THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Deerfield Triarc Capital Corp. (DFR)

4/21/2006 Proxy Information

Mr. Trutter is the Chief Investment Officer of Deerfield Capital Management LLC (DCM) and the Senior Managing Director responsible for DCM's Bank Loan Trading. Deerfield Triarc Capital Corp. has relations with Deerfield Capital Management LLC, Deerfield & Company LLC and Triarc Companies, Inc.

Mr. Smith had been Senior Vice President of Finance of Deerfield Capital Management LLC since January 2006. Deerfield Triarc Capital Corp. has relations with Deerfield Capital Management LLC, Deerfield & Company LLC and Triarc Companies, Inc.

Mr. Sachs serves as Chairman and Chief Executive Officer of Deerfield & Company LLC, or D&C, and the Manage of Deerfield Capital Management LLC. Deerfield Triarc Capital Corp. has relations with Deerfield Capital Management LLC, Deerfield & Company LLC and Triarc Companies, Inc.

Our related parties include our directors and executive officers as well as DCM, D&C and Triarc and their respective executive officers and directors. Upon completion of our December 2004 private offering, we entered into a management agreement with DCM, pursuant to which it conducts the day-to-day management of our operations. The management agreement requires DCM to manage our business affairs in conformity with the policies and the investment guidelines that are approved and monitored by our Board. Our chairman, chief executive officer, president, and general counsel also serve as officers or directors of DCM, D&C and/or Triarc, and our chief financial officer is also an employee of DCM. In addition, certain of our directors are directors or officers of D&C, DCM or Triarc. As a result, the management agreement was negotiated between related parties, and its terms, including fees payable, may not be as favorable to us as if they had had been negotiated with an unaffiliated third party.

In connection with our December 2004 private offering, we entered into a license agreement with D&C and Triarc, pursuant to which they each granted us a non-exclusive, royalty-free license to use their names.

Executive officers and directors of our company, DCM and Triarc collectively purchased 122,080 shares of our common stock in our December 2004 private offering. DCM also agreed to receive at least 15% of its incentive fee under our management agreement in shares of our common stock, subject to certain limitations in our management agreement and Charter, and generally not to transfer those shares before one year after the date they are paid. In addition, upon completion of our December 2004 private offering, we granted to DCM 403,847 shares of restricted stock and options to purchase 1,346,156 shares of our common stock with an exercise price of $15.00 per share. These shares and options vest or become exercisable in three equal annual installments. The first such installment vested or became exercisable on December 23, 2005. DCM has discretion to award these shares and options to its officers, employees and other individuals who provide services to it. As of March 31, 2006 no such awards had been made.

DCM's base management fee for the period ended December 31, 2005, was approximately $9.9 million. Amortization for the period of approximately $3.8 million related to the restricted stock and options granted to DCM was included in management fee expense to a related party in our consolidated statement of operations. As of December 31, 2005, DCM had earned an incentive fee of approximately $1.3 million and we paid DCM approximately $0.5 in expense reimbursements for the year ended 2005. At December 31, 2005, we were indebted to DCM for accrued but unpaid base management fees of approximately $1.1 million, accrued but unpaid incentive fees of approximately $1.3 million, and expense reimbursements of approximately $32,000. These amounts are included in the management fee payable and other payables, respectively.

A wholly-owned subsidiary of Triarc, Triarc Deerfield Holdings, LLC, purchased 1,000,000 shares of our common stock for $15 million in the December 2004 private offering, representing an ownership interest in the Company of 1.9% as of March 31, 2006. Certain members of the executive management team of DCM and its affiliates owned 281,594 shares of our common stock at March 31, 2006, representing an ownership percentage of 0.5% as of that date.

The Management Agreement

We have a management agreement with DCM expiring on December 31, 2007. It may be renewed for additional one-year periods. DCM performs portfolio management services on our behalf, including:

consulting with us on purchase and sale opportunities,

collecting information and submitting reports pertaining to our assets, interest rates, and general economic conditions, and

periodically reviewing and evaluating the performance of our portfolio of assets.

The Management Fee

Base Management Fee

We pay DCM a monthly base management fee equal to 1/12 of our equity times 1.75%.

Incentive Compensation

We also pay DCM quarterly incentive compensation equal to the product of: (a) 25% of the dollar amount by which (i) our net income (determined in accordance with GAAP) before non-cash equity compensation expense and incentive compensation, for the quarter per share of common stock (based on the weighted average number of shares of common stock outstanding for the quarter) exceeds (ii) an amount equal to (A) the weighted average of the price per share of the common stock in our December 2004 private offering and our June 2005 initial public offering, and the prices per share of common stock in any subsequent offerings by us, in each case at the time of issuance thereof, multiplied by (B) the greater of (1) 2.00% and (2) 0.50% plus one-fourth of the Ten Year Treasury Rate for such quarter, multiplied by (b) the weighted average number of shares of common stock outstanding during the quarter. This calculation is adjusted to exclude one-time events pursuant to changes in GAAP, as well as non-cash charges after discussion between DCM and our independent directors and approval by a majority of our independent directors in the case of non-cash charges. Fifteen percent of any such quarterly incentive compensation is to be paid in the form of shares of our common stock, based on a value per share determined by taking the average of the closing prices of the stock on the NYSE during the 30 days preceding the third day before the date on which the incentive compensation shares are issued.

Stock Options

In the interest of attracting and retaining our executive officers, employees, directors and other persons and entities that provide services to us, we adopted the 2004 Stock Incentive Plan, or Plan, which authorizes the issuance of options to purchase common stock and the grant of stock awards, performance shares and stock appreciation rights. Our Compensation Committee administers the Plan, which is designed to promote the success and enhance the value of the Company by linking the interests of those who provide services to us with the interests of our stockholders, and by providing those persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to us in our ability to motivate, attract and retain persons upon whose judgment, interest, and special efforts our successful operation is largely dependent.

Our Compensation Committee determines which officers, employees, and service providers will participate in the Plan and sets the terms of these persons' awards.

The Plan provides that the total number of shares of common stock available for issuance under the Plan may not exceed 2,692,313 shares. No awards may be granted under the Plan after December 16, 2014. The Board may amend or terminate the Plan at any time, but an amendment will not become effective without the approval of our stockholders if it increases the number of shares of common stock that may be issued under the Plan (other than changes to reflect certain corporate transactions and changes in capitalization as described above). No amendment or termination of the Plan will affect a participant's rights under outstanding awards without the participant's consent.

Restricted Stock and Option Grants

Upon completion of our December 2004 private offering, we granted DCM 403,847 shares of restricted stock and options to purchase 1,346,156 shares of our common stock with an exercise price of $15.00 per share, representing in the aggregate approximately 3.3% of the outstanding shares of our common stock as of March 31, 2006, assuming all outstanding options are exercised. These shares and options vest or become exercisable in three equal annual installments. The first installment vested or became exercisable on December 23, 2005. DCM has discretion to allocate these shares and options to its officers, employees and other individuals who provide services to it. As of March 31, 2006, no such awards had been made.

On May 24, 2005, we granted each of our independent directors 3,000 shares of restricted stock, which shares vested on the date of grant. On February 7, 2006, the Compensation Committee recommended and the Board approved the issuance of 2,500 shares of restricted stock to each independent director, such shares to be granted on May 23, 2006 and to be vested on the date of grant, and we intend to grant each independent director subsequent awards of 2,500 shares on an annual basis in future years, subject to recommendation by the Compensation Committee and approval by the Board.