THE COMPANIES ACT (AS REVISED)

THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
DRIFTWOOD CLO 2023-I, LTD.
Registration Number: EX-382916
Exempted Company Incorporated with Limited Liability
Prepared by:
Applegategate Offshore Services Ltd. Windward House, 4th Floor George Town, Grand Cayman KY1-1306 Cayman Islands
In coordination with:
Calderwood & Harkness LLP 450 Park Avenue New York, NY 10022
Adopted on or about the date of incorporation (prior to August 20, 2023)
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PART I
MEMORANDUM OF ASSOCIATION
OF
DRIFTWOOD CLO 2023-I, LTD.
(Adopted on or about the date of incorporation)
1. NAME
1.1 The name of the Company is Driftwood CLO 2023-I, Ltd. (hereinafter referred to as the "Company").
1.2 The Company is an exempted company incorporated with limited liability under the provisions of the Companies Act (as revised) of the Cayman Islands (the "Act"). The Company is registered with the Registrar of Companies of the Cayman Islands under Registration Number EX-382916.
1.3 The Company is formed and shall exist as a separate legal entity distinct from its members, directors, officers, agents, and affiliates.
2. REGISTERED OFFICE
2.1 The registered office of the Company shall be situate at PO Box 4927, Windward House, 3rd Floor, George Town, Grand Cayman KY1-1306, Cayman Islands, or at such other place in the Cayman Islands as the Directors may from time to time determine in accordance with the Act.
2.2 The Company shall maintain a registered office in the Cayman Islands at all times as required by the Act. Notice of any change in the address of the registered office shall be filed with the Registrar of Companies within the time period prescribed by the Act.
3. OBJECTS
3.1 The objects for which the Company is established are unrestricted, and the Company shall have full power and authority to carry out any object not prohibited by the Act or any other law of the Cayman Islands.
3.2 Without limiting the generality of the foregoing, the Company is established for the following principal purposes:
(a) To act as issuer and co-issuer of secured and subordinated notes (the "Notes") and other debt obligations in connection with a collateralized loan obligation transaction known as Driftwood CLO 2023-I, as more fully described in the Indenture and the other Transaction Documents (each as defined in the Articles of Association).
(b) To acquire, hold, manage, administer, sell, transfer, pledge, and otherwise deal with a portfolio of broadly syndicated first-lien senior secured leveraged loans, loan participations, and related collateral obligations (the "Collateral Portfolio"), and to receive and apply income and proceeds therefrom in accordance with the priority of payments waterfall established by the Indenture.
(c) To enter into an indenture, collateral management agreement, collateral administration agreement, co-issuance agreement, placement agreement, warehouse facility agreements and related take-out documentation, and any other agreements incidental to the foregoing, all on such terms and conditions as the Directors shall approve.
(d) To grant security interests in and pledge the Company's assets to secure the Notes issued under an indenture governed by the laws of the State of New York, including without limitation, to grant a first priority perfected security interest in all of the Company's right, title, and interest in the Collateral Portfolio and all proceeds thereof in favor of the Trustee (as defined herein) for the benefit of the holders of the Notes.
(e) To open, maintain, and operate bank accounts, securities accounts, and custody accounts with Ironclad Trust Company, N.A. (in its capacities as trustee, paying agent, note registrar, custodian, and collateral administrator), Havenwood Bank, N.A. (as account bank), and any other financial institution as the Directors may deem necessary or appropriate in furtherance of the Company's business.
(f) To engage Driftwood Credit Management LLC (SEC CRD #182447), a Delaware limited liability company and registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended, as collateral manager for the Collateral Portfolio, on such terms and conditions as are set forth in the Collateral Management Agreement and as the Directors may approve.
(g) To borrow money and issue notes, bonds, debentures, or other instruments of indebtedness, whether secured or unsecured, and to secure any such obligations by mortgage, pledge, or charge upon any or all of the Company's assets, in each case only as permitted by the Indenture and the Transaction Documents.
(h) To register with the Cayman Islands Tax Information Authority as a Reporting Foreign Financial Institution for purposes of compliance with the U.S. Foreign Account Tax Compliance Act ("FATCA") and the OECD Common Reporting Standard ("CRS"), and to provide all information and filings required thereunder.
(i) To do all such other acts and things as are incidental or conducive to the attainment of the above objects or any of them, including without limitation, the execution and delivery of all instruments, certificates, notices, consents, and other documents as may be necessary or desirable in connection therewith.
3.3 Nothing in this Clause 3 shall be construed as restricting the generality of any object or power set forth in any other clause of this Memorandum or in the Articles of Association, and each object and power shall be construed independently and shall in no way be limited by reference to or inference from any other object, power, or clause herein.
4. POWERS
4.1 Subject to the Act and any other applicable Cayman Islands law, the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as though the Company were a natural person.
4.2 Without prejudice to the generality of the foregoing, and subject to the Act and these presents, the Company shall have the power to:
(a) Issue up to US$400,000,000 (four hundred million United States dollars) in aggregate principal amount of Notes in multiple tranches, including secured notes rated by one or more nationally recognized statistical rating organizations and subordinated notes which are unrated, offered and sold pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers and non-U.S. persons in offshore transactions, respectively.
(b) Enter into the Indenture dated August 22, 2023 with Ironclad Trust Company, N.A. as Trustee and Driftwood CLO 2023-I, LLC as Co-Issuer, as supplemented by the First Supplemental Indenture dated September 8, 2023 (and any further supplements, amendments, or restatements thereof), governing the terms and conditions of the Notes, the Collateral Portfolio, the priority of payments, the security interests, and all related matters.
(c) Appoint and engage agents, trustees, counsel (including Applegategate Offshore Services Ltd. as Cayman Islands counsel and Calderwood & Harkness LLP as U.S. counsel to the Company), auditors (including Greystone Audit Partners LLP as independent auditors), rating agencies, placement agents, administrators, custodians, account banks, and other advisors and service providers as the Directors may determine to be necessary or desirable in connection with the Company's business and affairs.
(d) Carry on business and exercise any or all of its powers in any jurisdiction outside the Cayman Islands, to the extent not prohibited by the laws of such jurisdiction, including without limitation, in the United States, the United Kingdom, and any other jurisdiction where the Collateral Portfolio assets or transaction counterparties may be located.
4.3 The enumeration of specific powers in this Clause 4 shall not be construed as limiting in any way the general powers conferred on the Company by the Act or by any other provision of this Memorandum.
5. LIMITED LIABILITY
5.1 The liability of each member of the Company is limited to the amount, if any, unpaid on such member's shares in the Company.
5.2 No member shall be liable, solely by reason of being a member, for any debt, obligation, or liability of the Company, whether arising in contract, tort, or otherwise, beyond the amount described in Clause 5.1 above.
6. AUTHORIZED SHARE CAPITAL
6.1 The authorized share capital of the Company is US$50,000 (fifty thousand United States dollars) divided into 50,000 ordinary shares of a par value of US$1.00 each (the "Shares").
6.2 The Company may issue shares with or without a par value of any amount, subject to the provisions of the Act and these presents. Shares may be issued for such consideration, in such form, and on such terms as the Directors may determine.
6.3 All issued and outstanding shares of the Company shall be held by Driftwood Absolute Return Fund Ltd. (the "Parent"), an exempted company incorporated with limited liability under the laws of the Cayman Islands, CIMA Registration No. MC-2017-02834, with its registered office at PO Box 4927, Windward House, 3rd Floor, George Town, Grand Cayman KY1-1306, Cayman Islands, and its principal office at 200 Brickell Avenue, Suite 3100, Miami, Florida 33131, United States of America, or the Parent's permitted assigns as contemplated by the Transaction Documents.
6.4 The Company shall not issue bearer shares. All Shares shall be issued in registered form.
6.5 The rights and privileges attaching to the Shares shall be as set forth in the Articles of Association and shall be subject to the restrictions and limitations imposed by the Indenture and the other Transaction Documents.
7. AMENDMENT OF MEMORANDUM AND ARTICLES
7.1 The Company may, by Special Resolution (as defined in the Articles of Association), alter or amend this Memorandum of Association or the Articles of Association, subject to any restrictions imposed by the Indenture, the Note Purchase Agreement, or any other Transaction Document.
7.2 No amendment or alteration to this Memorandum or the Articles of Association shall be effective if such amendment or alteration is inconsistent with the terms of the Indenture or any other Transaction Document, unless such amendment or alteration has received the prior written consent of the Trustee acting at the direction of the requisite percentage of noteholders as specified in the Indenture.
7.3 Without limiting the generality of the foregoing, no amendment to this Memorandum or the Articles shall modify, impair, or otherwise adversely affect the rights of the holders of the Notes or the security interests granted under the Indenture without the consent required under the Indenture.
8. DEFINITIONS AND INTERPRETATION
8.1 Unless otherwise defined herein, capitalized terms used in this Memorandum shall have the meanings ascribed to them in the Articles of Association of the Company.
8.2 Words and expressions defined in the Act shall, unless the context otherwise requires, bear the same meanings in this Memorandum.
8.3 In this Memorandum, unless the context otherwise requires:
(a) words importing the singular shall include the plural and vice versa;
(b) words importing any gender shall include all genders;
(c) references to persons shall include bodies corporate, partnerships, and unincorporated associations;
(d) references to statutory provisions shall be construed as references to those provisions as amended, consolidated, re-enacted, or replaced from time to time; and
(e) headings and captions are inserted for convenience of reference only and shall not affect the construction or interpretation of this Memorandum.
PART II
ARTICLES OF ASSOCIATION
OF
DRIFTWOOD CLO 2023-I, LTD.
(Adopted on or about the date of incorporation)
ARTICLE 1 — INTERPRETATION AND DEFINITIONS
1.1 Definitions.  In these Articles, unless the context otherwise requires, the following terms shall have the meanings set forth below:
"Act" means the Companies Act (as revised) of the Cayman Islands, as the same may be amended, supplemented, or replaced from time to time.
"Articles" means these Articles of Association of the Company, as amended from time to time in accordance herewith.
"Board" or "Directors" means the board of directors of the Company as constituted from time to time in accordance with these Articles.
"Class A-1 Notes" means the US$256,000,000 aggregate principal amount of Class A-1 Secured Floating Rate Notes due October 15, 2036, issued by the Company and the Co-Issuer under the Indenture, bearing interest at a floating rate equal to Compounded SOFR (as defined in the Indenture) plus a specified margin, and identified as follows: CUSIP (144A): 26738TAA5; CUSIP (Reg S): G2694LAA7; ISIN (144A): US26738TAA51.
"Class A-2 Notes" means the US$40,000,000 aggregate principal amount of Class A-2 Secured Floating Rate Notes due October 15, 2036, issued by the Company and the Co-Issuer under the Indenture, bearing interest at a floating rate equal to Compounded SOFR plus 190 basis points per annum, and identified as follows: CUSIP (144A): 26738TAB3.
"Class B Notes" means the US$28,000,000 aggregate principal amount of Class B Secured Deferrable Floating Rate Notes due October 15, 2036, issued by the Company and the Co-Issuer under the Indenture, and identified as follows: CUSIP (144A): 26738TAC1.
"Class C Notes" means the US$24,000,000 aggregate principal amount of Class C Secured Deferrable Floating Rate Notes due October 15, 2036, issued by the Company and the Co-Issuer under the Indenture, and identified as follows: CUSIP (144A): 26738TAD9.
"Class D Notes" means the US$16,000,000 aggregate principal amount of Class D Secured Deferrable Floating Rate Notes due October 15, 2036, issued by the Company and the Co-Issuer under the Indenture, and identified as follows: CUSIP (144A): 26738TAE7.
"Closing Date" means September 12, 2023, being the date on which the Notes were issued and the Collateral Portfolio was acquired by the Company in accordance with the Indenture and the other Transaction Documents.
"Co-Issuer" means Driftwood CLO 2023-I, LLC, a Delaware limited liability company (Delaware Division of Corporations File No. 7429831), with its registered agent at National Registered Agents Inc., 1209 Orange Street, Wilmington, Delaware 19801, United States of America, formed for the sole purpose of co-issuing the Notes with the Company under the Indenture.
"Collateral Manager" means Driftwood Credit Management LLC, a Delaware limited liability company (SEC CRD #182447), registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended, appointed as collateral manager for the Collateral Portfolio pursuant to the Collateral Management Agreement.
"Collateral Management Agreement" means the Collateral Management Agreement dated August 22, 2023, between the Company and the Collateral Manager, as amended, supplemented, or restated from time to time.
"Collateral Portfolio" means the portfolio of broadly syndicated first-lien senior secured leveraged loans, loan participations, and related collateral obligations acquired and held by the Company from time to time in accordance with the Indenture and the Collateral Management Agreement.
"Company" means Driftwood CLO 2023-I, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, Registration Number EX-382916.
"Controlling Class" has the meaning assigned thereto in the Indenture.
"Indenture" means the Indenture dated August 22, 2023, among the Company, the Co-Issuer, and the Trustee, as supplemented by the First Supplemental Indenture dated September 8, 2023, and as further supplemented, amended, or restated from time to time in accordance with its terms.
"Member" means a registered holder of Shares as shown in the register of members of the Company.
"Memorandum" means the Memorandum of Association of the Company as set forth in Part I hereof, as amended from time to time.
"Notes" means, collectively, the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, and the Subordinated Notes, together with any additional notes issued under the Indenture in accordance with its terms.
"Ordinary Resolution" means a resolution passed by a simple majority of the votes cast by Members entitled to vote who are present in person or by proxy at a general meeting of the Company at which a quorum is present, or a resolution approved in writing by Members holding a simple majority of the issued Shares.
"Parent" means Driftwood Absolute Return Fund Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, CIMA Registration No. MC-2017-02834, with its registered office at PO Box 4927, Windward House, 3rd Floor, George Town, Grand Cayman KY1-1306, Cayman Islands, and its principal office at 200 Brickell Avenue, Suite 3100, Miami, Florida 33131, United States of America.
"Shares" means the ordinary shares of US$1.00 par value each in the capital of the Company.
"Special Resolution" means a resolution passed by two-thirds or more of the votes cast by Members entitled to vote who are present in person or by proxy at a general meeting of the Company at which a quorum is present, or a unanimous written resolution signed by all Members entitled to vote thereon.
"Stated Maturity" means October 15, 2036, being the final stated maturity date of the Notes as set forth in the Indenture.
"Subordinated Notes" means the US$36,000,000 aggregate principal amount of Subordinated Notes issued by the Company and the Co-Issuer under the Indenture, which are unrated and are subordinated in right of payment to all classes of rated Notes, and identified as follows: CUSIP (144A): 26738TAF4.
"Transaction Documents" means the Indenture, the Collateral Management Agreement, the Collateral Administration Agreement, the Co-Issuance Agreement, the Note Purchase Agreement dated September 8, 2023, and each other agreement, instrument, certificate, or document entered into by or on behalf of the Company in connection with the issuance of the Notes or the acquisition and management of the Collateral Portfolio, as any of the foregoing may be amended, supplemented, or restated from time to time.
"Trustee" means Ironclad Trust Company, N.A., a national banking association organized under the laws of the United States of America, with its principal corporate trust office at 100 Wall Street, Suite 1650, New York, New York 10005, acting in its capacities as trustee, paying agent, note registrar, custodian, and collateral administrator under the Indenture and the Collateral Administration Agreement, and its successors and assigns in such capacities.
1.2 Interpretation.  1.2.1 In these Articles, unless the context otherwise requires:
(a) words importing the singular shall include the plural and vice versa;
(b) words importing any gender shall include all genders;
(c) references to persons shall include bodies corporate, partnerships, unincorporated associations, trusts, and other entities, whether or not having a separate legal personality;
(d) references to statutory provisions shall be construed as references to those provisions as amended, re-enacted, consolidated, or replaced from time to time, and shall include any subordinate legislation, regulations, or orders made thereunder;
(e) references to "writing" shall include any method of reproducing words in a legible and non-transitory form, including electronic communication, unless expressly stated otherwise;
(f) references to "dollars" or "US$" shall mean the lawful currency of the United States of America; and
(g) any reference to a document being "in the agreed form" means in the form agreed between the relevant parties thereto and initialed or otherwise identified by or on behalf of such parties for the purpose of identification.
1.2.2 In the event of a conflict between these Articles and the Indenture or any other Transaction Document, the terms of the Indenture or such Transaction Document shall prevail to the extent permitted by applicable law. It is the express intention of the Members and the Directors that these Articles be construed, to the greatest extent possible, consistently with the Indenture and the other Transaction Documents.
1.2.3 Headings and captions in these Articles are inserted for convenience of reference only and shall not affect the construction or interpretation of any provision hereof.
1.2.4 References to "Clauses" or "Articles" shall, unless the context otherwise requires, be references to clauses or articles of these Articles.
ARTICLE 2 — SHARES
2.1 Issuance and Allotment of Shares
2.1.1 Subject to the provisions of the Act, the Memorandum, and these Articles, the Directors may issue, allot, and dispose of Shares at such times, to such persons, in such manner, for such consideration, and on such terms and conditions as they think proper.
2.1.2 All Shares shall be issued fully paid. No partly paid Shares shall be allotted or issued.
2.1.3 No Share may be issued or transferred to any person other than the Parent or a wholly owned subsidiary of the Parent without the prior written consent of the Trustee acting at the direction of a majority of the Controlling Class of noteholders under the Indenture. Any purported issuance or transfer in contravention of this Article 2.1.3 shall be null and void and of no force or effect, and the Company shall not register any such issuance or transfer on its register of members.
2.1.4 The Company shall maintain a register of members in accordance with the requirements of the Act, and entry of the name of any person in the register of members as a holder of Shares shall constitute prima facie evidence of such person's title to such Shares.
2.2 Share Certificates
2.2.1 Share certificates shall be issued in such form as the Directors may from time to time determine. The form of share certificate set forth in Schedule A hereto shall be the initial form of share certificate adopted by the Company.
2.2.2 Each Member shall be entitled to one certificate for all Shares registered in such Member's name, or to several certificates, each for one or more of such Shares, upon payment for every certificate after the first of such reasonable charges as the Directors may from time to time determine.
2.2.3 Every share certificate shall be signed by one or more Directors or by such other person or persons as the Directors may authorize for such purpose, and may bear the common seal of the Company (if any) or a facsimile thereof.
2.2.4 If a share certificate is lost, worn out, damaged, or destroyed, a replacement certificate may be issued on such terms and subject to such conditions (including requirements for indemnity and payment of expenses) as the Directors may determine.
2.3 Transfer of Shares
2.3.1 Transfers of Shares shall be effected by an instrument of transfer in such form as the Directors may from time to time approve, executed by or on behalf of the transferor and, if required by the Directors, also by or on behalf of the transferee.
2.3.2 No transfer of Shares shall be registered unless and until the transferee has provided such certifications, representations, warranties, and agreements as the Directors may reasonably require, including with respect to:
(a) compliance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the "Code");
(b) compliance with FATCA and the CRS, including the provision of applicable tax forms, certifications, and taxpayer identification numbers;
(c) compliance with applicable anti-money laundering and "know your customer" regulations of the Cayman Islands, the United States, and any other relevant jurisdiction;
(d) compliance with all applicable transfer restrictions set forth in the Transaction Documents; and
(e) such other regulatory, tax, and legal compliance matters as the Directors may reasonably deem necessary or appropriate.
2.3.3 The Directors may, in their absolute discretion, decline to register any transfer of Shares if such transfer would, in the opinion of the Directors, result in a violation of applicable law, the Indenture, or any other Transaction Document.
2.3.4 Transfers of Shares shall be subject to any applicable restrictions set forth in the Transaction Documents, and no transfer shall be effected if such transfer would cause the Company to be treated as a publicly traded partnership for U.S. federal income tax purposes or would otherwise adversely affect the tax treatment of the Company or the Notes.
2.4 Lien on Shares
2.4.1 The Company shall have a first and paramount lien on every Share (not being a fully paid Share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such Share. As all Shares are to be issued fully paid pursuant to Article 2.1.2, this provision is included for completeness only.
2.4.2 The Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article 2.4.
2.5 Redemption and Repurchase of Shares
2.5.1 The Company may redeem or repurchase any or all of its Shares, subject to and in accordance with the provisions of the Act and the restrictions and conditions set forth in the Indenture and the other Transaction Documents.
2.5.2 No redemption or repurchase of Shares shall be effected if such redemption or repurchase would result in a breach of any covenant, condition, or obligation of the Company under the Indenture or any other Transaction Document, or if any Event of Default (as defined in the Indenture) has occurred and is continuing.
2.5.3 Any Shares redeemed or repurchased by the Company shall, at the option of the Directors, either be cancelled or held as treasury shares, subject to the provisions of the Act.
ARTICLE 3 — GENERAL MEETINGS
3.1 Annual General Meeting
3.1.1 The Company may, but shall not be required to, hold an annual general meeting in each calendar year. The Directors shall determine whether an annual general meeting is to be held, and if so, the time and place of such meeting. The Company expressly avails itself of the exemption from the requirement to hold annual general meetings available to exempted companies under the Act.
3.2 Extraordinary General Meetings
3.2.1 The Directors may convene an extraordinary general meeting of the Company at any time and for any purpose.
3.2.2 Members holding not less than one-third of the issued and outstanding Shares carrying the right to vote at general meetings may requisition the Directors to convene an extraordinary general meeting by depositing at the registered office of the Company a signed written requisition specifying the objects of the meeting. If the Directors do not convene such meeting within twenty-one (21) days from the date of deposit of the requisition, the requisitionists themselves may convene such meeting in accordance with the Act.
3.3 Notice of General Meetings
3.3.1 At least five (5) clear days' notice in writing shall be given of any general meeting of the Company, whether annual or extraordinary.
3.3.2 Every notice of a general meeting shall specify:
(a) the place, date, and time of the meeting;
(b) the general nature of the business to be transacted at the meeting;
(c) if a Special Resolution is to be proposed, the text or substance of such resolution; and
(d) any other information required by the Act or these Articles.
3.3.3 The accidental omission to give notice of a meeting, or the non-receipt of such notice by any Member entitled to receive notice, shall not invalidate the proceedings at such meeting.
3.3.4 A general meeting may be held on shorter notice than that specified in Article 3.3.1 if the Members holding not less than ninety percent (90%) in par value of the issued Shares entitled to attend and vote at the meeting consent to shorter notice.
3.4 Quorum.  3.4.1 One (1) Member present in person or by proxy and entitled to vote shall constitute a quorum for a general meeting of the Company.
3.4.2 If a quorum is not present within thirty (30) minutes from the time appointed for the meeting, the meeting shall stand adjourned to such day and at such time and place as the Directors may determine. At such adjourned meeting, any Member present in person or by proxy shall constitute a quorum.
3.5 Voting.  3.5.1 On a show of hands, each Member present in person or by proxy shall have one (1) vote.
3.5.2 On a poll, each Member shall have one (1) vote for each Share held by such Member.
3.5.3 A poll may be demanded by any Member present in person or by proxy at the meeting.
3.5.4 Unless a poll is demanded, a declaration by the chairman of the meeting that a resolution has been carried or lost, and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the fact without proof of the number or proportion of votes in favor of or against such resolution.
3.5.5 In the case of joint holders of Shares, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the register of members.
3.6 Written Resolutions
3.6.1 A resolution in writing signed by all Members entitled to vote thereon (or their duly appointed proxies or authorized representatives) shall be as valid and effective as if such resolution had been passed at a general meeting of the Company duly convened and held, and may consist of several documents in like form each signed by one or more Members.
3.6.2 Given the single-member structure of the Company (with the Parent as the sole Member), written resolutions shall be the expected and ordinary method of passing resolutions of the Members.
3.7 Proxies.  3.7.1 A Member may appoint another person (whether or not a Member of the Company) as such Member's proxy to attend and vote at any general meeting of the Company.
3.7.2 The instrument appointing a proxy shall be in writing under the hand of the appointor or of such appointor's attorney duly authorized in writing, or, if the appointor is a body corporate, either under its common seal or under the hand of a duly authorized officer or attorney.
3.7.3 The instrument appointing a proxy, together with the power of attorney or other authority (if any) under which it is signed, shall be deposited at the registered office of the Company or at such other place as specified in the notice convening the meeting, at least forty-eight (48) hours before the time appointed for holding the meeting at which the proxy proposes to vote, or at such shorter time as the Directors may determine.
ARTICLE 4 — DIRECTORS
4.1 Number and Appointment of Directors
4.1.1 The Company shall have no fewer than one (1) and no more than five (5) Directors at any time.
4.1.2 The first Directors of the Company shall be appointed by the subscriber to the Memorandum of Association.
4.1.3 Subsequent Directors may be appointed by Ordinary Resolution of the Members in general meeting, or by the remaining Directors to fill a casual vacancy or as an addition to the Board, provided that the total number of Directors shall not exceed the maximum set forth in Article 4.1.1.
4.1.4 The appointment of any Director shall be subject to compliance with the requirements of the Transaction Documents, including any approval, consent, or notification requirements set forth in the Indenture.
4.2 Qualification.  4.2.1 A Director need not be a Member of the Company.
4.2.2 A Director may be a natural person or a body corporate. In the case of a corporate Director, such body corporate shall act through a duly authorized representative who shall be a natural person.
4.2.3 There are no share qualification requirements for Directors.
4.3 Removal of Directors
4.3.1 A Director may be removed from office at any time, with or without cause, by Ordinary Resolution of the Members, provided that such removal is consistent with any applicable restrictions or requirements set forth in the Transaction Documents.
4.3.2 Notwithstanding Article 4.3.1, any removal of a Director shall not take effect until a successor Director has been appointed (if required to maintain the minimum number of Directors) or the remaining Directors have confirmed that the business of the Company can be continued with the remaining number of Directors.
4.4 Resignation.  4.4.1 A Director may resign from office at any time by giving written notice to the Company at its registered office. Such resignation shall take effect at the time the notice is received by the Company or at such later time as may be specified in the notice.
4.4.2 A Director who resigns shall remain liable for any acts or omissions occurring prior to the effective date of such resignation.
4.5 Remuneration.  4.5.1 Directors shall be entitled to such remuneration (if any) as may be determined from time to time by Ordinary Resolution of the Members or by the Board, subject to any limitations or restrictions set forth in the Indenture or other Transaction Documents.
4.5.2 Directors shall be entitled to reimbursement of all reasonable out-of-pocket expenses incurred in connection with the performance of their duties as Directors, including travel, accommodation, and other business-related expenses, subject to such policies and procedures as the Board may establish.
4.6 Conflicts of Interest
4.6.1 A Director who has a direct or indirect material interest in any transaction, arrangement, or contract with the Company (whether actual or proposed) shall disclose the nature and extent of such interest to the Board at the earliest opportunity, and in any event before the Company enters into the transaction, arrangement, or contract in question.
4.6.2 Subject to compliance with the disclosure obligation set forth in Article 4.6.1, a Director who has an interest in any matter being considered by the Board may:
(a) vote on any resolution relating to such matter;
(b) be counted in the quorum at any meeting at which such matter is considered; and
(c) retain any benefit received by reason of such interest,
unless the Board, by resolution, determines otherwise in a particular case.
4.6.3 Without limiting the generality of the foregoing, it is acknowledged that Marcus Sorensen (Founder and Chief Investment Officer of Driftwood Absolute Return Fund Ltd. and principal of the Collateral Manager) and David Hwan (Managing Director, Structured Credit, Driftwood / DCM) may serve as Directors of the Company, and their respective affiliated roles with the Parent, the Collateral Manager, and their respective affiliates are hereby acknowledged and consented to by the Members. No transaction or arrangement between the Company and the Collateral Manager, the Parent, or any affiliate thereof shall be voidable solely by reason of such affiliation, provided that the terms of such transaction or arrangement are set forth in the Transaction Documents or are otherwise approved by the Board in accordance with these Articles.
4.7 Directors' Indemnification
4.7.1 Subject to the provisions of the Act and the Indenture, the Company shall indemnify and hold harmless each Director and former Director of the Company against all liabilities, losses, damages, costs, charges, and expenses (including, without limitation, legal fees and costs of investigation) incurred or sustained by such Director in connection with the execution of such Director's duties or the exercise of such Director's powers, including without limitation any liability incurred in defending any proceedings (whether civil, criminal, administrative, or investigative) in which such Director is made a party by reason of being or having been a Director of the Company.
4.7.2 The indemnification provided by Article 4.7.1 shall not extend to any liability arising from fraud, willful default, or dishonesty on the part of the Director seeking indemnification, as determined by a court of competent jurisdiction in a final, non-appealable judgment.
4.7.3 The Company may purchase and maintain insurance for the benefit of any Director against any liability incurred by such Director in connection with the performance of duties as a Director, to the extent permitted by the Act and the Transaction Documents.
ARTICLE 5 — POWERS AND DUTIES OF DIRECTORS
5.1 General Powers
5.1.1 The business and affairs of the Company shall be managed by and under the direction of the Board, which may exercise all powers of the Company that are not by the Act, the Memorandum, or these Articles required to be exercised by the Members in general meeting.
5.1.2 No resolution of the Members shall invalidate any prior act of the Board that would have been valid if such resolution had not been passed.
5.2 Specific Powers
5.2.1 Without limiting the generality of Article 5.1, the Directors shall have the power to take the following actions on behalf of the Company:
(a) To authorize the issuance of the Notes in an aggregate principal amount of up to US$400,000,000, comprising US$364,000,000 in rated secured notes (the Class A-1 Notes, Class A-2 Notes, Class B Notes, Class C Notes, and Class D Notes) and US$36,000,000 in subordinated notes (the Subordinated Notes), on such terms and conditions as are set forth in the Indenture and the other Transaction Documents.
(b) To execute and deliver the Indenture and all Transaction Documents on behalf of the Company, and to authorize any Director, officer, or authorized signatory to execute and deliver such documents, instruments, certificates, and agreements as may be necessary or desirable in connection therewith.
(c) To appoint Driftwood Credit Management LLC as Collateral Manager for the Collateral Portfolio and to enter into the Collateral Management Agreement dated August 22, 2023, providing for:
(i) a senior collateral management fee of 0.15% per annum of the aggregate principal amount of the Collateral Portfolio (estimated at approximately US$600,000 per year based on an initial portfolio of US$400,000,000);
(ii) a subordinate collateral management fee of 0.35% per annum of the aggregate principal amount of the Collateral Portfolio (estimated at approximately US$1,400,000 per year based on an initial portfolio of US$400,000,000); and
(iii) an incentive management fee equal to 20% of any excess residual cash flow distributable to the holders of the Subordinated Notes above a 12% internal rate of return hurdle, calculated and payable in accordance with the terms of the Collateral Management Agreement and the Indenture.
(d) To appoint Ironclad Trust Company, N.A. as Trustee, paying agent, note registrar, custodian, and collateral administrator under the Indenture and the Collateral Administration Agreement, and to enter into the Collateral Administration Agreement providing for:
(i) an annual trustee fee of US$25,000, payable quarterly in arrears; and
(ii) a trustee expense cap of US$50,000 per payment date for ordinary expenses (exclusive of extraordinary expenses, counsel fees, and litigation costs), reimbursable in accordance with the priority of payments waterfall under the Indenture.
(e) To engage Meridian Atlantic Securities LLC (SEC CRD #39821) as lead placement agent and Northbridge Capital Markets Inc. as co-placement agent for the offering and sale of the Notes, and to enter into the Note Purchase Agreement dated September 8, 2023, on such terms and conditions as the Directors shall approve.
(f) To engage Brindoval Analytical Services Inc. and Ridgeline Credit Ratings LLC as rating agencies for the purpose of assigning and monitoring credit ratings on the rated tranches of Notes (Class A-1, Class A-2, Class B, Class C, and Class D), and to enter into such engagement letters, fee agreements, and information-sharing arrangements as may be required in connection therewith.
(g) To open and maintain accounts with Havenwood Bank, N.A. as account bank for the transaction accounts established under the Indenture, and to authorize warehouse facility transactions, including the acquisition of collateral obligations on a warehoused basis prior to the Closing Date and the take-out of such warehoused assets into the final capital structure on the Closing Date.
(h) To appoint legal counsel to the Company, including Calderwood & Harkness LLP as issuer's U.S. counsel (with principal responsibility for U.S. securities law, tax, and transactional matters) and Applegategate Offshore Services Ltd. as issuer's Cayman Islands counsel (with principal responsibility for Cayman Islands corporate, regulatory, and tax matters), and to authorize such counsel to render opinions, provide advice, and take such other actions on behalf of the Company as may be necessary or appropriate.
(i) To appoint Greystone Audit Partners LLP as independent auditors of the Company, to conduct such audits and reviews of the Company's financial statements and records as may be required by the Indenture, the Act, or applicable law, and to fix the remuneration of such auditors.
(j) To execute, deliver, and file officer's certificates, secretary's certificates, closing certificates, incumbency certificates, solvency certificates, and such other certificates and instruments as may be required or customary in connection with the closing of the Notes offering on the Closing Date of September 12, 2023, and in connection with any subsequent amendment, supplement, or restatement of the Transaction Documents.
(k) To register the Company with the Cayman Islands Tax Information Authority as a Reporting Foreign Financial Institution for purposes of FATCA and CRS compliance, and to take all actions, make all filings, and provide all information necessary to maintain such registration and to comply with all applicable reporting obligations thereunder, including the annual reporting of financial account information to the Cayman Islands Tax Information Authority for automatic exchange with the U.S. Internal Revenue Service and other applicable tax authorities.
5.3 Limitation on Activities — Special Purpose Restrictions
5.3.1 The Company is organized as a special purpose vehicle for the sole purpose of issuing the Notes, acquiring and holding the Collateral Portfolio, and performing its obligations under the Transaction Documents. The special purpose nature of the Company is fundamental to the credit ratings assigned to the rated Notes and to the structural integrity of the collateralized loan obligation transaction. Accordingly, the Company shall not, without the prior written consent of the Trustee acting at the direction of the requisite percentage of noteholders as specified in the Indenture:
(a) Engage in any business or activity other than as described in the Memorandum and the Transaction Documents, or take any action that is not related to or necessary for the purposes set forth therein.
(b) Incur any indebtedness or other obligations for borrowed money other than under the Notes and the Indenture, or issue any additional securities or equity interests other than as contemplated by the Transaction Documents.
(c) Merge, consolidate, or amalgamate with any other entity, or sell, lease, transfer, or otherwise dispose of all or substantially all of the Company's assets, except as expressly permitted by the Indenture.
(d) Dissolve, liquidate, or wind up the Company's affairs, or consent to the appointment of a receiver, trustee, or liquidator for the Company or any material part of its assets, except in accordance with the Indenture or as required by applicable law.
(e) Amend, supplement, or otherwise modify its Memorandum or these Articles in any manner that is inconsistent with the Indenture or any other Transaction Document, without the prior written consent of the Trustee acting at the direction of the requisite percentage of noteholders as specified in the Indenture.
(f) Declare or pay any dividends or make any other distributions on its Shares other than in accordance with the priority of payments waterfall set forth in the Indenture, and only after all amounts due and payable to the holders of the Notes and other creditors of the Company ranking senior to equity distributions have been paid in full.
(g) Create, incur, assume, or permit to exist any lien, pledge, security interest, charge, encumbrance, or other claim on any of its assets other than as contemplated by the Indenture and the other Transaction Documents.
(h) Have any employees. All services required by the Company shall be performed by the Collateral Manager, the Trustee, and other agents and service providers engaged by the Company in accordance with the Transaction Documents.
(i) Commingle its assets with those of any other person or entity, including the Parent, the Collateral Manager, the Co-Issuer, or any affiliate thereof. The Company shall at all times maintain its assets, books, records, and accounts separate and distinct from those of any other person or entity.
(j) Act as agent for, or guarantor of, the obligations of any other person or entity, or assume, guarantee, endorse, or otherwise become liable for or upon the debts, obligations, or liabilities of any other person or entity.
5.3.2 The restrictions set forth in Article 5.3.1 are intended to preserve the bankruptcy-remote nature and structural integrity of the Company and to protect the interests of the holders of the Notes. Any action taken by the Company in violation of Article 5.3.1 shall be voidable at the election of the Trustee (acting at the direction of the requisite percentage of noteholders), without prejudice to any other remedies available under the Indenture or applicable law.
5.4 Delegation.  5.4.1 The Directors may delegate any of their powers to committees of one or more Directors, to agents, attorneys, or any other person or persons, in each case on such terms and subject to such conditions as the Directors may determine, provided that any such delegation shall be consistent with the Transaction Documents and shall not relieve the Directors of their overall responsibility for the management and supervision of the Company's business and affairs.
5.4.2 The Directors may at any time revoke any delegation of power made pursuant to this Article 5.4.
ARTICLE 6 — PROCEEDINGS OF DIRECTORS
6.1 Board Meetings
6.1.1 The Directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings as they see fit. Board meetings may be held at such times and in such places (including outside the Cayman Islands) as the Directors may from time to time determine.
6.1.2 A Director may participate in a meeting of the Board by means of telephone, video conference, or other electronic communication facility that permits all participants to communicate with each other on a simultaneous basis. A Director so participating shall be deemed to be present at such meeting for all purposes.
6.2 Notice.  6.2.1 Reasonable notice of every meeting of the Board shall be given to each Director at such Director's last known address or by electronic communication. The length of such notice shall be determined by the Directors from time to time, but in any event shall be no less than twenty-four (24) hours' notice unless all Directors consent to shorter notice or waive notice entirely.
6.2.2 A Director may waive notice of any meeting, whether before, at, or after such meeting, and attendance at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends for the express purpose of objecting to the transaction of business on the ground that the meeting was not properly convened.
6.3 Quorum.  6.3.1 One (1) Director present in person or participating by telephone or other electronic means shall constitute a quorum for a meeting of the Board.
6.3.2 If at any time there is only one Director, that sole Director shall constitute a quorum and may exercise all the powers of the Board.
6.4 Voting.  6.4.1 Questions arising at any meeting of the Board shall be determined by a majority of votes of the Directors present and voting. Each Director shall have one vote.
6.4.2 In the event of an equality of votes on any question, the chairman of the meeting (if any has been appointed) shall have a second or casting vote.
6.4.3 The Directors may appoint one of their number to serve as chairman of meetings of the Board. If no chairman is appointed, or if the chairman is not present within fifteen (15) minutes of the time appointed for the meeting, the Directors present may elect one of their number to serve as chairman for that meeting.
6.5 Written Resolutions of Directors
6.5.1 A resolution in writing signed by all Directors then in office (or their duly appointed alternates) shall be as valid and effective as if such resolution had been passed at a duly convened and held meeting of the Board. Such written resolution may consist of several documents in like form, each signed by one or more Directors, and shall be deemed to have been passed on the date on which the last Director signs.
6.5.2 Without limiting the generality of the foregoing, the Board Resolutions of the Company dated August 20, 2023, authorizing the issuance of the Notes and the execution and delivery of the Transaction Documents, were adopted by written resolution in accordance with this Article 6.5.
6.6 Minutes.  6.6.1 The Directors shall cause minutes to be kept in proper books of:
(a) all appointments of officers, agents, and other representatives made by the Directors;
(b) the names of the Directors and other persons present at each meeting of the Board;
(c) all proceedings at meetings of the Board and meetings of committees of the Board; and
(d) all written resolutions of the Directors adopted in accordance with Article 6.5.
6.6.2 Minutes shall be signed by the chairman of the meeting or by a Director authorized for such purpose by the Board, and shall be conclusive evidence of the proceedings recorded therein.
ARTICLE 7 — OFFICERS
7.1 Appointment.  7.1.1 The Directors may from time to time appoint such officers of the Company as they consider necessary for the administration and management of the Company, including without limitation a president, one or more vice presidents, a secretary, an assistant secretary, a treasurer, and an assistant treasurer.
7.1.2 Officers shall hold office at the pleasure of the Board and may be removed from office at any time, with or without cause, by resolution of the Board.
7.1.3 The Directors may delegate to any officer such powers, authorities, and duties as the Directors may from time to time determine, subject to the provisions of these Articles and the Transaction Documents.
7.1.4 Any officer may hold two or more offices simultaneously, and a Director may also serve as an officer of the Company.
7.2 Authorized Signatories
7.2.1 The Directors shall designate one or more authorized signatories for the Company for the execution and delivery of Transaction Documents, certificates, instruments, agreements, notices, and other documents on behalf of the Company.
7.2.2 A Secretary's Certificate or incumbency certificate, duly executed by the secretary (or an authorized Director acting as secretary) of the Company, certifying the identity and specimen signatures of the authorized signatories, shall be delivered to the Trustee and any other relevant parties in connection with the Closing Date and at such other times as may be required. Reference is made to the Secretary's Certificate dated September 12, 2023, certifying the incumbency and authorized signatures of the Company's officers and authorized signatories in connection with the closing of the Notes offering.
7.2.3 Third parties dealing with the Company shall be entitled to rely on any certificate, instrument, or document purporting to be executed by an authorized signatory of the Company without further inquiry as to the authority of such signatory, and the Company shall be bound by any document so executed.
ARTICLE 8 — SEAL
8.1 Common Seal
8.1.1 The Company may, but need not, have a common seal. If the Directors determine to adopt a common seal, it shall be in such form and bearing such inscription as the Directors may determine.
8.1.2 If adopted, the common seal shall not be affixed to any document except with the authority of the Directors or a committee of the Directors authorized for such purpose, and in the presence of at least one Director who shall sign the document to which the seal is affixed.
8.1.3 The Company may have a duplicate common seal for use outside the Cayman Islands. Such duplicate seal shall be a facsimile of the common seal with the addition of the name of the place where it is to be used.
8.1.4 In the absence of a common seal, a document may be executed on behalf of the Company by the signature of one or more Directors or other authorized signatories in accordance with Article 7.2.
ARTICLE 9 — DIVIDENDS AND DISTRIBUTIONS
9.1 Dividends.  9.1.1 Subject to the provisions of the Act, the Indenture, and these Articles, dividends may be declared and paid by the Company only out of profits or share premium available for distribution.
9.1.2 Dividends and distributions on the Shares shall be declared and paid only to the extent permitted by the Indenture and in compliance with the priority of payments waterfall set forth therein. The Indenture establishes a detailed priority of payments (the "Waterfall") pursuant to which all collections on the Collateral Portfolio are applied on each payment date in a specified order of priority, with equity distributions to the holders of the Shares ranking last in priority after all amounts due to senior creditors, the holders of the rated Notes, the holders of the Subordinated Notes, and other transaction parties have been satisfied.
9.1.3 No dividend or distribution shall be declared or paid on the Shares if:
(a) any Event of Default under the Indenture has occurred and is continuing;
(b) any overcollateralization test applicable to any class of Notes (including, without limitation, the Class A/B Overcollateralization Test, the Class C Overcollateralization Test, and the Class D Overcollateralization Test) is not satisfied as of the relevant determination date;
(c) any interest coverage test applicable to any class of Notes (including, without limitation, the Class A/B Interest Coverage Test, the Class C Interest Coverage Test, and the Class D Interest Coverage Test) is not satisfied as of the relevant determination date; or
(d) the payment of such dividend or distribution would otherwise cause or result in a breach of the Indenture or any other Transaction Document.
9.2 Payment.  9.2.1 Any dividend or distribution declared in accordance with Article 9.1 shall be paid by such method as the Directors shall determine, including by wire transfer, check, or other electronic payment to the bank account designated by the Member entitled to receive such dividend or distribution.
9.2.2 No interest shall be payable by the Company on any dividend or distribution.
9.2.3 Any dividend or distribution that is unclaimed after a period of six (6) years from the date of declaration thereof shall be forfeited and shall revert to the Company.
ARTICLE 10 — ACCOUNTS AND AUDIT
10.1 Books and Records
10.1.1 The Directors shall cause proper books of account to be kept with respect to all receipts and expenditures of the Company, the assets and liabilities of the Company, and all other matters required by the Act to be recorded.
10.1.2 The books of account shall be kept at the registered office of the Company or at such other place or places as the Directors shall determine, and shall at all times be open to inspection by the Directors.
10.1.3 The Directors shall from time to time determine whether and to what extent, at what times and places, and under what conditions the books of account and other records of the Company shall be open to the inspection of Members.
10.2 Audit.  10.2.1 The Company may, but shall not be required to, appoint auditors to examine and report on the financial statements of the Company.
10.2.2 If auditors are appointed, the initial auditors of the Company shall be Greystone Audit Partners LLP, or such other firm as the Directors may determine. The auditors shall hold office until the Directors determine to change the appointment.
10.2.3 The remuneration of the auditors shall be fixed by the Directors and shall be payable by the Company as an expense of the transaction in accordance with the priority of payments waterfall under the Indenture.
10.3 Financial Year
10.3.1 The financial year of the Company shall end on December 31 of each year, commencing with the financial year ending December 31, 2023, or on such other date as the Directors may from time to time determine.
10.4 Reporting Obligations
10.4.1 The Company shall comply with all reporting obligations imposed upon it under the Indenture, including without limitation:
(a) the delivery of periodic trustee reports, compliance certificates, and collateral pool data to Ironclad Trust Company, N.A. in its capacity as Trustee and collateral administrator, in the form and at the times specified in the Indenture;
(b) the delivery of annual financial statements (whether audited or unaudited) to the Trustee and, to the extent required, to the holders of the Notes;
(c) the delivery of tax information and reports to the holders of the Notes as required for such holders to comply with their respective U.S. federal, state, and local income tax obligations; and
(d) compliance with FATCA and CRS reporting requirements as a Reporting Foreign Financial Institution registered with the Cayman Islands Tax Information Authority, including the annual filing of returns and reports with the Cayman Islands Tax Information Authority for automatic exchange of financial account information with the U.S. Internal Revenue Service, Her Majesty's Revenue and Customs (United Kingdom), and other applicable foreign tax authorities.
10.4.2 The Directors shall ensure that all reports, certificates, and other documents required to be delivered by the Company under the Transaction Documents are prepared and delivered in a timely manner and in accordance with the terms of such Transaction Documents.
ARTICLE 11 — NOTICES
11.1 Method of Giving Notice
11.1.1 Any notice required or permitted to be given by the Company to any Member, Director, officer, or other person may be given in writing and delivered:
(a) personally, in which case it shall be deemed to have been given at the time of delivery;
(b) by mail (including airmail) to the address of such person as shown in the records of the Company, in which case it shall be deemed to have been given five (5) business days after the date of posting;
(c) by facsimile transmission to the facsimile number of such person as shown in the records of the Company, in which case it shall be deemed to have been given upon successful transmission; or
(d) by electronic communication (including electronic mail) to the electronic address of such person as shown in the records of the Company, in which case it shall be deemed to have been given upon dispatch, provided that the sender does not receive a notification of delivery failure.
11.1.2 In proving the giving of a notice by mail, it shall be sufficient to prove that the letter containing the notice was properly addressed, prepaid, and posted.
11.2 Notice to the Trustee
11.2.1 Any notice required or permitted to be given to the Trustee under the Transaction Documents shall be given in accordance with the notice provisions set forth in the Indenture.
11.2.2 Unless otherwise specified in the Indenture, notices to the Trustee shall be addressed as follows:
Ironclad Trust Company, N.A. 100 Wall Street, Suite 1650 New York, New York 1