**Exhibit 10.1**

 

**EXECUTION VERSION**

 

SECOND AMENDED AND RESTATEDFORBEARANCE AGREEMENT

 

THISSECOND 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 InstitutionalPurchasers (collectively, and together with the Swingline Purchaser (as definedbelow), the “Lenders”) and the Purchaser Agents from time to time partyto the Sale and Servicing Agreement referenced below, Wachovia Bank, NationalAssociation, as Swingline Purchaser (the “Swingline Purchaser”), andWachovia Capital Markets, LLC, as Administrative Agent (the “AdministrativeAgent”).  Capitalized terms usedherein and not otherwise defined shall have the meanings ascribed thereto inthe 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 “BackupServicer”), U.S. Bank National Association, as Collateral Custodian (the “CollateralCustodian”) and the Hedge Counterparty have entered into that certain Saleand Servicing Agreement dated as of March 10, 2006 (as amended prior tothe 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 Saleand Servicing Agreement), Deerfield Capital LLC failed to maintain stockholder’sequity of $240,000,000 plus 90% of the proceeds raised from equity issuers,which constitutes a Servicer Default under Section 6.15(j) of theSale and Servicing Agreement (and, accordingly, a Termination Event under Section 10.1(d) ofthe Sale and Servicing Agreement (the “Acknowledged Termination Event”).

 

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

 

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

 

WHEREAS,the Forbearance Period (as defined in the Amended and Restated Agreement) endedon November 30, 2008 as a result of the Loan Parties’ failure to achieve aLeverage 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 athird-party purchaser (the “Sale of Collateral”) and 100% of theproceeds of the Sale of Collateral are being used to reduce the AdvancesOutstanding, in connection with which the Loan Parties, the AdministrativeAgent and the Lenders have agreed to amend the Amended and Restated Agreementpursuant to the terms set forth herein; and

 

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

 

NOW,THEREFORE, in consideration of the premises and the mutual covenantshereinafter contained, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties heretoagree as follows:

 

AGREEMENT

 

1.             Estoppel, Acknowledgement andReaffirmation.  The Loan Partieshereby acknowledge their obligations under the respective Transaction Documentsto which they are party and reaffirm that each of the liens and securityinterests created and granted in or pursuant to the Transaction Documents isvalid and subsisting and that this Agreement shall in no manner impair orotherwise adversely affect such liens and security interests.

 

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

 

3.             Forbearance Termination Events.  Nothing set forth herein or contemplatedhereby is intended to constitute an agreement by the Administrative Agent orthe Lenders to forbear from exercising any of the rights available to themunder the Sale and Servicing Agreement, the other Transaction Documents, orApplicable Law (all of which rights and remedies are hereby expressly reservedby the Administrative Agent and the Lenders) upon or after the occurrence ofthe end of the Forbearance Period.  Asused herein, a “Forbearance Termination Event” shall mean the breach ofany of the obligations set forth in Section 4 hereof or theoccurrence of any Termination Event other than the Acknowledged TerminationEvent and the Termination Events described in Section 10.1(a), (b) (solelyto 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) (tothe extent related to the Originator rather than the Borrowers), (h), (i), (j),

 

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(k), (l) and (m) ofthe Sale and Servicing Agreement (such Termination Events, the “EnumeratedTermination Events”).  The “ForbearancePeriod” shall be the period from, and including, the date hereof to (butexcluding) the earlier to occur of:

 

(a)           July 7,2009; and

 

(b)           thedate on which a Forbearance Termination Event occurs.

 

4.             Loan Party Obligations.  During the Forbearance Period,

 

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

 

(b)           unlessthe Administrative Agent shall otherwise consent in writing, such consent notbe 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 AggregateUnpaids to zero;

 

(c)           withrespect to the waiver or amendment (including, without limitation, pursuant toa Material Modification) of the material terms of an Eligible Loan in theCollateral, the Loan Parties shall provide, not later than five (5) BusinessDays prior to the effective date of such waiver or amendment, written notice tothe Administrative Agent of such waiver or amendment along with the Servicer’srecommendation for approval or rejection of such waiver or amendment, asapplicable, and the Administrative Agent shall determine, in its reasonablejudgment, if such waiver or amendment, as applicable, is commerciallyreasonable and consistent with industry practice, in each case, givingconsideration to the creditworthiness of the related Obligor and current marketconditions.  The Administrative Agentshall use reasonable efforts to deliver its approval or rejection of suchwaiver or amendment, as applicable, within four (4) Business Days of receipt ofsuch notice. If the Administrative Agent approves such waiver or amendment, asapplicable, the relevant Loan Party may approve or consent to such waiver oramendment, as applicable.  If theAdministrative Agent rejects such waiver or amendment, as applicable, therelevant Loan Party shall not approve or consent to such waiver or amendment,as applicable. For the avoidance of doubt, a waiver or amendment (including, withoutlimitation, pursuant to a Material Modification) of the material terms of anEligible Loan in the Collateral that the Administrative Agent rejects and thatis consented to or approved by the lenders party to such Eligible Loan otherthan a Loan Party shall not be a Forbearance Termination Event;

 

(d)           theLoan Parties shall use commercial reasonable efforts to solicit interest in theremaining Collateral from potential third-party purchasers and in the eventthat a potential third-party purchaser expresses interest in the remainingCollateral or any portion thereof, the Loan Parties shall use commerciallyreasonable efforts to pursue a sale of the remaining Collateral or theapplicable portion thereof to such potential third-party purchaser; and

 

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(e)           theLenders may (but shall have no obligation to) solicit interest in the remainingCollateral or any portion thereof from potential third-party purchasers andupon any Loan Party receiving notice from the Administrative Agent that apotential 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 ofthe remaining Collateral or the applicable portion thereof to such potentialthird-party purchaser.

 

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

 

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

 

7.             Dissolution of DTRS.   The Administrative Agent and the Lendershereby consent to the dissolution of DTRS on or after the date hereof (the “Dissolution”)and agree that notwithstanding any provision of the Sale and ServicingAgreement to the contrary, the Dissolution shall not constitute a TerminationEvent, provided that the Administrative Agent receives evidence to itsreasonable satisfaction of the Dissolution promptly after the occurrencethereof.  In connection with theforegoing, the Administrative Agent and the Lenders hereby consent to thewithdrawal of an amount not to exceed $3,000 from the Collection Account inorder to repay, on behalf of DTRS, the inter-company note payable from DTRS tothe Originator, provided that the funds withdrawn by the Servicer areused for such purpose and such withdrawal is included in the first ServicingReport 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 TransactionDocuments and all references to Borrowers and Loan Parties in the TransactionDocuments or this Agreement shall be deemed to not include DTRS.

 

8.             Effectiveness.  This Agreement shall be effective as of the date when theAdministrative Agent shall have received (i) executed counterparts hereof fromeach party hereto and (ii) the proceeds of the Sale of Collateral inreduction of the Advances Outstanding.

 

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

 

(a)           Ithas taken all necessary action to authorize the execution, delivery andperformance of this Agreement.

 

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(b)           ThisAgreement has been duly executed and delivered by such Person and constitutessuch Person’s legal, valid and binding obligation, enforceable in accordancewith its terms, except as such enforceability may be subject to (i) bankruptcy,insolvency, reorganization, fraudulent conveyance or transfer, moratorium orsimilar laws affecting creditors’ rights generally and (ii) generalprinciples of equity (regardless of whether such enforceability is consideredin a proceeding at law or in equity).

 

(c)           Noconsent, approval, authorization or order of, or filing, registration orqualification with, any court or governmental authority or third party isrequired in connection with the execution, delivery or performance by suchPerson of this Agreement.

 

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

 

(e)           Immediatelyafter giving effect to this Agreement, (i) the representations andwarranties of the Loan Parties set forth in the Transaction Documents shall betrue and correct in all material respects (except that the representation as tono existence of a Termination Event or Potential Termination Event is herebymade subject to the Acknowledged Termination Event) and (ii) no PotentialTermination Event or Termination Event (other than the Acknowledged TerminationEvent) shall have occurred or be continuing.

 

10.           Reference to and Effect onTransaction Documents.  Except asspecifically modified herein, the Transaction Documents shall remain in fullforce and effect.  The execution,delivery and effectiveness of this Agreement shall not operate as a waiver ofany right, power or remedy of the Lenders, the Swingline Purchaser, theCollateral Agent, the Backup Servicer, or the Administrative Agent under any ofthe Transaction Documents, or constitute a waiver or amendment of any provisionof any of the Transaction Documents, except as expressly set forth herein.  Any breach of the terms of this Agreementshall constitute a Termination Event under the Sale and Servicing Agreement, andthis Agreement shall constitute a Transaction Document.

 

11.           Further Assurances.  Each of the parties hereto agrees to executeand deliver, or to cause to be executed and delivered, all such instruments asmay reasonably be requested to effectuate the intent and purposes, and to carryout the terms, of this Agreement.

 

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

 

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

 

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(a)           Releaseand Discharge.  Each Loan Partyhereby releases and forever discharges the Administrative Agent and the Lendersand their respective predecessors, successors, assigns, officers, managers,directors, shareholders, employees, agents, attorneys, representatives, parentcorporations, 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 naturewhatsoever, including, without limitation, all claims, demands, and causes ofaction for contribution and indemnity, whether arising at law or in equity,presently possessed, whether known or unknown, whether liability be direct orindirect, liquidated or unliquidated, presently accrued, whether absolute orcontingent, foreseen or unforeseen, and whether or not heretofore asserted,which such Loan Party may have or claim to have as of the date of thisAgreement against any Lender Party in any way related to the TransactionDocuments.

 

(b)           CovenantNot to Sue.  Each Loan Party agreesnot to sue any Lender Party or in any way assist any other person or entity insuing any Lender Party with respect to any claim released herein.  The Release Provision may be pleaded as afull and complete defense to, and may be used as the basis for an injunctionagainst, any action, suit, or other proceeding which may be instituted,prosecuted, or attempted in breach of the release contained herein.

 

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

 

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

 

(ii)           SuchLoan Party has executed this Agreement and the Release Provision thereof as itsfree and voluntary act, without any duress, coercion, or undue influenceexerted by or on behalf of any person.

 

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

 

(e)           BroadlyConstrued.  It is the express intentof each Loan Party that the release and discharge set forth in the ReleaseProvision be construed as broadly as possible in favor of the AdministrativeAgent and the Lenders so as to foreclose forever the assertion by such LoanParty of any claims released hereby against the Administrative Agent and theLenders.

 

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14.           Miscellaneous.

 

(a)           Section headingsin this Agreement are included herein for convenience of reference only andshall not constitute a part of this Agreement for any other purpose.

 

(b)           ThisAgreement may be executed in any number of separate counterparts, each of whichshall collectively and separately constitute one agreement.  Delivery of an executed counterpart of thisAgreement by facsimile shall be effective as an original and shall constitute arepresentation that an original shall be delivered to the Administrative Agent.

 

15.           Entire Agreement.  This Agreement and the other TransactionDocuments embody the entire agreement between the parties and supersede allprior agreements and understandings, if any, relating to the subject matterhereof.  This Agreement and the otherTransaction Documents represent the final agreement between the parties and maynot be contradicted by evidence of prior, contemporaneous or subsequent oralagreements of the parties.

 

16.           Amended and Restated AgreementSuperseded.  This Agreementsupersedes and replaces the Amended and Restated Agreement in its entirety andshall not be deemed to be a novation thereof.

 

**[REMAINDER OF THE PAGEINTENTIONALLY LEFT BLANK]**

 

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**INWITNESS WHEREOF**, the parties have caused this Agreement to beexecuted by their respective officers thereunto duly authorized, as of the datefirst 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 andRestated 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 andRestated Forbearance Agreement

 

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