners, LLC, its General Partner    
     
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   
         
  CHARLESBANK CAPITAL PARTNERS, LLC
 		  
  By:   /s/ Tami E. Nason    
    Name:   Tami E. Nason   
    Title:   Senior Vice President and General Counsel   

 

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Exhibit 5
MANAGEMENT AGREEMENT
     THIS MANAGEMENT AGREEMENT (this “Agreement”), dated as of April 13, 2011, is by and between Deerfield Capital Corp., a Maryland corporation (the “Company”), and CIFC Parent Holdings LLC, a Delaware limited liability company (“CIFC Parent”) (each referred to herein as a “Party” to this Agreement, collectively referred to as the “Parties” to this Agreement, and in the applicable context the Company as “Supplier” and CIFC Parent as “Receiver”).
     WHEREAS, the Company, Bulls I Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of the Company (“First MergerSub”), Bulls II Acquisition, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Second MergerSub” and, together with First MergerSub, the “MergerSubs”), CIFC Parent and Commercial Industrial Finance Corp., a Delaware corporation and wholly owned subsidiary of CIFC Parent (“CIFC”), are parties to the Agreement and Plan of Merger, dated as of December 21, 2010, as amended (the “Merger Agreement”);
     WHEREAS, the execution and delivery of this Agreement is a condition to the obligations of the Company, CIFC Parent and CIFC to consummate the transactions contemplated by the Merger Agreement;
     WHEREAS, the Parties desire to enter into this Agreement under which Supplier will provide and Receiver shall obtain support and assistance in the form of administrative and support services related to the business and operations of CIFC Parent from and after the Closing (as defined in the Merger Agreement);
     WHEREAS, Supplier and Receiver desire to set forth and confirm their rights and obligations in respect of the business arrangements described herein; and
     NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration to be received, Supplier and Receiver agree as follows:
ARTICLE I
AGREEMENT, TERM, LIMITATIONS AND DEFINITIONS
          Section 1.1 Agreement. During the term of this Agreement, in accordance with the Company’s existing practice and course of dealing, Supplier shall supply to Receiver, and Receiver shall purchase or receive from Supplier, the administrative and support services set forth on Schedule A hereto (the “Services”) on a continuing basis without Receiver’s express request, except as otherwise specified herein, all upon and subject to the terms and conditions specified in this Agreement. To the extent that Receiver requests, and Supplier agrees to perform, any Services other than those described on Schedule A on the date hereof, Schedule A shall be amended to include such additional Services.
          Section 1.2 Term. The term of this Agreement shall commence on the Effective Date and shall continue in effect until terminated in accordance with this Agreement.
          Section 1.3 Definitions. The following definitions shall apply to this Agreement:
               (a) “Business Day” means a day other than Saturday, Sunday or any other day on which banks located in New York, New York are authorized or obligated by law to close.
               (b) “Effective Date” shall mean the date hereof.
               (c) “Damages” means any and all claims, injuries, lawsuits, liabilities, losses, damages, judgments, fines, penalties, deficiencies, costs and expenses, including the reasonable fees and disbursements of counsel and experts (including reasonable fees of attorneys and paralegals, whether at the pre-trial, trial, or appellate level, or in arbitration) and all amounts reasonably paid in investigation, defense, or settlement of any of the foregoing.

 

 

                     
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                (d) “Governmental Authority” means any foreign, federal, state or local governmental, judicial, legislative, regulatory or administrative agency, commission or authority, and any court, tribunal or arbitrator(s) of competent jurisdiction, including Self-Regulatory Organizations.
                (e) “Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other entity.
                (f) “Receiver” shall mean CIFC Parent.
                (g) “Supplier” shall mean the Company.
                (h) “Self-Regulatory Organization” means each national securities exchange in the United States of America or other commission, board, agency or body that is charged with the supervision or regulation of brokers, dealers, securities underwriting or trading, stock exchanges, commodities exchanges, insurance companies or agents, investment companies or investment advisers, or to the jurisdiction of which any Party or any of their respective Subsidiaries is otherwise subject.
ARTICLE II
WARRANTIES AND LIABILITIES
          Section 2.1 Warranty. Supplier shall use reasonable care in providing Services. EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT OR OTHERWISE AGREED IN WRITING, SUPPLIER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE MERCHANTABILITY, SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF ANY SERVICE PROVIDED UNDER THIS AGREEMENT.
          Section 2.2 Limitation of Liability. If any Party shall be liable to the other for any matter relating to or arising in connection with this Agreement, whether based on an action or claim in contract, equity, negligence, intended conduct, tort or otherwise, in no event shall the measure of damages include, nor shall any Party be liable for, any amounts for loss of income, profit or savings or indirect, incidental, consequential, or punitive damages of any Party or any third parties.
ARTICLE III
PAYMENTS TO SUPPLIER
          Section 3.1 Compensation. An annual management fee (the “Management Fee”) equal to (a) $50,000 plus (b) $15,000 for each issuer of collateralized loan obligations (a “CLO Issuer”) in which Receiver holds securities during such annual period (and pro rated to the extent securities in such CLO Issuer are held by Receiver for any portion of the applicable annual period) shall be paid in four (4) installments each fiscal year, payable in advance on each of March 1, June 1, September 1, and December 1 of each such fiscal year during the term of this Agreement, with each such installment pro rated on a per diem basis for the number of calendar days in the period relating to such installment (i.e., that portion of the Management Fee payable on March 1 of each fiscal year shall relate to the period beginning on March 1 and ending on May 31 of each fiscal year, and that portion of the management fee payable on December 1 of each fiscal year shall relate to the period beginning on December 1 and ending on February 28 (or February 29) of the following fiscal year). On the date hereof, Receiver shall pay to Supplier the pro rated portion of the Management Fee for the period beginning on the Closing Date (as defined in the Merger Agreement) and ending on the last day of the calendar quarter that includes the Closing Date.
          Section 3.2 Expenses. Receiver shall reimburse Supplier, quarterly in arrears, for the reasonable and documented out-of-pocket expenses incurred by Supplier during the term of this Agreement in connection with the

 

 

                     
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performance by Supplier of the Services; provided, that no single expense shall exceed $5,000 and such expenses shall not in the aggregate exceed $10,000 in any year without the prior written authorization of Receiver. Supplier will deliver an invoice to Receiver for such expenses promptly following the completion of each quarter and Receiver shall pay such invoices within thirty (30) days after receipt of such invoice.
          Section 3.3 Taxes. If Receiver is required by law to make any deduction or withholding of taxes imposed by the laws of any jurisdiction upon Supplier or upon the payments to be made by Receiver in connection with the provision of Services, Receiver shall promptly effect payment thereof to the relevant tax authorities, and also shall promptly provide Supplier with official tax receipts or other evidence issued by the applicable tax authorities sufficient to establish that the taxes have been paid. Where Receiver is required by law to withhold or deduct taxes, Receiver shall only be required to remit an amount net of any such withholding or deductions to Supplier.
ARTICLE IV
TERMINATION
          Section 4.1 Termination by Mutual Consent. This Agreement may be terminated upon mutual written consent of the parties as of a date specified in such written consent.
          Section 4.2 Termination of Agreement for Convenience. Receiver may terminate this Agreement upon thirty (30) days prior written notice to Supplier. Supplier may terminate this agreement on or after May 31, 2012 upon one hundred eighty (180) days prior written notice to Receiver.
          Section 4.3 Termination for Cause. Except as provided by Section 4.5, if any Party materially or repeatedly defaults in the performance of any of its duties or obligations set forth in this Agreement, and such default is not substantially cured within sixty (60) days after written notice is given to the defaulting Party specifying the default, then the Party not in default may, by giving written notice thereof to the defaulting Party, terminate the provision of the Services relating to such default by that Party as of a date specified in such notice of termination.
          Section 4.4 Termination for Insolvency or Bankruptcy. Such termination provided in Section 4.3 may be made by giving written notice to the affected Party in the event of: (i) the liquidation or insolvency of the affected Party; (ii) the appointment of a receiver or similar officer for the affected Party; (iii) an assignment by the affected Party for the benefit of all or substantially all of its creditors; (iv) entry by the affected Party into an agreement for the composition, extension, or readjustment of all or substantially all of its obligations; or (v) the filing of a meritorious petition in bankruptcy by or against the affected Party under any bankruptcy or debtors’ law for its relief or reorganization.
          Section 4.5 Termination for Non-Payment. Supplier may terminate the provision of a Service if Receiver fails to pay when due any undisputed amounts due and such failure continues for a period of sixty (60) days after the last day payment is due, so long as Supplier gives Receiver written notice of the expiration date of the aforementioned sixty (60) day period at least thirty (30) days before such expiration date.
ARTICLE V
MISCELLANEOUS
          Section 5.1 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
          Section 5.2 Relationship of Parties. Supplier, in furnishing Services to Receiver hereunder, is acting only as an independent contractor and neither Supplier nor any of its employees shall be deemed or construed to be an employee, agent or legal representative of Receiver for any purpose whatsoever. Nothing set forth in this

 

 

                     
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Agreement shall be construed to create the relationship of principal and agent between Supplier and Receiver. No Party shall act or attempt to act or represent itself, directly or by implication, as an agent of another Party or in any manner assume or create, or attempt to assume or create, an obligation on behalf of or in the name of, another Party. Unless provided otherwise in this Agreement or separately in writing, Supplier, through either its employees or agents, shall not be construed as possessing the power to legally bind Receiver (contractually or otherwise) and Supplier’s employees and agents shall not have the power to execute or sign any legally binding agreement on behalf of Receiver. This Agreement shall not be construed to create a partnership or joint venture between Supplier, Receiver, or the other Parties.
          Section 5.3 Further Acts. Each Party shall do, or cause to be done, all such further acts and shall execute, acknowledge and deliver, or cause to be executed, acknowledged or delivered, any and all further documentation which the applicable Party may reasonably require in connection with the provision of the Services.
          Section 5.4 Notices. All notices, demands and other communications pertaining to this Agreement (“Notices”) shall be in writing and addressed as follows:
          If to the Company:
Deerfield Capital Corp.
6250 North River Road
Rosemont, IL 60018
Attention: Robert Contreras
Facsimile: (773) 380-1695
Email: rcontreras@DeerfieldCapital.com
          with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Simeon Gold, Esq.
Facsimile: (212) 310-8007
E-mail: simeon.gold@weil.com
          If to CIFC Parent:
CIFC Parent Holdings LLC
c/o Charlesbank Capital Partners, LLC
200 Clarendon Street, 54th Floor
Boston, MA 02116
Attention: Tim R. Palmer
Facsimile: 617-619-5402
E-mail: tpalmer@charlesbank.com
          with copies to:
Goodwin Procter LLP
135 Commonwealth Drive
Menlo Park, CA 94025
Attention: Kevin M. Dennis, Esq.
Facsimile: (650) 853-1038
E-mail: kdennis@goodwinprocter.com

 

 

                     
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Notices shall be deemed given (a) on the first (1st) Business Day after being sent, prepaid, by nationally recognized overnight courier that issues a receipt or other confirmation of delivery, (b) upon machine generated acknowledgement of receipt after transmittal by facsimile if so acknowledged to have been received before 5:00 p.m. on a Business Day at the location of receipt and otherwise on the next following Business Day or (c) when sent, if sent by electronic mail before 5:00 p.m. on a Business Day at the location of receipt and otherwise the next following Business Day. Any Party may change the address to which Notices under this Agreement are to be sent to it by giving written notice of a change of address in the manner provided in this Agreement for giving Notice.
          Section 5.5 Remedies. All remedies set forth in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to a Party at law, in equity or otherwise, and may be enforced concurrently or from time to time.
          Section 5.6 Governing Law. This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York without reference to any choice of law rules that would require the application of the laws of any other jurisdiction.
          Section 5.7 Consent to Jurisdiction. Each Party to this Agreement, by its execution hereof, (a) hereby irrevocably consents and agrees that any action, suit or proceeding arising in connection with any disagreement, dispute, controversy or claim, in whole or in part, arising out of, related to, based upon or in connection with this Agreement or the subject matter hereof shall be brought only in the courts of the State Courts of the State of New York, New York County or the United States District Court located in the State of New York, New York County, (b) hereby waives to the extent not prohibited by applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such action other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action to any court other than one of the above-named courts whether on the grounds of forum non conveniens or otherwise. Each Party hereby (i) consents to service of process in any such action in any manner permitted by New York law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 5.4 shall constitute good and valid service of process in any such action, and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process.
          Section 5.8 Specific Performance. The Parties to this Agreement each acknowledge that each Party would not have an adequate remedy at law for money damages in the event that any of the covenants hereunder have not been performed in accordance with their terms, and therefore agree that each other Party hereto shall be entitled to specific enforcement of the terms hereof and any other equitable remedy to which such Party may be entitled. Each of the Parties hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.
          Section 5.9 Binding Effect; Persons Benefiting; Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns. Nothing in this Agreement is intended or shall be construed to confer upon any Person other than the Parties hereto and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof. Without the prior written consent of each of the other Parties, this Agreement may not be assigned by any of the Parties and any purported assignment made without such consent shall be null and void.
          Section 5.10 Counterparts. This Agreement may be executed in counterparts (including by facsimile or other electronic transmission), each of which shall be deemed an original and each of which shall constitute one and the same instrument.

 

 

                     
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          Section 5.11 Entire Agreement. This Agreement, including any Schedules, any documents executed by the Parties simultaneously herewith or pursuant thereto constitute the entire understanding and agreement of the Parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, written or oral, between the Parties with respect to such subject matter.
          Section 5.12 Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance, is invalid or unenforceable in any jurisdiction, (a) a substitute and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable in such jurisdiction, the intent and purpose of their invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability of such provision affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
          Section 5.13 Amendments and Waivers. This Agreement, including any Schedules, may not be amended, altered or modified except by written instrument executed by each of the Parties hereto. The failure by any Party hereto to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of such Party thereafter to enforce each and every such provision. No waiver of any breach of or non-compliance with this Agreement shall be held to be a waiver of any other or subsequent breach or non-compliance. Any waiver made by any Party hereto in connection with this Agreement shall not be valid unless agreed to in writing by such Party.
          Section 5.14 Mutual Drafting; Interpretation. Each Party hereto has participated in the drafting of this Agreement, which each such Party acknowledges is the result of extensive negotiations between the Parties. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision.
          Section 5.15 Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person, other than the Parties hereto and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement, such third Persons specifically including employees or creditors of the Company.
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     IN WITNESS WHEREOF, the Parties hereto have each caused this Management Agreement to be executed and delivered by its duly authorized representative as of the date first written above.
         
  DEERFIELD CAPITAL CORP.
 		  
  By:   /s/ Jonathan W. Trutter    
    Name:   Jonathan W. Trutter   
    Title:   Chief Executive Officer   
 
  CIFC PARENT HOLDINGS LLC
 		  
  By:   /s/ Peter Gleysteen    
    Name:   Peter Gleysteen   
    Title:   Chief Executive Officer   
 
Signature Page to CIFC Management Agreement

 

 

                     
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SCHEDULE A
SERVICES
     The following shall constitute the Services:
  •   Maintenance of separate books and records of Receiver on an income tax basis, including the establishment of a general ledger and periodic journal entries to update Receiver’s accounts
 
  •   Support the annual audit of Receiver by providing information to the relevant auditors retained by Receiver in response to audit requests or otherwise
 
  •   Prepare financial statements on an income tax basis, including unaudited quarterly statements and audited annual reports and notes to the financial statements
 
  •   Provide account information and all other requested documentation in support of the annual K1 preparation process
 
  •   Act as representative of Receiver in dealings with Receiver’s external auditor, tax and legal advisors, and bankers; provided that Receiver shall be responsible for retaining any such parties
 
  •   Respond to Receiver’s reasonable inquiries for financial metrics with respect to the CLO securities held by Receiver, including, without limitation, comparative pricing and forecasts
          Notwithstanding the foregoing, all receipts and disbursements of funds will continue to be the responsibility of the Receiver.