Document:

Exhibit 10.1

 

 

Published CUSIP Number: 83002CAC1

Revolving Credit Facility CUSIP Number: 83002CAD9

Tranche A Term Loan Facility CUSIP Number: 83002CAE7

Tranche B Term Loan Facility CUSIP Number: 83002CAF4

 

$1,135,000,000

CREDIT AGREEMENT

 

among

 

SIX FLAGS ENTERTAINMENT CORPORATION,

as Parent

 

SIX FLAGS OPERATIONS INC.,

as Holdings

 

SIX FLAGS THEME PARKS INC., 
 as Borrower,

 

The Several Lenders from Time to Time Parties Hereto,

 

GOLDMAN SACHS BANK USA and

DEUTSCHE BANK SECURITIES INC.,

as Co-Syndication Agents,

 

BANK OF AMERICA, N.A., JPMORGAN CHASE BANK, N.A.

and BARCLAYS BANK PLC,

as Co-Documentation Agents,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent, an Issuing Lender and Swing Line Lender

 

Dated as of December 20, 2011

 

 

WELLS FARGO SECURITIES, LLC,

as Lead Arranger

 

WELLS FARGO SECURITIES, LLC, GOLDMAN SACHS BANK USA, DEUTSCHE BANK SECURITIES INC., BANK OF AMERICA, N.A., JPMORGAN CHASE BANK, N.A. and BARCLAYS CAPITAL, as Joint Bookrunners

 

 

TABLE OF CONTENTS

 

	
SECTION 1.
    	
DEFINITIONS
    	
1
    
	
1.1.
    	
Defined Terms
    	
1
    
	
1.2.
    	
Other Definitional Provisions
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
    	
49
    
	
2.1.
    	
Term Loan Commitments
    	
49
    
	
2.2.
    	
Procedure for Term Loan Borrowing
    	
49
    
	
2.3.
    	
Repayment of Term Loans
    	
50
    
	
2.4.
    	
Incremental Term Loans
    	
51
    
	
2.5.
    	
Refinancing Term Loans and Refinancing Notes
    	
53
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
AMOUNT AND TERMS OF THE REVOLVING   FACILITIES COMMITMENTS AND SWING LINE COMMITMENT
    	
55
    
	
3.1.
    	
Revolving Credit Commitments
    	
55
    
	
3.2.
    	
Procedure for Revolving Credit Borrowing
    	
56
    
	
3.3.
    	
Increase in Revolving Credit Commitments
    	
56
    
	
3.4.
    	
Replacement Revolving Credit Commitments
    	
58
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
LETTERS OF CREDIT; SWING LINE LOANS
    	
60
    
	
4.1.
    	
L/C Commitment
    	
60
    
	
4.2.
    	
Procedure for Issuance of Letter of Credit
    	
61
    
	
4.3.
    	
Fees and Other Charges
    	
61
    
	
4.4.
    	
L/C Participations
    	
61
    
	
4.5.
    	
Reimbursement Obligation of the Borrower
    	
62
    
	
4.6.
    	
Obligations Absolute
    	
63
    
	
4.7.
    	
Letter of Credit Payments
    	
63
    
	
4.8.
    	
Applications
    	
64
    
	
4.9.
    	
Swing Line Commitment
    	
64
    
	
4.10.
    	
Procedure for Swing Line Borrowing; Refunding of Swing Line   Loans
    	
64
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND THE LETTERS   OF CREDIT
    	
65
    
	
5.1.
    	
Repayment of Loans; Evidence of Debt
    	
65
    
	
5.2.
    	
Commitment Fees, Etc.
    	
66
    
	
5.3.
    	
Termination or Reduction of Revolving Credit Commitments
    	
67
    
	
5.4.
    	
Optional Prepayments
    	
67
    
	
5.5.
    	
Mandatory Prepayments and Commitment Reductions
    	
68
    
	
5.6.
    	
Conversion and Continuation Options
    	
71
    
	
5.7.
    	
Minimum Amounts and Maximum Number of Eurocurrency Tranches
    	
71
    
	
5.8.
    	
Interest Rates and Payment Dates
    	
71
    
	
5.9.
    	
Computation of Interest and Fees
    	
72
    
	
5.10.
    	
Inability to Determine Interest Rate
    	
72
    
	
5.11.
    	
Pro Rata Treatment and Payments
    	
73
    
	
5.12.
    	
Requirements of Law
    	
75
    
	
5.13.
    	
Taxes
    	
76
    

 

ii

 

	
5.14.
    	
Indemnity
    	
79
    
	
5.15.
    	
Illegality
    	
79
    
	
5.16.
    	
Change of Lending Office
    	
80
    
	
5.17.
    	
Replacement of Lenders under Certain Circumstances
    	
80
    
	
5.18.
    	
Loan Auctions
    	
80
    
	
5.19.
    	
Auction Procedures
    	
81
    
	
5.20.
    	
Defaulting Lenders
    	
83
    
	
5.21.
    	
Extensions of Term Loans and Revolving Credit Commitments
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
REPRESENTATIONS AND WARRANTIES
    	
90
    
	
6.1.
    	
Financial Condition
    	
90
    
	
6.2.
    	
No Change
    	
90
    
	
6.3.
    	
Existence; Compliance with Law
    	
90
    
	
6.4.
    	
Corporate Power; Authorization; Enforceable Obligations
    	
91
    
	
6.5.
    	
No Legal Bar
    	
91
    
	
6.6.
    	
Litigation
    	
91
    
	
6.7.
    	
No Default
    	
92
    
	
6.8.
    	
Ownership of Property; Liens
    	
92
    
	
6.9.
    	
Intellectual Property
    	
92
    
	
6.10.
    	
Taxes
    	
92
    
	
6.11.
    	
Federal Regulations
    	
93
    
	
6.12.
    	
Labor Matters
    	
93
    
	
6.13.
    	
ERISA
    	
93
    
	
6.14.
    	
Investment Company Act; Other Regulations
    	
94
    
	
6.15.
    	
Subsidiary Guarantors and Other Entities
    	
94
    
	
6.16.
    	
Use of Proceeds
    	
94
    
	
6.17.
    	
Environmental Matters
    	
94
    
	
6.18.
    	
Accuracy of Information, Etc.
    	
96
    
	
6.19.
    	
Security Documents
    	
96
    
	
6.20.
    	
Solvency
    	
97
    
	
6.21.
    	
Regulation H
    	
97
    
	
6.22.
    	
Parks
    	
97
    
	
6.23.
    	
OFAC
    	
98
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
CONDITIONS PRECEDENT
    	
98
    
	
7.1.
    	
Conditions Precedent to Initial Borrowing
    	
98
    
	
7.2.
    	
Conditions to Each Extension of Credit
    	
102
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
AFFIRMATIVE COVENANTS
    	
103
    
	
8.1.
    	
Financial Statements and Other Information
    	
103
    
	
8.2.
    	
Notices of Material Events
    	
106
    
	
8.3.
    	
Existence, Inspection of Books and Records, Etc.
    	
107
    
	
8.4.
    	
Insurance
    	
108
    
	
8.5.
    	
Compliance with Contractual Obligations and Requirements of   Law
    	
109
    
	
8.6.
    	
Additional Collateral, Etc.
    	
109
    
	
8.7.
    	
Further Assurances
    	
113
    
	
8.8.
    	
Environmental Laws
    	
114
    

 

iii

 

	
8.9.
    	
Ratings by S&P and Moody’s
    	
114
    
	
8.10.
    	
Post-Closing Covenants
    	
114
    
	
8.11.
    	
Hedging Agreements
    	
114
    
	
 
    	
 
    	
 
    
	
SECTION 9.
    	
NEGATIVE COVENANTS
    	
114
    
	
9.1.
    	
Senior Secured Leverage Ratio
    	
115
    
	
9.2.
    	
Consolidated Interest Coverage Ratio
    	
115
    
	
9.3.
    	
Indebtedness
    	
115
    
	
9.4.
    	
Liens
    	
120
    
	
9.5.
    	
Prohibition of Fundamental Changes
    	
124
    
	
9.6.
    	
Restricted Payments
    	
128
    
	
9.7.
    	
Capital Expenditures
    	
131
    
	
9.8.
    	
Investments
    	
131
    
	
9.9.
    	
Prepayment of Certain Indebtedness
    	
135
    
	
9.10.
    	
Transactions with Affiliates
    	
136
    
	
9.11.
    	
Changes in Fiscal Periods
    	
136
    
	
9.12.
    	
Certain Restrictions
    	
136
    
	
9.13.
    	
Lines of Business
    	
137
    
	
9.14.
    	
Modifications of Certain Documents
    	
137
    
	
9.15.
    	
Limitation on Activities of Parent and Holdings
    	
137
    
	
9.16.
    	
Limitation on Hedging Agreements
    	
138
    
	
9.17.
    	
Designation of Subsidiaries
    	
139
    
	
 
    	
 
    	
 
    
	
SECTION 10.
    	
EVENTS OF DEFAULT
    	
140
    
	
 
    	
 
    	
 
    
	
SECTION 11.
    	
THE AGENTS
    	
144
    
	
11.1.
    	
Appointment
    	
144
    
	
11.2.
    	
Delegation of Duties
    	
144
    
	
11.3.
    	
Exculpatory Provisions
    	
144
    
	
11.4.
    	
Reliance by Agents
    	
145
    
	
11.5.
    	
Notice of Default
    	
145
    
	
11.6.
    	
Non-Reliance on Agents and Other Lenders
    	
145
    
	
11.7.
    	
Indemnification
    	
146
    
	
11.8.
    	
Agent in Its Individual Capacity
    	
146
    
	
11.9.
    	
Successor Agents and Other Persons
    	
147
    
	
11.10.
    	
Authorization to Release Liens and Guarantees
    	
148
    
	
11.11.
    	
The Arranger, Joint Bookrunners, Co-Syndication Agents and   Co-Documentation Agents
    	
148
    
	
11.12.
    	
Withholding Taxes
    	
148
    
	
11.13.
    	
Administrative Agent May File Proofs of Claim
    	
148
    
	
 
    	
 
    	
 
    
	
SECTION 12.
    	
MISCELLANEOUS
    	
149
    
	
12.1.
    	
Amendments and Waivers
    	
149
    
	
12.2.
    	
Notices
    	
151
    
	
12.3.
    	
No Waiver; Cumulative Remedies
    	
153
    
	
12.4.
    	
Survival of Representations and Warranties
    	
153
    
	
12.5.
    	
Payment of Expenses; Indemnification
    	
153
    

 

iv

 

	
12.6.
    	
Successors and Assigns; Participations and Assignments
    	
155
    
	
12.7.
    	
Adjustments; Set-off
    	
159
    
	
12.8.
    	
U.S.A. Patriot Act
    	
160
    
	
12.9.
    	
Counterparts
    	
160
    
	
12.10.
    	
Severability
    	
160
    
	
12.11.
    	
Integration
    	
161
    
	
12.12.
    	
GOVERNING LAW
    	
161
    
	
12.13.
    	
Submission To Jurisdiction; Waivers
    	
161
    
	
12.14.
    	
Acknowledgments
    	
162
    
	
12.15.
    	
Confidentiality
    	
162
    
	
12.16.
    	
Release of Collateral and Guarantee Obligations
    	
163
    
	
12.17.
    	
Accounting Changes
    	
164
    
	
12.18.
    	
Delivery of Lender Addenda
    	
165
    
	
12.19.
    	
WAIVERS OF JURY TRIAL
    	
165
    
	
12.20.
    	
Usury Savings Clause
    	
165
    
	
12.21.
    	
Lender Action
    	
166
    

 

	
ANNEXES:
    	
 
    
	
 
    	
 
    
	
A
    	
Existing Letters of Credit
    
	
 
    	
 
    
	
SCHEDULES:
    	
 
    
	
 
    	
 
    
	
1.1(a)
    	
Mortgaged   Property
    
	
6.4
    	
Consents,   Authorizations, Filings and Notices
    
	
6.8
    	
Material   Real Properties
    
	
6.13
    	
ERISA
    
	
6.15(a)
    	
Loan   Parties
    
	
6.15(b)
    	
Non-Loan   Parties
    
	
6.19(a)-1
    	
UCC   Filing Jurisdictions
    
	
6.19(a)-2
    	
UCC   Financing Statements to Remain on File
    
	
6.19(a)-3
    	
UCC   Financing Statements to be Terminated
    
	
6.19(b)
    	
Mortgage   Filing Jurisdictions
    
	
6.21
    	
Mortgaged   Properties in Flood Zones
    
	
6.22
    	
Existing   Parks
    
	
8.10
    	
Post-Closing   Covenants
    
	
9.3(b)
    	
Existing   Indebtedness
    
	
9.4(b)
    	
Liens
    
	
9.5(c)
    	
Certain Permitted Dispositions
    
	
9.8(a)
    	
Permitted   Investments
    
	
9.13
    	
Business   Activities
    
	
 
    	
 
    
	
EXHIBITS:
    	
 
    
	
 
    	
 
    
	
A
    	
Form   of Guarantee and Collateral Agreement
    
	
B
    	
Form   of Compliance Certificate
    
			

 

v

 

	
C
    	
[Reserved]
    
	
D
    	
Form   of Solvency Certificate
    
	
E
    	
Form   of Assignment and Acceptance
    
	
F
    	
[Reserved]
    
	
G-1
    	
Form   of Tranche A Term Note
    
	
G-2
    	
Form   of Tranche B Term Note
    
	
G-3
    	
Form   of Revolving Credit Note
    
	
G-4
    	
Form   of Swing Line Note
    
	
H
    	
[Reserved]
    
	
I-1
    	
Form   of Exemption Certificate for Non-U.S. Lenders that are not partnerships for U.S.   Federal income tax purposes
    
	
I-2
    	
Form   of Exemption Certificate for Non-U.S. Participants that are not partnerships for   U.S. Federal income tax purposes
    
	
I-3
    	
Form   of Exemption Certificate for Non-U.S. Lenders that are partnerships for U.S.   Federal income tax purposes
    
	
I-4
    	
Form   of Exemption Certificate for Non-U.S. Participants that are partnerships for   U.S. Federal income tax purposes
    
	
J
    	
Form   of Lender Addendum
    
	
K
    	
Form   of Borrowing Notice
    
	
L
    	
Form   of Auction Notice
    
	
M
    	
Form   of Return Bid
    
	
N
    	
Form   of Intercompany Subordinated Note
    

 

vi

 

CREDIT AGREEMENT, dated December 20, 2011, among SIX FLAGS ENTERTAINMENT CORPORATION, a Delaware corporation (“Parent”), SIX FLAGS OPERATIONS INC., a Delaware corporation (“Holdings”), SIX FLAGS THEME PARKS INC., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (as defined below) (the “Lenders”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent (in such capacity, the “Administrative Agent”), an Issuing Lender and Swing Line Lender.

 

WHEREAS, Parent, Holdings, the Borrower and JPMorgan Chase Bank, N.A. as administrative agent, the lenders and the other parties thereto entered into that certain First Lien Credit Agreement dated as of April 30, 2010 (as amended, the “Existing Credit Agreement”);

 

WHEREAS, Parent, Holdings and Borrower have requested the Lenders to make loans and other credit available to them to enable them to, among other things, refinance certain existing indebtedness, pay related fees and expenses and finance the working capital needs and general corporate purposes of Parent, Holdings, the Borrower and its Subsidiaries, and the Lenders have agreed, subject to the terms and conditions hereof, to enter into this Agreement.

 

Accordingly, the parties hereto hereby agree as follows:

 

SECTION 1.  DEFINITIONS

 

1.1.          Defined Terms.  As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

 

“Accounting Changes”: as defined in Section 12.17.

 

“Acquisition”:  any acquisition, whether in a single transaction or series of related transactions, by Parent or any one or more of its Subsidiaries of (a) all or substantially all of the assets or business of another Person, or assets constituting a business unit, line of business or division of any Person, whether through purchase of assets or securities, by merger or otherwise; or (b) any Person that becomes a Subsidiary after giving effect to such acquisition.

 

“Acquisition Parties”: SFOG Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, L.L.C., a Delaware limited liability company, SFOT Acquisition I, Inc., a Delaware corporation, and SFOT Acquisition II, Inc., a Delaware corporation.

 

“Adjusted EBITDA”:  a non-GAAP measure, is defined as the Parent’s consolidated income (loss) from continuing operations: (i) excluding the cumulative effect of changes in accounting principles, fresh start accounting valuation adjustments, discontinued operations, income tax expense or benefit, reorganization items, restructure costs, other income or expense, gain or loss on early extinguishment of debt, equity income or loss of investees, interest expense (net), amortization, depreciation, stock-based compensation, gain or loss on disposal of assets, interests of third parties in the Adjusted EBITDA of properties that are less than wholly owned by the Parent (consisting as of the Closing Date of Six Flags Over Georgia, Six Flags Over Texas, Six Flags White Water Atlanta and Six Flags Great Escape Lodge & Indoor Waterpark), and (ii) plus the

 

 

Parent’s share of the Adjusted EBITDA of Dick Clark.  The definition of Adjusted EBITDA shall be applied in a manner consistent with Parent’s determinations of Adjusted EBITDA in quarterly financial report press releases issued prior to the Closing Date.

 

“Adjusted Leverage Ratio”:  as at any date, the ratio of (a) Consolidated Total Debt as at such date to (b) Adjusted EBITDA for such Measurement Period.

 

“Administrative Agent”:  as defined in the preamble hereto.

 

“Affiliate”:  any Person that directly or indirectly controls, or is under common control with, or is controlled by, Parent and, if such Person is an individual, any member of the immediate family (including parents, spouse, children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely by reason of his or her being a director, officer or employee of Parent, Holdings or any of its Subsidiaries and (b) none of the Wholly Owned Subsidiaries of Holdings or HWP shall be Affiliates.

 

“Agents”:  the collective reference to the Co-Documentation Agents, the Co-Syndication Agents, the Joint Bookrunners and the Administrative Agent.

 

“Aggregate Exposure”:  with respect to any Lender at any time, an amount equal to the sum of (a) the aggregate then unpaid principal amount of such Lender’s Term Loans and (b) the amount of such Lender’s Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

 

“Aggregate Exposure Percentage”:  with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the sum of the Aggregate Exposures of all Lenders at such time.

 

“Agreement”:  this Credit Agreement, as amended, supplemented or otherwise modified from time to time.

 

“Applicable Discount”: as defined in Section 5.19(c).

 

“Applicable Margin”: (a) in the case of Tranche B Term Loans which are Base Rate Loans, 2.25% per annum, (b) in the case of Tranche B Term Loans which are Eurocurrency Loans, 3.25% per annum and (c) in the case of Tranche A Term Loans and Revolving Credit Loans, the corresponding percentages per annum as set forth below based on the Senior Secured Leverage Ratio:

 

2

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Tranche A Term Loans
   and Revolving Credit
   Loans
    	
 
    
	
Pricing
   Level
    	
 
    	
Senior Secured Leverage
   Ratio
    	
 
    	
Commitment
   Fee Rate
    	
 
    	
Eurocurrency
   Loans
    	
 
    	
Base Rate
   Loans
    	
 
    
	
I
    	
 
    	
Less   than 2.50:1.00
    	
 
    	
0.375
    	
%
    	
2.00
    	
%
    	
1.00
    	
%
    
	
II
    	
 
    	
Greater   than or equal to 2.50:1.00, but less than 3.25:1.00
    	
 
    	
0.50
    	
%
    	
2.25
    	
%
    	
1.25
    	
%
    
	
III
    	
 
    	
Greater   than or equal to 3.25:1.00, but less than 3.75:1.00
    	
 
    	
0.625
    	
%
    	
2.50
    	
%
    	
1.50
    	
%
    
	
IV
    	
 
    	
Greater   than or equal to 3.75:1.00
    	
 
    	
0.75
    	
%
    	
2.75
    	
%
    	
1.75
    	
%
    

 

Swing Line Loans shall bear interest at the rate applicable to Revolving Credit Loans that are Base Rate Loans.

 

The Applicable Margin shall be determined and adjusted quarterly on the date (each a “Calculation Date”) three Business Days following receipt by the Administrative Agent of a certificate from a Responsible Officer of Parent delivered pursuant to Section 8.1(f); provided that (a) the Applicable Margin shall be based on Pricing Level II until the first Calculation Date after March 31, 2012 and thereafter the Pricing Level shall be determined by reference to the Senior Secured Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Borrower preceding the applicable Calculation Date, and (b) if the Borrower fails to provide the certificate of a Responsible Officer of Parent as required by Section 8.1(f) for the most recently ended fiscal quarter of the Borrower preceding the applicable Calculation Date, the Applicable Margin from such Calculation Date shall be based on Pricing Level IV until such time as an appropriate certificate is provided, at which time the Pricing Level shall be determined by reference to the Senior Secured Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Borrower preceding such Calculation Date.  The Applicable Margin shall be effective from one Calculation Date until the next Calculation Date.

 

Notwithstanding the foregoing, in the event that any financial statement delivered pursuant to Section 8.1(a) or Section 8.1(d) or certificate delivered pursuant to Section 8.1(f) is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, then (x) the Borrower shall immediately deliver to the Agent a corrected compliance certificate for such Applicable Period, (y) the Applicable Margin for such Applicable Period shall be determined as if the Senior Secured Leverage Ratio in the corrected compliance certificate were applicable for such Applicable Period, and (z) the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the benefit of the

 

3

 

Lenders the accrued additional interest and fees owing as a result of such increased Applicable Margin for such Applicable Period.  Nothing in this paragraph shall limit the rights of the Administrative Agent and Lenders with respect to Section 5.8(c) nor any of their other rights under this Agreement.  The Borrower’s obligations under this paragraph shall survive for so long as the Obligations with respect to Loans, Commitments or Letters of Credit (other than contingent indemnification obligations not yet due and payable) remain outstanding.

 

“Applicable Term Loan Facility”: as defined in Section 5.19(a).

 

“Application”:  an application, in such form as the relevant Issuing Lender may specify from time to time, requesting such Issuing Lender to issue a Letter of Credit.

 

“Approved Fund”:  as defined in Section 12.6(b).

 

“Arranger”:  the reference to Wells Fargo Securities, LLC, in its capacity as lead arranger.

 

“Asset Sale”:  any Disposition of Property or series of related Dispositions of Property (excluding any such Disposition permitted by clauses (i) through (v), clauses (ix) through (xii), clauses (xiv) through (xvi), and clause (xx) of Section 9.5(c) except for clause (ii) to the extent referred to therein) which yields gross proceeds to the Parent, or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $5,000,000.

 

“Assignee”:  as defined in Section 12.6(b)(i).

 

“Assignment and Acceptance”:  an Assignment and Acceptance substantially in the form of Exhibit E.

 

“Auction”: a “Dutch” auction whereby the Borrower offers to purchase Term Loans under any Facility of Term Loans pursuant to the auction procedures set forth in Section 5.19.

 

“Auction Amount”: as defined in Section 5.19(a).

 

“Auction Notice”: as defined in Section 5.19(a).

 

“Available Amount”: at any time, the sum of:

 

(i)            the cumulative portion of Excess Cash Flow for each fiscal year (if positive) of the Borrower, commencing with the fiscal year ending December 31, 2012, that is not required to be applied to prepay Loans pursuant to Section 5.5(c); plus

 

(ii)           an amount equal to the Retained Declined Proceeds; plus

 

4

 

(iii)          the portion of the Net Cash Proceeds from any sale of Capital Stock of the Parent contributed to the capital of the Borrower after the Closing Date and prior to such time; minus

 

(iv)          the aggregate amount of Restricted Payments made by the Borrower in reliance on Section 9.6(c)(i), (ii) or (iii) (other than Restricted Payments made with the proceeds of a Put Related Debt Incurrence (without giving effect to the $200,000,000 threshold set forth in the definition thereof)), or 9.6(e)(ii); minus

 

(v)           the aggregate amount of Investments made in reliance on Section 9.8(v)(i) (net of any cash return to the Borrower and its Subsidiaries that are Subsidiary Guarantors in respect of such Investments to the extent such cash return does not already increase Excess Cash Flow and Borrower Consolidated Adjusted EBITDA); minus

 

(vi)          the aggregate amount of Indebtedness prepaid in reliance on Section 9.9(f) (without double counting reductions in Excess Cash Flow pursuant to clause (b)(i)(B) thereof); minus

 

(vii)         the aggregate amount of Capital Expenditures made in reliance on Section 9.7(z).

 

“Available Revolving Commitment”:  with respect to any Revolving Credit Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Credit Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding; provided, that in calculating any Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available Revolving Commitment pursuant to Section 5.2(a), the aggregate principal amount of Swing Line Loans then outstanding shall be deemed to be zero.

 

“Bankruptcy Code”:  the Federal Bankruptcy Code of 1978, as amended from time to time.

 

“Base Capital Expenditure Amount”:  as defined in Section 9.7.

 

“Base Rate”:  for any day, a rate per annum (rounded upwards, if necessary, to the next 1/100 of 1.00%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1.00% and (c) the Eurocurrency Rate for a one month Interest Period beginning on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%, provided that, for the avoidance of doubt, the Eurocurrency Rate for any day shall be the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day, which in the case of any Tranche B Term Loans, shall not be less than 1.00%.  Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or such Eurocurrency Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Federal Funds Effective Rate or such Eurocurrency Rate, respectively.

 

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“Base Rate Loans”:  Loans for which the applicable rate of interest is based upon the Base Rate.

 

“Beneficial Share Assignment Agreement”: the Beneficial Share Assignment Agreement, dated as of April 1, 1998, by and between TW-SPV Co., GP Holdings, Inc. and Parent (as successor Premier Parks Inc.), as the same may be amended on or prior to the Closing Date and as the same may be further modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.

 

“Benefited Lender”:  as defined in Section 12.7(a).

 

“Board”:  the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

“Borrower”:  as defined in the preamble hereto.

 

“Borrower Consolidated Adjusted EBITDA”: for any period, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) means Parent Consolidated Adjusted EBITDA plus (a) administrative and other corporate charges of Parent that are not allocated to or paid by the Borrower or its Subsidiaries and excluding (b) any portion of Parent Consolidated Adjusted EBITDA (calculated on a net basis, taking into account positive and negative items) attributable to any Person (other than the Borrower or its Subsidiaries) to the extent that the Borrower or any of its Subsidiaries is not the owner of the interests in, or recipients of the cash received from, such Person.  The parties hereby agree that the Borrower Consolidated Adjusted EBITDA for the fiscal quarter ending (a) March 31, 2011 was $(48,978,000), (b) June 30, 2011 was $94,962,000 and (c) September 30, 2011 was $230,888,000.

 

“Borrowing Date”:  any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans, or issue Letters of Credit, hereunder.

 

“Business”:  as defined in Section 6.17(b).

 

“Business Day”:  (a) for all purposes other than as covered by clause (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks for deposits in Dollars in the London Interbank Eurocurrency market.

 

“Capital Expenditures”:  for any period, expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Parks Entities (or, for purposes of the definition of “Excess Cash Flow”, by the Borrower or any of its Subsidiaries) to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements) during such period, computed in accordance with GAAP, but excluding (a)

 

6

 

the amount of cash expended (i) with, or in an amount equal to, Reinvestment Deferred Amounts or, without duplication, the Net Cash Proceeds of (A) Recovery Events, (B) awards of compensation arising from the taking by eminent domain or condemnation of assets being replaced or (C) indemnity payments, (ii) as part of an Acquisition permitted hereunder (other than an Acquisition permitted by Section 9.5(b)(iii)), (b) expenditures that are accounted for as capital expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Parks Entities (or, for purposes of the definition of “Excess Cash Flow”, by the Borrower or any of its Subsidiaries) and that actually are paid for or reimbursed by a Person other than Parent or any Subsidiary or any Partnership Parks Entity, (c) any non-cash compensation or other non-cash costs reflected as additions to property, plant or equipment in the consolidated balance sheet of Parent and its Subsidiaries or in the balance sheet of any Partnership Parks Entity (or, for purposes of the definition of “Excess Cash Flow” in the consolidated balance sheet of the Borrower and its Subsidiaries), and (d) the purchase price of assets that are purchased simultaneously with the trade in or sale of existing assets solely to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such assets for the assets being traded in at such time and provided that such purchase, trade in and sale are conducted on an arms-length basis.

 

“Capital Lease Obligations”:  for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

 

“Capital Stock”:  any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing; provided that any instrument evidencing Indebtedness convertible or exchangeable for Capital Stock shall not be deemed to be “Capital Stock” unless and until any such instruments are so converted or exchanged.

 

“Change in Law”: (a) the adoption of any law, rule or regulation, (b) the issuance of any administrative guidance, or (c) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Closing Date”:  December 20, 2011.

 

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

 

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“Co-Documentation Agents”:  Bank of America, N.A., JPMorgan Chase Bank, N.A. and Barclays Bank plc

 

“Collateral”:  all Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document; provided that Collateral shall not include (x) any Property of any Excluded Foreign Subsidiary (including any Property that consists of Capital Stock held by such Excluded Foreign Subsidiary) or (y) more than 65% of any Foreign Subsidiary Voting Stock, provided that, for the avoidance of doubt, for purposes of this clause (y), Collateral shall include 100% of the total non-voting stock of any such Excluded Foreign Subsidiary.

 

“Commitment”:  with respect to any Lender, each of the Tranche A Term Loan Commitment, Tranche B Term Loan Commitment and the Revolving Credit Commitment.

 

“Commitment Fee Rate”:  the rate set forth under the heading “Commitment Fee Rate” in the definition of “Applicable Margin” and subject to the terms thereof.

 

“Compliance Certificate”:  a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

 

“Confidential Information Memorandum”:  the Confidential Information Memorandum dated November 30, 2011 and furnished to the Lenders prior to the Closing Date.

 

“Consolidated Cash Interest Expense” means, for any Measurement Period, the excess of:

 

(a) the sum, without duplication, of:

 

(i)            the interest expense (including imputed interest expense in respect of Capital Lease Obligations), net of interest income, of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP;

 

(ii)           any interest or other financing costs paid during such period in respect of Indebtedness of Parent and its Subsidiaries to the extent such interest or other financing costs shall have been capitalized rather than included in consolidated interest expense for such period in accordance with GAAP;

 

(iii)          any cash payments made during such period in respect of obligations referred to in clause (b)(ii) below that were amortized or accrued in a previous period; and

 

(iv)          to the extent not included in clauses (i), (ii) or (iii) above, net costs under Hedging Agreements, other than costs solely associated with the termination or unwinding of such Hedging Agreements, in respect of interest rates to the extent such net costs have been or are required to be paid in cash during such period; less

 

8

 

(b) without duplication and to the extent included in such consolidated interest expense for such period, the sum of:

 

(i)            noncash amounts attributable to amortization or write-off of capitalized interest or other financing costs paid in a previous period,

 

(ii)           noncash amounts attributable to amortization of debt discounts or accrued interest payable in kind for such period, and

 

(iii)          to the extent not included in (b)(i) or (b)(ii), (x) one-time fees and expenses associated with the Transactions or the consummation of any debt issuance and (y) annual agency and collateral monitoring fees.

 

“Consolidated Current Assets”:  at any date, all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, other than amounts related to current or deferred taxes based on income or profits.

 

“Consolidated Current Liabilities”:  at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the current portion of interest, Taxes based on income or profits, any Indebtedness, or accrued liabilities related to performance stock grants of the Borrower and its Subsidiaries and (b) without duplication, all Indebtedness consisting of Revolving Credit Loans or Swing Line Loans, to the extent otherwise included therein.

 

“Consolidated Interest Coverage Ratio”:  as at any date, the ratio of (a) Parent Consolidated Adjusted EBITDA for such Measurement Period to (b) Consolidated Cash Interest Expense for such Measurement Period.

 

“Consolidated Net Income”:  of any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided, that in calculating Consolidated Net Income for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Parent or is merged into or consolidated with Parent or any of its Subsidiaries, (b) the income (or deficit) of any Unrestricted Entity or any Person (other than a Subsidiary of Parent) in which Parent or any of its Subsidiaries has an ownership interest accounted for under the equity method, or any other Person that is not a Subsidiary (including any of the joint ventures established pursuant to the Great Escape Agreements (including but not limited to HWP Development Holdings LLC, HWP Management Inc. and HWP)), (c) the cumulative effect of a change in accounting principle and changes as a result of the adoption or modification of accounting policies during such period, (d) any effect of income (loss) from the early extinguishment of (i) Indebtedness and (ii) obligations under any Hedging Agreement or other derivative instruments, (e) the effects of non-cash acquisition

 

9

 

accounting adjustments and non-cash adjustments from the application of fresh start reporting, (f) any net gains, losses, income or expense attributable to non-controlling interests and (g) the undistributed earnings of any Subsidiary of Parent to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

 

“Consolidated Total Debt”:  as at the last day of any fiscal quarter, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of Parent and its Subsidiaries that would, in conformity with GAAP, be set forth on the balance sheet of Parent and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amounts of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters, plus (c) the maximum potential liability (regardless of the likelihood of such liability being incurred) of any guarantee by Parent or any of its Subsidiaries of the debt of any of the joint ventures established pursuant to the Great Escape Agreements (including but not limited to HWP Development Holdings LLC, HWP Management Inc. and HWP).  For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of March 31, 2011, June 30, 2011 and September 30, 2011 was $0.

 

“Consolidated Working Capital”:  at any date, the difference of (a) Consolidated Current Assets on such date less (b) Consolidated Current Liabilities on such date.

 

“Contractual Obligation”:  as to any Person, any provision of any security issued by such Person or of any agreement, lease, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.

 

“Co-Syndication Agents”: Goldman Sachs Bank USA and Deutsche Bank Securities Inc.

 

“Declined Proceeds”:  as defined in Section 5.11(d).

 

“Default”:  any of the events specified in Section 10, whether or not any requirement for the giving of notice, the lapse of time, or both as set forth in such Section, has been satisfied.

 

“Defaulting Lender”:  subject to Section 5.20(f), any Lender that (a) has failed to fund any portion of its Revolving Credit Loans or participations in Letters of Credit or Swing Line Loans within three Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, the Administrative Agent, the Issuing Lender, the Swing Line Lender or any Lender in writing that it does not intend to comply with its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements generally in which it commits to extend credit, (c) has failed, within three Business Days after written request by the Administrative Agent or the

 

10

 

Borrower, to confirm in writing to the Administrative Agent or the Borrower, as the case may be, that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Line Loans (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), (d) has otherwise failed to pay over to the Administrative Agent, any Issuing Lender, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) after the date of this Agreement, has become the subject of a bankruptcy or insolvency proceeding, or has had appointed for it a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had appointed for such parent company a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of such parent company’s business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition by a Governmental Authority or an instrumentality thereof of any equity interest in such Lender or a parent company thereof so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (e) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 5.20(f)) upon delivery of written notice of such determination to the Borrower, each Issuing Lender, each Swing Line Lender and each Lender.

 

“Designated Foreign Subsidiaries”: those Foreign Subsidiaries of Parent conducting operations or holding assets in Canada and Mexico or otherwise relating to the Parks in Canada and Mexico as such operations, assets or Parks exist as of the Closing Date or are expanded hereafter.

 

“Dick Clark”: CPIH LLC, a Delaware limited liability company.

 

“Discount Range”: as defined in Section 5.19(a).

 

“Disposition”:  with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof, but excluding any issuance by such Person of its own Capital Stock or termination of the economic and voting rights of GP Holdings Inc. pursuant to the Beneficial Share Assignment Agreement; and the terms “Dispose” and “Disposed of” shall have correlative meanings.

 

11

 

“Disqualified Capital Stock” shall mean any Capital Stock of any Person that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is puttable or exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock of such Person), pursuant to a sinking fund or otherwise, (b) is redeemable or exchangeable, in whole or in part, at the option of the holder thereof (other than solely for Qualified Capital Stock of such Person), or (c) provides for the scheduled payment of dividends in cash, in each case prior to the date that is 180 days after the Latest Maturity Date; provided that (i) if such Capital Stock is issued pursuant to any plan for the benefit of employees of such Person or any of its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by such Person or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations and (ii) any Capital Stock that would not constitute Disqualified Capital Stock but for the provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” prior to the date that is 180 days after the Latest Maturity Date shall not constitute Disqualified Capital Stock so long as the terms of such Capital Stock provide that the Loans and all other Obligations (other than obligations under Specified Hedge Agreements and Specified Cash Management Agreements) are repaid in full prior to such purchase or redemption.

 

“Dollars” and “$”:  lawful currency of the United States of America.

 

“Domestic Subsidiary”:  any Subsidiary of Parent organized under the laws of any jurisdiction within the United States of America.

 

“ECF Percentage”: for any fiscal year, (a) 50% if the Adjusted Leverage Ratio as of the last day of such fiscal year is greater than 3.50 to 1.00, (b) 25% if the Adjusted Leverage Ratio as of the last day of such fiscal year is less than or equal to 3.50 to 1.00 but greater than or equal to 3.00 to 1.00 and (c) 0% if the Adjusted Leverage Ratio as of the last day of such fiscal year is less than 3.00 to 1.00.

 

“Environmental Claim”:  any written notice, claim, demand or other communication (collectively, a “claim”) alleging or asserting such Person’s liability for investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, (b) exposure to Hazardous Materials or (c) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.  The term “Environmental Claim” shall include, without limitation, any claim by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of, or exposure to, Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, as a result of any of the foregoing.

 

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“Environmental Laws”:  any and all applicable present and future Federal, state, local and foreign laws, rules or regulations, and any orders or decrees, in each case as now or hereafter in effect, relating to the regulation or protection of human health and safety (with respect to exposure to pollutants, contaminants or toxic or hazardous materials, substances or wastes) or the environment or to emissions, discharges, Releases or threatened Releases of pollutants, contaminants or toxic or hazardous materials, substances or wastes into the environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or toxic or hazardous materials, substances or wastes.

 

“Environmental Permits”:  any and all permits, licenses, approvals, registrations, notifications, exemptions and other authorizations required under any Environmental Law.

 

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate”:  any Person treated as a single employer with Parent under Section 414(b) or (c) of the Code or, solely for purposes of Section 302(b) of ERISA and Section 412(b) of the Code and the lien created under Section 303(k) of ERISA and Section 430(k) of the Code, under Section 414(m) or (o) of the Code.

 

“ERISA Event”:  any of the following events or conditions:

 

(a)           any Reportable Event;

 

(b)           any failure by any Single Employer Plan to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Sections 302 or 303 of ERISA) applicable to such Single Employer Plan, whether or not waived, the filing pursuant to Section 412(c) of the Code of any request for a waiver of the funding standard with respect to any Single Employer Plan, or any failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Single Employer Plan;

 

(c)           the distribution under Section 4041 of ERISA of a notice of intent to terminate any Single Employer Plan or any action taken by Parent or an ERISA Affiliate to terminate any Single Employer Plan, or the incurrence by Parent or an ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Single Employer Plan;

 

(d)           the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Single Employer  Plan, or the receipt by Parent or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan;

 

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(e)           the complete or partial withdrawal from a Multiemployer Plan by Parent or any ERISA Affiliate that results in any Withdrawal Liability or the receipt by Parent or any ERISA Affiliate of notice from a Multiemployer Plan that it is, or is expected to be, in Reorganization, Insolvent or in “endangered” or “critical” status, within the meaning of Section 432 of the Code or Section 305 or Title IV of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA;

 

(f)            the institution of a proceeding by a fiduciary of any Multiemployer Plan against Parent or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 60 days;

 

(g)           the adoption of an amendment to any Single Employer Plan that, pursuant to Section 436(f) of the Code, would result in the loss of tax-exempt status of the trust of which such Single Employer Plan is a part if Parent or an ERISA Affiliate fails to timely provide security to the Single Employer Plan in accordance with the provisions of such Section; or

 

(h)           a determination that any Single Employer Plan is, or is expected to be, in “at risk” status (within the meaning of Title IV of ERISA).

 

“Eurocurrency Base Rate”:  with respect to each day during each Interest Period pertaining to a Eurocurrency Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the applicable page of the Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period; provided that, in the case of Tranche B Term Loans, such rate shall in no event be lower than 1.00% per annum.  In the event that such rate does not appear on such page, the “Eurocurrency Base Rate” for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying eurocurrency rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered deposits in Dollars at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurocurrency market where its eurocurrency and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein; provided that, in the case of Tranche B Term Loans, such rate shall in no event be lower than 1.00% per annum.

 

“Eurocurrency Loans”:  Loans under any Facility for which the applicable rate of interest is based upon the Eurocurrency Rate.

 

“Eurocurrency Rate”:  with respect to each day during each Interest Period, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

 

	
 
    	
Eurocurrency Base Rate
    	
 
    
	
 
    	
1.00 - Eurocurrency Reserve Requirements
    	
 
    

 

14

 

“Eurocurrency Reserve Requirements”:  for any day, as applied to a Eurocurrency Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

 

“Eurocurrency Tranche”:  the collective reference to Eurocurrency Loans under any Facility, the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

 

“Event of Default”:  any of the events specified in Section 10, provided that any requirement for the giving of notice, the lapse of time, or both, in each case as set forth therein, has been satisfied.

 

“Excess Cash Flow”: for any fiscal year of the Borrower:

 

(a)(i) Borrower Consolidated Adjusted EBITDA for such fiscal year (determined for such purpose without giving Pro Forma Effect to Specified Transactions), plus

 

(ii) any decrease in Consolidated Working Capital for such fiscal year (other than any decrease arising from acquisitions or dispositions by Borrower or any of its Subsidiaries completed during such period), plus

 

(iii) cash distributed to Borrower or any of its Subsidiaries that are Subsidiary Guarantors attributable to interests in Dick Clark, plus

 

(iv) total pension expenses of the Borrower and its Subsidiaries for such period, minus

 

(b) the sum of, in each case to the extent not otherwise deducted in arriving at Borrower Consolidated Adjusted EBITDA in such period, without duplication,

 

(i) (A) scheduled principal payments of the Term Loans and other Indebtedness during such period (including for purposes hereof, sinking fund payments, payments in respect of the principal components under capital leases and the like relating thereto), and (B) voluntary principal payments of Indebtedness (other than (I) the Term Loans, (II) Revolver Indebtedness, and (III) other revolving Indebtedness if not accompanied by a permanent reduction in the applicable commitments thereunder) by the Borrower and its Subsidiaries,

 

(ii) Consolidated Cash Interest Expense for such period (provided that for purposes of calculating Excess Cash Flow, Consolidated Cash Interest Expense shall be calculated for the Borrower and its Subsidiaries),

 

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(iii) income taxes paid by the Borrower and its Subsidiaries in cash during such period, excluding, for the avoidance of doubt, taxes resulting from the gain on the sale of assets,

 

(iv) Capital Expenditures paid in cash during such period (without double counting amounts pursuant to clause (v) below),

 

(v) the amount (without duplication) of Permitted Acquisitions, Investments made in reliance on Section 9.8(e)(ii), (n), (o), (v)(ii), (x), or (z) and Restricted Payments made in reliance on Section 9.6(c)(iv), 9.6(g)(ii) or 9.6(m), in each case made by the Borrower and its Subsidiaries,

 

(vi) any increase in Consolidated Working Capital for such fiscal year (other than any increase arising from acquisitions or dispositions by Borrower or any of its Subsidiaries completed during such period); and

 

(vii) the amount of cash payments made by the Borrower and its Subsidiaries on account of pensions in such period;

 

provided, that in the case of clauses (b)(i), (b)(iv) and (b)(v) above, such amounts shall not be deducted in calculating Excess Cash Flow to the extent paid or financed with External Cash Flow.

 

“Excess Cash Flow Application Date”:  as defined in Section 5.5(c).

 

“Excluded Foreign Subsidiaries”:  (a) any Foreign Subsidiary and (b) any FSHCO, but only on or after the date of any Change in Law after the Closing Date which provides that a guarantee of a United States obligation by a FSHCO will have the same or similar consequences for purposes of Section 956 of the Code as a guarantee by a Foreign Subsidiary.

 

“Excluded Taxes”:  with respect to any Agent, any Lender (including the Issuing Lender) or Transferee, or any other recipient of a payment made pursuant to a Loan Document, all: (a) net income Taxes, franchise or gross income Taxes (imposed in lieu of net income Taxes), capital Taxes, and U.S. branch profits Taxes, in each case, imposed as a result of a present or former connection between such recipient and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such recipient’s having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (b) any withholding Taxes to the extent attributable to a failure to comply with Section 5.13(e), (c) any backup withholding Tax to the extent attributable to a “Notified Payee Underreporting” as described in Section 3406(c) or a notification by the U.S. Internal Revenue Service that the “Taxpayer Identification Number” furnished by such recipient is incorrect, (d) Taxes that are imposed on amounts payable to such recipient pursuant to a Requirement of Law in effect on the date such Person became a party hereto, acquired a participation hereunder, or designated a new lending office for its Loans hereunder, except to the

 

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extent that such withholding Taxes would be imposed (i) on amounts payable to such recipient’s assignor (if any) (or, in the case of a Participant, the Lender selling participations to such Participant) and such recipient’s assignor (or participating Lender) was entitled, at the time of assignment (or the sale of the participations), to receive additional amounts from the Borrower or other Loan Party with respect to such Taxes pursuant to Section 5.13, or (ii) on amounts payable to a recipient prior to a designation of a new lending office, and such recipient was entitled, at the time of such designation, to receive additional amounts from the Borrower or other Loan Parties pursuant to Section 5.13, and (e) any United States federal withholding Taxes imposed under FATCA.

 

“Existing Credit Agreement”:  as defined in the recitals hereto.

 

“Existing Issuing Lender”: JPMorgan Chase Bank, N.A., in its capacity as issuer of any Letter of Credit under the Existing Credit Agreement.

 

“Existing Letters of Credit”:  the letters of credit described on Annex A.

 

“Existing Parks”:  as defined in Section 6.22.

 

“Existing Time Warner Facility”: the loan facility evidenced by (i) that certain Multiple Draw Term Credit Agreement, dated as of April 30, 2010, by and among TW-SF LLC and the Acquisition Parties, in the original principal amount of $150,000,000, and each other loan document entered in connection therewith, and (ii) that certain Guarantee Agreement, dated as of April 30, 2010, made by Parent, Holdings, the Borrower and certain of Parent’s Subsidiaries in favor of TW-SF LLC, in each case, as amended from time to time prior to the Closing Date.

 

“Extending Revolving Credit Commitment” as defined in Section 5.21.

 

“Extending Revolving Credit Lender” as defined in Section 5.21.

 

“Extending Term Lender” as defined in Section 5.21.

 

“Extending Term Loans” as defined in Section 5.21.

 

“Extension”: as defined in Section 5.21.

 

“Extension Date”: as defined in Section 5.21.

 

“Extension Offer”: as defined in Section 5.21.

 

“Extension Series”: each series of Term Loans and Revolving Credit Commitments extended pursuant to Section 5.21.

 

“External Cash Flow” means Reinvestment Deferred Amounts, any amounts reimbursed by a third party that is not the Parent or its Subsidiaries to the extent received in cash, amounts that are the Net Cash Proceeds of Indebtedness (other than Revolver

 

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Indebtedness), amounts contributed to the capital of the Borrower or amounts from any other Investment in the Borrower.

 

“Facility”:  each of (a) the Tranche A Term Loan Commitments and the Tranche A Term Loans made thereunder (the “Tranche A Term Loan Facility”), (b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made thereunder (the “Tranche B Term Loan Facility”), (c) each Incremental Series of Incremental Term Loans (each such Incremental Series, an “Incremental Term Facility”), (d) each Extension Series of Extending Term Loans (each such Extension Series, an “Extending Term Facility”), (e) each Refinancing Term Loan Series of Refinancing Term Loans (each such Refinancing Term Loan Series, a “Refinancing Term Facility”), (f) the Original Revolving Credit Commitments and the extensions of credit made thereunder (the “Original Revolving Credit Facility”), together with any additional Revolving Credit Commitments made pursuant to Section 3.3 if the terms of such additional Revolving Credit Commitments are identical to the terms of the Original Revolving Credit Commitments, (g) Revolving Credit Commitments established pursuant to Section 3.3 if the terms thereof are not identical to the terms of the Original Revolving Credit Commitments (each such series of such Revolving Credit Commitments, an “Incremental Revolving Facility”), (h) each Extension Series of Revolving Credit Commitments (each such Extension Series, an “Extended Revolving Credit Facility”) and (i) each Replacement Revolving Commitment Series of Replacement Revolving Commitments (each such Replacement Revolving Commitments Series, a “Replacement Revolving Facility”).

 

“FATCA”: Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable) and any current or future regulations or official interpretations thereof.

 

“Federal Funds Effective Rate”:  for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

“FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

 

“Fixed-to-Floating Swap”:  as defined in Section 9.16.

 

“Flood Certificate” shall mean a “Standard Flood Hazard Determination Form” of the Federal Emergency Management Agency and any successor Governmental Authority performing a similar function.

 

“Flood Program” shall mean the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood

 

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Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.

 

“Flood Zone” shall mean areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.

 

“Foreign Benefit Arrangement”: as defined in Section 6.13(b).

 

“Foreign Casualty Event”: as defined in Section 5.5(e).

 

“Foreign Disposition”: as defined in Section 5.5(e).

 

“Foreign Plan”: as defined in Section 6.13(b).

 

“Foreign Subsidiary”:  any Subsidiary of Parent that is not a Domestic Subsidiary.

 

“Foreign Subsidiary Voting Stock”: the total outstanding stock entitled to vote (within the meaning of Section 1.956-2(c) of the Treasury Regulations) of any Excluded Foreign Subsidiary.

 

“FSHCO”:  any Domestic Subsidiary that does not own a material amount of assets other than the  Capital Stock of one or more Foreign Subsidiaries.

 

“Funding Office”:  the office specified from time to time by the Administrative Agent as its funding office by notice to the Borrower and the Lenders.

 

“GAAP”:  generally accepted accounting principles in the United States of America as in effect from time to time.

 

“Governmental Authority”:  any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

 

“Great Escape Agreements”:  collectively, (a) that certain Second Amended and Restated Operating Agreement of HWP dated as of October 29, 2007 among HWP Management, Inc., HWP Development Holdings LLC, BBL HWP LLC, DACWP LLC and Leisure Water LLC, as members, and the following as guarantors or pledgors with respect to certain obligations:  Parent, Donald R. Led Duke, DACWP, LLC and Leisure Water, LLC (as may, subject to Section 9.14, be modified, amended, restated and/or substituted), (b) any and all agreements delivered pursuant thereto or in connection therewith or with the development and operation of the Property described therein, including the financing and refinancing thereof and (c) any and all agreements, documents or instruments entered into in connection with any expansion or development

 

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of the Great Escape’s lodge or any hotel or timeshare arrangements located on or adjacent to it.

 

“Guarantee”:  a guarantee, an indorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as verbs have the correlative meanings.

 

“Guarantee and Collateral Agreement”:  the Guarantee and Collateral Agreement dated as of the Closing Date among Parent, Holdings, the Borrower and each Subsidiary Guarantor in favor of the Administrative Agent, substantially in the form of Exhibit A as the same may be amended, supplemented or otherwise modified from time to time.

 

“Guarantors”:  the collective reference to Parent, Holdings and the Subsidiary Guarantors; provided that no Excluded Foreign Subsidiary shall be a Guarantor.

 

“Hazardous Material”:  any chemical, waste, material or substance which is now or hereafter prohibited, limited or otherwise regulated in any way under any Environmental Law, including without limitation any gasoline or petroleum (including without limitation crude oil or any fraction thereof) or petroleum products, asbestos, polychlorinated biphenyls and urea formaldehyde insulation.

 

“Hedging Agreement”:  all interest rate or currency swaps, caps or collar agreements, foreign exchange agreements, commodity contracts or similar arrangements entered into by Parent or any of its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies, or any swap agreement as defined in 11 U.S.C. § 101.  For avoidance of doubt, Hedging Agreements shall include any interest rate swap or similar agreement that provides for the payment by Parent or any of its Subsidiaries of amounts based upon a floating rate in exchange for receipt by Parent or such Subsidiary of amounts based upon a fixed rate.

 

“Highest Lawful Rate”: the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.

 

“Holdings”:  as defined in the preamble hereto.

 

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“HWP”:  HWP Development LLC, a New York limited liability company.

 

“Immaterial Subsidiary”: each Domestic Subsidiary of Parent that has been designated by the Borrower in writing to the Administrative Agent as an “Immaterial Subsidiary” for purposes of this Agreement if permitted by the following proviso; provided that (a) for purposes of this Agreement, in the good faith judgment of the Borrower, at no time shall (i) the consolidated total assets of all Immaterial Subsidiaries so designated equal or exceed 2.0% of the consolidated assets of Parent and its Subsidiaries (based on the most recent fiscal year for which financial statements have been furnished) or (ii) the consolidated revenues (other than revenues generated from transactions among Parent and its Subsidiaries or among such Subsidiaries) of all Immaterial Subsidiaries so designated equal or exceed 2.0% of the consolidated revenues (other than revenues generated from transactions among Parent and its Subsidiaries or among such Subsidiaries) of Parent and its Subsidiaries (based on the most recent fiscal year for which financial statements have been furnished) and (b) if at any time the consolidated assets or revenues of all such designated Immaterial Subsidiaries shall have exceeded the limits set forth in clause (a) above, then within 30 days after the date that Borrower in good faith makes such determination or, if later, financial statements are delivered that show that Borrower is not in compliance with the limits set forth in clause (a), Borrower shall take the actions required under Section 8.6 (to the extent required thereby) with respect to Wholly-Owned Subsidiaries that are not Immaterial Subsidiaries, Inactive Subsidiaries, Unrestricted Entities or Excluded Foreign Subsidiaries (unless the Administrative Agent in its sole discretion elects in writing to not require the Borrower to take such actions pursuant to Section 8.6(f)(iii)).

 

“Inactive Subsidiary”:  any Subsidiary of Parent that (a) has aggregate assets with a value not in excess of $500,000, (b) conducts no Business and (c) does not Guarantee any Indebtedness of Parent or any of its Subsidiaries.

 

“Increased Amount Date”:  the date on which Incremental Term Loans are borrowed pursuant to Section 2.4 and/or the date on which the increase in Revolving Credit Commitments pursuant to Section 3.3 becomes effective.

 

“Incremental Amendment”:  an amendment to this Agreement among the Borrower, the Administrative Agent and the lenders providing Incremental Term Loans and/or increased Revolving Credit Commitments on a particular Increased Amount Date.

 

“Incremental Amount”:  $300,000,000 less the sum of (a) any Incremental Term Loans made pursuant to Section 2.4, (b) any increase in Revolving Credit Commitments pursuant to Section 3.3 and (c) any Indebtedness incurred pursuant to Section 9.3(c).

 

“Incremental Revolving Facility”: as defined in the definition of “Facility”.

 

“Incremental Revolving Lender”: as defined in Section 3.3(d).

 

“Incremental Series”: as defined in Section 2.4.

 

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“Incremental Term Facility”: as defined in the definition of “Facility”.

 

“Incremental Term Lender”: a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.

 

“Incremental Term Loan Commitment”: the commitment of any lender, established pursuant to Section 2.4, to make Incremental Term Loans to the Borrower.

 

“Incremental Term Loans”: Term Loans made by one or more Lenders to the Borrower pursuant to Section 2.4.

 

“Indebtedness”:  for any Person, without duplication:  (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than (i) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business and (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not paid after becoming due and payable; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments (including negotiable instruments) issued and accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; (f) the liquidation value of all Disqualified Capital Stock of such Person and (g) Indebtedness of others Guaranteed by such Person; provided, however, that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed to be Indebtedness.  The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner to the extent such Indebtedness is recourse, provided that if such Person’s liability for such Indebtedness is contractually limited, only such Person’s share thereof shall be so included.  The amount of Indebtedness for any Person for purposes of clause (c) above shall be deemed equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness, and (ii) the fair market value of the Property encumbered thereby as determined in good faith by such Person.  Anything herein to the contrary notwithstanding, the following shall not constitute Indebtedness: (i) obligations under Hedging Agreements, (ii) obligations in respect of any Indebtedness that has been defeased (either covenant or legal) pursuant to the terms of the instrument creating or governing such Indebtedness, (iii) obligations under the Partnership Parks Agreements and (iv) solely for purposes of Section 10(f) of this Agreement and solely with respect to events arising from the bankruptcy proceedings from which Parent emerged on April 30, 2010, that certain $33,000,000 promissory note owed by HWP, Parent’s guarantee thereof, and the HWP mortgage related thereto.

 

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“Indemnified Liabilities”:  as defined in Section 12.5.

 

“Indemnified Taxes”:  all Taxes (other than Excluded Taxes) and Other Taxes.

 

“Indemnitee”:  as defined in Section 12.5.

 

“Indentures”:  collectively, any indenture or other agreement pursuant to which Indebtedness of Parent, Holdings or the Borrower may be outstanding at any time, in each case as amended as permitted by this Agreement.

 

“Insolvent”:  with respect to any Multiemployer Plan, the condition that such Multiemployer Plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights and copyrightable works, copyright licenses, patents, inventions, discoveries and developments, patent licenses, trademarks, service marks, trade names, brand names, corporate names, domain names, logos, trade dress and other source indicators and the goodwill of any business symbolized thereby, trademark licenses, technology, know-how, processes, trade secrets and confidential or proprietary business information, all registrations and applications related thereto, the right to obtain renewals, extensions, substitutions, continuations, continuations-in-part, divisions, reissues, re-examinations or similar legal protections related thereto, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

“Interest Payment Date”:  (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an Interest Period of three months or shorter, the last day of such Interest Period, (c) as to any Eurocurrency Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan (other than any Revolving Credit Loan and any Swing Line Loan), the date of any repayment or prepayment made in respect thereof.

 

“Interest Period”:  as to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six months (or (i) to the extent available to all applicable Lenders, nine or twelve months or (ii) solely with respect to the period after the day that is one month prior to the Revolving Facility Termination Date of a particular Facility or the Term Loan Maturity Date of a particular Facility, one week or two weeks solely with respect to such Facility) thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six

 

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months (or, to the extent available to all applicable Lenders, nine or twelve months) thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

 

(i)            if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

(ii)           any Interest Period that would otherwise extend beyond the Revolving Facility Termination Date or the relevant Term Loan Maturity Date, as the case may be, shall end on the Revolving Facility Termination Date or the relevant Term Loan Maturity Date, as applicable; and

 

(iii)          any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period.

 

“Investment”:  for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person; (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit arising in connection with the sale of inventory, supplies or patron services by such Person in the ordinary course of business, and excluding also any deposit made by such Person in the ordinary course of business of such Person or as an advance payment in respect of a Capital Expenditure (to the extent the making of such Capital Expenditure will not result in a violation of any of the provisions of Section 9.7); (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person, other than any Guarantee under the Partnership Parks Agreements; provided, however, that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed an Investment; or (d) the entering into of any Hedging Agreement.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment and shall include any and all fees, expenses, commission costs and charges related to such Investment.

 

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“Investment Grade Rating”:  a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.

 

“Issuing Lender”:  (a) with respect to the Existing Letters of Credit, the Existing Issuing Lender and (b) with respect to Letters of Credit issued hereunder on or after the Closing Date, Wells Fargo Bank, National Association or any other Revolving Credit Lender from time to time designated by the Borrower as an Issuing Lender with the consent of such Revolving Credit Lender and the Administrative Agent, or any of their respective affiliates, in each case in its capacity as issuer of any Letter of Credit.

 

“Joint Bookrunners”:  Wells Fargo Securities, LLC, Goldman Sachs Bank USA, Deutsche Bank Securities Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A. and Barclays Capital.

 

“Junior Lien Intercreditor Agreement”: an intercreditor agreement executed by the Borrower, the Administrative Agent on behalf of the Secured Parties, and one or more holders or agents in respect of one or more series of Indebtedness secured by the Collateral on a basis junior to the Lien on the Collateral in favor of the Administrative Agent created by the Security Documents, in form and substance reasonably satisfactory to the Administrative Agent.

 

“L/C Commitment”:  $50,000,000.

 

“L/C Fee Payment Date”:  the last day of each March, June, September and December and the last day of the Revolving Facility Commitment Period.

 

“L/C Obligations”:  at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 4.5.  The L/C Obligations of any Lender shall be its Revolving Credit Percentage of the L/C Obligations.

 

“L/C Participants”:  with respect to any Letter of Credit, the collective reference to all the Revolving Credit Lenders other than the Issuing Lender that issued such Letter of Credit.

 

“Latest Maturity Date”:  at any time, the latest of the latest Term Loan Maturity Date and the latest Revolving Facility Termination Date, in each case with respect to any then outstanding Facility.

 

“Lender Addendum”:  with respect to any Lender, a Lender Addendum, substantially in the form of Exhibit J, to be executed and delivered by such Lender on the Closing Date as provided in Section 12.18.

 

“Lenders”:  as defined in the preamble hereto.

 

“Letters of Credit”:  as defined in Section 4.1.

 

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“Lien”:  with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance having the effect of security in respect of such Property.  For purposes of this Agreement and the other Loan Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.

 

“Liquidity”: the sum of (a) Unrestricted Cash and Permitted Investments held by the Loan Parties and their consolidated Subsidiaries, (b) cash in the Escrow Account under and as defined in the Subordinated Indemnity Escrow Agreement (but in no event shall more than $15,000,000 be counted for purposes of Liquidity pursuant to this clause (b)) and (c) the aggregate Available Revolving Commitments on such date (with satisfaction of the applicable conditions precedent to Revolving Extensions of Credit to be tested as of such date).

 

“Loan”:  any loan made by any Lender pursuant to this Agreement.

 

“Loan Documents”:  this Agreement, the Security Documents, the Applications and the Notes.  For the avoidance of doubt, the term “Loan Documents” shall not be deemed to include any Specified Hedge Agreement, Hedging Agreement or Specified Cash Management Agreement.

 

“Loan Parties”:  Parent, Holdings, the Borrower and each Subsidiary of the Borrower that is a party to a Loan Document; provided that any such Person shall cease to be a Loan Party at the time such Person ceases to exist (including pursuant to a merger, consolidation, liquidation or otherwise) or is Disposed of to a non-Loan Party, in each case, to the extent permitted by this Agreement.

 

“Mandatory Prepayment Date”: as defined in Section 5.5.

 

“Margin Stock”:  “margin stock” within the meaning of Regulations T, U and X of the Board.

 

“Material Adverse Effect”:  a material adverse effect on (a) the Business, Property or financial condition of Parent and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

 

“Measurement Period”:  for any determination under this Agreement, the four consecutive fiscal quarters of Parent or Borrower, as applicable, then last ended for which financial statements are required to be delivered pursuant to Section 8.1(a) or (d).

 

“Minimum Extension Condition” as defined in Section 5.21.

 

“Moody’s”:  Moody’s Investors Service, Inc. and any successor thereto.

 

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“Mortgaged Properties”:  the Real Properties listed on Schedule 1.1(a), as to which the Administrative Agent for the benefit of the Lenders has been granted a Lien pursuant to the Mortgages.

 

“Mortgages”:  each of the mortgages and deeds of trust encumbering the Mortgaged Properties made by the Loan Parties party thereto in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, as delivered on the Closing Date in form and substance reasonably satisfactory to the Administrative Agent, together with any other mortgages and deeds of trust made by any Loan Parties in accordance with Section 8.6(b) in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially in the form of the mortgages and deeds of trust delivered on the Closing Date (with such changes thereto as shall be reasonably advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded), in each case as the same may be amended, amended and restated, extended, supplemented, substituted or otherwise modified from time to time.

 

“Multiemployer Plan”:  a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which Parent or any ERISA Affiliate has an obligation to contribute.

 

“Net Cash Flow from Partnership Parks”:  shall be, on an aggregate basis commencing on January 1, 2012, and to the extent a positive number, the amount of cash distributed by the Partnership Parks Entities to Parent, minus the amount of cash Investments or loans made directly or indirectly by Parent and its Subsidiaries in or to the Partnership Parks Entities (except to the extent such Investments or loans are made substantially contemporaneously with, and with the proceeds of, a Restricted Payment that reduces Excess Cash Flow pursuant to clause (b)(v) of the definition thereof or that reduces the Available Amount pursuant to clause (iv) of the definition thereof).

 

“Net Cash Proceeds”:  (a)  in connection with any Asset Sale or any Recovery Event, the proceeds thereof received by Parent or any Subsidiary in the form of cash and Permitted Investments (including any such proceeds received in such form by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness and other obligations secured by a Lien expressly permitted hereunder on, or amount required to be paid under Capital Lease Obligations relating to, any asset which is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of (i) Taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements applicable to the transactions) and (ii) any reserve for adjustment in respect of (A) the sale price of such asset or assets established in accordance with GAAP and (B) any liabilities associated with such asset or assets retained by Parent or any of its Subsidiaries after such sale or other disposition thereof and (b) in connection with any issuance or sale of debt securities or instruments or the incurrence of loans or other Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment

 

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banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.

 

“New York Collateral”: as defined in Section 12.7(a).

 

“Non-Consenting Lender”:  in the event that (i) the Borrower or the Administrative Agent has requested the Lenders to consent to a departure or waiver of any provisions of the Loan Documents or to agree to any amendment thereto, (ii) the consent, waiver or amendment in question requires the agreement of all Lenders or all affected Lenders in accordance with the terms of Section 12.1 or all the Lenders with respect to a certain class of Loans or Commitments and (iii) the Required Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a “Non-Consenting Lender”.

 

“Non-Guarantor Subsidiary”:  any Subsidiary of the Borrower that is not a Subsidiary Guarantor.

 

“Non-U.S. Lender”:  as defined in Section 5.13(e).

 

“Non-U.S. Participant”: shall mean a Participant that is a Non-U.S. Person.

 

“Non-U.S. Person”: shall mean a Person that is neither a citizen or resident of the United States of America, nor a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any jurisdiction thereof), nor an estate or trust that is subject to federal income taxation regardless of the source of its income.

 

“Note”:  any promissory note evidencing any Loan.

 

“Obligations”:  the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement Obligations and all other obligations and liabilities of any Loan Party to the Administrative Agent, to any Lender or, in the case of Specified Hedge Agreements and Specified Cash Management Agreements, to any Qualified Counterparty, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement, any Specified Cash Management Agreement or any other document made, delivered or given by any Loan Party in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided, that (a) subject to Section 12.16(b), obligations of Parent, Holdings or the Borrower under any Specified

 

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Hedge Agreements or Specified Cash Management Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements or Specified Cash Management Agreements.

 

“OFAC”: the U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

“Operated Properties”:  as defined in Section 6.17(a).

 

“Original Revolving Credit Commitments” shall mean the commitments of the Revolving Credit Lenders in effect as of the Closing Date to fund Revolving Credit Loans pursuant to Section 3.1.

 

“Original Revolving Credit Facility”: as defined in the definition of “Facility”.

 

“Other Taxes”:  any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to this Agreement or any other Loan Document, except any such Taxes that are imposed by the jurisdictions described in clause (a) of Excluded Taxes with respect to an assignment (other than an assignment made pursuant to Section 5.17).

 

“Parent”:  as defined in the preamble hereto.

 

“Parent Consolidated Adjusted EBITDA”:  for any period, the sum, for Parent and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:

 

(a)           Consolidated Net Income of Parent and its Subsidiaries for such period excluding those amounts which, in the determination of Consolidated Net Income for such period, have been added or deducted for (i) total interest expense and, to the extent not reflected in such total interest expense, any losses on hedging or other derivative instruments, net of interest income and gains on such hedging obligations, (ii) provisions for federal, state, local and foreign income tax, franchise taxes and similar taxes imposed in lieu of income tax, (iii) depreciation and amortization expense (including, without limitation, amortization of goodwill and other intangible assets) and any impairment of property, equipment, goodwill or other intangible assets, (iv) any effect of extraordinary, non-recurring or unusual gains or losses or expenses and curtailments or modifications to pension and post-retirement employee benefit plans, provided that the amount of cash expenditures added back as a result of this clause (iv) shall not exceed $20,000,000 in any twelve-month period, (v) any net gains or losses of disposed, abandoned or discontinued assets or operations except for income and expenses prior to disposition, (vi) any fees, expenses, commissions, costs or other charges related to (A) any securities offering, Investment, acquisition, disposition or other similar transaction permitted

 

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hereunder or the incurrence of Indebtedness permitted to be incurred hereunder (including any amendment, extension, renewal, refinancing or replacement thereof), in each case whether or not successful and whether or not consummated prior to, on, or after the Closing Date, and (B) the 2010 bankruptcy and emergence compensation, the termination or settlement of leases and executory contracts, litigation costs and settlements, asset write-ups or write-downs, income and gains recorded in connection with the corporate reorganization effected in connection therewith, provided that the amount of adjustments pursuant to this clause (B) shall not exceed $1,000,000 for the fiscal quarter ending December 31, 2011 and $2,000,000 for the fiscal year ending December 31, 2012, (vii)(A) any net unrealized gain or loss (after any offset) resulting in such period from obligations under any hedging obligations or other derivative instruments and the application of Statement of Financial Accounting Standards No. 133 and (B) any net unrealized gain or loss (after any offset) resulting in such period from currency translation, in each case to the extent not incurred in cash, (viii) the Consolidated Net Income of any Person (adjusted for items (i) through (vii) of this paragraph (a)) to the extent (A) attributable to interests held by third parties in Subsidiaries of Parent that are not wholly-owned by Parent or (B) attributable to (I) interests in Persons accounted for under the equity method, (II) Unrestricted Entities, or (III) any Person that is not a Subsidiary (including any of the joint ventures established pursuant to the Great Escape Agreements (including but not limited to HWP Development Holdings LLC, HWP Management Inc. and HWP)), except to the extent of the cash received by Parent or any of its Subsidiaries that are Subsidiary Guarantors in respect of such interests (excluding interests in Dick Clark) including management fees, and (ix) all other non-cash gains, losses or charges, plus

 

(b)           to the extent not included in the determination of Consolidated Net Income for such period, all proceeds of business interruption insurance received during such period, plus

 

(c)           the amount of cost savings (net of the amount of actual benefits realized during such period) projected by the Parent in good faith to be realized during the next four consecutive Fiscal Quarters (which cost savings shall be added to Parent Consolidated Adjusted EBITDA as so projected until fully realized and calculated on a Pro Forma Basis as though such cost savings had been realized on the first day of such period) as a result of a Permitted Acquisition or other Investment permitted by Section 9.8 or specific actions actually taken, initiated or anticipated to be taken and identified as provided below, so long as (A) such cost savings are directly attributable to the applicable acquisition or investment, are reasonably identifiable and factually supportable, and are expected to have a continuing impact, (B) the actions causing such cost savings in connection with any Permitted Acquisition or other Investment permitted by Section 9.8  are taken, or are reasonably expected to be taken, within 12 months of any such acquisition or investment and the Administrative Agent shall have received an certificate of a Responsible Officer of Parent that such actions have been taken, or are reasonably expected to be taken, within such time period, plus

 

(d)           any non-cash or stock-based compensation costs or expenses incurred by Parent or any of its Subsidiaries pursuant to any management equity plan or stock option

 

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plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, less any cash costs of such plans or agreements incurred during such period.

 

Calculations of Parent Consolidated Adjusted EBITDA shall be as set forth on Exhibit B attached hereto.

 

Notwithstanding the foregoing if, during any period for which Parent Consolidated Adjusted EBITDA is being determined, Parent or any of its Subsidiaries shall have consummated any Specified Transaction of the type described in clause (a), (b) or (c) of the definition thereof then, for all financial tests or ratios under this Agreement, Parent Consolidated Adjusted EBITDA shall be determined on a Pro Forma Basis.  The parties hereby agree that Parent Consolidated Adjusted EBITDA for the fiscal quarter ending (a) March 31, 2011 was $(50,683,000), (b) June 30, 2011 was $112,369,000 and (c) September 30, 2011 was $250,894,000.

 

“Parent Consolidated Leverage Ratio”: as at any date, the ratio of (a) Consolidated Total Debt as at such date to (b) Parent Consolidated Adjusted EBITDA for such Measurement Period.

 

“Pari Passu Intercreditor Agreement”: an intercreditor agreement executed by the Borrower, the Administrative Agent on behalf of the Secured Parties and one or more holders or agents in respect of one or more series of pari passu Indebtedness secured by the Collateral, in form and substance reasonably satisfactory to the Administrative Agent.

 

“Park”:  collectively, the Existing Parks and any other amusement or attraction park acquired by any of Parent and its Subsidiaries after the date hereof.

 

“Participant”:  as defined in Section 12.6(c).

 

“Participant Register”: as defined in Section 12.6(b)(iv).

 

“Partnership Parks Agreements”:  (a) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., the Borrower and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), (b) the Overall Agreement dated as of November 24, 1997 among Six Flags Over Texas Fund, Ltd., Flags’ Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., the Borrower and Six Flags Entertainment Corporation, as amended by the Agreement dated as of December 6, 1999 between and among the foregoing parties and Six Flags Fund II, Ltd., and the Related Agreements (as defined therein), and (c) the Subordinated Indemnity Agreement, and each related agreement entered into in connection therewith (including, without limitation, the Beneficial Share Assignment Agreement, the Subordinated Indemnity Escrow Agreement, and the Acquisition Company Liquidity

 

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Agreement dated as of December 8, 2006 by and among Parent, Holdings, Borrower, GP Holdings, Inc., SFOG II, Inc., SFT Holdings, Inc., Time Warner Inc., TW-SPV Co., Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), the Acquisition Parties, SFOG Acquisition A Holdings, Inc., SFOG Acquisition B Holdings, Inc., SFOT Acquisition I Holdings, Inc. and SFOT Acquisition II Holdings, Inc.), in each case, as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.

 

“Partnership Parks Entities”: (i) Six Flags Over Georgia II, L.P., a Delaware limited partnership, Texas Flags, Ltd., a Texas limited partnership, GP Holdings Inc., a Delaware corporation, SFOT Acquisition I Holdings, Inc., a Delaware corporation, SFOT Acquisition II Holdings, Inc., a Delaware corporation, SFOG Acquisition A Holdings, Inc., a Delaware corporation, SFOG Acquisition B Holdings, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, and the Acquisition Parties, (ii) any of their respective Subsidiaries and (iii) any other Person in which Parent owns any Capital Stock, directly or indirectly, that is formed with one of its purposes being to hold Capital Stock in the entities described in clauses (i) or (ii) above, directly or indirectly.

 

“Partnership Parks Lien” means a Lien on the Capital Stock issued by or owned by a Partnership Parks Entity, any Lien on Indebtedness owed by or to a Partnership Parks Entity, any Lien on any management fee owed by or to a Partnership Parks Entity, or a Lien on a material portion of the assets of the Partnership Parks Entities, taken as a whole.

 

“Partnership Parks Revolver Agreements”:  (i) that certain Credit Agreement dated as of December 7, 2010 among Six Flags Over Georgia II, L.P., as borrower, and JPMorgan Chase Bank, N.A., as lender, and the revolving credit note in respect thereof, (ii) that certain Guaranty dated as of December 7, 2010 made by SFOG Acquisition Company LLC in favor of JPMorgan Chase Bank, N.A. in respect of the liabilities of Six Flags Over Georgia II, L.P. under the credit agreement referred to in clause (i) above, (iii) that certain Subordination Agreement dated as of December 7, 2010 among SFOG II, Inc., Six Flags Over Georgia II, L.P. and JPMorgan Chase Bank, N.A., (iv) that certain Subordination Agreement dated as of December 7, 2010 among Six Flags Theme Parks Inc., Six Flags Over Georgia II, L.P. and JPMorgan Chase Bank, N.A., (v) that certain Credit Agreement dated as of December 7, 2010 among Texas Flags, Ltd., as borrower, and JPMorgan Chase Bank, N.A., and the revolving credit note in respect thereof, (vi) that certain Subordination Agreement dated as of December 7, 2010 among Six Flags Over Texas, Inc., Texas Flags, Ltd., Chase Equipment Leasing Inc. and JPMorgan Chase Bank, N.A., (vii) that certain Subordination Agreement dated as of December 7, 2010 among Six Flags Theme Parks Inc., Texas Flags, Ltd., Chase Equipment Leasing Inc. and JPMorgan Chase Bank, N.A., (viii) that certain Subordination Agreement dated as of December 7, 2010 among Parent, Texas Flags, Ltd., Chase Equipment Leasing Inc. and JPMorgan Chase Bank, N.A. and (ix) any agreements relating to the foregoing.

 

“Payment Amount”: as defined in Section 4.5.

 

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“Payment Office”:  the office specified from time to time by the Administrative Agent as its payment office by notice to the Borrower and the Lenders.

 

“PBGC”:  the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

 

“Permitted Acquisition”:  as defined in Section 9.5(e)(i).

 

“Permitted Holders”:  any fund affiliated with H Partners Management LLC, BHR Capital LLC or Pentwater Capital Management LP.

 

“Permitted Investments”:  (a) Dollars; (b)(i) Pounds Sterling or Euros or (ii) in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business; (c) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition; (d) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $500,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks; (e) repurchase obligations for underlying securities of the types described in clauses (c), (d) and (h) entered into with any financial institution meeting the qualifications specified in clause (d) above; (f) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 24 months after the date of creation thereof and Indebtedness or preferred stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of acquisition; (g) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower) and in each case maturing within 24 months after the date of creation or acquisition thereof; (h) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (i) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (j) Investments with average maturities of 12 months or less from the date of acquisition in money market funds; (k) investment funds investing 90% of their assets in securities of the types described in clauses (a) through (j) above; and (l) in the case of Foreign Subsidiaries, substantially similar investments to those set forth in clauses (a) through (k) above denominated in foreign currencies, provided that references to the United States of America (or any agency or instrumentality thereof) shall be deemed to mean foreign countries having a sovereign rating of “A” or better

 

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from either S&P or Moody’s (or another nationally recognized statistical rating agency selected by the Borrower and reasonably acceptable to the Administrative Agent).

 

“Permitted Liens”:  as defined in Section 9.4.

 

“Person”:  an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

“Plan”:  an employee benefit plan (within the meaning of Section 3(3) of ERISA, and that is subject to ERISA) and in respect of which Parent or, solely with respect to any such plan subject to Title IV of ERISA, any ERISA Affiliate is (or if such Plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an employer as defined in Section 3(5) of ERISA, but other than any Multiemployer Plan.

 

“Platform”: as defined in Section 7.1(f).

 

“Pledged Stock”: as defined in the Guarantee and Collateral Agreement.

 

“Prime Rate”:  the rate of interest per annum publicly announced from time to time by Wells Fargo Bank, National Association as its prime rate.  Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs.  The parties hereto acknowledge that the rate announced publicly by Wells Fargo Bank, National Association as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.

 

“Pro Forma Balance Sheet”:  as defined in Section 6.1.

 

“Pro Forma Basis” or “Pro Forma Effect” means, with respect to compliance with any financial test or ratio hereunder (including any incurrence test) in respect of a Specified Transaction that occurred after the commencement of the relevant Measurement Period for which such financial test or ratio is being calculated, including (to the extent such adjustments would have been observed during such Measurement Period if the Specified Transaction had occurred on the first date thereof) pro forma adjustments arising out of events which are directly attributable to the applicable acquisition or investment, are factually supportable, and are expected to have a continuing impact, in each case as determined on a basis consistent with Article 11 of Regulation S-X of the Securities Act, as interpreted by the Staff of the Securities and Exchange Commission and such other adjustments as are determined in accordance with the definition of Parent Consolidated Adjusted EBITDA, in each case as certified on behalf of the Parent by a Responsible Officer, using, for purposes of determining such compliance with a financial test or ratio as if such Specified Transaction consummated after the commencement of the relevant Measurement Period, and any Indebtedness incurred or repaid in connection therewith, had been consummated and incurred or repaid at the beginning of such period.

 

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“Pro Forma Compliance Certificate” shall mean a certificate of a Responsible Officer of Parent setting forth in reasonable detail computations necessary to show that the Loan Parties would have been in compliance with Sections 9.1 and 9.2 as at September 30, 2011, giving pro forma effect to the Loans to be made on the Closing Date and the use of proceeds thereof, and the payment of fees and expenses in connection with the foregoing, as if such events had occurred on September 30, 2011.

 

“Property”:  any right or interest in or to property of any kind whatsoever, whether Real Property, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.

 

“Purchase Money Indebtedness”:  (a) Indebtedness consisting of the deferred purchase price of Property, conditional sale or other obligations under any title retention agreement, installment sales and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the Property being financed, and (b) Indebtedness incurred to finance the acquisition of Property (including Acquisitions), including additions and improvements; provided, however, that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed (or replacement items) or, in the case of Real Property, the Real Property on which such asset is attached; and provided  further, that such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by the Borrower or a Subsidiary of such asset.

 

“Put Related Debt Incurrence” shall mean an incurrence by the Borrower of in excess of $200,000,000 of Indebtedness for borrowed money (other than Revolver Indebtedness) to fund the purchase of limited partnership units under the Partnership Parks Agreements.

 

“Qualified Capital Stock” shall mean any Capital Stock that is not Disqualified Capital Stock.

 

“Qualified Counterparty”:  with respect to any Specified Hedge Agreement or any Specified Cash Management Agreement, any counterparty thereto that (a) was the Arranger, an Agent, a Lender or an affiliate of the Arranger, an Agent or a Lender at the time such Specified Hedge Agreement or such Specified Cash Management Agreement was entered into and (b) has delivered to the Administrative Agent a writing signed by both such counterparty and the Borrower at any time (i) that advises the Administrative Agent of the existence of such agreement, (ii) pursuant to which such counterparty agrees that the Administrative Agent is entitled to act as its agent pursuant to the terms of this Agreement and the other Loan Documents, (iii) that advises the Administrative Agent whether it is authorized to release the Collateral and the guarantees when all Obligations (other than contingent indemnification obligations, Specified Hedge Agreements and Specified Cash Management Agreements (subject to the treatment of Letters of Credit as set forth in Section 12.16(b)) are paid in full without any requirement that the Qualified Counterparty in respect of the relevant Specified Hedge Agreement provide notification to the Administrative Agent that the Qualified Counterparty must have first received a substitute Lien and/or substitute guarantee or other collateral satisfactory to such

 

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Qualified Counterparty and (iv) pursuant to which the counterparty acknowledges that it has read and understands the definition of “Obligations” and Section 12.16.  For the avoidance of doubt, if the Arranger, any Agent or any Lender or any affiliate thereof ceases to be the Arranger, an Agent or a Lender hereunder (the “Cessation Date”), then any current or future obligations in respect of any Specified Hedge Agreements or any Specified Cash Management Agreements entered into prior to the Cessation Date with respect to such Arranger, Agent, Lender or affiliate of the foregoing shall continue to constitute Obligations hereunder and such Arranger, Agent, Lender or affiliate thereof shall continue to constitute a Qualified Counterparty hereunder.

 

“Qualifying Bids” as defined in Section 5.19(c).

 

“Qualifying Lender” as defined in Section 5.19(d).

 

“Real Properties”:  all right, title and interest in and to any and all parcels of or interests in real property, including the easements, hereditaments and appurtenances relating thereto and the improvements thereon, owned by, or leased by, Parent, Holdings, the Borrower or their respective Subsidiaries.

 

“Recovery Event”:  any settlement of or payment in excess of $5,000,000 in respect of any Property or casualty insurance claim or any condemnation proceeding relating to any Property of Borrower or any of its Subsidiaries.

 

“Refinance”: as defined in Section 2.5(a).

 

“Refinancing Effective Date”: as defined in Section 2.5(a).

 

“Refinancing Expenses”:  with respect to any Refinancing of any Indebtedness, accrued and unpaid interest (or dividends) and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection therewith.

 

“Refinancing Notes”:  first priority senior secured notes, junior lien secured notes and/or unsecured notes, in each case issued pursuant to an indenture, note purchase agreement or other agreement and in lieu of Refinancing Term Loans; provided that each of the following conditions is satisfied:

 

(a) before and after giving effect to the incurrence of such Refinancing Notes, the condition set forth in Section 7.2(b) shall be satisfied;

 

(b) (i) if the Refinancing Notes are pari passu with the Term Loans being Refinanced by such Refinancing Notes, such Refinancing Notes shall not mature, do not have scheduled amortization or payments of principal, and are not subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (except customary asset sale or change of control provisions), in each case prior to the latest Term Loan Maturity Date of the Term Loans being Refinanced and (ii) if the Refinancing Notes are secured on a junior lien basis, not secured or are subordinated to any of the Facilities in right of payment, such Refinancing Notes shall not mature, do not have scheduled amortization or payments of principal,

 

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and are not subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (except customary asset sale or change of control provisions), in each case prior to the date that is 180 days after the Latest Maturity Date;

 

(c) if secured, such Refinancing Notes are not secured by liens on the assets of Parent or any of its Subsidiaries, other than assets constituting Collateral;

 

(d) no Subsidiary is a guarantor with respect to such Refinancing Notes unless such Subsidiary is a Subsidiary Guarantor which is guaranteeing (or substantially concurrently with the incurrence of the Refinancing Notes will guarantee) the Obligations, and any Unrestricted Entity is an unrestricted entity (or substantive equivalent) under such Refinancing Notes;

 

(e) such Refinancing Notes may not be in an amount greater than the aggregate principal amount of the Term Loans being Refinanced plus unpaid accrued interest and premium (if any) thereon and underwriting discounts, fees, commissions and expenses incurred in connection with the Refinancing Notes;

 

(f) (i) if secured on a pari passu basis with the other Obligations, all collateral therefor shall be secured by the Security Documents and the Loan Parties and the Administrative Agent shall have entered into such amendments to the Security Documents as may be reasonably requested by the Administrative Agent (which shall not require any consent from any Lender) to provide the Refinancing Notes with the benefit of the applicable Security Documents on a pari passu basis with the other Obligations, the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Pari Passu Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the trustee, agent, or collateral trustee for such Refinancing Notes shall have executed the Pari Passu Intercreditor Agreement if reasonably requested by the Administrative Agent and (ii) if secured on a junior lien basis with the other Obligations, all collateral therefor shall be secured by collateral documentation that is substantially similar to the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Junior Lien Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the trustee, agent, or collateral trustee for such Refinancing Notes shall have executed the Junior Lien Intercreditor Agreement if reasonably requested by the Administrative Agent;

 

(g) such Refinancing Notes do not contain financial maintenance covenants in any way more restrictive than those set forth in this Agreement;

 

(h) subject to the foregoing, all other terms applicable to the Refinancing Notes (other than provisions relating to original issue discount, fees and interest rates which shall be as agreed between the Borrower and the lenders providing such Refinancing Notes) shall reflect market terms and conditions at the time of

 

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issuance and in any event shall be substantially identical to, or less favorable (taken as a whole) to the lenders providing such Refinancing Notes than, those applicable to the then outstanding Term Loans being Refinanced; and

 

(i) all of the Net Cash Proceeds of the Refinancing Notes shall be applied substantially concurrently with the incurrence thereof solely to the pro rata repayment of the Term Loans of the relevant Facility or Facilities being Refinanced.

 

“Refinancing Term Facility”: as defined in the definition of “Facility”.

 

“Refinancing Term Lender”: as defined in Section 2.5(b).

 

“Refinancing Term Loan Amendment”: as defined in Section 2.5(c).

 

“Refinancing Term Loans”: as defined in Section 2.5(a).

 

“Refinancing Term Loan Series” as defined in Section 2.5(b).

 

“Refunded Swing Line Loans”:  as defined in Section 4.10(b).

 

“Refunding Date”:  as defined in Section 4.10(c).

 

“Register”:  as defined in Section 12.6(b)(iv).

 

“Regulation H”:  Regulation H of the Board as in effect from time to time.

 

“Regulation U”:  Regulation U of the Board as in effect from time to time.

 

“Reimbursement Obligation”:  the obligation of the Borrower to reimburse each Issuing Lender pursuant to Section 4.5 for amounts drawn under Letters of Credit issued by such Issuing Lender for the account of the Borrower.

 

“Reinvestment Deferred Amount”:  with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by the Borrower or any of its Subsidiaries in connection therewith that, as a result of the delivery of a Reinvestment Notice, are not applied to repay the Loans pursuant to Section 5.5(b).

 

“Reinvestment Event”:  any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment Notice”:  a written notice executed by a Responsible Officer of Holdings or the Borrower stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire, restore or reconstruct assets used or useful in its business (including for Permitted Acquisitions).

 

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“Reinvestment Prepayment Amount”:  with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire, restore, or reconstruct assets used or useful in the business of the Borrower and its Subsidiaries (including for Permitted Acquisitions).

 

“Reinvestment Prepayment Date”:  with respect to any Reinvestment Event, the earlier of (a) the date occurring one year after such Reinvestment Event (or, if all or any portion of the Reinvestment Deferred Amount is not used within one year of such Reinvestment Date, but is contractually committed within 12 months of such Reinvestment Event to be so used or an executed letter of intent is in place within 12 months of such Reinvestment Event, then within 18 months of such Reinvestment Event)  and (b) within five Business Days after the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire, restore or reconstruct assets used or useful in the business of Parent and its Subsidiaries (including for Permitted Acquisitions) with all or any portion of the relevant Reinvestment Deferred Amount.

 

“Rejection Notice”: as defined in Section 5.11(d).

 

“Related Transactions”: the repayment in full and cancellation of the Existing Time Warner Facility, and the amendment to, waiver, supplement or other modification to certain Partnership Parks Agreements or other Contractual Obligations of the Partnership Parks Entities in connection with the transactions contemplated hereby.

 

“Release”:  any release, threatened release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment, including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata that violates or creates any liability under any Environmental Law.

 

“Reorganization”:  with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Replacement Revolving Commitments”: as defined in Section 3.4(a).

 

“Replacement Revolving Commitment Series”: as defined in Section 3.4(b).

 

“Replacement Revolving Credit Effective Date”: as defined in Section 3.4(a).

 

“Replacement Revolving Facility Amendment”: as defined in Section 3.4(c).

 

“Replacement Revolving Lender”: as defined in Section 3.4(b).

 

“Reply Amount”: as defined in Section 5.19(b).

 

“Reply Date”: as defined in Section 5.19(a).

 

“Reply Discount”: as defined in Section 5.19(b).

 

39

 

“Reportable Event”:  any of the events set forth in Section 4043(c) of ERISA and the regulations issued thereunder, with respect to a Single Employer Plan, as to which the PBGC has not waived the notice requirement by regulation as in effect on the date hereof.

 

“Repricing Transaction”:  (a) any prepayment of the Tranche B Term Loans using proceeds of Indebtedness incurred by the Borrower from a substantially concurrent incurrence of term loans or notes (including but not limited to Refinancing Notes or Refinancing Term Loans) for which the effective yield thereon on the date of such prepayment is lower than the effective yield on the Closing Date for the Tranche B Term Loans (with “effective yield” excluding, in each case, the effect of any arrangement, syndication, structuring or other fees payable in connection therewith, that are not shared with all lenders or holders of such term loans or notes, as the case may be, and without taking into effect any fluctuations in the Eurocurrency Rate) or (b) any repricing of the Tranche B Term Loans pursuant to an amendment hereto relating to the Applicable Margin, Base Rate, Eurocurrency Rate, interest rate floors or the yield on the Tranche B Term Loans that result in any of the foregoing on the date of such amendment being lower than such amounts for the Tranche B Term Loans on the Closing Date; provided that notwithstanding the foregoing, it shall not be a “Repricing Transaction” under this Agreement if any of the transactions set forth in clause (a) or clause (b) above occur in connection with a transaction contemplated by Section 10(l)(i) or Section 10(l)(ii) of this Agreement.

 

“Required Lenders”:  at any time, the holders of more than 50% of the sum of (a) the aggregate unpaid principal amount of the Term Loans then outstanding and (b) the Total Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.

 

“Requirement of Law”:  as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

 

“Responsible Officer”:  as to any Person, the chief executive officer, president, chief financial officer, senior vice president or treasurer or assistant treasurer, or general counsel or assistant general counsel, of such Person, but in any event, with respect to financial matters, the chief financial officer, senior vice president-finance or treasurer of such Person.

 

“Restricted Payment”:  dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any Capital Stock of Parent, Holdings or the Borrower or of any warrants, options or other rights to acquire the same (or to make any payments to any Person (except “earn-out” payments or similar payments in connection with an Acquisition or pursuant to any agreement entered into in connection therewith, in each case where such

 

40

 

obligation does not constitute Indebtedness) such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market or equity value of Parent, Holdings or the Borrower), excluding dividends payable by any of Parent, Holdings, or the Borrower or any Subsidiary solely in its own Qualified Capital Stock.

 

“Retained Declined Proceeds”: as defined in Section 5.11(d).

 

“Revolver Indebtedness”:  Indebtedness of the Borrower in respect of Revolving Credit Loans and Swing Line Loans.

 

“Revolving Credit Commitment”:  as to any Lender, the obligation of such Lender, if any, to make Revolving Credit Loans and participate in Swing Line Loans and Letters of Credit, if applicable, in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Credit Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance, Incremental Amendment or Replacement Revolving Facility Amendment pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof, and shall include, for the avoidance of doubt, Original Revolving Credit Commitments, increases in the Revolving Credit Commitments pursuant to Section 3.3, if any, Replacement Revolving Facility Commitments, if any and Extended Revolving Credit Commitments, if any.  As of the Closing Date, the aggregate amount of the Total Revolving Credit Commitments (comprising solely Original Revolving Credit Commitments) is $200,000,000.

 

“Revolving Credit Facility”:  as defined in the definition of “Facility” in this Section 1.1.

 

“Revolving Credit Lender”:  each Lender that has a Revolving Credit Commitment or that is the holder of Revolving Credit Loans.

 

“Revolving Credit Loans”:  as defined in Section 3.1, and shall include, for the avoidance of doubt, revolving loans made pursuant to any of the Revolving Credit Commitments.

 

“Revolving Credit Percentage”: as to any Revolving Credit Lender at any time, the percentage which such Lender’s Revolving Credit Commitment then constitutes of the Total Revolving Credit Commitments (or, at any time after the Revolving Credit Commitments shall have expired or been terminated, the percentage which the aggregate amount of such Lender’s Revolving Extensions of Credit then outstanding constitutes of the amount of the Total Revolving Extensions of Credit then outstanding).

 

“Revolving Extensions of Credit”: as to any Revolving Credit Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of Revolving Credit Loans, (b) such Lender’s Revolving Credit Percentage of the aggregate principal amount of Swing Line Loans then outstanding plus (c) such Lender’s Revolving Credit Percentage of the L/C Obligations then outstanding.

 

41

 

“Revolving Facility Commitment Period”:  the period from and including the Closing Date to the Revolving Facility Termination Date.

 

“Revolving Facility Termination Date”:  December 20, 2016; provided that (i) any reference to Revolving Facility Termination Date with respect to any Extended Revolving Credit Facility shall be the final maturity date as specified in the applicable Extension Offer and (ii) any reference to Revolving Facility Termination Date with respect to any Replacement Revolving Facility shall be the final maturity date as specified in the Replacement Revolving Facility Amendment.

 

“RP Eligible Proceeds”: Net Cash Proceeds from Dispositions permitted under Sections 9.5(c)(ii), 9.5(c)(vi), 9.5(c)(vii), 9.5(c)(viii), 9.5(c)(xiii), 9.5(c)(xvii) and 9.5(c)(xix).

 

“RP Trigger Ratio”:  a ratio of 3.50 to 1.00, unless the Borrower makes a Put Related Debt Incurrence, in which case the aforementioned ratio shall instead be 3.75 to 1.00 starting with the date such Indebtedness is incurred and for the remainder of the fiscal quarter that includes such date and for the immediately following three fiscal quarters of the Borrower, immediately after which time the ratio shall return to 3.50 to 1.00.

 

“Sanctioned Entity”: (a) an agency of the government of, (b) an organization directly or indirectly controlled by, or (c) a person resident in, a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/programs, or as otherwise published from time to time as such program may be applicable to such agency, organization or person.

 

“Sanctioned Person”: a Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published from time to time.

 

“S&P”:  Standard & Poor’s Ratings Services, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.

 

“SEC”:  the Securities and Exchange Commission (or successors thereto or an analogous federal Governmental Authority).

 

“Security Documents”:  the collective reference to the Guarantee and Collateral Agreement (and all assumptions thereof), the Mortgages and all other security documents which shall have been delivered on or prior to the Closing Date, or are hereafter delivered to the Administrative Agent granting a Lien on any Property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document, as the same have been, and on and after the Closing Date shall be modified, amended, amended and restated, restated or supplemented in accordance herewith.

 

“Senior Secured Debt”: as at the last day of any Measurement Period, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver

 

42

 

Indebtedness and the undrawn portion of any outstanding letters of credit) of the Borrower and its Subsidiaries hereunder or that otherwise is secured by property or assets of the Borrower and its Subsidiaries and that would, in conformity with GAAP, be set forth on the balance sheet of the Borrower and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amount of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of March 31, 2011, June 30, 2011 and September 30, 2011 was $0.

 

“Senior Secured Leverage Ratio”: as at any date, the ratio of (a) Senior Secured Debt as at such date to (b) Borrower Consolidated Adjusted EBITDA for the Measurement Period most recently ended prior to such date.

 

“Shared Services Agreement”:  the Amended and Restated Shared Services Agreement, dated as of January 1, 2006, among Parent, Holdings, the Borrower and PP Data Services Inc., a Subsidiary of Holdings, as the same may be amended in a manner not materially adverse to the interests of the Lenders.

 

“Single Employer Plan”:  any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

 

“Solvent”:  with respect to any Person, as of any date of determination, (a) the amount of the present fair saleable value (on a going concern basis) of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value (on a going concern basis) of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature.  For purposes of this definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured and (iii) assets shall include insurance coverage and/or indemnification available with respect to any liability.

 

“Specified Cash Management Agreement”:  any agreement, or any Guarantee of any agreement, providing for treasury, depositary, purchasing card or cash management services, including in connection with any automated clearing house transfers of funds or any similar transactions, between Parent, Holdings, the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.

 

43

 

“Specified Hedge Agreement”:  any Hedging Agreement entered into by Parent, Holdings, the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.

 

“Specified Transaction” means any (a) Disposition of all or substantially all the assets of or all the Capital Stock of any Subsidiary or of any division or product line of the Parent and its Subsidiaries, or any other Disposition (other than to a Loan Party) of Property involving consideration in excess of $5,000,000, (b) Permitted Acquisition or other Investment, in each case involving consideration in excess of $5,000,000, (c) designation of any Subsidiary as an Unrestricted Entity, or of any Unrestricted Entity as a Subsidiary, in each case in accordance with Section 9.17 or (d) the proposed incurrence of Indebtedness or making of a Restricted Payment or Investment or any other transaction in respect of which compliance with the any financial test or ratio hereunder (including any incurrence test) is by the terms of this Agreement required to be calculated on a Pro Forma Basis.

 

“Subordinated Debt”: any unsecured Indebtedness that is subordinated to the Obligations of the applicable Person, the terms and conditions of which include subordination provisions consistent with those prevailing in debt capital markets of the United States at the time of incurrence.

 

“Subordinated Indemnity Agreement”:  the Subordinated Indemnity Agreement, dated as of April 1, 1998, among Parent, GP Holdings Inc., Time Warner Inc., Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), TW-SPV Co., Holdings, the Borrower, SFOG II, Inc. and SFT Holdings, Inc., as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.

 

“Subordinated Indemnity Escrow Agreement”:  the Subordinated Indemnity Escrow Agreement dated as of September 28, 2006, by and among Parent, Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), Historic TW Inc. (formerly known as Time Warner Inc.) and The Bank of New York Mellon, as the same has been amended, supplemented, waived or otherwise modified on or prior to the Closing Date or may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.

 

“Subsidiary”:  as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person; provided that, notwithstanding the foregoing, each of the Partnership Parks Entities will be deemed to be a Subsidiary of Parent for all purposes under this Agreement, provided  further that none of the joint ventures established pursuant to the Great Escape Agreements, any Inactive Subsidiary, Six Flags Over Texas Fund, Ltd. or Six Flags Fund, Ltd. will be deemed to be a Subsidiary of Parent for any purpose under

 

44

 

this Agreement other than (a) with respect to the disclosure required as of the Closing Date under Section 6.15 and (b) in connection with the delivery of financial statements pursuant to Sections 6.1, 8.1(a) and 8.1(d) to the extent such Person otherwise would have been consolidated with Parent for purposes of such financial statements.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Parent.  Notwithstanding the foregoing, in no event shall any person designated as an Unrestricted Entity pursuant to Section 9.17 be deemed to be a Subsidiary of Parent, Holdings, Borrower or any of their respective Subsidiaries (unless such Unrestricted Entity is subsequently re-designated as a Subsidiary pursuant to Section 9.17 and otherwise meets the criteria set forth in this definition of “Subsidiary”).

 

“Subsidiary Guarantor”:  each Subsidiary of the Borrower other than (a) any Excluded Foreign Subsidiary, (b) Flags Beverages, Inc., Fiesta Texas Hospitality LLC and any other Subsidiary whose only material asset is a liquor license, (c) HWP, (d) HWP Development Holdings LLC, (e) any Inactive Subsidiary, (f) any Immaterial Subsidiary for so long as such Subsidiary remains an Immaterial Subsidiary (subject to the limitations on Immaterial Subsidiaries set forth in such definition) and (g) after the Closing Date, any non-Wholly Owned Subsidiary that does not execute the Guarantee and Collateral Agreement as permitted by Section 8.6.

 

“Swing Line Commitment”:  the obligation of the Swing Line Lender to make Swing Line Loans pursuant to Section 4.9 in an aggregate principal amount at any one time outstanding not to exceed $15,000,000.

 

“Swing Line Exposure”:  at any time, the aggregate principal amount of all Swing Line Loans outstanding at such time.  The Swing Line Exposure of any Lender in respect of any Swing Line Loan shall be its Revolving Credit Percentage of the principal amount of such Swing Line Loan.

 

“Swing Line Lender”:  Wells Fargo Bank, National Association, in its capacity as the lender of Swing Line Loans.

 

“Swing Line Loans”:  as defined in Section 4.9.

 

“Swing Line Participation Amount”:  as defined in Section 4.10(c).

 

“Tax Sharing Agreement”:  that certain Tax Sharing Agreement, effective as of January 1, 2011, among Parent, Holdings, and those Subsidiaries which are parties thereto, as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.

 

“Taxes”:  any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, including any interest, additions to tax or penalties attributable thereto.

 

45

 

“Term Loan Commitments”: the Tranche A Term Loan Commitments, the Tranche B Term Loan Commitments and any Incremental Term Commitment.

 

“Term Loan Lenders”: the Tranche A Term Loan Lenders, the Tranche B Term Loan Lenders, the Incremental Term Lenders, each Refinancing Term Lender and each Extending Term Lender.

 

“Term Loans”: the Tranche A Term Loans and the Tranche B Term Loans and, unless the context shall otherwise require, the Incremental Term Loans, each Extending Term Loan and each Refinancing Term Loan.

 

“Term Loan Maturity Date” shall mean the Tranche A Maturity Date, the Tranche B Maturity Date, the maturity of any Incremental Term Facility, the maturity date of any Refinancing Term Facility or the maturity date of any Extending Term Facility, as the case may be.

 

“Time Warner”: Historic TW Inc. and/or its affiliates.

 

“Total Revolving Credit Commitments”:  at any time, the aggregate amount of the Revolving Credit Commitments then in effect.

 

“Total Revolving Extensions of Credit”:  at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Credit Lenders outstanding at such time.

 

“Tranche A Maturity Date”: December 20, 2016.

 

“Tranche A Term Loan”: as defined in Section 2.1(a).

 

“Tranche A Term Loan Commitment”:  as to any Lender, the obligation of such Lender, if any, to make a Tranche A Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “Tranche A Term Loan Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Tranche A Term Loan Commitments on the Closing Date is $75,000,000.

 

“Tranche A Term Loan Facility”:  as defined in the definition of “Facility” in this Section 1.1.

 

“Tranche A Term Loan Lender”:  each Lender that has a Tranche A Term Loan Commitment or is the holder of a Tranche A Term Loan.

 

“Tranche A Term Loan Percentage”:  as to any Lender at any time, the percentage which the principal amount of such Lender’s Tranche A Term Loan then outstanding constitutes of the aggregate principal amount of all Tranche A Term Loans then outstanding.

 

46

 

“Tranche B Maturity Date”: December 20, 2018.

 

“Tranche B Term Loan”: as defined in Section 2.1(b).

 

“Tranche B Term Loan Commitment”:  as to any Lender, the obligation of such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “Tranche B Term Loan Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Tranche B Term Loan Commitments on the Closing Date is $860,000,000.

 

“Tranche B Term Loan Facility”:  as defined in the definition of “Facility” in this Section 1.1.

 

“Tranche B Term Loan Lender”:  each Lender that has a Tranche B Term Loan Commitment or is the holder of a Tranche B Term Loan.

 

“Tranche B Term Loan Percentage”:  as to any Lender at any time, the percentage which the principal amount of such Lender’s Tranche B Term Loan then outstanding constitutes of the aggregate principal amount of all Tranche B Term Loans then outstanding.

 

“Transactions”:  the execution, delivery and performance by each Loan Party of the Loan Documents to which it is or is to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

 

“Transferee”:  as defined in Section 12.15.

 

“Type”:  as to any Loan, its nature as a Base Rate Loan or a Eurocurrency Loan.

 

“Uniform Commercial Code”:  the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority (but not attachment) and for purposes of definitions related to such provisions.

 

“Unrestricted Cash”:  all cash that is not restricted cash, as determined in accordance with GAAP.

 

“Unrestricted Entity” shall mean (1) any person in which Parent, Holdings, Borrower or any of their respective Subsidiaries makes or has made an Investment and which is designated by the Board of Directors of Parent (or a duly authorized committee

 

47

 

thereof) as an Unrestricted Entity pursuant to Section 9.17 hereof and (2) any Subsidiary of any Unrestricted Entity.  As of the Closing Date, there are no Unrestricted Entities.

 

“U.S.A. PATRIOT Act”:  (a) the Trading with the Enemy Act, as amended, and each of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended or modified from time to time.

 

“Wholly Owned Non-Guarantor Foreign Subsidiary”: as defined in Section 9.3(f).

 

“Wholly Owned Subsidiary”:  with respect to any Person, any corporation, partnership, limited liability company or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares or equity interests held by foreign nationals, in each case to the extent mandated by applicable law) are directly or indirectly owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person.

 

“Withdrawal Liability”:  liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.

 

1.2.          Other Definitional Provisions.  (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

 

(b)   As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to Parent, Holdings and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.

 

(c)   The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(d)   Except as specifically provided herein, the meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

(e)   Each reference to the “Credit Agreement” in any Loan Document shall be deemed to be a reference to this Agreement, as amended, restated and supplemented from time to time after the date hereof.

 

(f)    When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day,

 

48

 

the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day.

 

(g)   Notwithstanding any other provision contained herein, all computations of amounts and ratios referred to in this Agreement shall be made without giving effect to any election under FASB Accounting Standards Codification 805, 810 or 825 (or any other financial accounting standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower at “fair value” as defined therein.

 

(h)   All references to “knowledge”, “aware” or “awareness” of any Loan Party or a Subsidiary of Holdings means the actual knowledge of a Responsible Officer.

 

(i)    All certifications to be made hereunder by an officer or representative of a Loan Party shall be made by such person in his or her capacity solely as an officer or a representative of such Loan Party, on such Loan Party’s behalf and not in such Person’s individual capacity.

 

SECTION 2.  AMOUNT AND TERMS OF
 TERM LOAN COMMITMENTS

 

2.1.          Term Loan Commitments.

 

(a)           Subject to the terms and conditions hereof, the Tranche A Term Loan Lenders severally agree to make term loans denominated in Dollars (each, a “Tranche A Term Loan”) to the Borrower on the Closing Date in an amount for each Tranche A Term Loan Lender not to exceed the Tranche A Term Loan Commitment of such Lender.  The Tranche A Term Loans may from time to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 5.6.

 

(b)           Subject to the terms and conditions hereof, the Tranche B Term Loan Lenders severally agree to make term loans denominated in Dollars (each, a “Tranche B Term Loan”) to the Borrower on the Closing Date in an amount for each Tranche B Term Loan Lender not to exceed the Tranche B Term Loan Commitment of such Lender.  The Tranche B Term Loans may from time to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 5.6.

 

2.2.          Procedure for Term Loan Borrowing.

 

(a)           The Borrower shall deliver to the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (i) three Business Days prior to the anticipated Closing Date, in the case of Eurocurrency Loans and (ii) one Business Day prior to the anticipated Closing Date, in the case of Base Rate Loans) requesting that the Tranche A Term Loan Lenders make the Tranche A Term Loans and that the Tranche B Term Loan Lenders make the Tranche B Term Loans and, in the case of both Tranche A Term Loans and Tranche B Term Loans, specifying the amount to be borrowed on the Closing Date.  Upon receipt of such notice the Administrative Agent shall promptly notify each Tranche A Term Loan Lender and each Tranche B Term Loan Lender thereof.  Not later than 12:00 Noon, New York City time, on the Closing Date each Tranche A

 

49

 

Term Loan Lender and each Tranche B Term Loan Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Tranche A Term Loan and the Tranche B Term Loan to be made by such Lender.

 

(b)           The procedures for the funding of Refinancing Term Loans shall be as set forth in the applicable Refinancing Term Loan Amendment and the procedures for the funding of Incremental Term Loans shall be as set forth in the applicable Incremental Amendment.

 

2.3.          Repayment of Term Loans.

 

(a)           The Tranche A Term Loan of each Tranche A Term Loan Lender shall mature in 20 installments, commencing on March 31, 2012, each of which shall be in an amount equal to such Lender’s Tranche A Term Loan Percentage multiplied by the amount set forth below opposite such installment and on the date indicated for such installment (as such amounts may be reduced from time to time pursuant to the application of voluntary and mandatory prepayments pursuant to Sections 5.4 and 5.5 and repurchases pursuant to Section 5.19):

 

	
Installment
    	
 
    	
Principal Amount
    	
 
    
	
March 31, 2012
    	
 
    	
$
    	
937,500
    	
 
    
	
June 30, 2012
    	
 
    	
$
    	
937,500
    	
 
    
	
September 30, 2012
    	
 
    	
$
    	
937,500
    	
 
    
	
December 31, 2012
    	
 
    	
$
    	
937,500
    	
 
    
	
March 31, 2013
    	
 
    	
$
    	
1,875,000
    	
 
    
	
June 30, 2013
    	
 
    	
$
    	
1,875,000
    	
 
    
	
September 30, 2013
    	
 
    	
$
    	
1,875,000
    	
 
    
	
December 31, 2013
    	
 
    	
$
    	
1,875,000
    	
 
    
	
March 31, 2014
    	
 
    	
$
    	
1,875,000
    	
 
    
	
June 30, 2014
    	
 
    	
$
    	
1,875,000
    	
 
    
	
September 30, 2014
    	
 
    	
$
    	
1,875,000
    	
 
    
	
December 31, 2014
    	
 
    	
$
    	
1,875,000
    	
 
    
	
March 31, 2015
    	
 
    	
$
    	
2,812,500
    	
 
    
	
June 30, 2015
    	
 
    	
$
    	
2,812,500
    	
 
    
	
September 30, 2015
    	
 
    	
$
    	
2,812,500
    	
 
    
	
December 31, 2015
    	
 
    	
$
    	
2,812,500
    	
 
    
	
March 31, 2016
    	
 
    	
$
    	
3,750,000
    	
 
    
	
June 30, 2016
    	
 
    	
$
    	
3,750,000
    	
 
    
	
September 30, 2016
    	
 
    	
$
    	
3,750,000
    	
 
    
	
Tranche A Maturity Date
    	
 
    	
All   outstanding Tranche A Term Loans
    	
 
    

 

(b)           The Tranche B Term Loan of each Tranche B Term Loan Lender shall mature in 24 installments, commencing on March 31, 2013, each of which shall be in an amount equal to such Lender’s Tranche B Term Loan Percentage multiplied by the amount set forth below opposite such installment and on the date indicated for such installment (as such amounts may be reduced from time to time pursuant to the application of voluntary and mandatory prepayments pursuant to Sections 5.4 and 5.5 and repurchases pursuant to Section 5.19):

 

50

 

	
Installment
    	
 
    	
Principal Amount
    	
 
    
	
March 31, 2013
    	
 
    	
$
    	
2,150,000
    	
 
    
	
June 30, 2013
    	
 
    	
$
    	
2,150,000
    	
 
    
	
September 30, 2013
    	
 
    	
$
    	
2,150,000
    	
 
    
	
December 31, 2013
    	
 
    	
$
    	
2,150,000
    	
 
    
	
March 31, 2014
    	
 
    	
$
    	
2,150,000
    	
 
    
	
June 30, 2014
    	
 
    	
$
    	
2,150,000
    	
 
    
	
September 30, 2014
    	
 
    	
$
    	
2,150,000
    	
 
    
	
December 31, 2014
    	
 
    	
$
    	
2,150,000
    	
 
    
	
March 31, 2015
    	
 
    	
$
    	
2,150,000
    	
 
    
	
June 30, 2015
    	
 
    	
$
    	
2,150,000
    	
 
    
	
September 30, 2015
    	
 
    	
$
    	
2,150,000
    	
 
    
	
December 31, 2015
    	
 
    	
$
    	
2,150,000
    	
 
    
	
March 31, 2016
    	
 
    	
$
    	
2,150,000
    	
 
    
	
June 30, 2016
    	
 
    	
$
    	
2,150,000
    	
 
    
	
September 30, 2016
    	
 
    	
$
    	
2,150,000
    	
 
    
	
December 31, 2016
    	
 
    	
$
    	
2,150,000
    	
 
    
	
March 31, 2017
    	
 
    	
$
    	
2,150,000
    	
 
    
	
June 30, 2017
    	
 
    	
$
    	
2,150,000
    	
 
    
	
September 30, 2017
    	
 
    	
$
    	
2,150,000
    	
 
    
	
December 31, 2017
    	
 
    	
$
    	
2,150,000
    	
 
    
	
March 31, 2018
    	
 
    	
$
    	
2,150,000
    	
 
    
	
June 30, 2018
    	
 
    	
$
    	
2,150,000
    	
 
    
	
September 30, 2018
    	
 
    	
$
    	
2,150,000
    	
 
    
	
Tranche B Maturity Date
    	
 
    	
All   outstanding Tranche B Term Loans
    	
 
    

 

(c)           The Incremental Term Loans of any Incremental Series shall amortize and mature as provided in the applicable Incremental Amendment.

 

(d)           The Refinancing Term Loans of any Refinancing Term Loan Series shall mature as provided in the applicable Refinancing Term Loan Amendment.

 

(e)           The Extending Term Loans of any Extension Series shall amortize and mature as provided in the applicable agreement giving effect to such relevant Extension.

 

2.4.          Incremental Term Loans.

 

(a)           The Borrower may, by written notice to the Administrative Agent from time to time, request Incremental Term Loan Commitments in an amount not to exceed the Incremental Amount from one or more Incremental Term Lenders (which may include any existing Lender) willing to provide such Incremental Term Loans in their own discretion; provided that on a Pro Forma Basis after giving effect to the borrowing of the Incremental Term Loans and the use of proceeds thereof, the Borrower is in compliance with the covenants set forth in Section 9.1 and Section 9.2, as of the latest Measurement Period; and provided further that:

 

51

 

(i)            before and after giving effect to the borrowing of such Incremental Term Loans on the Increased Amount Date, the conditions set forth in Section 7.2 shall be satisfied;

 

(ii)           such Incremental Term Loans shall mature no earlier than the Term Loans under any then outstanding Facility (and if such Incremental Term Loans are secured on a junior lien basis to any of the Facilities, such Incremental Term Loans shall mature no earlier than 180 days after the Latest Maturity Date), and such Incremental Term Loans shall not have a shorter average life to maturity than the remaining average life to maturity of the Term Loans under any then outstanding Facility;

 

(iii)          if the effective yield on any Incremental Term Loans as of the date of determination and prior to giving effect to this clause (iii) (with “effective yield” determined for purposes of this clause (iii) as (A) including original issue discount, upfront fees (with original issue discount and upfront fees being equated to interest based on assumed four-year life to maturity), the Applicable Margin and any “LIBOR” floor or “Base Rate” floor and (B) excluding arrangement, syndication, structuring or like fees payable in connection therewith that are not shared with all lenders and any fluctuations in the Eurocurrency Rate) exceeds the effective yield on the Tranche B Term Loans by more than 50 basis points, then the Applicable Margin for the Tranche B Term Loans shall be increased to the extent necessary so that the effective yield on the Tranche B Term Loans is 50 basis points less than the effective yield on such Incremental Term Loans;

 

(iv)          all other terms applicable to such Incremental Term Loans (other than provisions relating to original issue discount, fees, interest rates (subject to clause (iii) above) and, subject to clause (ii) above, maturity and amortization which shall be as agreed between the applicable Borrower and the Lenders providing such Incremental Term Loans) shall be either (1) substantially identical to, or less favorable to the lenders providing such Incremental Term Loans than, those applicable to the then outstanding Term Loans or (2) reasonably satisfactory to the Administrative Agent;

 

(v)           (1) if secured on a pari passu basis with the other Obligations, all collateral therefor shall be secured by the Security Documents and the Loan Parties and the Administrative Agent shall have entered into such amendments to the Security Documents (including modifications to the Mortgages and date down endorsements to the mortgagee’s title insurance policies issued to Administrative Agent with respect to the Mortgages) as may be reasonably requested by the Administrative Agent (which shall not require any consent from any Lender) in connection with the Incremental Term Loans and the Borrower shall have delivered such other documents, certificates and opinions of counsel in connection therewith as may be reasonably requested by the Administrative Agent and (2) if secured on a junior lien basis with the other Obligations, all collateral therefor shall be secured by collateral documentation that is substantially similar to the Security Documents (and in any event no more restrictive in any material respect), the Borrower shall have delivered such other documents, certificates and opinions of counsel

 

52

 

(including the Junior Lien Intercreditor Agreement) in connection with the Incremental Term Loans as may be reasonably requested by the Administrative Agent and the agent for such Incremental Term Loans shall have executed the Junior Lien Intercreditor Agreement if reasonably requested by the Administrative Agent; and

 

(vi)          the Incremental Term Loans shall rank pari passu in right of payment and pari passu or junior in right of security with the Term Loans.

 

(b)           The Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 12.6 (including consent, if applicable, from the Administrative Agent, such consent not to be unreasonably withheld or delayed) to provide all or a portion of the Incremental Term Loans (an “Incremental Term Lender”); provided that any Lender offered or approached to provide all or a portion of the Incremental Term Loans may elect or decline, in its sole discretion, to provide an Incremental Term Loan. Any Incremental Term Loans made on any Increased Amount Date shall be designated an incremental series (an “Incremental Series”) of Incremental Term Loans for all purposes of this Agreement; provided that any Incremental Term Loans may, to the extent provided in the applicable Incremental Amendment, be designated as an increase in any previously established Incremental Series of Incremental Term Loans made to the Borrower.

 

(c)           The Incremental Term Loans shall be established pursuant to an Incremental Amendment executed by the Borrower, the Administrative Agent and the Incremental Term Lenders providing such Incremental Term Loans which shall be consistent with the provisions set forth in paragraph (a) above (which shall not require the consent of any other Lender). Each Incremental Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto and thereto.  In connection with the Incremental Amendment, conforming amendments shall be made to this Agreement to reflect such Incremental Term Loans as may be necessary or appropriate in the reasonable opinion of the Borrower and the Administrative Agent to effect the provisions of this Section 2.4.

 

(d)           This Section 2.4 shall supersede any provisions in Section 12.1 to the contrary.

 

2.5.          Refinancing Term Loans and Refinancing Notes.

 

(a)           The Borrower may by written notice to Administrative Agent elect to request the establishment of one or more additional tranches of term loans denominated in Dollars under this Agreement (“Refinancing Term Loans”) to refinance or replace (collectively, “Refinance”) Term Loans outstanding under any Facility hereunder.  Each such notice shall specify the date (each, a “Refinancing Effective Date”) on which the Borrower propose that the Refinancing Term Loans shall be made, which shall be a date not less than five Business Days after the date on which such notice is delivered to the Administrative Agent; provided that each of the following conditions is satisfied:

 

(i)            before and after giving effect to the borrowing of such Refinancing Term Loans on the Refinancing Effective Date, the condition set forth in Section 7.2(b) shall be satisfied;

 

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(ii)           (x) if the Refinancing Term Loans are pari passu with the Term Loans being Refinanced by such Refinancing Term Loans, such Refinancing Term Loans shall mature no earlier than the Term Loans being Refinanced and shall not have a shorter average life to maturity than the remaining average life to maturity of the Term Loans being Refinanced and (y) if such Refinancing Term Loans are secured on a junior lien basis, not secured or are subordinated to any of the Facilities in right of payment, such Refinancing Term Loans shall mature no earlier than 180 days after the Latest Maturity Date and shall not have a shorter average life to maturity than the remaining average life to maturity of the Term Loans under any then outstanding Facility;

 

(iii)          if secured, such Refinancing Term Loans are not secured by liens on the assets of Parent or any of its Subsidiaries, other than assets constituting Collateral;

 

(iv)          no Subsidiary is a guarantor with respect to such Refinancing Term Loans unless such Subsidiary is a Subsidiary Guarantor which is guaranteeing (or substantially concurrently with the incurrence of the Refinancing Term Loans will guarantee) the Obligations, and any Unrestricted Entity is an unrestricted entity (or substantive equivalent) of such Refinancing Term Loans;

 

(v)           such Refinancing Term Loans may not be in an amount greater than the aggregate principal amount of the Term Loans being Refinanced plus unpaid accrued interest and premium (if any) thereon and underwriting discounts, fees, commissions and expenses incurred in connection with the Refinancing Term Loans;

 

(vi) (x) if secured on a pari passu basis with the other Obligations, all collateral therefor shall be secured by the Security Documents and the Loan Parties and the Administrative Agent shall have entered into such amendments to the Security Documents as may be reasonably requested by the Administrative Agent (which shall not require any consent from any Lender) to provide the Refinancing Term Loans with the benefit of the applicable Security Documents on a pari passu basis with the other Obligations, the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Pari Passu Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the agent for such Refinancing Term Loans shall have executed the Pari Passu Intercreditor Agreement if reasonably requested by the Administrative Agent and (y) if secured on a junior lien basis with the other Obligations, all collateral therefor shall be secured by collateral documentation that is substantially similar to the Security Documents (and in any event no more restrictive in any material respect), the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Junior Lien Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the agent for such Refinancing Term Loans shall have executed the Junior Lien Intercreditor Agreement if reasonably requested by the Administrative Agent;

 

54

 

(vii)         all other terms applicable to such Refinancing Term Loans (other than provisions relating to original issue discount, fees and interest rates which shall be as agreed between the Borrower and the lenders providing such Refinancing Term Loans) shall be substantially identical to, or less favorable to the lenders providing such Refinancing Term Loans than, those applicable to the then outstanding Term Loans being Refinanced; and

 

(viii)        all of the Net Cash Proceeds of the Refinancing Term Loans shall be applied substantially concurrently with the incurrence thereof solely to the pro rata repayment of the Term Loans of the relevant Facility or Facilities being Refinanced.

 

(b)           The Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 12.6 to provide all or a portion of the Refinancing Term Loans (a “Refinancing Term Lender”); provided that any Lender offered or approached to provide all or a portion of the Refinancing Term Loans may elect or decline, in its sole discretion, to provide a Refinancing Term Loan. Any Refinancing Term Loans made on any Refinancing Effective Date shall be designated a series (a “Refinancing Term Loan Series”) of Refinancing Term Loans for all purposes of this Agreement; provided that any Refinancing Term Loans may, to the extent provided in the applicable Refinancing Term Loan Amendment, be designated as an increase in any previously established Refinancing Term Loan Series of Refinancing Term Loans made to the Borrower.

 

(c)           The Refinancing Term Loans shall be established pursuant to an amendment to this Agreement among the Borrower, the Administrative Agent and the Refinancing Term Lenders providing such Refinancing Term Loans (a “Refinancing Term Loan Amendment”) which shall be consistent with the provisions set forth in paragraph (a) above (which shall not require the consent of any other Lender).  Each Refinancing Term Loan Amendment shall be binding on the Lenders, the Administrative Agent, the Loan Parties and the other parties hereto. The Administrative Agent shall be permitted, and is hereby authorized, to enter into such amendments with the Borrower to effectuate the foregoing.

 

(d)           Notwithstanding anything to the contrary contained in this Section 2.5, the Borrower may elect to issue Refinancing Notes consistent with the provisions set forth in paragraph (a) above in lieu of Refinancing Term Loans.

 

(e)           This Section 2.5 shall supersede any provisions in Section 5.11 or 12.1 to the contrary.

 

SECTION 3.  AMOUNT AND TERMS OF THE REVOLVING FACILITIES 
 COMMITMENTS AND SWING LINE COMMITMENT

 

3.1.          Revolving Credit Commitments.  (a) Subject to the terms and conditions hereof, (i) the Revolving Credit Lenders severally agree to make revolving credit loans denominated in Dollars (the “Revolving Credit Loans”) to the Borrower from time to time during the Revolving Facility Commitment Period in an aggregate principal amount at any one time outstanding for each Revolving Credit Lender which, when added to such Lender’s Revolving

 

55

 

Credit Percentage of the sum of (x) the L/C Obligations then outstanding and (y) the aggregate principal amount of the Swing Line Loans then outstanding, does not exceed the amount of such Lender’s Revolving Credit Commitment.  During the Revolving Facility Commitment Period, the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.  The Revolving Credit Loans may from time to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 3.2 and 5.6.

 

(b)   The Borrower shall repay all outstanding Revolving Credit Loans on or before the applicable Revolving Facility Termination Date.

 

3.2.          Procedure for Revolving Credit Borrowing.  The Borrower may borrow under the Revolving Credit Commitments on any Business Day during the Revolving Facility Commitment Period, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurocurrency Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount and Type of Revolving Credit Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurocurrency Loans, the length of the initial Interest Period therefor.  Each borrowing of Revolving Credit Loans under the Revolving Credit Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple of $500,000 (or, if the then aggregate Available Revolving Credit Commitments are less than $500,000, such lesser amount) and (y) in the case of Eurocurrency Loans, $2,500,000 or a whole multiple of $500,000 in excess thereof; provided, that the Swing Line Lender may request, on behalf of the Borrower, borrowings of Base Rate Loans under the Revolving Credit Commitments in other amounts pursuant to Section 4.10.  Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof.  Each Revolving Credit Lender will make its pro rata share of the amount of each borrowing of Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent.  Such borrowing will then be made available to the Borrower by the Administrative Agent in like funds as received by the Administrative Agent.

 

3.3.          Increase in Revolving Credit Commitments.

 

(a)           The Borrower may, by written notice to the Administrative Agent from time to time prior to the Revolving Facility Termination Date, request an increase in the Original Revolving Credit Commitments in an amount not to exceed the Incremental Amount from one or more Revolving Credit Lenders (which may include any existing Lender) willing to provide such increased Revolving Credit Commitments in their own discretion; provided that on a Pro Forma Basis after giving effect to the incurrence of such Revolving Credit Commitments (assuming for purposes of this Section 3.3 that such increased Revolving Credit Commitments are fully funded) and the use of proceeds thereof, the Borrower is in compliance with the covenants set forth in Section 9.1 and Section 9.2, as of the latest Measurement Period; and provided further that:

 

56

 

(i)            before and after giving effect to the increase in Revolving Credit Commitments contemplated hereby on the Increased Amount Date, the conditions set forth in Section 7.2 shall be satisfied;

 

(ii)           the increased Revolving Credit Commitments shall have the same terms and conditions as the Original Revolving Credit Commitments then in effect (other than fees, maturity (which may be no earlier than the Revolving Facility Termination Date for the Original Revolving Credit Commitments) and interest rate margins, which shall be as agreed between the Borrower and those lenders providing the additional Revolving Credit Commitments pursuant to this Section 3.3);

 

(iii)          the Loan Parties and the Administrative Agent shall enter into such amendments to the Security Documents as may be requested by the Administrative Agent (which shall not require any consent from any Lender) in connection with the increased Revolving Credit Commitments hereunder, and in each case the Borrower shall have delivered such other documents (including modifications to the Mortgages and date down endorsements to the mortgagee’s title insurance policies issued to Administrative Agent with respect to the Mortgages), certificates and opinions of counsel in connection with the foregoing as may be reasonably requested by the Administrative Agent; and

 

(iv)          any extensions of credit pursuant to any increase in the Revolving Credit Commitments shall rank pari passu in right of payment and pari passu in right of security with the Revolving Credit Commitments then in effect.

 

(b)           The Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 12.6 (including consent, if applicable, from the Administrative Agent, Issuing Lenders and Swing Line Lender, such consent not to be unreasonably withheld or delayed) to provide all or a portion of the increased Revolving Credit Commitments; provided that any Lender offered or approached to provide all or a portion of the increase in Revolving Credit Commitments may elect or decline, in its sole discretion, to provide such increased Revolving Credit Commitments.

 

(c)           Any increase in Revolving Credit Commitments pursuant to this Section 3.3 shall be established pursuant to an Incremental Amendment executed by the Borrower, the Administrative Agent and the lenders providing such increased Revolving Credit Commitments which shall be consistent with the provisions set forth in paragraph (a) above (which shall not require the consent of any other Lender). Each Incremental Amendment shall be binding on the Lenders, the Administrative Agent, the Loan Parties and the other parties hereto and thereto.

 

(d)           Upon each increase in the Revolving Credit Commitments pursuant to this section, each Revolving Credit Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Lender providing a portion of the Incremental Revolving Commitment (each a “Incremental Revolving Lender”) in respect of such increase, and each such Incremental Revolving Lender will automatically and without further act be deemed to have assumed, a portion of such Revolving Credit Lender’s participations hereunder in outstanding Letters of Credit and Swing Line Loans such that, after giving effect to

 

57

 

each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding (i) participations hereunder in Letters of Credit and (ii) participations hereunder in Swing Line Loans held by each Revolving Credit Lender (including each such Incremental Revolving Lender) will equal the percentage of the aggregate Revolving Credit Commitments of all Revolving Credit Lenders represented by such Revolving Credit Lender’s Revolving Credit Commitment.  The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

 

(e)           This Section 3.3 shall supersede any provisions in Section 12.1 to the contrary.

 

3.4.          Replacement Revolving Credit Commitments.

 

(a)           The Borrower may by written notice to Administrative Agent elect to request the establishment of one or more additional revolving facilities providing for revolving commitments denominated in Dollars under this Agreement (“Replacement Revolving Commitments”) to Refinance one or more Facilities of Revolving Credit Commitments under this Agreement.  Each such notice shall specify the date (each, a “Replacement Revolving Credit Effective Date”) on which the Borrower proposes that the Replacement Revolving Commitments shall become effective, which shall be a date not less than five Business Days after the date on which such notice is delivered to the Administrative Agent; provided that each of the following conditions is satisfied:

 

(i)            before and after giving effect to the establishment of such Replacement Revolving Commitments on the Replacement Revolving Credit Effective Date, the condition set forth in Section 7.2(b) shall be satisfied;

 

(ii) (x) if such Replacement Revolving Commitments are pari passu with the Revolving Credit Commitments being Refinanced by such Replacement Revolving Commitments, such Replacement Revolving Commitments shall have a scheduled termination date no earlier than the Revolving Credit Commitments being Refinanced and (y) if such Replacement Revolving Commitments are secured on a junior lien basis, not secured or are subordinated to any of the Facilities in right of payment, such Replacement Revolving Commitments shall have a scheduled termination date no earlier than 180 days after the Latest Maturity Date;

 

(iii)          if secured, such Replacement Revolving Commitments are not secured by liens on the assets of Parent or any of its Subsidiaries, other than assets constituting Collateral;

 

(iv)          no Subsidiary is a guarantor with respect to such Replacement Revolving Commitments unless such Subsidiary is a Subsidiary Guarantor which is guaranteeing (or substantially concurrently with the establishment of the Replacement Revolving Commitments will guarantee) the Obligations, and any Unrestricted Entity is

 

58

 

an unrestricted entity (or substantive equivalent) of such Replacement Revolving Commitments;

 

(v)           after giving effect to the establishment of any Replacement Revolving Commitments and any concurrent reduction in the aggregate amount of any other Revolving Credit Commitments, the aggregate amount of Revolving Credit Commitments and Replacement Revolving Commitments shall not exceed the aggregate amount of the Revolving Credit Commitments in effect immediately prior to the establishment of such Replacement Revolving Commitments;

 

(vi) (x) if secured on a pari passu basis with the other Obligations, all collateral therefor shall be secured by the Security Documents and the Loan Parties and the Administrative Agent shall have entered into such amendments to the Security Documents as may be reasonably requested by the Administrative Agent (which shall not require any consent from any Lender) to provide the Replacement Revolving Commitments with the benefit of the applicable Security Documents on a pari passu basis with the other Obligations, the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Pari Passu Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the trustee, agent, or collateral trustee for such Refinancing Notes shall have executed the Pari Passu Intercreditor Agreement if reasonably requested by the Administrative Agent and (y) if secured on a junior lien basis with the other Obligations, all collateral therefor shall be secured by collateral documentation that is substantially similar to the Security Documents (and in any event no more restrictive in any material respect), the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Junior Lien Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the agent for such Replacement Revolving Commitments shall have executed the Junior Lien Intercreditor Agreement if reasonably requested by the Administrative Agent;

 

(vii)         all other terms applicable to such Replacement Revolving Commitments (other than provisions relating to fees and interest rates which shall be as agreed between the Borrower and the lenders providing such Replacement Revolving Commitments) shall be substantially identical to, or less favorable to the lenders providing such Replacement Revolving Commitments than, those applicable to the Revolving Credit Commitments being Refinanced; and

 

(viii)        there shall be no more than two Facilities that are revolving facilities in the aggregate in effect at any time.

 

(b)           The Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 12.6 to provide all or a portion of the Replacement Revolving Commitments (a “Replacement Revolving Lender”); provided that any Lender offered or approached to provide all or a portion of the Replacement Revolving Commitments may elect or decline, in its sole discretion, to provide a Replacement Revolving Commitment. Any Replacement Revolving Commitments made on any Replacement Revolving Credit

 

59

 

Effective Date shall be designated a series (a “Replacement Revolving Commitment Series”) of Replacement Revolving Commitments for all purposes of this Agreement; provided that any Replacement Revolving Commitments may, to the extent provided in the applicable Replacement Revolving Facility Amendment, be designated as an increase in any previously established Replacement Revolving Commitments Series.

 

(c)           The Replacement Revolving Commitments shall be established pursuant to an amendment to this Agreement among the Borrower, the Administrative Agent and the Replacement Revolving Lenders providing such Replacement Revolving Commitments (a “Replacement Revolving Facility Amendment”) which shall be consistent with the provisions set forth in paragraph (a) above (which shall not require the consent of any other Lender).  Each Replacement Revolving Facility Amendment shall be binding on the Lenders, the Administrative Agent, the Loan Parties and the other parties hereto. The Administrative Agent shall be permitted, and is hereby authorized, to enter into such amendments with the Borrower to effectuate the foregoing.

 

(d)           On any Replacement Revolving Credit Effective Date, subject to the satisfaction of the foregoing terms and conditions, each of the Replacement Revolving Lenders with Replacement Revolving Commitments of such Replacement Revolving Commitment Series shall purchase from each of the other Lenders with Revolving Credit Commitments, at the principal amount thereof, such interests in the Revolving Credit Loans outstanding on such Replacement Revolving Credit Effective Date as may be specified by the Administrative Agent and as shall be necessary in order that, after giving effect to all such assignments and purchases, the Revolving Credit Loans will be held by the relevant Lenders ratably in accordance with their Revolving Credit Percentages.

 

(e)           This Section 3.4 shall supersede any provisions in Section 5.11 or 12.1 to the contrary.

 

SECTION 4.  LETTERS OF CREDIT; SWING LINE LOANS

 

4.1.          L/C Commitment.  (a) Prior to the Closing Date, the Existing Issuing Lender has issued the Existing Letters of Credit under the Existing Credit Agreement, which, from and after the Closing Date, shall constitute Letters of Credit hereunder.  Subject to the terms and conditions hereof, each Issuing Lender, in reliance on the agreements of the other Revolving Credit Lenders set forth in Section 4.4(a), agrees to issue letters of credit (the letters of credit issued on and after the Closing Date pursuant to this Section 4, the “Letters of Credit”) for the account of the Borrower (or any Subsidiary so long as Borrower is a joint and several co-applicant) on any Business Day during the Revolving Facility Commitment Period in such form as may be approved from time to time by such Issuing Lender; provided, that no Issuing Lender shall have any obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the outstanding L/C Obligations would exceed the L/C Commitment or (ii) the sum of (x) the L/C Obligations, plus (y) the aggregate principal amount of Swing Line Loans outstanding at any time plus (z) the aggregate amount of Revolving Credit Loans then outstanding would exceed the Total Revolving Credit Commitment.  Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the Revolving Facility Termination Date, provided that any Letter of Credit with a one-year term

 

60

 

may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).

 

(b)   No Issuing Lender shall at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause such Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

 

4.2.          Procedure for Issuance of Letter of Credit.  The Borrower may from time to time request that an Issuing Lender issue a Letter of Credit by delivering to such Issuing Lender at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may request.  Upon receipt of any Application, an Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower (but in no event shall any Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto).  Promptly after issuance by an Issuing Lender of a Letter of Credit, such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower.  Each Issuing Lender shall promptly furnish to the Administrative Agent, notice of the issuance of each Letter of Credit issued by it (including the amount thereof).

 

4.3.          Fees and Other Charges.  (a) The Borrower will pay a fee on the aggregate daily average drawable amount of all outstanding Letters of Credit issued for the Borrower’s account at a per annum rate equal to the Applicable Margin then in effect with respect to Eurocurrency Loans under the Revolving Credit Facility, shared ratably among the Revolving Credit Lenders in accordance with their respective Revolving Credit Percentages and payable quarterly in arrears on each L/C Fee Payment Date after the issuance date of any such Letter of Credit (subject to the Borrower’s payment of increased fees payable to Revolving Credit Lenders under any Replacement Revolving Facility or under any Extended Revolving Credit Facility to the extent otherwise permitted hereunder).  In addition, the Borrower shall pay to the relevant Issuing Lender for its own account a fronting fee on the aggregate daily average drawable amount of all outstanding Letters of Credit issued for the Borrower’s account by such Issuing Lender of an amount to be agreed upon by the Borrower and the relevant Issuing Lender (but in no event greater than 0.25% per annum), payable on such terms as are agreed to by the Borrower and the Issuing Lender.

 

(b)   In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses as are incurred or charged by such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit issued for the Borrower’s account.

 

4.4.          L/C Participations.  (a) Each Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce each Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby

 

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accepts and purchases from each Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s Revolving Credit Percentage in each Issuing Lender’s obligations and rights under each Letter of Credit issued by such Issuing Lender hereunder and the amount of each draft paid by such Issuing Lender thereunder.  Each L/C Participant unconditionally and irrevocably agrees with each Issuing Lender that, if a draft is paid under any Letter of Credit issued by such Issuing Lender for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to such Issuing Lender upon demand at such Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s Revolving Credit Percentage of the amount of such draft, or any part thereof, that is not so reimbursed.

 

(b)   If any amount required to be paid by any L/C Participant to an Issuing Lender pursuant to Section 4.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is not paid to such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360.  If any such amount required to be paid by any L/C Participant pursuant to Section 4.4(a) is not made available to such Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans under the Revolving Credit Facility.  A certificate of such Issuing Lender submitted to any L/C Participant with respect to any such amounts owing under this Section shall be conclusive in the absence of manifest error.

 

(c)   Whenever, at any time after an Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro  rata share of such payment in accordance with Section 4.4(a), such Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to such L/C Participant its pro  rata share thereof; provided, however, that in the event that any such payment received by such Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it.

 

4.5.          Reimbursement Obligation of the Borrower.  The Borrower agrees to reimburse each Issuing Lender for the amount of (a) such draft so paid and (b) any Other Taxes or expenses incurred by such Issuing Lender in connection with such payment (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the “Payment Amount”), on the Business Day that the Borrower receives notice of such draft, if such notice is received on such day (or if the Borrower shall have received such notice later than 10:00 A.M. New York City time on such Business Day, on the immediately following Business Day).  Each such payment shall be made to such Issuing Lender at its address for notices

 

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specified herein in Dollars and in immediately available funds.  Interest shall be payable on each Payment Amount from the date of the applicable drawing until payment in full at the rate set forth in (i) until the second Business Day following the date of the applicable drawing, Section 5.8(b) and (ii) thereafter, Section 5.8(c).  Each drawing under any Letter of Credit shall (unless an event of the type described in Section 10(g), (h) or (i)Section 10(g) shall have occurred and be continuing with respect to the Borrower, in which case the procedures specified in Section 4.4(a) for funding by L/C Participants shall apply) constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to Section 3.2 of Base Rate Loans in the amount of such drawing.  The Borrowing Date with respect to such borrowing shall be the first date on which a borrowing of Revolving Credit Loans could be made, pursuant to Section 3.2, if the Administrative Agent had received a notice of such borrowing at the time the Administrative Agent receives notice from the relevant Issuing Lender of such drawing under such Letter of Credit.

 

4.6.          Obligations Absolute.  The Borrower’s obligations under this Section 4 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person.  The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 4.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee.  No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a court of competent jurisdiction in a final non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Issuing Lender.  The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit issued by it for the Borrower’s account, or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower.

 

4.7.          Letter of Credit Payments.  If any draft shall be presented for payment under any Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and amount thereof.  The responsibility of the relevant Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit issued by such Issuing Lender, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

 

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4.8.          Applications.  To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall apply.

 

4.9.          Swing Line Commitment.  (a) Subject to the terms and conditions hereof, the Swing Line Lender agrees that, during the Revolving Facility Commitment Period, it will make available to the Borrower in the form of swing line loans denominated in Dollars (“Swing Line Loans”) a portion of the credit otherwise available to the Borrower under the Revolving Credit Commitments; provided that (i) the aggregate principal amount of Swing Line Loans outstanding at any time shall not exceed the Swing Line Commitment, (ii) the aggregate principal amount of Swing Line Loans outstanding at any time, when aggregated with the L/C Obligations, shall not exceed the Revolving Credit Commitments and (iii) the sum of (x) the aggregate principal amount of Swing Line Loans outstanding at any time plus (y) the L/C Obligations plus (z) the aggregate amount of Revolving Credit Loans then outstanding shall not exceed the Total Revolving Credit Commitment.  During the Revolving Facility Commitment Period, the Borrower may use the Swing Line Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof.  Swing Line Loans shall be Base Rate Loans only.

 

(b)   The Borrower shall repay all outstanding Swing Line Loans on or before the Revolving Facility Termination Date.

 

4.10.        Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.  (a) The Borrower may borrow under the Swing Line Commitment on any Business Day during the Revolving Facility Commitment Period, provided, the Borrower shall give the Swing Line Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be received by the Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date.  Each borrowing under the Swing Line Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof.  Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in the borrowing notice in respect of any Swing Line Loan, the Swing Line Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of such Swing Line Loan.  The Administrative Agent shall make the proceeds of such Swing Line Loan available to the Borrower on such Borrowing Date in like funds as received by the Administrative Agent.

 

(b)   The Swing Line Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf), on one Business Day’s notice given by the Swing Line Lender no later than 12:00 Noon, New York City time, request each Revolving Credit Lender to make, and each Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan to the Borrower, in an amount equal to such Revolving Credit Lender’s Revolving Credit Percentage of the aggregate amount of the Swing Line Loans (the “Refunded Swing Line Loans”) outstanding on the date of such notice, to repay the Swing Line Lender.  Each Revolving Credit Lender shall make the amount of such Revolving Credit Loan available to the Administrative Agent at the relevant Funding Office in immediately available funds, not later than 10:00 A.M., New York

 

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City time, one Business Day after the date of such notice.  The proceeds of such Revolving Credit Loans shall be made immediately available by the Administrative Agent to the Swing Line Lender for application by the Swing Line Lender to the repayment of the Refunded Swing Line Loans.

 

(c)   If prior to the time a Swing Line Loan would have otherwise been made pursuant to Section 4.10(b), one of the events described in Section 10(g), (h) or (i) shall have occurred and be continuing with respect to the Borrower, or if for any other reason, as determined by the Swing Line Lender in its sole discretion, Revolving Credit Loans may not be made as contemplated by Section 4.10(b), each Revolving Credit Lender shall, on the date such Revolving Credit Loan was to have been made pursuant to the notice referred to in Section 4.10(b) (the “Refunding Date”), purchase for cash an undivided participating interest in the then outstanding Swing Line Loans by paying to the Swing Line Lender an amount (the “Swing Line Participation Amount”) equal to (i) such Revolving Credit Lender’s Revolving Credit Percentage times (ii) the sum of the aggregate principal amount of Swing Line Loans then outstanding which were to have been repaid with such Revolving Credit Loans.

 

(d)   Whenever, at any time after the Swing Line Lender has received from any Revolving Credit Lender such Lender’s Swing Line Participation Amount, the Swing Line Lender receives any payment on account of the Swing Line Loans, the Swing Line Lender will distribute to such Lender its Swing Line Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro  rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swing Line Loans then due); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Revolving Credit Lender will return to the Swing Line Lender any portion thereof previously distributed to it by the Swing Line Lender.

 

(e)   Each Revolving Credit Lender’s obligation to make the Revolving Credit Loans referred to in Section 4.10(b) and to purchase participating interests pursuant to Section 4.10(c) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or other right which such Revolving Credit Lender or the Borrower may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 7.2; (iii) any adverse change in the condition (financial or otherwise) of Parent, Holdings or the Borrower; (iv) any breach of this Agreement or any other Loan Document by Parent, Holdings or the Borrower, any other Loan Party or any other Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

 

SECTION 5.  CERTAIN PROVISIONS APPLICABLE TO 
 THE LOANS AND THE LETTERS OF CREDIT

 

5.1.          Repayment of Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the appropriate Lender (i) the then unpaid principal amount of each Revolving Credit Loan and Swing Line

 

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Loan made by such Lender to the Borrower, on the Revolving Facility Termination Date (or on such earlier date on which the Loans become due and payable pursuant to Section 10), (ii) the principal amount of the Tranche A Term Loan made by such Lender to the Borrower, in installments according to the amortization schedule set forth in Section 2.3(a) (or on such earlier date on which the Loans become due and payable pursuant to Section 10), and (iii) the principal amount of the Tranche B Term Loan made by such Lender to the Borrower, in installments according to the amortization schedule set forth in Section 2.3(b) (or on such earlier date on which the Loans become due and payable pursuant to Section 10).  The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans made to it from time to time outstanding from the date of such Loans until payment in full thereof at the rates per annum, and on the dates, set forth in Section 5.8.

 

(b)   Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender to the Borrower from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)   The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 12.6(b)(iv), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made or continued hereunder and any Note evidencing such Loan, (ii) the Type of such Loan and each Interest Period applicable thereto, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(d)   The entries made in the Register and the accounts of each Lender maintained pursuant to Section 5.1(b) shall, to the extent permitted by applicable law, be prima  facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that (x) in the event of a conflict between the Register and the accounts maintained pursuant to Section 5.1(b), the Register shall govern and (y) the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower in accordance with the terms of this Agreement.

 

(e)   The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender a promissory note of the Borrower evidencing any Tranche A Term Loans, Tranche B Term Loans, Revolving Credit Loans or Swing Line Loans, as the case may be, of such Lender, substantially in the forms of Exhibit G-1, G-2, G-3 or G-4, respectively, with appropriate insertions as to date and principal amount.

 

5.2.          Commitment Fees, Etc.  (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Credit Lender a commitment fee for the period from and including the Closing Date to the last day of the Revolving Facility Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available Revolving Credit Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December

 

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and on the Revolving Facility Termination Date, commencing on the first of such dates to occur after the date hereof.

 

(b)   The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates from time to time agreed to in writing by the Borrower and the Administrative Agent.

 

5.3.          Termination or Reduction of Revolving Credit Commitments.  The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent (who shall reasonably promptly notify each Lender), to terminate the Revolving Credit Commitments or, from time to time, to reduce the aggregate amount of the Revolving Credit Commitments; provided, that the Borrower may rescind any notice of termination or reduction (by notice to the Administrative Agent on or prior to the specified effective date) if such notice is conditioned upon the effectiveness of other financing arrangements or the consummation of other transactions and if such condition is not satisfied;  provided further, that such termination or reduction shall be permitted only to the extent that, after giving effect thereto and to any prepayments of the Swing Line Loans made on the effective date thereof, (A) the sum of the aggregate principal amount of Swing Line Loans outstanding at any time shall not exceed the Swing Line Commitment and (B) the sum of (x) the aggregate principal amount of Swing Line Loans outstanding at any time plus (y) the L/C Obligations shall not exceed the Revolving Credit Commitments.  Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Credit Commitments then in effect.

 

5.4.          Optional Prepayments.  The Borrower may at any time and from time to time prepay the Loans made to it, in whole or in part, without premium or penalty (except as otherwise set forth in this Section 5.4), upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto in the case of Eurocurrency Loans and on the date of prepayment in the case of Base Rate Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurocurrency Loans or Base Rate Loans; provided, that the Borrower may rescind any notice of prepayment (by notice to the Administrative Agent on or prior to the specified effective date) if such notice is conditioned upon the effectiveness of other financing arrangements or the consummation of other transactions and if such condition is not satisfied; provided further, that (a) if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 5.14 and (b) no prior notice is required for the prepayment of Swing Line Loans.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given (subject to the revocation of notice as permitted above), the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of Revolving Credit Loans that are Base Rate Loans and Swing Line Loans) accrued interest to such date on the amount prepaid.  Partial prepayments of Loans (other than Swing Line Loans) shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.  Partial prepayments of Swing Line Loans shall be in an aggregate principal amount of $100,000 or a whole multiple thereof.  Optional prepayments shall be applied (a) to the Facility or Facilities of Term Loans selected by the Borrower, which shall reduce scheduled installments of principal on such Facility or Facilities as directed by the Borrower or (b) to the Revolving Credit Loans on a

 

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pro rata basis across all Facilities that are revolving facilities.  Notwithstanding anything to the contrary in this Section 5.4 or Section 5.5, any prepayment or repricing of the Tranche B Term Loans effected on or prior to the first anniversary of the Closing Date as a result of a Repricing Transaction shall be accompanied by a fee equal to 1.00% of the principal amount of Tranche B Term Loans prepaid or repriced, unless such fee is waived by the applicable Tranche B Term Loan Lender.  If in connection with a Repricing Transaction on or prior to such first anniversary any Lender is replaced as a result of its being a Non-Consenting Lender in respect of such Repricing Transaction pursuant to Section 5.17 or clause (b) of the last paragraph of Section 12.1, such Lender shall be entitled to the fee provided under this Section 5.4.

 

5.5.          Mandatory Prepayments and Commitment Reductions.  (a) If any Indebtedness shall be incurred by Parent, Holdings or the Borrower or any of its Subsidiaries (excluding any Indebtedness permitted by Section 9.3 other than (i) Section 9.3(a) (to the extent pertaining to Refinancing Notes or Refinancing Term Loans), (ii) Section 9.3(n)(i) (to the extent the Net Cash Proceeds of such Indebtedness are not applied by the Borrower to purchase Term Loans pursuant to an Auction as set forth in Section 5.19) and (iii) Section 9.3(n)(ii) (to the extent the Net Cash Proceeds thereof are not used to finance a Permitted Acquisition or to make the Investments specified in Section 9.3(n)(ii))), then, on the date of such incurrence the Term Loans shall be prepaid in an amount equal to 100% of the Net Cash Proceeds of such incurrence, as set forth in Section 5.5(d) (provided however that, solely in the case of Indebtedness incurred under Section 9.3(n)(ii), the Borrower shall be required to make the prepayments in the amounts set forth in such section, which shall be applied as set forth in Section 5.5(d)).

 

(b)   If on any date the Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or Recovery Event, the Loans shall be prepaid, on or before the date which is five Business Days following the date of receipt of such Net Cash Proceeds, by an amount equal to the amount of such Net Cash Proceeds, as set forth in Section 5.5(d); provided that, notwithstanding the foregoing, no prepayment of the Loans shall be required to be made under this Section 5.5(b) in respect of (i) Net Cash Proceeds received by the Borrower or any of its Subsidiaries from Asset Sales or Recovery Events in any fiscal year not to exceed $15,000,000 in the aggregate, (ii) the Net Cash Proceeds received by the Borrower or any of its Subsidiaries from any Asset Sale or Recovery Event in respect of which a Reinvestment Notice has been delivered (or is delivered within 30 days), so long as, on each Reinvestment Prepayment Date, the Loans shall be prepaid by an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Asset Sale or Recovery Event, as set forth in Section 5.5(d) and (iii) RP Eligible Proceeds, to the extent such RP Eligible Proceeds are designated as such within 120 days, and used within 180 days, of the Disposition which is the source of such RP Eligible Proceeds to make a Restricted Payment permitted to be made under Section 9.6(h).

 

(c)   Subject to the last sentence of this paragraph, if, for any fiscal year of the Borrower commencing with the fiscal year ending December 31, 2012, there shall be Excess Cash Flow, then, on the relevant Excess Cash Flow Application Date, the Term Loans shall be prepaid as set forth in Section 5.5(d) by an amount equal to (x) the ECF Percentage of such Excess Cash Flow during such fiscal year minus, to the extent not paid or financed with Net Cash Proceeds of secured Indebtedness (other than Revolver Indebtedness), (y) all voluntary principal payments of the Term Loans during such fiscal year (other than in connection with an

 

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Auction) and all voluntary principal payments in respect of Revolver Indebtedness (to the extent accompanied by an equivalent permanent reduction in commitments thereunder).  Each such prepayment shall be made on July 15 of the following fiscal year, beginning on July 15, 2013 (an “Excess Cash Flow Application Date”).

 

(d)   Subject to Section 5.11(d), amounts to be applied in connection with prepayments made pursuant to this Section 5.5 shall be applied, first, pro  rata to the Tranche A Term Loans and the Tranche B Term Loans and, to the extent required by the terms of any Extending Term Loans, Refinancing Term Loans or Incremental Term Loans, to such other Term Loans (based on the amount of Term Loans under each Facility requiring such a payment), and after giving effect to the foregoing, to the payment of the installments due on such Term Loans within each such Facility in direct order of maturity for the next four quarters, and thereafter to the pro  rata prepayment of the Term Loans within each such Facility (inclusive of the final payment due at the maturity of each such Facility), second, after the Tranche A Term Loans, the Tranche B Term Loans and, to the extent required by the terms of any Extending Term Loans, Refinancing Term Loans or Incremental Term Loans, such other Term Loans, have been prepaid in full, to prepay the Revolving Credit Loans and/or Swing Line Loans pro  rata according to the respective pro rata share of the relevant Lender (in each case without any corresponding reduction of the Commitments hereunder), and third, to cash collateralize outstanding Letters of Credit.  The application of any prepayment of Loans under any Facility pursuant to this Section shall be made, first, to Base Rate Loans under such Facility and, second, to Eurocurrency Loans under such Facility.  Each prepayment of the Loans under this Section (except in the case of Revolving Credit Loans and Swing Line Loans) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.  Pending the final application of Net Cash Proceeds, the Borrower may temporarily prepay outstanding Revolving Credit Loans and/or Swing Line Loans or otherwise make Permitted Investments.  For the avoidance of doubt, Retained Declined Proceeds shall not be required to be used to make mandatory prepayments under this Section 5.5.

 

(e)   Notwithstanding any other provisions of this Section 5.5, (i) to the extent that any of or all the Net Cash Proceeds of any Asset Sale by a Foreign Subsidiary giving rise to a prepayment pursuant to Section 5.5(b) (a “Foreign Disposition”), the Net Cash Proceeds of any Recovery Event from a Foreign Subsidiary (a “Foreign Casualty Event”), or Excess Cash Flow is prohibited or delayed by applicable local law from being repatriated to the United States (in each case, other than Foreign Dispositions, Foreign Casualty Events or Excess Cash Flow made by or attributable to any Designated Foreign Subsidiary, and with respect to such Foreign Dispositions, Foreign Casualty Events or Excess Cash Flow this Section 5.5(e) shall not apply; provided that if, pursuant to a Change in Law after the Closing Date, the cash held by any such Designated Foreign Subsidiaries becomes prohibited from being repatriated to the United States pursuant to a Requirement of Law, then the Net Cash Proceeds of Foreign Dispositions and Foreign Casualty Events and Excess Cash Flow, in each case attributable to such Designed Foreign Subsidiaries, shall, for so long as such Requirement of Law so prohibits such repatriation, be subject to this Section 5.5(e)), the portion of such Net Cash Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in Section 5.5(c), or the Borrower shall not be required to make a prepayment at the time provided in Section 5.5(b), as the case may be.  Instead, such amounts may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not

 

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permit repatriation to the United States (the Borrower hereby agreeing to cause the applicable Foreign Subsidiary to promptly take all actions reasonably required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected Net Cash Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be promptly effected and such repatriated Net Cash Proceeds or Excess Cash Flow will be promptly (and in any event not later than three Business Days after such repatriation) applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to this Section 5.5 to the extent provided therein and (ii) to the extent that the Borrower has determined in good faith that repatriation of any of or all the Net Cash Proceeds of any Foreign Disposition, any Foreign Casualty Event or Excess Cash Flow would have a material adverse tax cost consequence (taking into account any foreign tax credit or benefit received in connection with such repatriation) with respect to such Net Cash Proceeds or Excess Cash Flow, then, to the extent that such material adverse tax cost consequence is not directly attributable to actions taken by the Parent, the Borrower or any of their Subsidiaries with the intent of avoiding or reducing the mandatory prepayments otherwise required under this Section 5.5, the Net Cash Proceeds or Excess Cash Flow so affected may be retained by the applicable Foreign Subsidiary; provided that, in the case of this clause (ii), on or before the date on which any Net Cash Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to Section 5.5 (or such Excess Cash Flow would have been so required if it were Net Cash Proceeds), (x) the Borrower apply an amount equal to such Net Cash Proceeds or Excess Cash Flow to such reinvestments or prepayments as if such Net Cash Proceeds or Excess Cash Flow had been received by the Borrower rather than such Foreign Subsidiary, less the amount of additional taxes that would have been payable or reserved against if such Net Cash Proceeds or Excess Cash Flow had been repatriated (or, if less, the Net Cash Proceeds or Excess Cash Flow that would be calculated if received by such Foreign Subsidiary) or (y) such Net Cash Proceeds or Excess Cash Flow are applied to the repayment of Indebtedness of a Foreign Subsidiary.

 

Notwithstanding any of the other provisions of this Section 5.5, so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurocurrency Loans is required to be made under this Section 5.5 prior to the last day of the Interest Period therefor and less than three months are remaining in such Interest Period, in lieu of making any payment pursuant to this Section 5.5 in respect of any such Eurocurrency Loan prior to the last day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made into a cash collateral account maintained with the Administrative Agent until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of such Loans in accordance with this Section 5.5.  Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with the relevant provisions of this Section 5.5.

 

In respect of any of the mandatory prepayments set forth in this Section 5.5(a), (b)  or (c), Borrower shall deliver to the Administrative Agent (for prompt delivery to the Lenders) at least five Business Days prior to the date of any such prepayment (the date specified for such prepayment, the “Mandatory Prepayment Date”), a prepayment notice that shall specify the

 

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Mandatory Prepayment Date and amount of prepayment and the events giving rise to such prepayment.

 

5.6.          Conversion and Continuation Options.  (a) The Borrower may elect from time to time to convert Eurocurrency Loans of the Borrower under any Facility to Base Rate Loans under such Facility by giving the Administrative Agent at least one Business Day’s prior irrevocable notice of such election, provided that any such conversion of Eurocurrency Loans may be made only on the last day of an Interest Period with respect thereto.  The Borrower may elect from time to time to convert Base Rate Loans under any Facility to Eurocurrency Loans under such Facility by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan under a particular Facility may be converted into a Eurocurrency Loan when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Required Lenders have, determined in its or their sole discretion not to permit such conversions.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

(b)   The Borrower may elect to continue any Eurocurrency Loan under any Facility as Eurocurrency Loans upon the expiration of the then current Interest Period with respect thereto by giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurocurrency Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Required Lenders have, determined in its or their sole discretion not to permit such continuations, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso, such Loans shall be converted automatically to Base Rate Loans on the last day of such then expiring Interest Period.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

5.7.          Minimum Amounts and Maximum Number of Eurocurrency Tranches.  Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to $2,500,000 or a whole multiple of $500,000 in excess thereof and (b) no more than 15 Eurocurrency Tranches shall be outstanding at any one time.

 

5.8.          Interest Rates and Payment Dates.  (a) Each Eurocurrency Loan under each Facility shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined for such day plus the Applicable Margin for such Facility.

 

(b)   Each Base Rate Loan under each Facility shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin for such Facility.

 

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(c)   (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all overdue amounts shall bear interest at a rate per annum that is equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% per annum or (y) in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans under the Revolving Credit Facility plus 2% per annum, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise) (after giving effect to any grace period in Section 10(a)), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to Base Rate Loans under the Revolving Credit Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment (after giving effect to any grace period in Section 10(a)) until such amount is paid in full (after as well as before judgment).

 

(d)   Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

 

5.9.          Computation of Interest and Fees.  (a) Interest, fees and commissions payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to Base Rate Loans on which interest is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurocurrency Rate.  Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

 

(b)   Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.  The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 5.8(a).

 

5.10.        Inability to Determine Interest Rate.  If prior to the first day of any Interest Period:

 

(a)   the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the London interbank market, adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate for such Interest Period, or

 

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(b)   the Administrative Agent shall have received notice from the Required Lenders that the Eurocurrency Rate to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

 

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given, the Borrower may revoke any pending request for a borrowing of Eurocurrency Loans, or pending request for conversion to or continuation of Eurocurrency Loans, or failing that: (x) any Eurocurrency Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurocurrency Loans shall be continued as Base Rate Loans and (z) any outstanding Eurocurrency Loans under the relevant Facility shall be converted, on the last day of the then current Interest Period with respect thereto, to Base Rate Loans.  Until such notice has been withdrawn by the Administrative Agent, no further Eurocurrency Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurocurrency Loans.

 

5.11.        Pro Rata Treatment and Payments.  (a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee or Letter of Credit fee, and any reduction of the Commitments of the Lenders, shall be made pro  rata according to the respective Tranche A Term Loan Percentages, Tranche B Term Loan Percentages or Revolving Credit Percentages, as the case may be, of the relevant Lenders; provided however that if (i) the Borrower makes non pro-rata payments in accordance with Sections 5.18 and 5.19 to only those Lenders selling Term Loans in an Auction or (ii) Facilities in addition to the Tranche A Term Facility, the Tranche B Term Facility or the Original Revolving Credit Facility exist pursuant to the terms of this Agreement, this Section 5.11(a) shall not prohibit the Borrower from making such additional payments or such reductions in Commitments as otherwise expressly provided for herein.

 

(b)   Except as otherwise provided herein, each payment (including each prepayment) of the Tranche A Term Loans shall be allocated among the Tranche A Term Loan Lenders holding such Tranche A Term Loans pro  rata based on the principal amount of Tranche A Term Loans held by such Tranche A Term Loan Lenders.  Amounts prepaid on account of the Tranche A Term Loans may not be reborrowed.  Except as otherwise provided herein, each payment (including each prepayment) of the Tranche B Term Loans shall be allocated among the Tranche B Term Loan Lenders holding such Tranche B Term Loans pro  rata based on the principal amount of Tranche B Term Loans held by such Tranche B Term Loan Lenders.  Amounts prepaid on account of the Tranche B Term Loans may not be reborrowed.

 

(c)   Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Credit Loans shall be made pro  rata according to the respective outstanding principal amounts of the Revolving Credit Loans then held by the Lenders, except with respect to any payments made pursuant to Section 5.20.  Each payment in respect of Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender that issued such Letters of Credit.

 

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(d)   Notwithstanding anything to the contrary in Sections 5.5 or 5.11, each Term Loan Lender may, at its option, decline all or any portion of any mandatory payment (such declined amounts, the “Declined Proceeds”) applicable to the Term Loan of such Lender by providing written notice (each, a “Rejection Notice”) to the Administrative Agent and Borrower no later than 5:00 p.m., New York City time, three Business Days prior to the Mandatory Prepayment Date regarding such prepayment. Each Rejection Notice from a given Term Loan Lender shall specify the principal amount of the mandatory prepayment of Term Loans to be declined by such Term Loan Lender.  If a Term Loan Lender fails to deliver a Rejection Notice to the Administrative Agent within the time frame specified above or such Rejection Notice fails to specify the principal amount of the Term Loans to be rejected, any such failure shall be deemed an acceptance of the total amount of such mandatory repayment of Term Loans due to it.  Any Declined Proceeds properly rejected pursuant to the above terms shall be retained by the Borrower (such retained Declined Proceeds referred to herein as “Retained Declined Proceeds”).

 

(e)   All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 2:00 p.m., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Payment Office, in Dollars and in immediately available funds.  Any payment made by the Borrower after 2:00 p.m., New York City time, on any Business Day shall be deemed to have been made on the next following Business Day. The Administrative Agent shall distribute such payments to the Lenders entitled thereto promptly upon receipt in like funds as received.  If any payment hereunder (other than payments on the Eurocurrency Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  If any payment on a Eurocurrency Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.  In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

 

(f)    Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate, in each case for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount (but only to the extent theretofore made available by it to the Borrower) with interest thereon at

 

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the rate per annum applicable to the applicable borrowing under the relevant Facility on demand, from the Borrower.

 

(g)   Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro  rata shares of a corresponding amount.  If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

 

5.12.        Requirements of Law.  (a) If any Change in Law made subsequent to the date hereof or compliance by any Lender with any request or directive made subsequent to the date hereof (whether or not having the force of law) from any central bank or other Governmental Authority:

 

(i)            shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurocurrency Rate hereunder; or

 

(ii)           shall subject the Administrative Agent, any Lender or the Issuing Lender to any Taxes (other than (x) Excluded Taxes and (y) Indemnified Taxes that are covered by Section 5.13) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or

 

(iii)          shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to the Administrative Agent, such Lender, or the Issuing Lender by an amount which such Administrative Agent, Lender or the Issuing Lender reasonably deems to be material, of making, converting into, continuing or maintaining Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay the Administrative Agent, such Lender or the Issuing Lender, within 15 Business Days of its written demand, any additional amounts necessary to compensate the Administrative Agent, such Lender or the Issuing Lender for such increased cost or reduced amount receivable.  If any Lender or the Issuing Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

 

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(b)   If any Lender shall have determined that the adoption of or any Change in Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

 

(c)   A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error.  The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

(d)   The Borrower shall not be required to compensate a Lender pursuant to Section 5.12 for any such increased cost or reduction incurred more than 180 days prior to the date that such Lender demands, or notifies the Borrower of its intention to demand, compensation therefor, provided that, if the circumstance giving rise to such increased cost or reduction is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

5.13.        Taxes.  (a) Except as required by a Requirement of Law, all payments made by or on behalf of the Borrower or any other Loan Party under this Agreement or any other Loan Document shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes.  If any Taxes are required by a Requirement of Law to be withheld from any amounts payable by or on behalf of such Loan Party to any Agent, Lender or Transferee, the applicable Loan Party (if it is the withholding agent) shall deduct and withhold such amounts as required by law, and, to the extent such Taxes are Indemnified Taxes, the applicable Loan Party shall pay additional amounts to the extent necessary so that after the applicable Loan Party makes all required deductions and withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.13), such Agent, Lender or Transferee receives an amount equal to the sum it would have received had no deductions or withholdings for Indemnified Taxes been made.

 

(b)   In addition, the Borrower or any other Loan Party, as the case may be, shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)   Whenever any Indemnified Taxes are payable by the Borrower or any other Loan Party, reasonably promptly thereafter, the Borrower or any other Loan Party shall send to the Administrative Agent for the account of the relevant Agent or Lender, as the case may be, a copy of a receipt received by the Borrower or other Loan Party, as the case may be, showing

 

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payment thereof, or other evidence of such payment reasonably satisfactory to the Administrative Agent.  If the Borrower or any other Loan Party, as the case may be, fails to pay when due any Indemnified Taxes that it is required to pay to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower and the other Loan Parties shall jointly and severally indemnify the Agents and the Lenders for any incremental interest or penalties that may become payable by any Agent or any Lender solely as a result of such failure except to the extent any such penalties or interest were due to (i) the failure of the Agent, Lender or Transferee to promptly notify the Borrower of such Indemnified Taxes or (ii) the gross negligence or willful misconduct of the Agent, Lender or Transferee (as determined by a court of competent jurisdiction in a final non-appealable judgment).

 

(d)   Without duplication of amounts payable pursuant to Section 5.13(a), the Borrower and the other Loan Parties shall jointly and severally indemnify and hold harmless, any Agent, each Lender or Transferee within 15 Business Days after written demand therefor, for the full amount of any Indemnified Taxes imposed on the Agent or such Lender or Transferee, as the case may be, on or with respect to any payment by or on account of any obligation of any Borrower hereunder or under any other Loan Document (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.13), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, except to the extent that such Indemnified Taxes constitute a penalty or interest resulting from the gross negligence, bad faith or willful misconduct of such Agent, Lender or Transferee (as determined by a court of competent jurisdiction in a final non-appealable judgment).

 

(e)   Each Lender, Transferee (in the case of a Participant, if it has purchased a Participation from a Lender that is a Non-U.S. Person) and Agent that is a Non-U.S. Person (each a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant that is a Non-U.S. Person, the Participant shall deliver to the Lender from which it purchased its Participation, and such Lender shall obtain from the Participant and transmit to the Borrower and the Administrative Agent with such Lender’s Internal Revenue Service Form W-8IMY) two copies of U.S. Internal Revenue Service Form W-8BEN, Form W-8ECI or Form W-8IMY (together with all additional documentation required to be transmitted with Form W-8IMY), including the appropriate forms and related statements described in this Section, as applicable, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender or Non-U.S. Participant (i) with each such Form W-8BEN or W-8ECI certifying as to such filer’s entitlement to a zero rate of, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents, and (ii) if a Non-U.S. Lender is claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, attaching to such Non-U.S. Lender’s Form W-8BEN a statement substantially in the form of Exhibit I-1, Exhibit I-2, Exhibit I-3 or Exhibit I-4, as applicable.  Such forms shall be true and accurate and shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of a Participant that is a Non-U.S. Lender, on or before the date such Participant purchases the participation) and promptly from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent.  In addition, each Non-U.S. Lender shall deliver such forms promptly

 

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upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify the Borrower and the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.  Each Lender, Transferee (in the case of a Participant, if it has purchased a Participation from a Lender that is a Non-U.S. Person) and Agent that is not a Non-U.S. Lender shall furnish to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which it purchased its Participation) an accurate, properly completed and duly executed U.S. Internal Revenue Service Form W-9 (or successor form) establishing that such Lender (or Transferee) or Agent is not subject to U.S. backup withholding, and to the extent it may lawfully do so at such times, provide a new Form W-9 (or successor form) upon the expiration or obsolescence of any previously delivered form.

 

(f)  If a payment made to an Agent, Lender or Transferee under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Agent, Lender or Transferee were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Agent, Lender or Transferee shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with its obligations under FATCA, to determine that such Agent, Lender or Transferee has or has not complied with such Agent, Lender or Transferee’s obligations under FATCA and, as necessary, to determine the amount to deduct and withhold from such payment.  Solely for purposes of this Section 5.13(f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(g)  If any Agent, Lender or Transferee determines, in its sole discretion, exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower or any other Loan Party or with respect to which the Borrower or any other Loan Party has paid additional amounts pursuant to this Section 5.13, it shall promptly pay over any such refund to the Borrower (but only to the extent of indemnity payments made, and additional amounts paid, by the such Loan Party under this Section 5.13 with respect to the Indemnified Taxes giving rise to such refund), net of all related out-of-pocket expenses of such Agent, Lender or Transferee (as determined in the sole discretion exercised in good faith, of the Agent, Lender or Transferee) and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of such Agent, Lender or Transferee, agrees to repay the amount paid over to that Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Agent, Lender or Transferee in the event such Agent, Lender or Transferee is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (g), in no event will any Agent, Lender or Transferee be required to pay any amount to the Borrower pursuant to this paragraph (g) to the extent the payment of such amount would place such Agent, Lender or Transferee in a less favorable net after-Tax position

 

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than the Agent, Lender or Transferee would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph shall not be construed to require any Agent, Lender or Transferee to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

 

(h)  Each Agent, Lender and Transferee shall use commercially reasonable efforts to cooperate with the Borrower in attempting to recover any Indemnified Taxes which, in the reasonable discretion of the Borrower, were improperly imposed, provided, however that the Borrower shall indemnify the Agent, Lender or Transferee for any costs it incurs in connection with complying with this subsection (h).  The Borrower shall have the right to dispute, at its own cost, the imposition of any Indemnified Taxes (including interest and penalties) with the relevant Governmental Authority.  This paragraph shall not be construed to require the Administrative Agent or any Lender or Transferee to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.  In no event will this subsection (h) relieve the Borrower of its obligation to pay additional amounts to an Administrative Agent, Lender or Transferee under this Section 5.13.

 

(i)  The agreements in this Section 5.13 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

(j)  For purposes of this Section 5.13, the term “Lender” includes the Issuing Lender.

 

5.14.        Indemnity.  The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense (excluding any loss of anticipated profits) that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making by the Borrower of a prepayment or conversion of Eurocurrency Loans on a day that is not the last day of an Interest Period with respect thereto.  A certificate as to any amounts payable pursuant to this Section submitted to the Borrower, on behalf of the Borrower, by any Lender shall be conclusive in the absence of manifest error.  This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

5.15.        Illegality.  Notwithstanding any other provision herein, if any Change in Law after the date hereof shall make it unlawful for any Lender to make or maintain Eurocurrency Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such and convert Base Rate Loans to Eurocurrency Loans shall forthwith be canceled and (b) such Lender’s Loans then outstanding as Eurocurrency Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law.  If any such conversion of a Eurocurrency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto,

 

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the Borrower in respect of such Eurocurrency Loans shall pay to such Lender such amounts, if any, as may be required pursuant to Section 5.14.

 

5.16.        Change of Lending Office.  Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Sections 5.12, 5.13 or 5.15 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Sections 5.12, 5.13 or 5.15.

 

5.17.        Replacement of Lenders under Certain Circumstances.  The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 5.12 or 5.13, or gives a notice of illegality pursuant to Section 5.15, (b) becomes a Defaulting Lender or (c) becomes a Non-Consenting Lender, with a replacement financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) if applicable, prior to any such replacement, such Lender has not eliminated the continued need for payment of amounts owing pursuant to Section 5.12 or 5.13 or to eliminate any illegality described in a notice of illegality under Section 5.15, (iii) if applicable, the replacement financial institution shall purchase, at par (plus accrued interest and any premium payable hereunder), all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (iv) if applicable, the Borrower shall be liable to such replaced Lender under Section 5.14 (as though Section 5.14 were applicable) if any Eurocurrency Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (v) if applicable, the replacement financial institution, if not already a Lender, an affiliate of a Lender or an Approved Fund, shall be reasonably satisfactory to the Administrative Agent, (vi) if applicable, the replaced Lender shall be obligated to make such replacement, without such Lender’s consent, in accordance with the provisions of Section 12.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (vii) if applicable, the Borrower (or, if agreed to by the replacement lender, such replacement lender) shall pay all additional amounts (if any) required pursuant to Section 5.12 or 5.13, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated and any other payment obligations owed to such replaced Lender to the extent such replaced Lender has, in good faith, advised the Borrower (or, if agreed to by the replacement lender, such replacement lender) of the amount of the same in writing), and (viii) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender; provided that in the case of any Assignee in respect of Non-Consenting Lenders, the replacement Lender shall agree to the consent, waiver or amendment to which the Non-Consenting Lender did not agree.

 

5.18.        Loan Auctions.  (a) Notwithstanding any provision in this Agreement or the other Loan Documents to the contrary, the Borrower shall be permitted to enter into an Auction so long as each of the Term Loan Lenders under the Facility to which an Auction Notice relates hereunder shall be offered an opportunity to ratably participate in the applicable Auction, provided, that (i) the Borrower shall be in compliance with Sections 9.1 and 9.2 immediately

 

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before and immediately after giving effect to such Auction on a Pro Forma Basis as of the applicable Measurement Period, (ii) the Liquidity shall be no less than (x) $75,000,000, if the Auction is scheduled during the months of March, April and May of any given year, (y) $250,000,000, if the Auction is scheduled during the months of August, September, October and November of any given year, and (z) $150,000,000, if the Auction is scheduled during any other month of any given year, each on a pro  forma basis immediately after giving effect to such Auction (assuming maximum participation therein) and (iii) before and after giving effect to the Auction, no Event of Default shall have occurred and be continuing.

 

(b)   Concurrently with the effectiveness of any Assignment and Acceptance pursuant to which the Borrower becomes a Term Loan Lender hereunder, any Loans held by the Borrower shall be automatically cancelled (and may not be resold by the Borrower) and no interest shall accrue on such Loans after such date.  Upon the automatic cancellation of any Loans held by the Borrower, the Borrower shall no longer be a Term Loan Lender hereunder and such Loans shall be no longer outstanding for all purposes of this Agreement and all other Loan Documents, including, but not limited to (i) the making of, or the application of, any payments to the Term Loan Lenders pursuant to this Agreement or any other Loan Document, (ii) the making of any request, demand, authorization, direction, notice, consent or waiver pursuant to this Agreement or any other Loan Document, (iii) the calculation of financial covenants, (iv) the determination of Required Lenders, or (v) for any similar or related purpose, pursuant to this Agreement or any other Loan Document.

 

(c)   The parties hereto hereby agree that any Auction and cancellation of Loans (i) will not constitute a voluntary prepayment made by the Borrower for any purpose under this Agreement and the other Loan Documents, (ii) shall not be subject to Sections 5.4, 5.5, 5.11 or 12.7, (iii) the principal amount of the Term Loans so repurchased shall be applied on a pro  rata basis to reduce the scheduled remaining installments of principal on such Term Loan and (iv) will not constitute Investments by the Borrower.

 

5.19.        Auction Procedures.  (a)  In connection with an Auction, the Borrower will provide notification to the Administrative Agent (for distribution to the Term Loan Lenders of the applicable Facility with respect to which such notice relates) of the Auction (an “Auction Notice”), which shall be substantially in the form of Exhibit L.  Each Auction Notice shall contain (i) the total cash value of the bid, in a minimum amount of $5,000,000 with minimum increments of $1,000,000 (the “Auction Amount”), unless otherwise agreed by the Administrative Agent, (ii) the name of the relevant Facility or Facilities (which for the avoidance of doubt must be in respect of Term Loans) to which the Auction relates (the “Applicable Term Loan Facility”), (iii) the discount to par, which may be a single percentage or a range of percentages (the “Discount Range”) of the par principal amount of the Term Loans of each Applicable Term Loan Facility that represents the purchase price or range of purchase prices that could be paid in the Auction with respect to such Applicable Term Loan Facility and (iv) the date by which the Term Loan Lenders of the Applicable Term Loan Facility are required to indicate their election to participate in the Auction (the “Reply Date”), which shall be not less than five Business Days after delivery of the Auction Notice.

 

(b)   In connection with any Auction, each Term Loan Lender of the Applicable Term Loan Facility or Applicable Term Loan Facilities may, in its sole discretion, participate in

 

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such Auction and may provide the Administrative Agent with a notice of participation (the “Return Bid”) on or before the Reply Date, substantially in the form of Exhibit M, which shall specify (i) a discount to par for Term Loans in the Applicable Term Loan Facility that must be expressed as a price (the “Reply Discount”), which must be within the Discount Range, and (ii) a principal amount of Term Loans in the Applicable Term Loan Facility that such Lender is willing to offer for sale at its Reply Discount which must be in increments of $500,000 (the “Reply Amount”).  A Term Loan Lender in the Applicable Term Loan Facility may avoid the minimum increment amount condition solely when submitting a Reply Amount equal to such Term Loan Lender’s entire remaining amount of such Term Loans.  Term Loan Lenders may only submit one Return Bid per Auction per Applicable Term Loan Facility but each Return Bid may contain up to three component bids only one of which can result in a Qualifying Bid (as defined below).  Each Return Bid submitted to the Administrative Agent shall be irrevocable.  In addition to the Return Bid, the participating Lender must execute and deliver, to be held in escrow by the Administrative Agent, an Assignment and Acceptance. The Borrower will not have any obligation to purchase any Term Loans at a price that is outside the applicable Discount Range. The processing and recordation fees as set forth in Section 12.6 hereof shall not be applicable to any Auctions (it being understood and agreed that other fees may be applicable in connection with any Auction).

 

(c)   Based on the Reply Discounts and Reply Amounts received by the Administrative Agent (who shall reasonably promptly provide the Borrower with a copy of all Reply Discounts), the Administrative Agent, in consultation with the Borrower, will calculate the applicable discount (the “Applicable Discount”) for the Auction with respect to each Applicable Term Loan Facility, which will be the highest Reply Discount that is within the Discount Range and, in the event the Auction Amount cannot be paid in full at the highest Reply Discount, the Applicable Discount shall be the highest Reply Discount reducing in order to the lowest Reply Discount that is within the Discount Range which yields a prepayment in an aggregate principal amount equal to the lower of (i) the Auction Amount and (ii) the sum of all Reply Amounts.  The Borrower shall purchase Term Loans (or the respective portions thereof) of the Applicable Term Loan Facility from each relevant Term Loan Lender with a Reply Discount that is equal to or greater than the Applicable Discount (“Qualifying Bids”) at the Applicable Discount; provided that if the aggregate proceeds required to purchase all Term Loans of the Applicable Term Loan Facility subject to Qualifying Bids would exceed the Auction Amount for such Auction, the Borrower shall purchase such Term Loans of the Applicable Term Loan Facility at the Applicable Discount ratably based on the principal amounts of such Qualifying Bids (subject to rounding requirements specified by the Administrative Agent).  If a Term Loan Lender in the Applicable Term Loan Facility has submitted a Return Bid containing multiple bids at different Reply Discounts, only the bid with the highest Reply Discount that is equal to or greater than the Applicable Discount will be deemed the Qualifying Bid of such Term Loan Lender.  Each participating Term Loan Lender will receive notice of a Qualifying Bid as soon as reasonably practicable but in no case later than five Business Days from the date the Return Bid was due.

 

(d)   Once initiated by an Auction Notice, the Borrower may withdraw an Auction only in the event that, as of such time, no Return Bid has been received by the Administrative Agent.  Furthermore, in connection with any Auction, upon submission by a Term Loan Lender of a Return Bid, such Term Loan Lender (each, a “Qualifying Lender”) will be obligated to sell

 

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the entirety or its allocable portion of the Reply Amount, as the case may be, at the Applicable Discount.

 

(e)   Notwithstanding the provisions of this Section 5.19, the Administrative Agent in consultation with the Borrower, may amend or modify the procedures, notices, bids and Assignment and Acceptance Agreement in connection with any Auction (including, solely with Borrower’s consent), (i) any term to the extent Borrower’s commercial interests will be materially adversely affected by such amendment or modification and (ii) the economic terms to the extent no Term Loan Lenders have validly tendered Term Loans requested in an offer, but excluding economic terms of an auction after any Term Loan Lenders in the Applicable Term Loan Facility have validly tendered Term Loans requested in an offer, other than to increase the Auction Amount or raise the Discount Range; provided that no such amendments or modifications may be implemented after 24 hours prior to the date and time return bids are due.

 

(f) By providing an Auction Notice or purchasing any Term Loans (or any portions thereof) in the Auction initiated thereby, the Borrower shall be deemed to represent and warrant as of the date of such notice or purchase as the case may be that the Borrower is not in possession of any information regarding any Loan Party, its assets, its ability to perform its Obligations or any other matter that may be material to a decision by any Term Loan Lender to participate in such Auction or participate in any of the transactions contemplated thereby, that has not previously been disclosed to the Administrative Agent and the Lenders.

 

5.20.        Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender, to the extent permitted by applicable law:

 

(a)   fees shall cease to accrue on the unfunded portion of the Revolving Credit Commitment of such Defaulting Lender pursuant to Section 5.2(a), and the Borrower shall not be required to pay any such fees that do not accrue; provided that any such Commitment Fee accrued on any of the Revolving Credit Commitments of a Defaulting Lender during the period prior to the time such Revolving Credit Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Revolving Credit Lender shall be a Defaulting Lender except to the extent that such fee shall otherwise have been due and payable by the Borrower prior to such time;

 

(b)   the Revolving Credit Commitment and Revolving Extensions of Credit of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to 12.1, provided that (i) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders of the same tranche shall require the consent of such Defaulting Lender and (ii) the Revolving Credit Commitment of such Defaulting Lender may not be increased or extended, the interest rate of a Defaulting Lender’s Loan may not be decreased (except as set forth in clause (a) above), and the amount of principal of the Loans held by such Defaulting Lender may not be forgiven, in each case without the consent of such Defaulting Lender, the Administrative Agent and the Borrower; provided that any payments made with

 

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respect to such increase in such Revolving Credit Commitment shall not be subject to Sections 5.11 or 12.7 with respect to any Defaulting Lender;

 

(c)   if any Swing Line Exposure or L/C Obligations exists at the time a Revolving Credit Lender becomes a Defaulting Lender then:

 

(i)            all or any part of such Swing Line Exposure and L/C Obligations shall be reallocated among the Revolving Credit Lenders which are non-Defaulting Lenders in accordance with their respective Revolving Credit Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’ Revolving Extensions of Credit plus such Defaulting Lender’s Swing Line Exposure and L/C Obligations does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments, (y) the Revolving Credit Commitment of any non-Defaulting Lender is not exceeded by such Lender’s Revolving Extensions of Credit (and any participations therein) and (z) the conditions set forth in Section 7.2 are satisfied or waived at such time; and

 

(ii)           if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such Swing Line Exposure of such Defaulting Lender (after giving effect to any partial reallocation pursuant to clause (i) above) and (y) second, if requested by the Issuing Lender, cash collateralize such Defaulting Lender’s L/C Obligations (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 10 for so long as such L/C Obligations are outstanding or until such Lender ceases to be a Defaulting Lender pursuant to Section 5.20(f);

 

(iii)          if the Borrower cash collateralizes any portion of such Defaulting Lender’s L/C Obligations pursuant to this Section 5.20(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 4.3 with respect to such Defaulting Lender’s L/C Obligations during the period such Defaulting Lender’s L/C Obligations are cash collateralized; provided that, for the avoidance of doubt, any such fees under Section 4.3 that accrued with respect to such Defaulting Lender’s L/C Obligations during the period prior to the time such Revolving Credit Lender became a Defaulting Lender and that remain unpaid shall still be due and payable to such Defaulting Lender to the extent that such fee was otherwise due and payable by the Borrower prior to such time;

 

(iv)          if the L/C Obligations of the non-Defaulting Lenders are reallocated pursuant to this Section 5.20(c), then the fees payable to the Lenders pursuant to Section 5.2(a) and Section 4.3 shall be adjusted in accordance with such non-Defaulting Lenders’ Revolving Credit Percentages; or

 

(v)           if any Defaulting Lender’s L/C Obligations are neither cash collateralized nor reallocated pursuant to this Section 5.20(c), then, without prejudice to any rights or remedies of the Issuing Lender or any Lender hereunder, all commitment fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Revolving Credit Commitment that was utilized by

 

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such L/C Obligations) and letter of credit fees payable under Section 4.3 with respect to such Defaulting Lender’s L/C Obligations shall be payable to the Issuing Lender until such L/C Obligations are cash collateralized and/or reallocated;

 

(d)   so long as any Revolving Credit Lender is a Defaulting Lender, the Swing Line Lender shall not be required to fund any Swing Line Loan and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or, if requested by the Issuing Lender, cash collateral will be provided by the Borrower in accordance with Section 5.20(c), and participating interests in any such newly issued or increased Letter of Credit or newly made Swing Line Loan shall be allocated among non-Defaulting Lenders in a manner consistent with Section 5.20(c)(i) (and Defaulting Lenders shall not participate therein); and

 

(e)       so long as any Lender is a Defaulting Lender, any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 12.7 but excluding Section 5.17) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by the Administrative Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to the Issuing Lender or Swing Line Lender hereunder, (iii) third, if such Defaulting Lender is an Revolving Credit Lender and the Administrative Agent or the Issuing Lender so requests, held in such account as cash collateral for future funding obligations of the Defaulting Lender in respect of any existing interest in Letter of Credit, (iv) fourth, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, (v) fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) to cash collateralize the Issuing Lenders’ future fronting exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, (vi) sixth, to the payment of any amounts owing to the Lenders or an Issuing Lender or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender or such Issuing Lender or Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, (vii) seventh, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (viii) eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this section shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

(f)        In the event that the Administrative Agent, the Borrower, the Issuing Lender and the Swing Line Lender (as applicable) each agrees in writing that a Defaulting Lender which

 

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is a Revolving Credit Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swing Line Exposure and L/C Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Line Loans) or take such other actions as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Revolving Credit Percentage, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

5.21.        Extensions of Term Loans and Revolving Credit Commitments

 

(a)           Notwithstanding anything to the contrary in this Agreement, pursuant to one or more offers (each, an “Extension Offer”) made from time to time by the Borrower to all Lenders of Term Loans with a like maturity date or all Lenders with Revolving Credit Commitments with a like maturity date, in each case on a pro rata basis (based on the aggregate outstanding principal amount of the respective Term Loans or Revolving Credit Commitments with a like maturity date, as the case may be) and on the same terms to each such Lender, the Borrower is hereby permitted to consummate from time to time transactions with individual Lenders that accept the terms contained in such Extension Offers to extend the maturity date of each such Lender’s Term Loans and/or Revolving Credit Commitments and otherwise modify the terms of such Term Loans and/or Revolving Credit Commitments pursuant to the terms of the relevant Extension Offer (to the extent permitted by this section) (each, an “Extension”, and each group of Term Loans or Revolving Credit Commitments, as applicable, in each case as so extended, as well as the Term Loans and the Revolving Credit Commitments, in each case not so extended, being a separate Facility; any Extending Term Loans shall constitute a separate Facility of Term Loans from the Facility of Term Loans from which they were converted, and any Extended Revolving Credit Commitments shall constitute a separate Facility of Revolving Credit Commitments from the Facility of Revolving Credit Commitments from which they were converted), so long as the following terms are satisfied:

 

(i)            except as to interest rates, fees and final maturity (which shall be determined by the Borrower and the Extended Revolving Credit Lenders (as defined below) and set forth in the relevant Extension Offer), the Revolving Credit Commitment of any Revolving Credit Lender that agrees to an Extension with respect to such Revolving Credit Commitment (an “Extending Revolving Credit Lender”) extended pursuant to an Extension (an “Extended Revolving Credit Commitment”), and the related outstandings, shall be a Revolving Credit Commitment (or related outstandings, as the case may be) with applicable terms prior to the Revolving Facility Termination Date of the Original Revolving Credit Loans no more favorable, in any material respect, taken as a whole, to the Extending Revolving Credit Lenders than the terms of the Original Revolving Credit Commitments (and related outstandings) (except for covenants and other provisions contained therein applicable only to periods after the Latest Maturity Date); provided that (1) the borrowing and repayment (except for (A) payments of

 

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interest and fees at different rates on Extended Revolving Credit Commitments (and related outstandings), (B) repayments required upon the maturity date of the non-extended Revolving Credit Commitments and (C) repayments made in connection with a permanent repayment and termination of all Revolving Credit Commitments) of Revolving Credit Loans with respect to Extended Revolving Credit Commitments after the date on which such Extended Revolving Credit Commitments are established (an “Extension Date”) shall be made on a pro rata basis with all other Revolving Credit Commitments, (2) all Letters of Credit and Swing Line Loans shall be participated on a pro rata basis by all Lenders with Revolving Credit Commitments in accordance with their percentage of the Revolving Credit Commitments, (3) the permanent repayment of Revolving Credit Loans with respect to, and termination of, any Revolving Credit Commitments shall be made on a pro rata basis with all other Revolving Credit Commitments, except that the Borrower shall be permitted to permanently repay and terminate commitments of any Facility of Revolving Credit Commitments on a non-pro rata basis at the stated maturity of such Facility as compared to any other Facility with a later maturity date than such Facility, (4) assignments and participations of Extended Revolving Credit Commitments and extended Revolving Credit Loans shall be governed by the same assignment and participation provisions applicable to all other Revolving Credit Commitments and Revolving Credit Loans, (5) at no time shall there be more than two different Facilities that are revolving facilities during the term of this Agreement, (6) the final maturity date of any Extended Revolving Credit Commitments shall be no earlier than the maturity date of the Facility of Revolving Credit Commitments being extended and (7) except as the Swing Line Lender may otherwise agree, Swing Line Loans shall be required to be paid in full on the maturity date of the non-extended Revolving Credit Commitments (which Swing Line Loans may, for the avoidance of doubt, be re-borrowed pursuant to the terms hereof after such maturity date),

 

(ii)           except as to interest rates, fees, final maturity date, optional prepayment terms, required prepayment dates and participation in prepayments (which shall, subject to the immediately succeeding clauses (iii), (iv) and (v), be determined by the Borrower and the Extending Term Lenders (as defined below) and set forth in the relevant Extension Offer), the Term Loans of any Term Loan Lender that agrees to an Extension with respect to such Term Loans (an “Extending Term Lender”) extended pursuant to any Extension (“Extending Term Loans”) shall have terms applicable prior to the original Term Loan Maturity Date of the Facility of Term Loans being extended no more favorable in any material respect, taken as a whole, to the Extending Term Loan Lender than the terms of the Facility of Term Loans subject to such Extension Offer (except for covenants and other provisions contained therein applicable only to periods after the Latest Maturity Date),

 

(iii)          the final maturity date of any Extending Term Loans shall be no earlier than the Term Loan Maturity Date of the Facility of Term Loans being extended,

 

(iv)          the weighted average life of any Extending Term Loans shall be no shorter than the remaining weighted average life of the Term Loans extended thereby,

 

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(v)           any Extending Term Loans may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) in any voluntary or mandatory repayments or prepayments hereunder, in each case as specified in the respective Extension Offer,

 

(vi)          if the aggregate principal amount of Term Loans (calculated on the face amount thereof) or Revolving Credit Commitments, as the case may be, in respect of which Term Loan Lenders or Revolving Credit Lenders, as the case may be, shall have accepted the relevant Extension Offer shall exceed the maximum aggregate principal amount of Term Loans or Revolving Credit Commitments, as the case may be, offered to be extended by the Borrower pursuant to such Extension Offer, then the Term Loans or Revolving Credit Loans, as the case may be, of such Term Loan Lenders or Revolving Credit Lenders, as the case may be, shall be extended ratably up to such maximum amount based on the respective principal amounts (but not to exceed actual holdings of record) with respect to which such Term Loan Lenders or Revolving Credit Lenders, as the case may be, have accepted such Extension Offer,

 

(vii)         all documentation in respect of such Extension shall be consistent with the foregoing,

 

(viii)        before and after giving effect to such Extension, the condition set forth in Section 7.2(b) shall be satisfied;

 

(ix)           any applicable Minimum Extension Condition shall be satisfied unless waived by the Borrower, and

 

(x)            there may be no more than four different Facilities of Term Loans hereunder.

 

(b)           With respect to all Extensions consummated by the Borrower pursuant to this Section 5.21, (i) such Extensions shall not constitute voluntary or mandatory payments or prepayments for purposes of Section 2.3, Section 5.4 or Section 5.5 and (ii) no Extension Offer is required to be in any minimum amount or any minimum increment, provided that the Borrower may at its election specify as a condition (a “Minimum Extension Condition”) to consummating any such Extension that a minimum amount (to be determined and specified in the relevant Extension Offer in the Borrower’s sole discretion and may be waived by the Borrower) of Term Loans or Revolving Credit Commitments (as applicable) of any or all applicable Facilities be tendered.  The Administrative Agent and the Lenders hereby consent to the Extensions and the other transactions contemplated by this Section 5.21 (including, for the avoidance of doubt, payment of any interest, fees or premium in respect of any Extending Term Loans and/or Extended Revolving Credit Commitments on such terms as may be set forth in the relevant Extension Offer) and hereby waive the requirements of any provision of this Agreement (including, without limitation, Section 5.2, 5.11, Section 12.7(a) or any other pro rata payment section) or any other Loan Document that may otherwise prohibit or restrict any such Extension or any other transaction contemplated by this Section 5.21.

 

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(c)           No consent of any Lender or any Agent shall be required to effectuate any Extension, other than (i) the consent of each Lender agreeing to such Extension with respect to one or more of its Term Loans and/or Revolving Credit Commitments (or a portion thereof) and (ii) with respect to any Extension of the Revolving Credit Commitments, the consent of each Issuing Lender and the Swing Line Lender, which consent shall not be unreasonably withheld or delayed.  For the avoidance of doubt, no Lender shall have its Term Loans or Revolving Credit Commitments extended without the written consent of such Lender.  All Extending Term Loans, Extended Revolving Credit Commitments and all obligations in respect thereof shall be Obligations under this Agreement and the other Loan Documents that are secured by the Collateral on a pari passu basis with all other applicable Obligations under this Agreement and the other Loan Documents.  The Lenders hereby irrevocably authorize the Administrative Agent to enter into amendments to this Agreement and the other Loan Documents with the Borrower and other Loan Parties as may be necessary in order to establish new Facilities in respect of Revolving Credit Commitments or Term Loans so extended and such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with the establishment of such new Facilities, in each case on terms consistent with this Section 5.21.  In addition, any such amendment shall provide that, to the extent consented to by each relevant Issuing Lender, (a) with respect to any Letters of Credit the expiration date for which extend beyond the maturity date for the non-extended Revolving Credit Commitments, participations in such Letters of Credit on such maturity date shall be reallocated from Lenders holding Revolving Credit Commitments to Lenders holding Extended Revolving Credit Commitments in accordance with the terms of such amendment (provided that such participation interests shall, upon receipt thereof by the relevant Lenders holding Revolving Credit Commitments, be deemed to be participation interests in respect of such Revolving Credit Commitments and the terms of such participation interests (including, without limitation, the commission applicable thereto) shall be adjusted accordingly) and (b) limitations on drawings of Revolving Credit Loans and issuances, extensions and amendments to Letters of Credit shall be implemented giving effect to the foregoing reallocation prior to such reallocation actually occurring to ensure that sufficient Extended Revolving Credit Commitments are available to participate in any such Letters of Credit.  Without limiting the foregoing, in connection with any Extensions the respective Loan Parties shall (at their expense) amend (and the Administrative Agent is hereby directed to amend) any Mortgage that has a maturity date prior to the latest termination date of any Extending Term Loans or Extended Revolving Credit Commitments so that such maturity date is extended to the latest termination date of any Extending Term Loans or Extended Revolving Credit Commitments (or such later date as may be advised by local counsel to the Administrative Agent) and in connection therewith, to the extent requested by Administrative Agent, the respective Loan Parties shall (at their expense) deliver to the Administrative Agent a date down endorsement to the mortgagee’s title insurance policies issued to Administrative Agent with respect to any such amended Mortgages.

 

(d)           In connection with any Extension, the Borrower shall provide the Administrative Agent at least 10 Business Days (or such shorter period as may be agreed by the Administrative Agent) prior written notice thereof, and shall agree to such procedures (to ensure reasonable administrative management of the credit facilities hereunder after such Extension), if any, as may be established by, or acceptable to, the Administrative Agent, in each case acting reasonably to accomplish the purposes of this Section 5.21.

 

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SECTION 6.  REPRESENTATIONS AND WARRANTIES

 

To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Parent, Holdings and the Borrower hereby jointly and severally represent and warrant to each Agent and each Lender that:

 

6.1.          Financial Condition.  (a) The unaudited pro  forma consolidated balance sheet of Parent and its consolidated Subsidiaries as at September 30, 2011 (the “Pro Forma Balance Sheet”), copies of which have heretofore been furnished to the Administrative Agent, has been prepared giving effect (as if such events had occurred on such date) to (i) the Loans to be made on the Closing Date and the use of proceeds thereof and (ii) the payment of fees and expenses in connection with the foregoing.  The Pro Forma Balance Sheet has been prepared in good faith based on assumptions believed by Parent to be reasonable and as of the date of delivery thereof, and presents fairly in all material respects on a Pro Forma Basis the estimated financial position of Parent and its consolidated Subsidiaries as at September 30, 2011, assuming that the events specified in the preceding sentence had actually occurred at such date and giving effect to the other assumptions set forth therein.

 

The audited consolidated balance sheets of Parent as at December 31, 2010 and December 31, 2009, and the related consolidated statements of income and of cash flows for the fiscal years ended on December 31, 2010, December 31, 2009 and December 31, 2008, reported on by and accompanied by a report from KPMG LLP, present fairly in all material respects the consolidated financial condition of Parent as at such dates, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended.  The unaudited consolidated balance sheets of Parent as at September 30, 2011 and September 30, 2010, and the related consolidated statements of income and of cash flows for the fiscal periods ended on September 30, 2011 and September 30, 2010, present fairly in all material respects the consolidated financial condition of Parent as at such dates, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal periods then ended.

 

(b)   Parent and its Subsidiaries do not have any material Guarantee, contingent liabilities and liabilities for Taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected or disclosed in the notes in the most recent financial statements of Parent referred to in this paragraph or otherwise permitted by this Agreement and disclosed to the Lenders in writing.  During the period from December 31, 2010 to  and including the date hereof there has been no Disposition by Parent or any of its Subsidiaries of any material part of its Business or Property.

 

6.2.          No Change.  Since December 31, 2010, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

6.3.          Existence; Compliance with Law.  Each of Parent, Holdings and its Subsidiaries (other than the Inactive Subsidiaries) (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate (or equivalent) power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the Business in which it is currently engaged, (c) is

 

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duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its Business requires such qualification and (d) is in compliance with all Requirements of Law except in each case referred to in clauses (b), (c) or (d), to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

6.4.          Corporate Power; Authorization; Enforceable Obligations.  Each Loan Party has the corporate (or equivalent) power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and to consummate the Transactions and, in the case of the Borrower, to borrow hereunder.  Each Loan Party has taken all necessary corporate (or equivalent) action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and the consummation of the Transactions and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of this Agreement.  No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required to be obtained by any Loan Party in connection with the Transactions and the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 6.4 and Schedule 6.19(b), which consents, authorizations, filings and notices have been obtained or made and are in full force and effect, (ii) the filings referred to in Schedule 6.19(a)-1 and Schedule 6.19(a)-3 and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect.  Each Loan Document has been duly executed and delivered on behalf of each Loan Party that is a party thereto.  This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

6.5.          No Legal Bar.  The execution, delivery and performance of this Agreement and the other Loan Documents by the Loan Parties, the issuance of Letters of Credit, the borrowings hereunder, the use of the proceeds thereof and the consummation of the Transactions will not violate any Requirement of Law applicable to, or any Contractual Obligation of, Parent, Holdings or any of its Subsidiaries except to the extent such violation could not reasonably be expected to have a Material Adverse Effect and will not result in, or require, the creation or imposition of any Lien on any of their respective Properties or revenues pursuant to any such Requirement of Law or any material Contractual Obligation (other than the Liens created by the Security Documents).

 

6.6.          Litigation.  No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Parent, Holdings or the Borrower, threatened by or against Parent, Holdings or any of its Subsidiaries or against any of their respective Properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

 

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6.7.          No Default.  Neither Parent, Holdings, nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing.

 

6.8.          Ownership of Property; Liens.  Each of Holdings and its Subsidiaries has good and insurable title in fee simple to, or a valid leasehold interest in, all its material Real Property, and good title to, or a valid leasehold interest in, all its other material Property, and none of such Property (including the Real Property) is subject to any Lien except a Permitted Lien.  Attached as Schedule 6.8 is a list of all Real Property and Operated Property which are material to the operation of the Business of Holdings or its Subsidiaries as of the Closing Date.

 

6.9.          Intellectual Property.  Holdings and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property material to the conduct of its business as currently conducted, free and clear of all Liens other than Permitted Liens, and takes reasonable actions to protect, preserve and maintain such Intellectual Property.  Except as could not reasonably be expected to have a Material Adverse Effect, all such Intellectual Property is valid and enforceable and all registrations and applications for such Intellectual Property have not expired or been abandoned.  No action or proceeding is pending by any Person or, to the knowledge of Holdings or the Borrower, threatened, or imminent, on the date hereof, and no holding, decision or judgment has been rendered by any Governmental Authority or arbitrator which may limit, cancel or challenge the validity, enforceability, ownership or use of, such Intellectual Property which could reasonably be expected to have a Material Adverse Effect, nor does Holdings or the Borrower know of any valid basis for any such claim except for claims, actions, proceedings, holdings, decisions or judgments which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  The operation of the Business of Holdings and its Subsidiaries does not infringe, impair, misappropriate or otherwise violate the rights of any Person to an extent which could reasonably be expected to have a Material Adverse Effect, and to the knowledge of Holdings or the Borrower, no Person is infringing, impairing, misappropriating or otherwise violating any Intellectual Property owned by any of Holdings or its Subsidiaries to an extent which could reasonably be expected to have a Material Adverse Effect.

 

6.10.        Taxes.  Each of Parent, Holdings and each of its Subsidiaries has filed or caused to be filed all Federal, income and other material tax returns that are required to be filed by it and has paid all Taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property, and, except as could not otherwise reasonably be expected to result in a Material Adverse Effect, all other Taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (in each case other than any Taxes, fees or charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves (to the extent required by GAAP) have been provided on the books of Parent, Holdings or its Subsidiaries, as the case may be, and those which, with respect to Taxes or other assessments on Real Properties, can be contested without payment under applicable law); to the knowledge of Parent, Holdings and the Borrower, no claim is being asserted with respect to any Tax that could reasonably be expected to result in a Lien, except claims that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.

 

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6.11.        Federal Regulations.  No part of the proceeds of any Loans will be used for “buying” or “carrying” any Margin Stock within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board.  If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

 

6.12.        Labor Matters.  Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:  (a) there are no strikes or other labor disputes against Holdings or any of its Subsidiaries pending or, to the knowledge of Holdings or the Borrower, threatened; (b) hours worked by and payment made to employees of Holdings and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from Holdings or any of its Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Holdings or the relevant Subsidiary.

 

6.13.        ERISA.  (a)  Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (i) no ERISA Event has occurred during the three-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied, and is in compliance, with its terms and the applicable provisions of ERISA and the Code; (ii) no termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Single Employer Plan has arisen, during such three-year period; (iii)  except as described in Schedule 6.13, the present value of all accrued benefit obligations of all underfunded Single Employer Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) does not exceed the value of the assets of all such underfunded Single Employer Plans; (iv) neither Parent, Holdings, nor any ERISA Affiliate would become subject to any Withdrawal Liability if Parent, Holdings, or any ERISA Affiliate were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made; and (v) none of Parent, Holdings, the Subsidiaries and the ERISA Affiliates has received any written notification that any Multiemployer Plan is Insolvent, in Reorganization, in “endangered” or “critical” status, or has been terminated (all within the meaning of Title IV of ERISA), or has knowledge that any Multiemployer Plan is reasonably expected to be Insolvent, in Reorganization, in “endangered” or “critical” status, or terminated.

 

(b)   With respect to each employee benefit arrangement mandated by non-U.S. law (a “Foreign Benefit Arrangement”) and with respect to each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) in each case maintained or contributed to by Parent, Holdings, the Subsidiaries or any ERISA Affiliate that is not subject to U.S. law (a “Foreign Plan”), except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (i) any employer and employer contributions required by applicable law or by the terms of such Foreign Benefit Arrangement or Foreign Plan to have been made by Parent or the Subsidiaries have been made, or, if applicable, accrued in accordance with normal accounting practices; (ii) the accrued benefit obligations of each Foreign Plan that is maintained solely by Parent, Holdings, Borrower, any of their respective Subsidiaries or any ERISA Affiliate (based on those assumptions used to fund such Foreign Plan) with

 

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respect to all current and former participants do not exceed the assets of such Foreign Plan; (iii) each Foreign Plan that is required to be registered by Parent or the Subsidiaries has been registered and has been maintained in good standing with applicable regulatory authorities; and (iv) each Foreign Benefit Arrangement and Foreign Plan that in each case is maintained solely by Parent, Holdings, Borrower, any of their respective Subsidiaries or any ERISA Affiliate is in compliance (A) with all applicable provisions of law and all applicable regulations and published interpretations thereunder with respect to such Foreign Plan or Foreign Benefit Arrangement and (B) with the terms of such plan.

 

6.14.        Investment Company Act; Other Regulations.  No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.  No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.

 

6.15.        Subsidiary Guarantors and Other Entities.  Schedule 6.15(a), as of the Closing Date, sets forth the name and jurisdiction of formation of Parent, Holdings, Borrower and each Subsidiary Guarantor and, as to each such entity, the percentage of each class of Capital Stock owned by any Loan Party, and, except as so disclosed, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than directors’ qualifying shares) of any nature relating to any Capital Stock of Holdings, the Borrower or any such Subsidiary of the Borrower, except as created by the Loan Documents.  Schedule 6.15(b), as of the Closing Date, sets forth the name and jurisdiction of formation of (i) each Excluded Foreign Subsidiary, (ii) each Inactive Subsidiary, (iii) each Immaterial Subsidiary, (iv) each Unrestricted Entity, (v) each entity that is included in the definition of Excluded Assets in the Guarantee and Collateral Agreement, (vi) each joint venture and (vii) each Subsidiary of Parent that is not a Subsidiary Guarantor hereunder, and for each such Person, sets forth which of the categories described in the foregoing clauses (i) through (vii) apply to such Person..

 

6.16.        Use of Proceeds.  The proceeds of the Tranche A Term Loans and the Tranche B Term Loans made on the Closing Date shall be used to repay the outstanding Indebtedness under the Existing Credit Agreement and to pay fees and expenses incurred in connection with the Transactions and the Related Transactions.  The proceeds of the Revolving Credit Loans, the Swing Line Loans, and the Letters of Credit, shall be used to finance the working capital needs and general corporate purposes of Parent, Holdings, the Borrower and its Subsidiaries.

 

6.17.        Environmental Matters.  Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a)   the Real Properties, and such other amusement parks, attractions or real properties operated solely by Parent or its Subsidiaries, or in respect of which Parent or any of its Subsidiaries would be liable as an owner or operator under any Environmental Law (collectively, together with the Real Properties, the “Operated Properties”), do not contain, and, to their knowledge, have not previously contained, any Hazardous Materials in amounts or concentrations or under circumstances that constitute a violation of, could

 

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reasonably be expected to give rise to liability under, or require remedial action pursuant to any Environmental Law;

 

(b)   neither Parent nor any of its Subsidiaries has received or is aware of any notice of violation or alleged violation (which has not been remediated and finally settled in accordance with Environmental Law) of, non-compliance with, or liability or potential liability under, Environmental Laws with regard to any of the Operated Properties or the business operated by Parent or any of its Subsidiaries (the “Business”), nor does Parent or the Borrower have knowledge that any such notice will be received or is being threatened;

 

(c)   Hazardous Materials have not been transported or disposed of from the Operated Properties by or on behalf of Parent, Borrower or their Subsidiaries in violation of, or in a manner or to a location that could reasonably be expected to give rise to liability under, any Environmental Law, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Operated Properties in violation of, or in a manner that could reasonably be expected to give rise to liability to Parent, the Borrower or any Subsidiary under, or require remedial action pursuant to, any applicable Environmental Law which have not been remediated and finally settled in accordance with Environmental Law;

 

(d)   no Environmental Claim is pending or, to the knowledge of Parent and the Borrower, threatened, to which Parent or any Subsidiary is or could reasonably be expected to be named as a party with respect to the Operated Properties or the Business, nor has Parent or any Subsidiary received written notice of any consent decrees or other decrees, consent orders, administrative orders or other orders, or other requirements of any Governmental Authority outstanding under any Environmental Law with respect to the Operated Properties or the Business;

 

(e)   there has been no Release or threatened Release of Hazardous Materials at or from the Operated Properties or arising from or related to the operations of Parent or any Subsidiary in connection with the Operated Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could reasonably be expected to give rise to liability under, or require remedial action pursuant to, Environmental Laws which have not been remediated and finally settled in accordance with Environmental Law;

 

(f)    the Operated Properties and the Business are in compliance, and have during the last five years been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about the Operated Properties nor any violation of any Environmental Law with respect to the Operated Properties or the Business, in each case that could reasonably be expected to give rise to liability of the Parent or its Subsidiaries under any Environmental Law; and

 

(g)   neither Parent nor any Subsidiary has assumed or retained any contractual liability of any other Person under Environmental Laws.

 

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This Section 6.17 sets forth the sole and exclusive representations and warranties of the Loan Parties with respect to environmental, health and safety matters, including with respect to Environmental Laws, Environmental Claims and Hazardous Materials.

 

6.18.        Accuracy of Information, Etc.  No financial statement or written information (other than projections, budgets, estimates, forward-looking information and information of a general industry or economic nature) contained in this Agreement or any other Loan Document, or furnished by or on behalf of any Loan Party in the Confidential Information Memorandum, or contained in any other document, certificate or financial statement furnished by or on behalf of any Loan Party to the Administrative Agent, the Lenders, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, when considered as a whole, contained as of the date such financial statement, written information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made not materially misleading.  The projections, budgets, estimates and forward-looking information contained in the materials referenced above were based upon good faith estimates and assumptions believed by the management of Holdings to be reasonable at the time made, it being recognized by the Lenders that such projections, estimates and forward-looking information as it relates to future events is not to be viewed as fact, and that actual results during the period or periods covered by such projections, estimates and forward-looking information may differ from the projected results set forth therein, and such differences may be material.  There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum or in any other documents, certificates and written financial statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.

 

6.19.        Security Documents.  (a) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable (except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability) security interest in the Collateral (other than the Mortgaged Properties) described therein and proceeds thereof.  In the case of the Pledged Stock and Pledged Notes described in the Guarantee and Collateral Agreement, when any certificates representing such Pledged Stock or promissory notes representing Pledged Notes, as applicable, are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement (excluding Collateral consisting of registered and applied for United States patents, trademarks and copyrights), when financing statements in appropriate form are filed in the offices specified on Schedule 6.19(a) -1 (which financing statements have been duly completed and delivered to the Administrative Agent), when deposit account control agreements have been executed by the Administrative Agent, the account holder and the relevant depository institution, and such other filings or agreements as are specified on Schedule 3 to the Guarantee and Collateral Agreement (all documentation in respect of which other filings have been or will have been duly completed and executed and delivered to the Administrative Agent on or prior to the Closing Date except as otherwise set forth on Schedule 8.10 hereto), the Guarantee and Collateral Agreement shall constitute a perfected Lien on, and security interest in,

 

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all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations, in each case prior and superior in right to any other Person (except (i) in the case of Collateral other than Pledged Stock, Permitted Liens and (ii) in the case of Collateral consisting of Pledged Stock, (x) only those Permitted Liens that are nonconsensual or (y) Liens securing pari passu secured Refinancing Notes, pari passu secured Refinancing Term Facilities, pari passu secured Replacement Revolving Facilities, pari passu Incremental Term Facilities, pari passu secured Incremental Revolving Facilities or pari passu secured Indebtedness under Section 9.3(c)).  In the case of Collateral consisting of registered and applied for United States patents, trademarks or copyrights, to the extent required by applicable Federal law, filings made at the United States Patent and Trademark Office and the United States Copyright Office shall perfect the Lien and security interest created under the Guarantee and Collateral Agreement in all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof (subject to the limitations and requirements set forth in the Guarantee and Collateral Agreement) as security for the Obligations, in each case prior and superior in right to any other Person (subject to Permitted Liens).  Schedule 6.19(a)-2 lists each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will remain on file after the Closing Date.  Schedule 6.19(a) -3 lists each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will be terminated on or prior to the Closing Date; and on or prior to the Closing Date, the Borrower will have delivered to the Administrative Agent, or caused to be filed, duly completed UCC termination statements, authorized by the relevant secured party, in respect of each UCC Financing Statement listed in Schedule 6.19(a) -3.

 

(b)   Each of the Mortgages, when filed (or which have been filed) in the offices specified on Schedule 6.19(b), will be in form sufficient to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable (except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability) Lien on the Mortgaged Properties described therein and proceeds thereof; and shall upon due filing constitute a first priority perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties described therein and the proceeds thereof, as security for the Obligations, in each case prior and superior in right to any other Person (other than Persons holding Permitted Liens or other encumbrances or rights permitted hereunder or by the relevant Mortgage).

 

6.20.        Solvency.  Parent and its Subsidiaries (taken as a whole) are, and after giving effect to the Transactions and the incurrence of all Indebtedness and Obligations being incurred in connection herewith and therewith will be Solvent.

 

6.21.        Regulation H.  Except as set forth on Schedule 6.21, no Mortgage shall encumber improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has not been made available under the National Flood Insurance Act of 1968.

 

6.22.        Parks.  Set forth on Schedule 6.22 is a complete and correct list of all of the amusement and attraction parks owned or leased, and currently operated (the “Existing Parks”), by Parent or its Subsidiaries as of the Closing Date.

 

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6.23.        OFAC.  None of the Parent, Holdings, Borrower or any Subsidiary of any of the foregoing: (i) is a Sanctioned Person, (ii) has more than 10% of its assets in Sanctioned Entities, or (iii) derives more than 10% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  The proceeds of any Loan will not be used and have not been used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

 

SECTION 7.  CONDITIONS PRECEDENT

 

7.1.          Conditions Precedent to Initial Borrowing.  The agreement of each Lender to make the initial extension of credit requested to be made by it hereunder is subject to the satisfaction or waiver, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent (the making of the initial extensions of credit shall be deemed to be the satisfaction or waiver of all of the conditions precedent in this Section 7.1):

 

(a)   Loan Documents.  The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of Parent, Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement, executed and delivered by a duly authorized officer of Parent, Holdings, the Borrower and each Subsidiary Guarantor, (iii) Mortgages, executed and delivered by a duly authorized officer of each party thereto, (iv) a Lender Addendum, executed and delivered by a duly authorized officer of each party thereto, (v) for the account of each relevant Lender that so requests at least two Business Days in advance of the Closing Date, Notes conforming to the requirements hereof and executed and delivered by a duly authorized officer of the Borrower, (vi) the duly authorized, executed and delivered intercompany subordinated note substantially in the form set forth as Exhibit N hereto and (vii) each of the other Security Documents (including but not limited to Intellectual Property security agreements and deposit account control agreements) to be delivered as of the Closing Date.

 

(b)   Time Warner-Related Matters.  The Administrative Agent shall be satisfied (i) that either (x) no consent of Time Warner, Warner Bros. Entertainment Inc. (as assignee of Time Warner Entertainment Company, L.P.) or any of their respective affiliates is required in connection with the execution, delivery and performance of this Agreement and the other Loan Documents and the payment in full of all loans under and cancellation of all commitments under the Existing Credit Facility or (y) if any such consent is required in the reasonable discretion of the Administrative Agent, or if the Borrower otherwise determines that such consent is necessary or desirable, then such consent has been obtained to the reasonable satisfaction of the Administrative Agent and (ii) that the level of secured indebtedness permitted under the Subordinated Indemnity Agreement has been increased to a level to be mutually agreed that is reasonably satisfactory to the Administrative Agent.

 

(c)   Solvency Certificate.  The Administrative Agent shall have received a solvency certificate from the chief financial officer of the Parent substantially in the form of Exhibit D.

 

(d)   Pro Forma Balance Sheet; Pro Forma Compliance Certificate; Financial Statements; Financial Covenant Compliance.  The Lenders shall have received and be satisfied

 

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with in their reasonable discretion: (i) the Pro Forma Balance Sheet and the Pro Forma Compliance Certificate and (ii) the audited consolidated financial statements described in Section 6.1(a).  The Pro Forma Compliance Certificate shall show a Senior Secured Leverage Ratio of not more than 4.25 to 1.00 and a Consolidated Interest Coverage Ratio of not less than 2.25 to 1.00.

 

(e)   Approvals.  All material Governmental Authority and third party approvals necessary to be obtained by Holdings or any of its Subsidiaries in connection with the transactions contemplated hereby shall have been obtained and be in full force and effect.

 

(f)    Related Agreements.  The Administrative Agent shall have received (in a form reasonably satisfactory to the Administrative Agent) true and correct copies, certified as to authenticity by Parent or Holdings, of the Partnership Parks Agreements, the Shared Services Agreement, the Tax Sharing Agreement and such other documents or instruments as may be reasonably requested by the Administrative Agent, including, without limitation, a copy of any other debt instrument, security agreement or other material contract to which the Loan Parties and Parent may be a party; provided that any agreement, document, instrument or contract posted on Intralinks, SyndTrak, DataSite or a substantially similar electronic transmission (each, a “Platform”) will be deemed to have been provided, and certified as to its authenticity, by Parent and/or Holdings.

 

(g)   Payment of Existing Indebtedness; No Material Indebtedness.  The Administrative Agent shall have received evidence satisfactory to the Administrative Agent that all amounts outstanding under the Existing Credit Agreement and the Existing Time Warner Facility shall have been paid in full in cash, all commitments relating to the foregoing shall have been terminated and all liens and security interests related thereto shall have been terminated or released.  After giving effect to the repayments and refinancing of Indebtedness of the Loan Parties that shall occur on the Closing Date, (i) the Loan Parties shall have no material Indebtedness other than under the Loan Documents, the Partnership Parks Agreements and certain existing Indebtedness (including certain existing intercompany indebtedness) permitted by Section 9.3 and (ii) the Partnership Parks Entities shall have no material Indebtedness other than the Partnership Parks Revolving Agreements and certain existing Indebtedness (including certain existing intercompany indebtedness) permitted by Section 9.3.

 

(h)   Fees.  The Lenders, the Administrative Agent and the Arranger shall have received all fees required to be paid, and all expenses for which invoices have been presented (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent), on or before the Closing Date.  All such amounts will be paid with cash on hand of Parent and its Subsidiaries or with proceeds of Loans made on the Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Closing Date.

 

(i)    Business Plan.  The Lenders shall have received a satisfactory business plan for fiscal years 2012 through 2015 (and the Borrower shall have demonstrated projected minimum Liquidity of at least $60,000,000 at all times under such business plan), including on a monthly basis through December 31, 2012.

 

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(j)    Lien Searches.  The Administrative Agent shall have received the results of recent Uniform Commercial Code and other lien searches in each relevant domestic jurisdiction with respect to all Property of the Loan Parties (except that with respect to the Real Property, such lien searches shall be limited to the Mortgaged Properties), and such search shall reveal no Liens on any of the Property of the Loan Parties, except for Permitted Liens or Liens to be discharged prior to or at the Closing Date.

 

(k)   Closing Certificates.  The Administrative Agent shall have received the following certificates, each dated the Closing Date, in form and substance reasonably satisfactory to it:  (i) a certificate duly executed by either the chief executive officer or the chief financial officer of the Borrower certifying as to the satisfaction of certain conditions precedent specified therein and (ii) a certificate duly executed by a Responsible Officer, the secretary or the assistant secretary of each Loan Party with appropriate insertions and attachments.

 

(l)    Legal Opinions.  The Administrative Agent shall have received the following executed legal opinions:

 

(i)            the legal opinion of Kirkland & Ellis LLP, special counsel to Parent, Holdings and its Subsidiaries, in form and substance reasonably satisfactory to the Administrative Agent;

 

(ii)           the legal opinions of local counsel in each of the jurisdictions where a Mortgaged Property is located, in form and substance reasonably satisfactory to the Administrative Agent; and

 

(iii)          the legal opinions of local counsel with respect to each Subsidiary Guarantor not covered in the legal opinions referred to above in clauses (i) and (ii) of this Section 7.1(l), in form and substance reasonably satisfactory to the Administrative Agent.

 

Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

 

(m)  Pledged Stock; Stock Powers; Acknowledgment and Consent; Pledged Notes.  The Administrative Agent shall have received (i) if certificated, the certificates representing the Capital Stock pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof, (ii) such Acknowledgments and Consents, substantially in the form of Annex II to the Guarantee and Collateral Agreement, duly executed by certain issuers of Capital Stock to the extent required pursuant to the Guarantee and Collateral Agreement and (iii) each promissory note, if any, pledged and required to be delivered pursuant to the Guarantee and Collateral Agreement endorsed in blank (or accompanied by an executed transfer form in blank satisfactory to the Administrative Agent) by the pledgor thereof.

 

(n)   Filings, Registrations and Recordings.  Each document (including, without limitation, any Uniform Commercial Code financing statement and Uniform Commercial Code termination statement) required by the Security Documents or under any Requirement of Law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to

 

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create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein (including without limitation filings in respect of Intellectual Property), prior and superior in right to any other Person (other than with respect to Permitted Liens), shall have been filed, registered or recorded or shall have been delivered to the Administrative Agent in proper form for filing, registration or recordation.

 

(o)   Mortgages, etc.

 

(i)           The Administrative Agent shall have received a Mortgage with respect to each Mortgaged Property, executed and delivered by a duly authorized officer of each party thereto and duly acknowledged, and otherwise in form for recording or filing in the recording or filing office of the applicable governmental subdivision where such Mortgaged Property is located, together with (i) such other certificates, affidavits, questionnaires or returns as shall be required under any applicable laws in connection with the recording or filing thereof to create a mortgage Lien under applicable laws, and (ii) such financing statements and any other instruments necessary pursuant to applicable laws to grant a mortgage Lien under the laws of the jurisdiction where the applicable Mortgaged Property is located, all of which shall be in form and substance reasonably satisfactory to the Administrative Agent.

 

(ii)          The Administrative Agent shall have received evidence reasonably satisfactory to the Administrative Agent that each Mortgaged Property is in compliance with all applicable zoning requirements (including, without limitation, a zoning report and a zoning consultant’s report reasonably satisfactory to the Administrative Agent).

 

(iii)          The Administrative Agent shall have received, and the title insurance company issuing the policies or binders referred to in clause (iv) below (the “Title Insurance Company”) shall have received, the most recent available existing surveys or maps of the Parks and all portions of the Mortgaged Properties material to the Business, which surveys shall be (x) sufficient to enable the Title Insurance Company to remove the standard survey exception from (or to issue a survey deletion endorsement to) the title insurance policy or binder in respect of each Mortgaged Property and (y) otherwise reasonably acceptable to the Administrative Agent.

 

(iv)          The Administrative Agent shall have received in respect of each Mortgaged Property a mortgagee’s title insurance policy (or policies) or marked up unconditional binder for such insurance, together with such endorsements as the Administrative Agent shall reasonably request (including, without limitation, a “tie-in” or “cluster” endorsement, if applicable and available under applicable laws), in each case in form and substance, and in an amount, reasonably satisfactory to the Administrative Agent, together with such affidavits, certificates, information (including financial data) and instruments of indemnification as shall be required to induce the applicable Title Insurance Company to issue the title insurance policy or policies and endorsements as contemplated above.  The Administrative Agent shall have received evidence satisfactory to it that all premiums in respect of each such policy and all related expenses (including, without limitation, any filing, documentary, stamp, intangible and mortgage recording taxes, fees, charges, costs and expenses), if any, have been paid by Borrower.

 

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(v)           The Administrative Agent shall have received (A) a completed Flood Certificate with respect to each Mortgaged Property, which Flood Certificate shall be addressed to the Administrative Agent for the benefit of the Lenders, be completed by a company which has guaranteed the accuracy of the information contained therein and otherwise comply with the Flood Program; (B) with respect to any Mortgaged Property which is located in a Flood Zone and is located in a community that participates in the Flood Program, evidence that the Borrower has obtained a policy of flood insurance that is in compliance with all applicable regulations of the Flood Program and has a term ending not later than the maturity of the Indebtedness secured by such Mortgage and (C) if any Flood Certificate states that a Mortgaged Property is located in a Flood Zone, Borrower’s written acknowledgment that the Borrower has received the notice required pursuant to Section 208(e)(3) of Regulation H of the Board.

 

(vi)          The Administrative Agent shall have received a legible copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in clause (iv) above and a copy of all other material documents affecting the Mortgaged Properties.

 

(vii)         The Administrative Agent shall have received a collateral assignment of mortgage executed and delivered by a duly authorized officer of Stuart Amusement Company and duly acknowledged, in form and substance reasonably satisfactory to the Administrative Agent and otherwise in form for recording or filing in the recording or filing office of the applicable governmental subdivision where the applicable Real Property is located, with respect to each of (x) the mortgage from 1762 LLC in favor Stuart Amusement Company dated July 8, 1998 and (y) the mortgage from Jean W. Tarr and Laurie Ann Dehm, Trustees of the Tarr Family Trust in favor of Stuart Amusement Company dated September 4, 1998.

 

(p)   Insurance.  The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 8.4 that provide that the Administrative Agent is an additional insured or lender’s loss payee, together with endorsements to such insurance policies as may be reasonably requested by the Administrative Agent.

 

(q)   The U.S.A. PATRIOT Act.  No later than three Business Days prior to the Closing Date, to the extent requested in writing by the Administrative Agent at least five Business Days prior to the Closing Date, the Administrative Agent shall have received the documentation and other information as required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the U.S.A. PATRIOT Act.

 

(r)    Pro Forma Compliance.  The Loan Parties shall be in pro  forma compliance with the financial covenants set forth in Sections 9.1 and 9.2.

 

7.2.          Conditions to Each Extension of Credit.  The agreement of each Lender to make any extension of credit requested to be made by it hereunder on any date (including, without limitation, its initial extension of credit) is subject to the satisfaction of the following conditions precedent:

 

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(a)   Representations and Warranties.  Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date, provided, that, to the extent any such representation and warranty is already qualified by materiality or by reference to material adverse effect, such representation shall be true and correct in all respects.

 

(b)   No Default.  No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

 

Each borrowing by, and issuance of a Letter of Credit on behalf of, the Borrower hereunder shall constitute a representation and warranty by Parent, Holdings and the Borrower as of the date of such extension of credit that the conditions contained in this Section 7.2 have been satisfied or waived.

 

SECTION 8.  AFFIRMATIVE COVENANTS

 

Parent, Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (unless such Letter of Credit has been cash collateralized in full or a backstop letter of credit reasonably acceptable to the applicable Issuing Lender is in place) or any Loan or other Obligation (other than a contingent indemnification obligation) is owing to any Lender or any Agent hereunder, each of Parent, Holdings and the Borrower shall and shall cause each of their respective Subsidiaries to:

 

8.1.          Financial Statements and Other Information.  Deliver to the Administrative Agent for prompt distribution to each of the Lenders:

 

(a)   within 90 days after the end of each fiscal year of Parent, consolidated statements of operations, shareholders’ equity and cash flows of Parent and its Subsidiaries for such fiscal year and the related consolidated balance sheets of Parent and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of Parent and its Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP (it being agreed that such financial statements will be accompanied by a reconciliation statement to the operations of Borrower and its Subsidiaries) without a “going concern” or like qualification arising out of the scope of the audit (except relating to the financial statements for the fiscal year ending immediately prior to the stated termination date or maturity date of the relevant Facility, in each case to the extent solely related to such termination date or maturity date) or any

 

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other exception or qualification arising out of the scope of the audit (except relating solely to changes in accounting principles or practices reflecting changes in GAAP);

 

(b)   [Reserved];

 

(c)   within 90 days after the end of each fiscal year of each of Texas Flags, Ltd. and Six Flags Over Georgia II, L.P., consolidated statements of operations, partners’ equity and cash flows of each of Texas Flags, Ltd. and Six Flags Over Georgia II, L.P. and its Subsidiaries for such fiscal year and the related consolidated balance sheets of each of Texas Flags, Ltd. and Six Flags Over Georgia II, L.P. and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of each of Texas Flags, Ltd. and Six Flags Over Georgia II, L.P. and its Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP;

 

(d)   within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of Parent, interim condensed consolidated statements of operations, shareholders’ equity and cash flows of Parent and its Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheets of Parent and its Subsidiaries, as at the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding periods in the preceding fiscal year (except that, in the case of balance sheets, such comparison shall be to the last day of the prior fiscal year), accompanied by a reconciliation statement to the operations of Borrower and its Subsidiaries and a certificate of a Responsible Officer of Parent, which certificate shall state that such consolidated financial statements present fairly in all material respects the interim condensed consolidated financial condition and results of operations of Parent and its Subsidiaries, in each case in accordance with GAAP, consistently applied except as set forth therein, as at the end of, and for, such period (subject to normal year-end audit adjustments);

 

(e)   if any Unrestricted Entities are consolidated in the consolidated financial statements referenced in Section 8.1(a) or Section 8.1(d), simultaneously with the delivery of each set of consolidated financial statements referred to in such sections, the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of any Unrestricted Entities (if any) from such consolidated financial statements;

 

(f)    concurrently with any delivery of financial statements under clause (a) or (d) of this Section 8.1, a certificate of a Responsible Officer of Parent, (i) to the effect that no Default or Event of Default has occurred and is continuing (or, if any Default or Event of Default has occurred and is continuing, describing the same in reasonable detail and describing the action being taken or proposed to be taken with respect thereto), (ii) setting forth in reasonable detail the computations necessary to determine whether the Loan

 

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Parties were in compliance with Sections 9.1, 9.2, and 9.7 as of the end of the respective quarterly fiscal period or fiscal year, as applicable, (iii) setting forth the Restricted Payments made pursuant to Section 9.6(c)(i), (ii) and (iii), Section 9.6(e), Section 9.6(h), and 9.6(l), Investments made pursuant to Section 9.8(g) and 9.8(v)(i) and (ii), and prepayments made pursuant to Section 9.9(f) during the applicable quarterly fiscal period or fiscal year and including a description of such Restricted Payment, Investment or prepayment by category, and (iv) for any such certificate delivered with the financial statements under clause (a) of this Section 8.1, setting forth Excess Cash Flow for the last ended fiscal year and the Available Amount as of the date of such certificate, in each case with calculations in reasonable detail;

 

(g)   no later than 75 days after the end of each fiscal year of Parent, a detailed consolidated budget for the following fiscal year;

 

(h)   within 45 days after the end of each of the first three fiscal quarters of Parent and within 90 days after each fiscal year of Parent, a narrative discussion and analysis of the financial condition and results of operations of Parent and its Subsidiaries for such fiscal period and, if applicable, for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to the comparable periods of the previous year;

 

(i)    promptly upon their becoming publicly available, copies of all registration statements and regular periodic reports, if any, that Parent, Holdings or the Borrower shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered), exhibits to any registration statement and, if applicable, any registration statement on Form S-8);

 

(j)    promptly upon receipt thereof, copies of any final management letters (other than special letters) prepared by Parent’s independent public accountants with respect to the audit of the financial statements of Parent and its Subsidiaries;

 

(k)   within 15 Business Days after the end of each of the calendar months of June, July, August, September and October, a performance report in respect of the Parks detailing on a Park-by-Park basis attendance and revenue for the preceding calendar month and showing a comparison to budget, to the same period in the prior year and year-to-date in the prior year; and

 

(l)    from time to time such other information regarding the financial condition, operations, business or prospects of Parent or any of its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan to which Parent or the Subsidiaries are obligated to contribute and any material reports or other information required to be filed by Parent or the Subsidiaries under ERISA), or compliance with the terms of this Agreement, as any Lender or the Administrative Agent may reasonably request; provided however that in no event shall the requirements of this Section 8.1(l) require Parent, Holdings, Borrower or any Subsidiary to provide any document or information (A) that

 

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constitutes non-financial trade secrets or non-financial proprietary information, (B) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by law or any binding agreement (if entered into in good faith without the intent of limiting this Section 8.1(l)), (C) that is subject to attorney-client privilege or (D) to the extent such information is not reasonably available.

 

Notwithstanding the foregoing, the obligations in paragraphs (a), (d) and (h) of this Section 8.1 may be satisfied with respect to financial information of Parent and its Subsidiaries by furnishing Parent’s Form 10-K or 10-Q, as applicable, to the extent filed with the SEC.

 

Documents required to be delivered pursuant to Section 8.1(a), (d), (g), (h) or (i) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent posts such documents, or provides a link thereto on Parent’s website on the Internet; or (ii) on which such documents are posted on Parent’s or the Borrower’s behalf on a Platform; provided that (i) upon written request by the Administrative Agent, Parent or the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) Parent or the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 8.1(f) to the Administrative Agent.  Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.

 

8.2.          Notices of Material Events.  Furnish the following to the Administrative Agent in writing:

 

(a)   promptly after any Responsible Officer of Parent, Holdings or the Borrower has actual knowledge of facts that would give him or her reason to believe that any Default or Event of Default has occurred, notice of such Default or Event of Default;

 

(b)   as soon as any Responsible Officer of Parent, Holdings or the Borrower has actual knowledge of the facts that would give him or her reason to know of the occurrence thereof, prompt notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and of any material development in respect of such legal or other proceedings, affecting Parent or any of its Subsidiaries that, if adversely determined, could reasonably be expected to result in aggregate liabilities or damages in excess of $25,000,000 over available insurance or indemnification by creditworthy third parties that have not denied such insurance or indemnification;

 

(c)   (i) as soon as possible, and in any event within ten days after any Responsible Officer of Parent, Holdings or the Borrower has actual knowledge of facts that would

 

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give him or her reason to know that any ERISA Event has occurred or exists, notice of the occurrence of such ERISA Event (and as soon as practicable thereafter, a copy of any report or notice required to be filed with or given to the PBGC by Parent, Holdings or an ERISA Affiliate with respect to such ERISA Event), if such ERISA Event could reasonably be expected to result in aggregate liabilities in excess of $25,000,000 and (ii) promptly following receipt thereof, copies of any documents described in Sections 101(k) or 101(l) of ERISA that Parent, Holdings or any ERISA Affiliate has requested with respect to any Multiemployer Plan; provided, that if Parent, Holdings or any of the ERISA Affiliates have not requested such documents or notices from the administer or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, Parent, Holdings and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and Parent shall provide copies of such documents and notices to the Administrative Agent promptly after receipt thereof and further  provided that the rights granted to the Administrative Agent in this Section 8.2(c)(ii)  shall be exercised not more than once during a 12-month period;

 

(d)   as soon as possible, and in any event within five days prior to the incurrence by Parent of Indebtedness pursuant to any Indenture, notice of such incurrence (except as otherwise provided herein);

 

(e)   prompt notice after a Responsible Officer of Parent, Holdings or the Borrower has actual knowledge of the assertion of any Environmental Claim by any Person against, or with respect to the activities of, Parent or any of its Subsidiaries and notice of any alleged violation of or non-compliance with any Environmental Laws or any Environmental Permits other than any Environmental Claim or alleged violation that, if adversely determined, could not (either individually or in the aggregate) reasonably be expected to result in a Material Adverse Effect (after giving effect to available insurance or indemnification by creditworthy third parties); and

 

(f)    prompt notice after a Responsible Officer of Parent, Holdings or the Borrower has actual knowledge of any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section 8.2 shall be accompanied by a statement of a Responsible Officer of Parent or the Borrower setting forth in reasonable detail the facts and circumstances of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

8.3.          Existence, Inspection of Books and Records, Etc.

 

(a)   (i)  Preserve, renew and maintain in full force and effect its legal existence under the laws of the jurisdiction of its organization (other than with respect to Inactive Subsidiaries or Immaterial Subsidiaries) and (ii) take all reasonable action to maintain all rights, privileges (including its good standing), permits, licenses and franchises reasonably necessary in the normal conduct of its business, except (A) in the case of clause (ii) above, to the extent that

 

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failure to do so could not reasonably be expected to have a Material Adverse Effect or (B) in the case of clause (i) or (ii) above, pursuant to a transaction permitted by Section 9.5;

 

(b)   pay and discharge all Taxes imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such obligation, Tax, assessment, charge or levy (i) the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained to the extent required by GAAP; provided that, with respect to Taxes assessed against Real Properties, such Taxes can be contested without payment under applicable law or (ii) where the failure to pay or discharge such obligation, Tax, assessment, charge or levy would not reasonably be expected to result in a Material Adverse Effect;

 

(c)   maintain and preserve all of its Properties material to the conduct of the Business of Parent, Holdings and its Subsidiaries (taken as a whole) in good working order and condition (ordinary wear and tear, casualty and condemnation excepted), except for failures that could not reasonably be expected to result in a Material Adverse Effect;

 

(d)   keep adequate records and books of account, in which complete entries in all material respects will be made in accordance with GAAP; and

 

(e)   permit representatives of any Lender or the Administrative Agent, upon reasonable advance notice and during normal business hours, to examine, copy and make extracts from its books and records, to visit and inspect any of its Properties, and to discuss its business, finances, condition and affairs with its officers and independent accountants and the park presidents of its Parks, all to the extent reasonably requested by such Lender or the Administrative Agent (as the case may be); provided that (i) Borrower shall bear the expenses of the Administrative Agent in respect of the foregoing (x) not more than once per fiscal year in the absence of any continuing Event of Default and (y) during the continuance of an Event of Default, and (ii) excluding any such visits and inspections during the continuance of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 8.3(e).  The Administrative Agent and the Lenders shall give Parent the opportunity to participate in any discussions with Parent’s independent public accountants.  Notwithstanding anything to the contrary in this Section 8.3(e), none of Parent or any Subsidiary will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of (x) any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information or (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by law or any binding agreement (if entered into in good faith without the intent of limiting this Section 8.3(e)), (y) that is subject to attorney-client privilege or (z) such information is not reasonably available.

 

8.4.          Insurance.  Maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as Holdings and its Subsidiaries) as are customarily carried under similar circumstances by such other Persons. With

 

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respect to each Mortgaged Property, obtain flood insurance in such total amount as is required by Requirements of Law, if at any time the area in which any improvements located on any Mortgaged Property is designated a Flood Zone, and otherwise comply with the Flood Program.

 

8.5.          Compliance with Contractual Obligations and Requirements of Law.  Comply with Contractual Obligations and Requirements of Laws, unless failure to comply with such Contractual Obligations or Requirements of Law could not (either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect.

 

8.6.          Additional Collateral, Etc.  (a) With respect to any personal Property acquired after the Closing Date by Parent, Holdings, the Borrower or any of Parent’s Wholly Owned Subsidiaries (other than (v) any Unrestricted Entity, (w) any personal Property described in paragraph (c) of this Section, (x) any Property subject to a Lien permitted by Sections 9.4(b), (h), (i), (l), and (v), (y) any Property (including Capital Stock) acquired by an Excluded Foreign Subsidiary, an Unrestricted Entity or an Immaterial Subsidiary (in each case only if such acquisitions do not result in such Excluded Foreign Subsidiary, Unrestricted Entity or Immaterial Subsidiary no longer being an Excluded Foreign Subsidiary or an Immaterial Subsidiary or permitted to be continued as an Unrestricted Entity hereunder), or that is otherwise excluded from the definition of Collateral pursuant to the first proviso therein, and (z) any Property acquired after the date hereof to the extent that the creation of a security interest therein would be prohibited by a Requirement of Law or a Contractual Obligation binding on Parent, Holdings, the Borrower or any Subsidiary that is the owner of such Property (including pursuant to the Partnership Parks Agreements), provided that such Contractual Obligation existed at the time such Property was acquired and was not entered into in anticipation of such acquisition) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly, and in any event on or prior to 30 days after such acquisition (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as and to the extent required by the Guarantee and Collateral Agreement or as the Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such Property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such Property (subject to Permitted Liens), including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent.  Notwithstanding the foregoing, any Loan Party creating or acquiring Intellectual Property shall be required to take the actions required under the Guarantee and Collateral Agreement in respect of notifications to the Administrative Agent and filings in connection with such Intellectual Property.

 

(b)           With respect to any fee interest in any Real Property or leasehold interest in any Park, in each case having a value (together with improvements thereof) of at least $10,000,000, acquired after the Closing Date by any Loan Party (other than any such Real Property owned by an Excluded Foreign Subsidiary (if such acquisition does not result in such Excluded Foreign Subsidiary no longer being an Excluded Foreign Subsidiary hereunder), Properties subject to the Great Escape Agreements, Properties subject to the Partnership Parks Agreements or Properties subject to a Lien permitted by Sections 9.4(h), (l) or (v)), promptly,

 

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and in any event on or prior to 30 days after such acquisition (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver a first priority Mortgage (subject to Permitted Liens) in favor of the Administrative Agent, for the benefit of the Lenders, covering such Real Property, in form for recording or filing in the recording or filing office of the applicable governmental subdivision where such Mortgaged Property is situated, together with evidence that all filing, documentary, stamp, intangible and mortgage recording taxes, fees, charges, costs and expenses have been paid by Borrower, (ii) if reasonably requested by the Administrative Agent, provide the Administrative Agent with (x) a mortgagee title and extended coverage insurance policy insuring the first priority Lien of the Mortgage upon such Real Property in an amount at least equal to the fair market value of such Real Property (or such other amount as shall be reasonably acceptable to the Administrative Agent), together with (a) such endorsements as the Administrative Agent shall reasonably request and (b) evidence that all premiums in respect of such policy and all related expenses have been paid by Borrower, as well as a current or updated ALTA survey thereof, certified to the Administrative Agent and the applicable title insurance company and (y) any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent (provided, that the Loan Parties shall only be required to use commercially reasonable good faith efforts to obtain such consents and estoppels), (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions addressed to the Administrative Agent for the benefit of the Lenders relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent, (iv) deliver Flood Certificates with respect to any improved Mortgaged Property and evidence of flood insurance to the extent required by Section 7.1(o) and (v) otherwise take such actions and execute and/or deliver to the Administrative Agent such documents, agreements or instruments as the Administrative Agent shall reasonably require to confirm the validity, perfection and priority of the Liens of any such Mortgage (including, without limitation, the other documents, instruments, affidavits and certificates described in Section 7.1(o) in respect of such Mortgages).

 

(c)           With respect to any new Wholly Owned Subsidiary (other than an Excluded Foreign Subsidiary, an Unrestricted Entity, an Immaterial Subsidiary or an Inactive Subsidiary) created or acquired after the Closing Date (which, for the purposes of this paragraph, shall include any existing Wholly Owned Subsidiary that ceases to be an Excluded Foreign Subsidiary, an Immaterial Subsidiary or an Inactive Subsidiary or any Unrestricted Entity re-designated as a Subsidiary), by Parent or any of its Wholly Owned Subsidiaries, promptly, and in any event on or prior to 30 days after such creation or acquisition (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as and to the extent required by the Guarantee and Collateral Agreement or as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest (subject to Permitted Liens) in the Capital Stock of such new Wholly Owned Subsidiary that is owned by any Loan Party, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party and (iii) with respect to any such new Wholly Owned Subsidiary (other than any Unrestricted Entity, an Excluded Foreign Subsidiary, an Immaterial Subsidiary or an Inactive

 

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Subsidiary for so long as such Wholly Owned Subsidiary remains an Unrestricted Entity, an Excluded Foreign Subsidiary, an Immaterial Subsidiary or an Inactive Subsidiary), cause such new Wholly Owned Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest (subject to Permitted Liens) in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Wholly Owned Subsidiary, including, without limitation, the filing of Uniform Commercial Code financing statements, the filing of Intellectual Property security agreements, the execution of control agreements and the execution of counterparts to the intercompany note, in each case as may be required by the Guarantee and Collateral Agreement or as may be reasonably requested by the Administrative Agent and (iv) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(d)           With respect to any Wholly Owned Subsidiary (other than an Excluded Foreign Subsidiary, an Immaterial Subsidiary, an Inactive Subsidiary or an Unrestricted Entity) or Partnership Parks Entity that ceases to be contractually prohibited (and, in the case of any Partnership Parks Entity, ceases to be subject to any Requirement of Law (including any fiduciary or similar limitation applicable to the directors or managers thereof) effectively prohibiting it) from becoming a Subsidiary Guarantor or executing the Guarantee and Collateral Agreement or from having all or any portion of its Capital Stock from being pledged under the Guarantee and Collateral Agreement, promptly, and in any event on or prior to 30 days after such Wholly Owned Subsidiary or Partnership Parks Entity ceases to be prohibited from being a Subsidiary Guarantor (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver, or cause to be executed and delivered, to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest (subject to Permitted Liens) in the Capital Stock of such Person that is owned by Parent or any of its Wholly Owned Subsidiaries (other than an Excluded Foreign Subsidiary, an Immaterial Subsidiary, an Unrestricted Entity or an Inactive Subsidiary), (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Parent or such Wholly Owned Subsidiary, as the case may be, and (iii) if applicable, cause such Person (other than an Excluded Foreign Subsidiary, an Immaterial Subsidiary, an Inactive Subsidiary or an Unrestricted Entity) (A) to become a party to the Guarantee and Collateral Agreement and (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest (subject to Permitted Liens) in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Wholly Owned Subsidiary, including, without limitation, the filing of Uniform Commercial Code financing statements, the filing of Intellectual Property security agreements, the execution of control agreements and the execution of counterparts to the intercompany note, in each case as may be required by the Guarantee and Collateral Agreement or as may be reasonably requested by the Administrative Agent, and (iv) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions

 

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shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(e)           With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing Date by any Loan Party, promptly, and in any event on or prior to 30 days after such creation or acquisition (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable in order to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest (subject to Permitted Liens) in the Capital Stock of such new Excluded Foreign Subsidiary that is owned by such Loan Party, provided that in no event shall more than 65% of any Foreign Subsidiary Voting Stock be required to be so pledged and, provided  further, for the avoidance of doubt, that 100% of the total non-voting stock of any such Excluded Foreign Subsidiary shall be required to be so pledged, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Lien of the Administrative Agent thereon, and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

(f)            Notwithstanding the provisions of this Section, (i) Parent shall not be required to create, or to cause its Wholly Owned Subsidiaries to create, a security interest in the Capital Stock of any non-Wholly Owned Subsidiary acquired after the date hereof to the extent that and for so long as the creation of such a security interest would be prohibited by a Requirement of Law or a Contractual Obligation binding on Parent or the Wholly Owned Subsidiary that is the owner of such Capital Stock; provided, that (A) such Contractual Obligation either (x) was negotiated in good faith in an arm’s length transaction with a Person that is not an Affiliate of Parent or (y) existed at the time such Subsidiary was acquired and was not entered into in anticipation of such acquisition and (B) such prohibition shall be subject to applicable law (including Section 9-406, 9-407, 9-408 or 9-409 of the UCC or any successor provision thereto), (ii) the Partnership Parks Entities and their Property subject to the Partnership Parks Agreements, and the Capital Stock of GP Holdings, Inc. owned by Parent, and the Great Escape Agreements shall be expressly excluded from, and shall not be subject to, any provisions of this Section 8.6 so long as the creation of a security interest under, or the execution of, the Guarantee and Collateral Agreement is prohibited by a Contractual Obligation binding on the Partnership Parks Entities as in effect on the date hereof (subject to the proviso at the end of this clause (ii)) or, with respect to the Capital Stock of GP Holdings, Inc. owned by Parent, is prohibited by the Partnership Parks Agreements as in effect on the date hereof (subject to the proviso at the end of this clause (ii)); provided that the Parent and its Subsidiaries may, subject to Section 9.14(b), enter into amendments, restatements, supplements or other modifications to the Partnership Parks Agreements and replacement agreements having a substantially similar purpose to the Partnership Parks Agreements so long as, in each case, there is no adverse effect on the Lien purported to be created by the Security Documents in the assets of (x) Parent (other than with respect to the Capital Stock of GP Holdings, Inc.) and (y) Holdings, Borrower or any of their Subsidiaries and (iii) the Administrative Agent may, in its discretion, elect not to take a

 

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security interest or require any title insurance or similar item with respect to those assets as to which the Administrative Agent determines that the cost of obtaining such Lien is excessive in relation to the benefit to the Lenders of the security afforded thereby (with such election, if any, being advised to the Borrower in writing).

 

(g)           If, at any time, a Subsidiary is designated as an Unrestricted Entity in the manner permitted by this Agreement, Administrative Agent shall, upon the written request of the Borrower, release such Subsidiary from the Guarantee and Collateral Agreement and any other Security Documents to which such Subsidiary is a party and to the extent such Subsidiary’s Capital Stock was pledged as Collateral, such pledge shall be released and any certificates in respect thereof shall be returned to the applicable Loan Party reasonably promptly following such written request to the Administrative Agent (it being understood and agreed that the Administrative Agent shall be entitled in connection with any such request by Borrower to receive, upon the reasonable request of the Administrative Agent prior to the Administrative Agent executing and delivering such releases or returning any pledged Capital Stock certificates, a certificate of a Responsible Officer of the Borrower (i) stating that each of the conditions set forth in Section 9.17 have been satisfied and (ii) setting forth such calculations in connection with the foregoing as may be reasonably requested by the Administrative Agent).

 

(h)           If, at any time, a Subsidiary Guarantor becomes an Excluded Foreign Subsidiary following the adoption of an applicable Change in Law after the Closing Date as described in the definition of Excluded Foreign Subsidiary, the Administrative Agent shall, upon the written request of the Borrower, release such Subsidiary from the Guarantee and Collateral Agreement and any other Security Documents to which such Subsidiary is a party and to the extent such Subsidiary’s Capital Stock was pledged as Collateral, so much of such pledge as exceeds 65% of such Subsidiary’s outstanding stock entitled to vote (within the meaning of Section 1.956-2(c) of the Treasury Regulations) shall be released (provided that for the avoidance of doubt, 100% of the non-voting stock of such Subsidiary shall remain or become pledged) and any certificates in respect of the released portion thereof shall be returned to the applicable Loan Party reasonably promptly following such written request to the Administrative Agent (it being understood and agreed that the Administrative Agent shall be entitled in connection with any such request by Borrower to receive, upon the reasonable request of the Administrative Agent prior to the Administrative Agent executing and delivering such releases or returning any pledged Capital Stock certificates, a certificate of a Responsible Officer of the Borrower stating that such an applicable Change in Law has provided that the guarantee of a United States obligation by a FSHCO will have the same or similar consequences for purposes of Section 956 of the Code as a guarantee by a Foreign Subsidiary).

 

8.7.          Further Assurances.  From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates, opinions or documents, and take all such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other Property or assets hereafter acquired by Parent or any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto.  Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy

 

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pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, Parent will, or will cause the relevant Subsidiary to, execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lender may be required to obtain from Parent or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization.  If the Administrative Agent or the Required Lenders determine that they are required by any Requirement of Law to have appraisals prepared in respect of any Mortgaged Property, Borrower shall provide to the Administrative Agent appraisals that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA and are otherwise in form and substance reasonably satisfactory to the Administrative Agent.

 

8.8.          Environmental Laws.  Except to the extent that, in the aggregate, the failure to do so could not reasonably be expected to have a Material Adverse Effect:  (a) comply with, and take reasonable steps to ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and take reasonable steps to ensure compliance by all tenants and subtenants, if any, with, and obtain and comply with and maintain, any and all Environmental Permits, and (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions to the extent required under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.

 

8.9.          Ratings by S&P and Moody’s.  Use commercially reasonable efforts (a) to maintain a public corporate credit rating and a public facility rating (or the equivalents thereof) in respect of the Facilities by S&P and Moody’s until the Tranche B Maturity Date and (b) to assure that each such rating is updated or confirmed at least once per year so long as S&P and Moody’s are providing such yearly updates and confirmations in the ordinary course.

 

8.10.        Post-Closing Covenants.  Each of the Loan Parties shall satisfy the requirements set forth on Schedule 8.10 on or before the date specified for such requirement or such later date as may be determined by the Administrative Agent (or as may be extended by the Administrative Agent in its sole discretion).

 

8.11.        Hedging Agreements.  Not later than 90 days after the Closing Date, enter into and maintain at all times thereafter for a period of not less than two years, Hedging Agreements with Persons acceptable to the Administrative Agent, in an amount sufficient to cause at least 50% of the aggregate principal amount of outstanding (a) Term Loans and (b) Refinancing Notes, Indebtedness under Section 9.3(c) and 9.3(n) and like Indebtedness, in the aggregate, to be fixed rate Indebtedness or otherwise pursuant to arrangements reasonably satisfactory to the Administrative Agent.

 

SECTION 9.  NEGATIVE COVENANTS

 

Parent, Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (unless such Letter of Credit has been cash collateralized in full or a backstop letter of credit reasonably acceptable to the applicable Issuing Lender is in place) or any Loan or other Obligation (other

 

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than a contingent indemnification obligation) is owing to any Lender or any Agent hereunder, Parent, Holdings and the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

 

9.1.          Senior Secured Leverage Ratio.  Permit the Senior Secured Leverage Ratio as at the last day of any Measurement Period of the Borrower to exceed the ratio set forth opposite the applicable date:

 

	
Date
    	
 
    	
Senior Secured Leverage Ratio
    
	
From and including the Measurement Period ending on or about December   31, 2011 to and including the Measurement Period ending on or about March 31,   2013
    	
 
    	
4.25 to 1.00
    
	
From and including the Measurement Period ending on or about June 30,   2013 to and including the Measurement Period ending on or about September 30,   2014
    	
 
    	
4.00 to 1.00
    
	
The Measurement Period ending on or about December 31, 2014 and   thereafter
    	
 
    	
3.75 to 1.00
    

 

9.2.          Consolidated Interest Coverage Ratio.  Permit the Consolidated Interest Coverage Ratio as at the last day of any Measurement Period of the Borrower to be less than 2.25 to 1.00; provided that for the purpose of determining Consolidated Interest Coverage Ratio for the fiscal quarters ending March 31, 2012, June 30, 2012 and September 30, 2012, Consolidated Cash Interest Expense for the relevant period shall be deemed to equal Consolidated Cash Interest Expense for each such fiscal quarter (and, in the case of June 30, 2012 and September 30, 2012, respectively, each previous fiscal quarter commencing after the Closing Date) multiplied by 4, 2 and 4/3, respectively.

 

9.3.          Indebtedness.  Create, incur or suffer to exist any Indebtedness except:

 

(a)   Indebtedness of any Loan Party pursuant to any Loan Document or pursuant to the Refinancing Term Loans, any Replacement Revolving Facility or the Refinancing Notes;

 

(b)   Indebtedness of any Person outstanding on the date hereof and listed on Schedule 9.3(b), as the same may be modified or amended from time to time (subject to Section 9.14(b)), and any Indebtedness of such Person incurred to refinance, refund, replace or renew any such outstanding Indebtedness, provided that the principal amount (or accreted value, if applicable) of such refinancing, refunding, replacement or renewal of Indebtedness (or such Indebtedness as amended or modified) does not exceed the principal amount of the Indebtedness (or accreted value, if applicable) being so amended, modified, refinanced, refunded, replaced or renewed plus all interest capitalized in

 

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connection therewith, plus the Refinancing Expenses and any costs and premiums associated with such amending, modifying, refinancing, refunding, replacement or renewal;

 

(c)   Indebtedness of the Borrower in the form of notes issued pursuant to an indenture, note purchase agreement or other agreement, in lieu of the Incremental Term Loans pursuant to Section 2.4 and/or the increase in Revolving Credit Commitments pursuant to Section 3.3, in an amount not in excess of the Incremental Amount; provided that each of the following conditions is satisfied:  (i) before and after giving effect to the incurrence of such Indebtedness, the condition set forth in Section 7.2(b) shall be satisfied, (ii) such Indebtedness shall not mature, shall not have any scheduled amortization or payments of principal, and shall not be subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (except customary asset sale or change of control provisions), in each case prior to the Term Loans under any then outstanding Facility (and if such Indebtedness is secured on a junior lien basis, not secured or is subordinated to any of the Facilities in right of payment, such Indebtedness shall not mature, shall not have any scheduled amortization or payments of principal, and shall not be subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (except customary asset sale or change of control provisions), in each case earlier than 180 days after the Latest Maturity Date), (iii) on a Pro Forma Basis after giving effect to the incurrence of Indebtedness and the use of proceeds thereof, the Borrower is in compliance with the covenants set forth in Section 9.1 and Section 9.2 as of the latest Measurement Period, (iv) such Indebtedness does not contain any financial maintenance covenants in any way more restrictive than those set forth in this Agreement, (v) all other terms of such Indebtedness reflect market terms and conditions at the time of issuance and, other than in respect of original issue discount, fees and interest rates (and subject to clause (ii) above, maturity and amortization), shall be substantially identical to, or less favorable (taken as a whole) to, the lenders providing such Indebtedness than those applicable to the Term Loans of each then outstanding Facility, (vi) if secured, such Indebtedness is not secured by liens on the assets of Parent or any of its Subsidiaries, other than assets constituting Collateral, (vii) no Subsidiary is a guarantor with respect to such Indebtedness unless such Subsidiary is a Subsidiary Guarantor which is guaranteeing (or substantially concurrently with the issuance of such Indebtedness hereunder will guarantee) the Obligations, and any Unrestricted Entity is an unrestricted entity (or substantive equivalent) under such Indebtedness and (viii) (1) if secured on a pari passu basis with the other Obligations, all collateral therefor shall be secured by the Security Documents and the Loan Parties and the Administrative Agent shall have entered into such amendments to the Security Documents as may be reasonably requested by the Administrative Agent (which shall not require any consent from any Lender) to provide such Indebtedness with the benefit of the applicable Security Documents on a pari passu basis with the other Obligations, the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Pari Passu Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the trustee, agent, or collateral trustee for such Indebtedness shall have executed the Pari Passu Intercreditor Agreement if reasonably requested by the Administrative Agent and (2) if secured on a junior lien basis with the other Obligations, all collateral therefor shall be secured by collateral documentation that

 

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is substantially similar to the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), the Borrower shall have delivered such other documents, certificates and opinions of counsel (including the Junior Lien Intercreditor Agreement) in connection therewith as may be reasonably requested by the Administrative Agent and the trustee, agent, or collateral trustee for such Indebtedness shall have executed the Junior Lien Intercreditor Agreement if reasonably requested by the Administrative Agent;

 

(d)   (i) Indebtedness of any Loan Party to (A) any other Loan Party or (B) any Subsidiary of Parent (other than a Partnership Parks Entity) which is not a Loan Party and (ii) Guarantees by any Loan Party of obligations of any other Loan Party; provided that any intercompany Indebtedness incurred pursuant to clause (i)(A) above shall be evidenced by an intercompany note which shall be pledged to the Administrative Agent as, and to the extent required by, the Guarantee and Collateral Agreement substantially in the form of the Intercompany Subordinated Note attached hereto as Exhibit N or in such other form as may be reasonably satisfactory to the Administrative Agent; provided, further that any advance or loan made in respect of Indebtedness of Parent to Holdings, Borrower or any Subsidiary of Borrower, or in respect of Indebtedness of Holdings to Borrower or any Subsidiary of Borrower, shall be deemed to be a Restricted Payment for purposes of Section 9.6 and shall be permitted to the extent such Restricted Payment would have been permitted in compliance with Section 9.6;

 

(e)   Indebtedness of any Non-Guarantor Subsidiary (other than the Partnership Parks Entities) to Parent or to any other Subsidiary of Parent, and Guarantees by Parent or any Subsidiary of Parent (other than the Partnership Parks Entities) of Indebtedness of any such Non-Guarantor Subsidiary, in an aggregate amount outstanding for all such Indebtedness and Guarantees (without duplication), not exceeding $75,000,000 at any one time outstanding;

 

(f)    Indebtedness of any Non-Guarantor Subsidiary which is both a Wholly Owned Subsidiary and a Foreign Subsidiary (a “Wholly Owned Non-Guarantor Foreign Subsidiary”) to any other Wholly Owned Non-Guarantor Foreign Subsidiary, and Guarantees by any Wholly Owned Non-Guarantor Foreign Subsidiary of obligations of any other Wholly Owned Non-Guarantor Foreign Subsidiary;

 

(g)   (i) Indebtedness consisting of Purchase Money Indebtedness (including, for the avoidance of doubt, Indebtedness financing Investments permitted under Section 9.8 in connection with Permitted Acquisitions) and Capital Lease Obligations incurred after the date hereof in an aggregate principal amount not in excess of $150,000,000 at any one time outstanding and (ii) any Indebtedness incurred to refinance, refund, replace or renew the Indebtedness described in the foregoing clause (i), provided that the principal amount (or accreted value, if applicable) of such refinancing, refunding, replacement or renewal of Indebtedness does not exceed the principal amount of the Indebtedness (or accreted value, if applicable) being so refinanced, refunded, replaced or renewed plus all interest capitalized in connection therewith and the Refinancing Expenses;

 

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(h)   (i) Indebtedness of any Person outstanding on the date on which such Person becomes a Subsidiary of the Borrower (other than pursuant to the redesignation of an Unrestricted Entity) or is merged into or consolidated with or into the Borrower or any of its Subsidiaries in an aggregate principal amount not in excess of $150,000,000 at any one time outstanding; provided, that (A) such Indebtedness was not created in connection with, or in anticipation of, such acquisition and (B) the amount of such Indebtedness is not increased thereafter unless solely as a result of capitalization of interest or otherwise incurred under another subsection of this Section 9.3 substantially contemporaneously with such merger or consolidation, and (ii) any Indebtedness incurred to refinance the Indebtedness described in the foregoing clause (i), provided that the principal amount (or accreted value, if applicable) of such refinancing Indebtedness does not exceed the principal amount of the Indebtedness being so refinanced plus capitalized interest and any Refinancing Expenses associated therewith;

 

(i)    [Reserved];

 

(j)    Indebtedness representing deferred compensation to employees of Parent and its Subsidiaries incurred in the ordinary course of business;

 

(k)   Indebtedness incurred by Parent and its Subsidiaries in a Permitted Acquisition, any other Investment expressly permitted hereunder or any Disposition, in each case to the extent constituting (i) any indemnification, adjustment of purchase price, earn-out, non-compete, consulting, deferred compensation and similar obligations of Parent and its Subsidiaries incurred in connection therewith and (ii) obligations in respect of purchase price adjustments or similar adjustments incurred by Parent or its Subsidiaries under agreements governing Permitted Acquisitions, Investments permitted hereunder or Dispositions;

 

(l)    Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

 

(m)  obligations in respect of performance, bid, appeal, stay, customs and surety bonds, performance and completion guarantees, bank guarantees, bankers’ acceptances, including in respect of self-insurance, workers compensation claims or other Indebtedness with respect to reimbursement type obligations regarding workers compensation claims, deferred compensation, severance, pension and health and welfare retirement benefits or the equivalent thereof to current and former employees of Parent and its Subsidiaries and similar obligations provided by Parent or any of its Subsidiaries or obligations in respect of letters of credit related thereto, in each case, in the ordinary course of business, existing on the Closing Date or consistent with past practice;

 

(n)   (i) Subordinated Debt or unsecured Indebtedness of the Borrower or any of its Subsidiaries which are Loan Parties, to the extent that the Net Cash Proceeds thereof are used solely to prepay the Term Loans or to purchase Term Loans pursuant to an Auction as set forth in Section 5.19, and (ii) Subordinated Debt or unsecured Indebtedness of Parent or Holdings (and Guarantees of Parent or Holdings or any of its Subsidiaries of

 

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such Indebtedness) to the extent that the Net Cash Proceeds thereof are used solely to prepay the Term Loans, to finance a Permitted Acquisition, or to make an Investment otherwise permitted by Section 9.8(e)(ii), (n), (o), (v), (x) or (z), in each case, including the payment of related transaction fees and expenses, so long as with respect to clause (ii), if after giving Pro Forma Effect to the incurrence of such Indebtedness and the use of the Net Cash Proceeds thereof the Senior Secured Leverage Ratio would exceed 3.75 to 1.00 as of the relevant Measurement Period, at least the lesser of (I) 25% of the Net Cash Proceeds thereof and (II) an amount that when applied to prepay the Term Loans would result in the Senior Secured Leverage Ratio being equal to 3.75 to 1.00 on a Pro Forma Basis, are used to prepay the Term Loans, provided that, in the case of any Indebtedness incurred under either clause (i) or (ii) above, (v) after giving Pro Forma Effect to the incurrence of such Indebtedness and the use of the Net Cash Proceeds thereof, the Parent Consolidated Leverage Ratio shall not exceed 4.50 to 1.00 as of the relevant Measurement Period, and the Parent shall have delivered a certificate of a Responsible Officer evidencing same, (w) after giving effect to such Indebtedness and the use of the Net Cash Proceeds thereof, the Loan Parties shall be in compliance on a Pro Forma Basis with Sections 9.1 and 9.2 as of the relevant Measurement Period, (x) any such Indebtedness shall have a scheduled final maturity at least 180 days after the Latest Maturity Date and a weighted average life to maturity at least 180 days longer than the Latest Maturity Date, (y) the terms and conditions of such Indebtedness, taken as a whole, shall not be materially more restrictive on the Loan Parties than the terms and conditions contained herein, and in no event may such Indebtedness contain any financial covenants that are in any way more restrictive than those set forth in this Agreement and (z) no Subsidiary is a guarantor with respect to such Indebtedness unless such Subsidiary is a Subsidiary Guarantor which is guaranteeing the Obligations, and any Unrestricted Entity is an unrestricted entity (or substantive equivalent) under such Indebtedness;

 

(o)   other Indebtedness incurred by Parent or any of its Subsidiaries in an amount not to exceed $50,000,000 outstanding at any time;

 

(p)   [Reserved];

 

(q)   cash management obligations and other Indebtedness in respect of netting services, automatic clearinghouse arrangements, employees credit or purchase cards, overdraft protections and similar arrangements, in each case, in connection with deposit accounts or securities accounts;

 

(r)    Indebtedness of GP Holdings, Inc., SFT Holdings, Inc., Six Flags Over Texas, Inc., SFOG II, Inc. and/or the Partnership Parks Entities owed to Parent or to any Partnership Parks Entity that constitute “affiliate loans” or other Investments, in each case for the purpose of paying obligations described in Section 9.6(c)(i), (ii) and (iii) for purposes of the Partnership Parks Agreements;

 

(s)   Guarantees incurred in the ordinary course of business in respect of obligations to suppliers, advertisers, licensees or similar Persons that are not for borrowed money;

 

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(t)    other unsecured Indebtedness of the Partnership Parks Entities in an amount not to exceed $25,000,000 at any one time, and any Guarantees of the obligations thereunder to the extent such Guarantees are not provided by or recourse to a Loan Party; and

 

(u)   performance guarantees of Parent, Holdings, Borrower or its Subsidiaries entered into in the ordinary course of business primarily guaranteeing performance of Contractual Obligations of Holdings, Borrower or any of its Subsidiaries to a third party and not primarily for the purpose of guaranteeing payment of Indebtedness.

 

For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount (or accreted value, if applicable) of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, plus capitalized interest and any Refinancing Expenses associated therewith.

 

9.4.          Liens.  Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except the following (“Permitted Liens”):

 

(a)   Liens created pursuant to the Security Documents and, if not covered by the Security Documents, Liens in respect of any Incremental Amendment, Replacement Revolving Facility, Refinancing Notes or Refinancing Term Loans (subject to the limitations thereon);

 

(b)   Liens in existence on the date hereof and listed on Schedule 9.4(b) and any extension, modification, renewal or replacement thereof; provided that such extension, modification, renewal or replacement does not increase the outstanding principal amount of the Indebtedness secured thereby except by the amount of the Refinancing Expenses associated therewith; provided  further that any such Lien does not extend to any additional Property other than (x) after-acquired Property that is affixed or incorporated into the Property covered by such Lien and (y) proceeds and products thereof;

 

(c)   Liens imposed by any Governmental Authority for taxes, assessments and other charges or levies that are (i) not yet due, (ii) being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of Parent or the affected Subsidiaries, as the case may be, to the extent required by GAAP or, in the case of any Foreign Subsidiary, generally accepted accounting principles

 

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in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary or (iii) not otherwise required to be paid under Section 8.3(b);

 

(d)   carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, suppliers’, landlords’, brokers’ or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days (or if more than 30 days overdue, are unfiled (or if filed, have been discharged or stayed) and no other action has been taken to enforce such Lien) or that are being contested in good faith and by appropriate proceedings, and Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under clause (j) of Section 10;

 

(e)   Liens (other than any Liens imposed by ERISA or Code Section 412 or 430 or pursuant to any Environmental Law) not securing Indebtedness for borrowed money incurred or deposits made in the ordinary course of business, in each case in connection with workers’ compensation, unemployment insurance and other types of social security legislation and other similar obligations incurred in the ordinary course of business;

 

(f)    Liens securing obligations or deposits made in respect of the performance of bids, trade contracts, governmental contracts and leases (other than for Indebtedness for borrowed money including any precautionary Uniform Commercial Code financing statements filed by a lessor with respect to any equipment lease), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature (including those to secure health, safety and environmental obligations) incurred in the ordinary course of business;

 

(g)   easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto that, in the aggregate, do not interfere in any material respect with the ordinary conduct of the business of Parent or any of its Subsidiaries;

 

(h)   Liens securing Purchase Money Indebtedness or Capital Lease Obligations to the extent such Indebtedness is permitted to be incurred under Section 9.3(g); provided, that such Liens shall encumber only the Property (and after-acquired Property that is affixed or incorporated into such Property) and the proceeds and products thereof, that is the subject of such Purchase Money Indebtedness or Capital Lease Obligations; provided that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment by such lender;

 

(i)    Liens securing Indebtedness to the extent such Indebtedness is permitted under Section 9.3(h) and any extension, modification, renewal or replacement thereof; provided that such extension, modification, renewal or replacement does not increase the outstanding principal amount of the Indebtedness secured thereby except by the amount of the Refinancing Expenses associated therewith; provided, that such Liens shall encumber only the Property (and after-acquired Property that is affixed or incorporated

 

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into such Property) and the proceeds and products thereof that is the subject of such Indebtedness;

 

(j)    Liens pursuant to the Great Escape Agreements or pursuant to leases, concessions and similar arrangements, or other arrangements entered into in the ordinary course of business by Holdings and its Subsidiaries that could not reasonably be expected to have a Material Adverse Effect;

 

(k)   Liens in respect of the Escrow Account arising under the Subordinated Indemnity Escrow Agreement;

 

(l)    Liens on any asset of a Person existing at the time such Person becomes a Subsidiary (other than pursuant to the redesignation of an Unrestricted Entity) of the Borrower or is merged into or consolidated with or into the Borrower or any of its Subsidiaries and not created in contemplation of such event;

 

(m)  leases, licenses, subleases or sublicenses (including the provision of software under an open source license) granted to others in the ordinary course of business or in connection with an Investment permitted by Section 9.8 which do not (i) interfere in any material respect with the business of Holdings or any material Subsidiary, taken as a whole, or (ii) secure any Indebtedness;

 

(n)   Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

 

(o)   Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on the items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of law encumbering deposits or other funds maintained with a financial institution (including the right of set off) and which are within the general parameters customary in the banking industry;

 

(p)   Liens (i) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 9.8 to be applied against the purchase price for such Investment, (ii) consisting of an agreement to Dispose of any property in a Disposition permitted under Section 9.5, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien, and (iii) on securities that are the subject of repurchase agreements constituting Permitted Investments;

 

(q)   (i) any interest or title of a lessor or licensor under leases or licenses entered into by Parent or any of its Subsidiaries in the ordinary course of business and (ii) ground leases in respect of Real Property on which facilities owned or leased by Parent or any of its Subsidiaries are located;

 

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(r)    Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other financial institutions not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of Parent or any of its Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Parent and its Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of Parent or any of its Subsidiaries in the ordinary course of business;

 

(s)   Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Borrower or any of the Subsidiaries in the ordinary course of business;

 

(t)    Liens solely on any cash earnest money deposits made by Holdings or any of the Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

 

(u)   Liens arising from precautionary Uniform Commercial Code financing statement filings;

 

(v)   other Liens securing Indebtedness or other obligations in an aggregate principal amount at any time outstanding not to exceed $37,500,000; provided that the fair market value of the collateral securing such Indebtedness or obligations is not materially in excess of such amount;

 

(w)  Liens securing Indebtedness to the extent such Indebtedness is permitted under Sections 9.3(c) (subject to the limitations set forth therein), (l)(ii) and (q);

 

(x)    (i) Liens securing obligations described in Section 9.3(l)(i) so long as such Liens only apply to the insurance policies so financed and any payments thereunder and (ii) pledges and deposits in the ordinary course of business securing deductibles, self-insurance, co-payments (or insurance of similar obligations) or liabilities for reimbursement obligations of (including in respect of letters of credit or bank guarantees for the benefit of), insurance carriers providing property, casualty or liability insurance to any Loan Party;

 

(y)   required utility and similar deposits made in the ordinary course of business;

 

(z)    Liens on the Capital Stock of Unrestricted Entities; and

 

(aa) (i) Liens pursuant to the Partnership Parks Agreements or on limited partnership units owned by any of the Partnership Parks Entities and (ii) purchase options, call and similar rights of and restrictions for the benefit of a third party with respect to Capital Stock of a joint venture.

 

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9.5.          Prohibition of Fundamental Changes.

 

(a)   Mergers.  Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that:

 

(i)            Holdings or any Subsidiary of the Borrower may merge with or consolidate with or into (A) the Borrower (including a merger, the purpose of which is to reorganize the Borrower into a new jurisdiction), provided that (x) the Borrower shall be the continuing or surviving Person and (y) such merger does not result in the Borrower ceasing to be incorporated under the laws of the United States, any state thereof or the District of Columbia or (B) any one or more other Subsidiaries of the Borrower, provided that when any Subsidiary that is a Loan Party is merging with another Subsidiary of the Borrower, a Loan Party shall be the continuing or surviving Person;

 

(ii)           (A) any Subsidiary of Parent that is not a Loan Party may merge or consolidate with or into any other Subsidiary of Parent; provided that if such Subsidiary is a Loan Party, the Loan Party shall be the continuing or surviving Person and (B) any Immaterial Subsidiary of Parent may liquidate or dissolve or change its legal form if Parent determines in good faith that such action is in the best interests of Parent and its Subsidiaries and is not materially disadvantageous to the Lenders;

 

(iii)          any Subsidiary of the Borrower may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or another Subsidiary of the Borrower; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party or (B) to the extent constituting an Investment, such Investment must be a permitted Investment in accordance with Section 9.8 (other than Section 9.8(e)(i)) and any Indebtedness corresponding to such Investment must be permitted by Section 9.3;

 

(iv)          so long as no Default exists or would result therefrom, any Subsidiary of Parent (other than the Borrower, unless the Borrower is the continuing or surviving Person of such merger) may merge with any other Person (other than Parent or its Subsidiaries) in order to effect an Investment permitted pursuant to Sections 9.5(e) or 9.8 (other than Section 9.8(e)); and

 

(v)           so long as no Default exists or would result therefrom, a merger, dissolution, liquidation, consolidation (in each case not involving Parent or the Borrower) or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 9.5(c) (other than 9.5(c)(ix)) shall be permitted.

 

Notwithstanding the foregoing, Holdings may only merge or consolidate in accordance with the other provisions of this Section 9.5(a) if the security interest of the Administrative Agent on behalf of the Secured Parties (as defined in the Guarantee and Collateral Agreement) in the Capital Stock of the Borrower is not adversely affected.

 

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(b)   Restrictions on Acquisitions.  Acquire all or substantially all of the business or Property from, or all or substantially all of Capital Stock of, any Person except for (i) purchases of inventory and other Property to be sold or used in the ordinary course of business, (ii) Investments permitted under Sections 9.5(e) and 9.8 and Dispositions permitted under Section 9.5(c)(iii), and (iii) Capital Expenditures (to the extent the making of such Capital Expenditures will not result in a violation of any of the provisions of Section 9.7).

 

(c) Restrictions on Dispositions.  Consummate any Disposition other than (i) any Disposition of any inventory or other Property Disposed of in the ordinary course of business (including allowing any registrations or any applications for registration of any immaterial Intellectual Property rights to lapse or go abandoned in the ordinary course of business), (ii) sales of used, obsolete, surplus, uneconomic or worn out equipment or other Property not used or useful in the business of Parent and its Subsidiaries, provided that (x) in the judgment of Parent, the sale of such equipment or other Property will not result in more than a $2,000,000 reduction in the Borrower Consolidated Adjusted EBITDA for the four fiscal quarters following such sale from what it would otherwise have been and (y) to the extent the Net Cash Proceeds from any sale or disposition effected under this clause (ii), together with all other such sales under this clause (ii) in the same year of Parent, exceed $20,000,000 such excess shall be deemed to be an “Asset Sale” and subject to the provisions of Section 5.5(b) (subject to Section 5.11 and without giving effect to the $5,000,000 amount referred to in the definition of “Asset Sale”), (iii) any Disposition of any Property to the Borrower or any Subsidiary Guarantor, (iv) any Disposition of any Property (A) from a Loan Party to a Non-Guarantor Subsidiary of the Borrower, provided that the Disposition of such Property shall be deemed to constitute an Investment under Section 9.8, (B) from any Subsidiary of Parent (other than the Partnership Parks Entities) that is not a Loan Party to any other Subsidiary of Parent (other than the Partnership Parks Entities) that is not a Loan Party, or (C) from any Partnership Parks Entity to any other Partnership Parks Entity, (v) the sale (whether through a sale, swap or exchange) of any timeshare in any of the campground parks or pursuant to the Great Escape Agreements permitted under Section 9.5(e)(ii), (vi) the sale of other Property having a fair market value not to exceed $40,000,000 in the aggregate for any fiscal year of Parent, (vii) the sale of any Property, provided that with respect to any Dispositions pursuant to this clause (vii), (I) the fair market value of all Property sold in the aggregate shall not exceed the greater of (x) $250,000,000 or (y) 10% of consolidated total assets of Parent as of the end of the immediately preceding fiscal year, (II) such Dispositions shall be made for at least fair market value, as determined in good faith by the board of directors of Parent or the Borrower, and for at least 75% cash or cash equivalent consideration, (III) the requirements of Section 5.5(b) are complied with in connection therewith (subject to Section 5.11) and (IV) in connection with any such Disposition as to which the fair market value of the related Property is in excess of $20,000,000, individually or in the aggregate with other sales made substantially contemporaneously as part of the same transaction or series of transactions pursuant to this clause (vii), the Borrower shall be in compliance with Section 9.1 and Section 9.2 on a Pro Forma Basis as of the applicable Measurement Period; provided that in determining such compliance, the required Senior Secured Leverage Ratio shall be deemed to be 0.25 to 1.00 lower than the otherwise applicable Senior Secured Leverage Ratio, (viii) the sale of unused Real Property that is unimproved (except for parking lots) and that is adjacent to a Park, provided that with respect to all Dispositions permitted by this clause (viii), (A) such Dispositions shall be made for at least fair market value as determined in good faith by the board of directors of Parent or the Borrower, and for at least 75% cash or cash equivalent consideration, and (B) the requirements of Section 5.5(b)

 

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are complied with in connection therewith (subject to Section 5.11), (ix) Dispositions permitted by Sections 9.3(g), 9.4, 9.5(a) (other than Section 9.5(a)(v)), 9.6 and 9.8, (x) Dispositions in the ordinary course of business of Permitted Investments, (xi) leases, subleases, licenses or sublicenses (including the provision of software under an open source license), in each case in the ordinary course of business, and the termination thereof, which do not materially interfere with the business of Parent and its Subsidiaries, taken as a whole, (xii) Dispositions related to Recovery Events (without giving effect to the dollar threshold set forth in the definition thereof); provided that with respect to all Dispositions permitted by this clause (xii) the requirements of Section 5.5(b) (giving effect to the dollar threshold set forth in the definition of Recovery Event) are complied with in connection therewith (subject to Section 5.11), (xiii) Dispositions of Investments in joint ventures to the extent required by, or required to be made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements, (xiv) Dispositions of Property (other than Capital Stock of the Partnership Parks Entities) to the extent that (A) such Property is exchanged for credit against the purchase price of similar replacement Property or (B) the proceeds of such Disposition are promptly applied to the purchase price of such replacement property, (xv) Dispositions of accounts receivables in connection with the collection or compromise thereof, (xvi) Dispositions in the ordinary course of business consisting of the abandonment of Intellectual Property rights, which in the reasonable good faith determination of Parent or any of its Subsidiaries, are uneconomical, negligible, obsolete or otherwise not material in the conduct of its business, (xvii) Dispositions of non-core assets acquired in connection with a Permitted Acquisition, (xviii) Dispositions of the Capital Stock of Unrestricted Entities or any of their assets, (xix) any sale, lease, transfer or other Disposition of the property and assets set forth on Schedule 9.5(c) and (xx) the unwinding of any Hedging Agreement.

 

To the extent any Collateral is Disposed of as expressly permitted by this Section 9.5 to any Person other than a Loan Party, such Collateral shall be sold free and clear of the Liens created by the Loan Documents, subject to the provisions of Section 12.16 hereof.

 

(d)   Sale and Leaseback.  Enter into any transaction pursuant to which it shall convey, sell, transfer or otherwise dispose of any Property and, as part of the same transaction or series of transactions, rent or lease as lessee or similarly acquire the right to possession or use of, such Property, or other Property which it intends to use for the same purpose or purposes as such Property, to the extent such transaction gives rise to Indebtedness, unless any Indebtedness arising in connection with such transaction shall be permitted under Section 9.3(g).

 

(e)   Certain Permitted Transactions.  Notwithstanding the foregoing provisions of this Section 9.5:

 

(i)            Permitted Acquisitions.  The Borrower, any Subsidiary Guarantor or any Foreign Subsidiary may consummate an Acquisition after the date hereof (each, a “Permitted Acquisition”) so long as:

 

(A)  the Loan Parties shall be in compliance with Section 9.1 on a Pro Forma Basis after giving effect to such Permitted Acquisition as of the applicable Measurement Period and Parent shall have delivered to the Administrative Agent, at least five Business Days prior to the date of any such Permitted Acquisition, a certificate of a

 

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Responsible Officer of Parent setting forth computations in reasonable detail demonstrating satisfaction of the foregoing conditions as at the date of such certificate reflecting the terms of the transaction as of such date; provided  further that if prior to consummation of such Permitted Acquisition changes are made to the terms that would alter the computations previously delivered, Parent shall deliver a revised certificate demonstrating satisfaction of the foregoing conditions on the date of the consummation of such Permitted Acquisition;

 

(B)   such Permitted Acquisition (if by purchase of assets, merger or consolidation) shall be effected in such manner so that the acquired business, and the related assets (including, for the avoidance of doubt, in the case of a purchase of Capital Stock, the assets of the Person(s) whose Capital Stock is being directly or indirectly acquired), are owned either by the Borrower, a Subsidiary Guarantor or a Foreign Subsidiary and, if effected by merger or consolidation involving the Borrower, a Subsidiary Guarantor or a Foreign Subsidiary, then the Borrower, such Subsidiary Guarantor or such Foreign Subsidiary shall be the continuing or surviving entity and, if effected by merger or consolidation involving a Wholly Owned Subsidiary of the Borrower, a Wholly Owned Subsidiary shall be the continuing or surviving entity; provided, however, that with respect to any Permitted Acquisition effected in such manner so that the acquired business, and the related assets, are owned by a Foreign Subsidiary, such acquired business, and the related assets, shall be located outside of the United States of America;

 

(C)   the Borrower shall deliver to the Administrative Agent (which shall promptly forward copies thereof to each Lender) (i) as soon as possible and in any event no later than five days prior to the consummation of each such Permitted Acquisition (or, if executed, such earlier date as shall be five Business Days after the execution and delivery thereof), the most recent drafts of the respective agreements or instruments pursuant to which such Permitted Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements or instruments and all other material ancillary documents to be executed or delivered in connection therewith and (ii) promptly following request therefor (but in any event within three Business Days following such request), copies of such other information or documents (including, without limitation, environmental risk assessments) relating to such Permitted Acquisition as the Administrative Agent or the Required Lenders shall have reasonably requested (and which is available, or obtainable within such period by Parent with reasonable efforts);

 

(D)  to the extent applicable, the Borrower shall have complied with the provisions of Section 8.6 (as and when required by such Section), including, without limitation, to the extent not theretofore delivered, delivery to the Administrative Agent of (x) the certificates evidencing 100% of the Capital Stock (or, in the case of any new Excluded Foreign Subsidiary, 65% of the Foreign Subsidiary Voting Stock and 100% of the total non-voting stock of any such Excluded Foreign Subsidiary) of any new Subsidiary formed or acquired in connection with such Permitted Acquisition and that is not owned by an Excluded Foreign Subsidiary, accompanied by undated stock powers

 

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executed in blank, and (y) the agreements, instruments, opinions of counsel and other documents required under Section 8.6; and

 

(E)   immediately prior to such Permitted Acquisition and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.

 

(ii)           Other Dispositions.  The Borrower or any of its Subsidiaries may Dispose of (whether through a sale, swap or exchange) any timeshare or fractional interest in any of the campground parks or any assets or interests pursuant to the Great Escape Agreements.

 

9.6.          Restricted Payments.  Declare or make any Restricted Payment, except that:

 

(a)   each Subsidiary of Parent may make Restricted Payments to, or on behalf of or for the benefit of, Parent to enable Parent to pay out-of-pocket accounting fees, legal fees and other amounts incurred or owing by Parent in the ordinary course of business pursuant to the Shared Services Agreement;

 

(b)   each Subsidiary of Parent may make Restricted Payments to, or on behalf of or for the benefit of, Parent in respect of (i) income tax liabilities of Parent and its Subsidiaries in accordance with the Tax Sharing Agreement, (ii) value added tax, franchise taxes and similar Taxes to enable Parent to pay any such Taxes imposed on Parent on behalf or on account of its Subsidiaries and (iii) without duplication, any non-income Taxes imposed on Parent that are not attributable to assets or Subsidiaries owned by Parent other than the Borrower and its Subsidiaries; provided however that the sum of any such Restricted Payments made pursuant to clauses (ii) and (iii) of this Section 9.6(b) shall not exceed $1,000,000 for any taxable year of Parent;

 

(c)   so long as (x) at the time thereof and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, and (y) in the case of a Restricted Payment pursuant to any of clauses (iv) through (vii) below, the Loan Parties shall be in compliance with Sections 9.1 and 9.2 on a Pro Forma Basis after giving effect thereto as of the relevant Measurement Period, each of Holdings and the Borrower may make Restricted Payments in cash to enable Parent and its Subsidiaries to do the following, but in the case of clauses (i), (ii) and (iii), only to the extent such obligations cannot be met with cash flow available to Parent and its Subsidiaries from the Partnership Parks Entities or from Net Cash Flow from Partnership Parks:

 

(i)            to pay obligations of Parent or any of its Subsidiaries under the Partnership Parks Agreements; and

 

(ii)           to purchase limited partnership units under the Partnership Parks Agreements;

 

(iii)          to make Capital Expenditures for the Partnership Parks Entities, provided that the making of such Capital Expenditures does not violate Section 9.7;

 

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(iv)                              to move money to Parent to finance any Investment permitted to be made pursuant to Section 9.8 (other than Section 9.8(e)(i)); provided that (A) such Restricted Payment shall be made substantially concurrently with the closing or consummation of such Investment (or at future times as may be scheduled at the time of such closing or consummation to be made thereafter in connection therewith) and (B) Parent shall, immediately following the closing or consummation thereof, cause (1) all property acquired (whether assets or equity interests) to be contributed to the Borrower or a Loan Party (or a Person that will become a Loan Party upon receipt of such contribution) or (2) the merger (to the extent permitted in Section 9.5(a)) of the Person formed or acquired into the Borrower or a Loan Party in order to consummate such Permitted Acquisition, in each case, in accordance with the requirements of Section 8.6;

 

(v)                                 to make cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for equity interests of Parent; provided that any such cash payment shall not be for the purpose of evading the limitations set forth in this Section 9.6 (as determined in good faith by the board of directors or the managing board, as the case may be, of Parent (or any authorized committee thereof));

 

(vi)                              to pay fees and expenses (other than to Affiliates) related to any unsuccessful equity or debt offering permitted by this Agreement not in excess of $15,000,000 in the aggregate; and

 

(vii)                           to pay fees, costs and expenses related to the Transactions and the Related Transactions on the Closing Date;

 

(d)         to the extent constituting Restricted Payments, Parent and its Subsidiaries may enter into and consummate transactions expressly permitted by any provision of Section 9.5 (other than Section 9.5(c));

 

(e)          so long as no Default or Event of Default has occurred or is continuing or will occur or be continuing after giving effect thereto, (i) commencing on the Closing Date until December 31, 2012, Parent, Holdings and the Borrower may make Restricted Payments in cash, in an aggregate amount not exceeding $250,000,000, so long as Liquidity would not be less than $250,000,000 after giving pro  forma effect thereto and (ii) after December 31, 2012, Parent, Holdings and the Borrower may make Restricted Payments in an aggregate amount not exceeding the Available Amount, so long as Liquidity would not be less than $175,000,000 after giving pro  forma effect thereto; provided that in the case of each clause (i) or (ii), such Restricted Payment shall not be permitted unless the Senior Secured Leverage Ratio is less than the RP Trigger Ratio after giving Pro Forma Effect to the Restricted Payment as of the relevant Measurement Period;

 

(f)            Parent and its Subsidiaries may make Restricted Payments in the form of noncash repurchases of Capital Stock of Parent deemed to occur upon the exercise of stock options or warrants if such repurchased Capital Stock represents all or a portion of

 

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the exercise price of such options or warrants and cash payments of Taxes in connection therewith and cash payments in lieu of the issuance of fractional shares in connection with the exercise of such stock options or warrants;

 

(g)         Parent and its Subsidiaries may make (i) Restricted Payments of Capital Stock of an Unrestricted Entity, or (ii) Restricted Payments funded with dividends, sale proceeds or other distributions received from Unrestricted Entities;

 

(h)         Each of Holdings and the Borrower may make Restricted Payments in cash to enable Parent, and Parent may make Restricted Payments from RP Eligible Proceeds (A) in an aggregate amount not to exceed $200,000,000 and (B) relating to the sale of interests in Dick Clark pursuant to Section 9.5(c)(xix); provided that after giving Pro Forma Effect to (i) each Disposition which is the source of such RP Eligible Proceeds and (ii) the corresponding Restricted Payment, (A) the Senior Secured Leverage Ratio shall not exceed 3.50 (or in the case of RP Eligible Proceeds in respect of a Disposition under 9.5(c)(vii), 3.00 to 1.00)  to 1.00 as of the relevant Measurement Period and (B) the Borrower shall have minimum Liquidity of at least $150,000,000;

 

(i)             Each of Holdings and the Borrower may make Restricted Payments in cash in an aggregate amount not to exceed $25,000,000, to enable Parent to repurchase, retire or acquire for value equity interests of Parent from any future, present or former employee or director (or the estate, family members, spouse, successors, executors, administrator, heirs, legatees or distributees of the foregoing) of Parent or any of its Subsidiaries pursuant to any employee or director equity plan, employee or director stock option plan or any other employee or director benefit plan or any agreement (including any stock subscription or shareholder agreement) with any employee or director of Parent or any of its Subsidiaries;

 

(j)             Each of Holdings and the Borrower may make Restricted Payments in cash to enable Parent, and Parent may make Restricted Payments to executives of Parent when restricted Capital Stock of Parent vests (in lieu of payment of income tax by such executives);

 

(k)          so long as (x) no Default or Event of Default has occurred and is continuing and (y) the Loan Parties shall be in compliance with Sections 9.1 and 9.2 on a Pro Forma Basis after giving effect to such Restricted Payment as of the relevant Measurement Period, commencing on January 1, 2012, Parent, Holdings and the Borrower may make Restricted Payments in an aggregate amount up to $30,000,000;

 

(l)             so long as (x) no Default or Event of Default has occurred and is continuing and (y) the Loan Parties shall be in compliance with Sections 9.1 and 9.2 on Pro Forma Basis after giving effect to such Restricted Payment as of the relevant Measurement Period, commencing on January 1, 2013, Parent may make Restricted Payments in an aggregate amount up to Net Cash Flow from Partnership Parks; and

 

(m)       so long as (x) no Default or Event of Default has occurred and is continuing and (y) the Loan Parties shall be in compliance with Sections 9.1 and 9.2 on Pro Forma

 

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Basis after giving effect to such Restricted Payment as of the relevant Measurement Period, the Borrower may make Restricted Payments in an amount sufficient for the Parent or Holdings to make regularly scheduled payments of interest, fees, indemnities and expenses in accordance with the terms of Indebtedness incurred pursuant to Section 9.3(n)(ii) and to make AHYDO catch-up payments in respect of Indebtedness incurred pursuant to Section 9.3(n)(ii).

 

Nothing herein shall be deemed to prohibit the payment of Restricted Payments by any Subsidiary to its immediate parent company and each other owner of Capital Stock of such Subsidiary based on their relative ownership interests (provided however that Borrower and its Subsidiaries may not declare or pay any Restricted Payments to Holdings or Parent except as otherwise set forth in this Section 9.6).

 

9.7.                              Capital Expenditures.  Make any Capital Expenditure, except Capital Expenditures of Parent and its Subsidiaries not exceeding the Base Capital Expenditure Amount during any fiscal year of Parent; provided, that (i) any such amount referred to above, if not so expended in the fiscal year for which it is permitted may be carried over for expenditure in the next succeeding fiscal year and (ii) Capital Expenditures made during any fiscal year shall be deemed made, first, in respect of amounts carried over from the prior fiscal year pursuant to subclause (i) above and, second, in respect of amounts permitted for such fiscal year as provided above.  For purposes of the foregoing, the “Base Capital Expenditure Amount” shall be an amount equal to (x) $125,000,000 for any given fiscal year (for this purpose only, the period from the Closing Date through December 31, 2012 being considered one fiscal year) plus (y) in each case, with respect to each fiscal year in which an Acquisition is consummated and the immediately following fiscal year, an amount for each such fiscal year equal to 10% of the revenue (determined in accordance with GAAP) of the Person so acquired for the four fiscal quarters of such Person immediately preceding the date of such Acquisition plus (z), in each case, the Available Amount at such time.

 

9.8.                              Investments.  Make or permit to remain outstanding any Investments except:

 

(a)          Investments outstanding or contemplated on the date hereof and identified on Schedule 9.8(a) and any modification, replacement, renewal or extension thereof; provided that the amount of the original Investment increased except by the terms of such Investment or otherwise as permitted by this Section 9.8;

 

(b)         deposit accounts opened in the ordinary course of business;

 

(c)          Permitted Investments, and securities accounts opened in the ordinary course of business and to which Permitted Investments are credited;

 

(d)         Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;

 

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(e)          Investments consisting of (i) Indebtedness, Liens, fundamental changes and Restricted Payments or Capital Expenditures permitted under Sections 9.3 (other than Section 9.3(d) with respect to Parent), 9.4, 9.5 (other than Section 9.5(a)(iii)), 9.6 (other than Section 9.6(c)(iv)) and 9.7, respectively and (ii) Investments by the Borrower or any of its Subsidiaries in Intellectual Property assets and related assets so long as the fair market value of the Property that is invested does not exceed $100,000,000 in the aggregate, provided that in the case of any Investment that would be a Capital Expenditure such Investment shall be considered a Capital Expenditure for purposes of Section 9.7 and shall be disregarded for purposes of this Section 9.8;

 

(f)            (i) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of any Person or in settlement of delinquent obligations of, or other disputes with, any Person arising in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment, and (ii) the non-cash proceeds of any Disposition permitted by Section 9.5(c);

 

(g)         (i) loans and advances to Holdings or Parent (or any direct or indirect parent thereof) by any Subsidiary of Holdings or any Subsidiary of Parent, respectively, in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to Holdings or Parent in accordance with Section 9.6 (with any such loan or advance to be deemed to be a Restricted Payment for purposes of Section 9.6) and (ii) Investments by Parent in GP Holdings, Inc., SFT Holdings, Inc., Six Flags Over Texas, Inc., SFOG II, Inc. and/or the Partnership Parks Entities that will be used to make or constitute “affiliate loans” or other Investments for the purpose of paying obligations described in Section 9.6(c)(i), (ii) and (iii), in each case for purposes of the Partnership Parks Agreements, made substantially concurrently with and in an amount not in excess of (A) Restricted Payments made pursuant to Section 9.6(c)(i), (ii), and (iii) or (B) Indebtedness permitted to be incurred pursuant to Section 9.3(n)(ii) to the extent incurred to pay obligations described in Section 9.6(c)(i), (ii) or (iii);

 

(h)         advances of payroll payments to employees in the ordinary course of business;

 

(i)             [Reserved];

 

(j)             Investments held by a Subsidiary acquired after the Closing Date or of a corporation merged into the Borrower or merged or consolidated with a Subsidiary of the Borrower in accordance with Section 9.5 after the Closing Date to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

 

(k)          Investments by Parent or any of its Subsidiaries in assets that were Permitted Investments when such Investment was made;

 

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(l)             (i) asset purchases (including purchases of inventory, supplies and materials) and (ii) the licensing or contribution of Intellectual Property pursuant to joint marketing arrangements with other Persons, in each case in the ordinary course of business;

 

(m)       Guarantees by Parent or any of its Subsidiaries of leases (other than Capital Lease Obligations) or of other obligations of Subsidiaries that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

 

(n)         Investments in joint ventures (other than Investments of Intellectual Property) pursuant to which, among other things, Parent or any of its Subsidiaries is granted Intellectual Property rights for its Parks;

 

(o)         Investments constituting (i) contributions to the equity of HWP whether directly or through the joint venture contemplated by the Great Escape Agreements, (ii) contributions to such joint venture as contemplated by the Great Escape Agreements and additional Investments therein and (iii) Investments in a joint venture formed for the lease of property and construction of a time share hotel to be located in Lake George, New York; provided that the aggregate outstanding amount of all such Investments permitted by this clause (o), net of any amounts paid, repaid, returned, distributed or otherwise received in cash in respect of (and not in excess of the amount of) any such Investment, shall not exceed $10,000,000;

 

(p)         Investments by Parent and its Subsidiaries in Holdings and any Subsidiary Guarantor including Guarantees by Parent or any of its Subsidiaries of obligations of Parent, Holdings, the Borrower or any Subsidiary Guarantor;

 

(q)         Investments by Foreign Subsidiaries in Wholly Owned Subsidiaries which are Foreign Subsidiaries, including Guarantees by Foreign Subsidiaries of obligations of other Wholly Owned Subsidiaries which are Foreign Subsidiaries;

 

(r)            Hedging Agreements entered into in the normal course of business and consistent with industry practice and not for speculative purposes;

 

(s)          Investments received in connection with any Disposition permitted under Section 9.5 or any Disposition to which the Required Lenders shall have consented in accordance with Section 12.1;

 

(t)            any Acquisition permitted by Section 9.5(b) or 9.5(e);

 

(u)         Investments in an aggregate amount of up to but not exceeding $500,000 during any fiscal year in 229 East 79th Street Associates L.P.;

 

(v)         (i) so long as (a) no Default or Event of Default has occurred and is continuing, (b) the Senior Secured Leverage Ratio would be less than 3.50 to 1.00 after giving Pro Forma Effect to such Investment as of the relevant Measurement Period, and (c) the Loan Parties shall be in compliance with Sections 9.1 and 9.2 after giving Pro Forma Effect to such Investment as of the relevant Measurement Period, additional Investments in an aggregate amount up to the Available Amount at such time and (ii)

 

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other Investments in an aggregate amount at any one time outstanding, net of any amounts paid, repaid, returned, distributed or otherwise received in cash in respect of (and not in excess of the amount of) any such Investment, not to exceed $75,000,000 at any one time outstanding.

 

(w)       loans or advances to officers, directors, members of management, employees consultants and independent contractors of Parent or any of its Subsidiaries (i) in an aggregate amount (as to all such officers, directors, members of management, employees, consultants and independent contractors), net of any amounts paid, repaid, returned, distributed or otherwise received in cash in respect of (and not in excess of the amount of) any such Investment, up to $1,000,000 at any one time outstanding and (ii) in connection with such Person’s purchase of equity interests of Parent in an aggregate amount, net of any amounts paid, repaid, returned, distributed or otherwise received in cash in respect of (and not in excess of the amount of) any such Investment, not to exceed $1,000,000 at any time outstanding, determined without regard to any write-downs or write-offs of such loans or advances;

 

(x)           Investments consisting of the acquisition of additional interests in HWP and HWP Management, Inc.;

 

(y)         Investments in an aggregate amount, net of any amounts paid, repaid, returned, distributed or otherwise received in cash in respect of (and not in excess of the amount of) any such Investment, not to exceed $10,000,000 at any one time outstanding, made by a Subsidiary in or to the Partnership Parks Entities in the ordinary course of business and consistent with past practice;

 

(z)           (i) Investments by Parent or any Subsidiary in the Capital Stock of Unrestricted Entities solely in connection with Restricted Payments permitted under Section 9.6(g)(i), and (ii) Investments in Unrestricted Entities in an aggregate amount, net of any amounts paid, repaid, returned, distributed or otherwise received in cash in respect of (and not in excess of the amount of) any such Investment, at any time not to exceed $25,000,000; and

 

(aa)    Investments in cash or Permitted Investments in respect of the Escrow Account arising under the Subordinated Indemnity Escrow Agreement.

 

provided, that neither Parent nor any of its Subsidiaries shall make any Investment in any Partnership Parks Entity, any Unrestricted Entity or any Subsidiary of Parent that is not a Subsidiary Guarantor other than (A) pursuant to Section 9.8(a), 9.8(g)(ii), 9.8(l)(ii), 9.8(m), 9.8(n), 9.8(o), 9.8(q), 9.8(s), 9.8(t), 9.8(x), 9.8(y) and 9.8(z), (B) investments by a Partnership Parks Entity in any other Partnership Parks Entity, and (C) pursuant to Sections 9.8(e)(ii) and 9.8(v) provided that the only Person that may make Investments in the Partnership Parks Entities pursuant to such Sections is Parent.

 

For the avoidance of doubt, if an Investment would be permitted under any provision of this Section 9.8 (other than Section 9.8(t)) and as a Permitted Acquisition, such Investment need not

 

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satisfy the requirements otherwise applicable to Permitted Acquisitions unless such Investments are consummated in reliance on Section 9.8(t).

 

9.9.                              Prepayment of Certain Indebtedness.  Purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, or enter into any derivative transaction or similar transaction obligating Holdings or any of its Subsidiaries to make payments to any other Person as a result of a change in market value of, Indebtedness outstanding under any Indenture of Parent, Holdings, or (solely in the case of Indebtedness that is unsecured, that is subordinated in right of payment to the Obligations, or that is secured on a junior basis to the Obligations) any other Subsidiary of Parent (it being understood that the following shall be permitted, subject to compliance with any intercreditor or subordination agreement then in effect with the Lenders or any agent acting on behalf thereof): (a) payments of required payments of indemnities, expenses, fees and regularly scheduled principal and interest of Indebtedness of Parent and its Subsidiaries and payment at maturity shall be permitted, (b) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent or Holdings shall be permitted, with the Net Cash Proceeds of Indebtedness of Parent or Holdings, as the case may be (to the extent such Indebtedness constitutes a refinancing, refunding, replacement or renewal thereof plus all interest capitalized in connection therewith, any Refinancing Expenses and any costs and premiums associated with such refinancing, refunding, replacement or renewal) and is permitted pursuant to Section 9.3, to the extent not required to prepay any Loans or Facility pursuant to Section 5.5(a)), (c) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to a Loan Party, (d) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to Parent so long as immediately prior to and after giving effect thereto no Default or Event of Default shall have occurred and be continuing (it being agreed that in determining compliance with Section 9.6, any such payments shall be deemed to constitute Restricted Payments), (e) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to any Non-Guarantor Subsidiary so long as immediately prior to and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, (f) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent, Holdings or any other Subsidiary of Parent shall be permitted with the Available Amount at such time; provided that in the case of such a payment of Indebtedness of the Borrower or its Subsidiaries, no Default or Event of Default shall have occurred and be continuing immediately before and after such payment, (g) payments of regularly scheduled principal and interest of Indebtedness (or accreted value, if applicable) incurred pursuant to Sections 9.3(g), (h) and (k) to the extent that the assets securing such Indebtedness are Disposed of in compliance with Section 9.5(c), (h) exchange of any such Indebtedness for Qualified Capital Stock, (i) payments of senior unsecured Indebtedness of the Borrower or its Subsidiaries shall be permitted in an aggregate amount not to exceed $25,000,000; provided that no Default or Event of Default shall have occurred and be continuing immediately before and after such payment, (j) AHYDO catch-up payments in respect of such Indebtedness and (k) payments on that guarantee by Parent of the debt of HWP referenced in and pursuant to that certain Guaranty and Indemnity dated as of November 5, 2007 (as refinanced, refunded, replaced or renewed to the extent permitted by Section 9.3(b)) in an amount not in excess of the principal amount of such debt outstanding as of the Closing Date (plus accrued interest and premium, if any).

 

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9.10.                        Transactions with Affiliates.  Enter into any transaction with any Affiliate unless such transaction is upon fair and reasonable terms no less favorable to Parent, Holdings, the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.  Notwithstanding the foregoing, (i) any Affiliate who is an individual may serve as a director, officer or employee of Parent or any of its Subsidiaries and such Person may receive, and Parent and its Subsidiaries may engage in any transaction or series of transactions related to, reasonable compensation, severance, indemnities and reimbursement of reasonable expenses, including stock incentive and option plans and agreements relating thereto, (ii) Parent and its Subsidiaries may enter into transactions (other than extensions of credit by Parent or any of its Subsidiaries to an Affiliate) providing for the leasing of Property, the rendering or receipt of services or the purchase or sale of inventory and other Property in the ordinary course of business if the monetary or business consideration arising therefrom would be no less favorable (taken as a whole) in any material respect to Parent and its Subsidiaries as the monetary or business consideration that would obtain in a comparable transaction with a Person not an Affiliate, (iii) the Borrower or any of its Subsidiaries may make an Acquisition of assets of any Person which is an Affiliate solely by reason of such Person being controlled by Parent or any of its Subsidiaries and may make Investments in such Person, provided that such Acquisitions and Investments are (A) permitted under Section 9.5(e)(i) or 9.8 and (B) made upon fair and reasonable terms no less favorable (taken as a whole) to Parent or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (iv) Parent or any of its Subsidiaries may enter into any transaction required of it pursuant to (A) Section 9.8, (B) its agreement with Dick Clark, or (C) the Great Escape Agreements, (v) Parent and its Subsidiaries may be parties to and may perform their respective obligations under the Shared Services Agreement and the Tax Sharing Agreement, (vi) Parent or any of its Subsidiaries may perform their duties and obligations under the Partnership Parks Agreements and (vii) Parent or any of its Subsidiaries may enter into or consummate any transaction permitted for it by Sections 9.3(b), 9.3(c), 9.3(d), 9.3(e), 9.3(f), 9.3(i), 9.3(j), 9.3(k), 9.3(n), 9.3(o), 9.3(r), 9.3(t), 9.3(u), 9.4(j), 9.4(k), 9.4(l), 9.4(v), 9.5(a), 9.5(c)(iii), 9.5(c)(iv), 9.5(c)(v), 9.5(c)(ix), 9.5(c)(xi), 9.5(c)(xiv), 9.5(e)(ii), 9.6 (other than Section 9.6(d)), 9.8(a), 9.8(e), 9.8(f), 9.8(g), 9.8(h), 9.8(i), 9.8(j), 9.8(k), 9.8(l), 9.8(m), 9.8(n), 9.8(o), 9.8(p), 9.8(q), 9.8(s), 9.8(t), 9.8(u), 9.8(v), 9.8(w), 9.8(y) or 9.8(aa).

 

9.11.                        Changes in Fiscal Periods.  Permit the fiscal year of Parent, Holdings or the Borrower to end on a day other than December 31 or change Parent’s, Holdings’ or the Borrower’s method of determining fiscal quarters.

 

9.12.                        Certain Restrictions. Enter into, after the date hereof, any indenture, agreement, instrument or other arrangement that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the payment of Indebtedness owed by a Subsidiary to any Loan Party, the granting of Liens by any Loan Party for the benefit of Administrative Agent and the Lenders, the declaration or payment of dividends, the making of loans, advances or Investments or the sale, assignment, transfer or other disposition of Property to any Loan Party, other than any such prohibition or restraint (a) set forth in any agreement providing for the disposition of Property (so long as such prohibition or restraint relates only to the Property to be disposed of), (b) set forth in any of the Loan Documents or pursuant to the Refinancing Term Loans, any Incremental Amendment, any Replacement Revolving Facility or the Refinancing Notes, or any Indenture, or set forth in

 

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documentation evidencing Indebtedness pursuant to Section 9.3(c), (n) or (o) (in each case so long as such prohibition or restraint is not, in the good faith judgment of Parent, more restrictive than those required for comparable Indebtedness incurred by comparable entities, and so long as such prohibition or restraint is not more restrictive than the similar prohibition or restraint set forth in the Loan Documents), or any other document relating to any existing Indebtedness or any Indebtedness referred to in Section 9.3(b), 9.3(g) (solely to the extent relating to the Property subject to such Purchase Money Indebtedness or Capital Lease Obligation), 9.3(h) (solely to the extent relating to the Property subject to such Indebtedness) and 9.3(m) (and any comparable prohibitions or restraints in any document governing any Indebtedness incurred to refinance any of the foregoing, so long as such prohibitions or restraints are, in the good faith judgment of Parent, no more restrictive than those applicable to the Indebtedness being refinanced), (c) set forth in any Real Property lease agreement, licenses, joint venture agreements, contracts entered into in the ordinary course of business to the extent that such prohibition or restraint relates only to the Property which is the subject of such instrument and could not reasonably be expected to result in a Material Adverse Effect, (d) set forth in any instrument relating to a Permitted Lien, so long as such prohibitions or restraints relate only to the Property encumbered by such Permitted Lien and (e) set forth in any Contractual Obligation with respect to (i) negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 9.3(b), 9.3(g) and 9.3(h) but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness, (ii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest, and (iii) customary provisions restricting assignment or transfer of any agreement entered into in the ordinary course of business.  Notwithstanding the foregoing, the Parent and its Subsidiaries shall not enter into or permit to exist any contract, agreement or other arrangement that would prevent the Parent and its Subsidiaries from granting a Partnership Parks Lien to secure the Obligations, except for the Partnership Parks Agreements and replacement agreements having a substantially similar purpose to the Partnership Parks Agreements.

 

9.13.                        Lines of Business.  Engage to any substantial extent in any line or lines of business activity other than the business of owning and operating amusement and attraction parks, and businesses related, ancillary or complementary thereto and the businesses and activities related thereto more fully described on Schedule 9.13 attached hereto.

 

9.14.                        Modifications of Certain Documents.  Consent to any modification, supplement or waiver of:

 

(a)          its articles of incorporation or by-laws (or similar constituent documents) in any manner materially adverse to the Lenders; or

 

(b)         any provision of the Partnership Parks Agreements, the Partnership Parks Revolver Agreements, the Great Escape Agreements, the Tax Sharing Agreement or any agreement relating to any Permitted Acquisition or any lease of Real Property with respect to any Park if such modification, supplement or waiver would be materially adverse to the interests of the Lenders.

 

9.15.                        Limitation on Activities of Parent and Holdings.  (a)  In the case of Holdings, conduct, transact or otherwise engage in any business or operations other than those

 

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incidental to (i) its ownership of the Capital Stock of the Borrower and PP Data Services Inc., (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance), (iii) the performance of its obligations in the Loan Documents and the Partnership Parks Agreements, or (iv) not otherwise prohibited by the Loan Documents; provided that, notwithstanding anything herein to the contrary, Holdings may not (1) make any Acquisitions (except as expressly contemplated in Section 9.5(b)(ii) in connection with Investments permitted by clause (2) below only), (2) make any Investments except as expressly contemplated by Sections 9.8(a), (b), (c), (e)(i), (g), (h), (k), (m), (n), (o), (p), (r) (in connection with Indebtedness permitted under Section 9.3(n)(ii) only), (s), (t) (with respect to Section 9.5(b)(ii) in connection with Investments permitted by this clause (2) only), (u), (v), (w), (y), (z), and (aa), (3) create any Subsidiaries that are not Subsidiaries of Borrower or any of its Subsidiaries or (4) own any operating entity other than Borrower or act as an operating entity.

 

(b)         In the case of Parent, conduct, transact or otherwise engage in any business other than those incidental to (i) its ownership of the Capital Stock of its Subsidiaries and the parks subject to the Partnership Parks Agreements, (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance), (iii) its status as a publicly traded company or public filer or as a member of the consolidated group of Parent and its Subsidiaries (including the ability to participate in tax, accounting and other administrative matters or comply with laws relating thereto), (iv) the performance of its obligations in the Loan Documents and the Partnership Parks Agreements, (v) any public offering or other issuance of its Capital Stock or (vi) not otherwise prohibited by the Loan Documents; provided that, notwithstanding anything herein to the contrary, Parent may not (1) make any Acquisitions (except as expressly contemplated by Sections 9.5(b)(ii) in connection with Investments permitted by clause (2) below only, 9.5(b)(iii) in connection with the Partnership Parks Entities only), (2) make any Investments except as expressly contemplated by Sections 9.8(a), (b), (c), (d), (e)(i), (f)(i), (g), (h), (k), (l)(ii), (m), (n), (p), (r) (in connection with Indebtedness permitted under Section 9.3(n)(ii) only), (s), (t) (with respect to Sections 9.5(b)(ii) in connection with Investments permitted by this clause (2) only, 9.5(b)(iii) in connection with the Partnership Parks Entities only), (v), (w), (z), and (aa), (3) create any Subsidiaries that are not either Subsidiaries of the Borrower or the Partnership Parks Entities or (4) own any operating entity other than the Borrower and its Subsidiaries and the Partnership Parks Entities or act as an operating entity (provided that nothing in this Section 9.15(b) shall limit the ability of Parent to enter into sponsorship agreements, licensing agreements, management agreements, supply agreements or other similar agreements in the ordinary course of business).

 

9.16.                        Limitation on Hedging Agreements.  Enter into any Hedging Agreement other than Hedging Agreements entered into for the purpose of mitigating risks to which Parent and its Subsidiaries have actual exposure and not for speculative purposes, in respect of interest rates or foreign exchange rates; provided, that Parent and its Subsidiaries will not enter into any Hedging Agreement providing for payment by Parent or any Subsidiary of amounts based upon a floating interest rate in exchange for receipt by Parent or any Subsidiary of amounts based upon a fixed interest rate (each, a “Fixed-to-Floating Swap”) if, on the date of such Hedging Agreement and after giving effect thereto, the sum of (i) the aggregate notional principal amount covered by all such Fixed-to-Floating Swaps plus (ii) the aggregate principal amount of all then outstanding consolidated Indebtedness of Parent and its Subsidiaries (determined without duplication in accordance with GAAP) that as of such date bears interest at a floating rate (and is

 

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not effectively bearing interest at a fixed rate through a Hedging Agreement) would exceed 50% of then outstanding consolidated Indebtedness of Parent and its Subsidiaries (determined in accordance with GAAP).

 

9.17.                        Designation of Subsidiaries.  Designate (i) any Person as an Unrestricted Entity or (ii) any Unrestricted Entity as a Subsidiary of Parent, Holdings, Borrower or any of their respective Subsidiaries; except that Parent may at any time designate any Person (other than Parent, Holdings or Borrower) as an Unrestricted Entity or, to the extent otherwise meeting the definition of “Subsidiary,” any Unrestricted Entity as a Subsidiary of Parent, Holdings, Borrower or any of their respective Subsidiaries provided that at the time of such designation (and in the case of clause (c), (e), and (g) below, at all times thereafter):

 

(a)                                  immediately before and after such designation, no Default or Event of Default shall have occurred and be continuing or shall be caused thereby;

 

(b)                                 immediately after giving effect to such designation on a Pro Forma Basis, Borrower shall be in compliance with the covenants set forth in Section 9.1 and Section 9.2 as of the relevant Measurement Period;

 

(c)                                  with respect to any person to be designated as an Unrestricted Entity, (i) no Loan Party (other than the person to be designated or any Subsidiary thereof) has any direct or indirect obligation to subscribe for additional Capital Stock of the person to be designated or to maintain or preserve such person’s financial condition or to cause such person to achieve any specified levels of operating results (provided that for the avoidance of doubt, this clause (i) shall not prohibit arms-length services agreements between a Loan Party and an Unrestricted Entity) and (ii) such Unrestricted Entity shall not own any Capital Stock or Indebtedness of Parent or any of its Subsidiaries;

 

(d)                                 any designation of a person as an Unrestricted Entity shall be deemed an Investment under Section 9.8(v) or 9.8(z) (at the election of Parent) in an amount equal to the fair market value immediately prior to such designation of the aggregate interest of the Parent and its Subsidiaries in the person so designated;

 

(e)                                  upon the designation of any Unrestricted Entity as a Subsidiary in accordance with this Section 9.17, any outstanding Indebtedness or Liens of such Subsidiary must comply with Section 9.3 and Section 9.4, respectively, and the Parent and such Subsidiary shall comply with Section 8.6 with respect to such Subsidiary;

 

(f)                                    no person may be designated as an Unrestricted Entity more than once without the prior written consent of the Administrative Agent;

 

(g)                                 designate any Subsidiary that exists on the Closing Date as an Unrestricted Entity; and

 

(h)                                 designate any of the Partnership Parks Entities as an Unrestricted Entity.

 

Any such designation shall be evidenced by (i) providing notice to the Administrative Agent of the copy of the resolution of the Board of Directors of Borrower (or duly authorized

 

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committee thereof) giving effect to such designation and (ii) delivering to the Administrative Agent a certificate of a Responsible Officer of the Borrower certifying that such designation complies with the foregoing requirements.

 

SECTION 10.  EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a)          the Borrower shall default in the payment when due in accordance with the terms hereof of any principal of any Loan or Reimbursement Obligation, or shall default for five or more Business Days in the payment when due of any interest on any Loan or Reimbursement Obligation or any fee or any other amount payable by it hereunder or under any other Loan Document;

 

(b)         any representation, warranty or certification made or deemed made herein or in any other Loan Document (or in any modification or supplement hereto or thereto) by Parent or any Loan Party, or any certificate furnished to any Lender or the Administrative Agent pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect;

 

(c)          (i) Parent, Holdings or the Borrower shall default in the performance of any of its obligations under any of Section 8.2(a), Section 8.3(a) (with respect to Parent, Holdings or Borrower) or Section 9 of this Agreement or (ii) an “Event of Default” under and as defined in any Mortgage shall have occurred and be continuing;

 

(d)         any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (c) of this Section 10) or any other Loan Document and such failure shall continue unremedied for a period of 30 days after notice thereof to the Borrower by the Administrative Agent or any Lender (through the Administrative Agent);

 

(e)          any Loan Party shall default in the payment when due of any principal of or interest on any of its Indebtedness aggregating $25,000,000 or more or any Loan Party shall default in the payment when due of any amount aggregating $25,000,000 or more under any Hedging Agreement (in each case after the expiration of all applicable grace periods);

 

(f)            any event specified in any note, agreement, indenture or other document evidencing or relating to any Indebtedness aggregating $25,000,000 or more (other than Indebtedness under the Loan Documents) of any Loan Party shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity or any event specified in any Hedging Agreement shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit, termination or liquidation payment or payments aggregating $25,000,000 or more

 

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to become due, provided that this clause shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of Property securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness; provided further that such failure is unremedied and is not waived by the holders of such Indebtedness;

 

(g)         a proceeding or case shall be commenced, without the application or consent of Parent, Holdings, the Borrower or any Subsidiary, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of Parent, Holdings, the Borrower or such Subsidiary or of all or any substantial part of its Property, or (iii) similar relief in respect of Parent, Holdings, the Borrower or such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against Parent, Holdings, the Borrower or any Subsidiary shall be entered in an involuntary case under the Bankruptcy Code or any other applicable bankruptcy, insolvency or similar laws;

 

(h)         Parent, Holdings, the Borrower or any Subsidiary shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code or any other applicable bankruptcy, insolvency or similar laws, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or any other applicable bankruptcy, insolvency or similar laws or take any corporate action for the purpose of effecting any of the foregoing;

 

(i)             Parent, Holdings, the Borrower or any Subsidiary shall admit in writing its inability to pay its debts as such debts become due;

 

(j)             a final judgment or judgments for the payment of money of $25,000,000 or more in the aggregate (exclusive of judgment amounts to the extent covered by insurance or indemnification of creditworthy third parties that have not denied such insurance or indemnification) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against Parent, Holdings, the Borrower or any Subsidiary and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof, and Parent, Holdings, the Borrower or the relevant Subsidiary shall not, within such period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal;

 

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(k)          (i) an ERISA Event shall have occurred, (ii) a trustee shall be appointed by a United States district court to administer any Plan, (iii) the PBGC shall institute proceedings to terminate any Plan or Plans, (iv) Parent, Holdings, the Borrower, any Subsidiary or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred or will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable grounds for contesting such Withdrawal Liability or is not contesting such Withdrawal Liability in a timely and appropriate manner, or (v) Parent, Holdings, the Borrower, any Subsidiary or any ERISA Affiliate shall engage in any “prohibited transaction” as defined in Section 406 of ERISA or Section 4975 of the Code involving any Plan and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect;

 

(l)             any one or more of the following shall occur and be continuing:

 

(i)                                     any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934 (the “Exchange Act”), other than the Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the voting stock of Parent (for purposes of calculating the voting stock held by a group, the voting stock beneficially owned by a Permitted Holder shall be excluded to the extent such Permitted Holder is part of such group);

 

(ii)                                  during any period of two consecutive years (commencing immediately following the Closing Date), individuals who at the beginning of such period constituted the board of directors of Parent (together with any new directors whose election by such board of directors or whose nomination for election by Parent’s shareholders was approved by a vote of a majority of Parent’s directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of Parent’s directors then in office;

 

(iii)                               any change in control with respect to Parent (or similar event, however denominated) shall occur under and as defined in any Indenture or other agreement in respect of Indebtedness in an aggregate principal amount of at least $25,000,000 to which Parent or any of its Subsidiaries is a party;

 

(iv)                              Parent shall cease to own directly or indirectly 100% of the Capital Stock of the Borrower; or

 

(v)                                 Parent shall transfer its direct interest in GP Holdings Inc., a Delaware corporation, to any of its Subsidiaries.

 

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(m)       (i) any Security Document, after delivery thereof pursuant to Section 7.1 or 8.6, shall for any reason (other than pursuant to the terms hereof or thereof) cease to create a valid and perfected lien or any Loan Party shall so assert, with the priority required by the Security Documents (or other security purported to be created on the applicable Collateral) on and security interest in any material portion of the Collateral purported to be covered thereby, subject to Permitted Liens, except to the extent that any such loss of perfection or priority results from the failure of the Administrative Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Security Documents or (ii) the Guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party shall so assert;

 

(n)         (i) a “Default” under any of the Partnership Parks Agreements shall have occurred and be continuing that would permit either (A) SFOG II, Inc. to be removed as the general partner of Six Flags Over Georgia II, L.P., a Delaware limited partnership, or (B) Six Flags Over Texas, Inc. to be removed as the general partner of Texas Flags, Ltd., a Texas limited partnership, or (ii) a “Triggering Default” under the Subordinated Indemnity Agreement shall have occurred and be continuing; provided however that solely for purposes of this Section 10(n), “Default” shall mean an Overall Agreement Payment Default, a Partnership Minimum Amount Distribution Default, a Lease Payment Default or Another Material Default (in each case as defined under the applicable partnership park limited partnership agreement);

 

(o)         Parent or any of its Subsidiaries, including any Partnership Parks Entity, shall breach or otherwise default under any of its obligations under Section 6.1.18 of the Subordinated Indemnity Agreement (as in effect on the date hereof, without giving effect to any amendment, modification, or termination thereof, and without giving effect to any consent or waiver given by any party thereto in connection therewith).  For this purpose, the terms Georgia Acquisition Subsidiaries Guarantee, the Texas Acquisition Subsidiaries Guarantee, Capital Improvement Loan, and Acquisition Company Credit Agreement as used in such Section 6.1.18 shall mean such agreements and transactions as in effect on the date hereof.

 

then, and in any such event, (A) if such event is an Event of Default specified in clause (g) or (h) above, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, then, any or all of the following actions may be taken:  (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, exercise any remedy with respect to the Collateral provided for in any Security Document and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Revolving Credit Commitments to be terminated forthwith, whereupon the Revolving Credit Commitments shall immediately terminate, and declare the Loans hereunder (with accrued interest thereon) and all

 

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other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable.  In the case of all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit.  Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents.  After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto).

 

SECTION 11.  THE AGENTS

 

11.1.                        Appointment.  Each Lender hereby irrevocably designates and appoints the Agents as the agents of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent.

 

11.2.                        Delegation of Duties.  Each Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it in good faith with reasonable care.

 

11.3.                        Exculpatory Provisions.  Neither any Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its own gross negligence, bad faith or willful misconduct to the extent determined by a final and nonappealable decision of a court of competent jurisdiction) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity,

 

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effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder.  The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

 

11.4.                        Reliance by Agents.  Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex, electronic mail or teletype message, statement, order or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Loan Parties), independent accountants and other experts selected by such Agent.  The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 12.6 and all actions required by such Section in connection with such transfer shall have been taken.  Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) (including without limitation with respect to the determination of which Lenders, if any, are Defaulting Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

 

11.5.                        Notice of Default.  No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent shall have received notice from a Lender, Parent, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

 

11.6.                        Non-Reliance on Agents and Other Lenders.  Each Lender expressly acknowledges that neither any of the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or

 

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warranty by any Agent to any Lender.  Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their affiliates.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the Business, Property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

 

11.7.                        Indemnification.  To the extent of the amounts that the Borrower is required to pay or reimburse under this Agreement to the applicable Agent (and its Affiliates, directors, employees, agents and attorneys), in its capacity as such, but the Borrower fails to pay such amounts, the Lenders agree to indemnify each Agent (and its Affiliates, directors, employees, agents and attorneys) in its capacity as such (to the extent not reimbursed by Parent, Holdings or the Borrower and without limiting the obligation of Parent, Holdings or the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), for, and to save each Agent harmless from and against, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct.  The Administrative Agent shall have the right to deduct any amount owed to it by any Lender under this Section from any payment made by it to such Lender hereunder.  The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

 

11.8.                        Agent in Its Individual Capacity.  Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party

 

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as though such Agent were not an Agent.  With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

11.9.                        Successor Agents and Other Persons.  (a) The Administrative Agent may resign as Administrative Agent upon 10 Business Days’ notice to the Lenders and the Borrower.  If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 10(g), (h) or (i) with respect to Parent, Holdings or the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans.  If no successor agent has accepted appointment as Administrative Agent by the date that is 10 Business Days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.  After any retiring Agent’s resignation as Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.

 

(b)                                 Any Issuing Lender may resign at any time by giving 10 Business Days’ prior notice to the Administrative Agent, the Lenders and the Borrower.  After the resignation of an Issuing Lender hereunder, the retiring Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any existing Letter of Credit.  If Wells Fargo Bank, National Association resigns as an Issuing Lender and Wells Fargo Bank, National Association is at such time the Administrative Agent hereunder, then the consent of Wells Fargo Bank, National Association as Administrative Agent for the addition of a new Issuing Lender hereunder as set forth in clause (b) of the definition of “Issuing Lender” shall not be required.

 

(c)                                  The Swing Line Lender may resign at any time by giving 10 Business Days’ prior notice to the Administrative Agent, the Lenders and the Borrower.  After the resignation of the Swing Line Lender hereunder, the retiring Swing Line Lender shall remain a party hereto and shall continue to have all the rights and obligations of a Swing Line Lender under this Agreement and the other Loan Documents with respect to Swing Line Loans made by it prior to such resignation, but shall not be required to make any additional Swing Line Loans.  From and after the resignation of the Swing Line Lender, the Borrower may designate one of the Revolving Credit Lenders as the Swing Line Lender subject to the consent of such Revolving

 

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Credit Lender and notification to the Lenders, and such replacement Swing Line Lender shall have the rights and obligations of the Swing Line Lender hereunder with respect to Swing Line Loans made by such replacement Swing Line Lender.

 

11.10.                  Authorization to Release Liens and Guarantees.  The Administrative Agent is hereby irrevocably authorized by each of the Lenders to effect any release of Liens or guarantee obligations contemplated by Section 12.16.

 

11.11.                  The Arranger, Joint Bookrunners, Co-Syndication Agents and Co-Documentation Agents.  Neither the Arranger, nor the Joint Bookrunners, nor the Co-Syndication Agents, nor the Co-Documentation Agents, in their respective capacities as such, shall have any duties or responsibilities, and in their capacities as such, none of them shall incur any liability, under this Agreement and the other Loan Documents.

 

11.12.                  Withholding Taxes.  To the extent required by any Requirement of Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax.  If the U.S. Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, or if the Administrative Agent reasonably determines that a payment was made to a Lender pursuant to this Agreement without deduction of applicable withholding tax from such payment, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

 

11.13.                  Administrative Agent May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party or Subsidiary of any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

 

(a)                                  to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Lenders and the Agents (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Lenders and the Administrative Agent under Sections 4.3, 5.2 and 12.5) allowed in such judicial proceeding; and

 

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(b)                                 to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each Issuing Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agents and their agents and counsel, and any other amounts due the Agents under Sections 4.3, 5.2 and 12.5.

 

SECTION 12.  MISCELLANEOUS

 

12.1.                        Amendments and Waivers.  Neither this Agreement or any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 12.1.  The Required Lenders and each Loan Party party to the relevant Loan Document may, or (with the written consent of the Required Lenders) the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents (including amendments and restatements hereof or thereof) for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (ii) waive, on such terms and conditions as may be specified in the instrument of waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall:

 

(A)      in each case without the consent of each Lender directly affected thereby:

 

(1)  forgive the principal amount or extend the final scheduled date of maturity or termination of any Loan, Commitment or Reimbursement Obligation;

 

(2) extend the scheduled date or decrease the amount of any amortization payment in respect of any Loan (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Loans shall not constitute a postponement of any date scheduled for the payment of principal or interest);

 

(3)  reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof (it being understood that only the consent of the Required Lenders shall be necessary to amend the default rate of interest set forth in Section 5.8(c) or to waive any obligation of the Borrower to pay interest or letter of credit fees at such default rate);

 

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(4) increase the amount or extend the expiration date of any Commitment of any Lender (it being understood that a waiver of any condition precedent set forth in Section 7.2 or the waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender); or

 

(5) amend, modify or waive the application of the proceeds from any realization or recovery on the Collateral;

 

(B)        amend, modify or waive any provision of this Section or reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement, release all or substantially all of the Collateral, release Parent as a Guarantor or release all or substantially all of the aggregate value of the Guarantees of the Obligations, in each case without the consent of all Lenders (in each case, except as permitted by any Loan Document);

 

(C)        amend, modify or waive any provision of Section 11, or any other provision affecting any Agent or Arranger without the consent of such Agent or Arranger directly affected thereby;

 

(D)       amend, modify or waive any provision of Sections 3.3(b), 4.9, 4.10 or 5.20, without the written consent of the Swing Line Lender;

 

(E)         amend, modify or waive any provision of Section 5.11(a), (b) or (c) or Section 12.7(a) without the consent of each Lender directly affected thereby; and

 

(F)         amend, modify or waive any provision of Section 3.3(b), Section 4, 5.20 or 5.21(c) without the consent of the Issuing Lender;

 

Any such waiver and any such amendment, supplement or modification effected pursuant to the foregoing shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, Parent, the Lenders, the Administrative Agent and all future holders of the Loans.  In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.  Any such waiver, amendment, supplement or modification shall be effected by a written instrument signed by the parties required to sign pursuant to the foregoing provisions of this Section; provided, that delivery of an executed signature page of any such instrument by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

 

Notwithstanding anything to the contrary contained in this Section 12.1, (a) this Agreement and the other Loan Documents may be amended with the consent of the Administrative Agent, which consent it may withhold in its sole discretion or with respect to

 

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which consent the Administrative Agent may in its sole discretion seek the consent of the Required Lenders, at the reasonable request of the Borrower without the need to obtain the consent of any other Lender if such amendment is delivered in order to cure any ambiguity, conflict or defect in the Loan Documents, (b) in the event that the Borrower requests that this Agreement be modified or amended in a manner that would require the unanimous consent of all of the Lenders and such modification or amendment is agreed to by the Required Lenders, then with the consent of the Borrower and the Required Lenders, the Borrower and the Required Lenders shall be permitted to amend the Agreement without the consent of the Non-Consenting Lenders to provide for (i) the termination of the Commitment of each Non-Consenting Lender that are (w) Revolving Credit Lenders, (x) Tranche A Term Loan Lenders, (y) Tranche B Term Loan Lenders or (z) all three, at the election of the Borrower and the Required Lenders, (ii) the addition to this Agreement of one or more other financial institutions (each of which shall be a Lender, an affiliate of a Lender or an Approved Fund), or an increase in the Commitment of one or more of the Required Lenders (with the written consent thereof), so that the total Commitment after giving effect to such amendment shall be in the same amount as the total Commitment immediately before giving effect to such amendment, (iii) if any Loans are outstanding at the time of such amendment, the making of such additional Loans by such new financial institutions or Required Lender or Lenders, as the case may be, as may be necessary to repay in full, at par, the outstanding Loans of the Non-Consenting Lenders immediately before giving effect to such amendment (such par payment to include principal, interest, fees, any premiums required hereunder and other payment obligations owed to such Non-Consenting Lender to the extent such Non-Consenting Lender has, in good faith, advised the buyer of its Loans of the amount of the same in writing) together with and (iv) such other modifications to this Agreement as may be appropriate to effect the foregoing clauses (i), (ii) and (iii) and (c) this Agreement and the other Loan Documents may be amended (or amended and restated) without the consent of the Required Lenders (or any other Lender) as otherwise explicitly set forth herein (including to effect amendments (including amendments and restatements), supplements or other modifications to this Agreement and the other Loan Documents as may be necessary or appropriate to effect the provisions of Sections 2.4, 2.5, 3.3, 3.4 or 5.21).

 

12.2.                        Notices.  Unless otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy or electronic mail), and shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy, when sent and receipt has been confirmed by telephone or electronic mail, addressed (i) in the case of Parent, Holdings, the Borrower, the Administrative Agent and the Issuing Lenders as set forth below, (ii) in the case of the Lenders, as set forth in an administrative questionnaire delivered to the Administrative Agent or on Schedule I to the Lender Addendum to which such Lender is a party or, in the case of a Lender which becomes a party to this Agreement pursuant to an Assignment and Acceptance, in such Assignment and Acceptance or pursuant to such agreement pursuant to which such Lender becomes a party hereto (i.e., an Incremental Amendment) or (iii) in the case of any party, to such other address as such party may hereafter notify to the other parties hereto:

 

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Parent   or Holdings
    	
 
    	
c/o   Six Flags Operations Inc.

924   Avenue J East,

Grand   Prairie, Texas 75050

Attention:  Chief Financial Officer

Telecopy:  972-606-0275

Electronic   Mail: jmDuffey@sftp.com

Telephone:   972-595-5176
    
	
 
    	
 
    	
 
    
	
with   a copy to:
    	
 
    	
Six   Flags Operations Inc.

924   Avenue J East,

Grand   Prairie, Texas 75050

Attention:    General Counsel

Telecopy:    972-595-5175

Electronic   Mail: lBalk@sftp.com

Telephone:  972-595-5192
    
	
 
    	
 
    	
 
    
	
The   Borrower:
    	
 
    	
Six   Flags Theme Parks Inc.

c/o   Holdings, as set forth above
    
	
 
    	
 
    	
 
    
	
with   a copy to, with respect to Sections 5.13(e), 5.13(f), 12.6(b)(ii) and   12.6(c)(ii):

 
    	
 
    	
Andrews   Kurth LLP

450   Lexington Avenue

New   York, New York 10017

Attention:    Andrew Feiner

Telecopy:    212.813.8170

Electronic   Mail: andyfeiner@andrewskurth.com

Telephone:   212.850.2883
    
	
 
    	
 
    	
 
    
	
The   Administrative Agent:
    	
 
    	
Wells   Fargo Bank, National Association

MAC   D1109-019
   1525 West W.T. Harris Blvd.
   Charlotte, North Carolina 28262
   Attention:  Syndication Agency Services
   Telephone No.:  (704) 590-2703
   Facsimile No.:  (704) 590-3481
    
	
 
    	
 
    	
 
    
	
with   a copy to:                 
    	
 
    	
Wells   Fargo Bank, National Association

MAC   D1109-019

1525   West W.T. Harris Blvd.

Charlotte,   North Carolina 28262-8522

Attention:   Andrew Wullschleger

Telephone   No.: (704) 590-2912

Facsimile   No.: (704) 590-2790
    

 

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Issuing   Lender:
    	
 
    	
As   notified by such Issuing Lender to the Administrative Agent and the   Borrower
    

 

provided that any notice, request or demand to or upon the any Agent, the Issuing Lender or any Lender pursuant to Sections 2, 3 or 4, shall not be effective until received.  The attorneys for any party may, but shall not be required to, give any notice on behalf of their respective client.

 

12.3.                        No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

12.4.                        Survival of Representations and Warranties.  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

 

12.5.                        Payment of Expenses; Indemnification.  The Borrower agrees (a) to pay or reimburse the Administrative Agent and the Arranger for their reasonable and documented out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities (including the charges of any Platform) and the Administrative Agent in connection with development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents (whether or not such amendment, supplement or modification is completed) and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, all reasonable and documented out-of-pocket costs and expenses related to creating, perfecting or preserving any of the Liens contemplated hereby or by the other Loan Documents and all reasonable fees and disbursements and other charges of one primary counsel to the Administrative Agent (and one local counsel in each relevant jurisdiction (which, for the avoidance of doubt, may include each jurisdiction where a Mortgaged Property is located and, without duplication, each other jurisdiction where a Guarantor is organized)), (b) to pay or reimburse each Lender and the Administrative Agent for reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents (including in connection with any workout, restructuring or negotiations in respect thereof), including, without limitation, the reasonable and documented out-of-pocket fees and disbursements of one primary counsel to the Lenders and the Administrative Agent (taken as a whole), one local counsel in each relevant jurisdiction and, in the case of an actual or potential conflict of interest, one additional counsel in each relevant jurisdiction for similarly situated Lenders), (c) to pay, indemnify, or reimburse the Administrative Agent for, and hold the Administrative Agent harmless from, any and all Other Taxes and (d) to pay, indemnify or reimburse each Lender, each Agent, each Issuing Lender, the Swing Line Lender, the Arranger, their respective affiliates, and their respective officers, directors, trustees, employees, partners, representatives, advisors, agents and controlling persons (each, an “Indemnitee”) for, and hold

 

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each Indemnitee harmless from and against, any and all other liabilities, obligations, actual losses, damages, penalties, actions, judgments, suits and reasonable and documented out-of-pocket costs, expenses or disbursements of any kind or nature whatsoever with respect to the arrangement, syndication, execution, delivery, enforcement, performance or administration of this Agreement and any of the other Loan Documents, including, without limitation, any of the foregoing relating to the use of proceeds of the Loans or any Environmental Claim, or the violation of, noncompliance with or liability under, any Environmental Law, applicable to the operations of Parent or any of its Subsidiaries or any of the Properties and the reasonable and documented out-of-pocket fees and disbursements and other charges of legal counsel (limited to one primary counsel to the Indemnitees taken as a whole, one local counsel in each relevant jurisdiction and, in the case of an actual or potential conflict of interest, one additional counsel in each relevant jurisdiction for similarly situated Indemnitees) in connection with any of the foregoing or in connection with any claims, actions or proceedings commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto and whether or not such matter is initiated by or against Parent, Holdings, Borrower or any of their respective Affiliates in connection with any of the foregoing (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”), in each case, without regard to the exclusive or contributory negligence of any Indemnitee; provided, that the Borrower shall have no obligation hereunder to an Indemnitee with respect to Indemnified Liabilities to the extent (i) such Indemnified Liabilities are found by a court of competent jurisdiction in a final non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or of any director, officer, or employee of such Indemnitee, (ii) such Indemnified Liabilities are found by a court of competent jurisdiction in a final non-appealable judgment to have resulted from a material breach by such Indemnitee of such Indemnitee’s obligations hereunder, (iii) resulting from disputes solely among such Indemnitee and other Indemnitees (other than any claims (x) arising out of any act or omission of any Loan Party or any Affiliate of any Loan Party or (y) against any of the Arranger or any Agent or any Affiliate thereof acting in their capacity as Arranger or Agent) or (iv) settled by such Indemnitee without Parent’s and Borrower’s consent (provided, however, if at any time an Indemnitee shall have requested in accordance with this Agreement that you reimburse such Indemnitee for legal or other expenses in connection with investigating, responding to or defending any claim, action or proceeding, the Parent and the Borrower shall be liable, on a joint and several basis, for any settlement of any claim, action or proceeding effected without the written consent of the Parent and the Borrower if (x) such settlement is entered into more than 30 days after receipt by the Parent and the Borrower of such request for reimbursement and (y) Parent or Borrower shall not have reimbursed such Indemnitee in accordance with such request prior to the date of such settlement; provided further, that if any such claim, action or proceeding is settled with the written consent of Parent and Borrower, Parent and Borrower hereby agree, jointly and severally, to indemnify and hold harmless each Indemnitee from and against any and all actual Indemnified Liabilities by reason of such settlement in accordance herewith).  Without limiting the foregoing, and to the extent permitted by applicable law, Parent agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries so to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws (irrespective of the exclusive or contributory negligence of any Indemnitee), that any of them might have by statute or otherwise against any Indemnitee

 

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except to the extent such claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses are found by a court of competent jurisdiction in a final non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or of any director, officer, or employee of such Indemnitee.  This Section 12.5 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

To the fullest extent permitted by applicable law, each party hereto agrees that it shall not assert, and hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof (provided that the foregoing shall not in any event limit the indemnity and reimbursement obligations set forth in this Section 12.5 to the extent that any such indirect, consequential or punitive damages are included in any third party claim for which an Indemnitee is entitled to indemnification or reimbursement pursuant to this Section 12.5).  No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent such damages have resulted from such Indemnitee’s gross negligence, bad faith or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.

 

All amounts due under this Section shall be payable not later than 30 days after written demand therefor.  Statements for amounts payable by the Borrower pursuant to this Section shall be submitted to the attention of the Chief Financial Officer (Telephone No. 212-652-9384) (Fax No. 212-354-3089), at the address of the Borrower set forth in Section 12.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent.  The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder.

 

12.6.                        Successors and Assigns; Participations and Assignments.

 

(a)          The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of the Issuing Lender that issues any Letter of Credit), except that (i) Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

 

(b)         (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

 

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(A)      the Borrower, provided that (x) no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below), (y) no consent of the Borrower shall be required if an Event of Default under Section 10(a), (g), (h) or (i) has occurred and is continuing and (z) the Borrower shall be deemed to have consented to the relevant assignment if it has not objected to such assignment in writing to the Administrative Agent within ten Business Days after notice thereof;

 

(B)        the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Loan or Commitment to a Lender, an affiliate of a Lender or an Approved Fund; and

 

(C)        solely with respect to any assignment in respect of Revolving Credit Commitments, each Issuing Lender and the Swing Line Lender; provided that no consent of any Issuing Lender or the Swing Line Lender shall be required for an assignment of all or any portion of the Revolving Credit Commitments to another Revolving Credit Lender.

 

(ii)                                  Assignments shall be subject to the following additional conditions:

 

(A)      except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000  in the case of any Revolving Credit Commitments (or, in the case of the Term Loans, $1,000,000) unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default under Section 10(a), (g), (h) or (i) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

 

(B)        (1) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (payable among the Lenders party to the Assignment and Acceptance to the Administrative Agent; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment) and any documents required by Section 5.13 to the extent not already delivered, (2) the assigning Lender shall have paid in full any amounts owing by it to the Administrative Agent and (3) the Administrative Agent shall have recorded such transfer in the Register;

 

(C)        the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its Affiliates and their related

 

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parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws; and

 

(D)       the Assignee shall not be (x) a natural person or (y) Parent or any Subsidiary of Parent; provided that the Borrower may be an Assignee in connection with an Auction.

 

For the purposes of this Section 12.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.

 

(iii)                               Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Acceptance the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 5.12, 5.13, 5.14 and 12.5).  An Assignee shall not be entitled to the benefits of Section 5.13 unless such Assignee complies with Section 5.13(e).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

 

(iv)                              The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of and interest on the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”) and shall make such Register available for inspection by the Borrower from time to time upon reasonable prior notice.  Without in any way limiting each Lender’s ability to sell participations as set forth in Section 12.6(c), the right and title to a Loan or L/C Obligation may be transferred only upon proper notation in the Register.  The entries in the Register shall be conclusive, in the absence of manifest error and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection from time to time upon reasonable prior notice to the Administrative Agent by (i) the Borrower and (ii) any Lender (but only to the extent of entries in the Register that are applicable to such Lender).  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under this Agreement (the

 

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“Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Loans or its other obligations under this Agreement) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(v)                                 Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(c)          (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (C) the Borrower, the Administrative Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (D) the Participant shall not be (x) a natural person or (y) Parent or any of its Subsidiaries.  Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 12.1 and (2) directly and adversely affects such Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 5.12, 5.13 and 5.14 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.7(b) as though it were a Lender, provided such Participant shall be subject to Section 12.7(a) as though it were a Lender.

 

(ii)                                  A Participant shall not be entitled to receive any greater payment under Section 5.12 or 5.13 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s written consent.  Any Participant that is a Non-U.S. Lender shall

 

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not be entitled to the benefits of Section 5.13 unless such Participant complies with Section 5.13(e).

 

(d)         Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other Person, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

 

(e)          The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

 

(f)            If the Borrower wishes to replace the Loans or Commitments under any Facility with ones having different terms, it shall have the option, with the written consent of the Administrative Agent and subject to at least three Business Days’ advance notice to the Lenders under such Facility, instead of prepaying the Loans or reducing or terminating the Commitments to be replaced, to (i) require the Lenders under such Facility to assign such Loans or Commitments to the Administrative Agent or its designees and (ii) amend the terms thereof in accordance with Section 12.1.  Pursuant to any such assignment, all Loans and Commitments to be replaced shall be purchased at par (allocated among the Lenders under such Facility in the same manner as would be required if such Loans were being optionally prepaid plus payment of any accrued interest and fees thereon, any amounts owing pursuant to Section 5.14, any premiums required hereunder and other payment obligations owed to such Lender to the extent such Lender has, in good faith, advised the Administrative Agent of the amount of the same in writing).  By receiving such purchase price, the Lenders under such Facility shall automatically be deemed to have assigned the Loans or Commitments under such Facility pursuant to an Assignment and Acceptance, and accordingly no other action by such Lenders shall be required in connection therewith.  The provisions of this paragraph are intended to facilitate the maintenance of the perfection and priority of existing security interests in the Collateral during any such replacement.

 

12.7.                        Adjustments; Set-off.  (a) Except to the extent that this Agreement provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, (i) except to the extent that the Loan Documents provide that only the Term Loans shall be secured by the Mortgaged Property of the Borrower or any Subsidiary thereof located in the State of New York (the “New York Collateral”), if any Lender shall at any time receive any payment of all or part of the Obligations owing to it, or receive any Collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 10(g), (h) or (i), or otherwise), in a greater proportion than any such payment to or Collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, or (ii) if, as a result of any exercise of rights and remedies with respect to the New York Collateral, any Lender holding a Term Loan shall at any time receive any payment of all or part of the Obligations owing to it (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 10(g), (h) or (i), or otherwise), in a greater proportion than any such payment to any other Lender, if any, in respect

 

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of the Obligations owing to such other Lender, such benefited Lender (each benefited Lender referred to in clauses (i) and (ii) above, a “Benefited Lender”) shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral, or the proceeds thereof, ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment, benefits or proceeds is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

 

(b)         Subject to Section 12.21 hereof, in addition to any rights and remedies of the Lenders provided by law, each Lender and its Affiliates shall have the right, without prior notice to Parent, Holdings or the Borrower, any such notice being expressly waived by Parent, Holdings and the Borrower to the extent permitted by applicable law, after the occurrence and during the continuance of an Event of Default, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final but not including any Excluded Accounts (as defined in the Guarantee and Collateral Agreement), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of Parent, Holdings or the Borrower, as the case may be.  Each Lender or its Affiliate, as the case may be, agrees promptly to notify Parent after any such setoff and application made by such Lender or such Affiliate, provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

12.8.                        U.S.A. Patriot Act.  Each Lender hereby notifies the Borrower that pursuant to the requirements of the U.S.A. Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lenders to identify the Borrower and the Guarantors in accordance with the U.S.A. Patriot Act.

 

12.9.                        Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement or of a Lender Addendum by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with Holdings and the Administrative Agent.

 

12.10.                  Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

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12.11.                  Integration.  This Agreement and the other Loan Documents represent the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Arranger, any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.  Notwithstanding the foregoing, those certain provisions set forth in that certain engagement letter among Parent, Borrower and Wells Fargo Securities, LLC dated as of November 23, 2011 that expressly survive the termination of such engagement letter and the entering into of definitive financing documentation shall survive the entering into of this Agreement and the other Loan Documents.

 

12.12.                  GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

12.13.                  Submission To Jurisdiction; Waivers.  Each of the Agents, the Lenders, Parent, Holdings and the Borrower hereby irrevocably and unconditionally:

 

(a)          submits for itself and its Property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; provided that any suit seeking enforcement against any Collateral or other Property may be brought, at Administrative Agent’s option, in the courts of any jurisdiction where Administrative Agent elects to bring such action or where such Collateral or other Property may be found;

 

(b)         consents that any such action or proceeding shall be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c)          agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to Parent or Holdings, as the case may be, at its address set forth in Section 12.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

 

(d)         agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law; and

 

(e)          waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

 

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12.14.                  Acknowledgments.  Each of Parent, Holdings and the Borrower hereby acknowledges that:

 

(a)          it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto;

 

(b)         neither the Arranger, any Agent, any Lender nor any of their Affiliates has any fiduciary or advisory relationship with or duty to Parent, Holdings, Borrower or any of their affiliates arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Arranger, the Agents and the Lenders, on one hand, and Parent, Holdings and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor;

 

(c)          no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Arranger, the Agents and the Lenders or among Parent, Holdings, the Borrower and the Lenders;

 

(d)         the Arranger, each Agent, each Lender and their Affiliates may have economic interests that conflict with those of Parent, Holdings or the Borrower, their stockholders and/or their Affiliates; and

 

(e)          Parent, Holdings and Borrower acknowledge and agree that the transactions contemplated by the Loan Documents (including the exercise of any rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other hand.

 

None of Parent, Holdings or Borrower will claim that the Arranger, any Agent or any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Person, in connection with the transactions contemplated hereby or the process leading thereto.

 

12.15.                  Confidentiality.  Each of the Agents and the Lenders agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement; provided that nothing herein shall prevent any Agent or any Lender from disclosing any such information (a) to the Arranger, any Agent, any other Lender or any affiliate of any thereof, (b) to any Participant or Assignee (each, a “Transferee”) or prospective Transferee that agrees to comply with the provisions of this Section, (c) to any of its employees, directors, agents, attorneys, accountants and other professional advisors who have a need to know such information and are or have been advised of their obligation to keep such information confidential, (d) to any financial institution that is a direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section), (e) upon the request or demand of any Governmental Authority purporting to have jurisdiction over it, (f) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, and such Agent or Lender shall use commercially reasonable efforts in providing prior written

 

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notice to Borrower of such disclosure to the extent permitted by applicable Requirements of Law, (g) in connection with any litigation or similar proceeding, and such Agent or Lender shall use commercially reasonable efforts in providing prior written notice to Borrower of such disclosure to the extent permitted by applicable Requirements of Law, (h) that has been publicly disclosed other than in breach of this Section, (i) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, (j) in connection with the exercise of any remedy hereunder or under any other Loan Document or (k) on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Loans.  In addition, each Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Loan Documents.

 

EACH LENDER ACKNOWLEDGES THAT INFORMATION FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

 

12.16.                  Release of Collateral and Guarantee Obligations.

 

(a)          Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon the Disposition of Property not prohibited by the Loan Documents to any Person other than any Loan Party or to which Required Lenders have consented (provided however that the Required Lenders do not have the ability hereunder to release all or substantially all of the Collateral or release all or substantially all of the value of the Guarantees), the security interest in any Collateral being Disposed of in such Disposition shall be automatically released (and if a Person is being Disposed of in a Disposition not prohibited by the Loan Documents (other than to any Loan Party), the Guarantee of such Person, if a Loan

 

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Party, under the Guarantee and Collateral Agreement shall be automatically released) and, at the request of Parent or the Borrower in connection with any such Disposition of Property not prohibited by the Loan Documents (to any Person other than any Loan Party), the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any party to any Specified Hedge Agreement or Specified Cash Management Agreement) take such actions as shall be reasonably requested to release or subordinate its security interest in any Collateral being Disposed of in such Disposition, and to release or subordinate any guarantee obligations (or execute a subordination, non-disturbance or attornment agreement) under any Loan Document of any Person being Disposed of in such Disposition, to the extent necessary to permit consummation of such Disposition in accordance with the Loan Documents (it being understood and agreed that the Administrative Agent shall be entitled in connection with any such request by a Loan Party to receive upon the reasonable request of the Administrative Agent prior to the Administrative Agent executing and delivering such releases, a certificate of a Responsible Officer of such Loan Party (i) stating that the Collateral or the Capital Stock subject to such Disposition is being sold or otherwise disposed of in compliance with the terms hereof and (ii) specifying the Collateral or Capital Stock being sold or otherwise disposed of in the transaction).

 

(b)         Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations (other than contingent indemnification obligations not yet due and payable and obligations in respect of any Specified Hedge Agreement or Specified Cash Management Agreement) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding (except (i) Letters of Credit shall be deemed to be no longer outstanding solely for purposes of this Section 12.16(b) if such Letters of Credit have been cash collateralized or another form of credit support has been provided to each relevant Issuing Lender, in each case acceptable to the relevant Issuing Lender and (ii) if the Qualified Counterparty in respect of a Specified Hedge Agreement and the Borrower have advised the Administrative Agent in writing (pursuant to clause (iii) of the definition of “Qualified Counterparty”) that the Administrative Agent is not authorized to release the Collateral and the guarantee in the manner contemplated by this Section 12.16(b) unless such Qualified Counterparty is provided with a substitute Lien and/or substitute guarantee or other form of collateral satisfactory to such Qualified Counterparty, then the Administrative Agent shall not release the Collateral and the guarantee in the manner contemplated by this Section 12.16(b) unless it has been advised in writing by the Qualified Counterparty that it has no objections to the release in full of the Lien and guarantee in the manner contemplated by this Section 12.16(b)), (A) the Collateral shall be automatically released from the Liens created by the Security Documents, (B) the guarantee obligations of the Guarantors shall be automatically released, and (C) the Loan Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Loan Documents shall terminate, all without delivery of any instrument or performance of any act by any Person.  In connection with the foregoing, upon request of Parent, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement or any Specified Cash Management Agreement) take such actions as shall be required or reasonably requested to release its security interest in all Collateral, and to release all guarantee obligations under any Loan Document, whether or not on the date of such release there may be outstanding Obligations in respect of Specified Hedge Agreements (subject to the foregoing) or Specified Cash Management Agreements.  Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee

 

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obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its Property, or otherwise, all as though such payment had not been made.

 

12.17.                  Accounting Changes.  In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Parent, the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the financial condition of Parent and the Borrower shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by Parent, Holdings, the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants or, if applicable, the SEC.  Notwithstanding anything in this Agreement to the contrary, any change in GAAP that would require operating leases to be treated similarly to capital leases shall not be given effect in the definition of Indebtedness or any related definitions or in the computation of any financial ratio or requirement hereunder.

 

12.18.                  Delivery of Lender Addenda. Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the Borrower and the Administrative Agent.

 

12.19.                  WAIVERS OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

12.20.                  Usury Savings Clause.  Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate.  If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect.  In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Borrower shall pay to Administrative Agent an amount equal to the difference between the amount of interest 

 

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paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect.  Notwithstanding the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury laws.  Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to Borrower.

 

12.21.                  Lender Action.  Each Lender (which shall include each Issuing Lender and by their acceptance of the Collateral as security any Qualified Counterparty), on behalf of itself and its Affiliates, agrees that neither it nor its Affiliates shall take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Loan Party or any other obligor under any of the Loan Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Loan Party, without the prior written consent of the Administrative Agent.

 

[Remainder of the page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

 

	
 
    	
SIX   FLAGS ENTERTAINMENT CORPORATION,
    
	
 
    	
as   Parent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SIX   FLAGS OPERATIONS INC.,
    
	
 
    	
as   Holdings
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SIX   FLAGS THEME PARKS INC.,
    
	
 
    	
 as   Borrower
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, an Issuing Bank,   the Swing Line Lender and a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:   Authorized SignatoryExhibit 10.1

 

MASTER REPURCHASE AGREEMENT

 

Dated as of December 14, 2011

 

Between:

 

RYLAND MORTGAGE COMPANY, as Seller jointly and severally with the other Sellers

 

and

 

RMC MORTGAGE CORPORATION, as Seller jointly and severally with the other Sellers

 

and

 

JPMORGAN CHASE BANK, N.A., as Buyer

 

 

1.         Applicability

 

From time to time prior to the Termination Date, the parties hereto may enter into transactions in which RYLAND MORTGAGE COMPANY (“RMC”) and/or RMC MORTGAGE CORPORATION (“RMCMC”) (RMC and RMCMC, together with their respective successors and assigns, are each individually referred to herein as “Seller” and collectively “Sellers”) agree to transfer to JPMorgan Chase Bank, N.A. (together with its successors and assigns, “Buyer”) Mortgage Loans (including the Servicing Rights thereto and all Accounts created thereunder) on a servicing released basis against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Sellers those Mortgage Loans (including the Servicing Rights thereto and all Accounts created thereunder) on a servicing released basis at a date certain or on demand, against the transfer of funds by Sellers.  Each such transaction shall be referred to in this Agreement as a “Transaction” and shall be governed by this Agreement.  Buyer shall have no obligation to enter into any Transaction on or after the Termination Date.

 

2.         Definitions; Interpretation

 

(a)        Definitions.  As used in this Agreement and (unless otherwise defined differently therein) in each other Transaction Document, the following terms have these respective meanings.

 

“Accounts” means, collectively, the Cash Pledge Account, the Collection Account, the Funding Account and the Operating Account, any interest, additions and proceeds due or to become due on such accounts, which accounts are held at Financial Institution and include all of the above described deposits, deposit accounts, payment intangibles, financial assets and other obligations of Financial Institution, whether they are deposit accounts, negotiable or non-negotiable or book entry certificates of deposit, book entry investment time deposits, savings accounts, money market accounts, transaction accounts, time deposits, negotiable order of withdrawal accounts, share draft accounts, demand deposit accounts, instruments, general intangibles, chattel paper or otherwise, and all funds held in or represented by any of the

 

 

foregoing, and any successor accounts howsoever numbered and all accounts issued in renewal, extension or increase or decrease of or replacement or substitution for any of the foregoing; and all promissory notes, checks, cash, certificates of deposit, passbooks, deposit receipts, instruments, certificates and other records from time to time representing or evidencing the accounts described above and any supporting obligations relating to any of the foregoing property.

 

“Act of Insolvency” means with respect to any Person (a) the commencement by that Person as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, or a request by that Person for the appointment of a receiver, trustee, custodian or similar official for that Person or any substantial part of its property; (b) the commencement of any such case or proceeding against that Person, or another’s seeking such appointment, or the filing against that Person of an application for a protective decree that (i) is consented to or not timely contested by that Person, or (ii) results in the entry of an order for relief, such an appointment, the issuance of such a protective decree or the entry of an order having similar effect, or (iii) is not dismissed within fifteen (15) days; (c) the making by that Person of a general assignment for the benefit of creditors; (d) the admission in writing by that Person that it is unable to pay its debts as they become due, or the nonpayment of its debts generally as they become due; or (e) the board of directors, managers, members or partners, as the case may be, of that Person taking any action in furtherance of any of the foregoing.

 

“Additional Purchased Mortgage Loans” means Mortgage Loans provided by Sellers to Buyer pursuant to Paragraph 4(a).

 

“Adjusted LIBOR Rate” has the meaning set forth in the Side Letter.

 

“Adjusted Tangible Net Worth” means, with respect to any Person and its Subsidiaries on a consolidated basis on any day, an amount equal to:

 

	
 
    	
(i)         the Tangible Net Worth of such Person   and its Subsidiaries on a consolidated basis on that day;
    
	
 
    	
 
    	
 
    
	
plus
    	
(ii)        the lesser of (x) one percent   (1%) of the Outstanding Principal Balances of all Mortgage Loans for which   such Person and its Subsidiaries own the Servicing Rights and (y) the   capitalized value of such Person’s and its Subsidiaries’ Servicing Rights on   that day;
    
	
 
    	
 
    	
 
    
	
plus
    	
(iii)       the then unpaid principal amount of all   Qualified Subordinated Debt of such Person and its Subsidiaries;
    
	
 
    	
 
    	
 
    
	
minus
    	
(iv)       the book value of Mortgage Loans held   by such Person and its Subsidiaries for investment purposes net of their   reserves against Mortgage Loan investment losses on that day;
    
	
 
    	
 
    	
 
    
	
plus
    	
(v)        the lesser of (x) the amount   subtracted pursuant to clause (iv) immediately above and (y) fifty   percent (50%) of the sum of the Outstanding Principal Balances of Mortgage   Loans then held by such Person and its Subsidiaries for investment purposes;
    

 

2

 

	
minus
    	
(vi)       the book value   of REO Property held by such Person and its Subsidiaries net of their   reserves against REO Property losses on that day;
    
	
 
    	
 
    
	
plus
    	
(v)        the lesser of (x) the amount   subtracted pursuant to clause (vi) immediately above and   (y) fifty percent (50%) of the book value of REO Property held by such   Person and its Subsidiaries net of their reserves against REO Property losses   on that day;
    
	
 
    	
 
    
	
minus
    	
(vii)      fifty percent (50%) of the book value of   other illiquid investments held by such Person and its Subsidiaries net of   their reserves against other illiquid investments on that day.
    

 

“Affiliate” means, as to a specified Person, any other Person (a) that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the specified Person; (b) that is a director, manager, trustee, general partner or executive officer of the specified Person or serves in a similar capacity in respect of the specified Person; (c) that, directly or indirectly through one or more intermediaries, is the beneficial owner of ten percent (10%) or more of any class of equity securities of the specified Person; or (d) of which the specified Person is directly or indirectly the owner of ten percent (10%) or more of any class of equity securities (or equivalent equity interests).

 

“Aged Loan” means, on any day, a Purchased Mortgage Loan that is not a Jumbo Loan whose Purchase Date was more than forty-five (45) days but not more than sixty (60) days before that day.

 

“Agency” (and, with respect to two or more of the following, “Agencies”) means FHA, Fannie Mae, Ginnie Mae, Freddie Mac, RHS or VA.

 

“Agency Guidelines” means those requirements, standards and procedures which may be adopted by the Agencies from time to time with respect to their purchase or guaranty of residential mortgage loans, which requirements govern the Agencies’ willingness to purchase or guaranty such loans.

 

“Aggregate Purchase Price” means, at any time, the sum of the Purchase Prices paid by Buyer for all Purchased Mortgage Loans that are subject to Transactions outstanding at that time.

 

“Agreement” means this Master Repurchase Agreement between Sellers and Buyer (including any supplemental terms or conditions contained in the Exhibits hereto and the Side Letter), as amended, restated, supplemented or otherwise modified from time to time.

 

“Approved Takeout Investor” means any of (i) Fannie Mae, Freddie Mac and any of the other entities listed on Schedule I, as such schedule is updated from time to time by Buyer, in its sole discretion, with written notice to any Seller; (ii) CL or (iii) an entity that is acceptable to Buyer, as indicated by Buyer to any Seller in writing; provided, however, that, notwithstanding the foregoing, any entity described in the foregoing clauses (i) through (iii) that fails to perform any of its obligations under its Takeout Agreement shall cease to be an Approved Takeout Investor upon such failure.

 

3

 

“Assignment of Mortgage” means an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to effect the transfer of the Mortgage to the party indicated therein.

 

“Authorized Officer” means, with respect to a Seller, any officer or employee of such Seller who prepares for sale or delivers Mortgage Loans for sale to Buyer.

 

“Authorized Signers” means, with respect to a Seller, each of the officers of such Seller listed on Schedule II hereto or otherwise designated by the officer of such Seller who is such Seller’s administrator with respect to the MWF Web, as such schedule may be updated by such Seller from time to time with prior written notice to Buyer.

 

“Available Facilities” means, at any time, the aggregate amount of used and unused available warehouse lines of credit, purchase facilities, repurchase facilities and off-balance sheet funding facilities (whether committed or uncommitted) available to Sellers in the aggregate at such time.

 

“Bailee Letter” means a bailee letter in the form attached hereto as Exhibit J or such other form as is satisfactory to Buyer in its sole discretion.

 

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. Paragraph 101 et seq.), as amended by the Bankruptcy Reform Act and as further amended from time to time, or any successor statute.

 

“Bankruptcy Reform Act” means the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, effective as of October 17, 2005.

 

“Blanket Bond Required Endorsement” means, as to any Seller, endorsement of Seller’s mortgage banker’s blanket bond insurance policy to (i) provide that for any loss affecting Buyer’s interest, Buyer will be named on the loss payable draft as its interest may appear and (ii) provide Buyer access to coverage under the theft of secondary market institution’s money or collateral clause of policy.

 

“Business Day” means a day other than a Saturday or Sunday when (i) banks in Dallas, Texas, Houston, Texas and New York, New York are generally open for commercial banking business and (ii) federal funds wire transfers can be made.

 

“Cash Equivalents” means any of the following: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within three (3) months or less after the date of the applicable financial statement reporting such amounts; and (b) certificates of deposit, time deposits or Eurodollar time deposits having maturities of three (3) months or less after the date of the applicable financial statement reporting such amounts, or overnight bank deposits, issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and rated at least A- by S&P or A3 by Moody’s.

 

4

 

“Cash Pledge Account” means, with respect to Sellers jointly and severally, the blocked Seller’s account (under the sole dominion and control of Buyer) with JPM Chase styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Cash Pledge Account for Ryland Mortgage Company

 

“Change in Control” means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of outstanding shares of voting stock (or equivalent equity interests) of any Seller at any time if after giving effect to such acquisition such Person or Persons owns fifty percent (50%) or more of the outstanding voting stock (or equivalent equity interests) of such Seller.

 

“Change in Requirement of Law” means (a) the adoption of a Requirement of Law after the date of this Agreement, (b) any change in a Requirement of Law or (c) compliance by Buyer (or by any applicable lending office of Buyer) with any Requirement of Law made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines and directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, shall in each case be deemed to be a Change in Requirement of Law regardless of the date enacted, adopted, issued or implemented.

 

“CL” means JPM Chase, operating through either its unincorporated division commonly known as its Correspondent Lending group or its unincorporated division commonly known as Chase Rural Housing.

 

“CL Ineligible Loan” means either (i) a Conventional Conforming Loan or (ii) a Government Loan that is not an RHS Loan, that is not eligible for purchase by CL.  Item (hhh) on Exhibit B is not applicable to CL Ineligible Loans.

 

“CL Jumbo Loan” means a Jumbo Loan that is covered by a best efforts Takeout Commitment issued by CL.

 

“CL Loan” means an Eligible Mortgage Loan for which CL is the Approved Takeout Investor.

 

“Collection Account” means, with respect to Sellers jointly and severally, the blocked Seller’s account (under the sole dominion and control of Buyer) with JPM Chase styled as follows:

 

5

 

JPMorgan Chase Bank, N.A. Secured Party

Collection Account for Ryland Mortgage Company

 

“Completed Repurchase Advice” means with respect to any Purchased Mortgage Loan, receipt by Buyer of:

 

(i)         funds into the Funding Account in an amount equal to or greater than (x) the Repurchase Price of such Purchased Mortgage Loan minus (y) any unpaid Price Differential to be paid by Sellers on the next Remittance Date;

 

(ii)        in the event that the funds described in clause (i) above are less than an amount equal to (x) the Repurchase Price of such Purchased Mortgage Loan minus (y) any unpaid Price Differential to be paid by Sellers on the next Remittance Date, confirmation that funds in an amount equal to such deficiency are on deposit in the Operating Account and available for payment to Buyer after taking into account all other payments required to be made by Sellers out of funds on deposit in the Operating Account;

 

(iii)       confirmation, in a form acceptable to Buyer in its sole discretion, from the related Approved Takeout Investor, if applicable, that the funds received in the Funding Account are for the purchase of that Purchased Mortgage Loan; and

 

(iv)       an updated Loan Purchase Detail from a Seller showing the removal of that Purchased Mortgage Loan from the list of Purchased Mortgage Loans subject to the outstanding Transactions under this Agreement.

 

“Compliance Certificate” means a compliance certificate substantially in the form of Exhibit C, completed, executed and submitted by the vice president controller or treasurer of a Seller.

 

“Confirmation” means a confirmation substantially in the form attached hereto as Exhibit A and delivered pursuant to Paragraph 3.

 

“Conventional Conforming Loan” means a Mortgage Loan that conforms to Agency Guidelines.  The term Conventional Conforming Loan shall not include a Mortgage Loan that is a Government Loan.

 

“Cooperative Corporation” means with respect to any Cooperative Loan, the cooperative apartment corporation that holds legal title to the related Cooperative Project and grants occupancy rights to units therein to stockholders through Proprietary Leases or similar arrangements.

 

“Cooperative Loan” means a mortgage loan that is secured by a Lien on and perfected security interest in Cooperative Shares and the related Proprietary Lease granting exclusive rights to occupy the related Cooperative Unit in the building owned by the related Cooperative Corporation.

 

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“Cooperative Project” means, with respect to any Cooperative Loan, all real property and improvements thereto and rights therein and thereto owned by a Cooperative Corporation including the land, separate dwelling units and all common elements, all of which shall be located in any state of the United States or the District of Columbia.

 

“Cooperative Shares” means, with respect to any Cooperative Loan, the shares of stock issued by a Cooperative Corporation and allocated to a Cooperative Unit and represented by a stock certificate.

 

“Cooperative Unit” means, with respect to a Cooperative Loan, a specific unit in a Cooperative Project.

 

“Credit File” means, with respect to a Mortgage Loan, all of the paper and documents required to be maintained pursuant to the related Takeout Commitment or the related Hedging Arrangement, as applicable, and all other papers and records of whatever kind or description, whether developed or created by a Seller or others, required to Originate, document or service the Mortgage Loan.

 

“Current Assets” means, with respect to any Person at any date, those assets set forth in the consolidated balance sheet of the Person, prepared in accordance with GAAP, as current assets, defined as those assets that are now cash or that by their terms or disposition will be converted to cash within one year from the date of calculation.

 

“Current Liabilities” means, with respect to any Person at any date, those liabilities set forth in the consolidated balance sheet of the Person, prepared in accordance with GAAP, as current liabilities, defined as those liabilities due upon demand or within one year from the date of calculation.

 

“Current Ratio” means, with respect to any Person at any date, the sum of the amounts set forth in the consolidated balance sheet of the Person, prepared in accordance with GAAP, as Current Assets divided by the sum of the amounts set forth in such consolidated balance sheet as Current Liabilities.

 

“Debt” means, with respect to any Person, at any date (a) all indebtedness or other obligations of such Person (and, if applicable, that Person’s Subsidiaries, on a consolidated basis) which, in accordance with GAAP, would be included in determining total liabilities as shown on the liabilities side of a balance sheet of such Person at such date; and (b) all indebtedness or other obligations of such Person (and, if applicable, that Person’s Subsidiaries, on a consolidated basis) for borrowed money or for the deferred purchase price of property or services; provided, however, that, for purposes of this Agreement, there shall be excluded from Debt at any date loan loss reserves, deferred taxes arising from capitalized excess service fees, operating leases and Qualified Subordinated Debt.

 

“Default” means any condition or event that, with the giving of notice or lapse of time or both, would constitute an Event of Default.

 

“Defaulted Loan” means a Mortgage Loan (i) as to which any payment, escrow payment, or part thereof, remains unpaid for thirty (30) days or more from the original due date

 

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for such payment (whether or not the applicable Seller has allowed any grace period or extended the due date thereof by any means), (ii) as to which another material default has occurred and is continuing, including the commencement of foreclosure proceedings; (iii) as to which an Act of Insolvency has occurred with respect to the Mortgagor thereof or any cosigner, guarantor, endorser, surety, assumptor or grantor with respect thereto, or (iv) which, consistent with the applicable Seller’s collection policies, has been or should be written off as uncollectible in whole or in part.

 

“Defective Mortgage Loan” means a Mortgage Loan that is not an Eligible Mortgage Loan.

 

“Early Repurchase Date” has the meaning set forth in Paragraph 3(i)(ii).

 

“Electronic Tracking Agreement” means the Electronic Tracking Agreement substantially dated the date hereof, by and among, Buyer, Sellers, MERS and MERSCORP, Inc. (the “Electronic Agent”), as amended, supplemented or otherwise modified from time to time.

 

“Eligible Mortgage Loan” means, on any date of determination, a Mortgage Loan:

 

(i)         for which each of the representations and warranties set forth on Exhibit B are true and correct as of such date of determination;

 

(ii)        which is either a Conventional Conforming Loan, a Government Loan or a Jumbo Loan;

 

(iii)       which was Originated within thirty (30) days prior to the Purchase Date for the initial Transaction to which that Mortgage Loan was subject;

 

(iv)       which is eligible for sale to an Approved Takeout Investor under its Takeout Guidelines;

 

(v)        which has a scheduled Repurchase Date not later than the following number of days after the Purchase Date for the initial Transaction to which that Mortgage Loan was subject:

 

	
Type of   Mortgage Loan
    	
Number   of days
    
	
Aged Loan
    	
60
    
	
Conventional   Conforming Loan that is not an Aged Loan
    	
45
    
	
Government Loan   that is not an Aged Loan
    	
45
    
	
Jumbo Loan
    	
30
    

 

(vi)       which does not have a Loan-to-Value Ratio in excess of (i) 105% in the case of a Government Loan other than an RHS Loan, (ii) 103.627% in the case of an RHS Loan or (iii) 95% in the case of a Conventional Conforming Loan (or, in each case, such other percentage determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time) and, if its Loan-to-Value Ratio

 

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is in excess of 80% (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time), it has private mortgage insurance in an amount required by the applicable Agency Guidelines, unless pursuant to Agency Guidelines in existence at the time such Mortgage Loan was originated, private mortgage insurance is not required for such Mortgage Loan;

 

(vii)      which, if a Government Loan, the related Mortgagor has a FICO Score of at least 620 (or such other minimum FICO Score as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time);

 

(viii)      which, if a Conventional Conforming Loan, the related Mortgagor has a FICO Score of at least 620 (or such other minimum FICO Score as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time);

 

(ix)       for which a complete Loan File has been delivered to Buyer, or, in the case of a Wet Loan, for which the items listed in items (i) through (iv) of the definition of Loan File have been delivered to Buyer;

 

(x)        for which, if a Wet Loan on the applicable Purchase Date, all applicable items listed in items (v) through (xii) of the definition of Loan File have been delivered to Buyer at or prior to its Wet Funding Deadline;

 

(xi)       which, if a Wet Loan, its Purchase Price, when added to the sum of the Purchase Prices of all other Wet Loans that are then subject to Transactions is less than or equal to (i) 60% of the Facility Amount on any day that is one of the first five (5) or the last five (5) Business Days of any calendar month and (ii) 40% of the Facility Amount on any day other than a day contemplated by clause (i) above;

 

(xii)      for which, if not a CL Loan, Buyer has approved the underwriting, the Takeout Commitment or Hedging Arrangement, as applicable, the appraisal and other related information;

 

(xiii)      which, unless subject to a Hedging Arrangement, is not (a) subject to a Takeout Agreement with respect to which the applicable Seller is in default, or (b) rejected or excluded for any reason (other than default by Buyer) from the related Takeout Commitment by the Approved Takeout Investor;

 

(xiv)     which, unless subject to a Takeout Commitment, is not (a) subject to a Hedging Arrangement with respect to which the Seller is in default, or (b) rejected or excluded for any reason (other than default by Buyer) from the related Hedging Arrangement by the Person with whom such Hedging Arrangement is maintained;

 

(xv)      which is not a Mortgage Loan that a Seller has failed to repurchase or cause to be repurchased when required by the terms of this Agreement;

 

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(xvi)     for which, unless subject to a Hedging Arrangement, the Takeout Commitment, if applicable, has not expired or been terminated or cancelled by the Approved Takeout Investor;

 

(xvii)     for which, unless subject to a Takeout Commitment, the related Hedging Arrangement has not expired or been terminated or cancelled by the Person with whom such Hedging Arrangement is maintained;

 

(xviii)    for which the related Mortgage Note has not been out of the possession of Buyer pursuant to a Trust Release Letter for more than five (5) Business Days after the date of that Trust Release Letter;

 

(xix)     for which neither the related Mortgage Note nor the Mortgage has been out of the possession of Buyer pursuant to a Bailee Letter for more than the number of days specified in such Bailee Letter;

 

(xx)      which is not a Defaulted Loan;

 

(xxi)     which, if a Jumbo Loan, its Purchase Price, when added to the sum of the Purchase Prices of all other Jumbo Loans that are then subject to Transactions, is less than or equal to twenty percent (20%) (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time) of the Facility Amount, provided that the aggregate Purchase Price of OATI Jumbo Loans subject to Transactions shall never exceed $7,500,000 at any one time;

 

(xxii)     which, if an RHS Loan, its Purchase Price, when added to the sum of the Purchase Prices of all other RHS Loans that are then subject to Transactions, is less than or equal to twenty percent (20%) (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time) of the Facility Amount;

 

(xxiii)    which, if a CL Ineligible Loan, its Purchase Price, when added to the sum of the Purchase Prices of all other CL Ineligible Loans that are then subject to Transactions, is less than or equal to five percent (5%) (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time) of the Facility Amount;

 

(xxiv)    which, if an Aged Loan, its Purchase Price, when added to the sum of the Purchase Prices of all Aged Loans that are then subject to Transactions, is less than or equal to five percent (5%) (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) of the Facility Amount;

 

(xxv)    which, if an Investor Loan, its Purchase Price, when added to the sum of the Purchase Prices of all Investor Loans and Second Home Loans that are then subject to Transactions, is less than or equal to ten percent (10%) (or such other percentage as may

 

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be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) of the Facility Amount; and

 

(xxvi)    which, if a Second Home Loan, its Purchase Price, when added to the sum of the Purchase Prices of all Second Home Loans and Investor Loans that are then subject to Transactions, is less than or equal to ten percent (10%) (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) of the Facility Amount.

 

“Equivalent Mortgage Loan” means a Mortgage Loan for which all of the following characteristics are substantially the same as those of the Purchased Mortgage Loan for which such Mortgage Loan substitutes:  (i) its terms; (ii) its acceptability for purchase by an Approved Takeout Investor by such Approved Investor’s agreed purchase date for such Purchased Mortgage Loan and (iii) the purchase price that such Approved Takeout Investor will pay Seller for such Purchased Mortgage Loan.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and all rules and regulations promulgated thereunder, as amended from time to time and any successor statute, rules and regulations.

 

“Event of Default” has the meaning set forth in Paragraph 12.

 

“Facility Amount” has the meaning set forth in the Side Letter.

 

“Fannie Mae” means the Federal National Mortgage Association or any successor.

 

“FDIC” means the Federal Deposit Insurance Corporation or any successor.

 

“FHA” means the Federal Housing Administration, which is a sub-division of HUD, or any successor.  The term “FHA” is used interchangeably in this Agreement with the term “HUD”.

 

“FICO Score” means, with respect to any Mortgagor, the statistical credit score prepared by Fair Isaac Corporation, Experian Information Solutions, Inc., TransUnion LLC or such other Person as may be approved in writing by Buyer in its sole discretion.

 

“Financial Institution” means JPM Chase in its capacity of the bank at which the Accounts are held.

 

“Freddie Mac” means the Federal Home Loan Mortgage Corporation or any successor.

 

“Funding Account” means, with respect to Sellers jointly and severally, the blocked Seller’s account (under the sole dominion and control of Buyer) with JPM Chase styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Funding Account for Ryland Mortgage Company

 

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“GAAP” means generally accepted accounting principles consistently applied in the United States.

 

“Ginnie Mae” means the Government National Mortgage Association or any successor.

 

“GLB Act” means the Gramm-Leach Bliley Act of 1999 (Public Law 106-102, 113 Stat 1338), as it may be amended from time to time.

 

“Government Loan” means a Mortgage Loan which is insured by the FHA or guaranteed by the Department of Veterans Affairs or RHS.  The term Government Loan shall not include any Mortgage Loan which is a Conventional Conforming Loan.

 

“Governmental Authority” means and includes the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, any governmental or quasi-governmental department, commission, board, bureau or instrumentality, any court, tribunal or arbitration panel, and, with respect to any Person, any private body having regulatory jurisdiction over any Person or its business or assets (including any insurance company or underwriter through whom that Person has obtained insurance coverage).

 

“Hedging Arrangement” means any forward sales contract, forward trade contract, interest rate swap agreement, interest rate cap agreement, or other contract pursuant to which a Seller has protected itself from the consequences of a loss in the value of a Mortgage Loan or its portfolio of Mortgage Loans because of changes in interest rates or in the market value of mortgage loan assets.

 

“HUD” means the U.S. Department of Housing and Urban Development or any successor department or agency.

 

“Income” means, with respect to any Purchased Mortgage Loan, (i) all payments of principal, payments of interest, proceeds of Takeout Commitments, proceeds of Hedging Arrangements, cash collections, dividends, sale or insurance proceeds and other cash proceeds received relating to the Purchased Mortgage Loan and other Mortgage Assets, (ii) any other payments or proceeds received in relation to the Purchased Mortgage Loan and other Mortgage Assets (including, without limitation, any liquidation or foreclosure proceeds with respect to the Purchased Mortgage Loan and payments under any guarantees relating to the Purchased Mortgage Loan), (iii) all escrow withholds and escrow payments for Property Charges and (iv) all other “proceeds” as defined in Section 9-102(64) of the UCC.

 

“Indemnified Party” has the meaning set forth in Paragraph 16(b).

 

“Insured Closing Letter” means a letter of indemnification from a title insurer addressed to a Seller and, for each Wet Loan, Buyer, with coverage that is customarily acceptable to Persons engaged in the Origination of mortgage loans, identifying the Settlement Agent covered thereby and indemnifying such Seller and/or Buyer against losses incurred due to malfeasance or fraud by the Settlement Agent or the failure of the Settlement Agent to follow the specific

 

12

 

closing instructions specified by Buyer in the escrow letter with respect to the closing of the Mortgage Loan.  The Insured Closing Letter shall be either with respect to the individual Mortgage Loan being purchased pursuant hereto or a blanket Insured Closing Letter which covers closings conducted by the Settlement Agent in the jurisdiction in which the closing of such Mortgage Loan takes place.

 

“Interim Servicing Term” has the meaning set forth in Paragraph 13(a).

 

“Investor Loan” means a Conventional Conforming Loan secured by a single family residence that is not occupied by the Mortgagor that conforms to all CL mortgage loan guidelines.

 

“IRC” means the Internal Revenue Code of 1986, as amended from time to time and any successor statute.

 

“JPM Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its individual capacity, and its successors and assigns.

 

“Jumbo Loan” means an Eligible Mortgage Loan in an original principal amount not exceeding $1,000,000 and which conforms to all CL jumbo mortgage loan guidelines.

 

“Last Endorsee” means with respect to each Mortgage Loan, the last Person to whom such Mortgage Loan was assigned or the related Mortgage Note was endorsed, as applicable.

 

“Leverage Ratio” means that ratio of a Person’s Debt (including off balance sheet financings) to its Adjusted Tangible Net Worth.

 

“Lien” means any security interest, mortgage, deed of trust, charge, pledge, hypothecation, assignment, deposit arrangement, equity, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing.

 

“Liquidity” means, at any time, with respect to Sellers in the aggregate, Sellers’ unencumbered and unrestricted cash and Cash Equivalents (including the balance on deposit in the Cash Pledge Account, but excluding any restricted cash or cash pledged to third parties) at such time plus, with respect to any Purchased Mortgage Loans then subject to outstanding Transactions, the excess, if any, of (x) the aggregate maximum Purchase Price available to Sellers pursuant to the terms hereof for such Purchased Mortgage Loans over (y) the Aggregate Purchase Price at such time.

 

“Litigation” means, as to any Person, any action, lawsuit, investigation, claim, proceeding, judgment, order, decree or resolution pending or, to such Person’s knowledge, threatened against or affecting such Person or the business, operations, properties or assets of such Person before, or by, any Governmental Authority.

 

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“Loan File” means, with respect to each Mortgage Loan, the following documents:

 

(i)         if a Wet Loan, a fully executed Insured Closing Letter from the related Settlement Agent involved in the Wet Funding of that Mortgage Loan;

 

(ii)        if a Government Loan, a valid eligibility certification from VA, FHA or RHS, as applicable, or such other documentation as may be required by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time, with respect to such Purchased Mortgage Loan;

 

(iii)       if a Conventional Conforming Loan, a valid eligibility certification from Fannie Mae or Freddie Mac, as applicable, or such other documentation as may be required by Buyer in its sole discretion and specified in a written notice from Buyer to any Seller from time to time, with respect to such Mortgage Loan;

 

(iv)       evidence satisfactory to Buyer, in its sole discretion, that such Mortgage Loan is subject to a valid and binding Takeout Commitment or Hedging Arrangement, which may include a copy of the related Takeout Agreement or Hedging Arrangement and such other documents required by Buyer in its sole discretion;

 

(v)        the original Mortgage Note, endorsed in blank without recourse by the Last Endorsee thereof, together with all intervening endorsements showing an unbroken chain of endorsement from the originator of such Mortgage Loan to the Last Endorsee, or, if the original has been lost, a lost note affidavit in form and substance acceptable to Buyer and executed by the Last Endorsee;

 

(vi)       the original recorded Mortgage, or, if the original has been lost or if such Mortgage is in the process of being recorded, a copy of the original Mortgage together with an Officer’s Certificate (which may be included on the face of such copy) certifying (x) that such copy is a true, correct and complete copy and (y) that such Mortgage has been transmitted to the appropriate recording office for recordation;

 

(vii)      the originals of all assumption, modification, consolidation, substitution and extension agreements, if any, with evidence of recordation thereon, or copies of such original agreements together with an Officer’s Certificate certifying (x) that such copy is a true, correct and complete copy and (y) that such agreements have been transmitted to the appropriate recording office for recordation;

 

(viii)      all guarantees, supporting obligations and collateral, if any, received with respect to, or supporting repayment of, such Purchased Mortgage Loan;

 

(ix)       a copy of (1) the DU/DO/LP approval cover page or, (2) for a CL Jumbo Loan, a copy of the related CHL Correspondent Channel Approval Memorandum or, (3) for an RHS Loan, a copy of the related Conditional Commitment for Single Family Housing Loan Guarantee 1980-18 or, (4) for an OATI Jumbo Loan, evidence of underwriting approval by the related Approved Takeout Investor or, (5) for a Second Home Loan, a copy of the related valid eligibility certificate issued by an Agency;

 

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(x)        the original, or a copy (together with an Officer’s Certificate, which may be included on the face of such copy, certifying that such copy is a true, correct and complete copy) of the policy of lender’s title insurance described in item (q) of Exhibit B or of a commitment to issue such title insurance;

 

(xi)       evidence satisfactory to Buyer (i) that such Mortgage Loan is a MERS Designated Mortgage Loan (which, except for MOM Loans, shall be a copy of (an) Assignment(s) of Mortgage assigning the Mortgage from the original named mortgagee to MERS, either showing the relevant recording information or accompanied by an Officer’s Certificate, which may be included on the face of such copy, certifying that such copy is a true, correct and complete copy and that such Assignment of Mortgage has been transmitted to the appropriate recording office for recordation) and (ii) that Buyer is designated as “Interim Funder” on the MERS System with respect to such Mortgage Loan;

 

(xii)      if, at any point in the future, Buyer so designates, by giving at least ten (10) Business Days written notice to a Seller, that Sellers will, on a going forward basis, be responsible for giving the same (it being understood and agreed that unless and until Buyer gives such notice to a Seller, Buyer will be responsible for giving such notices to Mortgagors and this item will not be included in the Loan Files), a notice letter in form and substance acceptable to Buyer in its sole discretion, delivered by a Seller on behalf of Buyer to Mortgagor setting forth the information regarding Buyer as the “new creditor” and such other information required by Section 404 of The Helping Families Save Their Homes Act of 2009 (amending the Truth in Lending Act of 1968 (as amended)), and acknowledged in writing by Mortgagor unless Buyer has notified any Seller in writing that such notice is no longer required;

 

(xiii)      if a Cooperative Loan:

 

(A)       the original Cooperative Shares with original Stock Power with a signature guarantee in form and substance satisfactory to Buyer;

 

(B)       the original Proprietary Lease;

 

(C)       the original Recognition Agreement; and

 

(D)       an acknowledgement copy of the UCC-1 financing statement filed in connection with the Mortgage related thereto; and

 

(xiv)     such additional documents required by Buyer in its sole discretion from time to time by written notice to any Seller.

 

“Loan Purchase Detail” means a data tape or schedule of information prepared and transmitted electronically by a Seller to Buyer in the format and with such fields of information set forth in Exhibit I regarding the Purchased Mortgage Loans, as such required format or information fields may be changed from time to time by Buyer with prior written notice to any Seller.

 

15

 

“Loan-to-Value Ratio” or “LTV” means, for each Mortgage Loan as of the related Purchase Date, a fraction (expressed as a percentage) having as its numerator the original principal amount of the Mortgage Note and as its denominator the lesser of (x) the sales price of the related Mortgaged Property and (y) the appraised value of the related Mortgaged Property of such Mortgage Loan indicated in the appraisal obtained in connection with the Origination of such Mortgage Loan.

 

“Manufactured Home” means a single-family home constructed at a factory and shipped in one or more sections to a housing site.

 

“Margin Amount” means at any time with respect to any Purchased Mortgage Loan, the amount equal to (a) the applicable Margin Percentage for that Purchased Mortgage Loan at that time multiplied  by (b) the Market Value for that Purchased Mortgage Loan at that time.

 

“Margin Deficit” has the meaning specified in Paragraph 4(a).

 

“Margin Percentage” has the meaning set forth in the Side Letter.

 

“Margin Stock” has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

 

“Market Value” means, at any time with respect to any Purchased Mortgage Loan, the fair market value of such Purchased Mortgage Loan at such time as determined by Buyer in its sole discretion.

 

“Material Adverse Effect” means any (i) material adverse effect upon the validity, performance or enforceability of any Transaction Document, (ii) material adverse effect upon the properties, business or condition, financial or otherwise, of any Seller (and their Subsidiaries, on a consolidated basis), (iii) material adverse effect upon the ability of any Seller to fulfill its obligations under this Agreement, or (iv) material adverse effect on the value or salability of the Purchased Mortgage Loans subject to this Agreement, taken as a whole.

 

“Maximum Facility Ratio” means, at any time with respect to any Person or to Sellers in the aggregate, the ratio of (a) Available Facilities at such time, to (b) that Person’s or Sellers’ Adjusted Tangible Net Worth at such time.

 

“MERS” means Mortgage Electronic Registration Systems, Inc. and its successors and assigns.

 

“MERS Designated Mortgage Loan” means a Mortgage Loan that satisfies the definition of the term “MERS Designated Mortgage Loan” contained in the Electronic Tracking Agreement.

 

“MERS® System” has the meaning given that term in the Electronic Tracking Agreement.

 

“MIN” means the eighteen digit MERS Identification Number permanently assigned to each MERS Designated Mortgage Loan.

 

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“MOM Loan” means a MERS Designated Mortgage Loan that was registered on the MERS® System at the time of its Origination and for which MERS appears as the record mortgagee or beneficiary on the related Mortgage.

 

“Moody’s” means Moody’s Investors Service and any successor.

 

“Mortgage” means a mortgage, deed of trust or other security instrument creating a Lien on the Mortgaged Property.

 

“Mortgage Assets” has the meaning specified in Paragraph 6.

 

“Mortgage Loan” means a whole mortgage loan or Cooperative Loan which is secured by a Mortgage on residential real estate, and shall include all Servicing Rights with respect thereto.

 

“Mortgage Loan Documents” means the Mortgage Note, the Mortgage and all other documents evidencing, securing, guaranteeing or otherwise related to a Mortgage Loan.

 

“Mortgage Note” means the original, executed promissory note or other primary evidence of indebtedness of a Mortgagor on a Mortgage Loan.

 

“Mortgaged Property” means the residential real estate securing the Mortgage Note, which shall be either (i) in the case of a Mortgage Loan that is not a Cooperative Loan, a fee simple estate in the real property located in any state of the United States (including all buildings, improvements and fixtures thereon and all additions, alterations and replacements made at any time with respect to the foregoing) purchased with the proceeds of the Mortgage Loan or (ii) in the case of a Cooperative Loan, the Proprietary Lease and related Cooperative Shares.

 

“Mortgagor” means the obligor on a Mortgage Note or the grantor or mortgagor on a Mortgage, as the context requires.

 

“MWF Web” means the website maintained by Buyer and used by Sellers and Buyer to administer the Transactions, the notices and reporting requirements contemplated by the Transaction Documents and other related arrangements.

 

“OATI” is an adjective that, when used to modify a type of Mortgage Loan, means that it both (i) satisfies CL’s underwriting guidelines and (ii) is committed to be sold to an Approved Takeout Investor other than CL.

 

“Officer’s Certificate” means a certificate signed by a Responsible Officer of the applicable Seller and delivered to Buyer.

 

“Operating Account” means, with respect to Sellers jointly and severally, the blocked Seller’s account (under the sole dominion and control of Buyer) with JPM Chase styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

 

17

 

Operating Account for Ryland Mortgage Company

 

“Originate” or “Origination” means a Person’s actions in taking applications for, underwriting and closing Mortgage Loans.

 

“Origination Date” means the date of the Mortgage Note and the related Mortgage.

 

“Outstanding Principal Balance” of a Mortgage Loan means, at any time, the then unpaid outstanding principal balance of such Mortgage Loan.

 

“Party” means, with respect to this Agreement and the other Transaction Documents, any of Buyer and Sellers (collectively, the “Parties”).

 

“Person” means an individual, partnership, corporation (including a business trust), joint-stock company, limited liability company, trust, unincorporated association, joint venture, any Governmental Authority or other entity.

 

“Post-Origination Period” means the period of time between a Mortgage Loan’s Origination Date and its subsequent sale to an Approved Takeout Investor.

 

“Price Differential” means with respect to any Transaction hereunder, for each month (or portion thereof) during which that Transaction is outstanding, the sum of the following amount for each day during that month (or portion thereof): the weighted average of the applicable Pricing Rates for such day multiplied  by the Aggregate Purchase Price on such day divided  by 360.  The Price Differential for each Transaction shall accrue during the period commencing on (and including) the day on which the Purchase Price is transferred into the Funding Account (or otherwise paid to Seller) for such Transaction and ending on (but excluding) the date on which the Repurchase Price is paid.

 

“Pricing Rate” means the per annum percentage rate (or rates) to be applied to determine the Price Differential, which rate (or rates) shall be determined in accordance with the Side Letter.

 

“Prime Rate” means the rate of interest per annum announced from time to time by Buyer as its prime rate.  The Prime Rate is a variable rate and each change in the Prime Rate is effective from and including the date the change is announced as being effective.  THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE BUYER’S LOWEST RATE.

 

“Privacy Requirements” means (a) Title V of the GLB Act,  (b) federal regulations implementing such act codified at 12 CFR Parts 40, 216, 332 and 573, (c) the Interagency Guidelines Establishing Standards For Safeguarding Customer Information and codified at 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570 and (d) any other applicable federal, state and local laws, rules, regulations and orders relating to the privacy and security of Sellers’ Customer Information, as such statutes, regulations, guidelines, laws, rules and orders may be amended from time to time.

 

“Property Charges” means all taxes, fees, assessments, water, sewer and municipal charges (general or special) and all insurance premiums, leasehold payments or ground rents.

 

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“Proprietary Lease” means the lease on a Cooperative Unit evidencing the possessory interest of the owner of the Cooperative Shares in such Cooperative Unit.

 

“Purchase Date” means the date with respect to each Transaction on which the Mortgage Loans subject to such Transaction are transferred by a Seller to Buyer hereunder; provided, however, that in any case, the Purchase Date shall occur no later than thirty (30) days after the Origination Date of each related Mortgage Loan;.

 

“Purchase Price” has the meaning set forth in the Side Letter.

 

“Purchased Mortgage Loans” means, with respect to any Transaction, the Mortgage Loans sold by a Seller to Buyer in such Transaction hereunder (each of which sales shall be on a servicing released basis), including any Additional Purchased Mortgage Loans delivered pursuant to Paragraph 4(a) and excluding any Purchased Mortgage Loans repurchased by a Seller or transferred to a Seller.  Unless the context shall otherwise require, the term “Purchased Mortgage Loans” shall refer to all Purchased Mortgage Loans under all Transactions.

 

“Qualified Subordinated Debt” means, with respect to any Person, all unsecured Debt of such Person, for borrowed money, which is, by its terms or by the terms of a subordination agreement (which terms shall have been approved by Buyer), in form and substance satisfactory to Buyer, effectively subordinated in right of payment to all other present and future obligations and all indebtedness of such Person, of every kind and character, owed to Buyer and which terms or subordination agreement, as applicable, include, among other things, standstill and blockage provisions approved by Buyer, restrictions on amendments without the consent of Buyer, non-petition provisions and maturity date or dates for any principal thereof at least 395 days after the date hereof.

 

“Recognition Agreement” means, with respect to a Cooperative Loan, an agreement among a Cooperative Corporation, a lender and a Mortgagor whereby such parties (i) acknowledge that such lender may make, or intends to make, such Cooperative Loan and (ii) make certain agreements with respect to such Cooperative Loan.

 

“Remittance Date” means the 15th day of each month, or if such day is not a Business Day, the next succeeding Business Day.

 

“REO Property” means a Mortgaged Property acquired by a Seller through foreclosure or deed in lieu of foreclosure.

 

“Repurchase Date” means, with respect to each Transaction, the date on which a Seller is required to repurchase from Buyer the Purchased Mortgage Loans which are subject to that Transaction.  The Repurchase Date shall occur (i) for Transactions terminable on a date certain, on the date specified in the Confirmation, (ii) for Transactions to be terminable on demand, the earlier to occur of (a) the date specified in Buyer’s demand or (b) the date specified in the Confirmation on which a Seller is required to repurchase the Purchased Mortgage Loans if no demand is sooner made and (iii) for repurchases of Defective Mortgage Loans under Paragraph 3(i), the Early Repurchase Date; provided, however, that in any case, the Repurchase Date with respect to each Transaction shall occur no later than the earlier of (1) the Termination Date and (2) (i) for each Jumbo Loan purchase Transaction, the date that is thirty (30) days after the

 

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Purchase Date of such Transaction, (ii) for each Aged Loan purchase Transaction, the date that is sixty (60) days after the Purchase Date for such Transaction; or (iii) for each Transaction of any other type of Purchased Mortgage Loan, the date that is forty-five (45) days after the Purchase Date of such Transaction.

 

“Repurchase Price” means, for each Purchased Mortgage Loan on any day, the price for which such Purchased Mortgage Loan is to be resold by Buyer to a Seller upon termination of the Transaction in which Buyer purchased it (including a Transaction terminable on demand), that is (x) its Purchase Price minus (y) the sum of all cash, if any, theretofore paid by Seller into the Operating Account to cure the portion of any Margin Deficit that Buyer, using any reasonable method of allocation, attributes to such Purchased Mortgage Loan plus (z) its accrued and unpaid Price Differential on that day; provided that such accrued Price Differential may be paid on a day other than the Repurchase Date in accordance with the terms of this Agreement.

 

“Required Amount” has the meaning set forth in Paragraph 5(b).

 

“Requirement(s) of Law” means any law, treaty, ordinance, decree, requirement, order, judgment, rule, regulation (or interpretation of any of the foregoing) of any Governmental Authority having jurisdiction over Buyer, any Seller or any Approved Takeout Investor, any of their respective Subsidiaries or their respective properties or any agreement by which any of them is bound.

 

“Rescission” means the Mortgagor’s exercise of any right to rescind the related Mortgage Note and related documents pursuant to applicable law.

 

“Responsible Officer” means, as to any Person, the chief executive officer or president or, with respect to financial matters, the vice president controller or treasurer of such Person; provided, however, that in the event any such officer is unavailable at any time he or she is required to take any action hereunder, Responsible Officer means any officer authorized to act on such officer’s behalf as demonstrated by a certificate of corporate resolution or similar document and an incumbency certificate.

 

“RHS” means the Rural Housing Service of the Rural Development Agency of the United States Department of Agriculture or any successor.

 

“RHS Loan” means an Eligible Mortgage Loan guaranteed by RHS that conforms to all CL rural housing mortgage loan guidelines.

 

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor.

 

“Second Home Loan” means a Conventional Conforming Loan secured by a single family residence that is occupied by the Mortgagor but is not the Mortgagor’s principal residence and whose underwriting, Takeout Commitment, appraisal and all related documentation that Buyer elects to review are approved by Buyer.

 

“Sellers’ Accounts” means each of the Funding Account and the Operating Account.

 

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“Seller’s Customer” means any natural person who has applied to a Seller for a financial product or service, has obtained any financial product or service from a Seller or has a Mortgage Loan that is serviced or subserviced by a Seller.

 

“Sellers’ Customer Information” means with respect to Sellers, any information or records in any form (written, electronic or otherwise) containing a Seller’s Customer’s personal information or identity, including such Seller’s Customer’s name, address, telephone number, loan number, loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information and the fact that such Seller’s Customer has a relationship with a Seller.

 

“Servicing File” means with respect to each Mortgage Loan, all documents relating to the servicing thereof, which may consist of (i) copies of the documents contained in the related Credit File and Loan File, as applicable, (ii) the credit documentation relating to the underwriting and closing of such Mortgage Loan(s), (iii) copies of all related documents, correspondence, notes and all other materials of any kind, (iv) copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, (v) all other information or materials necessary or required to board such Mortgage Loan onto the applicable servicing system and (vi) all other related documents required to be delivered pursuant to any of the Transaction Documents.

 

“Servicing Records” means all servicing records created and/or maintained by a Seller in its capacity as interim servicer for Buyer with respect to a Purchased Mortgage Loan, including any and all servicing agreements, files, documents, records, databases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records and any other records relating to or evidencing the servicing thereof.

 

“Servicing Rights” means all rights and interests of a Seller or any other Person, whether contractual, possessory or otherwise to service, administer and collect Income with respect to Mortgage Loans, and all rights incidental thereto.

 

“Settlement Agent” means a title company, escrow company or attorney that is acceptable to Buyer in its sole discretion and that is (i) a division, subsidiary or licensed agent of a title insurance company reasonably acceptable to Buyer and (ii) insured against errors and omissions in such amounts and covering such risks as are at all times customary for its business and with industry standards, to which the proceeds of any purchase of a Mortgage Loan are to be wired in accordance with local law and practice in the jurisdiction where such Mortgage Loan is being Originated.

 

“Shipping Instructions” means the advice in the form of Exhibit D, sent by a Seller to Buyer electronically through the MWF Web, which instructs Buyer to send one or more Mortgage Notes and the related Mortgages to an Approved Takeout Investor.

 

“Side Letter” means the Side Letter dated as of the date hereof, among Buyer and Sellers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

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“Stock Power” means, with respect to a Cooperative Loan, an assignment of the stock certificate or an assignment of the Cooperative Shares issued by the Cooperative Corporation.

 

“Subservicer” has the meaning set forth in Paragraph 13(a)(ii).

 

“Subservicer Instruction Letter” means a letter agreement between a Seller and each Subservicer substantially in the form of Exhibit H.

 

“Subservicing Agreement” has the meaning set forth in Paragraph 13(a)(ii).

 

“Subsidiary” means any corporation, association or other business entity in which more than fifty percent (50%) of the total voting power or shares of stock (or equivalent equity interest) entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

“Successor Servicer” has the meaning set forth in Paragraph 13(e).

 

“Takeout Agreement” means an agreement, in form and substance acceptable to Buyer, between an Approved Takeout Investor and a Seller, pursuant to which such Approved Takeout Investor has committed to purchase from a Seller certain of the Purchased Mortgage Loans, as such agreement may be amended, restated, supplemented or otherwise modified from time to time with the prior written consent of Buyer.

 

“Takeout Commitment” means, with respect to each Approved Takeout Investor, the commitment to purchase a Purchased Mortgage Loan from a Seller pursuant to a Takeout Agreement, and that specifies (a) the type of Purchased Mortgage Loan to be purchased, (b) a purchase date or purchase deadline date and (c) a purchase price or the criteria by which the purchase price will be determined.

 

“Takeout Guidelines” means (i) the eligibility requirements established by the Approved Takeout Investor that must be satisfied by a Mortgage Loan originator to sell Mortgage Loans to the Approved Takeout Investor and (ii) the specifications that a Mortgage Loan must meet, and the requirements that it must satisfy, to qualify for the Approved Takeout Investor’s program of Mortgage Loan purchases, as such requirements and specifications may be revised, supplemented or replaced from time to time.

 

“Takeout Value” means, (i) with respect to any Purchased Mortgage Loan subject to a Takeout Commitment, the price that an Approved Takeout Investor has agreed to pay the applicable Seller for such Purchased Mortgage Loan, and (ii) with respect to any Purchased Mortgage Loan subject to a Hedging Arrangement, the weighted average price of portfolio hedges or forward trades for such Purchased Mortgage Loans.

 

“Tangible Net Worth” means, with respect to any Person at any date, the sum of total shareholders’ equity in such Person (including capital stock, additional paid-in capital and retained earnings, but excluding treasury stock, if any), each as determined in accordance with GAAP on a consolidated basis; provided that, for purposes of this definition, there shall be excluded from assets the following:  the aggregate book value of all intangible assets of such

 

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Person (as determined in accordance with GAAP), including goodwill, trademarks, trade names, service marks, copyrights, patents, licenses, franchises, capitalized servicing rights, excess capitalized servicing rights, each to be determined in accordance with GAAP consistent with those applied in the preparation of such Person’s financial statements; advances or loans to shareholders or Affiliates, advances or loans to employees (unless such advances are against future commissions), unconsolidated investments in Affiliates (including any unconsolidated Subsidiary), deferred tax assets, assets pledged to secure any liabilities not included in the Debt of such Person and any other assets that would be deemed by the Agencies to be unacceptable in calculating tangible net worth or which have been communicated by Buyer or CL in writing as being unacceptable in calculating tangible net worth for any subsequent period.

 

“Tax and Insurance Amount” means, at any time, the amount determined by Buyer from time to time in its sole discretion with written notice to any Seller, as the amount approximately equal to the escrowed tax and insurance payments made by the Mortgagors with respect to the Purchased Mortgage Loans, at that time.

 

“Termination Date” means the earliest of (i) that Business Day which any Seller designates as the Termination Date by written notice to Buyer at least thirty (30) days prior to such date, (ii) the date of declaration of the Termination Date pursuant to Paragraph 12(c), and (iii) 364 days after the date hereof, as such date may be extended by written agreement of Buyer and Sellers.

 

“Third Party Originator” means any Person, other than a permanent employee of a Seller, who engages in the solicitation, procurement, packaging, processing or performing of any other Origination function with regard to a Mortgage Loan.

 

“TPO Loan” means a Mortgage Loan which has been solicited, procured, packaged, processed or otherwise Originated by a Third Party Originator.

 

“Transaction” has the meaning set forth in Paragraph 1 of this Agreement.

 

“Transaction Documents” means this Agreement (including all exhibits and schedules attached hereto), each Confirmation, each Bailee Letter, each Trust Release Letter, the Side Letter, the Electronic Tracking Agreement, each Takeout Agreement, each Takeout Commitment, each Insured Closing Letter and each deposit account agreement, other agreement, document or instrument executed or delivered in connection therewith, in each case as amended, restated, supplemented or otherwise modified from time to time.

 

“Trust Release Letter” means a letter in substantially the form of Exhibit L, appropriately completed and authenticated by a Seller, or such other form as may be approved by Buyer in writing in its sole discretion.

 

“UCC” means the Uniform Commercial Code, as amended from time to time, as in effect in the relevant jurisdiction.

 

“VA” means the U.S. Department of Veterans Affairs or any successor department or agency.

 

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“Wet Funding” means the purchase of a Mortgage Loan that is Originated by a Seller on the Purchase Date under escrow arrangements satisfactory to Buyer pursuant to which a Seller is permitted to use the Purchase Price proceeds to close the Mortgage Loan prior to Buyer’s receipt of the complete Loan File.

 

“Wet Funding Deadline” means, with respect to any Wet Loan, the fifth (5th) Business Day after the Origination Date for such Wet Loan, or such later Business Day as Buyer, in its sole discretion, may specify from time to time.

 

“Wet Loan” means a Mortgage Loan for which the completed Loan File was not delivered to Buyer prior to funding of the related Purchase Price.

 

(b)        Interpretation.  Headings are for convenience only and do not affect interpretation.  The following rules of this Paragraph 2(b) apply unless the context requires otherwise.  The singular includes the plural and conversely.  A gender includes all genders.  Where a word or phrase is defined, its other grammatical forms have a corresponding meaning.  Any capitalized term used in the Side Letter and used, but not defined differently, in this Agreement has the same meaning here as there.  A reference in this Agreement to a Paragraph, subparagraph, Exhibit or Schedule is, unless otherwise specified, a reference to a Paragraph or subparagraph of, or an Exhibit or Schedule to, this Agreement.  “Indorse” and correlative terms used in the Uniform Commercial Code may be spelled with an initial “e” instead of “i”.  A reference to a party to this Agreement or another agreement or document includes the party’s successors and permitted substitutes or assigns.  A reference to an agreement or document is to the agreement or document as supplemented, amended, novated, restated or replaced, except to the extent prohibited by any Transaction Document.  A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it.  A reference to writing includes a facsimile or electronic transmission and any other means of reproducing words in a tangible and permanently visible form.  A reference to conduct includes an omission, statement or undertaking, whether or not in writing.  An Event of Default exists until it has been waived in writing by the appropriate Person or Persons or has been timely cured.  The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.  The term “including” and correlative terms are not limiting and mean “including without limitation”, whether or not that phrase is stated.  In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including”.  If a day for payment or performance specified by, or determined in accordance with, the provisions of this Agreement is not a Business Day, then the payment or performance will instead be due on the Business Day next following that day.  Unless otherwise specifically provided, all determinations by Buyer shall be in its sole, absolute and unfettered discretion.  This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters; all such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if Sellers or Buyer gives notice to the other of them that it requests an amendment to any provision hereof to eliminate the effect of any change occurring after the effective date of this Agreement in GAAP

 

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or in its application on the operation of such provision, whether any such notice is given before or after such change in GAAP or in its application, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.  Unless otherwise specifically provided, all accounting calculations shall be made on a consolidated basis.  Except where otherwise provided in this Agreement, references herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of the Sellers.  Except where otherwise provided in this Agreement, any determination, statement or certificate by the Buyer or an authorized officer of the Buyer or any of its Affiliates provided for in this Agreement that is made in good faith and in the manner provided for in this Agreement shall be conclusive and binding on the parties in the absence of manifest error.  A reference to an agreement includes a security interest, guarantee, agreement or legally enforceable arrangement, whether or not in writing.  A reference to a document includes an agreement (as so defined) in writing or a certificate, notice, instrument or document or any information recorded on a computer drive or other electronic media form.  Where a Seller is required by this Agreement to provide any document to Buyer, it shall be provided in writing or printed form unless Buyer requests otherwise, and at Buyer’s request, the document shall be provided in electronic form or in both printed and electronic form.  This Agreement and the other Transaction Documents are the result of negotiations between Buyer and Sellers (and Sellers’ related parties) and are the product of all parties.  In the interpretation of this Agreement and the other Transaction Documents, no rule of construction shall apply to disadvantage one party on the ground that such party originated, proposed, presented or was involved in the preparation of any particular provision of this Agreement or of any other Transaction, or of this Agreement or such other Transaction Document itself.  Except where otherwise expressly stated, the Buyer may (i) give or withhold, or give conditionally, approvals and consents, (ii) be satisfied or unsatisfied, and (iii) form opinions and make determinations, in each case in Buyer’s sole and absolute discretion.  Any requirement of good faith, reasonableness, discretion or judgment by Buyer shall not be construed to require Buyer to request or await receipt of information or documentation not immediately available from or with respect to Seller or any other Person or the Purchased Mortgage Loans themselves.  Buyer may waive, relax or strictly enforce any applicable deadline at any time and to such extent as Buyer shall elect, and no waiver or relaxation of any deadline shall be applicable to any other instance or application of that deadline or any other deadline, and no such waiver or relaxation, no matter how often made or given, shall be evidence of or establish a custom or course of dealing different from the express provisions and requirements of this Agreement.

 

3.                                    Initiation; Confirmations; Termination; Sellers as Agents

 

(a)        Initiation.  Any agreement to enter into a Transaction shall be made in writing at the initiation of a Seller through the MWF Web prior to the Termination Date.  In the event that a Seller desires to enter into a Transaction hereunder, a Seller shall deliver to Buyer no earlier than three (3) Business Days prior to, and no later than 3:30 p.m., Houston, Texas time, on, the date of the proposed Purchase Date, a request for Buyer to purchase an amount of Eligible Mortgage Loans on such Purchase Date.  All such purchases shall be on a servicing released basis and shall include the Servicing Rights with respect to such Eligible Mortgage Loan.  Such request shall state the Purchase Price and shall include the Confirmation in form and substance acceptable to Buyer related to the proposed Transaction.

 

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(b)        Purchase by Buyer.  Subject to the terms of the Side Letter and satisfaction of the conditions precedent set forth in this Paragraph 3 and in Paragraph 7, on the requested Purchase Date for each Transaction, Buyer shall transfer to a Seller — for a newly Originated Eligible Mortgage Loan, by transferring funds to the designated Settlement Agent — an amount equal to the Purchase Price for purchase of each Eligible Mortgage Loan that is the subject of such Transaction on that Purchase Date, less any amounts to be netted against such Purchase Price.  The transfer of funds to the Settlement Agent to be used to fund the Mortgage Loan, and if applicable, the netting of amounts for value, on the Purchase Date for any Transaction will constitute full payment by Buyer of the Purchase Price for such Mortgage Loan.  Within five (5) days following the Purchase Date, a Seller shall (i) take such steps as are necessary and appropriate to effect the transfer to Buyer on the MERS® System of the Purchased Mortgage Loans so purchased, and to cause Buyer to be designated as “Interim Funder” on the MERS® System with respect to each such Purchased Mortgage Loan and (ii) in the case of a Wet Funding, deliver all remaining items of the related Loan File to Buyer.  Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, Buyer shall have no obligation to enter into any Transaction on or after the Termination Date.  A Seller may (i) initially request less than one hundred percent (100%) of the Purchase Price for any one or more Purchased Mortgage Loans, (ii) repay part of the Purchase Price therefor to Buyer or (iii) both, and may subsequently request that Buyer fund (or re-fund) the balance of the Purchase Price to a Seller, and in either case so long as no Default or Event of Default has occurred and is continuing, Buyer may elect (but shall not be obligated) to fund (or re-fund) such balance to a Seller.

 

(c)        Confirmations.  The Confirmation for each Transaction shall (i) include the Loan Purchase Detail with respect to the Mortgage Loans subject to such Transaction, (ii) identify Buyer and Seller and (iii) set forth (A) the Purchase Date, (B) the Purchase Price, (C) the Repurchase Date, (D) the Pricing Rate applicable to the Transaction and (E) any additional terms or conditions of the Transaction mutually agreeable to Buyer and Seller.  In the event of any conflict between the terms of a Confirmation that has been affirmatively accepted by Buyer and this Agreement, such accepted Confirmation shall prevail.

 

(d)        Failed Fundings.  Sellers agree to report to Buyer by facsimile transmission or electronic mail as soon as practicable, but in no event later than one (1) Business Day after each Purchase Date any Mortgage Loans which failed to be funded to the related Mortgagor, otherwise failed to close for any reason or failed to be purchased hereunder.  Sellers further agree to (i) return, or cause the Settlement Agent to return, to the Funding Account, for refunding to Buyer the portion of the Purchase Price allocable to such Mortgage Loans as soon as practicable, but in no event later than one (1) Business Day after the related Purchase Date, and (ii) indemnify Buyer for any loss, cost or expense incurred by Buyer as a result of the failure of such Mortgage Loans to close or to be delivered to Buyer.

 

(e)        Accrual and Payment of Price Differential.  The Price Differential for each Transaction shall accrue during the period commencing on (and including) the day when the Purchase Price is transferred into the Funding Account (or otherwise paid to any Seller) for such Transaction and ending on (but excluding) the day when the Repurchase Price is paid to Buyer.  Accrued Price Differential for each Purchased Mortgage Loan shall be due and payable (i) on each Remittance Date, (ii) when any Event of Default occurs and (iii) on each Business Day after 

 

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any Event of Default occurs and so long as it is continuing, to and including the day that the Repurchase Price therefor shall be paid to Buyer.

 

(f)         Repurchase Required.  A Seller shall repurchase Purchased Mortgage Loans from Buyer on or prior to each related scheduled Repurchase Date.  Each obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Mortgage Loan.  A Seller is obligated to obtain the Purchased Mortgage Loans from Buyer or its designee at Sellers’ expense on the related Repurchase Date.  On the Repurchase Date, termination of the Transaction will be effected by resale by Buyer to a Seller or its designee of the Purchased Mortgage Loans (or, at Buyer’s election, Equivalent Mortgage Loans) on a servicing released basis against a Seller’s submission to Buyer of a Completed Repurchase Advice, all in form and substance satisfactory to Buyer.  After receipt of the payment of the Repurchase Price from a Seller, Buyer shall transfer such Purchased Mortgage Loans (or, at Buyer’s option, Equivalent Mortgage Loans) to such Seller and deliver, or cause to be delivered, to such Seller all Mortgage Loan Documents previously delivered to Buyer (or the Mortgage Loan Documents related to such Equivalent Mortgage Loans, as applicable) and take such steps as are necessary and appropriate to effect the transfer of the Purchased Mortgage Loan (or such Equivalent Mortgage Loans, as applicable) to such Seller on the MERS® System.  All such transfers from Buyer to Seller are and shall be without recourse and without any of the transfer warranties of UCC §3-417 or other warranty, express or implied.  Notwithstanding the foregoing or any other provision to the contrary in this Agreement or any other Transaction Document, Buyer shall not be obligated to transfer any Purchased Mortgage Loans (or any Equivalent Mortgage Loans) to any Seller after the termination of this Agreement or Buyer’s liquidation of the Purchased Mortgage Loans pursuant to Paragraph 12.

 

(g)        Repurchase Advice.  If Buyer receives the Completed Repurchase Advice with respect to a Purchased Mortgage Loan at or prior to 3:00 p.m. Houston, Texas time, on any Business Day, then the Repurchase Date will occur with respect to such Purchased Mortgage Loan on such day.  If Buyer receives the Completed Repurchase Advice with respect to any Purchased Mortgage Loan after 3:00 p.m. Houston, Texas time, on any Business Day, then the Repurchase Date will occur with respect to such Purchased Mortgage Loan on the next Business Day.  In connection with any repurchase pursuant to a Completed Repurchase Advice, Buyer will debit the Funding Account and the Operating Account, if applicable, for the amount of the Repurchase Price (less any amount of Price Differential to be paid on the next Remittance Date).  Without limiting Sellers’ obligations hereunder, at any time after the occurrence and during the continuance of a Default or an Event of Default, Sellers shall not be permitted to repurchase less than all of the Purchased Mortgage Loans relating to all Sellers without the prior written consent of Buyer.

 

(h)        Reliance.  With respect to any Transaction, Buyer may conclusively rely upon, and shall incur no liability to any Seller in acting upon, any request or other communication that Buyer reasonably believes to have been given or made by a Person authorized to enter into a Transaction on behalf of any Seller.

 

(i)         Defective Mortgage Loans.

 

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(i)         If, after Buyer purchases a Mortgage Loan, Buyer determines or receives notice (whether from a Seller or otherwise) that a Purchased Mortgage Loan is (or has become) a Defective Mortgage Loan, Buyer shall promptly notify any Seller, and a Seller shall repurchase such Purchased Mortgage Loan at the Repurchase Price on the Early Repurchase Date (as such term is defined below).

 

(ii)        If Sellers become obligated to repurchase a Mortgage Loan pursuant to subparagraph 3(i)(i) above, Buyer shall promptly give notice of such repurchase obligation to any Seller and a calculation of the Repurchase Price therefor.  On the same day a Seller receives such notice (the “Early Repurchase Date”), Sellers shall repurchase the Defective Mortgage Loan by making a payment to Buyer of an amount equal to the sum of the Repurchase Price, and shall submit a Completed Repurchase Advice.  Buyer is authorized to charge any of Sellers’ Accounts for such amount unless the Parties have agreed in writing to a different method of payment and Sellers have paid such amount by such agreed method.  If Sellers’ Accounts do not contain sufficient funds to pay in full the amount due Buyer under this subparagraph, or if the amount due is not paid by any applicable alternative method of payment previously agreed to by the Parties, Sellers shall promptly deposit funds in the Operating Account sufficient to pay such amount due Buyer and notify Buyer of such deposit.  After receipt of the payment of the Repurchase Price therefor from Sellers, Buyer shall transfer such Purchased Mortgage Loans (or, at Buyer’s option, Equivalent Mortgage Loans) to Seller and deliver, or cause to be delivered, to Seller all documents for the Mortgage Loan previously delivered to Buyer (or the Mortgage Loan Documents related to such Equivalent Mortgage Loans, as applicable) and take such steps as are necessary and appropriate to effect the transfer of the Purchased Mortgage Loan (or such Equivalent Mortgage Loans, as applicable) to Sellers on the MERS® System.

 

(j)         Sellers as Agents.  Each Seller hereby appoints all other Sellers, individually and collectively, as its agents for purposes of initiating Transactions, confirming Transactions, communicating with or receiving communications from Buyer, satisfying the margin maintenance provisions hereunder and for all other purposes under this Agreement and the other Transaction Documents.  Each Seller hereby accepts its appointment as agent for the other Sellers.  Each Seller acknowledges and agrees that (i) the appointments and acceptances contemplated hereby are made for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, (ii) a Seller, acting as agent, can bind any and all Sellers, (iii) Buyers’ actions with respect to any agent shall bind all Sellers, whether or not Buyer knows the applicable Seller is acting in an agency capacity and (iv) the agency appointments contemplated hereby shall not relieve any Seller of its obligations hereunder and shall not diminish the joint and several liability of all Sellers hereunder.  For the avoidance of doubt but not by way of limitation, the Parties agree that a Transaction may be initiated by, and a Confirmation may be addressed to, any Seller whether or not such Seller is the Party selling the Purchased Mortgage Loans subject to such Transaction or Confirmation.

 

4.                                    Margin Maintenance

 

(a)        Margin Deficit.  If at any time the sum of the Margin Amounts of all Purchased Mortgage Loans is less than the Aggregate Purchase Price (a “Margin Deficit”), then Buyer, by 

 

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notice to any Seller (a “Margin Call”), may require Sellers to transfer to Buyer (x) cash to be applied by Buyer to reduce the Repurchase Prices of Purchased Mortgage Loans that are then subject to outstanding Transactions or (y) if Buyer is willing to accept them in lieu of cash, additional Eligible Mortgage Loans reasonably acceptable to Buyer (“Additional Purchased Mortgage Loans”) or (z) a combination, to the extent (if any) acceptable to Buyer, of cash and Additional Purchased Mortgage Loans, so that immediately after such transfer(s) the sum of (i) such cash, if any, so transferred to Buyer plus (ii) the aggregate of the Margin Amounts of all Purchased Mortgage Loans for all Transactions outstanding at that time, including any such Additional Purchased Mortgage Loans, will be at least equal to the Aggregate Purchase Price at that time.

 

(b)        Margin Maintenance.  If the notice to be given by Buyer to any Seller under Paragraph 4(a) above is given at or prior to 10:00 a.m. Houston, Texas time on a Business Day, Sellers shall transfer cash or Additional Purchased Mortgage Loans to Buyer prior to 5:00 p.m. Houston, Texas time on the date of such notice, and if such notice is given after 10:00 a.m. Houston, Texas time, Sellers shall transfer cash or Additional Purchased Mortgage Loans prior to 12:00 p.m. Houston, Texas time on the Business Day following the date of such notice.  All cash required to be delivered to Buyer pursuant to this Paragraph 4(b) shall be deposited by Sellers into the Operating Account and applied by Buyer to reduce the Repurchase Prices of such of the Purchased Mortgage Loans that are then subject to outstanding Transactions as Buyer shall select, with the amount to be applied to the Repurchase Price of any particular Purchased Mortgage Loan to be determined by Buyer, using such reasonable method of allocation as Buyer shall elect in its sole discretion at the time.  Buyer’s election, in its sole and absolute discretion, not to make a Margin Call at any time there is a Margin Deficit shall not in any way limit or impair its right to make a Margin Call at any other time a Margin Deficit exists (or still exists).

 

(c)        Margin Excess.  If on any day after a Seller has transferred cash or Additional Purchased Mortgage Loans to Buyer pursuant to Paragraph 4(b) above, the sum of (i) the cash paid to Buyer and (ii) the aggregate of the Margin Amounts of all Purchased Mortgage Loans for all Transactions at that time, including any such Additional Purchased Mortgage Loans, exceeds the Aggregate Purchase Price, then at the request of a Seller, Buyer shall return a portion of the cash or Additional Purchased Mortgage Loans (or, at Buyer’s election, Equivalent Mortgage Loans) to a Seller so that the remaining sum of (i) and (ii) does not exceed the Aggregate Purchase Price; provided that the sum of the cash plus the value of Additional Purchased Mortgage Loans returned shall be strictly limited to an amount, after the return of which, no Margin Deficit will exist.

 

(d)        Market Value Determinations.  Buyer may determine the Market Value of any Purchased Mortgage Loans from time to time and with such frequency and taking into consideration such factors, as it may elect, in its sole discretion, including, but not limited to, current market conditions and the fact that the Purchased Mortgage Loans may be sold or otherwise disposed of under circumstances where any Seller is in default under this Agreement; provided, however, that a Market Value of zero shall be assigned to any Purchased Mortgage Loan that, at the time of determination, is not an Eligible Mortgage Loan.  Buyer’s determination of Market Value shall be conclusive upon the Parties.

 

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5.                                    Accounts; Income Payments

 

(a)        Accounts.  Prior to the date hereof, Sellers shall jointly and severally establish or cause to be established each of the Accounts at Financial Institution.  RMC’s taxpayer identification number will be designated as the taxpayer identification number for each Account and Sellers shall be jointly and severally responsible for reporting and paying taxes on any income earned with respect to the Accounts.  Each Account shall be under the sole dominion and control of Buyer, and each Seller agrees that (i) no Seller shall have any right or authority to withdraw or otherwise give any directions with respect to the Accounts or the disposition of any funds held in the Accounts; provided that any Seller may cause amounts to be deposited into any Account at any time, and (ii) Financial Institution may comply with instructions originated by Buyer directing disposition of the funds in the Accounts without further consent of any Seller.  Only employees of Buyer shall be signers with respect to the Accounts.  Pursuant to Paragraph 6, Sellers have pledged, assigned, transferred and granted a security interest to Buyer in all Accounts in which any Seller has rights or power to transfer rights and all Accounts in which any Seller later acquires ownership, other rights or the power to transfer rights.  Sellers and Buyer hereby agree that Buyer has “control” of the Accounts within the meaning of Section 9-104 of the UCC.  Any provision hereof to the contrary notwithstanding and for the avoidance of doubt, Sellers agree and acknowledge that Buyer is not required to return funds on deposit in an Account to any Seller if any amounts are owed to Buyer hereunder by any Seller or Sellers in the aggregate.

 

(b)        Cash Pledge Account.  On or prior to the date hereof, Sellers shall jointly and severally deposit an amount equal to 1.50% of the Facility Amount (the “Required Amount”) into the Cash Pledge Account.  Sellers shall cause an amount not less than the Required Amount to be on deposit in the Cash Pledge Account at all times.  If on any Remittance Date, the amount on deposit in the Cash Pledge Account is greater than the Required Amount, provided that no Default or Event of Default has occurred, upon a Seller’s request such excess will be disbursed to a Seller on such Remittance Date after application by Buyer to the payment of any amounts owing by any Seller or Sellers in the aggregate to Buyer on such date.  At any time upon or after the occurrence of an Event of Default, Buyer, in its sole discretion, may apply the amounts on deposit in any Cash Pledge Accounts in accordance with the provisions of Paragraph 5(f).

 

(c)        Funding Account.  The Funding Account shall be used for fundings of the Purchase Price and the Repurchase Price with respect to each Purchased Mortgage Loan in accordance with Paragraph 3.  Sellers shall jointly and severally cause all amounts to be paid in respect of the related Takeout Commitments to be remitted by the Approved Takeout Investors directly to the Funding Account without any notice to or consent of any Seller.  On each Repurchase Date which occurs pursuant to Paragraph 3(f) with respect to any Purchased Mortgage Loan, Buyer will apply the applicable amounts on deposit in the related Funding Account to the unpaid Repurchase Price due to Buyer for such Purchased Mortgage Loan and, unless an Event of Default has occurred, Buyer will transfer the remaining balance, if any, in the Funding Account to the Operating Account.  At any time upon or after the occurrence of an Event of Default, Buyer, in its sole discretion, may apply the amounts on deposit in the Funding Accounts in accordance with the provisions of Paragraph 5(f).

 

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(d)        Collection Account.  At any time after the occurrence of an Event of Default, Buyer may require that Sellers establish the Collection Account and then and thereafter jointly and severally maintain on deposit in the Collection Account an amount at least equal to the Tax and Insurance Amount, as determined by Buyer from time to time.  If then or at any time thereafter, Buyer gives notice to Sellers that the amount on deposit in the Collection Account is less than the Tax and Insurance Amount, Sellers shall promptly deposit additional funds in the Collection Account sufficient to increase its balance to equal the Tax and Insurance Amount.  At any time after the occurrence of an Event of Default, Buyer, in its sole discretion, may apply the amounts on deposit in the Collection Account in accordance with the provisions of Paragraph 5(f).

 

(e)        Operating Account.

 

(i)         The Operating Account shall be used for the purposes of (1) Sellers’ payment of Price Differential and any other amounts owing to Buyer under this Agreement, the Side Letter or any other Transaction Document, (2) Sellers’ funding of any shortfall between (x) the proceeds of an Eligible Mortgage Loan being purchased by Buyer that are to be disbursed at its Origination and (y) the Purchase Price to be paid by Buyer for that Eligible Mortgage Loan, (3) Sellers’ payment of any difference between the Repurchase Price and the amount received by Buyer from the applicable Approved Takeout Investor in connection with the repurchase of a Purchased Mortgage Loan pursuant to Paragraph 3(g) and (4) for any cash payments made by Seller to satisfy Margin Calls pursuant to Paragraph 4(b).

 

(ii)        On or before the fourth (4th) Business Day before each Remittance Date, Buyer will notify any Seller in writing of the Price Differential and other amounts due Buyer on that Remittance Date.  On or prior to the Business Day preceding each Remittance Date, Sellers shall jointly and severally deposit into the Operating Account an amount sufficient to pay all amounts due Buyer on that Remittance Date.  On each Remittance Date, Buyer shall withdraw funds from the Operating Account to effect such payment to the extent of funds then available in the Operating Account.  If the funds on deposit in the Operating Account are insufficient to pay the amounts then due Buyer in full, Sellers shall jointly and severally pay the deficiency amount on the date such payment is due by wire transfer of such amount to the Operating Account, and Buyer shall withdraw the funds so deposited to pay such deficiency to the extent of the funds deposited.

 

(iii)       Funds deposited by Sellers in the Operating Account to cover the shortfall, if any, referred to in clause (2) of subparagraph 5(e)(i) will be disbursed by Buyer to the Settlement Agent along with the Purchase Price of the related Eligible Mortgage Loan being purchased by Buyer to fund the Origination of such Mortgage Loan as provided in Paragraph 3(b).

 

(iv)       At any time after a Margin Call, Buyer may withdraw funds from the Operating Account to pay such Margin Call and shall apply the funds so withdrawn for that purpose to reduce the Repurchase Prices of Purchased Mortgage Loans then subject to outstanding Transactions as provided in Paragraph 4(b).  At any time after the 

 

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occurrence of an Event of Default, Buyer, in its sole discretion, may apply the amounts on deposit in the Operating Account in accordance with the provisions of Paragraph 5(f).

 

(v)        Unless (1) a Default or an Event of Default has occurred or (2) any amounts are then owing to Buyer or any Indemnified Party under this Agreement or another Transaction Document, on any Seller’s request, Buyer will transfer the Operating Account balance to an account designated by such Seller.

 

(f)         Application of Funds.  After the occurrence of an Event of Default, at such times as Buyer may direct in its sole discretion, Buyer shall apply all Income and such other amounts on deposit in all or any of the Accounts, other than (i) mortgagor’s actual escrow payments held in any account and required to be used for the payment of taxes and insurance on any Purchased Mortgage Loan and (ii) funds on deposit in the Collection Account that Buyer elects to apply, or to reserve for future application, to pay taxes and insurance in respect of Purchased Mortgage Loans if Buyer determines that available tax and insurance escrow deposits are insufficient (or is unable to confirm their sufficiency), in the same order and manner as is provided in Paragraph 12(e) for proceeds of dispositions of Purchased Mortgage Loans not repurchased by Seller.

 

(g)        Income.  Where a particular Transaction’s term extends over the date on which Income is paid by the Mortgagor on any Purchased Mortgage Loan subject to that Transaction, that Income will be the property of Buyer until Sellers, acting pursuant to their joint and several obligations hereunder, have paid Buyer the full Repurchase Price in respect of such Transaction.  Notwithstanding the foregoing, and provided no Default or Event of Default has occurred and is continuing and no Margin Deficit then exists, Buyer agrees that a Seller or its designee shall be entitled to receive and retain that Income to the full extent it would be so entitled if the Purchased Mortgage Loans had not been sold to Buyer; provided that any Income received by a Seller while the related Transaction is outstanding shall be deemed to be held by Sellers solely in trust for Buyer pending the payment of the Repurchase Price in respect of such Transaction and the repurchase of the related Purchased Mortgage Loans.  If a Default or an Event of Default has occurred and is continuing, or a Margin Deficit exists, as of the date Income is paid on a Purchased Mortgage Loan subject to a Transaction hereunder, if directed by Buyer, Sellers, acting pursuant to their joint and several obligations hereunder, shall cause such Income to be deposited directly into the Collection Account or to such other account as Buyer may direct.

 

(h)        Sellers’ Obligations.  The provisions of this Paragraph 5 shall not relieve any Seller from its joint and several obligations to pay the Repurchase Price on the applicable Repurchase Date and to satisfy any other payment obligation of Sellers hereunder or under any other Transaction Document.

 

6.                                    Security Interest; Assignment of Takeout Commitments

 

(a)        Security Interest.  Although the Parties intend that all Transactions hereunder be absolute sales and purchases and not loans, to secure the payment and performance by Sellers of their joint and several obligations, liabilities and indebtedness under each such Transaction and Sellers’ joint and several obligations, liabilities and indebtedness hereunder and under the other Transaction Documents, each Seller hereby pledges, assigns, transfers and grants to Buyer a security interest in the Mortgage Assets in which such Seller (individually or collectively with 

 

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the other Sellers) has rights or power to transfer rights and all of the Mortgage Assets in which such Seller (individually or collectively with the other Sellers) later acquires ownership, other rights or the power to transfer rights.  “Mortgage Assets” means (i) the Purchased Mortgage Loans with respect to all related Transactions hereunder (including, without limitation, all Servicing Rights with respect thereto), (ii) all Servicing Records, Loan Files, Mortgage Loan Documents, including, without limitation, the Mortgage Note and Mortgage, and all of Seller’s claims, liens, rights, title and interests in and to the Mortgaged Property related to such Purchased Mortgage Loans, (iii) all Liens securing repayment of such Purchased Mortgage Loans, (iv) all Income with respect to such Purchased Mortgage Loans, (v) the related Accounts, (vi) the Takeout Commitments and Takeout Agreements to the extent such Seller’s rights thereunder relate to the Purchased Mortgage Loans, (vii) all Hedging Arrangements relating to the Purchased Mortgage Loans and (viii) all proceeds of the foregoing, including, without limitation, to the extent constituting proceeds of the foregoing, all mortgage backed securities, and the right to have and receive such mortgage backed securities when issued, that are, in whole or in part, based on, backed by or created from Purchased Mortgage Loans for which the full Repurchase Price has not been received by Buyer, irrespective of whether such Purchased Mortgage Loans have been released from this security interest.  Each Seller hereby authorizes Buyer to file such financing statements and amendments relating to the Mortgage Assets as Buyer may deem appropriate, and irrevocably appoints Buyer as such Seller’s attorney-in-fact to take such other actions as Buyer deems necessary or appropriate to perfect and continue the Lien granted hereby and to protect, preserve and realize upon the Mortgage Assets.  Sellers agree, jointly and severally, to pay all fees and expenses associated with perfecting such Liens including, without limitation, the cost of filing financing statements and amendments under the UCC, registering each Purchased Mortgage Loan with MERS and recording assignments of the Mortgages as and when required by Buyer in its sole discretion.

 

(b)        Assignment of Takeout Commitment.  The sale of each Mortgage Loan to Buyer shall include the related Seller’s rights (but none of the obligations) under the applicable Takeout Commitment and Takeout Agreement to deliver the Mortgage Loan to the Approved Takeout Investor and to receive the net sum therefor specified in the Takeout Commitment from the Approved Takeout Investor.  Effective on and after the Purchase Date for each Mortgage Loan purchased by Buyer hereunder, each Seller assigns to Buyer, free and clear of any Lien, all of such Seller’s right, title and interest in any applicable Takeout Commitment and Takeout Agreement for such Mortgage Loan; provided that Buyer shall not assume or be deemed to have assumed any of the obligations of any Seller under any Takeout Agreement or Takeout Commitment.

 

7.                                    Conditions Precedent

 

(a)        Conditions Precedent to the Effectiveness of this Agreement.  The effectiveness of this Agreement shall be subject to the satisfaction of each of the following conditions precedent (any of which Buyer may electively waive, in Buyer’s sole discretion):

 

(i)         on or before the date hereof, Sellers shall deliver or cause to be delivered each of the documents listed on Exhibit E signed by or on behalf of each Seller and in form and substance satisfactory to Buyer and its counsel;

 

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(ii)        as of the date hereof, there has been no material adverse change in the financial condition of any Seller since the most recent financial statements of such Person delivered to Buyer;

 

(iii)       as of the date hereof, no material action, proceeding or investigation shall have been instituted or threatened, nor shall any material order, judgment or decree have been issued or proposed to be issued by any Governmental Authority with respect to any Seller;

 

(iv)       Sellers shall have delivered to Buyer opinions of counsel substantially in the form of Exhibit F and in form and substance satisfactory to Buyer and its counsel;

 

(v)        Sellers shall have delivered to Buyer such other documents, opinions of counsel and certificates as Buyer may reasonably request;

 

(vi)       Sellers shall have established, jointly and severally, the Accounts at Financial Institution and shall have deposited the Required Amount to the Cash Pledge Account;

 

(vii)      on or before the date hereof, Sellers, jointly and severally, shall have paid to the extent due all fees and out-of-pocket costs and expenses (including due diligence fees and expenses and reasonable legal fees and expenses) required to be paid under this Agreement and under the other Transaction Documents;

 

(viii)      a private investigative report with respect to each Seller, in form and substance satisfactory to Buyer, shall have been submitted to and approved by Buyer; and

 

(ix)       a third party audit of Sellers, in form and substance satisfactory to Buyer, shall have been submitted to and approved by Buyer.

 

(b)        Conditions Precedent to Each Transaction.  Buyer’s obligation to pay the Purchase Price for each Transaction shall be subject to the satisfaction of each of the following conditions precedent:

 

(i)         with respect to each Purchase Date, Sellers shall have delivered to Buyer a Confirmation and the Loan Purchase Detail with respect to the Purchased Mortgage Loans subject to such Transaction;

 

(ii)        in the case of a Mortgage Loan subject to a Wet Funding, Buyer shall have received the documents described in items (i) through (iv) of the definition of Loan File, and, in the case of any other Mortgage Loan subject to such Transaction, Buyer shall have received the complete Loan File for such Mortgage Loan, in each case in form and substance satisfactory to Buyer;

 

(iii)       no Default or Event of Default shall have occurred and be continuing;

 

(iv)       no Margin Deficit shall exist either before or after giving effect to such Transaction;

 

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(v)        this Agreement and each of the other Transaction Documents shall remain in full force and effect, and the Termination Date shall not have occurred;

 

(vi)       the representations and warranties of each Seller in this Agreement and each of the other Transaction Documents to which it is a party and in any Officer’s Certificate delivered to Buyer in connection therewith shall be true and correct on and as of the date hereof and such Purchase Date, with the same effect as though such representations and warranties had been made on and as of such date (except for those representations and warranties and Officer’s Certificates which are specifically made only as of a different date, which representations and warranties and Officer’s Certificates shall be correct on and as of the date made), and each Seller shall have complied with all the agreements and satisfied all the conditions under this Agreement, each of the other Transaction Documents and the Mortgage Loan Documents to which it is a party on its part to be performed or satisfied at or prior to the related Purchase Date;

 

(vii)      no Requirement of Law would prohibit the consummation of any transaction contemplated hereby, or would impose limits on the amounts that Buyer may legally receive or would impose a material tax or levy on such Transaction or the Purchase Price, Repurchase Price or any payments received in respect thereof;

 

(viii)      no action, proceeding or investigation shall have been instituted or threatened, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority to set aside, restrain, enjoin or prevent the consummation of any Transaction contemplated hereby or seeking material damages against Buyer in connection with the transactions contemplated by the Transaction Documents;

 

(ix)       after giving effect to such Transaction, as of the related Purchase Date and as of the proposed Repurchase Date for such Transaction, no Purchased Mortgage Loan subject to a Transaction was originated more than thirty (30) days prior to such Purchase Date and such proposed Repurchase Date;

 

(x)        Buyer shall have determined that the amounts on deposit in the Operating Account are sufficient to fund any shortfall between the proceeds of a Purchased Mortgage Loan to be funded at its Origination and the Purchase Price to be paid by Buyer for the related Mortgage Loan, after taking into account the other obligations of all Sellers to be satisfied with the amounts on deposit in the Operating Account on such Purchase Date;

 

(xi)       after giving effect to such Transaction, the aggregate Purchase Price for all outstanding Transactions shall not exceed the Facility Amount;

 

(xii)      Buyer shall have received such other documents, information, reports and certificates as it shall have reasonably requested; and

 

(xiii)      Sellers shall have jointly and severally deposited the amounts required by Paragraph 5 into each of the Collection Account and the Cash Pledge Account.

 

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The acceptance by a Seller, or by any Settlement Agent at the direction of a Seller, of any Purchase Price proceeds shall be deemed to constitute a representation and warranty by all Sellers that the foregoing conditions have been satisfied.

 

8.                                    Change in Requirement of Law

 

(a)        If any Change in Requirement of Law shall:

 

(i)         impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, Buyer (except any such reserve requirement reflected in the Adjusted LIBOR Rate); or

 

(ii)        impose on Buyer or the London interbank market any other condition affecting this Agreement or Transactions entered into by Buyer;

 

and the result of any of the foregoing shall be to increase the cost to Buyer of making or maintaining any purchase hereunder (or of maintaining its obligation to enter into any Transaction) or to increase the cost or to reduce the amount of any sum received or receivable by Buyer (whether of Repurchase Price, Price Differential or otherwise), then Sellers, jointly and severally, will pay to Buyer such additional amount or amounts as will compensate Buyer for such additional costs incurred or reduction suffered.

 

(b)        If Buyer determines that any Change in Requirement of Law regarding capital requirements has or would have the effect of reducing the rate of return on Buyer’s capital or on the capital of Buyer’s holding company as a consequence of this Agreement or the purchases made by Buyer to a level below that which Buyer or Buyer’s holding company could have achieved but for such Change in Requirement of Law (taking into consideration Buyer’s policies with respect to capital adequacy), then from time to time Sellers, jointly and severally, will pay to Buyer such additional amount or amounts as will compensate Buyer or Buyer’s holding company for any such reduction suffered.

 

(c)        A certificate of Buyer setting forth the amount or amounts necessary to compensate Buyer or its holding company, as the case may be, as specified in subparagraph (a) or (b) of this Paragraph shall be delivered to a Seller and shall be conclusive absent manifest error.  Sellers, jointly and severally, shall pay Buyer, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

(d)        Failure or delay on the part of Buyer to demand compensation pursuant to this Paragraph shall not constitute a waiver of Buyer’s right to demand such compensation; provided that Sellers shall not be required to compensate Buyer pursuant to this Paragraph for any increased costs or reductions incurred more than 270 days prior to the date that Buyer notifies any Seller of the Change in Requirement of Law giving rise to such increased costs or reductions and of Buyer’s intention to claim compensation therefor; provided, further, that, if the Change in Requirement of Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

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9.                                    Segregation of Documents Relating to Purchased Mortgage Loans

 

All documents relating to Purchased Mortgage Loans in the possession of a Seller shall be segregated from other documents and securities in its possession and shall be identified as being subject to this Agreement.  Segregation may be accomplished by appropriate identification on the books and records of the holder, including a financial or securities intermediary or a clearing corporation.  All of Sellers’ interest in the Purchased Mortgage Loans (including the Servicing Rights) shall pass to Buyer on the Purchase Date and nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise selling, transferring, pledging or hypothecating the Purchased Mortgage Loans, but no such transaction shall relieve Buyer of its obligations to transfer the Purchased Mortgage Loans (or, at Buyer’s election, Equivalent Mortgage Loans) to a Seller pursuant to Paragraph 3 or 4.

 

10.                            Representations and Warranties

 

(a)        To induce Buyer to enter into this Agreement and the Transactions hereunder, Sellers represent and warrant as of the date of this Agreement and as of each Purchase Date with respect to each Seller that each of the following statements is and shall remain true and correct throughout the term of this Agreement and until all obligations, liabilities and indebtedness of all Sellers under this Agreement and the other Transaction Documents are paid in full.

 

(i)         Representations and Warranties Concerning Purchased Mortgage Loans.  By each delivery of a Confirmation, Seller shall be deemed, as of the Purchase Date of the described sale of each Purchased Mortgage Loan (or, if another date is expressly provided in such representation or warranty, as of such other date), and as of each date thereafter that such Purchased Mortgage Loan remains subject to this Agreement, to represent and warrant that each Purchased Mortgage Loan then sold to Buyer is an Eligible Mortgage Loan.

 

(ii)        Organization and Good Standing.  Seller and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction under which it was organized, has full legal power and authority to own its property and to carry on its business as currently conducted, and is duly qualified as a foreign corporation or entity to do business and is in good standing in each jurisdiction in which the transaction of its business makes such qualification necessary, except in jurisdictions, if any, where a failure to be in good standing has no material adverse effect on the business, operations, assets or financial condition of Seller or any such Subsidiary.  For the purposes hereof, good standing shall include qualification for any and all licenses and payment of any and all taxes required in the jurisdiction of its organization and in each jurisdiction in which Seller or a Subsidiary transacts business.  Seller has no Subsidiaries except those identified by Seller to Buyer in Exhibit G.  With respect to Seller and each such Subsidiary, Exhibit G correctly states its name as it appears in its articles of formation filed in the jurisdiction of its organization, address, place of organization, each state in which it is qualified as a foreign corporation or entity, and in the case of the Subsidiaries, the percentage ownership (direct or indirect) of Seller in such Subsidiary.

 

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(iii)       Authority and Capacity.  Seller has all requisite power, authority and capacity to enter into this Agreement and each other Transaction Document and to perform the obligations required of it hereunder and thereunder.  This Agreement constitutes a valid and legally binding agreement of Seller enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization, conservatorship and similar laws, and by equitable principles.  No consent, approval, authorization, license or order of or registration or filing with, or notice to, any Governmental Authority is required under any Requirement of Law prior to the execution, delivery and performance of or compliance by Seller with this Agreement or any other Transaction Document or the consummation by Seller of any transaction contemplated thereby, except for those which have already been obtained by Seller, and the filings and recordings in respect of the Liens created pursuant to this Agreement and the other Transaction Documents.  If Seller is a depository institution, this Agreement shall be maintained in Seller’s official records.

 

(iv)       No Conflict.  Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement, nor compliance with its terms and conditions, shall conflict with or result in the breach of, or constitute a default under, or result in the creation or imposition of any Lien of any nature upon the properties or assets of Seller, any of the terms, conditions or provisions of Seller’s organizational documents, or any mortgage, indenture, deed of trust, loan or credit agreement or other agreement or instrument to which Seller is now a party or by which it is bound (other than this Agreement).

 

(v)        Performance.  Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform, and Seller intends to perform, each and every covenant which it is required to perform under this Agreement and the other Transaction Documents.

 

(vi)       Ordinary Course Transaction.  The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of Seller, and neither the sale, transfer, assignment and conveyance of Mortgage Loans to Buyer nor the pledge, assignment, transfer and granting of a security interest to Buyer in the Mortgage Assets, by Seller pursuant to this Agreement are subject to the bulk transfer or any similar Requirement of Law in effect in any applicable jurisdiction.

 

(vii)      Litigation; Compliance with Laws.  There is no Litigation pending or, to Seller’s knowledge threatened, that could reasonably be expected to cause a Material Adverse Effect or that might materially and adversely affect the Mortgage Loans sold or to be sold pursuant to this Agreement.  Seller has not violated any Requirement of Law applicable to Seller which, if violated, would materially and adversely affect the Mortgage Loans to be sold pursuant to this Agreement or could reasonably be expected to cause a Material Adverse Effect.

 

(viii)      Statements Made.  The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of Seller to Buyer in connection with the negotiation, preparation or delivery of this Agreement and the other Transaction

 

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Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.  All written information furnished after the date hereof by or on behalf of Seller to Buyer in connection with this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect on the date as of which such information is stated or certified or (in the case of projections) based on estimates that are believed to be reasonable as of the respective dates of such estimates.  There is no fact known to a Responsible Officer that, after due inquiry, could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Transaction Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to Buyer for use in connection with the transactions contemplated hereby or thereby.

 

(ix)       Approved Company.  Seller currently holds all approvals, authorizations and other licenses from the Approved Takeout Investors and the Agencies required under the Takeout Guidelines (or otherwise) to Originate, purchase, hold, service and sell Mortgage Loans of the types to be offered for sale to Buyer hereunder.

 

(x)        Fidelity Bonds.  Seller has purchased fidelity bonds and policies of insurance, all of which are in full force and effect, insuring Seller, Buyer and the successors and assigns of Buyer in the greater of (a) $500,000, (b) the amount required by the Approved Takeout Investor and (c) the amount required by any other Takeout Guidelines, against loss or damage from any breach of fidelity by Seller or any officer, director, employee or agent of Seller, and against any loss or damage from loss or destruction of documents, fraud, theft, misappropriation, or errors or omissions.

 

(xi)       Solvency.  As of the date hereof and immediately after giving effect to each Transaction hereunder, the fair value of the assets of Seller is greater than the fair value of the liabilities (including contingent liabilities if and to the extent required to be recorded as a liability on the financial statements of Seller in accordance with GAAP) of Seller, and Seller is and will be solvent, is, will be able and intends, to pay its debts as they mature and does not and will not have an unreasonably small capital to engage in the business in which it is engaged and proposes to engage. Seller does not intend to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not transferring any Loans with any intent to hinder, delay or defraud any Person.

 

(xii)      Reporting.  In its financial statements, Seller intends to report each sale of a Mortgage Loan hereunder as a financing in accordance with GAAP.  Seller has been advised by or confirmed with its independent public accountants that such sales can be so reported under GAAP on its financial statements.

 

(xiii)      Financial Condition.  The balance sheets of Seller provided to Buyer pursuant to Paragraph 11(g) (and, if applicable, its Subsidiaries, on a consolidated and consolidating basis) as at the dates of such balance sheets, and the related statements of

 

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income, changes in stockholders’ equity and cash flows for the periods ended on the dates of such balance sheets heretofore furnished to Buyer, fairly present the financial condition of Seller and its Subsidiaries as of such dates and the results of its and their operations for the periods ended on such dates.  On the dates of such balance sheets, Seller had no known material liabilities, direct or indirect, fixed or contingent, matured or unmatured, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against on, said balance sheets and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Seller except as heretofore disclosed to Buyer in writing.  Said financial statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved.  Since the date of such balance sheet, there has been no Material Adverse Effect, nor is Seller aware of any state of facts particular to Seller which (with or without notice or lapse of time or both) could reasonably be expected to result in any such Material Adverse Effect.

 

(xiv)     Regulation U.  Seller is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock, and no part of the proceeds of any sales made hereunder will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

 

(xv)      Investment Company Act.  Neither Seller nor any of its Subsidiaries is an “investment company” or controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(xvi)     Agreements.  Neither Seller nor any of its Subsidiaries is a party to any agreement, instrument or indenture, or subject to any restriction, materially or adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Paragraph 11(g).  None of Seller’s Subsidiaries is subject to any dividend restriction imposed by a Governmental Authority other than those under applicable statutory law.  Neither Seller nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument or indenture which default could reasonably be expected to result in a Material Adverse Effect.  No holder of any Debt of Seller or of any of its Subsidiaries has given notice of any alleged default thereunder, or, if given, the same has been cured or will be cured by Seller or the relevant Subsidiary within the cure period provided therein.  No Act of Insolvency with respect to Seller or any of its Subsidiaries or any of their respective properties is pending, contemplated or, to the knowledge of Seller, threatened.

 

(xvii)     Title to Properties.  Seller and each Subsidiary of Seller has good, valid, insurable (in the case of real property) and marketable title to all of its properties and assets (whether real or personal, tangible or intangible) reflected on the financial statements described in Paragraph 11(g), and the Mortgage Assets are free and clear of all Liens other than those created or permitted hereunder.

 

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(xviii)    ERISA.  All plans (“Plans”) of a type described in Paragraph 3(3) of ERISA in respect of which Seller or any Subsidiary of Seller is an “employer,” as defined in Paragraph 3(5) of ERISA, are in substantial compliance with ERISA, and none of such Plans is insolvent or in reorganization, has an accumulated or waived funding deficiency within the meaning of Paragraph 412 of the IRC, and neither Seller nor any Subsidiary of Seller has incurred any material liability (including any material contingent liability) to or on account of any such Plan pursuant to Paragraphs 4062, 4063, 4064, 4201 or 4204 of ERISA.  No proceedings have been instituted to terminate any such Plan, and no condition exists which presents a material risk to Seller or a Subsidiary of Seller of incurring a liability to or on account of any such Plan pursuant to any of the foregoing Paragraphs of ERISA.  No Plan or trust forming a part thereof has been terminated since December 1, 1974.

 

(xix)     Proper Names.  Seller does not operate in any jurisdiction under a trade name, division, division name or name other than those names previously disclosed in writing by Seller to Buyer, and all such names are utilized by Seller only in the jurisdiction(s) identified in such writing.  The only names used by Seller in its tax returns for the last ten years are set forth in Exhibit K.

 

(xx)      No Undisclosed Liabilities.  Other than as disclosed in the financial statements delivered pursuant to Paragraph 11(g), Seller does not have any liabilities or Debt, direct or contingent.

 

(xxi)     Tax Returns and Payments. (A) all federal, state and local income, excise, property and other tax returns required to be filed with respect to Seller’s operations and those of its Subsidiaries in any jurisdiction have been filed on or before the due date thereof (plus any applicable extensions); and (B) all such returns are true and correct; all taxes, assessments, fees and other governmental charges upon Seller, and Seller’s Subsidiaries and upon their respective properties, income or franchises, which are due and payable have been paid, including all Federal Insurance Contributions Act (FICA) payments and withholding taxes, if appropriate, other than those which are being contested in good faith by appropriate proceedings, diligently pursued and as to which Seller has established adequate reserves determined in accordance with GAAP, consistently applied.  The amounts reserved, as a liability for income and other taxes payable, in the financial statements described in Paragraph 11(g) are sufficient for payment of all unpaid federal, state and local income, excise, property and other taxes, whether or not disputed, of Seller and its Subsidiaries, accrued for or applicable to the period and on the dates of such financial statements and all years and periods prior thereto and for which Seller and Seller’s Subsidiaries may be liable in their own right or as transferee of the assets of, or as successor to, any other Person.

 

(xxii)     Subsidiaries.  Seller has not issued, and does not have outstanding, any warrants, options, rights or other obligations to issue or purchase any shares of its capital stock or other securities (or other equity equivalent).  The outstanding shares of capital stock (or other equity equivalent) of Seller have been duly authorized and validly issued and are fully paid and non-assessable.

 

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(xxiii)    Credit Information.  Seller has full right and authority and is not precluded by law or contract from furnishing to Buyer the applicable consumer report (as defined in the Fair Credit Reporting Act, Public Law 91-508) and all other credit information relating to each Purchased Mortgage Loan sold hereunder, and Buyer will not be precluded from furnishing such materials to the related Approved Takeout Investor by such laws.  Neither the foregoing nor any other provision of this Agreement or any other Transaction Document shall be construed to impose any obligation on Buyer to keep the above described materials confidential or to otherwise comply with the Fair Credit Reporting Act or any similar laws.

 

(xxiv)    No Discrimination.  Seller makes credit accessible to all qualified applicants in accordance with all Requirements of Law.  Seller has not discriminated, and will not discriminate, against credit applicants on the basis of any prohibited characteristic, including race, color, religion, national origin, sex, marital or familial status, age (provided that the applicant has the ability to enter into a binding contract), handicap, sexual orientation or because all or part of the applicant’s income is derived from a public assistance program or because of the applicant’s good faith exercise of rights under the Federal Consumer Protection Act.  Furthermore, Seller has not discouraged, and will not discourage, the completion of any credit application based on any of the foregoing prohibited bases.  In addition, Seller has complied with all anti-redlining provisions and equal credit opportunity laws applicable under all Requirements of Law.

 

(xxv)    Home Ownership and Equity Protection Act.  There is no litigation, proceeding or governmental investigation existing or pending or to the knowledge of Seller threatened, or any order, injunction or decree outstanding against or relating to Seller, relating to any violation of the Home Ownership and Equity Protection Act or any state, city or district high cost home mortgage or predatory lending law.

 

(xxvi)    Place of Business and Formation.  The principal place of business of Seller is located at the address set forth for Seller in Paragraph 15.  As of the date hereof, and during the four (4) months immediately preceding that date, the chief executive office of Seller and the office where it keeps its financial books and records relating to its property and all contracts relating thereto and all accounts arising therefrom is and has been located at the address set forth for Seller in Paragraph 15.  As of the date hereof, Seller’s jurisdiction of organization is the state specified in Paragraph 15.

 

(xxvii)   No Adverse Selection.  Seller used no selection procedures that identified the Purchased Mortgage Loans offered to Buyer for purchase hereunder as being less desirable or valuable than other comparable Mortgage Loans owned by Seller.

 

(xxviii)     MERS.  Seller and each Approved Takeout Investor is a member of MERS in good standing.

 

(xxix)    Seller is Principal.  Seller is engaging in the Transactions as a principal.

 

(xxx)    No Default.  No Default or Event of Default has occurred.

 

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(b)        Mortgage Loan Representations.  Each Seller represents and warrants to Buyer with respect to all Mortgage Loans that (i) each Purchased Mortgage Loan is an Eligible Mortgage Loan on and as of the Purchase Date therefor, (ii) each Mortgage Loan to be transferred from a Seller to Buyer as an Additional Purchased Mortgage Loan is an Eligible Mortgage Loan on and as of the date of transfer thereof and (iii) each Purchased Mortgage Loan identified as an Eligible Mortgage Loan by a Seller in any report or other information delivered to Buyer is an Eligible Mortgage Loan.  Each Seller further makes the representations and warranties regarding all Purchased Mortgage Loans (including all Additional Purchased Mortgage Loans) as are set forth in Exhibit B.

 

(c)        Survival of Representations.  All the representations and warranties made by any Seller to Buyer in this Agreement are binding on all Sellers regardless of whether the subject matter thereof was under the control of any Seller or a third party.  Each Seller acknowledges that Buyer will rely upon all such representations and warranties with respect to each Purchased Mortgage Loan purchased by Buyer hereunder, and each Seller makes such representations and warranties in order to induce Buyer to purchase the Mortgage Loans.  The representations and warranties by a Seller in this Agreement with respect to a Purchased Mortgage Loan shall be unaffected by, and shall supersede and control over, any provision in any existing or future endorsement of any Purchased Mortgage Loan or in any assignment with respect to such Purchased Mortgage Loan to the effect that such endorsement or assignment is without recourse or without representation or warranty.  All Seller representations and warranties shall survive delivery of the Loan Files and the Confirmations, purchase by Buyer of Purchased Mortgage Loans, transfer of the servicing for the Purchased Mortgage Loans to a successor servicer, delivery of Purchased Mortgage Loans to an Approved Takeout Investor, repurchases of the Purchased Mortgage Loans by a Seller and termination of this Agreement. The representations and warranties of a Seller in this Agreement shall inure to the benefit of Buyer and its successors and assigns, notwithstanding any examination by Buyer of any Mortgage Loan Documents, related files or other documents delivered to Buyer.

 

11.                            Sellers’ Covenants

 

Sellers agree jointly and severally to cause each Seller to perform, and cause each of such Seller’s Subsidiaries to perform, the following duties at all times during the term of this Agreement (and Sellers agree to be jointly and severally liable for the performance by each Seller of such duties):

 

(a)        Maintenance of Existence; Conduct of Business.  Seller and each of its Subsidiaries shall preserve and maintain its existence in good standing and all of its rights, privileges, licenses and franchises necessary in the normal conduct of its business, including without limitation its eligibility as lender, seller/servicer and issuer described under Paragraph 10(a)(ix); and each of Seller and its Subsidiaries shall conduct its business in an orderly and efficient manner and shall keep adequate books and records of its business activities, and make no material change in the nature or character of its business or engage in any business in which it was not engaged on the date of this Agreement.  Seller will not make any material change in its accounting treatment and reporting practices except as required by GAAP.  Seller shall remain a member of MERS in good standing.

 

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(b)        Compliance with Applicable Laws.  Seller and each of its Subsidiaries shall comply with all Requirements of Law applicable to it and Seller, the Purchased Mortgage Loans or any part thereof (including, without limitation, any Agency Guidelines, all anti-money laundering laws and regulations, including, without limitation, the USA Patriot Act of 2001, as amended, the GLB Act and all consumer protection laws and regulations) or relating to the Mortgage Assets and cause the Mortgage Assets to comply with all applicable Requirements of Law, a breach of which could reasonably expected to have a Material Adverse Effect, except where contested in good faith and by appropriate proceedings, and with sufficient reserves established therefor.

 

(c)        Inspection of Properties and Books.  Seller shall permit authorized representatives of Buyer to (i) discuss the business, operations, assets and financial condition of Seller and Seller’s Subsidiaries with their officers and employees and to examine their books of account, records, reports and other papers and make copies or extracts thereof, (ii) inspect all of Seller’s property and all related information and reports, and (iii) audit Seller’s operations to ensure compliance with the terms of the Transaction Documents, the GLB Act and other privacy laws and regulations, all at Seller’s expense and at such reasonable times as Buyer may request.  Seller will provide its accountants with a photocopy of this Agreement promptly after the execution hereof and will instruct its accountants to answer candidly any and all questions that the officers of Buyer or any authorized representatives of Buyer may address to them in reference to the financial condition or affairs of Seller and Seller’s Subsidiaries.  Seller may have its representatives in attendance at any meetings between the officers or other representatives of Buyer and Seller’s accountants held in accordance with this authorization.

 

(d)        Notices.  Seller will promptly notify Buyer, and in any event within ten (10) Business Days of obtaining knowledge, of the occurrence of any of the following with respect to any Seller and shall provide or cause the other Sellers to provide such additional documentation and cooperation as Buyer may request with respect to any of the following:

 

(i)         any change in Seller’s or any of its Subsidiary’s business address and/or telephone number;

 

(ii)        any merger, consolidation or reorganization of Seller or any of its Subsidiaries, or any changes in the ownership of Seller or any of its Subsidiaries by direct or indirect means.  “Indirect” means any change in ownership of a controlling interest of the relevant Person’s direct or indirect parent;

 

(iii)       any change of the name or jurisdiction of organization of Seller, any of its Subsidiaries;

 

(iv)       any significant adverse change in the financial position of Seller or any of its Subsidiaries;

 

(v)        entry of any court judgment or regulatory order in which Seller or any Subsidiary of Seller is or may be required to pay a claim or claims which could have a material adverse effect on the financial condition of Seller or any of Seller’s Subsidiaries or on Seller’s ability to perform its obligations under any Transaction Document, or on

 

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the ability of Seller or any Subsidiary of Seller to continue its operations in a manner similar to its current operations;

 

(vi)       the filing of any petition, claim or lawsuit against Seller or any of Seller’s Subsidiaries which could have a material adverse effect on the financial condition of Seller or any Subsidiary of Seller, on Seller’s ability to perform its obligations under any Transaction Document, or on the ability of Seller or any Subsidiary of Seller to continue its operations in a manner similar to its current operations;

 

(vii)      Seller or any Subsidiary of Seller admits to committing, or is found to have committed, a material violation of any Requirement of Law relating to its business operations, including but not limited to, its loan generation, sale or servicing operations;

 

(viii)      the initiation of any investigations, audits, examinations or reviews of Seller or any Subsidiary of Seller by any Agency, Governmental Authority, trade association or consumer advocacy group relating to the Origination, sale or servicing of mortgage loans by Seller or any Subsidiary of Seller or the business operations of Seller or any Subsidiary of Seller with the exception of normally scheduled audits or examinations by the regulators of Seller or any Subsidiary of Seller;

 

(ix)       any disqualification or suspension of Seller or any Subsidiary of Seller by an Agency or any notification or knowledge, from any source, of any disqualification or suspension, or any warning of any such disqualification or suspension or impending disqualification or suspension;

 

(x)        the occurrence of any actions, inactions or events upon which an Agency may, in accordance with Agency Guidelines, disqualify or suspend Seller or any Subsidiary of Seller as a seller or servicer, including (if Seller is or becomes a Freddie Mac-approved seller or servicer) those events or reasons for disqualification or suspension enumerated in Chapter 5 of the Freddie Mac Single Family Seller/Servicer Guide and (if Seller is or becomes a Fannie Mae-approved seller or servicer) any breach of Seller’s “Lender Contract” (as defined in the Fannie Mae Single Family 2010 Selling Guide) with Fannie Mae including the breaches described or referred to in Section A2-3, 1-01 “Lender Breach of Contract” of the Fannie Mae Single Family 2010 Selling Guide;

 

(xi)       the filing, recording or assessment of any federal, state or local tax Lien against it or any Subsidiary of Seller, or any of its or any such Subsidiary’s;

 

(xii)      the occurrence of any Event of Default hereunder or the occurrence of any Default;

 

(xiii)      the suspension, revocation or termination of any licenses or eligibility as described under Paragraph 10(a)(ix) of Seller or any Subsidiary of Seller;

 

(xiv)     any other action, event or condition of any nature which could reasonably be expected to result in a Material Adverse Effect or which, with or without notice or lapse of time or both, will constitute a default under any other agreement, instrument or

 

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indenture to which a Seller or any Subsidiary of a Seller is a party or to which its properties or assets may be subject; or

 

(xv)      any alleged breach by Buyer of any provision of this Agreement or of any of the other Transaction Documents.

 

(e)        Payment of Debt, Taxes, etc.

 

(i)         Seller shall pay and perform all obligations and Debt of Seller, and cause to be paid and performed all obligations and Debt of its Subsidiaries in accordance with the terms thereof, and pay and discharge or cause to be paid and discharged all taxes, assessments and governmental charges or levies imposed upon Seller, its Subsidiaries, or upon their respective income, receipts or properties, before the same shall become past due, as well as all lawful claims for labor, materials or supplies or otherwise which, if unpaid, might become a Lien upon such properties or any part thereof; provided, however, that Seller and its Subsidiaries shall not be required to pay obligations, Debt, taxes, assessments or governmental charges or levies or claims for labor, materials or supplies which are being contested in good faith and by proper proceedings that are being reasonably and diligently pursued, if such proceedings do not involve any likelihood of the sale, forfeiture or loss of any such property or any interest therein while such proceedings are pending; and provided, further, that book reserves adequate under GAAP shall have been established with respect thereto.

 

(ii)        (A)       All payments made by Seller under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto imposed by any Governmental Authority, excluding taxes imposed on (or measured by) its net income (however denominated) or capital, branch profits taxes, franchise taxes or any other tax imposed on the net income by the United States, a state or a foreign jurisdiction under the laws of which Buyer is organized or of its applicable lending office, or any political subdivision thereof (collectively, “Taxes”), all of which shall be paid by Seller for its own account not later than the date when due.  If Seller is required by a Requirement of Law to deduct or withhold any Taxes from or in respect of any amount payable hereunder, it shall: (a) make such deduction or withholding; (b) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than the date when due; (c) deliver to Buyer, promptly, original tax receipts and other evidence satisfactory to Buyer of the payment when due of the full amount of such Taxes; and (d) pay to Buyer such additional amounts as may be necessary so that such Buyer receives, free and clear of all Taxes, a net amount equal to the amount it would have received under this Agreement, as if no such deduction or withholding had been made.

 

(B)       In addition, Seller agrees to pay to the relevant Governmental Authority in accordance with all applicable Requirements of Law any current or future stamp or documentary taxes or any other excise or property taxes, charges

 

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or similar levies (including, without limitation, mortgage recording taxes, transfer taxes and similar fees) imposed by the United States or any taxing authority thereof or therein that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement (“Other Taxes”).

 

(C)       Seller agrees, jointly and severally with the other Sellers, to indemnify Buyer for the full amount of Taxes (including additional amounts with respect thereto) and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Paragraph 11(e), and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, provided that Buyer shall have provided a Seller with evidence, reasonably satisfactory to such Seller, of payment of Taxes or Other Taxes, as the case may be.

 

(D)       Any assignee of Buyer that is not incorporated or otherwise created under the laws of the United States, any state thereof, or the District of Columbia (a “Foreign Buyer”) shall provide Seller with properly completed United States Internal Revenue Service (“IRS”) Form W-8BEN or W-8ECI or any successor form prescribed by the IRS, certifying that such Foreign Buyer is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States on or prior to the date upon which each such Foreign Buyer becomes a purchaser of Mortgage Loans hereunder.  Each Foreign Buyer will resubmit the appropriate form on the earliest of (x) the third anniversary of the prior submission or (y) on or before the expiration of thirty (30) days after there is a “change in circumstances” with respect to such Foreign Buyer as defined in Treas. Reg. Section 1.1441(e)(4)(ii)(D).  For any period with respect to which a Foreign Buyer has failed to provide Seller with the appropriate form or other relevant document pursuant to this subparagraph (unless such failure is due to a change in any Requirement of Law occurring subsequent to the date on which a form originally was required to be provided), such Foreign Buyer shall not be entitled to any “gross-up” of Taxes or indemnification under this Paragraph 11(e) with respect to Taxes imposed by the United States; provided, however, that should a Foreign Buyer, which is otherwise exempt from a withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, Seller shall take such steps as such Foreign Buyer shall reasonably request to assist such Foreign Buyer to recover such Taxes.

 

(E)       Without prejudice to the survival or any other agreement of Seller hereunder, the agreements and obligations of Seller contained in this Paragraph 11(e) shall survive the termination of this Agreement.  Nothing contained in this Paragraph 11(e) shall require Buyer to make available any of its tax returns or other information that it deems to be confidential or proprietary.

 

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(F)       Each Party acknowledges that it is its intent, for purposes of U.S. federal, state and local income and franchise taxes only, to treat each purchase transaction hereunder as indebtedness of Seller that is secured by the Purchased Mortgage Loans and that the Purchased Mortgage Loans are owned by Seller in the absence of an Event of Default by Seller.  All parties to this Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law.

 

(f)         Insurance.  Seller shall, and shall cause its Subsidiaries to, maintain (a) errors and omissions insurance or mortgage impairment insurance and blanket bond coverage, with such companies and in such amounts as to satisfy prevailing Agency Guidelines requirements applicable to a qualified mortgage originating institution, and shall cause Seller’s policy to be endorsed with the Blanket Bond Required Endorsement; (b) liability insurance and fire and other hazard insurance on its properties, with responsible insurance companies approved by Buyer, in such amounts and against such risks as is customarily carried by similar businesses operating in the same vicinity; and (c) within thirty (30) days after notice from Buyer, obtain such additional insurance as Buyer shall reasonably require, all at the sole expense of Seller.  Photocopies of such policies shall be furnished to Buyer without charge upon obtaining such coverage or any renewal of or modification to such coverage.

 

(g)        Financial Statements and Other Reports.  Seller shall deliver, or cause to be delivered together with the other Sellers, to Buyer:

 

(i)         As soon as available and in any event not later than thirty (30) days after the end of each calendar month, statements of income and changes in stockholders’ equity of Seller and, if applicable, Seller’s Subsidiaries, on a consolidated and consolidating basis for the immediately preceding month, and related balance sheet as at the end of the immediately preceding month, all in reasonable detail, prepared in accordance with GAAP applied on a consistent basis, and certified as to the fairness of presentation by the vice president controller or treasurer of Seller, subject, however, to normal year-end audit adjustments and footnotes;

 

(ii)        As soon as available and in any event not later than thirty (30) days after the end of each calendar quarter, statements of cash flow of Seller and, if applicable, Seller’s Subsidiaries, on a consolidated and consolidating basis for the immediately preceding quarter, all in reasonable detail, prepared in accordance with GAAP applied on a consistent basis, and certified as to the fairness of presentation by the vice president controller or treasurer of Seller, subject, however, to normal year-end audit adjustments and footnotes;

 

(iii)       As soon as available and in any event not later than ninety (90) days after Seller’s fiscal year end, statements of income, changes in stockholders’ equity and cash flows of Seller, and, if applicable, Seller’s Subsidiaries, on a consolidated basis for the preceding fiscal year, the related balance sheet as at the end of such year (setting forth in comparative form the corresponding figures for the preceding fiscal year), all in reasonable detail, prepared in accordance with GAAP applied on a consistent basis throughout the periods involved, and accompanied by an opinion in form and substance

 

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satisfactory to Buyer and prepared by an accounting firm reasonably satisfactory to Buyer, or other independent certified public accountants of recognized standing selected by Seller and acceptable to Buyer, as to said financial statements and a certificate signed by the vice president controller or treasurer of Seller stating that said financial statements fairly present the financial condition, results and cash flows of operations of Seller (and, if applicable, Seller’s Subsidiaries on a consolidated basis) as at the end of, and for, such year;

 

(iv)       Together with each delivery of financial statements required in this Paragraph, a Compliance Certificate executed by the vice president controller or treasurer of Seller;

 

(v)        Photocopies of all regular or periodic financial and other reports, if any, which Seller or any Subsidiary of Seller shall file with the SEC or any other Governmental Authority, not later than five (5) days after filing;

 

(vi)       Photocopies of any audits completed by any Agency of Seller or any of its Subsidiaries, not later than five (5) days after receiving such audit;

 

(vii)      Not less frequently than once every week (and more often if requested by Buyer), a report in form and substance satisfactory to Buyer summarizing the Hedging Arrangements then in effect with respect to all Mortgage Loans then owned by Buyer and interim serviced by Seller (or a Successor Servicer);

 

(viii)      On each Business Day, a data tape for Purchased Mortgage Loans including the information described on Exhibit I and such other information requested by Buyer from time to time; and

 

(ix)       From time to time, with reasonable promptness, such further information regarding the Mortgage Assets, or the business, operations, properties or financial condition of Seller as Buyer may reasonably request.

 

(h)        Limits on Distributions.  Any Seller may declare and pay dividends so long as no Default or Event of Default exists or would result therefrom.

 

(i)         Use of Chase’s Name.  Seller shall and shall cause its Subsidiaries to, confine its use of Buyer’s logo and the “JPMorgan” and “Chase” names to those uses specifically authorized by Buyer in writing.  Except where required by the federal Real Estate Settlement Procedures Act or HUD’s Regulation X thereunder, or the Helping Families Save Their Homes Act of 2009, as amended from time to time, in no instance may Seller or any of its Subsidiaries disclose to any prospective Mortgagor, or the agents of the Mortgagor, that such Mortgagor’s Mortgage Loan will be offered for sale to Buyer.  None of Seller or its Subsidiaries may use Buyer’s name or logo to obtain any mortgage-related services without the prior written consent of Buyer.

 

(j)         Reporting.  In its financial statements, Seller will report each sale of a Mortgage Loan hereunder as a financing in accordance with GAAP.

 

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(k)        Transactions with Affiliates.  Seller will not and will not permit any of its Subsidiaries to (i) enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary course of Seller’s or such Subsidiary’s business and (c) upon fair and reasonable terms no less favorable to Seller or such Subsidiary than it would obtain in a comparable arm’s-length transaction with a Person which is not an Affiliate, or (ii) make a payment that is not otherwise permitted by this Paragraph 11 to any Affiliate.

 

(l)         Defense of Title; Preservation of Mortgage Assets.  Seller warrants and will defend the right, title and interest of Buyer in and to all Mortgage Assets against all adverse claims and demands of all Persons whomsoever.  Seller shall do all things necessary to preserve the Mortgage Assets so that such Mortgage Assets remain subject to a first priority perfected Lien hereunder.  Without limiting the foregoing, Seller will comply with all Requirements of Law applicable to Seller or relating to the Mortgage Assets and cause the Mortgage Assets to comply with all applicable Requirements of Law.  Seller will not allow any default to occur for which Seller is responsible under any Mortgage Assets or any Transaction Documents and Seller shall fully perform or cause to be performed when due all of its obligations under any Mortgage Assets and the Transaction Documents.

 

(m)       Limitation on Sale of Assets. Seller shall not convey, sell, lease, assign, transfer or otherwise dispose of (collectively, “Transfer”), all or substantially all of its property, business or assets (including, without limitation, receivables and leasehold interests) whether now owned or hereafter acquired or allow any of its Subsidiaries to Transfer all or substantially all of its assets to any Person.

 

(n)        No Amendment or Compromise.  Without Buyer’s prior written consent, none of Seller or those acting on Seller’s behalf shall amend or modify, or waive any term or condition of, or settle or compromise any claim in respect of, any item of the Purchased Mortgage Loans, any related rights or any of the Transaction Documents.

 

(o)        Loan Determined to be Defaulted or Defective.  Upon discovery by Seller that any Purchased Mortgage Loan is a Defaulted Loan or a Defective Mortgage Loan, Seller shall promptly give notice of such discovery to Buyer.

 

(p)        Further Assurances.  Seller agrees to do such further acts and things and to execute and deliver to Buyer such additional assignments, acknowledgments, agreements, powers and instruments as are reasonably required by Buyer to carry into effect the intent and purposes of this Agreement and the other Transaction Documents, to perfect the interests of Buyer in the Mortgage Assets or to better assure and confirm unto Buyer its rights, powers and remedies hereunder and thereunder.

 

(q)        Hedging Arrangements.  If and to the extent (if any) that Buyer shall approve in writing Seller’s use of Hedging Arrangements in lieu of Takeout Commitments, Seller shall maintain Hedging Arrangements with respect to all Mortgage Loans not the subject of Takeout Commitments reasonably satisfactory to Buyer, with Persons reasonably satisfactory to Buyer, in order to mitigate the risk that the Market Value of any such Mortgage Loan will change as a

 

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result of a change in interest rates or the market for mortgage loan assets before the Mortgage Loan is purchased by an Approved Takeout Investor or repurchased by Seller.

 

(r)        No Guaranties.  Without the prior written consent of Buyer, Seller shall not, and shall not permit any of its Subsidiaries to, guaranty any Debt in excess of $1,000,000 other than Debt incurred by a Subsidiary for a warehouse, facility or early purchase facility for Mortgage Loans.

 

(s)        Underwriting Guidelines.  Seller will underwrite Eligible Mortgage Loans in compliance with its underwriting guidelines in effect on the date hereof.  Seller will not change its underwriting guidelines in any material respect without the prior written consent of Buyer except as may be required from time to time to comply with Agency Guidelines.

 

(t)         No Mergers, Acquisitions, Subsidiaries.  Seller will not, and will not permit any of its Subsidiaries to, consolidate or merge with or into any entity (unless Seller is the surviving entity and any of Seller’s Subsidiaries may merge with or into Seller), consolidate, acquire any interest in any Person or create, form or acquire any Subsidiary not listed in Exhibit G.

 

(u)        UCC.  Seller will not change its name, identity, corporate structure or location (within the meaning of Paragraph 9-307 of the UCC) unless it shall have (i) given Buyer at least forty-five (45) days’ prior written notice thereof and (ii) delivered to Buyer all financing statements, amendments, instruments, legal opinions and other documents requested by Buyer in connection with such change.  Seller will keep its principal place of business and chief executive office at the location specified in Paragraph 15, and the office where it maintains any physical records of the Purchased Mortgage Loans at a corporate facility of Seller, or, in any such case, upon thirty (30) days’ prior written notice to Buyer, at another location within the United States.

 

(v)        Takeout Commitments.  Except to the extent superseded by this Agreement, Seller covenants that it shall continue to perform all of its duties and obligations to the Approved Takeout Investor, under any applicable Takeout Commitment and Takeout Agreement and otherwise, with respect to a Purchased Mortgage Loan as if such Mortgage Loan were still owned by Seller and to be sold directly by Seller to the Approved Takeout Investor pursuant to such Takeout Commitment on the date provided therein without the intervening ownership of Buyer pursuant to this Agreement.  Without limiting the generality of the foregoing, Seller shall timely assemble all records and documents concerning the Mortgage Loan required under any applicable Takeout Commitment (except that photocopies instead of originals shall be used for those documents already provided to Buyer in the Loan File) and all other documents and information that may have been required or requested by the Approved Takeout Investor, and Seller shall make all representations and warranties required to be made to the Approved Takeout Investor under the applicable Takeout Commitment and Takeout Agreement.

 

(w)       Financial Covenants (Applicable to RMC Only).

 

(i)         Leverage Ratio.  RMC shall not permit the Leverage Ratio of RMC (and, if applicable, its Subsidiaries, on a consolidated basis) to exceed 12 to 1 computed as of the end of each calendar month.

 

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(ii)        Minimum Adjusted Tangible Net Worth.  RMC shall not permit the Adjusted Tangible Net Worth of RMC (and, if applicable, its Subsidiaries, on a consolidated basis), computed as of the end of each calendar month to be less than $10,000,000.

 

(iii)       Minimum Current Ratio.  RMC shall not permit the Current Ratio of RMC (and, if applicable, its Subsidiaries, on a consolidated basis), computed as of the end of each calendar month, to be less than 1.05 to 1.

 

(iv)       Maintenance of Liquidity.  RMC shall maintain at all times unencumbered Liquidity in an amount greater than or equal to 3% of actual total assets (including the balance on deposit in the Cash Pledge Account, but excluding any restricted cash or cash pledged to third parties).

 

(v)        Net Income.  RMC shall not permit its net loss for its first (1st) fiscal quarter of each fiscal year to be greater than One Million Dollars ($1,000,000) and shall not permit its net income before taxes for any other fiscal quarter to be less than One Dollar ($1).

 

(vi)       Maximum Facility Ratio.  RMC shall not permit the Maximum Facility Ratio of RMC (and, if applicable, its Subsidiaries, on a consolidated basis) to exceed 30 to 1 computed as of the end of each calendar month.

 

(x)        Wholesale Originations.  No Seller shall Originate more than 20% of its total Mortgage Loan originations in any calendar month through wholesale or broker originations.

 

(y)        Government Regulation.  Seller shall not (1) be or become subject at any time to any Requirement of Law (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Buyer from making any advance or extension of credit to Seller or from otherwise conducting business with Seller, or (2) fail to provide documentary and other evidence of Seller’s identity as may be requested by Buyer at any time to enable Buyer to verify Seller’s identity or to comply with any applicable Requirement of Law, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

(z)        Contribution Provisions.  Seller shall not enter into any additional warehouse lines of credit, purchase facilities, repurchase facilities, off-balance sheet funding facilities (whether committed or uncommitted) or any similar contractual arrangement unless (A) Seller has given Buyer at least ten (10) Business Days prior written notice to Buyer and (B) if Seller is jointly and severally liable with any other Person, such contractual arrangement contains contribution rights to the same extent as exist herein under Paragraph 30(d) and related provisions.

 

(aa)      Mortgage-Backed Securities.  Seller shall not create any mortgage-backed securities backed by Purchased Mortgage Loans prior to the repurchase of such Purchased Mortgage Loans by any Seller or purchase of such Purchased Mortgage Loans by an Approved Takeout Investor in accordance with this Agreement.

 

(bb)      No Loans or Investments Except Approved Investments.  Seller shall not, and shall not permit any of its Subsidiaries to, make or permit to remain outstanding any loans or

 

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advances to, or investments in, any Person, except that the foregoing restriction shall not apply to:

 

(i)         investments in Cash Equivalents;

 

(ii)        Mortgage Loans; and

 

(iii)       other investments not to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate without Buyer’s prior written consent.

 

(cc)      Only Permitted Debt.  Seller shall not, and shall not permit any of its Subsidiaries to, incur, permit to exist or commit to incur any Debt that has not been approved by Buyer in writing in advance, except the following (collectively, “Permitted Debt”):

 

(i)         Seller’s obligations under this Agreement and the other Transaction Documents;

 

(ii)        Seller’s and its Subsidiaries’ obligations under other Available Facilities;

 

(iii)       obligations to pay taxes;

 

(iv)       liabilities for accounts payable, non-capitalized equipment or operating leases and similar liabilities, but only if incurred in the ordinary course of business;

 

(v)        accrued expenses, deferred credits and loss contingencies that are properly classified as liabilities under GAAP;

 

(vi)       non-speculative Hedging Arrangements incurred in the ordinary course of business; and

 

(vii)      other Debt approved in writing by Buyer, including the Permitted Debt, if any, described in Exhibit M (Buyer shall have no obligation to approve any other Debt, and may approve or disapprove it, in writing or otherwise, in Buyer’s sole and absolute discretion).

 

Seller shall give Buyer written notice prior to entering into any facility of the type described in the definition of Available Facilities.

 

12.                            Events of Default; Remedies.

 

(a)        Each of the following events shall, upon its occurrence and during its continuance, be an “Event of Default”:

 

(i)         Sellers fail to remit any Price Differential, Income, fees, Repurchase Price, escrow payment or any other amount due to Buyer pursuant to the terms hereof or any other Transaction Document or fails to cure any Margin Deficit as provided in Paragraph 4; or

 

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(ii)        Sellers fail to repurchase any Purchased Mortgage Loan at the time and for the amount required hereunder; or

 

(iii)       (A)       any representation or warranty made by a Seller in this Agreement or any other Transaction Document is untrue, inaccurate or incomplete in any material respect (each such representation or warranty, a “Materially False Representation”) on or as of the date made; provided that if any representation or warranty in subparagraph 10(a)(i) or Paragraph 10(b) or on Exhibit B (a “Loan Level Representation”) was when made, or has become, a Materially False Representation, then that Materially False Representation will not constitute a Default or an Event of Default — although such Materially False Representation will cause each affected Purchased Mortgage Loan to cease to be an Eligible Mortgage Loan and Sellers shall be obligated to repurchase it from Buyer promptly after learning from any source of its ineligibility — unless both (1) such Loan Level Representation relates to five (5) or more Purchased Mortgage Loans and (2) when such Loan Level Representation was made, an Authorized Officer of a Seller had actual knowledge that it was being made and that it was untrue, inaccurate or incomplete in a material respect, in which event such Materially False Representation will constitute an Event of Default; or

 

(B)       any information contained in any written statement, report, financial statement or certificate made or delivered by a Seller (either before or after the date hereof) to Buyer pursuant to the terms of this Agreement or any other Transaction Document is untrue or incorrect as of the date when made or deemed made; or

 

(iv)       Sellers shall fail to comply with any of the requirements set forth in Paragraph 11(c) (Inspection of Properties and Books), Paragraph 11(o) (Loan Determined to be Defaulted or Defective) or Paragraph 11(w) (Financial Covenants); or

 

(v)        a Seller, as applicable, shall fail to observe, keep or perform any duty, responsibility or obligation imposed or required by this Agreement or any other Transaction Document other than one of the Events of Default specified or described in another subparagraph of this Paragraph 12(a)), and such failure continues unremedied for a period of five (5) days; or

 

(vi)       any Act of Insolvency occurs with respect to a Seller, any of its Subsidiaries; or

 

(vii)      one or more judgments or decrees are entered against a Seller, any of its Subsidiaries involving claims not paid or not fully covered by insurance and all such judgments or decrees are not vacated, discharged, or stayed or bonded pending appeal within thirty (30) days after its entry; or

 

(viii)      any Agency, private investor or any other Person seizes or takes control of the servicing portfolio of a Seller, any of its Subsidiaries or any Subservicer for breach of any servicing agreement applicable to such servicing portfolio or for any other reason whatsoever; or

 

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(ix)       any Agency or Governmental Authority revokes or materially restricts the authority of a Seller, any of a Seller’s Subsidiaries or any Subservicer, to Originate, purchase, sell or service Mortgage Loans, or a Seller, any of such Seller’s Subsidiaries or any Subservicer shall fail to meet all requisite servicer eligibility qualifications promulgated by any Agency; or

 

(x)        there is a default under any agreement other than a Transaction Document that a Seller or any its Affiliates or Subsidiaries has entered into with Buyer or any of its Affiliates or Subsidiaries; or

 

(xi)       a Seller or any of its Subsidiaries fails to pay when due any other Debt in excess of Five Hundred Thousand Dollars ($500,000), individually or in the aggregate, beyond any period of grace provided, or there occurs any breach or default with respect to any material term of any such Debt, if the effect of such failure, breach or default is to cause, or to permit the holder or holders thereof (or a trustee on behalf of such holder or holders) to cause, such Debt of such Person to become or be declared due prior to its stated maturity (upon the giving or receiving of notice, lapse of time or both, or satisfaction of any other condition to acceleration, whether or not any such condition to acceleration has been satisfied); or

 

(xii)      there is a Material Adverse Effect; or

 

(xiii)      there is an Event of Default (however denominated in the agreement for such repurchase or lending arrangement) by a Seller or any of its Subsidiaries under (x) any mortgage loan repurchase arrangement similar to the arrangement provided for in this Agreement, including off balance sheet repurchase arrangements, or (y) any warehouse lending arrangement, including off balance sheet warehouse lending arrangements, that such Seller or a Subsidiary may have with any other Person, including both (1) any Default (however denominated in such agreement) for which no notice or grace period is specified and that therefore is an Event of Default (however denominated in such agreement) immediately upon its occurrence, and (2) any Default for which such agreement provides for notice, a grace period or both and that has continued uncured by such Seller or such Subsidiary (as the case may be) and unwaived by the counterparty to such agreement beyond the applicable notice and grace periods; or

 

(xiv)     (A) a Seller shall assert that any Transaction Document is not in full force and effect or shall otherwise seek to terminate or disaffirm its obligations under any such Transaction Document at any time following the execution thereof or (B) any Transaction Document ceases to be in full force and effect, or any material obligations of a Seller under any Transaction Document shall cease to be in full force and effect, or the enforceability thereof shall be contested by a Seller; or

 

(xv)      any Governmental Authority or any Person acting or purporting to act under Governmental Authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the assets of a Seller, any of its Subsidiaries or any Subservicer, or shall have taken any action to displace the management of a Seller, any of its Subsidiaries or to curtail its authority in

 

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the conduct of the business of such Seller, any of its Subsidiaries, or to restrict the payment of dividends to Seller by any Subsidiary of such Seller, and such action shall not have been discontinued or stayed within thirty (30) days; or

 

(xvi)     a default or an event of default shall have occurred under any other Transaction Document; or

 

(xvii)     any Change in Control of a Seller, any of its Subsidiaries shall have occurred without Buyer’s prior written consent or a material change in the management of a Seller, any of its Subsidiaries shall have occurred that has not been approved by Buyer in writing; or

 

(xviii)    any failure by a Seller to deliver assignments executed in blank to Buyer or its designee for each Purchased Mortgage Loan then held by Buyer within five (5) Business Days following any termination of a Seller’s MERS membership; or

 

(xix)     a downgrade of any of a Seller’s or any of its Subsidiaries’ servicer ratings below the ratings held by such Seller or such Subsidiary as of the date of this Agreement or, for ratings initiated after the date of this Agreement, below such initial ratings; or

 

(xx)      the initiation of any investigation or proceeding in respect of a Seller by any Governmental Authority, that is reasonably likely to have a material effect on such Seller’s ability to perform its obligations under this Agreement or the other Transaction Documents, provided that such Seller is not prohibited by law from disclosing the fact of the investigation; or

 

(xxi)     the Pension Benefit Guaranty Corp. shall, or shall indicate its intention to, file notice of a Lien pursuant to Section 4068 of ERISA with regard to any of the assets of a Seller or its Subsidiaries; or

 

(xxii)     a Seller shall become subject to registration as an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended; or

 

(xxiii)    Buyer shall fail to have a valid and perfected first priority security interest in any of the Purchased Mortgage Loans, including the Servicing Rights thereto, or any other Mortgage Assets, in each case free and clear of any other Lien.

 

(b)        If an Event of Default occurs, Buyer, at its option, may at any time or times thereafter while such Event of Default is continuing, elect by written notice to any Seller to do any or all of the following:

 

(i)         accelerate the Repurchase Date of each outstanding Transaction whose Repurchase Date has not already occurred and cancel the Purchase Date for any Transaction whose Purchase Date has not yet occurred;

 

(ii)        terminate and replace all Sellers as interim servicers with respect to any Mortgage Assets at the cost and expense of Sellers;

 

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(iii)       direct Sellers to cause all Income to be transferred into the Collection Account within one (1) Business Day after receipt by a Seller or any Subservicer;

 

(iv)       direct or cause Sellers to direct, all Mortgagors to remit all Income directly to an account specified by Buyer; and

 

(v)        terminate any commitment of Buyer to purchase Mortgage Loans under this Agreement or otherwise.

 

(c)        If Buyer has exercised the option referred to in Paragraph 12(b)(i), then (i) the applicable Seller’s obligations hereunder to repurchase all Purchased Mortgage Loans in such Transactions on the Repurchase Date determined in accordance with Paragraph 12(b)(i) shall thereupon become immediately due and payable, (ii) to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily application of (x) the greater of (1) the Pricing Rate for such Transaction and (2) five percent (5.00%) plus the Prime Rate to (y) the Repurchase Price for such Transaction as of the accelerated Repurchase Date as determined pursuant to Paragraph 12(b) (decreased as of any day by (A) any amounts retained by Buyer with respect to such Repurchase Price pursuant to clause (iii) or clause (iv) of this Paragraph 12(c) and (B) any proceeds from the sale of Purchased Mortgage Loans pursuant to Paragraph 12(e), on a 360 day per year basis for the actual number of days during the period from and including the date of the Event of Default giving rise to such option to but excluding the date of payment of the Repurchase Price as so increased, (iii) all Income paid after such exercise or deemed exercise shall be payable to and retained by Buyer and shall be applied to the aggregate unpaid Repurchase Prices and all other amounts owed by a Seller to Buyer or any other Indemnified Party under the Transaction Documents, (iv) in accordance with Paragraphs 4 and 5, all amounts on deposit in the Accounts, shall be applied by Buyer to the aggregate unpaid Repurchase Prices and all other amounts owed by a Seller to Buyer or any other Indemnified Party under the Transaction Documents, (v) Sellers shall, if directed by Buyer in writing to any Seller, immediately deliver to Buyer any documents then in Sellers’ possession relating to any Purchased Mortgage Loans subject to such Transactions, and (vi) Buyer may, by notice to any Seller, declare the Termination Date to have occurred.

 

(d)        Upon the occurrence of any Event of Default, without prior notice to any Seller, Buyer may (A) immediately sell, on a servicing released or servicing retained basis as Buyer deems desirable, in a recognized market at such price or prices as Buyer may in its sole discretion deem satisfactory, any or all Purchased Mortgage Loans of any or all Sellers subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by Sellers to Buyer or any other Indemnified Party under the Transaction Documents or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Mortgage Loans, to give each Seller credit for its Purchased Mortgage Loans in an amount equal to the Market Value therefor on such date against the aggregate unpaid Repurchase Prices and any other amounts owing by Sellers to Buyer or any other Indemnified Party under the Transaction Documents.

 

(e)        The proceeds of any disposition described above shall be applied first, to the reasonable costs and expenses incurred by Buyer in connection with or as a result of an Event of

 

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Default (including, without limitation, legal fees, consulting fees, accounting fees, file transfer and inventory fees, costs and expenses incurred in respect of a transfer of the servicing of the Purchased Mortgage Loans and costs and expenses incurred in connection with a disposition of the Purchased Mortgage Loans); second, to costs of cover and/or related hedging transactions; third, to the aggregate and accrued Price Differential owed hereunder, fourth, to the remaining aggregate Repurchase Prices owed hereunder; fifth, to any other accrued and unpaid obligations of Sellers hereunder and under the other Transaction Documents, and sixth, any remaining proceeds shall be paid to Sellers or other Person legally entitled thereto.

 

(f)         The Parties acknowledge and agree that:

 

(i)         Buyer has no desire or intention to hold any of the Purchased Mortgage Loans for investment under any circumstances, and if (x) Sellers fail to repurchase any Purchased Mortgage Loan when required to do so by this Agreement, whether before or after its termination, or (y) any Event of Default has occurred, and (z) Buyer has not made an affirmative election under the circumstances then prevailing to retain such Purchased Mortgage Loan pursuant to clause (B) of Paragraph 12(d), Buyer will sell it (i) if practicable and if the sale can be made without Buyer’s having to undertake representation, warranty or other obligations that Buyer, acting in its sole discretion, considers unacceptable, to the relevant Approved Takeout Investor (if any), or (ii) by private sale to another Person in the secondary mortgage market, undertaking only such representation, warranty and other obligations, if any, to such Person as Buyer, acting in its sole discretion, considers acceptable, at the earliest reasonable opportunity and for such price as Buyer, acting in its sole discretion, determines to be the optimal price available at the time of such sale; provided that if at any time Buyer determines that the secondary market for residential mortgage loans is illiquid, disrupted or dysfunctional, Buyer may elect to postpone sales of Purchased Mortgage Loans for so long as Buyer determines that any such market conditions persist, and no such delay shall be construed to constitute or require a change in the classification of the Purchased Mortgage Loans in Buyer’s hands from “held for sale” to “held for investment”, and in all cases, to the maximum extent not prohibited by applicable law, their Market Value shall be the only “reasonable determinant of value” of Purchased Mortgage Loans for purposes of Section 562 of the Bankruptcy Code;

 

(ii)        in the absence (whether because of market disruptions or for any other reason whatsoever) of a generally recognized source for secondary mortgage market prices of, or for bid or offer quotations for, any one or more Purchased Mortgage Loans at any time, whether before or after any termination of this Agreement, Buyer may determine the Market Values of such Purchased Mortgage Loans using such means, methods, averaging, weighting, calculations and assumptions as it shall determine in its sole discretion to be appropriate, and Buyer’s determination shall be conclusive and binding, absent manifest error, for all purposes, it being the Parties’ specific intention to include therein the purposes of Sections 559 and 562 of the Bankruptcy Code;

 

(iii)       except to the extent, if any, contrary to market practice, in determining values of Purchased Mortgage Loans, Buyer shall include all related accrued Income

 

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available either to be transferred to a secondary market purchaser or to be retained by Buyer to reduce their Repurchase Prices; and

 

(iv)       in determining the Market Value of any Purchased Mortgage Loans, it is reasonable for Buyer to use and rely on the information provided by any Seller on the daily data tape pursuant to Paragraph 11(g) without being required to check or verify the accuracy or completeness of such information.

 

(g)        The Parties further recognize that if, under the circumstances described in clause (x) or clause (y) of subparagraph 12(f)(i), Buyer has elected to sell Purchased Mortgage Loans, the market for Mortgage Loans may then be insufficiently liquid or dysfunctional in other respects, they agree that Buyer may elect the time and manner of liquidating any Purchased Mortgage Loan, and nothing contained herein shall obligate Buyer (i) to liquidate any Purchased Mortgage Loan immediately after Sellers’ failure to repurchase it when required by this Agreement, the occurrence of an Event of Default or any termination of this Agreement, or (ii) to liquidate all Purchased Mortgage Loans in the same manner or on the same day, and no exercise by Buyer of any right or remedy shall constitute a waiver of any other right or remedy.  Sellers shall be jointly and severally liable to Buyer for (i) the amount of all reasonable legal or other expenses incurred by Buyer in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions reasonably incurred) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default.

 

(h)        To the extent permitted by applicable law, Sellers shall be jointly and severally liable to Buyer for interest on any amounts owing by a Seller or Sellers hereunder, from the date such Seller or Sellers become liable for such amounts hereunder until such amounts are (i) paid in full by or on behalf of such Seller or Sellers or (ii) satisfied in full by the exercise of Buyer’s rights hereunder.  Interest on any sum payable by a Seller or Sellers to Buyer under this Paragraph 12(h) shall be at a rate equal to the greater of (x) the Pricing Rate for the relevant Transaction and (y) five percent (5%) plus the Prime Rate.

 

(i)         If an Event of Default occurs, Buyer shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement entered into in connection with the Transactions contemplated by this Agreement, under applicable law or in equity.

 

(j)         Each Seller hereby acknowledges, admits and agrees that Sellers’ joint and several obligations under this Agreement are recourse obligations of all Sellers.

 

(k)        Any provision hereof to the contrary notwithstanding, a Default or an Event of Default with respect to any Seller shall be deemed to be a Default or an Event of Default with respect to all Sellers.

 

13.       Servicing Rights Are Owned by Buyer; Interim Servicing of the Purchased Mortgage Loans

 

(a)        As a condition of purchasing an Eligible Mortgage Loan, Buyer hereby engages Sellers to interim service the related Purchased Mortgage Loans as agent for Buyer for a term of

 

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thirty (30) days during the Post Origination Period (the “Interim Servicing Term”), which is renewable as provided in clause (vi) below, on the following terms and conditions applicable to each Seller and to all Sellers jointly and severally:

 

(i)         Seller shall interim service and temporarily administer the Purchased Mortgage Loan on behalf of Buyer in accordance with prudent mortgage loan servicing standards and procedures generally accepted in the mortgage banking industry and in accordance with all applicable requirements of the Agencies, Requirements of Law, the provisions of any applicable servicing agreement, and the requirements of any applicable Takeout Agreement and the Approved Takeout Investor, so that the eligibility of the Purchased Mortgage Loan for purchase under such Takeout Agreement is not voided or reduced by such interim servicing and temporary administration;

 

(ii)        If any Eligible Mortgage Loan that is proposed to be sold on a Purchase Date is serviced by a servicer other than Seller or any of its Affiliates (a “Subservicer”), or if the interim servicing of any Purchased Mortgage Loan is to be transferred to a Subservicer, Seller shall provide a copy of the related subservicing agreement and a Subservicer Instruction Letter executed by such Subservicer (collectively, the “Subservicing Agreement”) to Buyer prior to such Purchase Date or interim servicing transfer date, as applicable.  Each such Subservicing Agreement shall be in form and substance acceptable to Buyer.  In addition, Seller shall have obtained the prior written consent of Buyer for such Subservicer to subservice the Purchased Mortgage Loans, which consent may be withheld in Buyer’s sole discretion.  In no event shall Seller’s use of a Subservicer relieve Seller of its obligations hereunder, and Seller shall remain liable under this Agreement as if Seller were interim servicing such Purchased Mortgage Loans directly.  Any termination of Seller as interim servicer shall automatically terminate each Subservicer.  In the event that any Agency or Governmental Authority revokes or materially restricts any Subservicer’s authority to originate, sell or service Mortgage Loans, or any Subservicer shall fail to meet all requisite originator, seller and servicer eligibility qualifications promulgated by any Agency, Buyer may direct Seller to immediately terminate such Subservicer as a subservicer of any or all of the Purchased Mortgage Loans and Seller shall promptly cause the termination of such Subservicer as directed by Buyer.

 

(iii)       Seller acknowledges that it has no right, title or interest in the Servicing Rights for any Purchased Mortgage Loan, and agrees that Seller may not transfer or assign any rights to master service, service, interim service, subservice or administer any Purchased Mortgage Loan prior to Seller’s repurchase thereof from Buyer (by payment to Buyer of the Repurchase Price on the applicable Repurchase Date) other than an interim servicing transfer to a Subservicer approved by Buyer pursuant to a Subservicing Agreement approved by Buyer as described above in this paragraph.

 

(iv)       Seller shall deliver all physical and contractual servicing materials, files and records for the servicing of each Purchased Mortgage Loan, together with all of the related Servicing Records that are not already in Buyer’s possession, to Buyer’s designee upon the earliest of (w) the occurrence of a Default or Event of Default hereunder, (x) the termination of Seller as interim servicer by Buyer pursuant to Paragraph 13(a)(v), (y) the

 

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expiration (and non-renewal) of the Interim Servicing Term, or (z) the transfer of servicing to any entity approved by Buyer and the assumption thereof by such entity.  Seller’s transfer of the Servicing Records and the physical and such contractual servicing materials, files and records under this Paragraph shall be in accordance with customary standards in the industry and such transfer shall include the transfer of the gross amount of all escrows held for the related mortgagors (without reduction for unreimbursed advances or “negative escrows”).

 

(v)        Buyer shall have the right to terminate a Seller as interim servicer of any of the Purchased Mortgage Loans, which right shall be exercisable at any time in Buyer’s sole discretion, upon written notice to any Seller.

 

(vi)       The Interim Servicing Term will be deemed renewed on each Remittance Date succeeding the related Purchase Date unless (i) a Seller has sooner been terminated as interim servicer of all of the Purchased Mortgaged Loans or (ii) an Event of Default has occurred on or before such Remittance Date, in which latter event the Interim Servicing Term for all Sellers will expire on such Remittance Date unless Buyer gives written notice to a Seller that the Interim Servicing Term for such Seller is renewed and specifying the renewal term.

 

(vii)      The Interim Servicing Term will automatically terminate and a Seller shall have no further obligation to interim service such Purchased Mortgage Loan as agent for Buyer or to make the delivery of documents required under this Paragraph, upon receipt by Buyer of the Repurchase Price therefor.

 

(viii)      Buyer has no obligation to pay any Seller a fee for the interim servicing obligations a Seller agrees to assume hereunder, no fee or other compensation will ever accrue or be or become owing, due or payable for or on account of such interim servicing and such interim servicing rights have no monetary value.

 

(b)        During the period a Seller is interim servicing any Purchased Mortgage Loans as agent for Buyer, Sellers agree that Buyer is the owner of the related Servicing Rights, Credit Files and Servicing Records and a Seller acting as interim servicer shall at all times maintain and safeguard, and cause any Subservicer to maintain and safeguard, the Credit File for the Purchased Mortgage Loan (including photocopies or images of the documents delivered to Buyer), and accurate and complete records of its interim servicing of the Purchased Mortgage Loan; a Seller’s possession of the Credit Files and Servicing Records being for the sole purpose of interim servicing such Purchased Mortgage Loans and such retention and possession by such Seller being in a temporary custodial capacity only.

 

(c)        Each Seller (and all Sellers jointly and severally) further covenants as follows:

 

(i)         Buyer may, at any time during Seller’s business hours on reasonable notice (provided that upon or during the occurrence of a Default or Event of Default, no such notice shall be required), examine and make copies of all such documents and records relating to interim servicing and administration of the Purchased Mortgage Loans;

 

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(ii)        At Buyer’s request, Seller shall promptly deliver to Buyer reports regarding the status of any Purchased Mortgage Loan being interim serviced by Seller, which reports shall include, but shall not be limited to, a description of any event that would cause the Purchased Mortgage Loan to become a Defaulted Loan or a Defective Mortgage Loan or any other circumstances that could cause a material adverse effect on such Purchased Mortgage Loan, Buyer’s title to such Purchased Mortgage Loan or the collateral securing such Purchased Mortgage Loan; Seller may be required to deliver such reports until the repurchase of the Purchased Mortgage Loan by Seller;

 

(iii)       Seller shall immediately notify Buyer if it becomes aware of any payment default that occurs under any Purchased Mortgage Loan sold hereunder by any Seller or any default under any Subservicing Agreement entered into by any Seller that would materially and adversely affect any Purchased Mortgage Loan subject thereto; and

 

(iv)       If, during the Post-Origination Period, any Mortgagor contacts Seller requesting a payoff quote on the related Purchased Mortgage Loan, Seller shall ensure that any payoff quote provided requires Mortgagor to wire payoff funds directly to the Funding Account and includes wiring instructions therefor.

 

(d)        Each Seller shall release its custody of the contents of any Credit File and any Loan File only (i) in accordance with the written instructions of Buyer, (ii) upon the consent of Buyer when such release is required as incidental to such Seller’s servicing of the Purchased Mortgage Loan, or is required to complete the Takeout Funding or comply with the Takeout Guidelines, or (iii) as required by any Requirements of Law.

 

(e)        Buyer reserves the right to appoint a successor interim servicer, or a regular servicer, at any time to service any Purchased Mortgage Loan (each a “Successor Servicer”) in its sole discretion.  If Buyer elects to make such an appointment after the occurrence of a Default or an Event of Default, Sellers shall jointly and severally be assessed all costs and expenses incurred by Buyer associated with transferring the physical and contractual servicing materials, files and records for the servicing of each Purchased Mortgage Loan, together with all related Servicing Records, to the Successor Servicer.  In the event of such an appointment, all Sellers shall perform all acts and take all action so that any part of the Credit File and related Servicing Records held by any Seller, together with all funds in the Collection Account and other receipts relating to such Purchased Mortgage Loan, are promptly delivered to the Successor Servicer, and shall otherwise fully cooperate with Buyer in effectuating such transfer.  No Seller shall have any claim for lost interim servicing income, any termination fee, lost profits or other damages if Buyer appoints a Successor Servicer hereunder.  Buyer may, in its sole discretion if an Event of Default shall have occurred and be continuing, without payment of any termination fee or any other amount to any Seller, sell any or all of the Purchased Mortgage Loans on a servicing released basis, at the sole cost and expense of Sellers.

 

(f)         In the event a Seller is terminated as interim servicer of any Purchased Mortgage Loan, whether by expiry of the Interim Servicing Term or by any other means, Sellers shall all cooperate with Buyer in effecting such termination and transferring all authority to interim service such Purchased Mortgage Loan to the Successor Servicer.  Without limiting the generality of the foregoing, each Seller shall, in the manner and at such times as the Successor

 

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Servicer or Buyer shall reasonably request (i) promptly transfer all data in its possession relating to the applicable Purchased Mortgage Loans and other Mortgage Assets to the Successor Servicer in such electronic format as the Successor Servicer may reasonably request, (ii) promptly transfer to the Successor Servicer, Buyer or Buyer’s designee all other files, records, correspondence and documents relating to the applicable Purchased Mortgage Loans and other Mortgage Assets and (iii) fully cooperate and coordinate with the Successor Servicer and/or Buyer to comply with any applicable so-called “goodbye” letter requirements, notices or other applicable requirements of the Real Estate Settlement Procedures Act or other applicable Requirements of Law applicable to the transfer of the servicing of the applicable Purchased Mortgage Loans.  Each Seller agrees that if any Seller fails to cooperate with Buyer or any Successor Servicer in effecting the termination of a Seller as servicer of any Purchased Mortgage Loan or the transfer of all authority to service such Purchased Mortgage Loan to such Successor Servicer in accordance with the terms hereof, Buyer will be irreparably harmed and entitled to injunctive relief and shall not be required to post bond.

 

(g)        Notwithstanding anything to the contrary in any Transaction Document, each Seller and Buyer agree that all Servicing Rights with respect to the Purchased Mortgage Loans are being transferred hereunder to Buyer on the applicable Purchase Date, the Purchase Price for the Purchased Mortgage Loans includes full and fair consideration for such Servicing Rights and such Servicing Rights shall be transferred by Buyer to a Seller upon Sellers’ payment of the Repurchase Price for such Purchased Mortgage Loans.

 

14.       Single Agreement

 

Buyer and Sellers acknowledge that, and have entered into this Agreement and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder, together with the provisions of the Side Letter, constitute a single business and contractual relationship and have been made in consideration of each other.  Accordingly, Buyer and each Seller agrees (i) to perform all of its obligations in respect of each related Transaction hereunder and its obligations under the Side Letter, and that a default in the performance by any Seller of any such obligations shall constitute a default by all Sellers in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder or any obligations under the Side Letter and (iii) that payments, deliveries and other transfers made by any of them in respect of any Transaction or any agreement under the Side Letter shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder or any agreement under the Side Letter, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

 

15.       Notices and Other Communications

 

Except as otherwise expressly provided herein, all such notices, statements, demands or other communications shall be in writing and shall be deemed to have been duly given and received (i) if sent by facsimile, upon the sender’s receipt of confirmation of transmission of such facsimile from the sending facsimile machine, (ii) by email, upon confirmation of receipt by the recipient, (ii) if hand delivered, when delivery to the address below is made, as evidenced by

 

63

 

a confirmation from the applicable courier service of delivery to such address, but without any need of evidence of receipt by the named individual required and (iii) if mailed by overnight courier, on the following Business Day, in each case addressed as follows:

 

	
if   to RMC:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Ryland Mortgage Company
    
	
 
    	
3011 Townsgate Road,   Suite 200A
    
	
 
    	
Westlake Village,   California 91361
    
	
 
    	
Attention:
    	
Mr. Martyn Watson
    
	
 
    	
Telephone:
    	
(805) 367-3740
    
	
 
    	
Facsimile:
    	
(805) 367-3805
    
	
 
    	
Email:
    	
mwatson@ryland.com
    
	
 
    	
 
    	
 
    
	
if   to RMCMC:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
RMC Mortgage   Corporation
    
	
 
    	
3011 Townsgate Road,   Suite 200A
    
	
 
    	
Westlake Village,   California 91361
    
	
 
    	
Attention:
    	
Mr. Martyn Watson
    
	
 
    	
Telephone:
    	
(805) 367-3740
    
	
 
    	
Facsimile:
    	
(805) 367-3805
    
	
 
    	
Email:
    	
mwatson@ryland.com
    
	
 
    	
 
    	
 
    
	
With   copies to:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
The Ryland   Group, Inc.
    
	
 
    	
3011 Townsgate Road,   Suite 200
    
	
 
    	
Westlake Village, CA   91361
    
	
 
    	
Attention:
    	
Mr. Timothy J.   Geckle
    
	
 
    	
 
    	
Senior Vice President   and General Counsel
    
	
 
    	
Telephone:
    	
(805) 367-3780
    
	
 
    	
Facsimile:
    	
(805) 367-3807
    
	
 
    	
Cell:
    	
(818) 292-0737
    
	
 
    	
Email:
    	
tgeckle@ryland.com
    
	
 
    	
 
    
	
 
    	
The Ryland   Group, Inc.
    
	
 
    	
3011 Townsgate Road,   Suite 200
    
	
 
    	
Westlake Village, CA   91361
    
	
 
    	
Attention:
    	
Kim Nelson
    
	
 
    	
 
    	
Treasurer
    
	
 
    	
Telephone:
    	
(805) 367-3723
    
	
 
    	
Facsimile:
    	
(805) 367-3802
    
	
 
    	
Cell:
    	
(805) 216-4571
    
	
 
    	
Email:
    	
knelson@ryland.com
    

 

64

 

	
if   to Buyer:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
JPMorgan Chase Bank,   N.A.
    
	
 
    	
712 Main Street, 9th   Floor
    
	
 
    	
Houston, Texas 77002
    
	
 
    	
Attention:
    	
John Greene
    
	
 
    	
Telephone:
    	
(713) 216-0255
    
	
 
    	
Facsimile:
    	
(713) 216-2818
    
	
 
    	
email:
    	
john.r.greene@jpmorgan.com
    
	
 
    	
 
    	
 
    
	
with   copies to:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Veronica J. Chapple
    
	
 
    	
Chase Mortgage   Warehouse Finance
    
	
 
    	
3929 W. John Carpenter   Fwy
    
	
 
    	
Irving, Texas 75063
    
	
 
    	
Phone:    214-492-4400
    
	
 
    	
Fax:  972-870-3606
    
	
 
    	
email:    vickie.j.chapple@jpmchase.com and cmwf.credit@jpmorganchase.com
    
	
and
    	
 
    
	
 
    	
Marjorie A. Hirsch
    
	
 
    	
Vice President and   Assistant General Counsel
    
	
 
    	
Legal and Compliance   Department
    
	
 
    	
JPMorgan Chase Bank,   N.A.
    
	
 
    	
1111 Fannin, 10th Floor   (Mail Code TX2-F069)
    
	
 
    	
Houston, Texas 77002
    
	
 
    	
Telephone:
    	
713-750-2305
    
	
 
    	
Facsimile:
    	
713-750-2346
    
	
 
    	
Email:
    	
Midge.Hirsch@jpmorgan.com
    

 

Any Party may revise any information relating to it by notice in writing to the other Party, in accordance with the provisions in this paragraph.  Any provision hereof to the contrary notwithstanding, any notice, demand or other communication provided by Buyer to any Seller shall be deemed to be effective notice to all Sellers.

 

16.       Fees and Expenses; Indemnity

 

(a)        Sellers shall pay their own legal and accounting fees and other costs incurred in respect of this Agreement, the other Transaction Documents and this facility.  Sellers jointly and severally agree to promptly pay all out-of-pocket costs and expenses incurred by Buyer, including, without limitation, reasonable attorneys’ fees, in connection with (i) preparation, negotiation, and documentation of this Agreement and the other Transaction Documents, (ii) administration of this Agreement and the other Transaction Documents and any amendment or waiver thereto and purchase and resale of Mortgage Loans by Buyer hereunder, (iii) protection of the Purchased Mortgage Loans (including, without limitation, all costs of filing or recording any assignments, financing statements, amendments and other documents), (iv) performance of due diligence, collateral audits and servicing appraisals by Buyer or any agent of Buyer

 

65

 

conducted prior to and after the date hereof, and (v) enforcement of Buyer’s rights hereunder and under any other Transaction Document (including, without limitation, costs and expenses suffered or incurred by Buyer in connection with any Act of Insolvency related to any Seller, appeals and any anticipated post-judgment collection services).

 

(b)        In addition to its other rights hereunder, Sellers shall jointly and severally indemnify Buyer and Buyer’s Affiliates and Subsidiaries and their respective directors, officers, agents, advisors and employees (each, an “Indemnified Party” and collectively the “Indemnified Parties”) against, and hold Buyer and each of them harmless from, any losses, liabilities, damages, claims, costs and expenses (including reasonable attorneys’ fees and disbursements) suffered or incurred by any Indemnified Party (“Losses”) relating to or arising out of this Agreement, any other Transaction Document or any other related document, or any transaction contemplated hereby or thereby or any use or proposed use of proceeds thereof and amendment or waiver thereof, or any breach of any covenant, representation or warranty contained in any of such documents, or arising out of, resulting from, or in any manner connected with, the purchase by Buyer of any Mortgage Loan or the servicing of any Purchased Mortgage Loans by any Seller or any Subservicer; provided that Sellers shall not be required to indemnify any Indemnified Party to the extent such Losses result from the gross negligence or willful misconduct of such Indemnified Party.  The provisions of this Paragraph 16 shall survive the termination of this Agreement.

 

17.       Shipment to Approved Takeout Investor; Trust Release Letters

 

(a)        Shipping Instructions.  If a Seller desires that Buyer send a Mortgage Note and the related Mortgage to an Approved Takeout Investor, rather than to a Seller directly, in connection with Sellers’ repurchase of the related Purchased Mortgage Loan, then a Seller shall prepare and send to Buyer Shipping Instructions to instruct Buyer when and how to send such Mortgage Note and related Mortgage to such Approved Takeout Investor.  Buyer shall use its best efforts to send each Mortgage Note and related Mortgage on or before the date specified for shipment in the Shipping Instructions in accordance with the cutoff times specified in the “Chase Mortgage Warehouse Finance Customer Reference Guide” provided by Buyer to such Seller, or otherwise specified by Buyer to any Seller in writing from time to time.  If a Seller instructs Buyer to send a Mortgage Note and related Mortgage before the Repurchase Date, Buyer will send the Mortgage Note and related Mortgage under a Bailee Letter.  If a Seller does not provide Buyer with Shipping Instructions with respect to a Mortgage Loan, Buyer shall send the Mortgage Note and related Mortgage to a Seller at such time as Buyer receives the Repurchase Price.

 

(b)        Trust Release Letters.  If a Seller believes that a Mortgage Note contains one or more errors or omissions that are correctable and necessary to facilitate the purchase or enforceability of that Mortgage Note, then a Seller may deliver a Trust Release Letter to Buyer to request the release of the Mortgage Note to a Seller for the purpose of making that correction.  If Buyer, in its sole discretion, deems the reason stated by a Seller in the Trust Release Letter to warrant return of the Mortgage Note to a Seller for correction, then Buyer will deliver the Mortgage Note to such Seller at its earliest convenience.  The related Seller shall return the corrected Mortgage Note to Buyer no later than the fifth (5th) Business Day after the date of the related Trust Release Letter.  At all times any Mortgage Note is in the possession Sellers

 

66

 

pursuant to a Trust Release Letter or otherwise, Sellers shall hold such Mortgage Note in trust for the benefit of Buyer.  At no time shall the aggregate original Outstanding Principal Balance of all Mortgage Notes released to all Sellers pursuant to this Paragraph exceed $5,000,000.

 

18.         Further Assurances.

 

Each Seller shall (i) promptly provide such further assurances or agreements as Buyer may request in good faith in order to effect the purposes of this Agreement and (ii) on or prior to the date hereof, mark its systems and/or other data processing records evidencing the Purchased Mortgage Loans with a legend or other identifier, acceptable to Buyer, evidencing that Buyer has acquired an interest therein as provided in this Agreement.

 

19.         Buyer as Attorney-in-Fact

 

Buyer is hereby appointed the attorney-in-fact of each Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments that Buyer may, in good faith, deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest.  Without limiting the generality of the foregoing, Buyer shall have the right and power to add and amend endorsements in Seller’s name of Mortgage Notes either in blank or to any Approved Takeout Investor or its designee, to cancel endorsements and to re-endorse Mortgage Notes in Seller’s name and to receive, endorse and collect all checks made payable to the order of a Seller representing any Income on any of the Purchased Mortgage Loans and to give full discharge for the same.

 

20.         Wire Instructions

 

(a)          Unless otherwise specified in this Agreement, any amounts to be transferred by Buyer to any Seller hereunder shall be sent by wire transfer in immediately available funds to the account of Sellers (and to the account specified in writing by any Seller) at:

 

	
Bank:
    	
JPMorgan   Chase Bank, New York, NY
    
	
Acct.  No.:
    	
 
    
	
ABA No.:
    	
 
    
	
Account Name:
    	
 
    
	
 
    	
 
    
	
Bank:
    	
JPMorgan   Chase Bank, New York, NY
    
	
Acct.  No.:
    	
 
    
	
ABA No.:
    	
 
    
	
Account Name:
    	
 
    

 

(b)          Unless otherwise specified in this Agreement, any amounts to be transferred by a Seller to Buyer hereunder shall be sent by wire transfer in immediately available funds to the account of Buyer at:

 

67

 

	
Bank:
    	
JPMorgan Chase   Bank, N.A.
    
	
Acct.   No.:
    	
 
    
	
ABA   No.
    	
 
    
	
Reference:
    	
 
    
	
Attention:
    	
 
    

 

(c)          Amounts received by Buyer after 4:00 p.m., Houston, Texas time, on any Business Day shall be deemed to have been paid and received on the next succeeding Business Day.

 

21.         Entire Agreement; Severability

 

This Agreement, as supplemented by the Side Letter, supersedes any existing agreements between the Parties containing terms and conditions for repurchase transactions.  Each provision and agreement of this Agreement and the other Transaction Documents shall be treated as separate and independent from any other provision or agreement of this Agreement and the other Transaction Documents and shall be enforceable notwithstanding the unenforceability of any of such other provisions or agreements.  Without limiting the generality of the foregoing, if any phrase or clause of any Transaction Document would render any provision or agreement of that (or any other) Transaction Document unenforceable, such phrase or clause shall be disregarded and deemed deleted, and such provision or agreement shall be enforced as fully as if the offending phrase or clause had never appeared.

 

22.         Assignments; Termination

 

(a)          The rights and obligations of Sellers under this Agreement and under any Transaction shall not be assigned by any Seller without the prior written consent of Buyer and any such assignment without the prior written consent of Buyer shall be null and void.

 

(b)          Buyer may assign all or any portion of its rights, obligations and interest under this Agreement and in the Mortgage Assets at any time without the consent of any Person, provided that any such assignment, other than an assignment to an Affiliate of Buyer, is subject to the prior written consent of Sellers so long as an Event of Default or Default has not occurred and is not continuing.  Any such assignment shall be in a minimum amount of at least $5,000,000 unless otherwise consented to by Sellers; provided that Sellers’ consent shall not be required if an Event of Default or Default has occurred and is continuing.  Resales of Purchased Mortgage Loans by Buyer (subject to Sellers’ right to repurchase the Purchased Mortgage Loans or, at Buyer’s election, Equivalent Mortgage Loans before termination of this Agreement or Buyer’s liquidation of the Purchased Mortgage Loans pursuant to Paragraph 12) in accordance with applicable law, shall be permitted without restriction.  Buyer may sell participation interests in all or any portion of its rights, obligations and interest under this Agreement and in the Mortgage Assets to any Person at any time without the consent of any Person.  In addition to, and notwithstanding any provision to the contrary in, the foregoing, Buyer may assign its rights to enforce this Agreement as to any Mortgage Loan to any Person that subsequently purchases such Mortgage Loan from Buyer or provides financing to Buyer with respect to such Mortgage Loan.

 

68

 

(c)          In addition to the foregoing, Buyer may, at any time in its sole discretion, pledge or grant a Lien in all or any portion of its rights under this Agreement (including, without limitation, any rights to Mortgage Assets and any rights to payment of the Repurchase Price) to secure obligations to a Federal Reserve Bank, without notice to or consent of any Seller; provided that no such pledge or grant of a security interest would release Buyer from any of its obligations under this Agreement, or substitute any such pledgee or grantee for Buyer as a party to this Agreement.

 

(d)          Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns.

 

(e)          Notwithstanding any of the foregoing provisions of this Paragraph, Buyer shall not be precluded from assigning, charging or otherwise dealing with all or any part of its interest in any sum payable to it under Paragraph 12.

 

(f)           This Agreement and all Transactions outstanding hereunder shall terminate automatically without any requirement for notice on the date occurring on or after the Termination Date on which all Repurchase Prices and all other obligations of Sellers under the Transaction Documents have been paid in full.  Any provision hereof to the contrary notwithstanding, any notice contemplated in the definition of Termination Date in Paragraph 2 that is provided by a Seller shall be binding on all Sellers.

 

23.         Counterparts

 

This Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

 

24.         GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

(a)          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(b)          EACH SELLER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING IN 

 

69

 

THIS PARAGRAPH 24 SHALL AFFECT THE RIGHT OF BUYER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY SELLER OR ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.  EACH PARTY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS FOR NOTICES HEREUNDER SPECIFIED IN PARAGRAPH 15.

 

(c)          EACH SELLER AND BUYER (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN ANY OR ALL SELLERS AND BUYER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO BUYER TO PROVIDE THE FACILITY EVIDENCED BY THIS AGREEMENT.

 

25.         No Waivers, Etc.

 

No express or implied waiver of any Event of Default by Buyer shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by Buyer shall constitute a waiver of its right to exercise any other remedy hereunder.  No modification or waiver of any provision of this Agreement and no consent by any Party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by all of the Parties hereto.  Without limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) hereof will not constitute a waiver of any right to do so at a later date.

 

26.         Use of Employee Plan Assets

 

(a)          If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by any Seller in a Transaction, a Seller shall so notify Buyer prior to the Transaction.  Such Seller shall represent in writing to Buyer that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and Buyer may proceed in reliance thereon but shall not be required so to proceed.

 

(b)          Subject to the last sentence of Paragraph (a) of this Paragraph, any such Transaction shall proceed only if a Seller furnishes or has furnished or caused to be furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

 

(c)          By entering into a Transaction pursuant to this Paragraph, each Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as such Transaction is outstanding.

 

70

 

27.         Intent

 

(a)          The Parties intend and acknowledge that each Transaction is a “repurchase agreement” as that term is defined in Paragraph 101 of the Bankruptcy Code, and a “securities contract” as that term is defined in Paragraph 741 of the Bankruptcy Code.  Each Seller hereby agrees that it shall not challenge the characterization of this Agreement as a “repurchase agreement” as that term is defined in Paragraph 101 of the Bankruptcy Code, or as a “securities contract” as that term is defined in Paragraph 741 of the Bankruptcy Code in any dispute or proceeding.

 

(b)          It is understood that any Party’s right to accelerate or terminate this Agreement or to liquidate Mortgage Loans delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 12 hereof, is a contractual right to accelerate, terminate or liquidate this Agreement or such Transaction as described in Paragraphs 555 and 559 of the Bankruptcy Code.

 

(c)          The Parties agree and acknowledge that if a Party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

(d)          It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as any of the Parties is not a “financial institution” as that term is defined in FDICIA).

 

(e)          It is understood and agreed that this Agreement constitutes a “master netting agreement” as that term is defined in Paragraph 101 of the Bankruptcy Code, and that any Party’s right to cause the termination, liquidation, or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with, this Agreement or any Transaction is a contractual right to cause the termination, liquidation, or acceleration of, or to offset net termination values, payment amounts or other transfer obligations arising under or in connection with, this Agreement or any Transaction as described in Paragraph 561 of the Bankruptcy Code.

 

28.         Disclosure Relating to Certain Federal Protections

 

The Parties acknowledge that they have been advised that:

 

(a)          in the case of Transactions in which one of the Parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Paragraph 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other Parties with respect to any Transaction hereunder;

 

71

 

(b)          in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Paragraph 15C of the 1934 Act, SIPA will not provide protection to the other Parties with respect to any Transaction hereunder; and

 

(c)          in the case of Transactions in which one of the Parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

 

29.         Confidentiality

 

(a)          Confidential Terms.  The Parties hereby acknowledge and agree that all written or computer-readable information provided by one Party to any other regarding the terms set forth in any of the Transaction Documents or the Transactions contemplated thereby (the “Confidential Terms”) shall be kept confidential and shall not be divulged to any Person (other than Affiliates and Subsidiaries thereof) without the prior written consent of such other Party except to the extent that (i) such Person is an Affiliate, division, or parent holding company of a Party or a director, officer, employee or agent (including an accountant, legal counsel and other advisor) of a Party or such Affiliate, division or parent holding company, (ii) in such Party’s opinion it is necessary to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies or regulatory bodies or in order to comply with any applicable federal or state laws or regulations, (iii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, (iv) in the event of a Default or and Event of Default Buyer reasonably determines such information to be necessary or desirable to disclose in connection with the marketing and sales of the Purchased Mortgage Loans or otherwise to enforce or exercise Buyer’s rights hereunder, or (v) to the extent Buyer deems necessary or appropriate, in connection with an assignment or participation under Paragraph 22 of this Agreement or in connection with any hedging transaction related to Purchased Mortgage Loans.  Notwithstanding the foregoing or anything to the contrary contained herein or in any other Transaction Document, the Parties may disclose to any and all Persons, without limitation of any kind, the U.S. federal, state and local tax treatment of the Transactions, any fact that may be relevant to understanding the U.S. federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such U.S. federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that no Seller may disclose (except as provided in clauses (i) and (ii) of this paragraph (a)) the name of or identifying information with respect to Buyer, the Side Letter, any terms contained therein (including the Pricing Rate, Facility Fee, Purchase Price Percentage and Purchase Price) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the U.S. federal, state and local tax treatment of the Transactions and is not relevant to understanding the U.S. federal, state and local tax treatment of the Transactions, without the prior written consent of Buyer. The provisions set forth in this Paragraph 29 shall survive the termination of this Agreement for a period of one (1) year following such termination.

 

(b)          Privacy of Sellers’ Customer Information.

 

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(i)            Each Sellers’ Customer Information in the possession of Buyer, other than information independently obtained by Buyer and not derived in any manner from or using information obtained under or in connection with this Agreement, is and shall remain confidential and proprietary information of Sellers.  Except in accordance with this Paragraph 29(b), Buyer shall not use any Sellers’ Customer Information for any purpose, including the marketing of products or services to, or the solicitation of business from, Customers, or disclose any Sellers’ Customer Information to any Person, including any of Buyer’s employees, agents or contractors or any third party not affiliated with Buyer.  Buyer may use or disclose Sellers’ Customer Information only to the extent necessary (i) for examination and audit of Buyer’s activities, books and records by Buyer’s regulatory authorities, (ii) to protect or exercise Buyer’s rights and privileges or (iii) to carry out Buyer’s express obligations under this Agreement and the other Transaction Documents (including providing the related Sellers’ Customer Information to Approved Takeout Investors), and for no other purpose; provided that Buyer may also use and disclose Sellers’ Customer Information as expressly permitted by a Seller in writing, to the extent that such express permission is in accordance with the Privacy Requirements.  Buyer shall take commercially reasonable steps to ensure that each Person to which Buyer intends to disclose Sellers’ Customer Information, before any such disclosure of information, agrees to keep confidential any such Sellers’ Customer Information and to use or disclose such Sellers’ Customer Information only to the extent necessary to protect or exercise Buyer’s rights and privileges, or to carry out Buyer’s express obligations, under this Agreement and the other Transaction Documents (including providing the related Sellers’ Customer Information to Approved Investors).  Buyer agrees to maintain an information security program and to assess, manage and control risks relating to the security and confidentiality of Sellers’ Customer Information pursuant to such program in the same manner as Buyer does in respect of its own customers’ information, and shall implement the standards relating to such risks in the manner set forth in the Interagency Guidelines Establishing Standards for Safeguarding Company Customer Information set forth in 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570.  Without limiting the scope of the foregoing sentence, Buyer shall use at least the same physical and other security measures to protect all of Sellers’ Customer Information in its possession or control as it uses for its own customers’ confidential and proprietary information.

 

(ii)           Sellers shall indemnify the Indemnified Parties against, and hold each of them harmless from, any losses, liabilities, damages, claims, costs and expenses (including reasonable attorneys’ fees and disbursements) suffered or incurred by any Indemnified Party relating to or arising out of any Seller’s loss, improper disclosure or misuse of any Sellers’ Customer Information.

 

30.         Multiple Sellers

 

(a)          Sellers.  Each representation and warranty in the Transaction Documents by a Seller shall be deemed to be its separate representation and warranty and the joint and several representation and warranty of all Sellers.  Each covenant and agreement by a Seller under the Transaction Documents is the joint and several covenant and agreement of all Sellers.  Any notice or other communication provided to a Seller pursuant hereto shall be deemed to have been 

 

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given each Seller and any failure to receive any notice or communication contemplated hereby shall not relieve a Seller from its joint and several liability for the obligations of each Seller hereunder.

 

(b)          Basis for Structure.  RMC and RMCMC have each determined that they will specifically and materially benefit from all Transactions hereunder.  They intend, and Buyer has required, that RMC and RMCMC jointly and severally execute and deliver this Agreement and certain other Transaction Documents.  Each Seller has requested and bargained for the structure and terms of, and security for, all Transactions.

 

(c)          Joint and Several Obligation.  Each Seller hereby irrevocably and unconditionally agrees (i) that it is jointly and severally liable to Buyer for full payment and performance of the obligations and liabilities of all Sellers, including all obligations of each of RMC and RMCMC under the Transaction Documents and (ii) to fully pay and perform all such obligations and liabilities, including all indemnity obligations under the Transaction Documents.  With respect to its obligations to repurchase Purchased Mortgage Loans, transfer cash and/or Additional Purchased Mortgage Loans to Buyer to eliminate any Margin Deficit, maintain the Required Amount in each Cash Pledge Account, maintain the Tax and Insurance Amount in the Collection Account, pay Taxes and Other Taxes, pay Price Differential, indemnify the Indemnified Parties and pay Buyer’s fees, expenses and other obligations and liabilities of another Seller to Buyer, each Seller agrees to the terms set forth in Schedule III.  Each Seller further agrees that, notwithstanding any right of Buyer to investigate fully the affairs of a Seller and notwithstanding any knowledge of facts determined or determinable by Buyer, Buyer has the right to rely fully on the representations, warranties, covenants and agreements of each Seller contained in the Agreement and upon the accuracy of any document, instrument, certificate or exhibit given or delivered hereunder.

 

(d)          Contribution Rights.  Each Seller intends that its joint and several obligations under the Transaction Documents, and the security interest granted by it in the Mortgage Assets pursuant to Paragraph 6(a), are not subject to challenge or repudiation on any basis (other than the defense if, and on the basis that, such obligations have been paid to the extent that they have been paid).  Therefore, as of the date any transfer — as that term is defined in Bankruptcy Code § 101(54) — is deemed to occur under the Transaction Documents, each Seller’s liabilities under the Transaction Documents and all of such Seller’s other liabilities, calculated in each case to the full extent of that Seller’s probable net exposure when and if those liabilities become absolute and mature (“Dated Liabilities”), are intended by that Seller to be less than the fair valuation of all of its assets as of that date (“Dated Assets”).  To that end, each Seller hereby (i) grants to each other Seller, and recognizes each other Seller as having, ratable rights of subrogation and contribution in the amount, if any, by which the granting Seller’s Dated Assets (but for the total subrogation and contribution in its favor under this paragraph) would exceed the granting Seller’s Dated Liabilities, and (ii) acknowledges receipt of and recognizes its ratable rights to subrogation and contribution from such other Seller in the amount that such other Seller’s Dated Assets (but for the total subrogation and contribution in its favor under this paragraph) would exceed such other Seller’s Dated Liabilities.  It is a material objective of this Paragraph 30 that each Seller recognizes rights to subrogation and contribution rather than be deemed not to be solvent by reason of an interpretation of its joint and several obligations under the Transaction Documents.

 

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31.         Contribution with Respect to Seller Obligations

 

(a)          To the extent that any Seller shall make a payment under this Agreement or any other Transaction Document (a “Seller Payment”) which, taking into account all other Seller Payments then previously or concurrently made by any other Seller, exceeds the amount which otherwise would have been paid by or attributable to such Seller if each Seller had paid the aggregate obligations of Sellers hereunder and under the other Transaction Documents (collectively, the “Seller Obligations”) satisfied by such Seller Payment in the same proportion as such Seller’s “Allocable Amount” (as defined below) (as determined immediately prior to such Seller Payment) bore to the aggregate Allocable Amounts of each of Sellers as determined immediately prior to the making of such Seller Payment, then, following payment in full in cash of Seller Payment and Seller Obligations, such Seller shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Seller for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Seller Payment.

 

(b)          As of any date of determination, the “Allocable Amount” of any Seller shall be equal to the maximum amount of the claim which could then be recovered from such Seller under this Agreement and the other Transaction Documents without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

(c)          This Paragraph 31 is intended only to define the relative rights of Sellers, and nothing set forth in this Paragraph 31 is intended to or shall impair the obligations of Sellers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement and the other Transaction Documents.  The Parties acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of Seller or Sellers to which such contribution and indemnification is owing.  The rights of the indemnifying Sellers against other Sellers under this Paragraph 31 shall be exercisable upon the full and indefeasible payment of Seller Obligations in cash.

 

32.         Setoff

 

Except to the extent specifically permitted herein, each Seller hereby irrevocably and unconditionally waives all right to setoff that it may have under contract (including this Agreement), applicable law, in equity or otherwise with respect to any funds or monies of Buyer (or any disclosed principal for which Buyer is acting as agent) at any time held by or in the possession of a Seller.

 

Each Seller agrees that Buyer may set off any funds or monies of any Seller at any time held by or in the possession of Buyer, whether in connection with this Agreement, any other Transaction Document or otherwise, against any amounts Sellers owe to Buyer, or against any amounts Sellers owe to any other Indemnified Party, whether pursuant to the terms of this Agreement or any other Transaction Document or otherwise.

 

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33.         WAIVER OF SPECIAL DAMAGES.

 

EACH SELLER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SUCH SELLER MAY HAVE TO CLAIM OR RECOVER FROM BUYER IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

34.         USA PATRIOT ACT NOTIFICATION.

 

The following notification is provided to each Seller pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for each Seller:  When Seller opens an account, if Seller is an individual, Buyer will ask for Seller’s name, taxpayer identification number, residential address, date of birth, and other information that will allow Buyer to identify Seller, and if Seller is not an individual, Buyer will ask for Seller’s name, taxpayer identification number, business address, and other information that will allow Buyer to identify Seller.  Buyer may also ask, if Seller is an individual, to see Seller’s driver’s license or other identifying documents, and if Seller is not an individual to see Seller’s legal organizational documents or other identifying documents.

 

[Remainder of page intentionally blank.]

 

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JPMORGAN CHASE BANK, N.A.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ John Greene
    	
 
    
	
 
    	
John Greene
    	
 
    
	
 
    	
Assistant Vice   President and Underwriter
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
RYLAND MORTGAGE COMPANY,
    	
 
    
	
jointly and severally with the
    	
 
    
	
other Sellers
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ David A.   Brown
    	
 
    
	
Name:  David   A. Brown
    	
 
    
	
Title:  President
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
RMC MORTGAGE CORPORATION,
    	
 
    
	
jointly and severally with the
    	
 
    
	
other Sellers
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Martyn   Watson
    	
 
    
	
Name:  Martyn   Watson
    	
 
    
	
Title:  Assistant   Treasurer
    	
 
    

 

Signature Page to
 Master Repurchase Agreement

 

 

List of Exhibits and Schedules

 

	
Exhibit A
    	
Form of Confirmation
    
	
 
    	
 
    
	
Exhibit B
    	
Mortgage Loan   Representations and Warranties
    
	
 
    	
 
    
	
Exhibit C
    	
Form of Compliance   Certificate
    
	
 
    	
 
    
	
Exhibit D
    	
Form of Shipping   Instructions
    
	
 
    	
 
    
	
Exhibit E
    	
Conditions Precedent   Documents
    
	
 
    	
 
    
	
Exhibit F
    	
Required Opinions of   Counsel
    
	
 
    	
 
    
	
Exhibit G
    	
Subsidiary Information
    
	
 
    	
 
    
	
Exhibit H
    	
Form of Subservicer   Letter
    
	
 
    	
 
    
	
Exhibit I
    	
Fields for Daily Data   Tape
    
	
 
    	
 
    
	
Exhibit J
    	
Form of Bailee Letter
    
	
 
    	
 
    
	
Exhibit K
    	
Seller Names from Tax   Returns
    
	
 
    	
 
    
	
Exhibit L
    	
Form of Trust Release   Letter
    
	
 
    	
 
    
	
Exhibit M
    	
Permitted Debt
    
	
 
    	
 
    
	
Schedule I
    	
Approved Takeout   Investors
    
	
 
    	
 
    
	
Schedule II
    	
Sellers’ Authorized   Signers
    
	
 
    	
 
    
	
Schedule III
    	
Terms of each Seller’s   Obligations to pay transactions by another of them
    

 

 

EXHIBIT A

 

FORM OF CONFIRMATION

 

CONFIRMATION

 

	
TO:
    	
[NAME OF SELLER]
    
	
 
    	
 
    
	
FROM:
    	
JPMorgan Chase Bank,   N.A.
    
	
 
    	
 
    
	
RE:
    	
Confirmation under   Master Repurchase Agreement (the “Agreement”)   between JPMorgan Chase Bank, N.A. and [NAME OF SELLER]
    

 

JPMorgan Chase Bank, N.A. (“Buyer”) is pleased to confirm your sale and its purchase of the Mortgage Loans described below and listed on the attached Loan Purchase Detail pursuant to the Agreement under the following terms and conditions:

 

	
ORIG. PRINCIPAL AMOUNT   OF MORTGAGE LOANS:
    	
 
    	
As set forth on   attached Loan Purchase Detail
    
	
 
    	
 
    	
 
    
	
CURRENT PRINCIPAL   AMOUNT OF MORTGAGE LOANS:
    	
 
    	
As set forth on   attached Loan Purchase Detail
    
	
 
    	
 
    	
 
    
	
PURCHASE DATE:
    	
 
    	
The date specified as   the Purchase Date in the request related to this Confirmation
    
	
 
    	
 
    	
 
    
	
REPURCHASE DATE:
    	
 
    	
45 days after the   Purchase Date (30 days after the Purchase Date if a Jumbo Loan) or such other   date as required by, or otherwise determined in accordance with, the   Agreement
    
	
 
    	
 
    	
 
    
	
PURCHASE PRICE:
    	
 
    	
(a)    for any CL Loan, the Purchase Price set   forth in the Side Letter applicable to CL Loans on the Purchase Date; and

 

(b)    for any other Eligible Mortgage Loan, the   Purchase Price set forth in the Side Letter as applicable to Eligible   Mortgage Loans other than CL Loans on the Purchase Date.
    

 

Exhibit A-1

 

	
PRICING RATE:
    	
 
    	
(a)    for   any CL Loan, the per annum percentage rate set forth in the Side Letter as   applicable to CL Loans on the Purchase Date; and

 

(b)    for   any other Eligible Mortgage Loan, the per annum percentage rate set forth in   the Side Letter as applicable to Eligible Mortgage Loans other than CL Loans   on the Purchase Date.
    
	
 
    	
 
    	
 
    
	
PRICE DIFFERENTIAL (TO   BE PAID ON EACH APPLICABLE REMITTANCE DATE):
    	
 
    	
For each month (or   portion thereof) during which the Transaction is outstanding, the sum of the   following amount for each day during that month (or portion thereof):   the weighted average of the applicable Pricing Rates for such day multiplied    by the Aggregate Purchase Price on such day divided  by   360. The Price Differential for the Transaction shall accrue during the   period commencing on (and including) the day on which the Purchase Price is   transferred into the Funding Account (or otherwise paid to or for the account   of Seller) for the Transaction and ending on (but excluding) the date on   which the Repurchase Price is paid.
    

 

The Agreement is incorporated by reference into this Confirmation and made a part hereof as if it were fully set forth herein.  All capitalized terms used herein but not otherwise defined shall have the meanings specified in the Agreement.

 

Exhibit A-2

 

EXHIBIT B

 

MORTGAGE LOAN
 REPRESENTATIONS AND WARRANTIES

 

With respect to each Mortgage Loan sold under this Agreement, (i) as of the Purchase Date for the purchase of any Purchased Mortgage Loans by Buyer from any Seller and as of the date of this Agreement and any related Transaction hereunder, and (ii) at all times while the Transaction Documents or any Transaction hereunder is in force and effect, each Seller represents and warrants to Buyer that each of the statements set forth in the lettered paragraphs of this Exhibit B is true and correct.  For purposes of this Exhibit B and the representations and warranties set forth herein, a breach of a representation or warranty shall be deemed to have been cured with respect to a Mortgage Loan if and when a Seller has taken or caused to be taken action such that the event, circumstance or condition that gave rise to such breach no longer adversely affects such Mortgage Loan.  With respect to those representations and warranties which are made to the best of Seller’s knowledge, if it is discovered by Buyer or any Seller that the substance of such representation and warranty is inaccurate, notwithstanding any Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

(a)                               Mortgage Loans as Described.  The information set forth in the related Loan Purchase Detail is complete, true and correct.

 

a.                                   Valid First Lien.  The Mortgage is properly recorded and is a valid, existing and enforceable first Lien with respect to each Mortgage Loan which is indicated by Seller to be a first Lien on the Mortgaged Property, including all improvements on the Mortgaged Property, free and clear of all adverse claims, and Liens having priority over the Lien of the Mortgage, subject only to (i) the Lien of current real property taxes and assessments not yet due and payable, (ii) covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording being acceptable to mortgage lending institutions generally and specifically referred to in the lender’s title insurance policy delivered to Seller and which do not adversely affect the purchase by, or the purchase price to be paid by, the Approved Takeout Investor, and (iii) other matters to which like properties are commonly subject which do not individually or in the aggregate materially interfere with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property.  Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, existing and enforceable first lien and first priority security interest securing the related Mortgage Loan on the property described therein and Seller has full right to sell and assign the related Mortgage Assets to Buyer.

 

b.                                  Validity of Mortgage Documents.  With respect to each Mortgage Loan, Seller or its designee has in its possession all Servicing Files, or any miscellaneous items (except for those Servicing Files disclosed to Buyer by Seller as outstanding).  

 

Exhibit B-1

 

The Mortgage Note and the related Mortgage are original and genuine and each is the legal, valid and binding obligation of the Mortgagor thereof, enforceable in all respects in accordance with its terms except as enforceability may be limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or other similar laws affecting the enforcement of the rights of creditors and (ii) general principles of equity, whether enforcement is sought in a proceeding in equity or at law, and Seller has taken all action necessary to transfer such rights of enforceability to Buyer.  Neither the operation of any of the terms of any Mortgage or Mortgage Note, nor the exercise by any holder of any right thereunder, will render the Mortgage or Mortgage Note unenforceable, in whole or in part, or subject to any right of rescission, setoff, counterclaim or defense, and no such right of rescission, setoff, counterclaim or defense has been asserted with respect thereto.  All parties to the Mortgage Note and the Mortgage had the legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and properly executed by such parties. All items required to be delivered pursuant to this Agreement shall be delivered to Buyer, within the time frames set forth in this Agreement, and if a document is delivered in imaged format, such images must be of sufficient quality to be readable and able to be copied.  There is only one original executed Mortgage Note with respect to such Mortgage Loan.

 

c.                                   Customary Provisions.  The Mortgage and related Mortgage Note contain customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure.  Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and merchantable title to the Mortgaged Property.  There is no homestead or other exemption or right available to the Mortgagor or any other person which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage.  The Mortgage Note and Mortgage are on forms that are conforming to Agency Guidelines and the Takeout Guidelines, as applicable.

 

d.                                  Original Terms Unmodified.  The terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered or modified in any respect, except by written instruments which (a) have been recorded in the applicable public recording office if required by law or if necessary to maintain the lien priority of the Mortgage, and (b) which have been delivered to Buyer; the substance of any such waiver, alteration or modification has been approved by the insurer under the private mortgage insurance policy, if any, and by the title insurer, to the extent required by the related policy provided by Seller and is reflected appropriately on any and all documentation or data and is true and accurate in all respects.  No other instrument of waiver, alteration or modification has been executed, and no 

 

Exhibit B-2

 

Mortgagor has been released, in whole or in part, except in connection with an assumption agreement approved by the insurer under the private mortgage insurance policy, if any, and by the title insurer, to the extent required by the policy, and which assumption agreement is a part of the loan file. As of the Purchase Date, the full original principal amount of each Mortgage Loan has been fully disbursed as provided for in the Mortgage Loan Documents, and there is no requirement for any future advances.

 

e.                                   No Defenses.  The Mortgage Note and the Mortgage are not subject to any right of rescission, set off, counterclaim or defense, including, without limitation, the defense of usury, nor will the operation of any of the terms of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set off, counterclaim or defense, including, without limitation, the defense of usury, and no such right of rescission, set off, counterclaim or defense has been asserted with respect thereto; and neither the Mortgagor nor the Mortgaged Property is as of the Purchase Date or was as of the Origination Date, subject to an Act of Insolvency.

 

f.                                      No Outstanding Charges.  There are no defaults by Seller or any Subservicer in complying with the terms of the Mortgage, and (1) all taxes, ground rents, special assessments, governmental assessments, insurance premiums, leasehold payments, water, sewer and municipal charges which previously became due and owing have been paid, or escrow funds have been established in an amount sufficient to pay for every such escrowed item which remains unpaid and which has been assessed but is not yet due and payable prior to any “economic loss” dates or discount dates (or if payments were made after any “economic loss” date or discount date, then Seller has paid any penalty or reimbursed any discount out of Seller’s funds) and (2) all flood and hazard insurance premiums and private mortgage insurance premiums which are due, have been paid without loss or penalty to the Mortgagor.  As of the Purchase Date, no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under a Mortgage Loan has occurred, including but not limited to a violation of applicable law, local ordinances or city codes resulting from a deterioration or defect existing in any Mortgaged Property, and neither Seller nor its predecessors have waived any default, breach, violation or event of acceleration.  Seller has received no notice of, and has no knowledge of, any event, including but not limited to the bankruptcy filing or death of a Mortgagor, which may or could give rise to a Mortgagor default under the Mortgage Note or Mortgage.  None of Seller or any Subservicer has advanced funds, or induced, solicited or knowingly received any advance from any Person other than the Mortgagor, directly or indirectly, for the payment of any amount due under the Mortgage Loan, unless otherwise permitted in the Takeout Guidelines.

 

g.                                   No Satisfaction of Mortgage.  The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has 

 

Exhibit B-3

 

not been released from the Lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such satisfaction, cancellation, subordination, rescission or release.  Neither Seller nor any Subservicer has waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan to be in default, and neither Seller nor any Subservicer has waived any default.

 

h.                                   No Default.  There is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event permitting acceleration, and neither Seller nor any Subservicer has waived any default, breach, violation or event permitting acceleration.  With respect to each Mortgage Loan (i) the first Lien securing the Mortgage Loan is in full force and effect, (ii) there is no default, breach, violation or event of acceleration existing under such first Lien Mortgage or the related Mortgage Note, and (iii) no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration thereunder.

 

i.                                       Full Disbursement of Proceeds.  The Mortgage Loan has been closed and the proceeds of the Mortgage Loan have been fully disbursed to or for the account of the Mortgagor and there is no obligation for the mortgagee to advance additional funds thereunder and any and all requirements as to completion of any on site or off site improvement and as to disbursements of any escrow funds therefor have been complied with.  All costs, fees, and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage have been paid, and the Mortgagor is not entitled to any refund of any amounts paid or due to the mortgagee pursuant to the Mortgage Note or Mortgage with exception to escrow holdbacks.

 

j.                                      No Mechanics’ Liens.  There are no mechanics’ or similar Liens or claims filed for work, labor or material (and no rights are outstanding that under law could give rise to such lien) affecting the related Mortgaged Property which are or may be Liens prior to, or equal or coordinate with, the lien of the related Mortgage.

 

k.                                  No Additional Collateral.  The Mortgage Note is not and has not been secured by any collateral except the Lien of the corresponding Mortgage on the Mortgaged Property and the security interest of any applicable security agreement.

 

l.                                       Origination; Payment Terms.  The Mortgage Loan was originated by Seller, which is a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Paragraphs 203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or other similar institution which is supervised and examined by a federal or state authority or duly licensed by state licensing authority, if applicable.  Seller and all other parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, 

 

Exhibit B-4

 

during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (2) organized under the laws of such state, or (3) qualified to do business in such state, or (4) federal savings and loan associations or national banks having principal offices in such state, or (5) not doing business in such state.  Principal payments on the Mortgage Loan commenced or will commence no more than sixty (60) days after the proceeds of the Mortgage Loan were disbursed.  The Mortgage Loan requires interest payable in arrears on the first day of the month.  Each Mortgage Note requires a monthly payment which is sufficient (i) during the period prior to the first adjustment to the Mortgage interest rate, to amortize the original principal balance fully over the original term thereof (unless otherwise provided in the Takeout Guidelines) and to pay interest at the related Mortgage interest rate, and (ii) during the period following each interest rate adjustment date in the case of each adjustable rate Mortgage Loan, to amortize the outstanding principal balance fully as of the first day of such period over the then remaining term of such Mortgage Note and to pay interest at the related Mortgage interest rate.  The Mortgage Note does not permit negative amortization.  Interest on the Mortgage Note is calculated on the basis of a 360 day year consisting of twelve 30 day months.  The Mortgage Loan is not a simple interest Mortgage Loan.  The Mortgage Loan does not require a balloon payment upon the maturity thereof. The Mortgage Note does not by its terms provide for the capitalization or forbearance of interest.

 

m.                               Ownership.  Immediately prior to Buyer’s payment of the Purchase Price, Seller was the sole owner and holder of the Mortgage Loan and the indebtedness evidenced by the Mortgage Note.  The Mortgage Loan, including the Mortgage Note and the Mortgage, were not assigned or pledged by Seller and Seller had good and marketable title thereto, and Seller had full right to transfer and sell the Mortgage Loan to Buyer free and clear of any Lien, participation interest, equity, pledge or claim and had full right and authority subject to no interest or participation in, or agreement with any other Person to sell or otherwise transfer the Mortgage Loan.  Following the sale of the Mortgage Loan, Buyer will own such Mortgage Loan and the other Mortgage Assets free and clear of any Lien and shall have a valid and perfected first priority security interest in such Mortgage Loan and the other Mortgage Assets then existing and thereafter arising in each case free and clear of any Lien.  After the related Purchase Date, Seller will not have any right to modify or alter the terms of the sale of the Mortgage Loan and Seller will not have any obligation or right to repurchase the Mortgage Loan, except as provided in this Agreement or as otherwise agreed to by Seller and Buyer.  Seller has full right to sell, assign and transfer the Mortgage Loan without the consent of the related Mortgagor or any other Person.

 

n.                                   Transfer of Mortgage Loan.  The Mortgage Loan is a MERS Designated Mortgage Loan.  The original Mortgage was recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the Lien thereof as against creditors of Seller, or is in the process of being recorded.  Seller has designated Buyer as the “Interim Funder” on the MERS® System with respect to

 

Exhibit B-5

 

such Mortgage Loan and unless otherwise authorized by Buyer, no Person is listed as interim funder on the MERS® System with respect to such Mortgage Loan.

 

o.                                  Hazard Insurance.  All buildings or other customarily insured improvements upon the Mortgaged Property are insured by an insurer generally acceptable under the Takeout Guidelines and to prudent mortgage lending institutions against loss by fire, hazards of extended coverage and such other hazards as are required in the Takeout Guidelines pursuant to an insurance policy conforming to the requirements of Takeout Guidelines and providing coverage in an amount equal to the lesser of (i) the full insurable value of the Mortgaged Property or (ii) the outstanding principal balance owing on the Mortgage Loan.  All such insurance policies are in full force and effect and contain a standard mortgagee clause naming the originator of the Mortgage Loan, its successors and assigns as mortgagee and all premiums thereon have been paid.  If the Mortgaged Property is in an area identified on a flood hazard map or flood insurance rate map issued by the Federal Emergency Management Agency as having special flood hazards (and such flood insurance has been made available), a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration is in effect which policy conforms to the requirements of the Takeout Guidelines.  The Mortgage obligates the Mortgagor thereunder to maintain all such insurance at the Mortgagor’s cost and expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor from the Mortgagor.  Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering the common facilities of a planned unit development.  The hazard insurance policy is the valid and binding obligation of the insurer, is in full force and effect, and will be in full force and effect and inure to the benefit of Buyer upon the consummation of the transactions contemplated by this Agreement.  Seller has not engaged in, and has no knowledge of the Mortgagor, any Subservicer or any prior servicer having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other person or entity, and no such unlawful items have been received, retained or realized by Seller.

 

p.                                  Title Insurance.  The Mortgage Loan is covered by an ALTA, CLTA or TLTA lender’s title insurance policy, acceptable to Fannie Mae or Freddie Mac, or state law, issued by a title insurer acceptable to Fannie Mae or Freddie Mac, or state law and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring in (h)(iv)) Seller, its successors and assigns as to the first priority lien of the Mortgage in the original principal amount of the Mortgage Loan and, if such Mortgage Loan is an adjustable rate Mortgage Loan, against 

 

Exhibit B-6

 

any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment in the Mortgage interest rate or monthly payment.  Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance.  Additionally, such lender’s title insurance policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged Property or any interest therein.  The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading.  Seller and its successors and assigns are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is in full force and effect and will be in full force and effect upon the consummation of the transactions contemplated by this Agreement and will inure to the benefit of Buyer and its assigns without any further act.  No claims have been made under such lender’s title insurance policy, and Seller has not done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy.

 

q.                                  Insured Closing Letter and Escrow Letter.  There is, with respect to such Mortgage Loan, a valid and enforceable Insured Closing Letter and escrow letter duly executed by the Settlement Agent.

 

r.                                     Private Mortgage Insurance Policy.  In the event that a private mortgage insurance policy is required by Buyer, the Mortgage Loan has a valid and transferable private mortgage insurance policy.  Unless the private mortgage insurance policy for a Mortgage Loan was cancelled at the request of the Mortgagor or automatically terminated, in either case in accordance with applicable law, all premiums have been paid and all provisions of such private mortgage insurance policy have been and are being complied with.  With respect to a purchase money Mortgage Loan, both the original appraised value and the purchase price are accurately depicted as such on Seller’s (or, as applicable, Subservicer’s) servicing system. Where a Mortgage Loan was closed as a streamlined refinance and a new appraisal was not required, the prior appraised value that was relied on in making the credit decision for the Mortgage Loan is accurately depicted on Seller’s (or, as applicable, Subservicer’s) servicing system.  Seller has not funded the private mortgage insurance policy premium, if any, with respect to such Mortgage Loan.  The Mortgage interest rate for the Mortgage Loan is net of any such insurance premium.

 

s.                                    Optional Insurance. No single payment credit life insurance or other optional insurance product that has been considered “predatory” by Fannie Mae or Freddie Mac has been obtained in connection with such Mortgage Loan.  If such Mortgage Loan involved any type of optional insurance, such insurance was properly serviced including, without limitation, by use of the proper application and collection of premiums, the maintenance of complete and accurate records, processing and payment of claims and the handling of correspondence.  The 

 

Exhibit B-7

 

Mortgage Loan does not involve an optional insurance product that was or is being provided free of charge to the Mortgagor.

 

t.                                      Insurance.  All required insurance policies, of whatever type, remain in full force and effect.  Seller has not engaged in, and has no knowledge of the Mortgagors having engaged in, any act or omission which would impair the coverage validity or binding effect of any such policies. No action, inaction, or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any applicable special hazard insurance policy, private mortgage insurance policy or bankruptcy bond, irrespective of the cause of such failure of coverage.  In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be received by Seller or any Subservicer or any designee of Seller or any Subservicer or any corporation in which Seller, any Subservicer or any officer, director, or employee of Seller or any Subservicer had a financial interest at the time of placement of such insurance.

 

u.                                   Mortgaged Property Undamaged; No Condemnation Proceedings.  As of the related Purchase Date, there are no uninsured casualty losses or casualty losses where coinsurance has been, or Seller has reason to believe will be, claimed by the insurance company or where the loss, exclusive of contents, is, or will be, greater than the recovery (less actual costs and expenses incurred in connection with such recovery) from the insurance carrier.  No casualty insurance proceeds have been used to reduce Mortgage Loan balances or for any other purpose except to make repairs to the Mortgaged Property, except as allowed pursuant to applicable law and the Mortgage Loan documents.  All damage with respect to which casualty insurance proceeds have been received by or through Seller has been properly repaired or is in the process of being repaired using such proceeds.  There is no damage to the Mortgaged Property from waste, fire, windstorm, flood, tornado, earthquake or earth movement, hazardous or toxic substances, other casualty, or any other property related circumstances or conditions that would adversely affect the value or marketability of any Mortgage Loan or Mortgaged Property, and adequate insurance is in place to cover all such events.  There is no proceeding pending or, to the best of Seller’s knowledge, threatened for the partial or total condemnation of the Mortgaged Property that would adversely affect the Mortgage Loan.

 

v.                                   Location of Improvements; No Encroachments.  All improvements subject to the Mortgage which were considered in determining the appraised value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property (and wholly within the project with respect to a condominium unit) and no improvements on adjoining properties encroach upon the Mortgaged Property except those which are insured against by the title insurance policy referred to in (p) above and all improvements on the Mortgaged Property comply with all applicable zoning and subdivision laws and ordinances.

 

Exhibit B-8

 

w.                               Appraisal.  The loan file contains an appraisal or an underwriting property valuation using an automated valuation model of the related Mortgaged Property, in each case, in a form acceptable to the applicable Agency, Buyer and CL and consistent with the Takeout Guidelines, made and signed, prior to the approval of the Mortgage Loan application, by a qualified appraiser, duly appointed by Seller, who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof, whose compensation is not affected by the approval or disapproval of the Mortgage Loan and who met the minimum qualifications of the applicable Agency. Each appraisal of the Mortgage Loan was made in accordance with the requirements of Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the Date of Origination of the Mortgage Loan;

 

x.                                   Construction Defects.  Any home or other improvement included within the Mortgaged Property was constructed in a workmanlike manner, and was accepted by the original homeowner or Mortgagor in good and habitable condition and working order, and conforms with all warranties, express or implied, representations, legal obligations, and local, state and federal requirements and codes concerning the condition, construction, and placement of the home or improvement.

 

y.                                   Occupancy of the Mortgaged Property.  The Mortgaged Property is lawfully occupied under applicable law.  All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy, have been made or obtained from the appropriate authorities and no improvement located on or part of the Mortgaged Property is in violation of any zoning law or regulation.

 

z.                                    Type of Mortgaged Property.  The Mortgaged Property is located in the United States and consists of a single parcel of real property with a detached single family residence erected thereon, or a two to four family dwelling, or an individual condominium unit, or an individual unit in a planned unit development, or a Cooperative Unit in a Cooperative Project; provided, however, that any condominium project or planned unit development generally conforms to the Takeout Guidelines regarding such dwellings.  As of the date of origination, no portion of the Mortgaged Property was used for commercial purposes, and since the date of origination, no portion of the Mortgaged Property has been used for commercial purposes; provided, that Mortgaged Properties which contain a home office shall not be considered as being used for commercial purposes as long as the Mortgaged Property has not been altered for commercial purposes and is not storing any chemicals or raw materials other than those commonly used for homeowner repair, maintenance and/or household purposes.  If the Mortgaged Property is a condominium unit or a planned unit development (other than a de minimis planned unit development) such condominium or planned unit development project is acceptable to Buyer.  The Mortgaged Property is not a Manufactured Home or a mobile home.

 

Exhibit B-9

 

aa.                            Environmental Matters.  There is no pending action or proceeding directly involving any Mortgaged Property of which Seller is aware in which compliance with any environmental law, rule or regulation is an issue and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property.  The Mortgaged Property is free from any and all toxic or hazardous substances and there exists no violation of any local, state or federal environmental law, rule or regulation.

 

bb.                          Flood Certification Contract.  If the Mortgaged Property relating to such Mortgage Loan is in an area designated as a flood area by the Federal Emergency Management Agency, a flood insurance policy complying with all Requirements of Law is in effect.

 

cc.                            Unacceptable Investment.  Seller has no knowledge of any circumstances or condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor’s credit standing that could reasonably be expected to cause investors to regard the Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become delinquent or materially adversely affect the value or the marketability of the Mortgage.

 

dd.                          Servicemembers Civil Relief Act.  The Mortgagor has not notified Seller or any Subservicer, and Seller has no knowledge of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003, as amended, or other similar state or federal law.

 

ee.                            No Fraud.  No fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to the Mortgage Loan has taken place on the part of Seller, any Subservicer or any other Person involved in the origination of the Mortgage Loan or in the application for any insurance in relation to such Mortgage Loan, including without limitation the Mortgagor, any appraiser, any builder or developer.  The documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not misleading.  Seller has reviewed all of the documents constituting the Loan File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein.

 

ff.                                  Delinquency.  All payments required to be made prior to the related Purchase Date for such Mortgage Loan under the terms of the Mortgage Note have been made, the Mortgage Loan has not been dishonored, and the Mortgage Loan is not and has never been a Delinquent Loan or a Defaulted Loan.

 

gg.                            Compliance with Applicable Laws.  Any and all requirements of any applicable federal, state or local law including, without limitation, usury, truth in lending, real estate settlement procedures, consumer credit protection, fair credit billing, 

 

Exhibit B-10

 

fair credit reporting, fair debt collection practices, predatory and abusive lending laws, equal credit opportunity, fair housing and disclosure laws or unfair and deceptive practices laws applicable to the origination and servicing of the Mortgage Loan including, without limitation, any provisions relating to prepayment penalties, have been complied with, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations. Seller maintains, and shall maintain, evidence of such compliance as required by applicable law or regulation and shall make such evidence available for inspection at Seller’s office during normal business hours upon reasonable advance notice.  Each Mortgage Loan at the time it was made complied in all material respects with applicable local, state, and federal laws, including, but not limited to, all applicable predatory and abusive lending laws.

 

hh.                            Disclosure and Rescission Materials.  The Mortgagor has received all disclosure materials required by applicable law with respect to the making of mortgage loans of the same type as the Mortgage Loan and rescission materials required by applicable law and has acknowledged receipt of such materials to the extent required by applicable law and such documents will remain in the loan file.

 

ii.                                    Texas Refinance Loans.  Each Mortgage Loan originated in the State of Texas pursuant to Article XVI, Paragraph 50(a)(6) of the Texas Constitution (a “Texas Refinance Loan”) has been originated in compliance with the provisions of Article XVI, Paragraph 50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas Finance Code.  With respect to each Texas Refinance Loan that is a cash out refinancing, the related Mortgage Loan Documents state that the Mortgagor may prepay such Texas Refinance Loan in whole or in part without incurring a prepayment penalty.  Seller does not collect any such prepayment penalties in connection with any such Texas Refinance Loan.

 

jj.                                  Anti-Money Laundering Laws.  Seller and its agents have at all times complied with all applicable federal, state and local anti-money laundering laws, orders and regulations to the extent applicable to Seller or its agent, including without limitation the USA PATRIOT Act of 2001, the Bank Secrecy Act and the regulations of the Office of Foreign Asset Control (collectively, the “Anti-Money Laundering Laws”), in respect of the origination and servicing of each Mortgage Loan; Seller has established an anti-money laundering compliance program as and to the extent required by the Anti-Money Laundering Laws, has conducted the requisite due diligence in connection with the origination and servicing of each Mortgage Loan for purposes of the Anti-Money Laundering Laws to the extent applicable to Seller, and, to the extent required by applicable law, maintains, and will maintain, either directly or through third parties, sufficient information to identify the applicable Mortgagor for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is subject to nullification pursuant to Executive Order 13224 (the “Executive Order”) or the regulations promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC Regulations”) or in violation of the Executive Order or the OFAC Regulations, and no Mortgagor is subject to the provisions of such Executive Order or the 

 

Exhibit B-11

 

OFAC Regulations nor listed as a “blocked person” for purposes of the OFAC Regulations.

 

kk.                          Predatory Lending Regulations.  The Mortgage Loan is not classified as (a) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994 (“HOEPA”) or (b) a “high cost,” “threshold,” “covered,” or “predatory” loan under any other applicable state, federal or local law.  The Mortgage Loan does not have an “annual percentage rate” or total “points and fees” payable by the related Mortgagor (as each such term is calculated under HOEPA) that exceed the thresholds set forth by HOEPA and its implementing regulations, including 12 C.F.R. § 226.32(a)(1)(i). No predatory or deceptive lending practices, including, without limitation, the extension of credit without regard to the ability of the Mortgagor to repay and the extension of credit which has no apparent benefit to the Mortgagor, were employed in the origination of the Mortgage Loan. No term or condition of, and no practice used in connection with the Origination of, such Mortgage Loan has been categorized as an “unfair” or “deceptive” term, condition or practice under any applicable federal, state or local law (or regulation promulgated thereunder) and the Mortgage Loan does not have any terms which expose Buyer to regulatory action or enforcement proceedings, penalties or other sanctions.

 

ll.                                    State Laws.  No Mortgage Loan is a “High-Cost Home Loan” as defined in the Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 of 2003); no Mortgage Loan is a “High-Cost Home Loan” as defined in the Kentucky high-cost home loan statute effective June 24, 2003 (Ky. Rev. Stat. Paragraph 360.100); no Mortgage Loan is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27, 2003 (N.J.S.A. 46:10B-22 et seq.); no Mortgage Loan is a “High-Cost Home Loan” as defined in the New Mexico Home Loan Protection Act effective January 1, 2004 (N.M. Stat. Ann. §§ 58-21A-1 et seq.); no Mortgage Loan is a “High-Risk Home Loan” as defined in the Illinois High-Risk Home Loan Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et seq.); no Mortgage Loan is a “High-Cost Home Mortgage Loan” as defined in the Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C); no Mortgage Loan is a “High Cost Home Loan” as defined in the Indiana Home Loan Practices Act, effective January 1, 2005 (Ind. Code Ann. Paragraphs 24-9-1 through 24-9-9); no Mortgage Loan that was originated on or after October 1, 2002 and on or prior to March 7, 2003, which is secured by property located in the State of Georgia; no Mortgage Loan that was originated after March 7, 2003, which is a “high cost home loan” as defined under the Georgia Fair Lending Act, as amended (the “Georgia Act”); no Mortgage Loan is a “high cost home loan,” as defined in Paragraph 6 L of the New York State Banking Law; and no Mortgage Loan is a “covered loan” as contemplated in the California Predatory Lending Act set forth in California Finance Code Sections 4970 to 4979.8.

 

mm.                    Arbitration.  No Mortgagor agreed to submit to arbitration to resolve any dispute arising out of or relating in any way to the mortgage loan transaction; any breach 

 

Exhibit B-12

 

of this representation shall be deemed to materially and adversely affect the value of the Mortgage Loan and shall require a repurchase of the affected Mortgage Loan.

 

nn.                            Higher Cost Products.  The Mortgagor was not encouraged or required to select a Mortgage Loan product offered by the Mortgage Loan’s originator which is a higher cost product designed for less creditworthy Mortgagors, unless at the time of the Mortgage Loan’s origination, such Mortgagor did not qualify taking into account such facts as, without limitation, the Mortgage Loan’s requirements and the Mortgagor’s credit history, income, assets and liabilities and debt-to-income ratios for a lower-cost credit product then offered by the Mortgage Loan’s originator or any affiliate of the Mortgage Loan’s originator.  If, at the time of loan application, the Mortgagor may have qualified for a lower-cost credit product then offered by any mortgage lending affiliate of the Mortgage Loan’s originator, the Mortgage Loan’s originator referred the Mortgagor’s application to such affiliate for underwriting consideration.  For a Mortgagor who seeks financing through a Mortgage Loan originator’s higher-priced nonprime lending channel, the Mortgagor was directed towards or offered the Mortgage Loan originator’s standard mortgage line if the Mortgagor was able to qualify for one of the standard products.

 

oo.                          Underwriting Methodology.  With respect to delegated underwritten loans, the methodology used in underwriting the extension of credit for each Mortgage Loan does not rely solely on the extent of the Mortgagor’s equity in the collateral as the principal determining factor in approving such extension of credit.  The methodology employed objective criteria such as the Mortgagor’s income, assets and liabilities, to the proposed mortgage payment and, based on such methodology, the Mortgage Loan’s originator made a reasonable determination that at the time of origination the Mortgagor had the ability to make timely payments on the Mortgage Loan.

 

pp.                          Points and Fees. No Mortgagor was charged “points and fees” (whether or not financed) in an amount greater than (i) $1,000, or (ii) 5% of the principal amount of such Mortgage Loan, whichever is greater.  For purposes of this representation, such 5% limitation is calculated in accordance with Fannie Mae’s anti-predatory lending requirements as set forth in the Agency Guidelines and “points and fees” (x) include origination, underwriting, broker and finder fees and charges that the mortgagee imposed as a condition of making the Mortgage Loan, whether they are paid to the mortgagee or a third party, and (y) exclude bona fide discount points, fees paid for actual services rendered in connection with the origination of the Mortgage Loan (such as attorneys’ fees, notaries fees and fees paid for property appraisals, credit reports, surveys, title examinations and extracts, flood and tax certifications, and home inspections), the cost of mortgage insurance or credit-risk price adjustments, the costs of title, hazard, and flood insurance policies, state and local transfer taxes or fees, escrow deposits for the future payment of taxes and insurance premiums, and other miscellaneous fees and charges which miscellaneous fees and charges, in total, do not exceed 0.25% of 

 

Exhibit B-13

 

the principal amount of such Mortgage Loan.  All fees and charges (including finance charges) and whether or not financed, assessed, collected or to be collected in connection with the origination and servicing of each Mortgage Loan have been disclosed in writing to the Mortgagor in accordance with applicable state and federal law and regulation.

 

qq.                          Prepayment Penalties. With respect to any Mortgage Loan that contains a provision permitting imposition of a penalty upon a prepayment prior to maturity: (i) the Mortgage Loan provides some benefit to the Mortgagor (e.g., a rate or fee reduction) in exchange for accepting such prepayment penalty, (ii) the Mortgage Loan’s originator had a written policy of offering the Mortgagor the option of obtaining a mortgage loan that did not require payment of such a penalty, (iii) the prepayment penalty was adequately disclosed to the Mortgagor in the mortgage loan documents pursuant to applicable state, local and federal law, and (v) notwithstanding any state or federal law to the contrary, neither Seller nor any Subservicer shall impose such prepayment premium in any instance when the mortgage debt is accelerated as the result of the Mortgagor’s default in making the loan payments.

 

rr.                                Single Premium Credit Insurance Policies.  No Mortgagor was required to purchase any single premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreement as a condition of obtaining the extension of credit.  No Mortgagor obtained a prepaid single premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) in connection with the origination of the Mortgage Loan.  No proceeds from any Mortgage Loan were used to purchase single premium credit insurance policies or debt cancellation agreements as part of the origination of, or as a condition to closing, such Mortgage Loan; any breach of this representation shall be deemed to materially and adversely affect the value of the Mortgage Loan and shall require a repurchase of the affected Mortgage Loan.

 

ss.                              Origination Practices; Servicing.  The origination practices used by Seller and the collection and servicing practices used by Seller and any Subservicer with respect to each Mortgage Loan have been in all respects legal and customary in the mortgage origination and servicing industry and the collection and servicing practices used by Seller and any Subservicer have been consistent with customary servicing procedures.  The Mortgage Loan satisfies, and has been originated and underwritten in accordance with, all applicable requirements of Seller’s underwriting guidelines.  Seller has serviced the Mortgage Loan at all times since its origination.

 

tt.                                  Escrow Payments.  With respect to escrow deposits and payments that Seller is entitled to collect, all such payments are in the possession of, or under the control of Seller, and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made.  All escrow payments have been collected in full compliance with state and federal law and 

 

Exhibit B-14

 

the provisions of the related Mortgage Note and Mortgage.  As to any Mortgage Loan that is the subject of an escrow, escrow of funds is not prohibited by applicable law and has been established in an amount sufficient to pay for every escrowed item that remains unpaid and has been assessed but is not yet due and payable.  No escrow deposits or other charges or payments due under the Mortgage Note have been capitalized under any Mortgage or the related Mortgage Note.

 

uu.                            Interest on Escrows.  As of the related Purchase Date, Seller has credited to the account of the related Mortgagor under the Mortgage Loan all interest required to be paid by applicable law or by the terms of the related Mortgage Note on any escrow account.  Evidence of such credit shall be provided to Buyer upon request.

 

vv.                            Escrow Analysis.  Seller has properly conducted an escrow analysis for each escrowed Mortgage Loan in accordance with applicable law.  All books and records with respect to each Mortgage Loan comply with applicable law and regulations, and have been adjusted to reflect the results of the escrow analyses.  Except as allowed by applicable law, no inflation factor was used in the escrow analysis. Seller has delivered notification to the Mortgagor(s) under each Mortgage Loan of all adjustments resulting from such escrow analyses.

 

ww.                    Escrow Holdbacks.  The Mortgage Loan is not subject to outstanding escrow holdbacks except those specifically identified by Seller as defined in the Takeout Guidelines.

 

xx.                            Credit Reporting.  If applicable, Seller has caused to be fully furnished, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e., favorable and unfavorable) on its Mortgagor loan files to Equifax, Experian, and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis; any breach of this representation shall be deemed to materially and adversely affect the value of the Mortgage Loan and shall require a repurchase of the affected Mortgage Loan.

 

yy.                            Interest Rate Adjustments.  If applicable, with respect to each adjustable rate Mortgage Loan, all interest rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note.  Any interest required to be paid pursuant to state and local law has been properly paid and credited.  The Mortgagor has executed a statement to the effect that the Mortgagor has received all disclosure materials required by applicable law with respect to the making of adjustable rate mortgage loans.

 

zz.                              Regarding the Mortgagor.  The Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a “living trust” and such “living trust” is in compliance with Agency Guidelines for such trusts.  The Mortgagor is a natural person.  The Mortgagor is not an owner, officer, director, employee, relative or agent of Seller or an Affiliate of Seller.  The Mortgagor is not a 

 

Exhibit B-15

 

government or a governmental subdivision or agency.  The Mortgagor occupies the Mortgaged Property unless the Mortgaged Property is an Investor Loan.

 

aaa.                     Fannie Mae Takeout Guidelines Announcement 95-19.  Seller will transmit full file credit reporting data for each Mortgage Loan pursuant to Fannie Mae Announcement 95-19 and that for each Mortgage Loan, Seller agrees it shall report one of the following statuses each month as follows:  new origination, current, delinquent (30 or more days), foreclosed, or charged-off.

 

bbb.                  Tax Identification/Back Up Withholding.  All tax identifications for individual Mortgagors, have been certified as required by law.  Seller has complied with all IRS requirements regarding the obtainment and solicitation of taxpayer identification numbers and the taxpayer identification numbers provided to Buyer as reflected on the system are correct. To the extent a Mortgage Loan is on back up withholding, Seller has substantiated both the initial reason for the back up withholding and the amount of such back up withholding and the reason for such back up withholding in the amount currently withheld still exists.

 

ccc.                     IRS Forms.  All IRS forms, including, but not limited to, Forms 1099, 1098, 1041 and K-1, as appropriate, which are required to be filed with respect to activity occurring on or before the year in which the Purchase Date occurs and have been filed or will be filed in accordance with applicable law.

 

ddd.                  Electronic Drafting of Payments.  If Seller or a Subservicer drafts monthly payments electronically from the Mortgagor’s bank account, such drafting occurs in compliance with applicable federal, state, and local laws and regulations; and the applicable agreement with the Mortgagor; and such applicable agreement with the Mortgagor both legally and contractually can be fully assigned to Buyer pursuant to the assignment provisions contained therein, and will be fully assigned to Buyer pursuant to this Agreement.

 

eee.                     Third Party Originators and TPO Loans.  The Mortgage Loan is not a TPO Loan, nor was it originated by a Third Party Originator.

 

fff.                              U.S. Loan; Mortgagor.  The Mortgage Loan is denominated and payable only in United States dollars within the United States and the related Mortgagor is a United States citizen or resident alien or, only if the Mortgagor is a trustee as described in item (aaa) in this Exhibit B that is not a natural person, Mortgagor is a corporation or other legal entity organized under the laws of the United States or any state thereof or the District of Columbia.

 

ggg.                     Representations and Warranties to Approved Takeout Investor.  Any representations or warranties made by Seller to the Approved Takeout Investor upon final sale of the Mortgage Loan are hereby incorporated into this Agreement, and Seller is deemed to make the same representations and warranties to Buyer, as if such representations and warranties were fully set forth herein.

 

Exhibit B-16

 

hhh.                     CL Eligible.  The Mortgage Loan is eligible for sale to CL (even if CL is not the Approved Takeout Investor).

 

iii.                                 Takeout Commitment/Hedging Arrangement.  The Mortgage Loan is subject to (a) a legally valid and binding Takeout Commitment and satisfies all of the requirements related to such Takeout Commitment; or (b) a legally valid and binding Hedging Arrangement and satisfies all the requirements related to such Hedging Arrangement.

 

jjj.                              Agency Guidelines.  The Mortgage Loan satisfies, and has been originated in accordance with, all applicable requirements of the applicable Agency Guidelines;

 

kkk.                  MERS.  The Mortgage Loan is a MERS Designated Mortgage Loan.

 

lll.                                 Whole Loan.  The Mortgage Loan is a whole loan and not a participation interest.

 

mmm.         UCC Characterization.  The Mortgage Loan is an “account”, “chattel paper”, “promissory note” or “payment intangible” within the meaning of Article 9 of the UCC of all applicable jurisdictions.

 

nnn.                     Bankruptcy Code Characterization.  The Mortgage Loan is a “mortgage loan” within the meaning of the Bankruptcy Code.

 

ooo.                  No Previous Financing.  The Mortgage Loan has not been previously financed by any other Person.

 

ppp.                  Ineligible Loan Types.  The Mortgage Loan is not (i) a negative amortization loan, (ii) a second lien loan, (iii) a home equity line of credit or similar loan, (iv) secured by Mortgaged Property which is not occupied by the Mortgagor unless the Mortgage Loan is an Investor Loan, (v) secured by Mortgaged Property which is a vacation home or second home of Mortgagor unless the Mortgage Loan is a Second Home Loan, (vi) a reverse mortgage, (vii) a subprime Mortgage Loan or alt-A Mortgage Loan, or (viii) considered an “Expanded Approval” loan or a similar loan such as is described in the applicable Agency’s eligibility certification.

 

qqq.                  No Equity Participation.  No document relating to the Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property.  The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgagor and Seller has not financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor.

 

rrr.                           Condominiums/ Planned Unit Developments.  If the Mortgage Loan is a condominium loan, the related residential dwelling is a condominium unit or a unit in a planned unit development (other than a de minimis planned unit development) and such condominium or planned unit development project meets 

 

Exhibit B-17

 

the eligibility requirements of Fannie Mae and Freddie Mac including Fannie Mae eligibility requirements for sale to Fannie Mae or is located in a condominium or planned unit development project which has received Fannie Mae project approval and the representations and warranties required by Fannie Mae with respect to such condominium or planned unit development have been made and remain true and correct in all respects.

 

sss.                        Downpayment.  The source of the down payment with respect to such Mortgage Loan has been fully verified by Seller.

 

ttt.                              Due on Sale.  The related Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.

 

uuu.                     Flood Certification Contract. Seller has obtained a life of loan, transferable flood certification contract for such Mortgage Loan and such contract is assignable without penalty, premium or cost to Buyer.

 

vvv.                     No Construction Loans.  The Mortgage Loan was not made in connection with (a) the construction or rehabilitation of a Mortgaged Property or (b) facilitating the trade-in or exchange of a Mortgaged Property.

 

Exhibit B-18

 

EXHIBIT C

 

FORM OF COMPLIANCE CERTIFICATE

 

COMPLIANCE CERTIFICATE

 

	
SELLER:
    	
RYLAND MORTGAGE COMPANY
    
	
 
    	
 
    
	
BUYER:
    	
JPMORGAN CHASE BANK,   N.A.
    
	
 
    	
a national banking   association
    
	
 
    	
 
    
	
TODAY’S DATE:
    	
____/____/____
    
	
 
    	
 
    
	
REPORTING   PERIOD ENDED:                                  ______   month(s) ended ____/____/____
    

 

This certificate is delivered to Buyer under the Master Repurchase Agreement dated effective as of July __, 2011, between Sellers and Buyer (the “Agreement”), all the defined terms of which have the same meanings when used herein.

 

I hereby certify that with respect to Seller indicated above:  (a) I am, and at all times mentioned herein have been, the duly elected, qualified, and acting Treasurer of Seller; (b) to the best of my knowledge, the Financial Statements of Seller and any footnotes thereto from the period shown above (the “Reporting Period”) and which accompany this certificate were prepared in accordance with GAAP and present fairly the financial condition of Seller as of the end of the Reporting Period and the results of its operations for Reporting Period; (c) a review of the Agreement and of the activities of Seller during the Reporting Period has been made under my supervision with a view to determining Seller’s compliance with the covenants, requirements, terms, and conditions of the Agreement, and such review has not disclosed the existence during or at the end of the Reporting Period (and I have no knowledge of the existence as of the date hereof) of any Default or Event of Default with respect to any Seller, except as disclosed herein (which specifies the nature and period of existence of each Default or Event of Default, if any, and what action Seller has taken, is taking, and proposes to take with respect to each); (d) the calculations described on the pages attached hereto evidence that Seller is in compliance with the requirements of the Agreement at the end of the Reporting Period (or if Seller is not in compliance, showing the extent of non-compliance and specifying the period of non-compliance and what actions Seller proposes to take with respect thereto); and (e) Seller was, as of the end of the Reporting Period, in compliance and good standing with applicable CL, Fannie Mae, Ginnie Mae, Freddie Mac, and HUD net worth requirements.

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title: Treasurer
    	
 
    

 

Exhibit C-1

 

SELLER:

 

REPORTING PERIOD ENDED:                          ____/____/____

 

All financial calculations set forth herein are as of the end of the Reporting Period.

 

I.                              TANGIBLE NET WORTH

 

	
The Tangible Net   Worth is:
    	
 
    
	
Shareholder’s   equity:
    	
$
    
	
Minus:   intangible assets – goodwill, intellectual property, etc.
    	
$
    
	
Minus:   capitalized servicing rights
    	
$
    
	
Minus: Employee   Loans 
    (unless they are advances against commissions)
    	
$
    
	
Minus: Assets   pledged to secure liabilities not included in Debt
    	
$
    
	
Minus: Advances   or loans to Shareholders and Affiliates
    	
$
    
	
Minus: Any   assets unacceptable to Buyer or Agencies
    	
$
    
	
Minus:   Unconsolidated Investments in Affiliates (including any unconsolidated   Subsidiary)
    	
$
    
	
Minus: deferred   tax assets, pledged assets, assets deemed unacceptable by Agencies and assets   unacceptable to Buyer or CL (per definition)
    	
$
    
	
TANGIBLE NET   WORTH:
    	
$
    

 

II.                        ADJUSTED TANGIBLE NET WORTH

 

	
Adjusted   Tangible Net Worth is:
    	
 
    
	
Tangible Net   Worth (from above):
    	
$
    
	
Plus: Lesser of   (i) 1.00% times unpaid principal balance of Seller’s Mortgage Loans with   Servicing Rights and (ii) capitalized value of Seller’s Servicing Rights
    	
$
    
	
Plus:  Qualified Subordinated Debt:
    	
$
    
	
Minus: 100% of   net book value of Mortgage Loans held for investment
    	
$
    
	
Plus:  Lesser of (A) 50% of net book value of   Mortgage Loans held for investment and (B) net book value of Mortgage   Loans held for investment
    	
$
    
	
Minus: net book   value of REO Property
    	
$
    
	
Plus: Lesser of   (A) 50% of net book value of REO Property and (B) net book value of   REO Property
    	
 
    

 

Exhibit C-2

 

	
Minus: 50% of   net book value of other illiquid investments
    	
$
    
	
ADJUSTED   TANGIBLE NET WORTH:
    	
$
    
	
REQUIRED   MINIMUM (through Termination Date)
    	
$10,000,000
    
	
In   compliance?  
    	
Yes No

 
    

 

III.                  DEBT OF SELLER

 

	
Total   Liabilities 
    	
$
    
	
Plus:  off balance sheet debt:  
    	
$
    
	
Minus:  loan loss reserves (if included in   liabilities):
    	
$
    
	
Minus:  deferred taxes arising from capitalized   excess servicing fees:
    	
$
    
	
Minus: operating   leases
    	
$
    
	
Minus: Qualified   Subordinated Debt
    	
$
    
	
DEBT:
    	
$
    

 

IV.                   LEVERAGE RATIO:  DEBT TO ADJUSTED TANGIBLE NET WORTH

 

	
Debt (from   above):
    	
$
    
	
Adjusted   Tangible Net Worth:
    	
$
    
	
RATIO   OF DEBT/ADJUSTED TANGIBLE NET WORTH:
    	
__:1
    
	
Maximum   permitted 
    	
12:1
    
	
In   compliance?
    	
Yes No
    

 

V.                         MAXIMUM FACILITY RATIO

 

	
Total Available   Facilities:
    	
$
    
	
Adjusted   Tangible Net Worth (from above):
    	
$
    
	
RATIO   OF TOTAL AVAILABLE WAREHOUSE CREDIT/ADJUSTED TANGIBLE NET WORTH:
    	
__:1
    
	
Maximum   permitted
    	
30:1
    
	
In   compliance?
    	
Yes No
    

 

VI.                   LIQUIDITY TO TOTAL ASSETS

 

	
Cash   Equivalents:
    	
$
    
	
Available   Purchase Price under Agreement
    	
$
    

 

Exhibit C-3

 

	
Total Liquidity
    	
$
    
	
Total Assets
    	
$
    
	
LIQUIDITY AS A   PERCENTAGE OF TOTAL ASSETS
    	
___%
    
	
Amount of   Liquidity Required
    	
3% of Total   Assets
    
	
In   compliance?
    	
Yes No
    

 

VII.             CURRENT RATIO

 

	
Current Assets
    	
$
    
	
Current   Liabilities
    	
$
    
	
RATIO   OF CURRENT ASSETS TO CURRENT LIABILITIES
    	
__:1
    
	
Minimum   required (through Termination Date)
    	
1.05:1
    
	
 
    	
 
    
	
In   compliance?
    	
Yes No
    

 

VIII.       NET INCOME (tested each fiscal quarter)/NET LOSS (tested each fiscal quarter)

 

	
Net Income for   most recently ended full fiscal quarter:
    	
$
    
	
Minimum   required:
    	
$1.00
    
	
In   compliance?
    	
Yes No
    
	
Net Operating   Loss for first fiscal quarter
    	
$
    
	
Maximum   permitted:
    	
$1,000,000
    
	
In   compliance?
    	
Yes No
    

 

IX.                   PERMITTED DEBT

 

	
Debt incurred   since date of Agreement or last Compliance Certificate (whichever is later):
    
	
Counterparty
    	
Amount
    	
Permitted?
    	
Under   which clause of Paragraph 11(cc)?
    
	
 
    	
 
    	
Yes No
    	
 
    
	
 
    	
 
    	
Yes No
    	
 
    
	
 
    	
 
    	
Yes No
    	
 
    

 

Exhibit C-4

 

X.                         PRODUCTION

 

	
Volume
    	
Current Month
    	
Year-to-Date
    
	
Residential   Mortgage Loans Funded
    	
$
    	
$
    
	
Commercial Loans   Funded *
    	
$
    	
$
    
	
TOTAL   VOLUME
    	
$
    	
$
    

* Commercial loans include 5 or more unit multi-family properties and mixed use properties.

 

 

	
Volume
    	
Current   Month
    	
Year-to-Date
    
	
Banked Loan   Production
    	
$
    	
$
    
	
Brokered Loan   Production
    	
$
    	
$
    
	
TOTAL   VOLUME
    	
$
    	
$
    

 

	
By   Channel/Source
    	
Current Month
    	
Year-to-Date
    
	
Retail as % of   Total
    	
%
    	
%
    
	
TPO Loans as a %   of Total
    	
%
    	
%
    
	
Correspondent as   a % of Total**
    	
%
    	
%
    
	
TOTAL   (Must = 100%) 
    	
%
    	
%
    

*Correspondent loans are defined as those that are purchased as closed loans from third parties.

 

	
By   Category
    	
Current Month
    	
Year-to-Date
    
	
Government as %   of Total
    	
%
    	
%
    
	
Conventional as   % of Total
    	
%
    	
%
    
	
Jumbo as % of   Total
    	
%
    	
%
    
	
Alt A as % of   Total
    	
%
    	
%
    
	
Subprime as % of   Total
    	
%
    	
%
    
	
Second Mortgages   as %
    	
%
    	
%
    
	
Other (Describe)
    	
%
    	
%
    
	
Total (Must =   100%)
    	
%
    	
%
    
	
By   Finance Type
    	
Current Month
    	
Year-to-Date
    
	
Purchase as % of   Total
    	
%
    	
%
    
	
Refinance as a %   of Total
    	
%
    	
%
    
	
TOTAL (Must =   100%) 
    	
%
    	
%
    

 

Exhibit C-5

 

	
Others
    	
Current   Month
    	
Year-to-Date
    
	
Average FICO
    	
%
    	
%
    
	
Average LTV
    	
%
    	
%
    
	
Average CLTV
    	
 
    	
 
    

 

XI.                   FACILITIES (Please list all Available Facilities including off balance sheet facilities)

 

	
Institution
    	
Total (committed or
   uncommitted, please
   indicate “C” or “U”)
    	
Outstanding
    
	
 
    	
$                           
    	
$
    
	
 
    	
$
    	
$
    
	
 
    	
$
    	
$
    
	
 
    	
 
    	
 
    
	
TOTALS
    	
$
    	
$
    

 

XII.             REPURCHASES / INDEMNIFICATIONS (R&I)

 

	
Repurchases
    	
UPB
    	
# of Loans
    	
Actual or Estimated Loss
    	
How were they recorded on the financials?
    
	
Beginning   Open R&I’s 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
$
    	
 
    	
$
    	
 
    
	
New   R&I’s received this month
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
$
    	
 
    	
$
    	
 
    
	
R&I’s   rescinded this month
    	
$
    	
 
    	
$
    	
n/a
    
	
R&I’s   settled this month
    	
$
    	
 
    	
$
    	
 
    
	
Ending   Open R&I’s
    	
$
    	
 
    	
$
    	
 
    

* If you have a detailed schedule of loans subject to repurchases that includes the investor requesting, reason for repurchases, origination date, loan characteristics such as LTV, lien position, occupancy etc., and valuation method if you have estimated your loss exposure, please attach it with this table.

 

Exhibit C-6

 

XIII.       FORECLOSURES

 

	
 
    	
Current   Month
    	
Year-to-Date
    
	
Foreclosure loan   units
    	
$
    	
$
    
	
Foreclosure loan   volumes
    	
$
    	
$
    
	
Expected loss on   Foreclosures
    	
$
    	
$
    
	
TOTALS
    	
$
    	
$
    

 

XIV.        LOAN LOSS RESERVE

 

	
 
    	
Current   Month
    	
Year-to-Date
    
	
Beginning loan   loss reserve
    	
$
    	
$
    
	
Additional loss   provision
    	
$
    	
$
    
	
Actual charge   off
    	
$
    	
$
    
	
Ending   Loan Loss Reserve
    	
$
    	
$
    

 

XV.              LOAN SERVICING

 

	
 
    	
Current   Month
    	
Year-to-Date
    
	
60 days   delinquency (Unit)
    	
 
    	
 
    
	
60 days   delinquency volumes
    	
$
    	
$
    
	
Loan servicing   report attached
    	
 
    	
 
    

 

XVI.        LITIGATION

 

	
 
    	
Current   Month
    	
Year-to-Date
    
	
Pending   litigation (Unit)
    	
 
    	
 
    
	
Expected losses   on litigation
    	
$
    	
$
    

 

XVII.  THIRD PARTY REPORTS

 

All reports received from third parties (such as the SEC, Fannie Mae, Ginnie Mae, Freddie Mac) subsequent to the last reporting period are attached hereto.  These reports include the following (if none, write “None”): ___

 

XVIII. DEFAULTS OR EVENTS OF DEFAULT

 

Disclose nature and period of existence and action being taken in connection therewith; if none, write “None”: ___

 

Exhibit C-7

 

XIX.                OTHER REPORTS REQUIRED (Please attach if applicable)

 

a.                                     Buyer Warehouse Loans T& I Escrow reconciliation

 

b.                                    Indemnification & Repurchase Report for the prior year and current YTD.

 

c.                                     Hedge Reports (including:  position summary report, MBS & whole loan trade detail, loan level detail report with weighted average take out price)

 

Exhibit C-8

 

EXHIBIT D

 

FORM OF SHIPPING INSTRUCTIONS

 

Shipping Instructions

 

These loans being shipped to a custodian? ____________________ Or to an Investor?

_______________

 

 

Please ship the following notes to:

 

Investor name

 

Street address

 

City, State, Zip

 

Attn:

 

Endorse the note as follows:                       Endorsement Instructions

 

	
Loan Number
    	
Borrower Name
    	
Loan Amount
    
	
 
    	
 
    	
 
    
	
 
    	
Attach   additional pages as required

 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

Special Instructions:  ________________________________________

 

For any questions, please contact:     Name:  ___________________________

 

Phone:  ________________________

 

Fax Number:  _______________________________

 

Signature:  _______________________

 

Exhibit D-1

 

EXHIBIT E

 

CONDITIONS PRECEDENT DOCUMENTS

 

 

1.                                    Master Repurchase Agreement

 

2.                                   Side Letter

 

3.                                    Electronic Tracking Agreement

 

4.                                    Certified organizational documents of Seller

 

5.                                    UCC, tax lien and judgment searches, state of each Seller’s organization, and tax lien and judgment searches, county where each Seller’s chief executive office is located

 

6.                                    UCC-1 Financing Statements

 

7.                                    Opinions of Counsel

 

8.                                    Errors and omissions insurance policy or mortgage impairment insurance policy or evidence of insurance in lieu of policy

 

9.                                    Blanket bond coverage policy or evidence of insurance in lieu of policy endorsed to (i) provide that for any loss affecting Buyer’s interest, Buyer will be named on the loss payable draft as its interest may appear and (ii) provide Buyer access to coverage under the theft of secondary market institution’s money or collateral clause of such insurance policy

 

10.                            Subservicer Instruction Letter between each Seller and any Subservicer

 

Exhibit E-1

 

EXHIBIT F

 

REQUIRED OPINIONS OF COUNSEL WITH RESPECT TO EACH SELLER

 

1.                                    RMC has been legally incorporated under the laws of the State of Ohio and RMCMC has been legally incorporated under the laws of the State of California and each is validly existing and in good standing under the laws of that State, and has the requisite entity power and authority to execute and deliver each Transaction Document to which it is a party and to perform its obligations thereunder.

 

2.                                    Each of the execution, delivery and performance by Seller of the Transaction Documents to which it is a party has been duly authorized by all requisite corporate action on the part of Seller.

 

3.                                    Each Transaction Document to which Seller is a party has been duly executed and delivered by a duly authorized officer of Seller.

 

4.                                    Each Transaction Document to which Seller is a party constitutes the valid and binding obligation of Seller under the laws of the State of New York, enforceable against Seller in accordance with its respective terms.1

 

5.                                    The execution, delivery and performance by Seller of its obligations under each of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby will not result in (i) any breach or violation of its organizational documents, (ii) any breach, violation or acceleration of or default under any indenture, loan or credit agreement, lease, mortgage, security agreement or other material agreement or instrument to which it is a party or by which it is bound,2 (iii) any breach or violation of any order, writ, judgment, injunction or decree of any court, agency or other governmental body, or (iv) any breach or violation of any United States federal, State of Ohio, State of California or State of New York statute or regulation that is normally applicable to transactions of the type contemplated by the Agreements.

 

6.                                    There is no legal action, suit, proceeding or investigation before any court, agency or other governmental body pending or, to my knowledge, threatened against Seller which, either in one instance or in the aggregate, (a) could reasonably be expected to have a material adverse effect on its business, operations, properties or condition (financial or otherwise) or (b) draws into question the validity of, seeks to prevent the consummation of any of the transactions contemplated by or would impair materially its ability to perform its obligations under any of the Transaction Documents to which it is a party.

 

7.                                    The execution, delivery and performance of Seller’s obligations under each of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby do not require any consent, approval, authorization or order of, filing with 

 

1 To be given by outside counsel licensed to practice in the State of New York.

2 To be given by outside counsel.  An officer of Seller is to certify to outside counsel and JPM that the attached list of agreements are all of the indentures, leases, credit agreements, repos and other material agreements to which Seller or its parent is subject or a party.

 

Exhibit F-1

 

or notice to any United States federal, State of Ohio, State of California, or State of New York court, agency or other governmental body under any United States federal, State of Ohio, State of California, or State of New York statute or regulation that is normally applicable to transactions of the type contemplated by the Agreements, except such as may be required under the securities laws of any State of the United States or such as have been obtained, effected or given.

 

8.                                    Seller is not required to register as an “investment company” under the Investment Company Act of 1940, as amended.

 

9.                                    The Repurchase Agreement creates, for the benefit of Buyer, a valid security interest that will attach to all right, title and interest of Seller in and to the Mortgage Assets and their proceeds3.

 

10.                            The Buyer’s security interest in each Mortgage Note and its proceeds will be perfected upon delivery of such Mortgage Note to Buyer in the State of Texas pursuant to and in accordance with the Transaction Documents.4

 

11.                            The Buyer’s security interest in the Mortgage Assets in which a security interest can be perfected by filing, and in their proceeds, will be perfected upon filing of the applicable financing statement in the filing office located in the State of Ohio (as to RMC) and the State of California (as to RMCMC), each of which is the proper place to file against the applicable Seller.5

 

3 Creation opinion to be given by outside counsel competent to opine on New York law.

4 Perfection opinions to be given by outside counsel.

5 Perfection opinions to be given by outside counsel.

 

Exhibit F-2

 

EXHIBIT G

 

SUBSIDIARY INFORMATION

 

	
SUBSIDIARIES OF
   SELLER
    	
STATE
   AUTHORIZED
   TO DO
   BUSINESS
    	
ORG. TYPE
    	
DATE
    	
PERCENTAGE
   OWNERSHIP
    	
DBA’S
    
	
 
    
	
Associates Funding, Inc.
    	
DE
    	
Incorporation
    	
08/12/94
    	
100% by   Ryland Mortgage Company
    	
No
    
	
Associates Mortgage Funding Corporation
    	
DE
    	
Incorporation
    	
06/23/89
    	
100% by   Ryland Mortgage Company
    	
No
    
	
Cornerstone Title Company
    	
AZ
    	
Foreign
    	
10/08/02
    	
100% by   Ryland Mortgage Company
    	
Ryland Title Company
    
	
 
    	
CO
    	
Foreign
    	
02/23/98
    	
 
    	
Ryland Title Company
    
	
 
    	
DE
    	
Foreign
    	
03/28/03
    	
 
    	
Ryland Title Company
    
	
 
    	
FL
    	
Foreign
    	
05/07/92
    	
 
    	
Ryland Title Company
    
	
 
    	
GA
    	
Foreign
    	
07/17/01
    	
 
    	
No
    
	
 
    	
IL
    	
Foreign
    	
08/11/95
    	
 
    	
Ryland Title Company
    
	
 
    	
IN
    	
Foreign
    	
03/26/03
    	
 
    	
Ryland Title Company
    
	
 
    	
MD
    	
Incorporation
    	
07/27/89
    	
 
    	
No
    
	
Qualified   as “Ryland Title Company”   (CornerstoneTitle Company was unavailable at time of qualification)
    	
MN
    	
Foreign
    	
07/25/00
    	
 
    	
No
    
	
 
    	
NC
    	
Foreign
    	
08/30/01
    	
 
    	
Ryland Title Company
    
	
 
    	
NV
    	
Foreign
    	
05/07/03
    	
 
    	
Ryland Title Company
    
	
 
    	
TX
    	
Foreign
    	
05/18/93
    	
 
    	
Ryland Title Company
    
	
 
    	
VA
    	
Foreign
    	
01/01/99
    	
 
    	
Ryland Title Company
    
	
Ryland Insurance Services
    	
AZ
    	
Foreign
    	
03/12/96
    	
100% by   Ryland Mortgage Company
    	
No
    
	
 
    	
CA
    	
Incorporation
    	
09/13/95
    	
 
    	
No
    
	
 
    	
CO
    	
Foreign
    	
06/07/96
    	
 
    	
No
    

 

Exhibit G-1

 

	
SUBSIDIARIES OF
   SELLER
    	
STATE
   AUTHORIZED
   TO DO
   BUSINESS
    	
ORG. TYPE
    	
DATE
    	
PERCENTAGE
   OWNERSHIP
    	
DBA’S
    
	
 
    	
DE
    	
Foreign
    	
04/23/03
    	
 
    	
No
    
	
 
    	
FL
    	
Foreign
    	
04/21/97
    	
 
    	
No
    
	
 
    	
GA
    	
Foreign
    	
10/06/97
    	
 
    	
No
    
	
 
    	
IL
    	
Foreign
    	
12/31/97
    	
 
    	
No
    
	
 
    	
IN
    	
Foreign
    	
05/06/97
    	
 
    	
No
    
	
Qualified   as “Ryland Insurance Services, Inc.”
    	
MD
    	
Foreign
    	
05/23/96
    	
 
    	
Ryland Insurance Services
    
	
Qualified   as “Ryland Insurance Services   Agency, Inc.”
    	
MN
    	
Foreign
    	
06/30/97
    	
 
    	
No
    
	
Qualified   as “Ryland Insurance Services D/B/A Ryland   Insurance Services, Inc.”
    	
NC
    	
Foreign
    	
04/22/97
    	
 
    	
No
    
	
 
    	
NV
    	
Foreign
    	
05/16/03
    	
 
    	
No
    
	
 
    	
OH
    	
Foreign
    	
06/11/97
    	
 
    	
No
    
	
 
    	
SC
    	
Foreign
    	
04/01/97
    	
 
    	
No
    
	
 
    	
TX
    	
Foreign
    	
02/04/97
    	
 
    	
No
    
	
 
    	
VA
    	
Foreign
    	
05/23/96
    	
 
    	
No
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 

SUBSIDIARIES OF SELLER - RMC MORTGAGE   CORPORATION

 
    

 

Exhibit G-2

 

EXHIBIT H

 

FORM OF SUBSERVICER INSTRUCTION LETTER

 

SUBSERVICER INSTRUCTION LETTER

 

________________, 200_

________________________, as Subservicer

________________________

________________________

Attention: ____________________

 

Re:                            Master Repurchase Agreement, dated as of ____________________, 2011 (“Repurchase Agreement”), by and between JPMorgan Chase Bank, N.A., (“Buyer”) and Ryland Mortgage Company and RMC Mortgage Corporation (each a “Seller”)

 

Ladies and Gentlemen:

 

As Subservicer (referenced herein as “You”) of those mortgage loans described on Schedule 1 hereto, which may be amended or updated from time to time (the “Mortgage Loans”) pursuant to that Subservicing Agreement, between You and the undersigned Seller, as amended or modified, attached hereto as Exhibit A (the “Subservicing Agreement”), you are hereby notified that the undersigned Seller has sold to Buyer such Mortgage Loans pursuant to the above-referenced Repurchase Agreement.

 

You agree to service the Mortgage Loans in accordance with the terms of the Subservicing Agreement for the benefit of Buyer and, except as otherwise provided herein, Buyer shall have all of the rights, but none of the duties or obligations of any Seller under the Subservicing Agreement including, without limitation, payment of any indemnification or reimbursement or payment of any servicing fees or any other fees. No subservicing relationship shall be hereby created between You and Buyer.

 

Upon your receipt of written notification by Buyer that a Default has occurred under the Repurchase Agreement (the “Default Notice”), you, as Subservicer, hereby agree to remit all payments or distributions made with respect to such Mortgage Loans, net of the servicing fees payable to you with respect thereto, immediately in accordance with Buyer’s wiring instructions provided below, or in accordance with other instructions that may be delivered to you by Buyer:

 

[wire instructions]

 

Exhibit H-1

 

You agree that, following your receipt of such Default Notice, under no circumstances will you remit any such payments or distributions in accordance with any instructions delivered to you by the undersigned Seller, except if Buyer instructs you in writing otherwise.

 

You further agree that, upon receipt written notification by Buyer that an Event of Default has occurred under the Repurchase Agreement (“Event of Default Notice”), Buyer shall assume all of the rights and obligations of any Seller under the Subservicing Agreement, except as otherwise provided herein.  Subject to the terms of the Subservicing Agreement, You shall (x) follow the instructions of Buyer with respect to the Mortgage Loans and deliver to a Buyer any information with respect to the Mortgage Loans reasonably requested by such Buyer, and (y) treat this letter agreement as a separate and distinct servicing agreement between You and Buyer (incorporating the terms of the Subservicing Agreement by reference), subject to no setoff or counterclaims arising in Your favor (or the favor of any third party claiming through You) under any other agreement or arrangement between You and any Seller or otherwise.  Notwithstanding anything to the contrary herein or in the Subservicing Agreement, in no event shall Buyer be liable for any fees, indemnities, costs, reimbursements or expenses incurred by You prior to receipt of such Event of Default Notice or otherwise owed to You in respect of the period of time prior to receipt of such Event of Default Notice.

 

[NO FURTHER TEXT ON THIS PAGE]

 

Exhibit H-2

 

Please acknowledge receipt of this instruction letter by signing in the signature block below and forwarding an executed copy to Buyer promptly upon receipt.  Any notices to Buyer should be delivered to the following address: [                                         ], Attention: [               ], Telephone: [                   ], Facsimile: [                   ].

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[NAME OF APPLICABLE   SELLER]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

Acknowledged and Agreed as of this       day of                        , 20     :

 

 

	
[SUBSERVICER]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
			

 

Exhibit H-3

 

EXHIBIT I

 

FIELDS FOR DAILY DATA TAPE

 

The daily data tape shall include the following fields, accurately completed for each Purchased Mortgage Loan:

 

Seller’s Loan number

Mortgagor’s name

City, state and zip code of the Mortgaged Property

Outstanding Principal Balance as of such date

Approved Takeout Investor

Takeout Value

Market Value (based on Buyer’s determination)

Loan-to-Value Ratio

Interest rate

Original principal balance

Current scheduled monthly payment of principal and interest,

Origination date

First Purchase Date on which Mortgage Loan will be or was purchased under the Agreement

Such other fields as Buyer requires from time to time in its sole discretion with notice to Seller

 

Exhibit I-1

 

EXHIBIT J

 

FORM OF BAILEE LETTER

 

[date]

 

[Investor name and address]

 

Ladies and Gentlemen:

 

	
 

1.   Papers Are   Enclosed; Conditional Delivery

 
    

JPMorgan Chase Bank, N.A. (“JPM Chase”) hereby delivers with this letter to you, as bailee, limited and conditional possession of the promissory notes (“Notes”) and the other loan documents (collectively, the “Loan Papers”) relating to the mortgage loans (the “Loans”) described on the attached Exhibit A.  JPM Chase is the successor in ownership interest to Ryland Mortgage Company and RMC Mortgage Corporation (whichever of them is named as payee or last endorsee on each Note delivered to you herewith, the “Mortgage Company”) in and to the Loans pursuant to that certain Master Repurchase Agreement between those affiliated companies, as Sellers, and JPM Chase, as Buyer, as supplemented, amended or restated from time to time (the “Repurchase Agreement”). The Loan Papers are delivered to you at the request of the Mortgage Company for your inspection and determination of whether to purchase the Loans under your agreement with the relevant Mortgage Company (the “Purchase Agreement”), and for no other use or purpose.  Detailed terms of this bailment are stated in Paragraph 6 below.  The Loan Papers are also delivered conditionally:  if you are unwilling to accept the terms and conditions of this bailment, as specified below, you must immediately return all Loan Papers to JPM Chase.  If you do not return them within two business days after receipt, you will have accepted the bailment terms and conditions.

 

	
 

2.  Examine Papers;   How to Purchase Loans

 
    

Please examine the Loan Papers and decide whether you will purchase any or all of the Loans.  To purchase one or more Loans, send, or cause Mortgage Company to send, a list to JPM Chase indicating which Loans you are buying and remit the Pay-off Price (defined in Paragraph 3 below) for each Loan to JPM Chase in immediately available federal funds wired to :

 

JPMorgan Chase Bank, N.A.

ABA No. 021000021

712 Main Street

Houston, Texas 77002

For Credit Account No.                         

Attention:  Chase Mortgage Warehouse Finance

Phone:  214-492-4351

Further Credit — Ryland Mortgage Company and affiliates

 

Please return the Loan Papers for all Loans that you decide not to purchase to JPM Chase addressed to:

 

Exhibit J-1

 

JPMorgan Chase Bank, N.A.

Mortgage Warehouse Finance

Royal Ridge Operations Center 3929 W. John Carpenter Freeway

Mail Stop 1731

Irving, Texas 75063

Attn: Anthony Lassiter

Phone:  (214) 492-4393

 

	
 

3.  Pay-off Price

 
    

The “Pay-off Price” for each Loan is the greater of:

 

(x) the minimum payment required for the Mortgage Company’s repurchase of such Loan so that the Mortgage Company can sell it to you (the “Release Price”), as set forth in the “Release Price” column of Exhibit A; and

 

(y) the purchase price that you and the Mortgage Company have agreed you will pay for such Loan (the “Agreed Purchase Price”).

 

If you pay JPM Chase only the Agreed Purchase Price for a Loan whose Release Price exceeds the Agreed Purchase Price, you will thereupon become the owner of that Loan, provided that JPM Chase retains a security interest in that Loan and the related Loan Papers to secure payment to JPM Chase of the amount by which the Release Price exceeds the Agreed Purchase Price (the “Required Deficiency Payment”), which security interest will not be released unless and until either you or the Mortgage Company pays JPM Chase the Required Deficiency Payment and concurrently gives JPM Chase a written notice that both (i) identifies the Loan with the payment and (ii) indicates that the amount so paid equals at least the amount of the Required Deficiency Payment of that Loan.

 

	
 

4.  Loans Owned by   JPM Chase, Repurchased and Transferred to You by Mortgage Company

 
    

Pursuant to the Repurchase Agreement, the Mortgage Company has sold the Loans to JPM Chase, and JPM Chase owns and holds the Loan Papers, the Loans they evidence and all related security, collateral support and other rights.  Payment of the Pay-off Price to JPM Chase will effect the relevant Mortgage Company’s repurchase of the Loans from JPM Chase under the Repurchase Agreement and their transfer by that Mortgage Company to you under the Purchase Agreement.

 

	
 

5.  UCC §   9-313(h) Perfection  by   Possession

 
    

Although the parties intend that all transactions under the Master Repurchase Agreement be sales and purchases and not loans, if any one or more Transactions are recharacterized as loans by a court of competent jurisdiction, the parties have agreed that the Mortgage Company has pledged the Loans to JPM Chase as security for such recharacterized transactions.  To invoke UCC § 9-313(h) to maintain the perfection by possession of the Loan Papers of the security interest in the Loans held by JPM Chase as secured party, we instruct you hereby, concurrently with this delivery of the Loan Papers, (1) to hold possession of the Loan 

 

Exhibit J-2

 

Papers for the benefit of JPM Chase as secured party, or (2) to redeliver the Loan Papers to JPM Chase.

 

	
 

6.  The Mortgage   Company’s, JPM Chase’s and Your Respective Interests in the Loans and the   Loan Papers — You Are Only a Bailee

 
    

We are delivering bare possession of the Loan Papers to you as bailee for your inspection and decision whether you will (i) pay JPM Chase (for the relevant Mortgage Company’s repurchase credit) for, and buy (from the Mortgage Company), the related Loans or (ii) return to JPM Chase the Loan Papers for the Loans that you do not purchase and pay for.  JPM Chase retains and reserves all of its ownership rights in the Loans and the Loan Papers until you actually pay JPM Chase for the Loans and thereby purchase them from the Mortgage Company in accordance with this bailee letter.  You acquire no ownership or security interest in them by our delivery of them to you.  No sale on credit is being made, and no credit is being extended to you.  This bailee letter and our delivery of the Loan Papers to you creates a “true bailment” under applicable law, and your interest in the Loan Papers and their related Loans is and will be limited to that of a bailee under such law, with no ability to pass a greater interest to another, unless and until you purchase and wire payment of the Pay-off Price (defined below) for the Loans you decide to purchase (if any) to JPM Chase in strict accordance with Paragraph 2 and the other provisions of this bailee letter.

 

	
 

7.  Proceeds not   Released

 
    

No Release of Interest in Mortgages, Warehouse Lender Release of Security Interest or other release that JPM Chase has executed or executes will be effective to release JPM Chase’s interest in the proceeds of any Loan unless and until the full Release Price for that Loan has actually been received by JPM Chase.

 

	
 

8.  JPM Chase has    Exclusive Authority to  Give Instructions

 
    

With respect to the Loans, only JPM Chase has authority (A) to request or direct you (i) where to make payment, (ii) where to return the Loan Papers for Loans you decide not to purchase or (iii) to take any other action, or (B) to make any agreement with you.  Unless JPM Chase hereafter gives you different written instructions or advice, this bailee letter provides all instructions and advice for the Loans and the Loan Papers.  You may not honor any notice, direction or other communication from the Mortgage Company (or anyone else) concerning the Loans or the Loan Papers unless it is specifically confirmed in writing by JPM Chase.

 

	
 

9. No Other Payment or  Delivery Before Payment  to JPM Chase

 
    

You may not make payment for the Loans to anyone but JPM Chase unless you are otherwise specifically instructed in writing by JPM Chase.  Until JPM Chase has received payment of the full Pay-off Price for a Loan, you may not deliver any of its Loan Papers to anyone other than JPM Chase without written authorization from JPM Chase.  DO NOT SEND ANY PAYMENTS OR ANY LOAN PAPERS TO THE MORTGAGE COMPANY.

 

	
 

10. Only If You Have Already  paid the Pay-Off Price

 
    

If (but only if) you have already paid the Pay-off Price for a Loan to JPM Chase, then the enclosed Loan Papers for, and 

 

Exhibit J-3

 

ownership of, that Loan are being delivered to you free of such security interest or any trust, bailment or any other claim by JPM Chase.

 

	
 

11. 30-Day Period in which to Purchase

 
    

It is very important that you promptly return the Loan Papers to us for each Loan that you do not intend to purchase so that we will know at all times which specific Loans will remain subject to the Repurchase Agreement and which will not.  Accordingly, you will have 30 days after the date of this letter to either (i) return the enclosed Loan Papers for any Loan you elect not to purchase, or (ii) to purchase all of the Loans that you do not return.

 

	
 

12. JPM Chase’s Absolute Right to Require Return of    Loan Papers Not Sooner  Purchased

 
    

Notwithstanding any other provision of this bailee letter, the enclosed Loan Papers are delivered to you on the express and controlling condition that, unless JPM Chase has already received the Pay-Off Price for each of the Loans, you will return any or all of them to JPM Chase promptly upon your receipt of JPM Chase’s written direction to do so, regardless of whether or not you have decided to purchase such Loans, excluding only those Loans (if any) for which you have already paid us the Pay-Off Price.

 

	
 

13. You Agree to Keep  the Loan Papers Safe

 
    

You are directed to keep all of the enclosed Loan Papers in a fire-resistant vault and safe from loss, theft and other casualty and you will bear any losses, costs or expenses the Mortgage Company and JPM Chase may incur as a result of any such event.

 

	
 

14. This Letter  Controls

 
    

If any other written instruction or advice you receive from us, the Mortgage Company or anyone else in respect of the Loans is inconsistent with this bailee letter, then this bailee letter shall control unless JPM Chase confirms in writing that the other instruction or advice controls.

 

	
 

15. Please Confirm  Receipt

 
    

Please immediately indicate your receipt of this bailee letter and the enclosed Loan Papers, and your acceptance of and agreement to the bailment and the other terms and conditions stated above, by dating and signing the enclosed copy of this bailee letter and returning it to us (although your doing so will not be necessary to the effectiveness of any of this bailee letter’s terms, provisions or conditions).

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
JPMORGAN CHASE BANK,   N.A.
    
	
 
    	
 
    
	
Attached:
    	
 
    
	
Exhibit A —   schedule of Loans shipped
    	
 
    

 

Exhibit J-4

 

RECEIPT ACKNOWLEDGED AND BAILMENT, TERMS AND CONDITIONS ACCEPTED AND AGREED TO ON                              , 201    

 

	
 
    	
[INVESTOR’S NAME]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

Exhibit J-5

 

EXHIBIT K

 

SELLER NAMES FROM TAX RETURNS

 

Ryland Mortgage Company

 

RMC Mortgage Corporation

 

Exhibit K-1

 

EXHIBIT L

 

FORM OF TRUST RELEASE LETTER

 

TRUST RELEASE LETTER

 

TO: JPMORGAN CHASE BANK, N.A.

 

RE: [Seller]

 

DATE: [      ]

 

Reference is made to the Master Repurchase Agreement dated as of                          , 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), between: (a) JPMorgan Chase Bank, N.A. (“Buyer”) and (b) Ryland Mortgage Company and RMC Mortgage Corporation (each a “Seller” and collectively, the “Sellers”).  Capitalized terms used herein and not otherwise defined have the meanings given to those terms in the Agreement.

 

Seller hereby requests that the following Mortgage Note be returned to Seller at [address] for the reason(s) set forth below:

 

 

	
Loan ID number
    	
 
    	
Mortgagor last

names (1 name

sufficient if same

name)
    	
 
    	
 
    	
Mortgage loan

amount
    	
 
    	
 
    	
Allonge, Rider, or

CEMA docs to be

returned also?
    	
 
    	
 
    	
Reason(s)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

Seller agrees that Buyer continues to have the sole ownership interest in the listed Mortgage Note and all other Mortgage Assets related to the Mortgage Note.

 

Seller shall return the corrected Mortgage Note to Buyer no later than the fifth (5th) Business Day after the date of this Trust Release Letter.  At all times the Mortgage Note listed above is in the possession of Seller pursuant to this Trust Release Letter, Seller shall hold such Mortgage Note in trust for the benefit of Buyer.  Seller hereby certifies that after Buyer delivers the Mortgage Note described above to Seller, the aggregate original Outstanding Principal Balance of all Mortgage Notes released to Seller pursuant to Trust Release Letters as of the date of this Trust Release Letter does not exceed $5,000,000.

 

Seller has caused the information set forth in the table below to be accurately completed.

 

Exhibit L-1

 

	
This Trust
   Receipt prepared
   by
   (first & last
   name)
    	
 
    	
 
    	
First &   last name
   of contact person
   for questions (if
   different from
   name to the left)
    	
 
    	
 
    	
Contact
   person’s phone
   number
    	
 
    	
 
    	
Contact
   person’s fax
   number
    	
 
    	
 
    	
Contact person’s   e-mail
   address
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

	
 
    	
Sincerely,
    
	
 
    	
[SELLER]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

Exhibit L-2

 

EXHIBIT M

 

PERMITTED DEBT

 

None.

 

 

Exhibit M-1

 

SCHEDULE I

 

APPROVED TAKEOUT INVESTORS

 

CitiMortgage Inc. (Bond Unit)

Federal Home Loan Mortgage Corporation

Federal National Mortgage Association

Indiana Housing HFA

JPMorgan Chase

North Carolina Housing Finance Agency

PennyMac

PHH Mortgage Corporation

South Carolina Housing Finance Agency

Texas Dept. of Housing & Community Affairs

US Bank (Bond Unit)

Wells Fargo

 

Schedule I-1

 

SCHEDULE II

 

SELLERS’ AUTHORIZED SIGNERS

 

Ryland Mortgage Company:

 

	
David A. Brown
    	
President and Secretary
    
	
 
    	
 
    
	
Martyn Watson
    	
Vice President,   Treasurer and Controller
    

 

RMC Mortgage Corporation:

 

	
Manuel Alejandro Rascon
    	
President, Treasurer   and Secretary
    
	
 
    	
 
    
	
Timothy J. Geckle
    	
Vice President
    
	
 
    	
 
    
	
Martyn Watson
    	
Assistant Treasurer
    

 

Schedule II-1

 

SCHEDULE III

 

TERMS OF EACH SELLER’S OBLIGATIONS TO PAY 
 TRANSACTIONS BY ANOTHER OF THEM

 

Each Seller hereby agrees to the following terms with respect to Transactions and with respect to the obligations and liabilities of each other Seller:

 

1.         Each Seller hereby (a) agrees to any modifications of any terms or conditions of each other Seller’s obligations and liabilities to Buyer (“Obligations”) and/or to any extensions or renewals of time of payment or performance by any other Seller; (b) agrees that it shall not be necessary for Buyer to resort to legal remedies against any other Seller, nor to take any action against any other Person obligated (an “Obligor”) or on or against any Mortgage Assets or any other security for payment or performance of any other Seller’s Obligations before proceeding against such Seller; (c) agrees that no release of any other Seller or other Obligor, or of any Mortgage Assets or other security for any other Seller’s obligations and liabilities, whether by operation of law or by any act of Buyer, with or without notice to such Seller, shall release such Seller and (d) waives notice of demand, dishonor, notice of dishonor, protest, and notice of protest and waives, to the extent permitted by law, all benefit of valuation, appraisement and exemptions under the laws of the United States, or any of the States of New York, Texas or any other state or territory of the United States.

 

2.         The obligations of each Seller for every other Seller’s Obligations shall be primary, absolute and unconditional, and shall remain in full force and effect without regard to, and shall not be impaired or affected by:  (a) the genuineness, validity, regularity or enforceability of, or any amendment or change in, this Agreement or any other Transaction Document, or any change in or extension of the manner, place or terms of payment of all or any portion of such other Seller’s Obligations; (b) the taking or failure to take any action to enforce this Agreement or any other Transaction Document, or the exercise or failure to exercise any remedy, power or privilege contained therein or available at law or otherwise, or the waiver by Buyer of any provisions of this Agreement or any other Transaction Document; (c) any impairment, modification, change, release or limitation in any manner of the liability of the other Seller or its estate in bankruptcy, or of any remedy for the enforcement of such other Seller’s liability, resulting from the operation of any present or future provision of the bankruptcy laws (if applicable) or any other statute or regulation, or the dissolution, bankruptcy, insolvency, or reorganization of such other Seller; (d) the merger or consolidation of such other Seller or any sale or transfer by such other Seller of all or part of its assets or property; (e) any claim such Seller may have against such other Seller or any other Obligor, including any claim of contribution; (f) the release, in whole or in part, of such other Seller or any other Obligor; (g) the occurrence of any event or circumstances which might otherwise constitute a surety or similar defense available to, or a discharge of, any Seller, including failure of consideration, fraud by or affecting any Person, usury, forgery, breach of warranty, failure to satisfy any requirement of the statute of frauds, running of any statute or limitation, accord and satisfaction and any defense based on remedies of any type or (h) any other action or circumstance which (with or without notice to or knowledge of such Seller) might in any manner or to any extent vary the risks of such Seller or otherwise constitute a legal or equitable discharge or defense, it being understood 

 

Schedule III-1

 

and agreed by each Seller that its obligations for every other Seller’s Obligation shall not be discharged except by the full payment and performance of such other Seller’s Obligation.

 

3.         Each Seller hereby waives every right to which it may be entitled by virtue of any suretyship law.

 

4.         Buyer shall have the right to determine how, when and what application of payments and credits, if any, whether derived from any Seller or from any other source, shall be made on the Obligations and any other obligations and liabilities owed by any Seller and/or any other Obligor to Buyer.

 

5.         The obligations of each Seller hereunder shall continue to be effective, or be automatically reinstated, as the case may be, if at any time the performance or the payment, as the case may be, in whole or in part, of any Seller’s Obligations is rescinded or must otherwise be restored or returned by Buyer or any other Person (as a preference, fraudulent conveyance or otherwise) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Seller or any other Person or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to any Seller or any other Person, or any substantial part of its property, or otherwise, all as though such payments had not been made.  If an Event of Default shall at any time have occurred and be continuing or shall exist and declaration of default or acceleration under or with respect to any Seller’s Obligations shall at such time be prevented by reason of the pendency against any Seller or any other Person of a case or proceeding under any applicable bankruptcy or insolvency law, each Seller agrees that its obligations for any Seller’s Obligations shall be deemed to have been declared in default or accelerated with the same effect as if such Obligations had been declared in default and accelerated in accordance with their respective terms and each Seller shall forthwith perform or pay, as the case may be, as required hereunder in accordance with the terms hereunder without further notice or demand.

 

6.         No postponement or delay on the part of Buyer in the enforcement of any right with respect to the Obligations of any Seller, including any other Seller’s Obligations, shall constitute a waiver of such right and all rights of Buyer hereunder shall be cumulative and not alternative and shall be in addition to any other rights granted to Buyer in any other agreement or by law.

 

Schedule III-2

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