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ITEM 1.01
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Entry into a Material Definitive Agreement
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Entry into Management Agreement with CIDM
II LLC
On January 21, 2022, the Company entered into a Management Agreement
(the “Management Agreement”) with CIDM II LLC (the “Manager”). Any capitalized terms not defined
herein shall have the meaning ascribed to them in the Management Agreement.
Scope of Management
Pursuant to the Management Agreement, the Manager
will, subject to the oversight of the Company’s Board of Directors (the “Board”) and the Investment Committee
of the Board and the parameters set forth in the Company’s investment policy (the “Investment Policy”), (i) provide
the Company with advisory services with respect to the management and allocation of the Assets (as defined therein) of the Company and
its subsidiaries and (ii) exercise discretionary management authority over the Company’s trading portfolio of publicly traded securities.
As a part of the Manager’s advisory services,
prior to the end of each quarter, the Manager will present a proposed allocation of Assets between the Company’s Portfolios (as
defined therein) for consideration and approval of the Asset Management Committee. The Manager will also assist and advise the Company
with respect to identifying potential businesses and assets for acquisition, along with performing due diligence, and with monitoring
and evaluating performance of the Assets.
In addition to its advisory services, the Manager
will have full management authority to manage the investment and reinvestment of publicly traded equity and debt securities held in the
Company’s trading portfolio (the “Trading Portfolio”), subject to the (i) limitations and guidelines set forth
in the Investment Policy, and any amendments thereto as approved by the Board and (ii) Company’s right to, upon notice, withdraw
some or all of the Assets of the Trading Portfolio or to assign all authority held by the Manager over the Trading Portfolio to the Company.
Term and Termination
The Management Agreement is effective as of January
21, 2022 and may be terminated by either party upon thirty days’ prior written notice.
Fees
The Manager will receive the following compensation
for performance under the Management Agreement:
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A management fee equal to 2% of the fair market value of the Assets.
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A performance fee in respect of each Performance Period shall be equal to 20% of the appreciation of end-of-year net asset value. The Performance Fee shall be calculated as of the end of each Performance Period and payable no later than 90 days after the end of the Performance Period.
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The Management Fee and Performance Fee shall be
paid through the issuance of stock appreciation rights (“SAR”) of the Company’s common stock resulting in no
cash payment to the Manager unless and until there are certain qualifying changes of control (which does not include any change of control
related to the stock ownership of the Manager or its affiliates) as contemplated in an exhibit to the Management Agreement.
The Manager is also entitled to payment or reimbursement
of certain administrative costs and expenses incurred in connection with the management of the Assets, such as custodial fees, brokerage
commissions and similar fees and expenses. The Manager shall be responsible for all of its operating expenses.
Indemnification
The Manager is obligated to indemnify the Company
and its affiliates from any and all losses, claims, demands, actions or liabilities, including attorney’s fees, related to acts
or omissions of the Manager that constitute bad faith, fraud, willful misconduct, negligence, breach of the Management Agreement or fiduciary
duty, or violation of applicable law. The Company is obligated to indemnify the Manager from liabilities, obligations, losses, damages,
suits and expenses related to the Company’s material breach of the Management Agreement. The Management Agreement is subject to
various covenants and representations of the Manager and the Company.
Related Party Transaction
The Manager is an entity managed and owned by
Julian Singer, a former member of the Company’s Board of Directors. Under the Management Agreement, Mr. Singer is defined as
a “Key Person” who will devote substantially all of his time to performing under the Management Agreement on behalf of the
Manager. Mr. Singer has broad experience as a trader and analyst, particularly in the mergers and acquisitions area, and the Management
Agreement acknowledges that the Company is relying on his relevant expertise for performance under the Management Agreement.
Standstill
During the term of the Management Agreement, the
Manager will be subject to certain standstill restrictions, including, but not limited to, restrictions on the Manager’s engagement
in the solicitation of proxies or stockholder proposals with respect to the Company.
The foregoing description of the Management Agreement
is qualified in its entirety by the full text of such agreement, a copy of which is furnished as Exhibit 10.1 hereto and incorporated
herein by reference.
