Exhibit 10.1

 

EXECUTION VERSION

 

SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

 

THIS SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT, dated as of May 8, 2009
(this “Agreement”), is entered into among DWFC, LLC (“DWFC”), Deerfield TRS
(Bahamas) Ltd. (“DTRS” and together with DWFC, the “Borrowers”), Deerfield
Capital LLC, as Originator (the “Originator”) and as Servicer (the “Servicer”),
each of the Conduit Purchasers, the Institutional Purchasers (collectively, and
together with the Swingline Purchaser (as defined below), the “Lenders”) and the
Purchaser Agents from time to time party to the Sale and Servicing Agreement
referenced below, Wachovia Bank, National Association, as Swingline Purchaser
(the “Swingline Purchaser”), and Wachovia Capital Markets, LLC, as
Administrative Agent (the “Administrative Agent”).  Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed thereto in the
Sale and Servicing Agreement (as defined below).

 

RECITALS

 

WHEREAS, the Borrowers, the Originator, the Servicer, the Lenders, the Purchaser
Agents, the Swingline Purchaser, the Administrative Agent, Lyon Financial
Services, Inc. (d/b/a/ U.S. Bank Portfolio Services), as Backup Servicer (the
“Backup Servicer”), U.S. Bank National Association, as Collateral Custodian (the
“Collateral Custodian”) and the Hedge Counterparty have entered into that
certain Sale and Servicing Agreement dated as of March 10, 2006 (as amended
prior to the date hereof, the “Sale and Servicing Agreement”).

 

WHEREAS, as of the required reporting date for the fiscal quarters ending as of
March 31, 2008 and June 30, 2008 (pursuant to Section 6.10(d) of the Sale and
Servicing Agreement), Deerfield Capital LLC failed to maintain stockholder’s
equity of $240,000,000 plus 90% of the proceeds raised from equity issuers,
which constitutes a Servicer Default under Section 6.15(j) of the Sale and
Servicing Agreement (and, accordingly, a Termination Event under
Section 10.1(d) of the Sale and Servicing Agreement (the “Acknowledged
Termination Event”).

 

WHEREAS, the Borrowers, the Originator and the Servicer (collectively, the “Loan
Parties”) have requested, and the Administrative Agent and the Lenders have,
pursuant to a Forbearance Agreement dated as of May 12, 2008 (the “Original
Agreement”), agreed to a request by the Loan Parties to (i) forbear from
exercising certain rights and remedies arising from the Acknowledged Termination
Event, (ii) forbear from exercising any right to terminate the rights and
obligations of the Servicer arising from the Acknowledged Termination Event and
(iii) waive application of the Concentration Limits set forth in clause (a) of
the definition of “Concentration Limits” in each case, during the Forbearance
Period.

 

WHEREAS, the Loan Parties, the Administrative Agent and the Lenders amended and
restated the Original Agreement pursuant to that certain Amended and Restated
Forbearance Agreement dated as of August 11, 2008 (the “Amended and Restated
Agreement”).

 

WHEREAS, the Forbearance Period (as defined in the Amended and Restated
Agreement) ended on November 30, 2008 as a result of the Loan Parties’ failure
to achieve a Leverage Ratio (as defined in the Amended and Restated Agreement)
of 25%.

 

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WHEREAS, on or prior to the date hereof, a portion of the Collateral is being
sold to a third-party purchaser (the “Sale of Collateral”) and 100% of the
proceeds of the Sale of Collateral are being used to reduce the Advances
Outstanding, in connection with which the Loan Parties, the Administrative Agent
and the Lenders have agreed to amend the Amended and Restated Agreement pursuant
to the terms set forth herein; and

 

WHEREAS, the Loan Parties have requested that the Administrative Agent and the
Lenders consent to the dissolution of DTRS.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

AGREEMENT

 

1.             Estoppel, Acknowledgement and Reaffirmation.  The Loan Parties
hereby acknowledge their obligations under the respective Transaction Documents
to which they are party and reaffirm that each of the liens and security
interests created and granted in or pursuant to the Transaction Documents is
valid and subsisting and that this Agreement shall in no manner impair or
otherwise adversely affect such liens and security interests.

 

2.             Forbearance.  Subject to the terms and conditions set forth
herein, the Administrative Agent and the Lenders agree that they shall, during
the Forbearance Period (as defined below), (i) forbear from exercising any and
all rights or remedies available to them under the Sale and Servicing Agreement,
the other Transaction Documents and Applicable Law as a result of the
Acknowledged Termination Event or any of the Enumerated Termination Events (as
defined below), but only to the extent such rights or remedies arise exclusively
as a result of the Acknowledged Termination Event or any of the Enumerated
Termination Events, (ii) waive the requirement to maintain stockholder’s equity
in the amount set forth in Section 6.15(j) of the Sale and Servicing Agreement
and (iii) waive application of the Concentration Limits in computing the
Borrowing Base; provided that the Administrative Agent and the Lenders shall be
free to exercise any or all of their rights and remedies arising on account of
the Acknowledged Termination Event and the limited waiver described in clauses
(ii) and (iii) above shall terminate and all Concentration Limits shall be
applied, at any time upon or after the end of the Forbearance Period (as defined
below).

 

3.             Forbearance Termination Events.  Nothing set forth herein or
contemplated hereby is intended to constitute an agreement by the Administrative
Agent or the Lenders to forbear from exercising any of the rights available to
them under the Sale and Servicing Agreement, the other Transaction Documents, or
Applicable Law (all of which rights and remedies are hereby expressly reserved
by the Administrative Agent and the Lenders) upon or after the occurrence of the
end of the Forbearance Period.  As used herein, a “Forbearance Termination
Event” shall mean the breach of any of the obligations set forth in Section 4
hereof or the occurrence of any Termination Event other than the Acknowledged
Termination Event and the Termination Events described in Section 10.1(a),
(b) (solely to the extent resulting from any failure to comply with
Section 6.10(c), (d) or (e) or Section 6.12 of the Sale and Servicing
Agreement), (e) (to the extent related to the Originator rather than the
Borrowers), (h), (i), (j),

 

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(k), (l) and (m) of the Sale and Servicing Agreement (such Termination Events,
the “Enumerated Termination Events”).  The “Forbearance Period” shall be the
period from, and including, the date hereof to (but excluding) the earlier to
occur of:

 

(a)           July 7, 2009; and

 

(b)           the date on which a Forbearance Termination Event occurs.

 

4.             Loan Party Obligations.  During the Forbearance Period,

 

(a)           the Servicer shall use commercially reasonable efforts to provide
to the Administrative Agent, upon request, all information regarding each
Eligible Loan in the Collateral (including, without limitation, the most recent
credit analysis of each Obligor with respect to such Eligible Loan);

 

(b)           unless the Administrative Agent shall otherwise consent in
writing, such consent not be unreasonably withheld, none of the Loan Parties
shall effect a sale, assignment, transfer or other conveyance of any part of the
Collateral (a “Transfer”) that would, after giving effect to such Transfer, fail
to reduce the Aggregate Unpaids to zero;

 

(c)           with respect to the waiver or amendment (including, without
limitation, pursuant to a Material Modification) of the material terms of an
Eligible Loan in the Collateral, the Loan Parties shall provide, not later than
five (5) Business Days prior to the effective date of such waiver or amendment,
written notice to the Administrative Agent of such waiver or amendment along
with the Servicer’s recommendation for approval or rejection of such waiver or
amendment, as applicable, and the Administrative Agent shall determine, in its
reasonable judgment, if such waiver or amendment, as applicable, is commercially
reasonable and consistent with industry practice, in each case, giving
consideration to the creditworthiness of the related Obligor and current market
conditions.  The Administrative Agent shall use reasonable efforts to deliver
its approval or rejection of such waiver or amendment, as applicable, within
four (4) Business Days of receipt of such notice. If the Administrative Agent
approves such waiver or amendment, as applicable, the relevant Loan Party may
approve or consent to such waiver or amendment, as applicable.  If the
Administrative Agent rejects such waiver or amendment, as applicable, the
relevant Loan Party shall not approve or consent to such waiver or amendment, as
applicable. For the avoidance of doubt, a waiver or amendment (including,
without limitation, pursuant to a Material Modification) of the material terms
of an Eligible Loan in the Collateral that the Administrative Agent rejects and
that is consented to or approved by the lenders party to such Eligible Loan
other than a Loan Party shall not be a Forbearance Termination Event;

 

(d)           the Loan Parties shall use commercial reasonable efforts to
solicit interest in the remaining Collateral from potential third-party
purchasers and in the event that a potential third-party purchaser expresses
interest in the remaining Collateral or any portion thereof, the Loan Parties
shall use commercially reasonable efforts to pursue a sale of the remaining
Collateral or the applicable portion thereof to such potential third-party
purchaser; and

 

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(e)           the Lenders may (but shall have no obligation to) solicit interest
in the remaining Collateral or any portion thereof from potential third-party
purchasers and upon any Loan Party receiving notice from the Administrative
Agent that a potential third-party purchaser has expressed interest in the
Collateral, without further action on the part of the Lenders or the
Administrative Agent, the Loan Parties shall use commercially reasonable efforts
to pursue a sale of the remaining Collateral or the applicable portion thereof
to such potential third-party purchaser.

 

5.             Cure.  The Loan Parties may cure any breach of Section 4(b) by
depositing cash in the Collection Account in an amount sufficient to repay the
Aggregate Unpaids in full.

 

6.             Remedies.  The Loan Parties hereby acknowledge and agree that
after the end of the Forbearance Period, notwithstanding anything to the
contrary in the Sale and Servicing Agreement or any other Transaction Document,
but subject to applicable law: (i) in compliance with Section 9-610 of the UCC,
the Administrative Agent may elect to sell the Collateral by public or private
proceedings, by one or more contracts, as a unit or in parcels, and at any time
and place and on any terms and to the extent notice thereof shall be required by
law, ten (10) days’ notice to the Borrowers of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
commercially reasonable notification; and (ii) in compliance with Section 9-620
of the UCC, the Administrative Agent may alternatively elect to accept the
Collateral in full satisfaction of the Aggregate Unpaids due and owing to the
Lenders.

 

7.             Dissolution of DTRS.   The Administrative Agent and the Lenders
hereby consent to the dissolution of DTRS on or after the date hereof (the
“Dissolution”) and agree that notwithstanding any provision of the Sale and
Servicing Agreement to the contrary, the Dissolution shall not constitute a
Termination Event, provided that the Administrative Agent receives evidence to
its reasonable satisfaction of the Dissolution promptly after the occurrence
thereof.  In connection with the foregoing, the Administrative Agent and the
Lenders hereby consent to the withdrawal of an amount not to exceed $3,000 from
the Collection Account in order to repay, on behalf of DTRS, the inter-company
note payable from DTRS to the Originator, provided that the funds withdrawn by
the Servicer are used for such purpose and such withdrawal is included in the
first Servicing Report delivered after the date of such withdrawal.  Upon the
dissolution of DTRS, all references (in any capacity) to DTRS shall be deemed
deleted from the Transaction Documents and all references to Borrowers and Loan
Parties in the Transaction Documents or this Agreement shall be deemed to not
include DTRS.

 

8.             Effectiveness.  This Agreement shall be effective as of the date
when the Administrative Agent shall have received (i) executed counterparts
hereof from each party hereto and (ii) the proceeds of the Sale of Collateral in
reduction of the Advances Outstanding.

 

9.             Representations of Loan Parties.  Each of the Loan Parties
represents and warrants as follows:

 

(a)           It has taken all necessary action to authorize the execution,
delivery and performance of this Agreement.

 

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(b)           This Agreement has been duly executed and delivered by such Person
and constitutes such Person’s legal, valid and binding obligation, enforceable
in accordance with its terms, except as such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

 

(c)           No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or third
party is required in connection with the execution, delivery or performance by
such Person of this Agreement.

 

(d)           The execution and delivery of this Agreement does not (i) violate,
contravene or conflict with any provision of its organization documents or
(ii) violate, contravene or conflict with any laws applicable to it or any of
its Subsidiaries.

 

(e)           Immediately after giving effect to this Agreement, (i) the
representations and warranties of the Loan Parties set forth in the Transaction
Documents shall be true and correct in all material respects (except that the
representation as to no existence of a Termination Event or Potential
Termination Event is hereby made subject to the Acknowledged Termination Event)
and (ii) no Potential Termination Event or Termination Event (other than the
Acknowledged Termination Event) shall have occurred or be continuing.

 

10.           Reference to and Effect on Transaction Documents.  Except as
specifically modified herein, the Transaction Documents shall remain in full
force and effect.  The execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of the Lenders, the
Swingline Purchaser, the Collateral Agent, the Backup Servicer, or the
Administrative Agent under any of the Transaction Documents, or constitute a
waiver or amendment of any provision of any of the Transaction Documents, except
as expressly set forth herein.  Any breach of the terms of this Agreement shall
constitute a Termination Event under the Sale and Servicing Agreement, and this
Agreement shall constitute a Transaction Document.

 

11.           Further Assurances.  Each of the parties hereto agrees to execute
and deliver, or to cause to be executed and delivered, all such instruments as
may reasonably be requested to effectuate the intent and purposes, and to carry
out the terms, of this Agreement.

 

12.           GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

13.           Release.  As a material part of the consideration for
Administrative Agent and the Lenders entering into this Agreement, the Loan
Parties agree as follows (the “Release Provision”):

 

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(a)           Release and Discharge.  Each Loan Party hereby releases and
forever discharges the Administrative Agent and the Lenders and their respective
predecessors, successors, assigns, officers, managers, directors, shareholders,
employees, agents, attorneys, representatives, parent corporations,
subsidiaries, and affiliates (the “Lender Parties”) jointly and severally from
any and all claims, counterclaims, demands, damages, debts, agreements,
covenants, suits, contracts, obligations, liabilities, accounts, offsets,
rights, actions and causes of action of any nature whatsoever, including,
without limitation, all claims, demands, and causes of action for contribution
and indemnity, whether arising at law or in equity, presently possessed, whether
known or unknown, whether liability be direct or indirect, liquidated or
unliquidated, presently accrued, whether absolute or contingent, foreseen or
unforeseen, and whether or not heretofore asserted, which such Loan Party may
have or claim to have as of the date of this Agreement against any Lender Party
in any way related to the Transaction Documents.

 

(b)           Covenant Not to Sue.  Each Loan Party agrees not to sue any Lender
Party or in any way assist any other person or entity in suing any Lender Party
with respect to any claim released herein.  The Release Provision may be pleaded
as a full and complete defense to, and may be used as the basis for an
injunction against, any action, suit, or other proceeding which may be
instituted, prosecuted, or attempted in breach of the release contained herein.

 

(c)           Representations and Warranties.  Each Loan Party hereby
acknowledges, represents and warrants to each Lender Party that:

 

(i)            Such Loan Party has read and understands the effect of the
Release Provision. Such Loan Party has had the assistance of independent counsel
of its own choice, or has had the opportunity to retain such independent
counsel, in reviewing, discussing, and considering all the terms of the Release
Provision; and if counsel was retained, counsel for such Loan Party has read and
considered the Release Provision and advised such Loan Party to execute the
same.  Before execution of this Agreement, such Loan Party has had adequate
opportunity to make whatever investigation or inquiry it may deem necessary or
desirable in connection with the subject matter of the Release Provision.

 

(ii)           Such Loan Party has executed this Agreement and the Release
Provision thereof as its free and voluntary act, without any duress, coercion,
or undue influence exerted by or on behalf of any person.

 

(d)           Consideration.  Each Loan Party understands that the Release
Provision was a material consideration in the agreement of the Administrative
Agent and the Lenders to enter into this Agreement.

 

(e)           Broadly Construed.  It is the express intent of each Loan Party
that the release and discharge set forth in the Release Provision be construed
as broadly as possible in favor of the Administrative Agent and the Lenders so
as to foreclose forever the assertion by such Loan Party of any claims released
hereby against the Administrative Agent and the Lenders.

 

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14.           Miscellaneous.

 

(a)           Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

 

(b)           This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.  Delivery of an executed counterpart of this Agreement by facsimile
shall be effective as an original and shall constitute a representation that an
original shall be delivered to the Administrative Agent.

 

15.           Entire Agreement.  This Agreement and the other Transaction
Documents embody the entire agreement between the parties and supersede all
prior agreements and understandings, if any, relating to the subject matter
hereof.  This Agreement and the other Transaction Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.

 

16.           Amended and Restated Agreement Superseded.  This Agreement
supersedes and replaces the Amended and Restated Agreement in its entirety and
shall not be deemed to be a novation thereof.

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.

 

 

BORROWER:

DWFC, LLC,

 

as a Borrower

 

 

 

 

 

By:

/s/ Jonathan W. Trutter

 

 

Name:

Jonathan W. Trutter

 

 

Title:

Authorized Signatory

 

 

 

 

 

 

BORROWER:

DEERFIELD TRS (BAHAMAS) LTD.,

 

as a Borrower

 

 

 

 

 

By:

/s/ Jonathan W. Trutter

 

 

Name:

Jonathan W. Trutter

 

 

Title:

Authorized Signatory

 

 

 

 

ORIGINATOR:

DEERFIELD CAPITAL LLC,

 

as the Originator

 

 

 

 

 

By:

/s/ Jonathan W. Trutter

 

 

Name:

Jonathan W. Trutter

 

 

Title:

Authorized Signatory

 

 

 

 

SERVICER:

DEERFIELD CAPITAL LLC,

 

as the Servicer

 

 

 

 

 

By:

/s/ Jonathan W. Trutter

 

 

Name:

Jonathan W. Trutter

 

 

Title:

Authorized Signatory

 

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

 

 

Second Amended and Restated Forbearance Agreement

 

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SWINGLINE PURCHASER:

WACHOVIA BANK, NATIONAL ASSOCIATION, as the Swingline Purchaser

 

 

 

 

 

By:

/s/ Mike Romanzo

 

 

Name:

Mike Romanzo

 

 

Title:

Director

 

 

 

 

INSTITUTIONAL PURCHASER:

WACHOVIA BANK, NATIONAL ASSOCIATION, as the Institutional Purchaser

 

 

 

 

 

By:

/s/ Mike Romanzo

 

 

Name:

Mike Romanzo

 

 

Title:

Director

 

 

 

 

ADMINISTRATIVE AGENT:

WACHOVIA CAPITAL MARKETS, LLC,

 

as the Administrative Agent

 

 

 

 

 

By:

/s/ Raj Shah

 

 

Name:

Raj Shah

 

 

Title:

Managing Director

 

 

Second Amended and Restated Forbearance Agreement

 

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