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DEERFIELD TRIARC CAPITAL CORP.
PROXY STATEMENT

GENERAL MEETING INFORMATION

General

This proxy statement and the accompanying form of proxy and Notice of Annual Meeting are provided in connection with the solicitation of proxies by the Board of Directors, or the Board, of Deerfield Triarc Capital Corp., a Maryland corporation, for use at the 2007 Annual Meeting of Stockholders, or the Meeting. Unless otherwise noted or the context otherwise requires, we refer to Deerfield Triarc Capital Corp. as “DFR,” “we,” “us,” “our,” or “our company,” to Deerfield & Company LLC and its subsidiaries as “Deerfield,” to Deerfield Capital Management LLC, a wholly owned subsidiary of Deerfield and our external manager as “DCM” or “our manager,” to Triarc Companies Inc. as “Triarc” and to DFR Merger Company, LLC, our wholly owned subsidiary, as “Merger Sub.”

Important Note

No person is authorized to make any representation with respect to the matters described in this proxy statement other than those contained, or incorporated by reference, in this proxy statement and, if given or made, such representation must not be relied upon as having been authorized by us, Deerfield or any other person or entity. This proxy statement provides you with detailed information about the proposals to be considered and voted upon at the Meeting. The information in this proxy statement is current as of the date of this proxy statement. Stockholders are urged to carefully review this proxy statement, including the accompanying annexes, which discuss each of the proposals to be voted upon at the Meeting. You are encouraged to carefully review the section of this proxy statement captioned “Risk Factors” beginning on page 13, which describes certain factors that should be considered in evaluating the proposals to be considered and voted upon at the Meeting.

This proxy statement does not constitute the solicitation of a proxy from any person in any jurisdiction where it is unlawful to make such proxy solicitation. The delivery of this proxy statement shall not, under any circumstances, imply that there has not been any change in the information set forth herein since the date of the proxy statement.

Date, Time and Place of the Meeting

The Meeting will be held on  , 2007 at             , at 10:00 a.m., Eastern Daylight Savings Time, and any adjournments or postponements thereof.

Mailing Address; Date of Mailing

The mailing address of our principal executive office is 6250 N. River Road, 9th Floor, Rosemont, Illinois 60018. This proxy statement and the enclosed form of proxy and Notice of Annual Meeting are first being mailed to the stockholders on or about  , 2007.

Notice & Voting

Each outstanding share of our common stock entitles its holder to one vote. Only our stockholders of record at the close of business on  , 2007, or the Record Date, will be entitled to notice of, and to vote at, the Meeting or any adjournment or postponement thereof. As of the Record Date, there were   shares of DFR common stock outstanding and entitled to vote at the Meeting and approximately   holders of record. For your comfort and security, admission to the Meeting will be by ticket only. You also must present identification containing a photograph. If you are a registered stockholder (your shares are held in your name) and plan to attend the Meeting, please check the appropriate box on the enclosed proxy card.

Your admission ticket can be detached from the top portion of the proxy card. If you are a beneficial owner (your shares are held in street name by a bank, broker or other nominee or

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intermediary) and plan to attend the Meeting, your admission ticket is the left side of your voting information form. In addition, you can obtain an admission ticket in advance by writing to Corporate Secretary, Deerfield Triarc Capital Corp., 6250 N. River Road, 9th Floor, Rosemont, Illinois 60018, and enclose proof of ownership, such as a bank or brokerage account statement or a letter from the bank or broker verifying such ownership. Stockholders who do not obtain tickets in advance may obtain them upon verification of ownership at the registration desk on the day of the Meeting. Tickets may be issued to others at our discretion.

If you complete and properly sign and return the accompanying proxy card, your shares will be voted as you specify, but if you do not specify a vote with respect to a proposal, your shares will be voted as the Board recommends with respect to the proposals.

Under our bylaws, business transacted at the Meeting is confined to the purposes stated in the Notice of Annual Meeting. The proxy being solicited does, however, convey discretionary authority to the persons named therein as proxies to vote on matters that are incidental to the conduct of the Meeting.

You may revoke your proxy by:

If you hold your shares in street name (that is, through a broker or other nominee or intermediary), you may vote and revoke a previous vote only by following the procedures established by the broker or other nominee or intermediary.

Votes Required for Approval of Each Proposal

Share Issuance. For the proposal to issue 9,635,192 shares of our common stock in connection with the merger of Merger Sub with and into Deerfield, or the Merger, you may vote in favor of the proposal, against the proposal or abstain from voting. Under the NYSE rules and the Merger Agreement, if a quorum is present, ratification of this proposal requires the affirmative vote of: (i) a majority of the votes cast on the proposal (provided that the total votes cast on the proposal represent a majority of the outstanding shares of our common stock entitled to vote on the proposal); and (ii) a majority of the votes cast on the proposal by stockholders who are not affiliates of Deerfield or Triarc.

Election of Director Nominees. For the election of the director nominees, you may vote in favor of some or all of the nominees or withhold your vote as to some or all of the nominees. If a quorum is present, then the nominees receiving a plurality of the votes cast at the Meeting will be elected directors.

Ratification of Independent Auditors. For the proposal to ratify the appointment of the independent auditors, you may vote in favor of the proposal, against the proposal or abstain from voting. If a quorum is present, ratification of this proposal requires the affirmative vote of a majority of the votes cast on the proposal.

Increase in number of shares available for issuance under the Deerfield Triarc Capital Corp. Stock Incentive Plan. For the proposal to increase the number of shares available for issuance under the Deerfield Triarc Capital Corp. Stock Incentive Plan, or the Stock Incentive Plan, you may vote in favor of the proposal, against the proposal or abstain from voting. If a quorum is present, ratification of this proposal requires the affirmative vote of a majority of the votes cast on the proposal (provided that the total votes cast on the proposal represent a majority of the outstanding shares of our common stock entitled to vote on the proposal).

Abstentions and Unspecified Shares Held in Street Name

Brokers holding shares for beneficial owners must vote those shares according to the specific instructions they receive from the beneficial owners, unless the brokers have been given discretionary voting power by the beneficial owners. However, brokers or nominees holding shares

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for a beneficial owner might not have discretionary voting power and might not have received voting instructions from the beneficial owner of the shares. In such cases, a broker may not vote on a proposal, which is known as a “broker non-vote.”

Broker non-votes will not be counted as votes cast but will be counted for the purpose of determining the existence of a quorum. Assuming a quorum is present, broker non-votes will thus have no effect on proposals that require the affirmative vote of a majority of the votes cast.

Because the election of directors and ratification of our independent auditors are routine matters for which specific instructions from beneficial owners will not be required, no broker non-votes will arise in the context of these proposals. The approval of other proposals is not considered routine, and broker non-votes may arise in the context of these proposals.

Share Issuance. For the proposal to issue 9,635,192 shares of our common stock in connection with the Merger, abstentions and broker non-votes are not considered votes cast and will not be counted for or against the proposal, or towards the total votes cast on the proposal for the purposes of determining if the necessary majority of outstanding shares has voted on the proposal.

Election of Director Nominees. You may not abstain from electing a nominee as a director. With respect to each nominee, you must vote for the election of the nominee or withhold your vote. Votes withheld from the election of a director will have the effect of a vote AGAINST the director nominee because a plurality of the votes cast at the Meeting is required for the election of each director.

Ratification of Independent Auditors. Abstentions are not considered votes cast and will not be counted for or against the proposal to ratify the appointment of the independent auditors, but will be counted for the purpose of determining the existence of a quorum.

Amendment to the Deerfield Triarc Capital Corp. Stock Incentive Plan. For the proposal to amend the Deerfield Triarc Capital Corp. Stock Incentive Plan, or the Stock Incentive Plan, abstentions and broker non-votes are not considered votes cast and will not be counted for or against the proposal, but will be counted for the purpose of determining the existence of a quorum.

Quorum

A majority of the votes entitled to be cast, represented in person or by proxy, will constitute a quorum for the transaction of business. At the close of business on May  , 2007, we had   shares of common stock outstanding.

Availability of Documents

The following documents are posted on our Internet site: http://www.deerfieldtriarc.com (the information on which is not incorporated into this proxy statement), and can also be obtained from us by written request to Corporate Secretary, Deerfield Triarc Capital Corp., 6250 N. River Road, 9th Floor, Rosemont, Illinois 60018

We have selected   as our proxy solicitor. If you have questions, require assistance voting your shares or need additional copies of proxy materials, you may call  .

The date of this proxy statement is  , 2007

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FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement and the information incorporated by reference into this proxy statement are forward-looking as defined by the Private Securities Litigation Reform Act of 1995. These include statements as to such things as future capital expenditures, growth, business strategy and the benefits of the Merger, including future financial and operating results, cost savings, enhanced revenues and the accretion/dilution to reported earnings that may be realized from the Merger as well as other statements of expectations regarding the Merger and the financing transaction and any other statements regarding pro forma or future results or expectations. Forward looking statements can be identified by forward looking language, including words such as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “may,” “plans,” “projects,” “will” and similar expressions, or the negative of these words. Such forward-looking statements are based on facts and conditions as they exist at the time such statements are made as well as predictions as to future facts and conditions the accurate prediction of which may be difficult and involve the assessment of events beyond our or Deerfield’s control. The forward-looking statements are also based on various operating assumptions. Caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, actual results may differ materially from expectations or projections. We do not undertake any obligation to update any forward-looking statement, whether written or oral, relating to matters discussed in this proxy statement, except as otherwise required by federal securities laws.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

Relating to the Merger:

Relating to the ongoing operation of DFR:

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Relating to the ongoing operation of DCM:

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These and other factors that could cause actual results to differ materially from those described in the forward-looking statements are set forth in (i) “Risk Factors” of this proxy statement, (ii) “Item 1A. Risk Factors” of DFR’s annual report on Form 10-K for the year ended December 31, 2006 and quarterly report on Form 10-Q for the three months ended March 31, 2007, and (iii) from time to time in DFR’s other public filings with the SEC and public statements by DFR. Readers of this proxy statement are cautioned to consider these risks and uncertainties and not to place undue reliance on the forward-looking statements.

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SUMMARY

You should rely only on the information contained in or incorporated by reference into this proxy statement in deciding how to vote on the proposals to be considered at the Meeting. We have authorized no one to provide you with additional or different information. The following is a summary of information in this proxy statement, particularly as it relates to the Merger. This summary may not contain all of the information about the Merger or the other proposals that is important to you. For a complete description of the Merger, we encourage you to read the Merger Agreement attached as Annex A to this proxy statement. In addition, you are encouraged to read the information incorporated by reference into this proxy statement, which includes important business and financial information about us, which has been filed with the SEC. You may obtain this information without charge from us or from the SEC through its website at http://www.sec.gov.

Deerfield Triarc Capital Corp.

We are a diversified financial company that invests in real estate investments, primarily mortgage-backed securities, as well as corporate investments. We are externally managed by DCM, a wholly owned subsidiary of Deerfield. We have elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes, and intend to continue to operate so as to qualify as a REIT. Our objective is to provide attractive returns to our investors through a combination of dividends and capital appreciation. To achieve this objective, we intend to opportunistically invest in financial assets to construct an investment portfolio that is leveraged where appropriate in order to achieve attractive risk-adjusted returns and that is structured to allow us to maintain our qualification as a REIT and the requirements for exclusion from regulation under the Investment Company Act of 1940, as amended, or 1940 Act.

Our targeted investments may be categorized as follows:

In addition, we may invest opportunistically in other fixed income investments, including investment grade corporate bonds and related derivatives, government bonds and related derivatives and other fixed income-related instruments.

As noted above, we are externally managed by DCM, a fixed income asset manager and a SEC registered investment adviser. DCM is a wholly-owned subsidiary of Deerfield. Triarc owns a majority interest in Deerfield. Assuming we complete the Merger, we will acquire DCM and become an internally managed company.

Deerfield & Company LLC

Deerfield is a holding company the primary assets of which are all of the outstanding membership interests of DCM and capital stock of Deerfield Capital Management (Europe) Limited, or DCM (Europe). Deerfield’s principal executive offices are located at 6250 N. River Road, 9th Floor, Rosemont, Illinois 60018, and the telephone number is (773) 380-1600.

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Deerfield Capital Management LLC

DCM is a wholly owned subsidiary of Deerfield and a Chicago-based, SEC registered asset manager that manages client funds (primarily for institutions) worldwide. DCM (together with its predecessor companies) commenced its investment management operations in 1993. As of May 1, 2007, DCM managed approximately $14.2 billion of client funds. Through our management agreement with DCM, we have had access to its resources in portfolio management and infrastructure support, such as risk management, credit analysis, operations, systems, accounting, portfolio valuation, compliance and internal audit. As of May 1, 2007, DCM had 144 employees, including 47 portfolio managers and investment analysts. Also, as of May 1, 2007, DCM had 33 full-time investment professionals specializing in mortgage backed securities, or MBS, asset-backed securities, or ABS, loans and leveraged finance, dedicating a significant part of their time to sourcing (including performing due diligence) and managing the assets of our portfolio. DCM’s investment professionals perform services for other DCM accounts as well as ours. For the year ended December 31, 2006 and three months ended March 31, 2007, 21.6% and 31.6% of DCM’s revenues were derived from services provided to us, respectively.

DCM primarily invests in a broad range of debt instruments in managing client portfolios. The primary investment focus is on MBS and other ABS, loans, corporate bonds, leveraged finance instruments and government securities. DCM has separate portfolio management teams for each of these areas. Deerfield primarily utilizes fundamental credit analysis, duration management, yield curve arbitrage and basis spread techniques in its investing.

We are the only account that DCM manages pursuant to the specific investment strategy it uses for us, although DCM uses some of the components of that strategy for some of its other clients. For example, in selecting bank loan investments for us, DCM uses the same or similar analysis that it uses in managing bank loan portfolios for other clients.

The Share Issuance Proposal; Parties to the Merger

At the Meeting, you will be asked to consider and vote upon a proposal to approve the issuance of shares of our common stock in order to complete the transaction contemplated by the Merger Agreement that we entered into on April 19, 2007 with Merger Sub, our wholly owned subsidiary, Deerfield, an entity in which Triarc owns a controlling interest, and Triarc, as the sellers’ representative.

Since our inception, we have sought to provide returns to our investors through a combination of dividends and capital appreciation on our real estate investments, which are primarily in mortgage-backed securities. These day-to-day operations historically have been managed by DCM, a wholly owned subsidiary of Deerfield, under the supervision of the Board pursuant to the management agreement with DCM. If the Merger is completed, Deerfield will become an indirect, wholly owned subsidiary of DFR. As a result, our existing business will diversify significantly and we will become internally managed. Following the Merger, we intend to continue to be taxed as a REIT and will hold our interests in Deerfield and DCM through domestic taxable REIT subsidiaries, or TRSs.

Consideration to be Paid in the Merger

The aggregate consideration to be paid by DFR in connection with the Merger consists of $145 million in cash and 9,635,192 shares of DFR common stock. The cash portion of the aggregate consideration is subject to various deductions, including an amount equal to the principal amount and accrued and unpaid interest outstanding, if any, under a revolving note of Deerfield immediately prior to the Merger and an amount equal to the unpaid transaction expenses of Deerfield and Triarc (incurred on behalf of all Deerfield members generally) immediately prior to the Merger. The 9,635,192 shares of DFR’s common stock to be issued in the Merger, will constitute approximately  % of the outstanding shares of DFR’s common stock immediately following completion of the Merger. This issuance will reduce your percentage ownership of our common stock.

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Of the total of 9,635,192 shares of DFR common stock to be issued in the Merger, 2,504,817 shares will be deposited into an escrow account and will be available as the sole recourse to satisfy the post-closing indemnification obligations of the members of Deerfield. The Merger Agreement also permits Deerfield, prior to the Merger, to distribute to its members up to approximately $6.0 million of cash (plus amounts for taxes relating to pre-closing periods, minus the amount of certain debt prepayments, if any, made after the date of the Merger Agreement), and requires Deerfield to distribute to its members 309,038 shares of DFR common stock owned by Deerfield. In order to fund the cash portion of the consideration and our expenses associated with the Merger, we and our subsidiaries intend to incur $155.0 million of debt financing.

Principal Reasons for the Merger

We believe that the proposed Merger provides us with an opportunity to (i) acquire an alternative asset manager, which will both significantly diversify our existing business and sources of income and (ii) convert our current external management structure into an internally-managed structure. We believe the proposed Merger will result in our becoming a more diversified financial services company that generates both non-capital intensive fee-based revenue from DCM’s alternative asset management platform, as well as risk-adjusted spread-based income from DFR’s investment portfolio of mortgage assets and alternative fixed income investments. We believe the combination of the highly scalable nature of DCM’s asset advisory business and the broader access that DCM may have to capital afforded by its acquisition by a public company will better position us to leverage DCM’s existing infrastructure and investment personnel to launch new products and business lines. In addition, we believe the internalization of our manager that will result from the Merger will enhance the efficiency of our cost structure. For these and other reasons, we believe the proposed Merger will be accretive to our net income and earnings per share and, therefore, will enhance stockholder value; however, these or any other benefits may not be realized. See “Proposal 1—Reasons for the Proposed Merger” and “Risk Factors.”

Recommendation of Special Committee and Board

The Special Committee has determined that, in light of all of the factors that it considered, the Merger and the other transactions contemplated by the Merger Agreement, including the issuance of 9,635,192 shares our common stock pursuant to the Merger Agreement, are fair to DFR and in our best interest and in the best interest of our stockholders that are not also beneficial owners of interests in Deerfield. Accordingly, the Special Committee has unanimously approved the Merger Agreement and the issuance of our common stock pursuant to the Merger Agreement and it has unanimously recommended that the Board approve the Merger Agreement and the issuance of our common stock pursuant to the Merger Agreement and recommend that stockholders vote FOR the proposed issuance of 9,635,192 shares of our common stock pursuant to the Merger Agreement.

After careful consideration, including consideration of the unanimous recommendation of the Special Committee and the opinions of Bear, Stearns & Co. Inc., or Bear Stearns, and Houlihan Lokey Howard & Zukin Financial Advisors, Inc., or Houlihan Lokey, our Board (excluding those members who abstained because of a material financial interest in the Merger that differs from that of our stockholders) has approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, including the issuance of 9,635,192 shares of our common stock pursuant to the Merger Agreement. The Board (excluding those members who abstained because of a material financial interest in the Merger that differs from that of our stockholders) recommends that stockholders vote FOR the proposed issuance of 9,635,192 shares of our common stock pursuant to the Merger Agreement. See “Proposal 1—Recommendations of the Special Committee and the Board.”

The Board also unanimously recommends that you vote FOR each other proposal described in this proxy statement.

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Opinions of Bear, Stearns & Co. Inc. and Houlihan Lokey Howard & Zukin Financial Advisors, Inc.

In connection with the Merger, Bear Stearns and Houlihan Lokey, the Special Committee’s financial advisors, each provided its opinion that, as of April 19, 2007, based upon and subject to the assumptions, factors, qualifications and limitations set forth in such written opinions, the proposed cash and stock consideration to be paid by us in the Merger, taken in the aggregate, was fair to DFR, from a financial point of view. The full text of the written opinions of Bear Stearns and Houlihan Lokey, which describe, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, are attached as Annex B and Annex C to this proxy statement, respectively, and are incorporated by reference into this document. You are encouraged to read the opinions carefully in their entirety. Bear Stearns and Houlihan Lokey each provided its opinion to the Special Committee to assist the Special Committee in evaluating, from a financial point of view, the consideration provided for in the Merger Agreement. The opinions do not address any other aspect of the Merger and do not constitute a recommendation as to how you should vote in connection with the proposed issuance.

Interests of Certain of Our Directors and Officers in the Merger

Three of our directors and certain of our officers have a material financial interest in the Merger that differs from that of our stockholders because they or their affiliates are members of Deerfield and will receive a portion of the Merger consideration in exchange for their profits interests in Deerfield or, in the case of Mr. Sachs, certain of his affiliates that are members of Deerfield have the right under Deerfield’s existing operating agreement to require Triarc to purchase for cash all or a part of their membership interests in Deerfield simultaneously with the completion of the Merger. In addition, all of our officers and three of our directors are also directors, officers, employees or consultants of Triarc and/or Deerfield or their respective affiliates, certain of whom may benefit from early vesting of restricted stock awards. See “Proposal 1—Certain Interests of our Officers and Directors in Deerfield.”

Our Management Following the Merger

On May 25, 2007, certain affiliates of Mr. Sachs irrevocably exercised their right under Deerfield’s existing operating agreement to require Triarc to purchase for cash all of their membership interests in Deerfield simultaneously with the completion of the Merger. In connection with this exercise, Mr. Sachs has tendered his resignation as a director and as chairman and chief executive officer of Deerfield and its subsidiaries, effective upon completion of the Merger. It is anticipated, however, that Mr. Sachs will remain as a director of DFR. With the exception of Mr. Sachs, we expect substantially all of the key members of DCM’s management team who are currently providing services to us will remain employed by DCM following the Merger, and will continue to provide services to us through a services agreement with DCM.

Registration Rights Agreement

We have granted rights to a subsidiary of Triarc and, subject to their execution of the registration rights agreement, the other members of Deerfield who would receive stock in connection with the Merger, and to their permitted transferees, in respect of the registration of any shares of DFR common stock issued in exchange for membership interests of Deerfield, which require us to register those shares under the Securities Act of 1933, as amended, or the Securities Act. See “Proposal 1—Description of the Material Agreements Relating to the Merger—The Registration Rights Agreement.”

Closing

We anticipate the completion of the Merger will occur within several business days following the satisfaction or waiver of the conditions to the Merger set forth in the Merger Agreement (other than conditions that by their nature are to be satisfied at the completion of the Merger), or on such

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other date as we and Deerfield may mutually agree. See “Proposal 1—Description of the Material Agreements Relating to the Merger—The Merger Agreement—Conditions to the Completion of the Merger.”

Board Nominees

In the Merger Agreement, we have agreed, subject to the Board’s fiduciary duties and compliance with applicable laws, to cause an individual designated by Triarc (as the sellers’ representative) to be nominated as a Class I director for election to the Board for a three-year term at our annual stockholders’ meeting to be held in 2008.

Conditions of the Merger

The obligation of either party to complete the Merger is subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, including:

The obligation of DFR to complete the Merger is subject to the satisfaction or waiver by DFR, in its sole discretion, of certain conditions set forth in the Merger Agreement, including:

The obligation of Deerfield to complete the Merger is subject to the satisfaction or waiver by Deerfield, in its sole discretion, of certain conditions set forth in the Merger Agreement, including:

See “Proposal 1—Description of the Material Agreements Relating to the Merger—Conditions to the Completion of the Merger.”

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Termination

The Merger Agreement may be terminated at any time before the closing, by mutual written consent of Deerfield and us, before or after approval of the share issuance proposal by our stockholders, or by either us or Deerfield under certain circumstances. Further, the Merger Agreement may be terminated by either Deerfield or us after October 19, 2007 if the Merger has not occurred by that date. See “Proposal 1—Description of the Material Agreements Relating to the Merger—Termination of the Merger Agreement.”

Regulatory Matters

DFR and Deerfield must seek regulatory consent to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Further, the resale registration statement contemplated by the registration rights agreement must have been declared effective by the SEC under the Securities Act. We will also need the approval of the U.K. Financial Services Authority. See “Proposal 1—Description of the Material Agreements Relating to the Merger—The Merger Agreement—Conditions to the Completion of the Merger.”

No Dissenter’s or Appraisal Rights with Respect to the Merger

Under Maryland law, you will not be entitled to appraisal rights with respect to the Merger. See “Proposal 1—Dissenter’s or Appraisal Rights.”

U.S. Federal Income Tax Consideration

The Merger will not result in the recognition of taxable income by us or our stockholders for U.S. federal income tax purposes. Because we will hold Deerfield and DCM through domestic TRSs, income from Deerfield and DCM will be fully subject to federal, state and local income tax. In addition, our ability to make future investments in TRSs may be limited as a result of our ownership of Deerfield and DCM. See “Proposal 1—Material United States Federal Income Tax Consequences of the Merger.”

Accounting Treatment

In accordance with United States generally accepted accounting principles, or GAAP, DFR will account for the Merger using the purchase method of accounting. Under the purchase method of accounting, DFR will allocate the total estimated purchase price to Deerfield’s net tangible assets and identifiable intangible assets based on their fair values as of the date of completion of the Merger, and record the excess of the purchase price over those fair values as goodwill. DFR will incur amortization expense over the useful lives of identifiable intangible assets acquired in connection with the Merger. In addition, to the extent the value of goodwill or identifiable intangible assets becomes impaired, DFR may be required to incur material charges relating to the impairment of that asset.

Financing

We and our subsidiaries will incur substantial additional indebtedness to complete the Merger. We intend to enter into a senior secured term credit facility with UBS Loan Finance LLC, UBS Securities LLC, Bank of America, N.A. and Bank of America Securities LLC, providing for $155.0 million of financing to us and our subsidiaries by a syndicate of lenders, including UBS Loan Finance LLC and Bank of America, N.A. The amount borrowed under this credit facility is expected to be payable in full on a date five years from the closing date. The proceeds of this indebtedness will be used to pay the cash portion of the Merger consideration and DFR’s Merger-related fees and expenses. See “Proposal 1—Financing.”

Risk Factors

There are a number of risks associated with the Merger that you should consider before returning your proxy. See “Risk Factors” on page 13 of the proxy statement.

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RISK FACTORS

The failure to fulfill all conditions precedent to the Merger may prevent the consummation of the Merger, which would cause us to receive little or no benefit from the substantial costs we have incurred in connection with the Merger, or may lead to a change in the terms of the Merger Agreement that may be unfavorable to us.

The obligation of either party to complete the Merger is subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, including,

The obligation of DFR to complete the Merger is subject to the satisfaction or waiver by DFR, in its sole discretion, of certain conditions set forth in the Merger Agreement, including:

The obligation of Deerfield to complete the Merger is subject to the satisfaction or waiver by Deerfield, in its sole discretion, of certain conditions set forth in the Merger Agreement, including:

If one or more of these conditions to the completion of the Merger are not met, then the party to the Merger Agreement entitled to the benefit of such condition may elect not to proceed with the Merger or may instead waive any or all conditions precedent. Accordingly, the Merger may not be consummated or, if consummated, the final terms of the Merger may be less favorable to us than the terms in the current version of the Merger Agreement attached as Annex A to this proxy statement. See “Proposal 1—Description of the Material Agreements Relating to the Merger—The Merger Agreement—Conditions to the Completion of the Merger.”

Our existing stockholders may be substantially diluted by the issuance of shares of our common stock in the Merger and this issuance may depress the market price of our common stock.

In determining whether to vote in favor of the issuance of approximately 9,635,192 shares of our common stock to enable us to complete the Merger, our stockholders should consider that they are

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subject to the risk of substantial dilution of their interests which will result from the issuance of such shares, and that as a result of this issuance, Deerfield’s members will receive approximately  % of our outstanding common stock as of    , 2007. Accordingly, our current stockholders’ ownership interest would decrease by approximately  %. This economic ownership dilution could reduce the market price of our common stock unless and until we realize improved economic performance as a result of the Merger. If we do not achieve the economic benefits of the Merger that we seek, our stockholders could suffer substantial dilution without corresponding value.

We have always been externally managed and we may not be able to successfully transition to an internally managed company.

We have always been externally managed and have not had our own management personnel. With the exception of Mr. Sachs, we expect substantially all of the key members of DCM’s management team who are currently providing services to us will remain employed by DCM following the Merger, and will continue to provide services to us through a services agreement with DCM. Following the Merger these individuals will be employees of DCM, our subsidiary following the Merger, or us, and we will be responsible for designing and implementing our own compensation structure. We may not be successful when designing and implementing our own compensation structure and our management team may not be satisfied with the new arrangement. If we do not successfully transition to an internally managed company and otherwise successfully integrate Deerfield’s operations, our operations and financial performance could be significantly damaged.

The pro forma financial statements presented for illustrative purposes may not be indicative of our financial condition or results of operations following the Merger.

The pro forma financial statements contained in this proxy statement are presented for illustrative purposes only and may not be indicative of our financial condition or results of operations following the Merger for several reasons. The pro forma financial statements have been derived from the financial statements of DFR and Deerfield and certain adjustments and assumptions have been made regarding our acquisition of Deerfield after giving effect to the Merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy.

We may not uncover all risks associated with acquiring Deerfield and significant liabilities may arise after completion of the Merger.

There may be risks that we fail or are unable to discover in the course of performing our due diligence in connection with the completion of the acquisition. All of Deerfield’s liabilities will remain intact after the Merger, whether pre-existing or contingent, as a matter of law. While we have tried to minimize this risk by conducting due diligence, there could be numerous liabilities that we failed to identify. Any significant liability that may arise or be discovered after the closing may harm our business, financial condition, results of operations and prospects. Further, any rights to indemnification we have are subject to a one-year survival period and other limitations, and the shares held in escrow could be insufficient to satisfy any claims we may have.

The opinions obtained by us from our financial advisors do not address the fairness, from a financial point of view, of the Merger consideration at any time other than April 19, 2007 and will not reflect changes in circumstances prior to the closing date of the Merger.

On April 19, 2007, Bear Stearns delivered to the Special Committee its opinion that, as of April 19, 2007, and based upon and subject to the assumptions, qualifications and limitations set forth in the written opinion, the consideration to be paid by DFR was fair, from a financial point of view, to DFR. Further, on April 19, 2007, Houlihan Lokey delivered to the Special Committee its opinion that, as of April 19, 2007, and based upon and subject to the assumptions, qualifications and limitations set forth in the written opinion, the consideration to be paid by DFR was fair, from a financial point of view, to DFR.

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Our stockholders should be aware that the opinions are directed to the Special Committee, not our stockholders, that they contain numerous assumptions and conditions that should be reviewed carefully and that the financial opinions do not address the fairness, from a financial point of view, of the Merger consideration at any time other than at April 19, 2007. Our stockholders should also be aware that the opinions did not reflect changes after April 19, 2007 that may occur or may have occurred to the operations, businesses, financial condition or prospects of us or Deerfield, general market and economic conditions, and other factors.

If the Merger is not completed, we will have nonetheless incurred substantial costs, and our financial results and operations and the market price of our common stock may be adversely affected.

We have incurred and expect to continue to incur substantial costs in connection with the Merger. These costs are primarily associated with the fees of financial advisors, attorneys, accountants and consultants. In addition, we have diverted significant management resources in an effort to complete the Merger. If the Merger is not completed, we will receive little or no benefit from these costs. In addition, if the Merger is not completed, we may experience negative reactions from the financial markets and others. Each of these factors may adversely affect the trading price of our common stock and our financial results and operations.

We will need to incur substantial indebtedness to consummate the Merger and our leverage could adversely affect our financial health.

As of March 31, 2007, our total long-term outstanding debt on a consolidated basis was approximately $972.2 million. In order to complete the Merger, we plan to incur an additional $155.0 million of indebtedness, and will also assume debt of Deerfield outstanding as of March 31, 2007 in the amount of $3.6 million. Our indebtedness could adversely affect our financial health and business and future operations by, among other things:

Our ability to make payments on our debt will depend upon our future operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which we cannot control. If the cash flows from our operations are insufficient to service our debt obligations, we may take actions, such as delaying or reducing capital expenditures, attempting to restructure or refinance our debt, selling assets or operations or seeking additional equity capital. Any or all of these actions may not be sufficient to allow us to service our debt obligations. Further, we may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. Our failure to generate sufficient funds to pay our debts or to successfully undertake any of these actions could, among other things, materially adversely affect the market value of our common stock and our ability to repay our obligations under our indebtedness.

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We anticipate that the terms of our proposed senior secured term loan facility that we will obtain to assist with the funding of the cash portion of the Merger consideration will impose operating and financial restrictions, which may prevent us from raising additional capital and capitalizing on certain business opportunities.

We expect that the terms of our new credit facility that we will enter into in connection with the Merger will require us to comply with certain financial covenants, including a maximum senior leverage ratio, a minimum interest coverage ratio and a minimum tangible net worth. The proposed terms of our new credit facility also include certain covenants restricting or limiting our ability to, among other things:

These covenants may adversely affect our ability to finance future operations or limit our ability to pursue certain business opportunities or take certain corporate actions. The covenants may also restrict our flexibility in planning for changes in our business and the industry and make us more vulnerable to economic downturns and adverse developments. The documentation governing the credit facility has not been finalized and, accordingly, the actual terms may further restrict our operation of our business.

Following completion of the Merger, our performance will be subject to significant risks that are associated with DCM’s business to which we have not historically been subject.

Historically we have been a financial company that invests primarily in mortgage-backed securities and other real estate investments, as well as corporate investments. We generate risk-adjusted spread-based income from our investment portfolio. DCM is SEC-registered asset manager that, as of May 1, 2007, managed approximately $14.2 billion of client funds. DCM generates fee-based revenue from the management of these client funds. Accordingly, while the completion of the Merger would significantly diversify our business, it will also subject us to significant new risks and uncertainties associated with DCM’s business to which we have not historically been subject, which are described in this proxy statement.

The income from Deerfield and DCM will be subject to federal, state and local income tax, and our ownership of Deerfield and DCM may jeopardize our REIT qualification and may limit our ability to conduct our investment strategy.

Deerfield’s income consists solely of the income earned by DCM, which consists primarily of advisory fee income. That advisory fee income is not qualifying income for purposes of either the 75% or 95% gross income test applicable to REITs. A REIT, however, may own stock and securities in one or more TRSs that may earn income that would not be qualifying income if earned directly by the parent REIT. Consequently, following the Merger, we will hold our ownership interest in Deerfield and DCM through domestic TRSs. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. A TRS pays federal, state and local income tax at regular corporate rates on any income it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise

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tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.

Because we will hold our ownership interest in Deerfield and DCM through domestic TRSs, the income earned by Deerfield and DCM will be fully subject to federal, state and local income tax. Moreover, the value of our investment in the stock and securities of our TRSs may not, in the aggregate, exceed 20% of the value of our total assets. In addition, our income from our TRSs, combined with our other nonqualifying income for purposes of the 75% gross income test, may not exceed 25% of our gross income on an annual basis. Accordingly, our ownership of Deerfield and DCM may limit our ability to invest in other TRSs and other assets that produce nonqualifying income, even though such investments would otherwise have been in accordance with our investment strategy.

DCM’s revenues fluctuate based on the amount and/or value of client assets, which could decrease for various reasons including investment losses, withdrawal of capital, or both.

DCM’s success depends on its ability to earn investment advisory fees from the client accounts it manages. Such fees generally consist of payments based on the amount of assets in the account (management fees), and on the profits earned by the account or the returns to certain investors in the accounts (performance fees). If there is a reduction in an account’s assets, there will be a corresponding reduction in DCM’s management fees from the account, and a likely reduction in DCM’s performance fees (if any) relating to the account, since the smaller the account’s asset base the smaller will be the potential profits earned by the account. There could be a reduction in an account’s assets as the result of investment losses in the account, the withdrawal by investors of their capital in the account, or both.

Investors in the accounts managed by DCM have various types of withdrawal rights, ranging from the right of investors in separate accounts to withdraw any or all of their capital on a daily basis, the right of investors in hedge funds to withdraw their capital on a monthly or quarterly basis, and the right of investors in CDOs to terminate the CDO in specified situations. Investors in hedge funds and managed accounts might withdraw capital for many reasons, including their dissatisfaction with the account’s performance, adverse publicity regarding DCM, DCM’s loss of key personnel, errors in reporting to investors account values or account performance, other matters resulting from problems in DCM’s systems technology, investors’ desire to invest their capital elsewhere, and their need (in the case of investors that are themselves investment funds) for the capital to fund withdrawals by their investors. DCM could experience a major loss of account assets, and thus advisory fee revenue, at any time.

Poor investment performance could lead to a loss of clients and a decline in DCM’s revenues.

Investment performance is a key factor for the retention of client assets, the growth of DCM’s assets under management and the generation of management fee revenue. Poor investment performance could impair DCM’s revenues and growth because:

The failure of DCM’s investment products to perform well both on an absolute basis and in relation to competing products, therefore, could have a material adverse effect on DCM’s business.

DCM derives much of its revenues from contracts that may be terminated on short notice.

DCM derives a substantial portion of its revenues from investment management agreements with accounts that generally have the right to remove DCM as the investment advisor of the account and replace it with a substitute investment advisor. Some of these investment management

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agreements may be terminated for various reasons, including failure to follow the account’s investment guidelines, fraud, breach of fiduciary duty and gross negligence, or, alternatively, may not be renewed.

With respect to DCM’s agreements with some of the CDOs it manages, DCM can be removed without cause by investors that hold a specified amount of the securities issued by the CDO. All of DCM’s agreements with CDOs allow investors that hold a specified amount of securities issued by the CDO to remove DCM for “cause,” which typically includes DCM’s violation of the management agreement or the CDO’s indenture, DCM’s breach of its representations and warranties under the agreement, DCM’s bankruptcy or insolvency, DCM’s fraud or a criminal offense by DCM or its employees, and the failure of certain of the CDO’s performance tests. These “cause” provisions may be triggered from time to time with respect to our CDOs, and as a result DCM could be removed as the investment manager of such CDOs.

Although DCM is expected to remain as the investment advisor for each of its clients, the Merger, if consummated, will constitute a change of control of DCM and thus result in a deemed assignment of DCM’s advisory contracts under the Investment Advisers Act. In addition, certain of DCM’s advisory contracts require the explicit consent of the client, the underlying investors in the client, or other third parties to the assignment of the advisory contract that results from the Merger. As the Merger Agreement requires that DCM obtain consents to the assignment or deemed assignment of advisory contracts from clients constituting at least 80% of its assets under management, we could be obligated to complete the Merger even if clients constituting up to 20% of DCM’s assets under management determine not to consent to the assignment or deemed assignment of the advisory contracts. Under such circumstances, we may lose a portion of DCM’s expected advisory fees, which we may not be able to replace.

DCM could lose client assets as the result of the loss of key DCM personnel.

DCM generally assigns the management of its investment products to specific teams, consisting of DCM portfolio management and other personnel. The loss of a particular member or members of such a team—for example, because of resignation or retirement—could cause investors in the product to withdraw, to the extent they have withdrawal rights, all or a portion of their investment in the product, and adversely affect the marketing of the product to new investors and the product’s performance. In the case of certain CDOs, DCM can be removed as investment advisor upon its loss of specified key employees. In the case of certain other accounts, investors have the right to immediately redeem their investments upon DCM’s loss of specified key employees. In addition to the loss of specific portfolio management team members, the loss of one or more members of DCM’s senior management involved in supervising the portfolio teams could have similar adverse effects on DCM’s investment products. In connection with the exercise by certain affiliates of Mr. Sachs of their right under Deerfield’s existing operating agreement to require Triarc to purchase for cash all of their membership interests in Deerfield simultaneously with the completion of the Merger, on May 25, 2007, Mr. Sachs tendered his resignation as a director and as chairman and chief executive officer of Deerfield and its subsidiaries, effective upon completion of the Merger. The Merger might cause DCM to lose one or more other key employees, which may result in the loss of existing clients.

DCM may need to offer new investment strategies and products in order to continue to generate revenue.

The segments of the asset management industry in which DCM operates are subject to rapid change. Investment strategies and products that had historically been attractive to investors may lose their appeal for various reasons. Thus, strategies and products that have generated fee revenue for DCM in the past may fail to do so in the future. In such case, DCM would have to develop new strategies and products in order to retain investors or replace withdrawing investors with new investors.

It could be both expensive and difficult for DCM to develop new strategies and products, and DCM may not be successful in this regard. In addition, alternative asset management products

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represent a substantially smaller segment of the overall asset management industry than traditional asset management products (such as many corporate bond funds). DCM’s inability to expand its offerings beyond alternative asset management products could inhibit its growth and harm its competitive position in the investment management industry.

Changes in the fixed income markets could adversely affect DCM.

DCM’s success depends largely on the attractiveness to institutional investors of investing in the fixed income markets, and changes in those markets could significantly reduce the appeal of DCM’s investment products to such investors. Such changes could include increased volatility in the prices of fixed income instruments, periods of illiquidity in the fixed income trading markets, changes in the taxation of fixed income instruments, significant changes in the “spreads” in the fixed income markets (the amount by which the yields on particular fixed income instruments exceed the yields on benchmark U.S. Treasury securities), and the lack of arbitrage opportunities between U.S. Treasury securities and their related instruments (such as interest rate swap and futures contracts).

The fixed income markets can be highly volatile, and the prices of fixed income instruments may fluctuate for many reasons beyond DCM’s control or ability to anticipate, including economic and political events and terrorism acts. Any adverse changes in the fixed income markets could reduce DCM’s revenues.

The narrowing of CDO spreads could make it difficult for DCM to launch new CDOs.

It is important for DCM to be able to launch new CDO products from time to time, both to expand its CDO activities (which are a major part of DCM’s business) and to replace existing CDOs as they are terminated or mature. The ability to launch new CDOs is dependent on the amount by which the interest earned on the collateral held by the CDO (such as bank loans or asset-backed securities) exceeds the interest payable by the CDO on the debt obligations it issues to investors, as well as other factors. If these “spreads” are not wide enough, the proposed CDO will not be attractive to investors and thus cannot be launched. There may be sustained periods when such spreads will not be sufficient for DCM to launch new CDO products, which could impair DCM’s business.

DCM could lose client assets as the result of adverse publicity.

Asset managers such as DCM can be particularly vulnerable to losing clients because of adverse publicity. Asset managers are generally regarded as fiduciaries, and if they fail to adhere at all times to a high level of honesty, fair dealing and professionalism they can incur large and rapid losses of client assets. Accordingly, a relatively small perceived lapse in this regard, particularly if it resulted in a regulatory investigation or enforcement proceeding, could materially harm DCM’s business.

DCM could incur losses due to trading errors.

DCM could make errors in placing transaction orders for client accounts, such as purchasing a security for an account whose investment guidelines prohibit the account from holding the security, purchasing an unintended amount of the security, or placing a buy order when DCM intended to place a sell order. If the transaction resulted in a loss for the account, DCM might be required to reimburse the account for the loss, or DCM might choose to do so for client relations purposes. Such reimbursements could be substantial.

DCM could lose management fee income from its CDOs because of payment defaults by issuers of collateral held by the CDOs or the triggering of certain structural protections built into CDOs.

Under the investment management agreements between DCM and the CDOs it manages, DCM’s management fee from the CDO is generally subject to a “waterfall” structure, under which DCM will not receive all or a portion of its fees if, among other things, the CDO does not have sufficient cash flows from its underlying collateral (such as bank loans or asset-backed securities) to

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pay the required interest on the notes it has issued to investors and certain expenses. This could occur if there are defaults by issuers of the collateral on their payments of principal or interest relating to the collateral. In that event, DCM’s management fees would be deferred until funds are available to pay the fees, if such funds become available. In addition, many CDOs have structural provisions meant to protect investors from deterioration in the credit quality of the underlying collateral pool. If those provisions are triggered, then certain portions of DCM’s management fees may be deferred indefinitely.

DCM may be unable to increase its assets under management in certain of its investment vehicles, or it may have to reduce such assets, because of capacity constraints.

Some of DCM’s investment vehicles are limited in the amount of client assets they can accommodate by the amount of liquidity in the instruments traded by the vehicles, the arbitrage opportunities available in those instruments, or other factors. DCM may thus manage investment vehicles that are relatively successful but that cannot accept additional capital because of such constraints. In addition, DCM might have to reduce the amount of assets managed in investment vehicles that face capacity constraints. Changes in the fixed income markets could materially reduce capacity, such as an increase in the number of asset managers using the same or similar strategies as DCM.

The fixed income investment management market is highly competitive and DCM may lose client assets due to competition from other asset managers that have greater resources than DCM or that are able to offer services and products at more competitive prices.

The alternative asset management industry is very competitive. Many firms offer similar and additional investment management products and services to the same types of clients that DCM targets. DCM currently focuses almost exclusively on fixed income securities and related financial instruments in managing client accounts. It has limited experience in equity securities. This is in contrast to numerous other asset managers with comparable assets under management, which have significant background and experience in both the equity and debt markets and thus are more diversified.

In addition, many of DCM’s competitors have or may in the future develop greater financial and other resources, more extensive distribution capabilities, more effective marketing strategies, more attractive investment vehicle structures and broader name recognition. DCM’s competitors may be able to use these resources and capabilities to place DCM at a competitive disadvantage in retaining assets under management and adding new assets. Also, DCM may be at a disadvantage in competing with other asset managers that are subject to less regulation and are thus less restricted in their client solicitation and portfolio management activities, and DCM may be competing for non-U.S. clients with asset managers that are based in the jurisdiction of the prospective client’s domicile.

Because barriers to entry into the alternative asset management business are relatively low, DCM may face increased competition from many new entrants into DCM’s relatively limited market of providing fixed income asset management services to institutional clients.

Additionally, if other asset managers offer services and products at more competitive prices than DCM, DCM may not be able to maintain its current fee structure. Although DCM’s investment management fees vary somewhat from product to product, historically DCM has competed primarily on the performance of its products and not on the level of its investment management fees relative to those of its competitors. In recent years, however, despite the fact that alternative asset managers typically charge higher fees than traditional managers, particularly with respect to hedge funds and similar products, there has been a trend toward lower fees in the investment management industry generally.

In order to maintain its fee structure in a competitive environment, DCM must be able to continue to provide clients with investment returns and service that make investors willing to pay DCM’s fees. DCM might not succeed in providing investment returns and service that will allow it

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to maintain its current fee structure. Fee reductions on existing or future business could impair DCM’s profit margins and results of operations.

Changes in laws, regulations or government policies affecting DCM’s businesses could limit its revenues, increase its costs of doing business and materially and adversely affect its business.

DCM’s business is subject to extensive government regulation. This regulation is primarily at the federal level, through regulation by the SEC under the Investment Advisers Act of 1940, as amended, and regulation by the Commodity Futures Trading Commission, or CFTC, under the Commodity Exchange Act, as amended. DCM is also regulated by state regulators.

The Investment Advisers Act imposes numerous obligations on investment advisers including anti-fraud prohibitions, advertising and custody requirements, disclosure obligations, compliance program duties and trading restrictions. The CFTC regulates commodity futures and option markets and imposes numerous obligations on the industry. DCM is registered with the CFTC as both a commodity trading advisor and a commodity pool operator and certain of its employees are registered with the CFTC as “associated persons.” DCM is also a member of the National Futures Association, the self-regulatory organization for the U.S. commodity futures industry, and thus subject to its regulations.

If DCM fails to comply with applicable laws or regulations, DCM could be subject to fines, censure, suspensions of personnel or other sanctions, including revocation of its registration as an investment adviser, commodity trading advisor or commodity pool operator. Changes in laws, regulations or government policies could limit DCM’s revenues, increase its costs of doing business and materially harm its business.

DCM (Europe), a subsidiary of Deerfield, is subject to extensive government regulation, primarily by the United Kingdom Financial Services Authority under the U.K. Financial Services and Markets Act of 2000. Such regulation is generally similar to the regulation governing DCM.

The non-U.S. domiciled investment funds that DCM manages are regulated in the jurisdiction of their domicile. Changes in the laws or government policies of these foreign jurisdictions could limit DCM’s revenues from these funds, increase DCM’s costs of doing business in these jurisdictions and materially adversely affect DCM’s business.

The level of investor participation in DCM’s products may also be affected by the regulatory and self-regulatory requirements and restrictions applicable to DCM’s products and investors, the financial reporting requirements imposed on DCM’s investors and financial intermediaries, and the tax treatment of DCM’s products. Adverse changes in any of these areas may result in a loss of existing investors or difficulties in attracting new investors.

DCM’s business may be harmed by it becoming a subsidiary of a REIT.

DCM’s status as a subsidiary of a REIT may make it difficult for DCM to retain existing clients, including the underlying investors in the investment funds DCM manages, and to attract new clients. Such clients may determine that DCM has an incentive to favor its management of our investing over DCM’s investing for those clients, particularly if the client account is likely to compete with us, for example with regard to the allocation of scarce investment opportunities. While we cannot predict the effect on DCM’s business that will result from DCM becoming a wholly-owned subsidiary of a REIT, the completion of the Merger could have an adverse effect on DCM’s existing and future client relationships and its business and revenues.

Our ownership of Deerfield might jeopardize our 1940 Act exemption or limit our ability to conduct our investment strategy and thus reduce our earnings and ability to pay dividends.

In order to be exempt from regulation under the Investment Company Act of 1940, or 1940 Act, we—and each of our subsidiaries—must qualify for one of the exemptions from investment company status in the 1940 Act. Our ownership of Deerfield will be held through our subsidiary Deerfield Triarc Capital LLC, or DTC LLC, which relies on an exemption from investment

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company status that generally requires it to maintain at least 55% of its assets in specified real estate assets and at least 80% of its assets in real estate and real-estate related securities. DTC LLC’s ownership interest in Deerfield will not constitute such a security, and thus may make it more difficult for DTC LLC to comply with the 80% asset test. As a result, we will need to monitor carefully DTC LLC’s compliance with the 80% asset test, and the Merger may make it difficult for DTC LLC to acquire other assets that do not qualify for the 80% test, which might generate higher returns than Deerfield. If DTC LLC fails to meet the 80% asset test, we could be required to materially restructure our activities and to register as an investment company under the 1940 Act, which could impair our operating results.

Our status as a proprietary account of DCM might restrict DCM’s management of our investing.

For regulatory purposes, we are likely to be considered a “proprietary” account of DCM after the Merger. This may restrict DCM’s management of our account, for example with regard to “crossing” transactions between our account and the account of a non-proprietary DCM client. DCM may not be successful in managing these restrictions after the completion of the Merger.

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HISTORIC AND PRO FORMA CAPITALIZATION

The following table sets forth the capitalization of DFR and Deerfield as of March 31, 2007, and the pro forma capitalization of our company after giving effect to the Merger and the financing incurred in connection therewith. This table should be read in conjunction with the unaudited pro forma condensed combined financial information, including the notes thereto, the DFR and Deerfield audited and unaudited historical financial statements, including the notes thereto, and “Information Relating to DFR—DFR’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Information Relating to Deerfield—Deerfield’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case, included elsewhere or incorporated by reference in this proxy statement.

The unaudited pro forma capitalization is not necessarily indicative of the capitalization of our company following the Merger that would have occurred had the Merger and the financing incurred in connection therewith occurred on the date indicated, nor is it necessarily indicative of future capitalization. The unaudited pro forma adjustments are based upon information set forth in this proxy statement, and certain assumptions included in the notes to the unaudited pro forma condensed combined financial statements.

The pro forma capitalization reflects DFR as the accounting acquirer, with the Merger reflected as an acquisition and, accordingly, goodwill is recorded in conjunction with the shares issued by DFR to the members of Deerfield. The table below assumes a purchase price of $301.3 million for accounting purposes, based on the issuance of 9,635,192 shares at $16.23, the average closing price of our common stock on April 18, 19, 20, 23 and 24, 2007, and a cash payment of $145.0 million. There are certain other transaction related costs and allocations also included in this table. The pro forma information discussed below is preliminary and for illustrative purposes only.

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COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND POLICY

Our common stock has been trading on the NYSE under the trading symbol “DFR” since our initial public offering on June 29, 2005. As of May 14, 2007, DFR had 51,732,066 shares of common stock issued and outstanding and there were approximately 35 holders of record.

The following table sets forth, for the periods indicated, the high and low closing prices of our common stock as reported on the New York Stock Exchange:

Prior to our June 29, 2005 initial public offering, there had been no public trading market for our common stock, but the shares of our common stock issued to qualified institutional buyers in connection with our December 2004 private offering were eligible for trading in PORTAL, a subsidiary of the NASDAQ Stock Market, Inc., that permits secondary sales of eligible unregistered securities to qualified institutional buyers in accordance with Rule 144A under the Securities Act.

The information above regarding PORTAL prices may not be complete because we have access only to information regarding trades reported by our initial purchaser and placement agent and not trades reported by other broker-dealers. Moreover, broker-dealers are not required to report all trades to PORTAL.

To satisfy the requirements to qualify as a REIT and generally not be subject to federal income and excise tax, we intend to make regular quarterly distributions of all or substantially all of our REIT taxable income to holders of our common stock out of assets legally available. Any future distributions we make will be at the discretion of our Board and will depend upon our earnings and financial condition, maintenance of REIT status, applicable provisions of the Maryland General Corporation Law and such other factors as our Board deems relevant. For more information regarding risk factors that could materially adversely affect our earnings and financial condition, please see “Part I—Item 1A.—Risk Factors” of our annual report on Form 10-K and quarterly report on Form 10-Q incorporated by reference in this proxy statement.

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The following table sets forth the closing price of our common stock as reported on the NYSE on April 19, 2007 (the last day of trading before the day the Merger was announced), on  , 2007, the Record Date, and on  , 2007, the date of this proxy statement. There is no established public trading market for Deerfield’s membership interests.

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PROPOSAL NO. 1

APPROVE THE ISSUANCE OF 9,635,192 SHARES OF DFR COMMON STOCK TO THE HOLDERS OF DEERFIELD OWNERSHIP INTERESTS PURSUANT TO THE MERGER AGREEMENT TO ENABLE DFR TO COMPLETE THE MERGER.

This section of the proxy statement describes material aspects of the proposed Merger, including the issuance of shares of our common stock pursuant to the Merger Agreement. This summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement, including the full text of the Merger Agreement, which is attached as Annex A, and the other documents we refer you to for a more complete understanding of the Merger. In addition, important business and financial information about DFR is incorporated into this proxy statement/prospectus by reference. See “How to Obtain More Information.”

Deerfield Triarc Capital Corp.

DFR is a diversified financial company that invests in real estate investments, primarily mortgage-backed securities, as well as corporate investments. We have elected to be taxed as a REIT, for federal income tax purposes, and intend to continue to operate so as to qualify as a REIT. Our objective is to provide attractive returns to our investors through a combination of dividends and capital appreciation. To achieve this objective, we intend to invest opportunistically in financial assets to construct an investment portfolio that is leveraged where appropriate in order to achieve attractive risk-adjusted returns and that is structured to allow us to maintain our qualification as a REIT and the requirements for exclusion from regulation under the Investment Company Act of 1940, as amended, or 1940 Act.

We have been externally managed by DCM since commencement of business in December 2004.

Deerfield, DCM and the Management Agreement

Upon the completion of the Merger, we will become the owner of all of the membership interests of Deerfield. At such time, we will become internally managed and our existing management agreement with DCM will be cancelled.

Deerfield

Deerfield is a holding company the primary assets of which are all of the outstanding membership interests of DCM and all of the outstanding shares of DCM (Europe).

DCM

DCM is a wholly owned subsidiary of Deerfield and a Chicago-based, SEC registered asset manager that manages client funds (primarily for institutions) worldwide. DCM (together with its predecessor companies) commenced its investment management operations in 1993. As of May 1, 2007, DCM managed approximately $14.2 billion of client funds. Through our management agreement with DCM, we have had access to its resources in portfolio management and infrastructure support, such as risk management, credit analysis, operations, systems, accounting, portfolio valuation, compliance and internal audit. As of May 1, 2007, DCM had 144 employees, including 47 portfolio managers and investment analysts. Also, as of May 1, 2007, DCM had 33 full-time investment professionals specializing in MBS, ABS, loans and leveraged finance, dedicating a significant part of their time to sourcing, including performing due diligence, and managing the assets of our portfolio. DCM’s investment professionals perform services for other DCM accounts as well as ours. For the year ended December 31, 2006 and three months ended March 31, 2007, 21.6% and 31.6% of DCM’s revenues were derived from services provided to us, respectively.

DCM primarily invests in a broad range of debt instruments in managing client portfolios. The primary investment focus is on MBS and other ABS, loans, corporate bonds, leveraged finance

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instruments and government securities. DCM has separate portfolio management teams for each of these areas. DCM primarily utilizes the following strategies: fundamental credit analysis, duration management, yield curve arbitrage and basis spread techniques.

DCM has historically been very selective in making investments, basing its investment decisions on in-depth fundamental research and proprietary analytical methodologies, and relying on teams of experienced senior portfolio managers and research analysts. DCM values portfolio diversity, favors stable sectors that are resilient across economic cycles and takes into account industry and macroeconomic trends in its decision making. In addition, DCM has experience evaluating and negotiating structural protection for its investments with a clear focus on minimizing credit losses.

DCM (together with its predecessor companies) has actively operated as an asset manager since 1993 and registered with the SEC as an investment adviser in January 1997. DCM is also registered with the U.S. Commodity Futures Trading Commission as a commodity pool operator and commodity trading advisor, and is a member of the U.S. National Futures Association.

As of May 1, 2007, Triarc, through a subsidiary, owned approximately 64% of the outstanding capital interests, at least 52% of the profits interests and approximately 94% of the voting interests in Deerfield, which owns 100% of DCM. Senior management of DCM owns and controls the balance of the equity and voting interests in Deerfield. In addition, all of our officers and three of our seven directors are also employees of DCM or its affiliates. See “Certain Interests of Our Officers and Directors in Deerfield.”

We are the only account that DCM manages pursuant to the specific investment strategy it uses for us, although DCM uses some of the components of that strategy for its other clients. For example, in selecting bank loan investments for us, DCM uses the same or similar analysis that it uses in managing bank loan portfolios for other clients. We are party to a management agreement with DCM, pursuant to which DCM provides these investment management services to us. See “Management Agreement.”

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Our Organizational Structure Shortly After the Merger

The following chart summarizes our expected structure shortly after the completion of the Merger:

Management Agreement

We are party to a management agreement with DCM that provides for 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. DCM’s role as manager is under the supervision and direction of our Board.

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Our Organizational Structure

Reasons for the Proposed Merger

We believe the proposed Merger provides us with an opportunity to acquire an alternative asset management company that will both significantly diversify our existing business and sources of income and convert our current external management structure into an internally-managed structure. We believe the benefits to us and our stockholders of such an opportunity include:

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In connection with the acquisition of DCM pursuant to the proposed Merger, we will issue 9,635,192 shares of our common stock to the members of Deerfield. In this proxy statement, we are seeking your approval of this issuance of common stock because the New York Stock Exchange rules require that it be approved by our stockholders representing a majority of the votes cast on the proposal (provided that the total votes cast on the proposal represent a majority of the outstanding shares of our common stock entitled to vote on the proposal), and because we have made the approval of the stock issuance by our stockholders representing a majority of the votes cast on the proposal a condition to the consummation of the transactions contemplated by the Merger Agreement. We have also made the approval of the stock issuance by a majority of the votes cast on the proposal by stockholders who are not affiliates of Deerfield or Triarc a condition to the consummation of the transactions contemplated by the Merger Agreement.

Certain Interests of Our Officers and Directors in Deerfield

Three of our seven directors and all of our executive officers are also employees of Deerfield or its affiliates:

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In addition, the following of our directors and executive officers are beneficial owners of membership interests in Deerfield as described below:

As members of Deerfield, affiliates of Mr. Peltz and Messrs. Trutter and White have executed, or are entitled to execute, the registration rights agreement which will be entered into with the members of Deerfield who will receive our common stock in connection with the Merger and will receive the registration rights described under “Description of the Material Agreements Relating to the Merger—Registration Rights Agreement”.

In the case of Mr. Sachs, who is one of our directors and also a director and the chairman and chief executive officer of Deerfield and DCM, on May 25, 2007 certain of Mr. Sachs’ affiliates that are members of Deerfield irrevocably exercised their right under Deerfield’s existing operating agreement to require Triarc to purchase for cash all of the membership interests in Deerfield held by these affiliates of Mr. Sachs simultaneously with the completion of the Merger. In connection with this exercise, Mr. Sachs has tendered his irrevocable resignation as a director and chairman and chief executive officer of Deerfield and its subsidiaries effective upon completion of the Merger. It is anticipated, however, that Mr. Sachs will remain as a director of DFR. In connection with his resignation as an officer of Deerfield and its subsidiaries, Mr. Sachs will also be entitled to severance payments and certain other benefits.

Background of the Proposed Merger

In May 2006, the Nominating & Corporate Governance Committee of our Board, or the governance committee, met to conduct its annual self-assessment. At the meeting, the members also discussed whether DFR needed a clearer strategy for its future growth and to increase the yield of its common stock.

On June 1, 2006, the governance committee met with Mr. Peltz, our then-chairman and the chairman and chief executive officer of Triarc, to review the results of its self-assessment. In connection with the meeting, the members of the governance committee expressed to Mr. Peltz their concern that DFR needed a clearer strategy for its future growth and to increase the yield of its common stock. In this discussion, the issue was raised as to whether DFR should consider acquiring DCM in order to both diversify DFR’s revenue sources and internalize its management.

In June 2006, following the governance committee’s meeting with Mr. Peltz, Peter H. Rothschild, a director and member of the governance committee, contacted an investment bank in connection with DFR’s possible internalization of its management through the acquisition of DCM. Mr. Rothschild requested that the investment bank conduct a preliminary review of the feasibility of DFR acquiring DCM, including the level of consideration DFR should offer for DCM to effect the acquisition.

By mid-July 2006, the investment bank had sufficiently completed an analysis to report preliminary results to Mr. Rothschild and Mr. Rothschild reported those results to his co-directors, Robert E. Fischer, Robert B. Machinist and Howard Rubin. During this time, Messrs. Rothschild, Fischer, Machinist and Rubin were also informed that Mr. Sachs, a director and the chairman and

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chief executive officer of Deerfield and DCM, was in discussions with Triarc regarding the possible acquisition of Triarc’s membership interests in Deerfield by certain members of DCM’s management.

On July 17, 2006, Messrs. Fischer, Machinist and Rothschild met with Mr. Peltz to discuss the possible acquisition of DCM in light of the investment bank’s preliminary conclusions. At the meeting, Messrs. Fischer, Machinist and Rothschild told Mr. Peltz that DFR may consider acquiring DCM for consideration consisting of cash and stock having an aggregate value of approximately $250 million. The closing price of DFR common stock on July 14, 2006, the last trading day prior to the meeting, was $12.79.

In late July 2006, Mr. Peltz informed Mr. Rothschild that Triarc had determined that DFR’s tentative proposal was too low and that, instead, Triarc was considering other alternative transactions.

In mid-September 2006, Triarc suggested to Mr. Fischer that both he and the other DFR directors who do not hold membership interests in Deerfield should be prepared to form a special committee of the Board, consisting of directors who do not hold membership interests in Deerfield, to determine whether DFR should take any action under DFR’s management agreement with DCM in the event of a third party offer to acquire DCM.

During the period from early October 2006 through mid-January 2007, the closing price of DFR common stock rose from $13.11 on October 2, 2006 to $17.03 on January 19, 2007.

In late January 2007, a representative of Triarc, informed Messrs. Fischer, Machinist, Rothschild and Rubin that Triarc had received expressions of interest from at least two unaffiliated potential acquirers of Deerfield and suggested that a special committee of the Board, consisting of directors who do not hold membership interests in Deerfield, be established to determine what action DFR should take under its management agreement with DCM in connection with any third-party proposals to acquire Deerfield.

In early February 2007, various DFR directors who do not hold membership interests in Deerfield had informal conversations with representatives of Triarc as to whether Triarc and Deerfield would consider a proposal from DFR to acquire Deerfield in which a significant portion of the consideration would consist of DFR common stock. The directors noted the appreciation in the trading price of DFR common stock over the prior months and both DFR and DCM’s improved operating results. Triarc responded that it would be prepared to entertain such a proposal.

Subsequently, these directors held additional informal conversations with representatives of Triarc regarding the need to establish a special committee of the Board, consisting of directors who do not beneficially own membership interests in Deerfield, and engage independent financial and legal advisors to consider, on behalf of DFR, a possible proposal to acquire Deerfield.

In anticipation of the formal establishment of the Special Committee for the purpose of considering and negotiating a possible acquisition of Deerfield, on February 13, 14 and 16, 2007, Messrs. Fischer, Machinist and Rothschild met with various investment banking firms and law firms that had been invited to make presentations to the Special Committee regarding their engagement in connection with our possible acquisition of Deerfield. (Mr. Rubin participated in the February 13, 2007 meeting.) At these meetings, the directors agreed that, once established, the Special Committee would engage Bear, Stearns & Co. Inc. as its financial advisor and Weil, Gotshal & Manges LLP as its legal counsel.

On March 1, 2007, the Board distributed a unanimous written consent containing resolutions establishing the Special Committee consisting of Mr. Rothschild, as interim chairman, and Messrs. Fischer, Machinist and Rubin, and delegating to the Special Committee authority to:

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The resolutions in the unanimous written consent further provided, among other things, that:

On March 2, 2007, Goldman Sachs & Co., Triarc’s financial advisor, granted the Special Committee and its advisors access to a data room that had been established to facilitate the sale of Deerfield. From and after this date, the Special Committee’s legal and financial advisors conducted, on behalf of DFR, legal and financial due diligence in order to determine appropriate valuation and contractual terms for a potential acquisition of Deerfield.

Also on March 2, 2007, Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to Triarc and Deerfield, provided Weil Gotshal with a draft of the Merger Agreement. At various times through the date of execution of the Merger Agreement, Weil Gotshal and Bear Stearns, on behalf of the Special Committee, and Paul Weiss and Goldman Sachs, on behalf of Triarc and Deerfield, negotiated the draft of the Merger Agreement and related documents. These negotiations included discussions regarding, and the exchange of drafts and comments on, these documents.

On March 5, 2007, the Special Committee held a telephonic meeting that was also attended by representatives from Weil Gotshal. The Special Committee discussed the advisability of retaining a second investment banking firm, in addition to Bear Stearns, to render an opinion with respect to the fairness of the consideration to be paid in any transaction that might be negotiated, and unanimously agreed to interview three investment banking firms for this purpose. The Special Committee then asked Weil Gotshal to describe various discussions that had taken place between Weil Gotshal and Bear Stearns regarding tax and other structural issues with respect to the potential acquisition of Deerfield, as well as possible next steps that the Special Committee and Weil Gotshal could take.

On March 8, 2007, the Special Committee held a telephonic meeting with representatives from Weil Gotshal in attendance. The Special Committee discussed its meetings with three additional investment banking firms and unanimously agreed that Houlihan Lokey should be engaged to provide the Special Committee with a second opinion. In addition, Weil Gotshal described various structural and other issues that it had identified in connection with the draft of the Merger Agreement that had been circulated by Paul Weiss. The Special Committee instructed Weil Gotshal to meet with Paul Weiss to further discuss and attempt to resolve these issues.

On March 9, 2007, the Special Committee held a meeting that was attended by representatives from Weil Gotshal and Bear Stearns. The Special Committee discussed financial projections for both DFR and Deerfield and the potential termination of the management agreement between DFR and

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DCM in the event an acquisition of Deerfield is consummated. Following this, the Special Committee directed Bear Stearns to schedule a meeting with representatives of DCM and Triarc to discuss a potential transaction.

On March 13, 2007, Weil Gotshal met with Paul Weiss and a representative of Triarc to exchange preliminary comments on the draft of the Merger Agreement provided by Paul Weiss and the structure of a potential transaction generally. Weil Gotshal noted that, among other things, the draft of the Merger Agreement resembled an agreement used in connection with the acquisition of a public company, rather than a private company, in that Deerfield’s representations and warranties were limited in scope and did not survive beyond the closing, and there were no provisions providing for post-closing indemnification of DFR for breaches of Deerfield’s representations, warranties, covenants and agreements. Additionally, Weil Gotshal noted that there were no provisions that limited the right of Deerfield members to compete with a merged DFR/Deerfield after the closing, and the agreement required DFR to pay Deerfield a termination fee if the agreement was terminated under certain circumstances.

On March 14, 2007, the Special Committee held a telephonic meeting with representatives from Weil Gotshal in attendance. Weil Gotshal reported on its meeting with Paul Weiss and a representative of Triarc the previous day.

On March 16, 2007, DFR received an executed copy of the unanimous written consent distributed on March 1, 2007 from the last DFR director.

Also on March 16, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal and Bear Stearns. The Special Committee, Bear Stearns and Weil Gotshal discussed a number of issues in relation to the possible acquisition of Deerfield including the valuation assumptions that Bear Stearns was using in its valuation of Deerfield as well as the possible strategies that DFR could use if it determined to make a formal offer to acquire Deerfield.

On March 20, 2007, the members of the Special Committee and Bear Stearns attended a meeting with representatives of Deerfield and Triarc (on which Weil Gotshal participated telephonically), at which the representatives of Deerfield and Triarc discussed with the members of the Special Committee their assumptions regarding DCM’s performance and management following the completion of a potential transaction, as well as their general proposals relating to the structure and form of consideration for a potential transaction.

Immediately following this meeting on March 20, 2007, the Special Committee held a meeting that was attended by Bear Stearns and, telephonically, by Weil Gotshal. At this meeting, the Special Committee, after discussing the matter with its financial and legal advisors, unanimously determined that it was in the best interest of DFR and its stockholders who do not hold membership interests in Deerfield to make an offer to acquire Deerfield. In this regard, the Special Committee unanimously agreed that it should make an offer to acquire all of the equity interests of Deerfield for consideration valued at $290 million, consisting of $145 million of cash and DFR common stock having a value of $145 million (based upon a $16.50 market price, which the Special Committee noted was higher than the then-current trading price of DFR’s common stock). The Special Committee unanimously authorized Mr. Rothschild to orally communicate the terms of this offer to Triarc’s representatives.

Later on March 20, 2007, Mr. Rothschild and Bear Stearns met with Edward P. Garden, the Vice Chairman of Triarc, and, in accordance with the Special Committee’s prior instruction, orally delivered the Special Committee’s offer in respect of the possible acquisition of Deerfield. Mr. Garden advised Mr. Rothschild that the Special Committee’s offer did not provide sufficient value to Deerfield’s members because:

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Mr. Garden further proposed a counter-offer of $310 million of consideration, consisting of $155 million in cash and DFR common stock having a value of $155 million (based upon the current market price).

On March 25, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal. Mr. Rothschild reported to the other members of the Special Committee on his meeting with Mr. Garden, including Mr. Garden’s response to the Special Committee’s offer and his counter-offer to the Special Committee. The Special Committee, together with Weil Gotshal and Bear Stearns, discussed how to proceed in light of the counter-offer and determined that it would be in the best interests of DFR and the stockholders who do not hold membership interests in Deerfield to revise its proposal to acquire Deerfield and offer to provide $290 million of consideration consisting of $145 million in cash and our common stock having a value of $145 million (based on the current market price).

On March 26, 2007, Mr. Rothschild and Bear Stearns met with Mr. Garden of Triarc in order to present the Special Committee’s revised offer. Mr. Garden rejected the Special Committee’s revised offer and proposed a revised counter-offer consisting of:

On March 27, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal and Bear Stearns. Mr. Rothschild reported on his conversation the prior day with Mr. Garden, including Mr. Garden’s response to the Special Committee’s revised offer and his revised counter-offer to the Special Committee. The Special Committee, together with Weil Gotshal and Bear Stearns, discussed how to proceed in light of the revised counter-offer and determined that it would be in the best interests of DFR and its stockholders that do not hold membership interests in Deerfield to make a revised offer. In this regard, the Special Committee determined that its revised offer would consist of:

On March 28, 2007, Mr. Rothschild had a telephone conversation with Mr. Garden of Triarc to present the Special Committee’s revised offer to acquire Deerfield. In that conversation, Mr. Garden indicated that the Special Committee’s revised offer would be acceptable, subject to the negotiation of definitive documentation, provided that Deerfield was permitted to distribute all of the shares of DFR common stock it currently held to its members prior to closing of the transaction, and provided DFR would reimburse Deerfield’s members for Deerfield’s out-of-pocket expenses incurred

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in connection with the organization of DFP on a pro-rata basis with DFR’s recoupment of any expenses incurred by DFR in connection with DFP after the closing.

On March 29, 2007, the Special Committee (excluding Mr. Machinist) held a telephonic meeting that was attended by representatives from Weil Gotshal. Mr. Rothschild reported that the revised offer proposed by the Special Committee would be acceptable to Triarc and Deerfield, provided the parties could negotiate definitive documentation and agree on certain issues relating to the distribution of the previously granted DFR common stock and the proposed reimbursement of the expenses incurred by Deerfield in connection with DFP. Later that day, the Special Committee held a second meeting (with Weil Gotshal in attendance), to update Mr. Machinist as to the status of the negotiations.

On March 30, 2007, Weil Gotshal distributed to Paul Weiss a draft of the Merger Agreement containing a number of proposed revisions, including the elimination of various business-related DFR representations and warranties, the inclusion of additional Deerfield representations and warranties, the elimination of any requirement to provide financing commitment letters upon execution of a definitive agreement, the inclusion of a financing condition to DFR’s obligation to close, the elimination of any termination fee payable by DFR to Deerfield in the event a definitive Merger Agreement is terminated under any circumstances, and the inclusion of various provisions creating an obligation of the Deerfield members to indemnify DFR for certain breaches of the Merger Agreement.

On April 1, 2007, in light of the progress that had been made in negotiations, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal, Bear Stearns and Houlihan Lokey in order to brief Houlihan Lokey as to the status of negotiations and to answer various questions that Houlihan Lokey had regarding the possible acquisition of DCM, including the possible synergies that could arise from the acquisition, as part of Houlihan Lokey’s diligence in connection with its engagement.

On April 3, 2007, Paul Weiss distributed to Weil Gotshal a revised draft of the Merger Agreement proposing, among other things, that DFR secure financing commitment letters prior to the execution of a definitive Merger Agreement, that DFR remove “Triarc” from its name, that DFR pay Deerfield’s and Triarc’s transaction-related expenses in the event the Merger Agreement is terminated for specified reasons, and further limitations on the indemnification obligations of Deerfield’s members.

On April 4, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal, Bear Stearns and Houlihan Lokey. The Special Committee discussed a range of issues concerning the possible acquisition of DCM, including the preliminary views of each of Bear Stearns and Houlihan Lokey with respect to the financial aspects of the possible acquisition. Additionally, Weil Gotshal described the revisions proposed by Paul Weiss in the draft of the Merger Agreement it had received the day before.

Later on April 4, 2007, Weil Gotshal met with Paul Weiss and representatives of Deerfield and Triarc to discuss the Special Committee’s comments to Paul Weiss’ proposed revisions to the draft of the Merger Agreement.

On April 5, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal. At the meeting, the Special Committee discussed the meeting that had taken place the previous day between Weil Gotshal and Paul Weiss regarding the negotiation of the Merger Agreement.

On April 10, 2007, Weil Gotshal distributed to Paul Weiss a memorandum setting forth the Special Committee’s position with respect to various outstanding issues relating to the draft of the Merger Agreement. In this memorandum, Weil Gotshal also proposed, on behalf of the Special Committee, that the draft of the Merger Agreement be revised, among other things, to include a post- closing book value adjustment to account for decreases in Deerfield’s book value since December 31, 2006, and to provide that all of Deerfield’s consolidated earnings between the date a definitive Merger Agreement is executed and the date of closing be retained by Deerfield following closing. Later that day, Paul Weiss distributed to Weil Gotshal a revised draft of the Merger

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Agreement that addressed some, but not all, of the outstanding issues identified in the memorandum.

On April 11, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal. At the meeting, the Special Committee discussed various employee matters relating to the possible acquisition of Deerfield, as well as the discussions that had taken place between Weil Gotshal and Paul Weiss regarding the ability of the Special Committee to conduct diligence with various DCM employees.

On the morning of April 16, 2007, the Special Committee held a telephonic meeting that was attended by representatives from Weil Gotshal. The Special Committee and Weil Gotshal discussed various issues that were raised by the draft of the Merger Agreement, including the financing representations and covenants.

Subsequently on April 16, 2007, Messrs. Rothschild and Fischer and Weil Gotshal met with representatives of Deerfield and Triarc and Paul Weiss to discuss outstanding issues relating to the draft of the Merger Agreement and the potential transaction generally. At this meeting, the parties discussed, among other things, the status of our efforts to obtain financing for a potential transaction, the desire of the Special Committee to meet and discuss the transaction with members of Deerfield management who also are officers of DFR, the Special Committee’s request for a post- closing book value adjustment and its related need to restrict Deerfield from making extraordinary distributions of cash to its members, the terms of Deerfield’s post-closing indemnification obligations, any rights of Triarc and certain other Deerfield members to designate nominees to the Board after the closing, the extent to which Deerfield members will be reimbursed for Deerfield expenses incurred in connection with the organization of DFP, and the terms of the registration rights agreement. Additionally, at this meeting, subject to the approval of the other members of the Special Committee, Messrs. Rothschild and Fischer, on the one hand, and the representatives of Deerfield and Triarc, on the other hand, reached agreement on a number of outstanding terms of the draft of the Merger Agreement, including the closing condition relating to client consents obtained, that DFR would change its name to eliminate “Triarc,” the non-competition provisions, the elimination of any obligation of DFR to pay Deerfield’s fees in the event the transaction is not consummated, and the survival term of the representations and warranties in the Merger Agreement.

Later that day, the Special Committee held a second telephonic meeting that was attended by Weil Gotshal. At the meeting, Weil Gotshal and Messrs. Rothschild and Fischer briefed the other members of the Special Committee on the negotiations that had occurred earlier that day and the status of various open issues relating to the draft of the Merger Agreement, registration rights agreement and escrow agreement.

As described above, in April 2007, the Special Committee had asked Deerfield and Triarc to permit the officers of DFR who also are employees of DCM to meet with and assist the Special Committee and its advisors with regard to the Merger and the Merger Agreement. The Special Committee requested the individuals’ assistance because, although the Special Committee’s principal advisors were Bear Stearns and Weil Gotshal, the Special Committee considered that such additional assistance was necessary to the Special Committee and its advisors in their consideration of the Merger and the Merger Agreement. These individuals, Triarc and the Special Committee and their representatives discussed the potential conflicts of interest in light of the dual roles of these individuals as DFR officers, on the one hand, and DCM employees and, in certain cases, Deerfield members, on the other hand. In view of the fact that DFR did not have any officers or employees that were not also DCM employees, the parties concluded that it was appropriate for these individuals (in their capacities as DFR officers, rather than DCM employees or Deerfield members) to meet with and assist the Special Committee and its advisors with regard to the Merger and the Merger Agreement. It was agreed, however, that these individuals would not be asked about Deerfield’s negotiating strategy or the valuation of Deerfield or DFR and that DFR would indemnify them against any liabilities arising out of their participation in such meetings in their capacities as DFR officers.

On April 18, 2007, the individuals (in their capacities as DFR officers) met with Mr. Machinist, Bear Stearns and Weil Gotshal to discuss the Merger and the Merger Agreement. At the outset of

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that conversation, the attendees confirmed that their assistance would be limited to matters that did not relate to Deerfield’s negotiating strategy or the valuation of Deerfield or DFR.

During the evening of April 18, 2007, and the morning of April 19, 2007, Weil Gotshal and Paul Weiss continued to negotiate and resolve various other terms of the draft of the Merger Agreement and other documentation.

On the afternoon of April 19, 2007, the Special Committee held a meeting that was attended by representatives from Weil Gotshal, Bear Stearns and Houlihan Lokey. The purpose of the meeting was for the Special Committee to consider the terms of the possible acquisition of Deerfield that had been negotiated and, if appropriate, for the Special Committee to vote on whether to approve the draft of the Merger Agreement, as negotiated, and the other documents contemplated by the draft of the Merger Agreement. Weil Gotshal provided the Special Committee with a summary of the draft of the Merger Agreement and history of the negotiations to date. Houlihan Lokey made a presentation to the Special Committee regarding financial aspects of the proposed acquisition of Deerfield and delivered its written opinion that, as of April 19, 2007, and based upon and subject to the assumptions, factors, qualifications and limitations set forth in its opinion, the aggregate merger consideration was fair, from a financial point of view, to DFR. Bear Stearns made its presentation to the Special Committee regarding financial aspects of the proposed acquisition of Deerfield and delivered its written opinion that, as of April 19, 2007, and based upon and subject to the assumptions, qualifications and limitations set forth in its opinion, the merger consideration to be paid by DFR was fair, from a financial point of view. Following a discussion of these reports, the Special Committee after due deliberation unanimously voted to adopt resolutions: