EX-10.1






Exhibit 10.1




TABERNA CAPITAL MANAGEMENT, LLC

450 PARK AVENUE

FLOOR 11

NEW YORK, NEW YORK 10022



November 7, 2008




Jonathan W. Trutter

Chief Executive Officer

Deerfield Capital Management LLC

Deerfield Capital LLC

and Deerfield Capital Corp.

6250 North River Road

Rosemont, Illinois, 60018




Re: Letter Agreement (“Letter Agreement”) regarding Deerfield Capital LLC



Dear Mr. Trutter:



Reference is hereby made to (i) that certain Junior Subordinated Indenture (as amended,
supplemented or otherwise modified from time to time, the “Indenture I”) between Deerfield
Capital LLC (formerly Deerfield Triarc Capital LLC, the “Company”), and The Bank of New
York Trust Company, National Association (as successor to JPMorgan Chase Bank, National
Association) (the “Trustee”), dated as of September 29, 2005, (ii) that certain Junior
Subordinated Indenture (as amended, supplemented or otherwise modified from time to time, the
“Indenture II”) between the Company and the Trustee, dated as of August 2, 2006, and (iii)
that certain Junior Subordinated Indenture (as amended, supplemented or otherwise modified from
time to time, the “Indenture III” and together with the Indenture I and the Indenture II,
the “Indentures”) between the Company and the Trustee, dated as of October 27, 2006,
pursuant to which the Company issued junior subordinated notes which evidence loans made to the
Company (collectively, the “Trust Preferred Securities”). Taberna Capital Management, LLC
(“Taberna”) serves as collateral manager for the entities that own all of the Trust
Preferred Securities and is authorized to enter into this Agreement on their behalf. Capitalized
terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms
in the Indentures.



Reference is also made to those certain Parent Guaranty Agreements given by Deerfield Capital Corp.
(formerly Deerfield Triarc Capital Corp., the “Parent”) for the benefit of the Trustee
wherein the Parent guarantees the payment obligations of the Company to the Trustee under the
respective Indentures and related documents.



Pursuant to Section 10.6(d) of each of the Indentures, the Company covenanted that it would:





From and after May 6, 2008 and until the Securities and all of the other obligations under
this Indenture have been paid and satisfied in full, the Company shall maintain a
Consolidated Net Worth of not less than One Hundred Seventy-Five Million Dollars
($175,000,000) (the “Minimum Net Worth Covenant”).


As of the date hereof, the Consolidated Net Worth of the Company and its Subsidiaries may be less
than $175,000,000 and the Company is seeking the waiver provided herein.




 









 







Pursuant to Section 10.7 of each of the Indentures, Taberna, on behalf of all holders of the Trust
Preferred Securities, hereby waives (i) any prior noncompliance with the Minimum Net Worth Covenant
and any such noncompliance shall be deemed to have been cured for every purpose under the Indenture
and (ii) any future noncompliance with the Minimum Net Worth Covenant through the earlier to occur
of (a) April 1, 2010 (the “Waiver Period”) or (b) the date the Company and the Trustee
enter in Supplemental Indentures in accordance with paragraph 5 below; provided, however, that a
failure to satisfy the thirty (30) day deadline in paragraph 5 below shall not have any effect on
the waiver granted pursuant to this clause (ii) and the Waiver Period shall remain in effect. In
consideration for the waiver of the Minimum Net Worth Covenant, the parties hereto agree to the
following terms and conditions effective upon execution of this Letter Agreement:



1) During the Waiver Period only, the Parent, the Company and Deerfield Capital Management LLC (the
“Management Company”) shall not incur any indebtedness except for indebtedness permitted to
be incurred in accordance with provisions that are substantially similar to the provisions of the
documents, existing as of the date hereof, in relation to (i) those certain Series A Senior Secured
Notes issued by DFR Merger Company, LLC and Deerfield & Company due 2012 and (ii) those certain
Series B Senior Secured Notes issued by DFR Merger Company, LLC and Deerfield & Company LLC due
2012 (collectively, the “Seller Notes”).



2) During the Waiver Period only, the Parent, the Company and the Management Company shall not make
any dividend or distribution in respect of their respective capital stock except as permitted in
accordance with provisions that are substantially similar to the provisions of the documents,
existing as of the date hereof, in relation to the Seller Notes.



3) Taberna shall have the right, upon not less than three (3) business days prior written notice to
the Company to have representatives and agents of Taberna visit and inspect, at such reasonable
time during normal business hours as stated in such notice, any of the Parent’s and its
Subsidiaries’ properties, to examine their respective corporate, financial and operating records,
and make abstracts therefrom, and to discuss their affairs, finances and accounts with their
respective directors and officers, all (unless an Event of Default has occurred and is then
continuing) at the expense of Taberna (which expense shall not be reimbursable by the Parent and
its Subsidiaries); provided that Taberna may not exercise such rights (which shall include
where Taberna has exercised such similar rights pursuant to the Indenture I, the Indenture II or
the Indenture III) more than once in any fiscal quarter of the Parent, unless an Event of Default
is continuing, in which case Taberna may do any of the foregoing at the expense of the Parent or
its Subsidiaries at any reasonable time during normal business hours and as often as may reasonably
be desired.



4) Section 10.9(b) of each of the Indentures will be amended so that it reads as follows:



“The Company shall not, and shall not permit any its Subsidiaries to, directly or indirectly,
without the prior written consent of the Holders of not less than a majority in aggregate principal
amount of the outstanding Preferred Securities, (a) sell, transfer, pledge or issue, in one or more
transactions, any direct or indirect beneficial ownership interests in the Management Company which
results in (i) any Person, whether directly or indirectly, other than the Guarantor (and/or any
Subsidiaries wholly owned, directly or indirectly, by the Guarantor) owning any equity interests in
the Management Company or any rights to distributions from the Management Company or (ii) any
Person other than the Guarantor (and/or any Subsidiary wholly owned, directly or indirectly, by the
Guarantor) having responsibility for the management of the Management Company and the
administration of the day-to-day business and affairs
of the Management Company or (b) sell, transfer, pledge or assign any material asset of the
Management Company other than to the Guarantor (and/or any Subsidiaries wholly owned, directly or
indirectly, by


 









 






the Guarantor); provided, however, that the existing liens under the documents
relating to the Seller Notes shall not constitute a breach of this Section 10.9(b).”



5) The parties hereto agree to enter into supplemental indentures (the “Supplemental
Indentures”) amending the Indentures to (a) incorporate the requirements of paragraphs (1)
through (4) above into the Indentures. The parties hereto agree to execute the Supplemental
Indentures evidencing the agreements set forth herein within thirty (30) days of the date hereof
and the Company agrees to pay all reasonable attorneys’ fees and disbursements incurred by Taberna
in connection with the execution of the proposed Supplemental Indentures. The parties hereto agree
to cooperate in good faith in the completion of the Supplemental Indentures and that time is of the
essence;



The Company agrees to pay Taberna, or its designee, a one time fee of $375,000 to enter into this
Letter Agreement and the Supplemental Indentures which shall be payable on execution by Taberna of
this Letter Agreement.



The execution of this Letter Agreement shall not modify or amend any obligations of the Company
under the Indenture (and related documents) except as specifically provided herein.



Except as otherwise provided herein, this waiver shall not extend to any default under Section
10.6(d) of the Indenture occurring after the execution of the Supplemental Indentures, or to
any default under any other provision of the Indenture, and this notice is given to you by Taberna
without waiving, without prejudice to and expressly reserving all other rights and remedies
available to Taberna now or hereafter existing at law, in equity or otherwise.



We appreciate your attention to this matter. Should you have any questions regarding the
foregoing, please do not hesitate to contact Raphael Licht, Chief Legal Officer, and Chief
Administrative Officer of RAIT Financial Trust, at (215) 243-9033.




	 	 	 	 	 
	 	Very truly yours,



TABERNA PREFERRED FUNDING III, LTD.

 	 
	 	By:  	TABERNA CAPITAL MANAGEMENT, LLC,
 as Collateral Manager

 	 
	 	By:  	/s/ Jack E. Salmon	 
	 	 	Name:  	Jack E. Salmon	 
	 	 	Title:  	CFO and EVP	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	TABERNA PREFERRED FUNDING V, LTD.

 	 
	 	By:  	TABERNA CAPITAL MANAGEMENT, LLC, 
as Collateral Manager

 	 
	 	By:  	/s/ Jack E. Salmon	 
	 	 	Name:  	Jack E. Salmon	 
	 	 	Title:  	CFO and EVP	 
	 
	 	TABERNA PREFERRED FUNDING VII, LTD.

 	 
	 	By:  	TABERNA CAPITAL MANAGEMENT, LLC,
 as Collateral Manager

 	 
	 	By:  	/s/ Jack E. Salmon	 
	 	 	Name:  	Jack E. Salmon	 
	 	 	Title:  	CFO and EVP	 
	 
	 	TABERNA PREFERRED FUNDING VIII, LTD.

 	 
	 	By:  	TABERNA CAPITAL MANAGEMENT, LLC,
 as Collateral Manager

 	 
	 	By:  	/s/ Jack E. Salmon	 
	 	 	Name:  	Jack E. Salmon	 
	 	 	Title:  	CFO and EVP	 
	 
	 	TABERNA PREFERRED FUNDING IX, LTD.

 	 
	 	By:  	TABERNA CAPITAL MANAGEMENT, LLC, 
as Collateral Manager

 	 
	 	By:  	/s/ Jack E. Salmon	 
	 	 	Name:  	Jack E. Salmon	 
	 	 	Title:  	CFO and EVP	 
	 




 









 





	 	 	 	 	 
	ACCEPTED AND AGREED TO BY:



DEERFIELD CAPITAL LLC

 	 	 
	By:  	/s/ Jonathan W. Trutter	 	 
	 	Name:  	Jonathan W. Trutter	 	 
	 	Title:  	CEO	 	 
	 
	DEERFIELD CAPITAL CORP.

 	 	 
	By:  	/s/ Jonathan W. Trutter	 	 
	 	Name:  	Jonathan W. Trutter	 	 
	 	Title:  	CEO