EXHIBIT 99.2
Term Sheet
AAMAC Stockholders Agreement
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Parties o Halcyon Management Inc. (as successor to Alternative
Asset Management Acquisition Corp., ("AAMAC")),
Halcyon Partners LP ("HPV") and Hanover Overseas
Limited, STC Investment Holdings LLC, Solar Capital,
and the HPV partners no longer hold any Exchangeable
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxx and Xxxxxxxxx
Xxxxxxx (together, the "Founders")
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Representations and o Representations by Founders regarding ownership of
Warranties their AAMAC warrants ("Sponsors' Warrants") and AAMAC
common stock ("Founders' Common Stock") held in
escrow pursuant to the terms of the Escrow Agreement
dated as of August 1, 2007 between AAMAC, the
Founders and the Continental Stock Transfer & Trust
Company (such agreement, the "Escrow Agreement") and
any shares of AAMAC common stock purchased after
signing of the Purchase Agreement
o Representations by HPV regarding ownership of
exchangeable B shares of Halcyon Management Group LLC
(such shares, the "Exchangeable Shares" and such
entity, "Halcyon")
o Representations by AAMAC that it has not extended
registration rights to any persons other than the
Founders.
o Other customary representations and warranties on
authority, no conflicts, etc.
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Transfer Restrictions
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Transfer Restrictions o Founders may not directly or indirectly transfer, or
on Founders publicly announce any intention to transfer (except
to Permitted Transferees - as defined in the Warrant
Agreement dated as of August 1, 2007 between AAMAC
and Continental Stock Transfer & Trust Company - who
agree to be bound by these transfer restrictions)
their Founders' Common Stock or their Founders
Performance Warrants (as such term is defined in the
Purchase Agreement), or any AAMAC common stock
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which is received pursuant to exercise of the
Founders Performance Warrants, for a period of one
year post-closing.
o The Sponsors' Warrants owned by Xxxx X. Xxxxx and by
Jakal Investments LLC, in the amounts of 355,750 and
712,000, respectively, and the AAMAC common stock
underlying such warrants, shall be restricted from
transfer for a period of one year post-closing.
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HPV Transfer o HPV shall include in its organizational documents the
Restrictions and transfer and individual vesting requirements in the
Individual Vesting form of the restrictions described on Schedule A.
o HPV shall not amend such sections of its organization
documents without the consent of AAMAC, as approved
by the independent directors of AAMAC.
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Investment of Cash Proceeds
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Investment of Cash o HPV's organizational documents shall require the HPV
Proceeds in Halcyon partners, except those which are estates or
Funds by HPV Partners testamentary trusts (or as otherwise contemplated by
the employment agreement term sheets with HPV
partners), to maintain an aggregate investment in
Halcyon Funds equal to (A) the after-tax cash
proceeds received at the Closing (not including any
proceeds resulting from third party financing) minus
any tax liability owed as a result of receipt of the
Seller Note, multiplied by (B) 75%, (the "Required
Amount"), until the third anniversary of the Closing
(the "Cash Lock-up Period").
o HPV's organizational documents will specify that,
during the Cash Lock-up Period, funds that constitute
the Required Amount will be subject to full
management fees and to the payment of 30% of
incentive fees (the latter of which will be allocable
exclusively to AAMAC). Pre-transaction capital
(including family investments) invested in Halcyon
Funds will count toward the Required Amount as long
as it is subject to the foregoing fee arrangements.
Amounts invested by Halcyon employees outside of
Required Amounts will continue to be invested on a
no-fee basis.
o HPV's organizational documents will specify that,
during the Cash Lock-up Period, HPV partners will be
permitted to withdraw net appreciation as well as
amounts needed to satisfy quarterly income tax
payments. HPV partners will be permitted to withdraw
the full amount upon death/disability or
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involuntary termination without cause or resignation
for good reason. Each HPV partner will determine the
allocation of the Required Amount among Halcyon Funds
but, with the exception of those partners who are
portfolio managers or directors of research for
actively managed hedge funds, absent compelling
reason, each partner will allocate at least 65% of
such HPV partner's Required Amount to the strategy
for which such HPV partner has primary
responsibility.
o HPV shall not amend such sections of its organization
documents without the consent of AAMAC, as approved
by the independent directors of AAMAC
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Voting
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Board Appointments o The parties agree that HPV shall be entitled to
designees on the Board of AAMAC as follows:
o If HPV holds more than 80% of the number of
Exchangeable Shares issued to HPV at the closing
of the acquisition (excluding for all purposes
Exchangeable Shares issued to persons who are not
members of Halcyon Employee Vehicle as of the
closing), it shall nominate individuals
designated by HPV such that HPV shall have the
greater of (A) 4 designees on the Board or (B)
designees representing as close to 50% of the
Board as possible without equaling or exceeding
50% of the Board.
o If HPV holds more than 60% and less than 80% of
the number of Exchangeable Shares issued to HPV
at the closing of the acquisition (excluding for
all purposes Exchangeable Shares issued to
persons who are not members of Halcyon Employee
Vehicle as of the closing), it shall nominate
individuals designated by HPV such that HPV shall
have the greater of (A) 3 designees on the Board
or (B) designees representing as close to 33% of
the Board as possible.
o If HPV holds more than 40% and less than 60% of
the number of Exchangeable Shares issued to HPV
at the closing of the acquisition (excluding for
all purposes Exchangeable Shares issued to
persons who are not members of Halcyon Employee
Vehicle as of the closing), it shall nominate
individuals designated by HPV such that HPV shall
have the greater of (A) 2
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designees on the Board or (B) designees
representing as close to 22% of the Board as
possible.
o If HPV holds more than 20% and less than 40% of
the number of Exchangeable Shares issued to HPV
at the closing of the acquisition (excluding for
all purposes Exchangeable Shares issued to
persons who are not members of Halcyon Employee
Vehicle as of the closing), it shall nominate
individual(s) designated by HPV such that HPV
shall have the greater of (A) 1 designee on the
Board or (B) designees representing as close to
11% of the Board as possible.
o Also, for the purposes of the thresholds immediately
above, shares of AAMAC common stock received upon
exchange of Exchangeable Shares and held by HPV
partners shall be included as if owned by HPV.
o In the event that any HPV designee shall cease to
serve as a director during the term of his office,
the resulting vacancy shall be filled by another HPV
designee.
o HPV shall be entitled to proportional representation
(with a minimum of one representative) on every
committee of the AAMAC Board (subject to law and
stock exchange regulation).
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Actions Requiring HPV o The parties agree that as long as HPV owns more than
Consent 40% of the number of Exchangeable Shares issued to
HPV at the closing of the acquisition (excluding for
all purposes Exchangeable Shares issued to persons
who are not members of Halcyon Employee Vehicle as of
the closing), AAMAC shall not authorize, approve or
ratify any of the following actions, with respect to
itself, Halcyon or any subsidiary of Halcyon, without
HPV's written consent:
o Any incurrence of indebtedness that would cause
aggregate indebtedness of AAMAC and its
subsidiaries to exceed the greater of $100
million and 10% of existing long-term
indebtedness;
o Any issuance by AAMAC in a transaction or series
of related transactions of equity securities or
options, warrants, or other securities
exercisable for or convertible into equity
securities that would represent, after such
issuance or upon conversion exchange or exercise
(as the case may be), at least 20% of the total
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voting power or economic value of AAMAC;
o Any investment in a Person or a group of related
Persons in an amount greater than $100 million;
o The adoption, amendment or redemption of a
shareholder rights plan;
o Any restructuring of Halcyon Asset Management
Group LLC ("Opco") or its subsidiaries, or the
addition of new affiliates;
o Any appointment of a replacement candidate for
CEO, Vice Chairman, COO, President, CIO, or
management committee of AAMAC;
o Any share repurchase by AAMAC subject to baskets
to be agreed before closing; and
o Any agreement to do any of the above
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Actions Requiring o If the AAMAC Board shall take any of the following
a 2/3 Vote of the actions, it shall do so only by a vote of 2/3 of the
AAMAC Board Board:
o termination or reduction in duties for CEO, Vice
Chairman, COO, President, CIO or management
committee members of AAMAC or its subsidiaries;
o any merger, consolidation, business combination
of AAMAC or its subsidiaries;
o any liquidation, dissolution or sale of a
material portion of the assets of AAMAC or its
subsidiaries;
o expansion of the size of the board;
o any share repurchase by XXXXX; and
o proposal of an amendment to the charter.
Additional items may be added to the list above (or
the list of consents in the preceding section) if
agreed by AAMAC and Halcyon Representative between
signing and closing.
o The Founders and AAMAC shall take such action as may
be required to amend the Bylaws of AAMAC to
incorporate the
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above consent and supermajority provisions effective
as of the closing.
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Registration Rights
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Founders and HPV o The Founders and HPV are entitled to certain
Registration Rights registration rights for their Founders' Common Stock,
Sponsors' Warrants, AAMAC common stock underlying
Sponsors' Warrants and Founders Performance Warrants,
AAMAC common stock or the AAMAC common stock
underlying Exchangeable Shares, respectively (the
"Registrable Securities"). This agreement shall
replace the Founders' existing Registration Rights
Agreement with AAMAC.
o Registration rights will accommodate the exchange
mechanism so that the HPV or the HPV partners will
not be required to effect the exchange before
registration becomes available for sales.
o All registration rights are subject to the provisions
regarding transfer restrictions, above.
o All expenses of the registered offerings pursuant to
exercise by the Founders or HPV of their registration
rights shall be paid by AAMAC (other than
underwriting discounts and commissions with respect
to underwritten offerings). In connection with each
Demand Registration and Piggyback Registration, AAMAC
shall reimburse the Founders and HPV for the
reasonable fees and disbursements of their counsel.
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Demand Rights o Availability: The Founders (as a group) and HPV,
acting either individually or together, may issue to
AAMAC a written request (a "Demand Notice") that
AAMAC effect the registration of all or any portion
of such party's Registrable Securities (a "Demand
Registration"). Demand Registration of the
Registrable Securities shall be available beginning
twelve months after the closing date (or on the
closing date in the case of the Sponsors' Warrants
and the AAMAC common stock underlying the Sponsors'
Warrants; and provided that the request for such
registration may be submitted at any time following
the ninth month following the closing date, without
accelerating AAMAC's obligation to effect a
registration statement before the 12 month period
above), and only if there is no shelf registration
statement in effect. During every twelve month
period, the Founders (as a group) shall be entitled
to one demand and HPV shall be entitled to two
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demands, provided that the Demand Notice relates to
Registrable Securities equal to or greater than
$5,000,000 in the aggregate (or $1,000,000 in the
case of a Demand Notice with respect to the Sponsors'
Warrants and the AAMAC Common Stock underlying the
Sponsors' Warrants) (the "Minimum Amount"). The right
to make demands shall be suspended at any time when a
shelf registration statement is available.
o Withdrawal: The demanding party may withdraw the
Demand Notice at any time prior to the effective date
of the registration statement filed in response to
such Demand Notice. AAMAC shall be responsible for
all expenses relating to Demand Registration.
o Postponement: Upon notice to the demanding party,
AAMAC may postpone effecting a Demand Registration on
one occasion during any period of six consecutive
months if AAMAC has determined in good faith that
effecting the registration would materially and
adversely affect AAMAC, provided that such
postponement shall be for the shortest possible
period of time determined in good faith by AAMAC but
not exceeding 30 days (which period may not be
extended or renewed).
o Registration Statement: AAMAC must file a
registration statement within 60 days of the Demand
Notice (except as noted in the first bullet above),
and must maintain the effectiveness of such statement
until all Registrable Securities to which the Demand
Notice relates are disposed, to a maximum of 180 days
(extended for any period during which a stop order,
injunction, etc. was in effect). The registration
statement shall be on such appropriate registration
form of the SEC as shall be selected by AAMAC,
subject to the consent of the HPV or the Founder.
o Underwriter: The demanding party may elect to have an
underwritten offering, and are entitled to select the
underwriter.
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Piggyback Rights o Availability: The Founders and HPV shall have
unlimited piggyback rights, provided that they shall
have no piggyback rights for Form S-8 or S-4
registrations (and successor forms).
o Notice: AAMAC shall give notice of an intended
registered offering to the Founders and HPV as soon
as practicable, but
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no less than 15 days prior to anticipated filing
date.
o Cutbacks: Cutbacks will be permitted in an
underwritten offering if the underwriter determines
in good faith that selling the number of shares
requested to be included in the offering would
materially and adversely affect AAMAC's ability to
sell the shares at the desired offering price. If the
offering is for AAMAC's account, then priority will
be given to the shares being sold by AAMAC, then to
the Founders and HPV (pro rata based on the number of
shares that each elects to include in the
registration), then to other holders of AAMAC shares.
If the offering is initiated for the account of AAMAC
shareholders other than Founders and HPV, priority
shall be to those shareholders, then to the Founders
and HPV (pro rata based on the number of shares that
each elects to include in the registration), then to
the shares being sold by AAMAC. If the offering is
initiated by HPV or the Founders pursuant to a Demand
Notice, then priority shall be to the demanding
party, then to the non-demanding party (i.e. HPV or
the Founders), then to shares being sold by AAMAC,
and then to other shareholders; provided that in the
case of a demand by either party with respect to
which the other party has exercised piggyback rights,
if the underwriter has determined there should be a
cutback, the party exercising piggyback rights may
convert its piggyback election to a demand, such that
the converting party and the demanding party will be
treated pro rata in such cutback (based on the number
of shares that each elects to include in the
registration); provided further that the conversion
of election shall be counted as a demand.
o Underwriting Terms: AAMAC to require underwriter to
include Registrable Securities in offering on same
terms and conditions as AAMAC shares.
o Withdrawal: The Founders and HPV may withdraw from a
piggyback registration at any time. AAMAC shall be
responsible for all expenses (other than underwriting
discounts and commission in the case of an
underwritten offering).
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Shelf Rights o Availability: Shelf registration rights shall be
available to the Founders (as a group) and HPV for
their Registrable Securities after such time as AAMAC
becomes S-3 eligible and no earlier than twelve
months after the closing date. The number and
frequency of takedown demands (a "Shelf Notice") to
which the Founders (as a group) and HPV are
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entitled shall be the same as the entitlement for
demand registrations. The Founders and HPV must
demand shelf registration for a number of Registrable
Securities equal to or greater than $5,000,000 (or
$1,000,000 in the case of a Shelf Notice with respect
to the Sponsors' Warrants and the AAMAC Common Stock
underlying the Sponsors' Warrants). Notwithstanding
the foregoing 12 month limitation, the Sponsors'
Warrants and the AAMAC common stock underlying the
Sponsors' Warrants shall be registrable on any
earlier shelf registration statement that AAMAC makes
available to holders of public warrants following
closing.
o Suspension: AAMAC may suspend the shelf registration
statement for a maximum of 60 days in succession or
120 days in aggregate in any 12 month period if it
would become necessary to disclose a financing,
acquisition, corporate reorganization or other
similar transaction or event, the disclosure of which
at such time would be materially detrimental to
AAMAC. The required term of the effective period of
the shelf shall be extended to account for the period
of time during which the shelf was suspended.
o Effectiveness: AAMAC must file a shelf registration
statement within 60 days of receipt of a Shelf
Notice, and must use reasonable best efforts to have
such statement declared effective within 90 days of
filing. The registration statement shall be kept
continuously effective.
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Other
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Charter and Bylaws o The parties shall take or cause to be taken all
lawful action necessary to ensure at all times as of
and following the Closing Date that the certificate
of incorporation and by-laws of AAMAC and Halcyon are
not inconsistent with the provisions of this
agreement or the transactions contemplated hereby.
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Termination o Agreement shall terminate on the date that (a) HPV
and the HPV partners no longer hold any Exchangeable
Shares or AAMAC Common Stock and (b) Founders no
longer hold any AAMAC Common Stock or AAMAC warrants.
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Schedule A
Exchangeable Shares held indirectly by the partners of HPV (the "HPV Units")
will vest, with respect to such partner, as follows:
1. 20% of each HPV partner's HPV Units (100% in the case of any HPV Units
resulting from a cash shortfall adjustment or the adjustment related to
price targets) will vest immediately, with the remainder to vest in equal
annual installments over the first five anniversaries of the Closing.
Unvested HPV Units shall vest in full upon death, disability, termination
without "cause," resignation for "good reason," a cessation of employment
at the end of the term of the employment agreement following a notice of
non-renewal by the employer (a "Non-Renewal"), or a change of control of
Opco (each, a "Qualifying Event"), provided that HPV will have the power
to decide that termination without "cause," resignation for "good reason,"
cessation of employment due to a Non-Renewal or change of control is not a
Qualifying Event in the case of a HPV partner other than the initial chief
executive officer. If HPV exercises such power, each HPV partner's
unvested HPV Units shall continue to vest in accordance with the vesting
schedule set forth above. Unvested HPV Units will be forfeited upon a
termination with "cause" or a resignation without "good reason" (as such
terms are defined in the HPV partners' employment agreements).
2. HPV Units, whether or not vested, are not transferable, subject to the
limited exceptions for certain permitted transferees described below.
3. Vested HPV Units can be exchanged for shares of AAMAC common stock, which
can be sold or otherwise transferred in accordance with applicable
securities laws, subject to the following two contractual restrictions
(which are not applicable to AAMAC shares representing any vested HPV Units
resulting from a cash shortfall adjustment, provided that such shares are
subject to certain transfer restrictions set forth in the Purchase
Agreement):
o Until the first anniversary of the Closing, each HPV partner
is not permitted to transfer AAMAC shares representing more
than 5% of his or her vested HPV Units. This prohibition
expires upon a Qualifying Event.
o Until the fifth anniversary of the Closing, each HPV partner
is not permitted to transfer AAMAC shares representing more
than 75% of his or her vested HPV Units. This prohibition
expires upon a Qualifying Event.
4. Vested and unvested HPV Units or AAMAC shares that are subject to the
foregoing restrictions may be transferred (without consideration) with the
consent of the management of HPV, not to be unreasonably withheld, to:
members of the family or charitable donees of each HPV partner, other
partners of HPV who are then actively engaged in Halcyon's business or
accounts beneficially owned by or for the benefit of the foregoing, as
long as such transferees are subject to the same vesting and transfer
restrictions that would have applied to the transferring HPV partner in
the absence of such transfer and will not have any governance rights.
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