EXHIBIT 10.5
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EXECUTION COPY
COMMITMENT AGREEMENT
This COMMITMENT AGREEMENT (this "AGREEMENT") is entered into as of June
26, 2004, by and among Triarc Companies, Inc., a Delaware corporation
("TRIARC"), Sachs Capital Management LLC, a Delaware limited liability company
("SCM"), Xxxxx X. Xxxxxxx ("XXXXXXX") and Deerfield Capital Management LLC, a
Delaware limited liability company ("DCM").
RECITALS
WHEREAS, Triarc, SCM, Deerfield Partners Fund II LLC, Xxxxxxx, Xxxxxx
Shrear and Xxxxxxx X. Xxxxx are parties to the Purchase Agreement, dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time, the "PURCHASE AGREEMENT"), relating to the sale of certain membership
interests in Deerfield & Company LLC ("D&C") to Triarc;
WHEREAS, each of Triarc, SCM, Xxxxxxx, Xxxxxxxx Xxxxxxx and the other
Members party thereto will execute and deliver, simultaneously herewith, a
Fourth Amended and Restated Operating Agreement of D&C, dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"OPERATING AGREEMENT"); and
WHEREAS, it is a condition precedent to the execution and delivery of
the Purchase Agreement and the consummation of the transactions contemplated
thereby that each of the parties hereto enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and other valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. INVESTMENT BY TRIARC IN THE FUND. Upon the terms and subject
to the conditions set forth herein, Triarc or an Affiliate thereof hereby agrees
to invest, at the Closing (as defined in the Purchase Agreement), $100,000,000
(the "TRIARC COMMITMENT") in Deerfield Strategy-Select Fund, LLC, a
multi-strategy hedge fund to be managed by DCM, which will conduct its business
in accordance with the business plan attached as EXHIBIT A hereto (collectively
with its offshore feeder equivalent, Deerfield-Strategy Select Fund Ltd., the
"FUND"); PROVIDED, HOWEVER, that if as of the Closing the Fund is not, to the
satisfaction of Triarc, in its sole discretion, able to comply with the
obligations set forth in Section 11.7 of the Operating Agreement in all material
respects, to the extent applicable, Triarc shall instead deposit at the Closing
the Triarc Commitment in a managed account (the "Managed Account") to be managed
by DCM that will invest exclusively in any direct obligations of, or obligations
the principal of and interest on are unconditionally guaranteed by, the United
States of America until such time as the Fund is, to the satisfaction of Triarc,
in its sole discretion, able to comply with such obligations in all material
respects, to the extent applicable, at which time the Triarc Commitment shall be
invested in the Fund. Notwithstanding anything to the contrary contained herein,
Triarc's obligation to invest all or any portion of the Triarc
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Commitment shall be subject to the execution of definitive agreements related to
the organization and management of the Fund on customary market terms for such
funds and otherwise reasonably satisfactory in form and substance to Triarc (the
"FUND Documents"). If the Triarc Commitment has not been invested in the Fund,
but is still invested in the Managed Account as of the nine month anniversary of
the Closing, Triarc shall have the right to withdraw the Triarc Commitment, in
whole or in part, in one or more transactions upon five business days notice to
DCM. Furthermore, following Triarc's initial investment in the Fund, Triarc's
obligation to invest, and to maintain the investment of, all or any portion of
the Triarc Commitment shall be subject to Triarc's satisfaction in its sole
discretion on the date of such initial investment and during the Compliance
Period (as defined in the Operating Agreement) that the Fund will be able to
comply, and remains in compliance, with Section 11.7 of the Operating Agreement
in all material respects, to the extent applicable.
2. INVESTMENT BY SCM AND XXXXXXX. Upon the terms and subject to
the conditions set forth herein, each of SCM and Xxxxxxx hereby agrees to invest
in the Fund at the Closing, an amount equal to ten percent (10%) of the
after-tax portion of the Estimated Purchase Price (as defined in the Purchase
Agreement) received by SCM and Xxxxxxx, respectively, pursuant to the Purchase
Agreement (each, the "MANAGEMENT COMMITMENT"); PROVIDED, HOWEVER, that if as of
the Closing the Fund is not, to the satisfaction of Triarc, in its sole
discretion, able to comply with the obligations set forth in Section 11.7 of the
Operating Agreement in all material respects, to the extent applicable, each of
SCM and Xxxxxxx shall instead deposit at the Closing the Management Commitment
in a Managed Account to be managed by DCM that will invest exclusively in any
direct obligations of, or obligations the principal of and interest on are
unconditionally guaranteed by, the United States of America until such time as
the Fund is, to the satisfaction of Triarc, in its sole discretion, able to
comply with such obligations in all material respects, to the extent applicable,
at which time the Management Commitment shall be invested in the Fund. If the
Management Commitment has not been invested in the Fund, but is still invested
in the Managed Account as of the nine month anniversary of the Closing, each of
Sachs and Xxxxxxx shall have the right to withdraw their respective portions of
the Management Commitment, in whole or in part, in one or more transactions upon
five business days notice to DCM.
3. LOCK-UP. Subject to Section 1 above and Section 4 below, each
of Triarc, SCM and Xxxxxxx may not make a full or partial redemption or
withdrawal, as the case may be, of its capital account in the Fund or from its
Managed Account pending investment in the Fund, for a period of two years (the
"LOCK-UP PERIOD") from the date of its initial investment in the Fund (as to
each of Triarc, SCM and Xxxxxxx, together with any subsequent investments in the
Fund, its "INVESTMENT").
4. REDEMPTIONS/WITHDRAWALS.
(a) Notwithstanding anything herein to the contrary:
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(i) Triarc may redeem or withdraw in accordance
with the provisions governing redemptions by investors in the Fund set forth in
the applicable Fund Documents all or a portion of its Investment in the Fund if
Triarc's Investment constitutes 20% or less of the aggregate net asset value of
the Fund; and
(ii) if there is (a) a material adverse change in
the business, operations or condition (financial or otherwise) of the Fund, (b)
a decline as of the end of any calendar month of more than twenty-five percent
(25%) of the Fund's net asset value from the date of Triarc's initial investment
in the Fund (excluding any additions to, redemptions by or distributions to
investors in the Fund from the capital of the Fund), (c) a failure by DCM or the
Fund to hold all necessary registrations, licenses, consents or approvals to
carry out its business, or (d) unless Triarc provides its prior written approval
to such change, a fundamental change in the investment strategy of the Fund from
that described in the Confidential Private Placement Memorandum of the Fund (the
"OFFERING MEMORANDUM"), Triarc may redeem or withdraw all or a portion of its
Investment upon 10 days prior written notice to DCM; and
(iii) SCM and Xxxxxxx, as applicable, may redeem
or withdraw all or a portion of its Investment in the Fund at any time after (A)
the exercise by the Sachs Affiliated Parties (as defined in the Operating
Agreement) or the Xxxxxxx Affiliated Parties (as defined in the Operating
Agreement), as applicable, of their Put Rights (as defined in the Operating
Agreement) with respect to all of their remaining Membership Interests (as
defined in the Operating Agreement) pursuant to the Operating Agreement or (B)
the exercise by Triarc of its Call Option (as defined in the Operating
Agreement) with respect to all of the Membership Interests of the Sachs
Affiliated Parties or the Xxxxxxx Affiliated Parties, as applicable, pursuant to
the Operating Agreement.
(b) Notwithstanding anything herein to the contrary, if
Triarc elects to redeem or withdraw all or a portion of its Investment in the
Fund pursuant to this Agreement, each of SCM and Xxxxxxx may redeem or withdraw
upon the same terms and conditions applicable to Triarc on such redemption or
withdrawal by Triarc a portion of its Investment in the Fund equal to an amount
no greater than the percentage that the amount that Triarc has so elected to
redeem or withdraw bears to the amount of Triarc's Investment at such time.
(c) Any partial redemption or withdrawal, as the case may
be, by Triarc from the Fund or the Managed Account that is permitted under this
Agreement may be made in any amount of not less than $250,000 so long as
Triarc's remaining capital account balance in the Fund is at least $1,000,000.
(d) If the Fund limits the total amount of redemptions in
any quarter, Triarc, SCM and Xxxxxxx will be treated on a PRO RATA basis with
other investors in the Fund.
(e) Each of Triarc, SCM and Xxxxxxx will not be charged
or obligated to pay any subscription, disposition fees, redemption fees or other
similar fees
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in connection with the acquisition or disposition of such entity's shares or
interests, including in the event that such entity's shares or interests are
compulsorily redeemed.
5. DISTRIBUTIONS.
(a) Distributions from the Fund, in satisfaction of a
full redemption or withdrawal, as the case may be, will be made, such that
Triarc, SCM or Xxxxxxx, as the case may be, receives, within three business days
of the effective redemption or withdrawal date, cash in an amount equal to at
least 95% of the estimated net asset value of the such entity's capital account
or shares in the Fund, as the case may be, on the effective redemption or
withdrawal date.
(b) The Fund will pay Triarc, SCM or Xxxxxxx, as the case
may be, interest on the balance of such entity's redemption or withdrawal, as
the case may be, from the effective redemption or withdrawal date to the date
such balance is actually paid, at a rate per annum equal to the average
(calculated weekly) annual 91 day Treasury Xxxx rate. The Fund will pay the
balance (subject to audit adjustments) and all of the accrued interest in cash
within five business days after completion of the Fund's monthly books.
(c) Distributions from the Fund in satisfaction of a
partial redemption or withdrawal, as the case may be, will be made such that
Triarc, SCM or Xxxxxxx, as the case may be, receives, within three business days
of the effective redemption or withdrawal date, cash in an amount equal to 100%
of the amount requested to be redeemed or withdrawn.
6. FEES. Notwithstanding the constituent documents of the Fund
(the "FUND AGREEMENT"), the management fee borne by each of Triarc, SCM and
Xxxxxxx on an annual basis shall be equal to 1.5% of such entity's capital
account balance in the Fund; PROVIDED, HOWEVER, that the management fee borne by
each of Triarc, SCM and Xxxxxxx for any amounts deposited in the Managed Account
on an annual basis shall be equal to 0.5% of such person's or entity's account
balance in the Managed Account.
7. RIGHT OF FIRST REFUSAL. Each of Triarc, SCM and Xxxxxxx may
have a right of first refusal on additional shares or interests offered by the
Fund. Any offering of shares or other interests in a vehicle (other than the
Fund) managed by DCM or an affiliate thereof with investment objectives and
guidelines substantially similar to those of the Fund will be deemed to be an
offering of the Fund.
8. ASSIGNMENT. Each of Triarc, SCM and Xxxxxxx may assign its
interests in the Fund to any affiliates without the consent of the Fund or DCM.
Triarc, SCM and Xxxxxxx, as the case may be, will have no obligation to pay any
redemption or withdrawal fee or penalty in connection with any such assignment.
For purposes of this Agreement, (a) affiliates of any entity (including SCM)
shall include any person who is an "affiliate" as defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended from time to time, (b) affiliates of an individual shall include (i)
members of such individual's Immediate Family (as defined in the Operating
Agreement), (ii) the heirs or legal representatives of any such deceased
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individual, and (iii) a trust, corporation, partnership or limited liability
company, all of the beneficial interests in which shall be held by such
individual or such individual's Immediate Family members or such deceased
individual's heirs or legal representatives, and (c) affiliates of SCM shall
also include any person who would be an affiliate of Xxxxxxx X. Xxxxx if he were
a party to this Agreement.
9. NOTICE. DCM will provide written notice to each of Triarc, SCM
and Xxxxxxx upon the occurrence of:
(a) any material amendment or modification to the Fund
Agreement;
(b) to the knowledge of DCM or any of its
representatives, the commencement with respect to the Fund of any tax audit, or
other investigations or proceedings with respect to taxes;
(c) a termination of the Fund's investment management,
administration or custodian agreements or a change in, or termination of, the
Fund's legal counsel, administrator, prime broker or auditor;
(d) to the knowledge of DCM or any of its
representatives, any investigation of the Fund, DCM or their principals by a
federal, state or regulatory body with authority over the Fund, DCM or their
principals;
(e) to the knowledge of DCM or any of its
representatives, any administrative, civil or criminal legal actions in which
the Fund, DCM or any of their principals are named a party or material witness,
or which may limit the Fund's ability to perform its duties;
(f) any material changes to investment strategies of the
Fund, any material changes to valuation policies relating to the Fund or any
material changes relating to soft dollar arrangements;
(g) any reduction of aggregate investments in the Fund by
any of the members, employees and principals of DCM by twenty percent (20%) or
more of their value as of the end of any calendar month;
(h) any substantial reduction from the date of the first
closing of the Fund of the time commitment of any of Xxxxxxx X. Xxxxx, Xxxxx X.
Xxxxxxx or Xxxxxxxx X. Xxxxxxx to the investments, business and operation of the
Fund; or
(i) any of the events specified in clause (ii) of Section
4(a) above.
If such notice is not provided to any of Triarc, SCM or
Xxxxxxx within 30 days, any redemption or withdrawal fees or penalties with
respect to such Person will be waived by the Fund.
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10. MOST FAVORED NATIONS. DCM hereby confirms and agrees that none
of the Fund, DCM or any of their respective affiliates has entered into any side
letter or similar agreement or arrangement with any other investor or
prospective investor in the Fund on or prior to the date hereof. If the Fund,
DCM or any of their respective affiliates shall in the future enter into any
side letter or similar agreement or arrangement with a proposed or existing
investor in the Fund (collectively, "SIDE Letters"), Triarc, SCM and Xxxxxxx
shall be promptly furnished with a copy of such Side Letters. DCM, on behalf of
the Fund, hereby agrees that Triarc, SCM and Xxxxxxx shall have the benefit of
any provision in any Side Letter with any investor in the Fund.
11. TAX REPORTING. DCM shall cause the Fund to be treated as a
partnership for U.S., state and local tax purposes and to prepare IRS. Form 1065
and Schedules K-1 (and related state and local filings) within 90 days of year
end.
12. SUBSEQUENT INVESTMENTS. The terms of the Investment by each of
Triarc, SCM and Xxxxxxx will also apply to any subsequent investments by Triarc,
SCM or Xxxxxxx, as the case may be, in the Fund.
13. INSURANCE. DCM shall cause the Fund to maintain with
financially sound and reputable insurers, insurance in amounts and against such
risks as are customarily maintained by reputable companies under similar
circumstances and shall furnish copies of such insurance upon written request by
Triarc, SCM or Xxxxxxx.
14. AMENDMENT; WAIVER. Any amendment, supplement or modification
of this Agreement or any waiver of the terms and conditions hereof shall not be
binding upon any party, unless approved in writing by each of the parties
hereto. Each party agrees that no failure or delay by another party to this
Agreement in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to applicable principles of conflict of laws (if as a result the
governing law of another jurisdiction would apply).
16. COUNTERPARTS. This Agreement may be executed in counterparts,
which, taken together, shall constitute a single original document.
17. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO, ON BEHALF OF
ITSELF AND EACH OF ITS AFFILIATES, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
18. THIRD PARTY BENEFICIARIES; ASSIGNMENT. This Agreement is not
intended to and does not confer upon any person other than the parties hereto
any rights, claims or remedies hereunder. Without the written consent of each
other party hereto,
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none of the parties hereto may assign any of its rights or delegate any of its
obligations under this Agreement, except that each of Triarc, SCM and Xxxxxxx
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any of its affiliates; PROVIDED, that, no
such assignment shall relieve Triarc, SCM and Xxxxxxx, as the case may be, of
any of its obligations under this Agreement. Any purported assignment or
delegation in violation of this provision shall be void.
19. ENTIRE AGREEMENT. This Agreement (including the Exhibits),
together with the Purchase Agreement, the Operating Agreement and the definitive
agreements related to the organization and management of the Fund, sets forth
the entire agreement and understanding among the parties relating to the subject
matter hereof and supersedes any prior agreement or understanding, whether
written or oral, relating to the subject matter hereof.
20. EFFECTIVENESS; TERMINATION. This Agreement shall not become
effective until the Closing has occurred. Upon a termination of the Purchase
Agreement pursuant to Article X of the Purchase Agreement, this Agreement shall
automatically be terminated and be of no force or effect without any of the
parties hereto being required to take any action.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto, each intending to be legally
bound hereby, have caused this Agreement to be executed as of the date first
above written.
TRIARC COMPANIES, INC.
By: /s/ Xxxxxx X. Garden
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Name: Xxxxxx X. Garden
Title: Executive Vice President
DEERFIELD CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Chairman & Chief Executive
Officer and Director
SACHS CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx, as Trustee
of the Xxxxxxx X. Xxxxx
Revocable Trust
Title: Member
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
