Document:

exv10w25

Exhibit 10.25

(CONFIDENTIAL TREATMENT OF CERTAIN DESIGNATED PORTIONS OF THIS AGREEMENT HAVE
BEEN REQUESTED BY NATIONSTAR MORTGAGE LLC, SUCH CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED, AS INDICATED BY AN [*] IN THE TEXT, AND SUBMITTED TO THE SECURITIES
AND EXCHANGE COMMISSION). 

FIF HE HOLDINGS LLC

Fifth Amended and Restated

Limited Liability Company Agreement

Dated as of September 17, 2010

 

 

Table of Contents

	 	 	 	 	 

	ARTICLE I DEFINITIONS
	 	 	2	 
	 
	 
	ARTICLE II FORMATION AND PURPOSE
	 	 	2	 
	 
	2.1. Formation
	 	 	2	 
	2.2. Name
	 	 	2	 
	2.3. Registered Office/Agent
	 	 	2	 
	2.4. Term
	 	 	2	 
	2.5. Purpose and Powers
	 	 	3	 
	2.6. Admission; Redemption
	 	 	3	 
	2.7. Principal Office
	 	 	3	 
	 
	ARTICLE III MEMBERSHIP, Series, UNITS AND CAPITAL ACCOUNTS
	 	 	3	 
	 
	3.1. General
	 	 	3	 
	3.2. Establishment of Series
	 	 	3	 
	3.3. Series Property
	 	 	4	 
	3.4. Liabilities Associated with Series
	 	 	4	 
	3.5. Apportionment of Income and Expenses Among Series
	 	 	5	 
	3.6. Capital Contributions
	 	 	5	 
	3.7. Classes of Units
	 	 	5	 
	3.8. Additional Members and Units
	 	 	7	 
	3.9. Single Class
	 	 	7	 
	3.10. Series Capital Accounts
	 	 	7	 
	3.11. Revaluations of Assets and Series Capital Account Adjustments
	 	 	8	 
	3.12. Additional Capital Account Adjustments
	 	 	8	 
	3.13. Additional Series Capital Account Provisions
	 	 	8	 
	3.14. Unit Certificates
	 	 	9	 
	3.15. Loans from Members
	 	 	10	 
	3.16. Subsequent Investments
	 	 	10	 
	3.17. Management Unit Surrender and Issuance
	 	 	11	 
	 
	ARTICLE IV STATUS OF MEMBERS
	 	 	11	 
	 
	4.1. Limited Liability
	 	 	11	 
	4.2. Return of Distributions of Capital
	 	 	11	 

i

 

	 	 	 	 	 

	ARTICLE V DESIGNATION, RIGHTS, AUTHORITIES, POWERS, RESPONSIBILITIES, AND 
DUTIES OF THE MANAGER
	 	 	12	 
	 
	5.1. Manager
	 	 	12	 
	5.2. Authority of the Managers
	 	 	13	 
	5.3. Decisions
	 	 	14	 
	5.4. Officers; Agents
	 	 	15	 
	5.5. Management Rights Letter Agreement
	 	 	16	 
	 
	ARTICLE VI BOOKS, RECORDS, ACCOUNTING, AND REPORTS
	 	 	16	 
	 
	6.1. Books and Records
	 	 	16	 
	6.2. Financial Statements
	 	 	17	 
	6.3. Filings
	 	 	17	 
	6.4. Confidentiality and Non-Disclosure
	 	 	18	 
	 
	ARTICLE VII DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS
	 	 	20	 
	 
	7.1. Manager’s Determination
	 	 	20	 
	7.2. Series 1 Distributions
	 	 	20	 
	7.3. Series 2 Distributions
	 	 	21	 
	7.4. Tax Distributions
	 	 	22	 
	7.5. No Violation
	 	 	23	 
	7.6. Withholdings
	 	 	23	 
	7.7. Property Distributions and Installment Sales
	 	 	23	 
	7.8. Net Profit or Net Loss
	 	 	23	 
	7.9. Regulatory Allocations
	 	 	25	 
	7.10. Tax Allocations
	 	 	25	 
	7.11. Changes in Members’ Series Interest
	 	 	26	 
	7.12. Credits
	 	 	26	 
	7.13. Tax Treatment of Class B Units
	 	 	26	 
	7.14. Tax Treatment of Company Match Class A Units
	 	 	27	 
	 
	ARTICLE VIII TAX MATTERS MEMBER; OTHER TAX MATTERS
	 	 	27	 
	 
	8.1. Tax Matters Member
	 	 	27	 
	8.2. Certain Authorizations
	 	 	27	 
	8.3. Indemnity of Tax Matters Member
	 	 	28	 
	8.4. Information Furnished
	 	 	28	 
	8.5. Notice of Proceedings, etc.
	 	 	29	 

ii

 

	 	 	 	 	 

	8.6. Notices to Tax Matters Member
	 	 	29	 
	8.7. Elections with Respect to Issuance of Class B Units
	 	 	29	 
	 
	ARTICLE IX TRANSFERS OF SERIES INTERESTS; CALL RIGHTS, TAG ALONG RIGHTS, 
DRAG ALONG OBLIGATIONS AND OTHER RIGHTS AND OBLIGATIONS
	 	 	30	 
	 
	9.1. Transfer by Members
	 	 	30	 
	9.2. Conditions to Transfer
	 	 	30	 
	9.3. Member’s Agreement
	 	 	31	 
	9.4. Records
	 	 	32	 
	9.5. Additional Transfer Restrictions
	 	 	32	 
	9.6. Tag Along
	 	 	32	 
	9.7. Drag Along
	 	 	35	 
	9.8. Miscellaneous Provisions Relating to Sales or Sale of Series Interests under Section 9.6 and 9.7
	 	 	36	 
	9.9. Pre-Emptive Rights
	 	 	38	 
	9.10. Forfeiture of Class A Units
	 	 	40	 
	9.11. Repurchase Rights
	 	 	41	 
	9.12. Management Loan
	 	 	43	 
	9.13. Class B Employment Termination Redemption Rights
	 	 	45	 
	9.14. Class B Sale Repurchase Right
	 	 	46	 
	9.15. Proceeds of Sale Transaction
	 	 	47	 
	 
	ARTICLE X ADMISSION OF ASSIGNEE AS MEMBER
	 	 	47	 
	 
	10.1. Requirements
	 	 	47	 
	10.2. Consent
	 	 	48	 
	10.3. Withdrawal of Member; No Dissolution
	 	 	48	 
	 
	ARTICLE XI RIGHTS AND POWERS OF THE MEMBERS
	 	 	48	 
	 
	11.1. No Management and Control
	 	 	48	 
	11.2. Specific Limitations
	 	 	48	 
	11.3. Amendments to Certificate and Agreement; Voting
	 	 	49	 
	 
	ARTICLE XII DISSOLUTION OF COMPANY
	 	 	50	 
	 
	12.1. Termination of Membership
	 	 	50	 
	12.2. Events of Dissolution or Liquidation
	 	 	50	 
	12.3. Liquidation
	 	 	50	 

iii

 

	 	 	 	 	 

	12.4. No Action for Dissolution
	 	 	51	 
	12.5. No Further Claim
	 	 	51	 
	 
	ARTICLE XIII INDEMNIFICATION
	 	 	51	 
	 
	13.1. General
	 	 	51	 
	13.2. Exculpation
	 	 	52	 
	13.3. Persons Entitled to Indemnity
	 	 	52	 
	13.4. Procedure Agreements
	 	 	52	 
	13.5. Interested Transactions
	 	 	52	 
	13.6. Business Opportunities
	 	 	52	 
	13.7. Fiduciary and Other Duties
	 	 	53	 
	13.8. Amendment
	 	 	53	 
	13.9. Survival
	 	 	53	 
	13.10. No Inconsistent Amendments to Certificate
	 	 	53	 
	 
	ARTICLE XIV REPRESENTATIONS AND COVENANTS BY THE MEMBERS
	 	 	53	 
	 
	14.1. Investment Intent
	 	 	53	 
	14.2. Securities Regulation
	 	 	54	 
	14.3. Knowledge and Experience
	 	 	54	 
	14.4. Economic Risk
	 	 	54	 
	14.5. Binding Agreement
	 	 	54	 
	14.6. Tax Position
	 	 	54	 
	14.7. Information
	 	 	54	 
	 
	ARTICLE XV COMPANY AND SERIES REPRESENTATIONS
	 	 	55	 
	 
	15.1. Organization, etc.
	 	 	55	 
	15.2. Series Interests
	 	 	55	 
	 
	ARTICLE XVI RIGHT TO CONVERT TO CORPORATE FORM
	 	 	55	 
	 
	16.1. Conversion of Company
	 	 	55	 
	16.2. Execution of Documents
	 	 	56	 
	 
	ARTICLE XVII LIMITED LIABILITY
	 	 	56	 
	 
	 
	ARTICLE XVIII MISCELLANEOUS
	 	 	56	 
	 
	18.1. Additional Documents
	 	 	56	 
	18.2. General
	 	 	56	 
	18.3. Notices, etc.
	 	 	57	 

iv

 

	 	 	 	 	 

	18.4. Execution of Papers
	 	 	59	 
	18.5. Arbitration
	 	 	60	 
	18.6. Matters of Interpretation
	 	 	61	 
	18.7. Subsidiary Matters
	 	 	62	 
	18.8. Severability
	 	 	62	 
	18.9. No Third Party Rights
	 	 	62	 
	18.10. Counterparts
	 	 	62	 

v

 

Limited Liability Company Agreement

FIF HE Holdings LLC

Fifth Amended and Restated

Limited Liability Company Agreement

     THIS FIFTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as amended from time
to time, this “Agreement”) of FIF HE Holdings LLC (the “Company”), dated as of September 17, 2010
(the “Effective Date”), is by and among each of the Persons (as hereinafter defined) from time to
time party hereto, as Members (as hereinafter defined).

     WHEREAS, the Company was formed as a limited liability company pursuant to the Delaware
Limited Liability Company Act by filing of Certificate of Formation (the “Certificate”) with the
Secretary of State of the State of Delaware on February 27, 2006, as amended on March 27, 2006 and,
as amended and restated on July 11, 2006.

     WHEREAS, the Company and certain of its Members previously entered into that certain Limited
Liability Company Agreement effective as of March 30, 2006.

     WHEREAS, the Company and its Members previously entered into that certain Amended and Restated
Limited Liability Company Agreement dated as of July 11, 2006, that certain Second Amended and
Restated Limited Liability Company Agreement dated as of December 27, 2006 with effect as of July
11, 2006, that certain Third Amended and Restated Limited Liability Company Agreement dated as of
November 19, 2007, and that certain Fourth Amended and Restated Limited Liability Company Agreement
dated as of December 31, 2008 with effect as of November 19, 2007 (the “Fourth Amended and Restated
Agreement” and together with such other limited liability company agreements, the “Previous
Agreements”).

     WHEREAS, it is intended by the parties hereto that pursuant to Section 18-215 of the Act the
Company shall have Series (as hereinafter defined) having separate assets, liabilities, rights,
powers, duties, purposes, and objectives and that the debts, liabilities and obligations incurred,
contracted for or otherwise existing with respect to a particular Series of the Company will be
enforceable against the assets of such Series only, and not against the assets of the Company
generally or any other Series thereof, and none of the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to the Company generally or any other
Series thereof shall be enforceable against the assets of a different Series.

     WHEREAS, it is intended by the parties hereto that each Series (and not the Company as a
whole) shall constitute a separate partnership for federal (and applicable state) income tax
purposes, and that the partners thereof shall consist solely of the Members holding a Series
Interest (as hereinafter defined) in such Series.

1

 

     WHEREAS, the Members desire to enter into this Fifth Amended and Restated Limited Liability
Company Agreement to provide for, among other things, the issuance of additional Series 1 Class A
Units, Series 1 Class C Preferred Units, Series 1 Class D Preferred Units and Series 2 Class A
Units.

     NOW, THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants and conditions set forth in this Agreement, the Fourth Amended and Restated Agreement is
hereby amended and restated as follows:

ARTICLE I

DEFINITIONS

     For purposes of this Agreement certain capitalized terms have specifically defined meanings
which are either set forth or referred to in Schedule 1 which is attached hereto and
incorporated herein by reference.

ARTICLE II

FORMATION AND PURPOSE

     2.1. Formation. The Company was formed by the filing of the Certificate with the Secretary of
State of the State of Delaware. In accordance with Section 18-215 of the Act, the Company shall
have Series having separate assets, liabilities, rights, powers, duties, purposes and objectives.
The rights and liabilities of the Members and each Series shall be determined pursuant to the Act,
the Certificate and this Agreement. To the extent that the rights or obligations of any Member or
Series are different by reason of any provision of this Agreement than they would be in the absence
of such provision, this Agreement shall, to the maximum extent permitted by the Act, control.

     2.2. Name. The name of the Company is FIF HE Holdings LLC. The business of the Company and each
Series may be conducted under that name, together with the Series designation of the respective
Series, or, upon compliance with applicable laws, any other name that the Company Manager or
applicable Series Manager, as the case may be, deems appropriate or advisable. The Company Manager
shall file, or shall cause to be filed, any fictitious name certificates and similar filings, and
any amendments thereto, that the Company Manager considers appropriate or advisable.

     2.3. Registered Office/Agent. The registered office required to be maintained by the Company in
the State of Delaware pursuant to the Act is 1209 Orange Street, Wilmington, DE 19801. The name
and address of the registered agent of the Company pursuant to the Act is CT Corporation, 1209
Orange Street, Wilmington, DE 19801. The Company may, upon compliance with the applicable
provisions of the Act, change its registered office or registered agent from time to time in the
discretion of the Company Manager.

     2.4. Term. The term of the Company and each Series shall continue until the Company or such Series
is dissolved as hereinafter provided. The existence of the Company and

2

 

each Series as a separate legal entity shall continue until a certificate of dissolution is filed
with the Secretary of State of the State of Delaware as provided in the Act.

     2.5. Purpose and Powers. Subject to the limitations contained elsewhere in this Agreement, the
Company and each Series thereof are formed for the object and purpose of, and the nature of the
business to be conducted and promoted by the Company and each Series thereof is, engaging in any
lawful act or activity for which limited liability companies and each Series thereof may be formed
under the Act and engaging in any and all activities necessary, advisable, convenient or incidental
thereto. The Company and each Series have the power and authority to engage in all manner of
actions as it deems necessary to carry out the purposes of the Company or such Series, as the case
may be.

     2.6. Admission; Redemption. Upon the execution of this Agreement or a counterpart of this
Agreement, together with any other documents or instruments required by the Company Manager or
applicable Series Manager, as the case may be, in connection therewith, and the making of the
capital contribution (if any) required by the applicable Series Manager to be made at such time, a
Person shall be admitted to a Series as a member of such Series.

     2.7. Principal Office. The principal executive office of the Company and each Series shall be
located at the principal executive office of the Fortress Holders, and, subject to the provisions
hereof, the Company Manager or applicable Series Manager, as the case may be, may from time to time
change the location of the principal executive office of the Company and each Series to any other
place within or without the State of Delaware. The Company Manager or applicable Series Manager,
as the case may be, may establish and maintain such additional offices and places of business of
the Company and each Series, either within or without the State of Delaware, as it deems
appropriate.

ARTICLE III

MEMBERSHIP, SERIES, UNITS AND CAPITAL ACCOUNTS

     3.1. General. The limited liability company interests in the Company shall consist exclusively of
Series Interests in the respective Series. No Person who is a Member of a particular Series shall
have any interest in any other Series unless such Person is also a Member of such other Series.

     3.2. Establishment of Series. (a) The following Series are established and designated as follows:
(i) Series 1 interests (“Series 1”) and Series 2 interests (“Series 2”). Each of Series 1 and
Series 2 shall have the relative rights, powers, authority, privileges, preferences, duties and
responsibilities set forth in this Agreement.

	 	(b)	 	One or more additional Series (each an “Additional Series”) may
be established by the Company Manager. In establishing an Additional Series,
the Company Manager shall: (i) set forth the initial assets and liabilities of
such Series and, either expressly or by reference to another document or
documents, the objectives, policies, restrictions and limitations in respect of
the investments of such Additional Series;

3

 

	 	 	 	(ii) designate, fix and determine the relative rights, powers, authority,
privileges, preferences, duties, responsibilities, liabilities and
obligations in respect of Series Interests in such Additional Series and the
Members thereof (to the extent such terms differ from those set forth
herein); (iii) set forth the initial Series Property of such Additional
Series; and (iv) set forth any other provisions applicable to such Series
Interests.

     3.3. Series Property. A description of the Series Property of each Series as of the date hereof is
set forth on Schedule 3.3. To the extent that any asset of the Company as of the date
hereof is not described on Schedule 3.3 as being included in the Series Property of a
particular Series, such asset shall be included in the Series Property of Series 1.

     3.4. Liabilities Associated with Series. (a) The liabilities associated with a particular Series
shall include all liabilities and obligations of the Company relating to any Series Property of
such Series (“Series Liabilities”). All Series Liabilities shall be enforceable against the Series
Property of that Series only and not against the assets associated with any other Series. The
Members have caused notice of this limitation on inter-Series liabilities to be set forth in the
Certificate of Formation, and, accordingly, the statutory provisions of Section 18-215(b) of the
Act relating to limitations on inter-series liabilities (and the statutory effect under Section
18-207 of the Act of setting forth such notice in the Certificate of Formation) shall apply to the
Company and each Series. Any liabilities or obligations of the Company that are primarily related
to the Series Property of a particular Series shall be deemed to be wholly related to such Series.
To the extent that any liabilities or obligations of the Company are not primarily related to the
Series Property of a particular Series, such liabilities shall be deemed for all purposes to be
partially attributable to each Series in proportion to the Fair Market Value of the Series Property
of such Series relative to the Fair Market Value of the Series Property of all Series.
Notwithstanding anything contained herein to the contrary, the liabilities and obligations of the
Company under that certain Guaranty dated as of July 11, 2006 between the Company and Greenwich
Capital Financial Products, Inc. shall be joint and several liabilities and obligations of each
Series.

	 	(b)	 	Notwithstanding any other provision of this Agreement, no
distribution on or in respect of Series Interests in a particular Series,
including, for the avoidance of doubt, any distribution made to a Member in
connection with any withdrawal from such Member’s Series Capital Account in
such Series permitted or required under the provisions of this Agreement and
any distribution made in connection with the winding up of such Series, shall
be effected by the Company other than from the assets associated with that
Series, nor shall any Member or former Member of a Series otherwise have any
right or claim against the assets associated with any other Series (except to
the extent that such Member or former Member has such a right or claim
hereunder as a Member or former Member of such other Series or in a capacity
other than as a Member or former Member).

4

 

     3.5. Apportionment of Income and Expenses Among Series.

     3.5.1. Any income, gain, loss, deduction or expense of the Company that is primarily
attributable to a Series shall be deemed for all purposes to be wholly attributable to such
Series; provided, however, that, for the avoidance of doubt, any loss, deduction or expense
primarily attributable to a Series in accordance with Section 3.4 shall be deemed wholly
attributable to such Series.

     3.5.2. Any income, gain, loss, deduction or expense of the Company not primarily
attributable to a particular Series shall be deemed for all purposes to be partially
attributable to each Series in proportion to the Fair Market Value of the Series Property of
such Series relative to the Fair Market Value of the Series Property of all Series.

     3.6. Capital Contributions. Each Member’s capital contribution, if any, whether in cash or in
kind, and the number of Units of various Classes of Series Interests issued to such Member shall be
as set forth in the writing pursuant to which such Units were issued to such
Member; and the capital contribution of and number, Series, and Classes of Units issued to each
Member shall be recorded on the books and records of the Company and such Series. Any in-kind
capital contributions shall be effected by a written assignment or such other documents as the
applicable Series Manager shall direct. Any Member making an in-kind capital contribution agrees
to do such further acts and execute such further documents as the Manager(s) may direct to perfect
the Series’ interest in such in-kind capital contribution. Each Member hereby agrees that any
distribution or payment of cash or other assets to the Members of a particular Series that are
designated by the Manager of the Series making such distribution or payment as being subsequently
mandatorily contributed to another Series (a “Mandatory Series Capital Contribution”) shall be
required to be contributed in full, which shall occur automatically and without action of any
Member, to such other Series and no additional Units shall be issued in respect of such Mandatory
Series Capital Contribution.

     3.7. Classes of Units. The Series Interests of the Members shall be represented by Units of
different Classes within each Series, as follows:

     3.7.1. (a) Each “Series 1 Class A Unit” shall represent a Series Interest in Series 1,
shall be designated as a Series 1 Class A Unit of the Company and shall be entitled to the
Distributions provided for in Sections 7.2 and 7.4. The Company Match Series 1 Class A
Units shall constitute “Series 1 Class A Units” for all purposes of this Agreement.

	 	(b)	 	Each “Series 1 Class B Unit” shall represent a Series Interest
in Series 1, shall be designated as a Series 1 Class B Unit of the Company,
shall have no voting rights (except as provided in Section 5.3.2) and shall
only be entitled to the Distributions provided for in Sections 7.2 and 7.4.
The Distributions applicable to any Series 1 Class B Units issued by Series 1
after the date hereof shall be specified by the Series 1 Manager at the time of
such Issuance and shall be determined (if the Series 1 Manager so desires) so
as to cause the Series 1 Class B Units to constitute “profits

5

 

	 	 	 	interests” within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343 (“Rev.
Proc. 93-27”).

	 	(c)	 	Each “Series 1 Class C Preferred Unit” shall represent a Series
Interest in Series 1, shall be designated as a Series 1 Class C Preferred Unit
of the Company and shall be entitled to the Distributions provided for in
Sections 7.2 and 7.4.

	 	(d)	 	Each “Series 1 Class D Preferred Unit” shall represent a Series
Interest in Series 1, shall be designated as a Series 1 Class D Preferred Unit
of the Company and shall be entitled to the Distributions provided for in
Sections 7.2 and 7.4.

     3.7.2. (a) Each “Series 2 Class A Unit” shall represent a Series Interest in Series 2,
shall be designated as a Series 2 Class A Unit of the Company and shall be entitled to the
Distributions provided for in Sections 7.3 and 7.4. The Company Match Series 2 Class A
Units shall constitute “Series 2 Class A Units” for all purposes of this Agreement.

	 	(b)	 	Each “Series 2 Class B Unit” shall represent a Series Interest
in Series 2, shall be designated as a Series 2 Class B Unit of the Company,
shall have no voting rights (except as provided in Section 5.3.2) and shall
only be entitled to the Distributions provided for in Section 7.2 and 7.4. The
Distributions applicable to any Series 2 Class B Units issued by Series 2 after
the date hereof shall be specified by the Series 2 Manager at the time of such
Issuance and shall be determined (if the Series 2 Manager so desires) so as to
cause the Series 2 Class B Units to constitute “profits interests” within the
meaning of Rev. Proc. 93-27.

     3.7.3. Fractions of a Unit May be Issued. Each limited liability company
interest in a Series shall constitute a “security” within the meaning of (i) Article 8 of
the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time
to time in the State of Delaware and (ii) the Uniform Commercial Code of any other
applicable jurisdiction that presently or hereafter substantially includes the 1994
revisions to Article 8 thereof as adopted by the American Law Institute and the National
Conference of Commissioners on Uniform State Laws and approved by the American Bar
Association on February 14, 1995.

     3.7.4. Schedule of Units. Schedule 3.7 sets forth all of the
outstanding Units of each Class and Series, and indicates the Persons who hold such Units
and the consideration (if any) paid for such Units. The Company Manager or any Series
Manager shall (without the approval of any Members) update Schedule 3.7 from time to
time to reflect the issuance of additional Units, any additional capital contribution made
with respect to any Units, or the sale, forfeiture, repurchase or other transfer of Units,
as provided for in this Agreement.

6

 

     3.8. Additional Members and Units. Subject to the terms and conditions of Section 9.9, a Series
Manager may issue Units (which may be Units of existing Classes or new Classes of such Series) and
admit Persons as Members in exchange for such contributions to capital or such other consideration
(including past or future services) and on such terms and conditions as such Series Manager
reasonably deems appropriate; provided, that any such consideration shall be at least equal in
value to the Fair Market Value of such Units other than Units issued to any employee or consultant
of the Company or any of its Subsidiaries. Promptly following the issuance of Units such Series
Manager shall cause the books and records of such Series and Schedule 3.7 to be amended to
reflect the number, Series and Classes of Units issued and, in the case of Units issued other than
in connection with the performance of services for the Company, the capital contribution per Unit.

     3.9. Single Class.

     3.9.1. Notwithstanding the fact that a Member may hold any combination of Classes of
Units or only one Class of Units in a particular Series, the Members of each respective
Series shall constitute a single class of Members of such Series for all purposes under the
Act and this Agreement, except to the extent this Agreement expressly provides otherwise.
Upon Issuance of the Units as provided in this Agreement, the Units shall be deemed to be
duly authorized, validly issued, fully paid and nonassessable.

     3.9.2. In case the Company or a Series at any time or from time to time after the date
hereof shall declare or pay any dividend or make any other distribution on any Class of
Units of a particular Series payable in such Units, or shall effect a subdivision or split
of any Class of outstanding Units of a particular Series into a greater number of such Units
(by reclassification or otherwise than by payment of a dividend in such Units), then, and in
each such case, the Company or such Series shall simultaneously take the same proportional
action with respect to each other Class of Units of such Series then outstanding.

     3.9.3. In case the outstanding Units of any Class of a particular Series shall be
combined or consolidated, by reclassification or otherwise, into a lesser number of such
Units, then, and in each such case, the Company or such Series shall simultaneously take the
same proportional action with respect to each other Class of Units of such Series then
outstanding.

     3.9.4. Sections 3.9.1, 3.9.2 and 3.9.3 shall not apply to any issuances pursuant to
Article XVI.

     3.10. Series Capital Accounts. A separate account shall be established and maintained for each
Member with respect to each Series in which such Member holds a Series Interest (each a “Series
Capital Account”) which shall be increased by (a) the amount of cash and the Asset Value of any
other property contributed by such Member to such Series as a capital contribution (net of
liabilities secured by such property or that such Series is considered to assume or take the
property subject to pursuant to Code Section 752) and (b) such Member’s share of the Net Profit of
such Series, and shall be reduced by (c) the amount of cash and the Asset Value of any other
property distributed to such Member by such Series (net of liabilities secured by such property or

7

 

that the Member is considered to assume or take the property subject to pursuant to Code Section
752) and (d) such Member’s share of the Net Loss of such Series. The Series Capital Accounts of
the Members shall be further adjusted, without duplication, as provided in Sections 3.11, 3.12,
7.6, 7.7, 7.8, 7.9 or 7.12. It is the intention of the Members that the Series Capital Accounts be
maintained in accordance with the provisions of Section 704(b) of the Code and the Regulations
thereunder and that this Agreement be interpreted consistently therewith.

     3.11. Revaluations of Assets and Series Capital Account Adjustments. Immediately preceding the
issuance of additional Units to a new or existing Member in exchange for cash, property or (in the
determination of the applicable Series Manager) services or upon the redemption of the Series
Interest of a Member, the Distribution of more than a de minimis amount of cash or property or the
liquidation of the Company or a Series, the then prevailing Asset Values of such Series shall be
adjusted to equal their respective gross fair market values, as reasonably determined by the
applicable Series Manager, and any increase in the net equity value of such Series (Asset Values
less liabilities) shall be credited to the Series Capital Accounts of the Members in the same
manner as Net Profits are credited under Section 7.8 (or any decrease in the net equity value of
such Series shall be charged in the same manner as Net Losses are charged under Section 7.8).
Accordingly, as of the date Asset Values are adjusted pursuant to this Section 3.11, the Series
Capital Accounts of Members will reflect both realized and unrealized gains and losses through such
date.

     3.12. Additional Capital Account Adjustments. Any income of a Series that is exempt from federal
income tax shall be credited to the Series Capital Accounts of the Members of such Series in the
same manner as Net Profits are credited under Section 7.8 when such income is realized. Any
expenses or expenditures of a Series described in Code Section 705(a)(2)(B) (relating to
expenditures which may be neither deducted nor capitalized for tax purposes) or treated as so
described pursuant to the Treasury Regulations promulgated under Section 704 of the Code shall be
charged to the Series Capital Accounts of the Members of such Series, in the same manner as Net
Losses are charged under Section 7.8. If a Series makes an election under Section 754 of the Code
to provide a special basis adjustment upon the Transfer of a Series Interest in such Series or the
distribution of property by such Series, Series Capital Accounts shall be adjusted to the limited
extent required by the Treasury Regulations under Section 704 following such Transfer or
distribution.

     3.13. Additional Series Capital Account Provisions.

     3.13.1. No Member shall have the right to demand a return of all or any part of its
capital contributions. Any return of the capital contributions of any Member shall be made
solely from the assets of the respective Series and only in accordance with the terms of
this Agreement. No interest shall be paid to any Member with respect to its capital
contribution or Series Capital Account.

     3.13.2. In the event that all or a portion of the Units of a Member are transferred in
accordance with the terms of this Agreement, the transferee of such Units shall also succeed
to all or the relevant portion of the Series Capital Account of the transferor. Units held
by a Member may not be transferred independently of the interest in the capital of the
Company to which the Units relate.

8

 

     3.13.3. No Member shall have any obligation to repay any deficit balance in its Capital
Account.

     3.14. Unit Certificates.

     3.14.1. Upon the Issuance of Units to any Member in accordance with the provisions of
this Agreement, the applicable Series Manager may, in its sole discretion, authorize the
issuance of one or more Unit Certificates in the name of such Member. Each such Unit
Certificate shall be denominated in terms of the number, Series and Class of Units evidenced
by such Unit Certificate and shall be signed by the applicable Series Manager or by two
authorized officers of the relevant Series on behalf of such Series.

     3.14.2. The Company shall issue a new Unit Certificate in place of any Unit Certificate
previously issued if the holder of the Units represented by such Unit Certificate, as
reflected on the books and records of such Series:

	 	(a)	 	makes proof by affidavit, in form and substance satisfactory to
the applicable Series Manager, that such previously issued Unit Certificate has
been lost, stolen or destroyed;

	 	(b)	 	requests the issuance of a new Unit Certificate before the
Company or Series has notice that such previously issued Unit Certificate has
been acquired by a purchaser for value in good faith and without notice of an
adverse claim;

	 	(c)	 	if requested by the applicable Series Manager, delivers to the
Company and Series a bond, in form and substance satisfactory to the Company
Manager and applicable Series Manager, with such surety or sureties as the
Company Manager and applicable Series Manager may direct, to indemnify the
Company and Series against any claim that may be made on account of the alleged
loss, destruction or theft of the previously issued Unit Certificate; and

	 	(d)	 	satisfies any other reasonable requirements imposed by the
applicable Series Manager.

     3.14.3. Each certificate representing any Unit shall have the following legend endorsed
conspicuously thereupon:

     “The sale, encumbrance or other disposition of the securities
represented by this certificate are subject to the provisions of the Limited
Liability Company Agreement of FIF HE Holdings LLC (as amended and in effect
from time to time) to which its securityholders are party, a copy of which
may be inspected at the principal office of the issuer or obtained from the
issuer without charge.”

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     3.14.4. Each certificate representing any Unit shall have the following legend endorsed
conspicuously thereupon:

     “The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act of 1933, as
amended (the “Securities Act”), and may not be sold, assigned, pledged or
otherwise transferred in the absence of an effective registration under the
Securities Act covering the transfer or an opinion of counsel, reasonably
satisfactory to the issuer, that registration under the Securities Act is
not required.”

     3.14.5. The Company and applicable Series will not, and will instruct any transfer
agent not to, register the Transfer of any Unit until the conditions specified in the
foregoing legends are satisfied.

     3.14.6. The restrictions imposed by Section 3.14.4 upon the transferability of Units
shall cease and terminate as to any particular Series Interest when, in the opinion of
Skadden, Arps, Slate, Meagher & Flom LLP or other counsel reasonably acceptable to the
Company and Series, such restrictions are no longer required in order to assure compliance
with the Securities Act.

     3.15. Loans from Members. Loans by a Member to the Company or any Series shall not be considered a
contribution to any capital and shall not be considered part of any Member’s Series Interest or
Invested Capital. If any Member makes a loan to the Company or any Series the making of such loan
shall not result in any increase in the amount of any Series Capital Account of such Member. The
amounts of any such loan shall be a debt of the Company or such Series to such Member and shall be
payable or collectible only out of the Company’s or such Series’ assets in accordance with the
terms and conditions upon which such loans are made. Any such loans shall be made on commercially
reasonable terms and conditions in light of the circumstances on which such Loans are made. The
repayment of loans from a Member to the Company upon liquidation shall be subject to the order of
priority set forth in Section 12.3. Neither the Company nor any Series shall accept a loan from
any Member unless either (i) the Fortress Holders and Majority Management Holders consent in
writing to such loan, which consent shall not be unreasonably withheld, conditioned or delayed or
(ii) the Management Holders are offered the opportunity to participate in the making of such loan
pursuant to the procedures set forth in Section 9.9.

     3.16. Subsequent Investments. In the event and on each occasion that the Company, Series 1 or
Series 2 desires to accept a Material Subsequent Investment, the Company, Series 1 or Series 2, as
the case may be, shall give written notice thereof to the Class B Holder Members not less than 30
days prior to accepting such Material Subsequent Investment, which notice shall state the proposed
amount of such Material Subsequent Investment and shall describe, in reasonable detail, the purpose
or purposes of, and other information concerning, such Material Subsequent Investment.
Notwithstanding anything to the contrary herein, the obligations under the preceding sentence shall
terminate and be of no further force or effect once a Wall-Off Election (as defined below) has been
made. During such 30 day period, the Majority Class B Holder Members may elect (for the avoidance
of doubt, such election by the Majority Class B

10

 

Holder Members shall not restrict the ability of
the Company, Series 1 or Series 2 to accept such Material Subsequent Investment), to have the
Distributions to which the Class B Holder is entitled determined without reference to such Material
Subsequent Investment (a “Wall-Off
Election”); it being understood that once a Wall-Off Election is made, Distributions thereafter
shall be made without reference to such Material Subsequent Investment or any contributions of or
investments in Invested Capital that are made subsequent to such Material Subsequent Investment (a
“Further Investment”). In the event of a Wall-Off Election, the parties hereto agree to use
reasonable efforts to negotiate, in good faith, an amendment to this Agreement reasonably intended
to implement such Wall-Off Election. In the event of a Wall-Off Election, the Company Manager and
applicable Series Manager will use reasonable efforts to ensure that the Class B Holder receives
its Initial Series 1 Liquidity Distribution and/or Initial Series 2 Liquidity Distribution, as
applicable, and subsequent Distributions on the Transaction Related Investment Capital and any
prior Material Subsequent Investments (i.e., which will not include any Further Investments) as to
which the Majority Class B Holder Members have not made a Wall-Off Election, at such time and in
such amounts as it would otherwise have been entitled to pursuant to Section 7.2 or Section 7.3, as
applicable, if such Material Subsequent Investments as to which the Majority Class B Holder Members
have made a Wall-Off Election and any such Further Investments had not been made. The Company
Manager and the applicable Series Manager shall disclose to the Class B Holder Members the details
of the efforts being used in accordance with the immediately preceding sentence and will consult
with the Class B Holder Members with respect to such efforts. By its execution of this Fourth
Amended and Restated Limited Liability Company Agreement, the Class B Holder Members hereby
irrevocably waive their right to make a Wall-Off Election with respect to any Material Subsequent
Investment (1) on or prior to the date hereof with respect to which any Series 1 Class A Unit,
Series 1 Class C Preferred Units or Series 1 Class D Preferred Units were issued and (2) after the
date hereof in an amount up to $150,000,000, and the consideration for which is Series 1 Class C
Preferred Units or Series 1 Class D Preferred Units (the “Set Aside Capital”).

     3.17. Management Unit Surrender and Issuance. Effective as of December 31, 2008, the Management
Holders agreed to surrender the Series 2 Class A Units set forth opposite their respective names on
Schedule 3.17 and Series 1 issued to the Management Holders the Series 1 Class A Units set
forth opposite their respective names on Schedule 3.17. Schedule 3.7 reflects the
exchange detailed on Schedule 3.17.

ARTICLE IV

STATUS OF MEMBERS

     4.1. Limited Liability. Except as expressly required by the Act, no Member shall be bound by or
personally liable for the expenses, liabilities, or obligations of the Company or any Series as
more fully set forth in Article XVII.

     4.2. Return of Distributions of Capital. Except as otherwise expressly required by law or pursuant
to a specific obligation set forth in this Agreement, a Member, in its capacity as such, shall have
no liability for obligations, liabilities or losses of the Company or a Series whether to the
Company, to any of the other Members, to the creditors of the Company or any Series or any other
third party (it being expressly understood that a Member may lose all of its capital

11

 

contributions
as well as such Member’s share of any assets and undistributed profits of the Company or a Series).
Except as required by law, no Member shall be obligated by this Agreement to return any
Distribution to the Company or a Series or pay the amount of any
Distribution for the account of the Company or a Series or to any creditor of the Company or a
Series. However, if any court of competent jurisdiction holds that, notwithstanding the provisions
of this Agreement, any Member is obligated to return or pay any part of any Distribution, the
obligation shall be that of such Member alone and not of the Managers or any other Member;
provided, however, that if any Member is required to return all or any portion of any Distribution
under circumstances that are not unique to such Member but that would have been applicable to all
Members of a particular Series if such Members had been named in the lawsuit against the Member in
question (such as where a Distribution was made pro rata to all Members and rendered the Company or
a Series insolvent, but only one Member was sued for the return of such Distribution), the Member
that was required to return or repay the Distribution (or any portion thereof) shall be entitled to
reimbursement from the other Members of the Series that made such Distribution that were not
required to return the Distributions made to them pro rata based on each such Member’s share of the
Distribution in question. The amount of any Distribution returned to the Company or a Series by a
Member or paid by a Member for the account of the Company or a Series or to a creditor of the
Company or a Series shall be added to the account or accounts from which it was subtracted when it
was distributed to the Member.

ARTICLE V

DESIGNATION, RIGHTS, AUTHORITIES, POWERS,

RESPONSIBILITIES, AND DUTIES OF THE MANAGER

     5.1. Manager. The business of the Company and each Series shall be managed by the Person(s)
designated by the Majority Class A Holders, in the case of the Company, or the applicable Series
Majority Class A Holders, in the case of such Series, respectively. Pete Smith c/o Fortress
Investment Group, L.L.C., 1345 Avenue of the Americas, New York, New York 10105 shall be the
initial Manager of the Company and each Series.

     5.1.1. Decisions of a Manager shall be decisions of the “manager” for all purposes of
the Act with respect to the Company and such Series and shall be carried out by officers or
agents of the Company or such Series appointed by the Managers in the vote or resolution in
question or in one or more standing votes or resolutions. A decision of a Manager may be
amended, modified or repealed in the same manner in which it was adopted, but no such
amendment, modification or repeal shall affect any Person who has been furnished a copy of
the original vote or resolution, certified by a duly authorized officer of the Company or
such Series, until such Person has been notified in writing of such amendment, modification
or repeal.

     5.1.2. The Company Manager and each Series Manager shall, unless otherwise provided by
law, hold office until removed by the Majority Class A Holders or Series Majority Class A
Holders, respectively, (for any reason), the date such Manager resigns or the death of such
Manager. A Manager may resign by written notice to the Company and, if applicable, the
Series of which such Manager acts as manager, which resignation shall not require acceptance
and, unless otherwise specified in the resignation notice,

12

 

shall be effective upon receipt
by the Company and such Series. If a vacancy occurs with respect to the Company Manager,
the Majority Class A Holders shall appoint a replacement Company Manager within thirty (30)
days of the creation of such vacancy.
If a vacancy occurs with respect to a Series Manager, the applicable Series Majority
Class A Holders shall appoint a replacement Series Manager within (30) days of the creation
of such vacancy.

     5.1.3. Any action required or permitted to be taken at any meeting of the Company
Manager or Series Manager, as the case may be, may be taken without a meeting if such
Manager consents thereto in writing, and such writing or writings are filed with the records
of the Company or such Series. Such consent shall be treated for all purposes as the act of
such Manager.

     5.1.4. The Managers shall be reimbursed for their reasonable out-of-pocket expenses
incurred in the performance of their duties as Managers.

     5.1.5. The manager of Management LLC shall be reimbursed by the Company for its
reasonable out-of pocket expenses incurred in the performance of its duties as manager of
Management LLC.

     5.2. Authority of the Managers. Subject to any provisions of this Agreement which require the
consent or approval of one or more Members and any other limitations contained in this Agreement,
the Company Manager shall have the exclusive power and authority to manage the business and affairs
of the Company and to make all decisions with respect thereto and a Series Manager shall have the
exclusive power and authority to manage the business and affairs of such Series and to make all
decisions with respect thereto. Except as may be otherwise expressly provided in this Agreement,
the Company Manager or applicable Series Manager, as the case may be, or other Persons designated
by such Manager, shall be the only Persons authorized to execute documents which shall be binding
on the Company or Series. Except as may be otherwise expressly provided in this Agreement, the
Members shall not have the power to bind the Company or any Series. To the fullest extent
permitted by Delaware law, but subject to any specific provisions hereof granting rights to Members
and any other limitations contained in this Agreement, the Managers shall have the power to do any
and all acts, statutory or otherwise, with respect to the Company or Series, as the case may be, or
this Agreement, which would otherwise be possessed by the Members under the laws of the State of
Delaware, and the Members shall have no power whatsoever with respect to the management of the
business and affairs of the Company or any Series. Subject to any provisions of this Agreement
which require the consent or approval of one or more Members and any other limitations contained in
this Agreement (including Section 5.3), the power and authority granted to the Managers hereunder
shall include all those necessary or convenient for the furtherance of the purposes of the Company
or Series, as the case may be, and shall include the power to make all decisions with regard to the
management, operations, assets, financing and capitalization of the Company or Series, as the case
may be, and all other acts or activities necessary or desirable for the carrying out of the
purposes of the Company or Series, as the case may be, including any and all actions that the
Company or Series, as the case may be, may take pursuant to Section 2.6 of this Agreement.

13

 

     5.3. Decisions.

     5.3.1. Class A Units. Neither the Company nor a Series shall (and, with respect to
clause (c) below only, shall cause its Subsidiaries not to), without Class A Approval or
Series Class A Approval, as the case may be:

	 	(a)	 	engage in any transaction with any Member or any Affiliate of a
Member that is not on an arm’s length basis;

	 	(b)	 	(i) amend or waive any provision of the Certificate or this
Agreement in any manner or (ii) establish any Additional Series, that, in the
case of clause (i) or (ii), adversely affects the rights, preferences or
privileges of the Management Holders in respect of their Class A Units of a
Series in a manner different from the Fortress Holders in respect of their
Class A Units of such Series; or

	 	(c)	 	engage in any new line of business such that CHEC’s principal
business is other than the origination and servicing of home loans and
mortgages, home equity loans and manufactured housing loans.

     5.3.2. Class B Units. Neither the Company nor a Series shall, without Class B
Approval, (i) amend or waive any provision of the Certificate or this Agreement in any
manner or (ii) establish any Additional Series that, in the case of clause (i) or (ii):

	 	(a)	 	adversely affects those rights, preferences or privileges of
the Class B Units of a particular Series that are specific or unique to such
Class B Units; or

	 	(b)	 	adversely affects those rights, preferences or privileges of
the Class B Units of a particular Series that are similar to or the same as the
rights, preferences or privileges of the Class A Units of such Series in a
manner disproportionate from the treatment of such Class A Units;

provided, however, that the creation or issuance of any class or series of Units, including
without limitation, Units that entitle the holders thereof to rights that are junior to, on
a parity with, or senior or superior to those of the Class B Units, will not be deemed to
adversely affect the rights, preferences or privileges of the Class B Units of any Series.

        5.3.3. Class C Preferred Units. Neither the Company nor any Series shall, without
Class C Preferred Approval, (i) amend or waive any provision of the Certificate or this
Agreement in any manner or (ii) establish any Additional Series that, in the case of clause
(i) or (ii):

	 	(a)	 	adversely affects those rights, preferences or privileges of
the Class C Preferred Units that are specific or unique to such Class C
Preferred Units; or

14

 

	 	(b)	 	adversely affects those rights, preferences or privileges of
the Class C Preferred Units that are similar to or the same as the rights,
preferences or privileges of the Series 1 Class A Units in a manner
disproportionate from the treatment of such Class A Units;

provided, however, that the creation or issuance of any class or series of Units, including
without limitation, Units that entitle the holders thereof to rights that are junior to, on
a parity with, or senior or superior to those of the Class C Preferred Units, will not be
deemed to adversely affect the rights, preferences or privileges of the Class C Preferred
Units of any Series.

     5.3.4. Class D Preferred Units. Neither the Company nor any Series shall, without
Class D Preferred Approval, (i) amend or waive any provision of the Certificate or this
Agreement in any manner or (ii) establish any Additional Series that, in the case of clause
(i) or (ii):

	 	(a)	 	adversely affects those rights, preferences or privileges of
the Class D Preferred Units that are specific or unique to such Class D
Preferred Units; or

	 	(b)	 	adversely affects those rights, preferences or privileges of
the Class D Preferred Units that are similar to or the same as the rights,
preferences or privileges of the Series 1 Class A Units in a manner
disproportionate from the treatment of such Class A Units;

provided, however, that the creation or issuance of any class or series of Units, including
without limitation, Units that entitle the holders thereof to rights that are junior to, on
a parity with, or senior or superior to those of the Class D Preferred Units, will not be
deemed to adversely affect the rights, preferences or privileges of the Class D Preferred
Units of any Series.

     5.4. Officers; Agents. The Managers by vote or resolution shall have the power to appoint agents
(who may be referred to as officers) to act for the Company and applicable Series, as the case may
be, with such titles, if any, as such Manager deems appropriate and to delegate to such officers or
agents such of the powers as are granted to such Manager hereunder, including the power to execute
documents on behalf of the Company or applicable Series, as the case may be, as such Manager may in
its sole discretion determine; provided, however, that no such delegation by such Manager shall
cause such Manager to cease to be the “manager” of the Company or applicable Series, as the case
may be, within the meaning of the Act. The officers or agents so appointed may include persons
holding titles such as Chair, Chief Executive Officer, President, Executive Vice President, Vice
President, Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary or Controller.
Unless the authority of the agent designated as the officer in question is limited in the document
appointing such officer or is otherwise specified by the Manager making such delegation, any
officer so appointed shall have the same authority to act for the Company or applicable Series, as
the case may be, as a corresponding officer of a Delaware corporation would have to act for a
Delaware corporation in the absence of a specific delegation of authority and as more specifically
set forth in Schedule 5.4; provided, however,

15

 

that unless such power is specifically delegated to the officer in question either for a specific
transaction or generally, no such officer shall have the power to acquire or lease real property,
to borrow money, to issue notes, debentures, securities, equity or other interests of or in the
Company or applicable Series, as the case may be, to make investments in (other than the investment
of surplus cash in the ordinary course of business) or to acquire securities of any Person, to give
guarantees or indemnities, to merge, liquidate or dissolve the Company or applicable Series, as the
case may be, or to sell or lease all or any substantial portion of the assets of the Company or
applicable Series, as the case may be. The applicable Manager, in its sole discretion, may by vote
or resolution ratify any act previously taken by an officer or agent acting on behalf of the
Company or applicable Series, as the case may be.

     5.5. Management Rights Letter Agreement. With respect to each Member that has advised the Company
and each applicable Series that it is or intends to qualify as a “venture capital operating
company,” within the meaning of the Department of Labor “plan assets” regulation, 29 C.F.R. §
25103-101 (the “Regulation”), the Company and each applicable Series shall deliver to each such
Member a “management rights letter agreement,” substantially in the form attached hereto as
Schedule 5.5. The management rights letter is intended to satisfy the requirement of
contractual management rights for purposes of qualifying the Member’s investment in the Company as
a “venture capital investment” under the Regulation. In the event the management rights set forth
in such letter are not satisfactory for such purpose, the Company, each applicable series and the
Member shall reasonably cooperate in good faith to agree upon mutually satisfactory management
rights that will satisfy the Regulation.

ARTICLE VI

BOOKS, RECORDS, ACCOUNTING, AND REPORTS

     6.1. Books and Records. Each Series shall maintain at its principal office all of the following:

	 	(a)	 	A current list of the full name and last known business or
residential address of each Member of such Series together with information
regarding the amount of cash and a description and statement of the agreed
value of any other property or services contributed by each Member with respect
to such Series and which each Member of such Series has agreed to contribute in
the future, the number and Classes of Units issued to each Member with respect
to such Series, the date on which each Member became a Member of such Series,
and the balance in each Member’s Series Capital Account as of the close of the
most recent calendar year for which financial statements have been prepared and
such other more recent date, if any, for which adjustments have been credited
or charged to the Series Capital Accounts of the Members of such Series in
accordance with Sections 3.10, 3.11, 3.12, 7.6, 7.7, 7.9 or 7.12;

	 	(b)	 	A copy of the Certificate and this Agreement, including any and
all amendments to either thereof, together with executed copies of any

16

 

	 	 	 	powers of attorney pursuant to which the Certificate, this Agreement, or any
amendments may have been executed;

	 	(c)	 	Copies of such Series’ federal, state, local and foreign income
tax or information returns and reports, if any, for the six (6) most recent
taxable years or such lesser number of years if such Series has been in
existence for less than six (6) years;

	 	(d)	 	The financial statements of the Company for the six (6) most
recent calendar years or such lesser number of years if the Company has been in
existence for less than six (6) years; and

	 	(e)	 	Such Series’ books and records for at least the current and
past three (3) calendar years or such lesser number of years if such Series has
been in existence for less than three (3) years.

     6.2. Financial Statements. The Company Manager shall cause books of account to be maintained
reflecting the operations of the Company on an annual basis. The fiscal year of each Series and
the Company shall end on December 31, except that if the Company or a Series is required under the
Code to use a taxable year other than a calendar year, then the fiscal year of the Company or such
Series shall be such other taxable year. The Company Manager shall deliver to each holder of any
Units:

	 	(a)	 	within 120 days after the end of each fiscal year of the
Company, a copy of the audited consolidated balance sheet of the Company as at
the end of such fiscal year, and the related audited consolidated statements of
income, cash flows and members’ equity of the Company for such fiscal year, in
each case prepared in accordance with United States generally accepted
accounting principles, and accompanied by a report on such consolidated
statements of independent certified public accountants of recognized national
standing; and

	 	(b)	 	within 60 days after the end of each quarterly fiscal period in
each fiscal year of the Company (other than the last quarterly fiscal period of
each such fiscal year), a copy of the unaudited consolidated balance sheet of
the Company as at the end of such quarter, and the related unaudited
consolidated statements of income, cash flows and members’ equity of the
Company for such quarter and (in the case of statements of income and cash
flows for the second and third quarters) for the portion of the fiscal year
ending with such quarter, in each case prepared in accordance with United
States generally accepted accounting principles (except for the absence of
footnotes).

     6.3. Filings. At each Series’ expense, the respective Series Manager shall cause the income tax
returns for such Series to be duly prepared and timely filed with the appropriate authorities and
to have prepared and to furnish to each Member of such Series such information with respect to such
Series as is necessary to enable such Members to prepare their federal, state

17

 

and other income tax returns. The respective Series Manager, at such Series’ expense, shall also
cause to be duly prepared and timely filed, with appropriate federal, state and other regulatory
and administrative bodies, all reports required to be filed by such Series with those entities
under then current applicable laws, rules, and regulations. The reports shall be prepared on the
accounting or reporting basis required by the regulatory bodies.

     6.4. Confidentiality and Non-Disclosure.

     6.4.1. Each Member agrees that, except as otherwise consented to by the Company Manager
and applicable Series Manager, all information which has been furnished to it or will be
furnished to it, pursuant to this Agreement or otherwise, relating to a Series, the Company
or any of its Subsidiaries or the business of any of them will be kept confidential, will
not be used by such Member, or by any of its agents, representatives, or employees, for any
purpose other than evaluating and monitoring the investment in a Series or the Company and
its Subsidiaries and enforcing rights hereunder, and will not be disclosed by such Member,
or by any of its agents, representatives, or employees, in any manner whatsoever, in whole
or in part.

     6.4.2. Notwithstanding the foregoing provisions of Section 6.4.1, any information that
the Member in question can demonstrate (a) was generally known in the trade or business in
which it is practiced by the Series or the Company or its Affiliates at the time of
disclosure to such Member, or becomes so generally known after such disclosure through no
act of such Member or its employees or agents, or (b) has come into the possession of such
Member from a third party who was not actually known by such Member to be under an
obligation to the Series or the Company or any of its Affiliates to maintain the
confidentiality of such information shall not be subject to the immediately preceding
sentence.

     6.4.3. Notwithstanding the provisions of Section 6.4.1:

	 	(a)	 	each Member shall be permitted to disclose such information to
those of its agents, representatives, financial advisors and employees who need
to be familiar with such information in connection with such Member’s
investment in a Series or the Company for use solely for such purpose;

	 	(b)	 	in respect of Class A Units, Class C Preferred Units or Class D
Preferred Units, each Member shall be permitted to disclose such information to
financial institutions, investment bankers and prospective purchasers of such
Member’s Class A, Class C Preferred or Class D Preferred Series Interest for
use solely in evaluating a prospective investment in or Transfer of such Series
Interest; provided, however, that, in the case of Class A Units, any such
disclosure by a Management Holder shall be subject to the Majority Class A
Holders consent to the Transfer of such Management Holder’s Class A Units
pursuant to Section 9.1;

	 	(c)	 	each Member shall be permitted to disclose such information to
its partners and stockholders;

18

 

	 	(d)	 	each Management Holder shall be permitted to disclose such
information to any Member of the Immediate Family of such Management Holder;

	 	(e)	 	each Member shall be permitted to disclose information to the
extent required by law, so long as such Member shall have, to the extent
reasonably practicable, first afforded the Company and Series with a reasonable
opportunity to contest the necessity of disclosing such information (unless
such disclosure is made to regulatory or other governmental authorities having
jurisdiction over such Member, in which event such opportunity to contest need
not be given to the Company and Series) and; provided, that such Member shall
disclose only that portion of the information which it is advised by counsel
that it is legally required to so disclose and will use commercially reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded the information so disclosed; and

	 	(f)	 	each Member shall be permitted to disclose information to the
extent necessary for the enforcement of any right of such Member arising under
this Agreement.

     6.4.4. Without intending to limit the remedies available to the Company and each
Series, each Member acknowledges that a breach of any of the covenants contained in this
Section 6.4 may result in material irreparable injury to the Company, Series or their
respective Affiliates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, to the fullest extent permitted by law, the Company and such
Series shall be entitled to seek a temporary restraining order and/or a preliminary or
permanent injunction restraining the Member and/or such Member’s Affiliates from engaging in
activities prohibited hereby or such other relief as may be required to specifically enforce
any of the covenants contained herein, and to the fullest extent permitted by law, such
Member agrees not to oppose the granting of such injunctive relief on the basis that
monetary damages are an adequate remedy. Each Member hereby agrees and consents that such
injunctive relief may be sought in the courts in the State of Delaware, or in any other
court having competent jurisdiction. Each Member agrees that it shall advise each Person to
whom it provides information pursuant to this Section 6.4 of the confidentiality and
non-disclosure restrictions contained herein. Each Member shall be liable and responsible
for any breaches of this Section 6.4 by Persons to whom such Member has provided information
in compliance with this Section 6.4.

     6.4.5. The provisions of this Section 6.4 shall survive any termination of this
Agreement and shall continue to bind each Person who was ever subject to this provision even
if such Person would otherwise cease to be subject to this provision.

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ARTICLE VII

DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS

     7.1. Manager’s Determination. Except as provided in Section 7.4, each Series Manager shall have
the sole authority to determine the timing and the aggregate amount of any Distributions to Members
of such Series.

     7.2. Series 1 Distributions. Subject to Section 7.1, all Distributions from Series 1 to its
Members shall be allocated and made in the following manner and priority:

	 	(i)	 	first, to the Class D Preferred Holders, (x)
applied first to any accrued and unpaid Series 1 Class D Preferred
Yield at such time and allocated among the holders of Series 1 Class D
Preferred Units pro rata in proportion to the accrued and unpaid Series
1 Class D Preferred Yield on their Series 1 Class D Preferred Units;
and (y) applied subsequently to any unpaid Series 1 Class D Preferred
Priority Return and allocated among the holders of Series 1 Class D
Preferred Units pro rata in proportion to the unpaid Series 1 Class D
Preferred Priority Return on their Series 1 Class D Preferred Units,
until such time as the Class D Preferred Holders have received
Distributions from Series 1 the sum of which is equal to the Series 1
Class D Preferred Priority Return;

	 	(ii)	 	second, after the Series 1 Class D Preferred
Priority Return has been paid in full, to the Class C Preferred Holders
(x) applied first to any accrued and unpaid Series 1 Class C Preferred
Yield at such time and allocated among the holders of Series 1 Class C
Preferred Units pro rata in proportion to the accrued and unpaid Series
1 Class C Preferred Yield on their Series 1 Class C Preferred Units;
and (y) applied subsequently to any unpaid Series 1 Class C Preferred
Priority Return and allocated among the holders of Series 1 Class C
Preferred Units pro rata in proportion to the unpaid Series 1 Class C
Preferred Priority Return on their Series 1 Class C Preferred Units,
until such time as the Class C Preferred Holders have received
Distributions from Series 1 the sum of which is equal to the Series 1
Class C Preferred Priority Return;

	 	(iii)	 	third, after the Series 1 Class D Preferred
Priority Return and the Series 1 Class C Preferred Priority Return have
been fully paid, the Fortress Holders and Management Holders shall be
entitled to receive all subsequent Distributions from Series 1 pro rata
in proportion to their respective ownership percentage of the Series 1
Class A Units held by the Fortress Holders and Management Holders,
until such time as the Fortress Holders have received Distributions
from Series 1 the sum of which is equal to the Series 1 Priority
Return;

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	 	(iv)	 	fourth, after the Series 1 Class D Preferred
Priority Return, the Series 1 Class C Preferred Priority Return and the
Series 1 Priority Return have been fully paid, the Class B Holder shall
be entitled to receive all subsequent Distributions from Series 1 until
it has been paid the Initial Series 1 Liquidity Distribution; and

	 	(v)	 	fifth, after the Series 1 Class D Preferred
Priority Return, the Series 1 Class C Preferred Priority Return, the
Series 1 Priority Return and the Initial Series 1 Liquidity
Distribution have been paid, the Fortress Holders and Management
Holders shall be entitled to receive that percentage of all subsequent
Distributions from Series 1 equal to the Fortress Series 1 Distribution
Percentage pro rata in proportion to their respective ownership
percentage of the Series 1 Class A Units held by the Fortress Holders
and the Management Holders, and the Class B Holder shall be entitled to
receive that percentage of all such subsequent Distributions from
Series 1 equal to the Series 1 Class B Distribution Percentage.

For the avoidance of doubt, subject to the Management Holders’ exercise of the Wall-Off Election
under Section 3.16, the Class D Preferred Holders, the Class C Preferred Holders and the Fortress
Holders of Series 1 Class A Units, respectively, shall be entitled to receive a Series 1 Class D
Preferred Priority Return, Series 1 Class C Preferred Priority Return and Series 1 Priority Return,
respectively, on all Invested Capital regardless of whether invested on or before the date hereof
or at a later date (including after Distributions have otherwise been made pursuant to Section
7.2(iii) and/or Section 7.2(iv)). All Distributions made with respect to Series 1 Class A Units
shall be made pro rata to the Company Match Series 1 Class A Units, whether they have vested
hereunder or remain subject to limitations or restrictions on vesting.

     7.3. Series 2 Distributions. Subject to Section 7.1, all Distributions from Series 2 to its
Members shall be made in the following manner and priority:

	 	(i)	 	first, to the Fortress Holders and Management
Holders pro rata in proportion to their respective ownership percentage
of the Series 2 Class A Units held by the Fortress Holders and
Management Holders, until such time as the Fortress Holders have
received Distributions from Series 2 the sum of which is equal to the
Series 2 Priority Return;

	 	(ii)	 	second, after the Series 2 Priority Return has
been fully paid to the Fortress Holders, the Class B Holder shall be
entitled to receive all subsequent Distributions from Series 2 until it
has been paid the Initial Series 2 Liquidity Distribution; and

	 	(iii)	 	third, after the Series 2 Priority Return and
Initial Series 2 Liquidity Distribution have been paid, the Fortress
Holders and Management Holders shall be entitled to receive that
percentage of all subsequent Distributions from Series 2 equal to the
Fortress

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	 	 	 	Series 2 Class A Distribution Percentage pro rata in proportion to
their respective ownership percentage of the Series 2 Class A Units
held by the Fortress Holders and Management Holders and the Class B
Holder shall be entitled to receive that percentage of all such
subsequent Distributions from Series 2 equal to the Series 2 Class B
Distribution Percentage.

For the avoidance of doubt, subject to the Management Holders’ exercise of the Wall-Off Election
under Section 3.16, the Fortress Holders of Series 2 Class A Units shall be entitled to receive a
Series 2 Priority Return on all Invested Capital regardless of whether invested on or before the
date hereof or at a later date (including after Distributions have otherwise been made pursuant to
Section 7.3(ii) and/or Section 7.3(iii)). All Distributions made with respect to Series 2 Class A
Units shall be made pro rata to the Company Match Series 2 Class A Units, whether they have vested
hereunder or remain subject to limitations or restrictions on vesting.

     7.4. Tax Distributions. Unless doing so is prohibited by law or would result in a
breach of an agreement between the Company and a third party, and limited by and only to the extent
of Distributable Cash Flow, each Series Manager shall distribute to each Management Holder as a
Class A Holder and, as applicable, to Management LLC as the Class B Holder annually on or before
March 31st of each year an amount of cash (“Tax Distribution”) that in the good faith judgment of
such Series Manager is equal to the assumed federal and state income taxes payable by the
applicable Management Holder as a Class A Holder and/or, as applicable, a Management LLC Member, on
(i) the estimated share of the items of taxable income of such Series (and to the extent
applicable, as a member of Management LLC) allocable to such Management Holder with respect to the
preceding fiscal year minus (ii) the excess of (a) the aggregate net losses, if any, allocated to
such Management Holder as a Member of Series 1 and/or Series 2 (and to the extent applicable, as a
member of Management LLC) with respect to all fiscal years prior to such preceding taxable year,
over (b) the aggregate net income so allocated to such Management Holder during such period. Such
federal and state income taxes shall be computed based on the highest federal and state marginal
tax rates respectively applicable to such Management Holder, taking into account in determining
such marginal tax rates the capital or ordinary character of the income or gain allocated to such
Management Holder. Tax Distributions to a Management Holder and to Management LLC for the benefit
of such Management Holder with respect to any taxable year shall be reduced, to an amount not less
than zero, by the amount of Distributions made to such Management Holder and Management LLC for the
benefit of such Management Holder during such taxable year other than amounts treated as Tax
Distributions with respect to such prior taxable year; provided, however, that Tax Distributions
shall not be reduced by any amounts treated as Distributions to a Management Holder pursuant to
Section 9.12. Any Tax Distribution to a Management Holder or to Management LLC for the benefit of
such Management Holder shall be treated as an advance against Distributions to be made to such
Management Holder or Management LLC for the benefit of such Management Holder under Section 7.2 and
Section 7.3 and shall be offset, together with a deemed interest charge computed based on monthly
compounding at an annual rate of the prime rate as published in The Wall Street Journal on the date
of such Tax Distribution from the date of each Tax Distribution (determined on a FIFO basis) to the
date repaid, and shall be repaid by offset against subsequent Distributions that would otherwise be

22

 

made to such Member under Section 7.2 and Section 7.3. Such advances (and any interest
thereupon) may be repaid by a Management Holder or Management LLC at any time without penalty.
Upon the liquidation of the Company or a Series pursuant to this Agreement, if the amount of any
Tax Distributions (plus any interest thereupon) previously made to a Management Holder or
Management LLC for the benefit of such Management Holder and not repaid exceeds the amount, if any,
that is then available for Distribution to such Management Holder or Management LLC for the benefit
of such Management Holder (and which is offset against such Tax Distributions and interest)
pursuant to Section 7.2 or 7.3, the Company and each Series shall have recourse with respect
thereto only to the Class A Units held by such Management Holder, any Class B Units held by
Management LLC for the benefit of such Management Holder and any equity interests in Management LLC
held by such Management Holder, and such Management Holder shall have no further liability or
obligation with respect thereto. The Company Manager and each Series Manager shall use reasonable
efforts to cause all agreements between the Company or such Series and any third party to permit
the Tax Distributions in accordance with the terms of this Section 7.4.

     7.5. No Violation. Notwithstanding any provision to the contrary contained in this Agreement, no
Series shall make a distribution to any Member on account of such Member’s interest in such Series
if such distribution would violate Section 18-607 of the Act or other applicable law.

     7.6. Withholdings. Each Series Manager is authorized to withhold from Distributions, or with
respect to allocations, to its Members and to pay over to the appropriate federal, state, local or
foreign government any amounts required to be so withheld. The Series Manager shall allocate any
such amounts to its Members in respect of whose Distribution or allocation the tax was withheld and
paid over and shall treat such amounts as actually distributed to such Members.

     7.7. Property Distributions and Installment Sales. If any assets of a Series shall be distributed
in kind pursuant to this Article VII, such assets shall be distributed to the Members entitled
thereto in the same proportions as such Members would have been entitled to cash Distributions.
The amount by which the Fair Market Value of any property to be distributed in kind to such Members
exceeds or is less than the then prevailing Asset Value of such property shall, to the extent not
otherwise recognized by such Series, be taken into account in determining Net Profit and Net Loss
and determining the Series Capital Accounts of its Members as if such property had been sold at its
Fair Market Value immediately prior to the Distribution. If any assets are sold in transactions in
which, by reason of the provisions of Section 453 of the Code or any successor thereto, gain is
realized but not recognized, such gain shall be taken into account when realized in computing gain
or loss of such Series for purposes of allocation of Net Profit or Net Loss under this Article VII,
and, if such sales shall involve substantially all the assets of the Company or such Series, the
Company or such Series shall be deemed to have been dissolved notwithstanding any election by the
Members to continue the Company or such Series, as the case may be, for purposes of collecting the
proceeds of such sales.

     7.8. Net Profit or Net Loss. The “Net Profit” or “Net Loss” of a Series for each calendar year or
relevant part thereof shall mean such Series’ taxable income or loss for federal income tax
purposes for such period (including therein all items of income, gain, loss or

23

 

deduction required
to be stated separately pursuant to Section 703(a)(1) of the Code) with the following adjustments:

	 	(a)	 	Gain or loss attributable to the disposition of property of
such Series with an Asset Value different than the adjusted basis of such
property for federal income tax purposes shall be computed with respect to the
Asset Value of such property and any tax gain or loss not included in Net
Profit or Loss shall be taken into account and allocated among the Members of
such Series pursuant to Section 7.10.

	 	(b)	 	Depreciation, amortization or cost recovery deductions with
respect to any property with an Asset Value that differs from its adjusted
basis for federal income tax purposes at the beginning of a year shall be in an
amount which bears the same ratio to such beginning Asset Value as the federal
income tax depreciation, amortization or other cost recovery deductions for
such year or other period bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such year is zero, depreciation shall be determined with
reference to such beginning Asset Value using any reasonable method selected by
the applicable Series Manager.

	 	(c)	 	Any items which are required to be specially allocated pursuant
to Section 7.9 shall not be taken into account in determining Net Profit or Net
Loss.

Subject to Section 7.9, and Section 7.14, the Net Profit or Net Loss of a Series (or, if necessary,
items of gross income or gross loss) for any relevant fiscal period shall be allocated and credited
and debited (as applicable) to the Series Capital Accounts of the Members of such Series so as to
ensure, to the extent possible, that the Series Capital Account of each such Member as of the end
of such fiscal period (as increased by such Member’s share of “partnership minimum gain” and
“partnership nonrecourse debt minimum gain,” as such terms are defined in Treasury Regulations
Section 1.704-2) is equal to the excess of (which may be negative): (i) the aggregate
Distributions that such Member would be entitled to receive if all of the assets of such Series
were sold for their Asset Values, all Series liabilities were satisfied in cash according to their
terms (limited, with respect to each nonrecourse liability, to the Asset Value of the assets
securing such liability), and the net proceeds were distributed as of the end of such fiscal period
in accordance with Section 7.2 to all Units of such Series other than nonvested Company Match Class
A Units, over (ii) the amount, if any, such Member is obligated to contribute to the capital of
such Series. In particular, with respect to any relevant fiscal period, each Class C Preferred
Holder and Class D Preferred Holder shall be allocated an amount of Net Profit equal to the amount
of the Series 1 Class C Preferred Yield or Series 1 Class D Preferred Yield, as applicable,
distributable to such Class C Preferred Holder or Class D Preferred Holder, as applicable, during
such fiscal period (such amount of Net Profit with respect to such Class C Preferred Holder or
Class D Preferred Holder, the “Preferred Yield Net Profit,” and such allocation, the “Preferred
Yield Net Profit Allocation”), and, with respect to any fiscal period in which the aggregate amount
of Net Profits of Series 1 is less than the aggregate amount of Series 1 Class C Preferred Yield or
Series 1 Class D Preferred Yield distributable to such

24

 

Class C Preferred Holder or Class D
Preferred Holder, as applicable, during such fiscal period, each Class C Preferred Holder and Class
D Preferred Holder shall in addition to the Preferred Yield Net Profit Allocation be allocated an
amount of gross income equal to the excess of (i) the amount of Series 1 Class C Preferred Yield or
Series 1 Class D Preferred Yield, as applicable,
distributable to such Class C Preferred Holder or Class D Preferred Holder, as applicable, during
such fiscal period over (ii) the amount of Preferred Yield Net Profit allocable to such Class C
Preferred Holder or Class D Preferred Holder, as applicable, during such fiscal period.
Accordingly, distributions of Series 1 Class C Preferred Yield and Series 1 Class D Preferred Yield
depend upon the income of Series 1 and are not intended to constitute guaranteed payments within
the meaning of Section 707(c) of the Code. In the event that a Member transfers Series 1 Class C
Preferred Units or Series 1 Class D Preferred Units in satisfaction of the Company’s preferred
restricted stock units without consideration, any Company deduction resulting from such
satisfaction shall be specially allocated to the transferring Member.

     7.9. Regulatory Allocations. Although it is not anticipated that events will arise that will
require application of the provisions of this Section 7.9, there are hereby included in this
Agreement such provisions governing the allocation of income, gain, loss, deduction and credit (and
items thereof) as may be necessary to provide that a Series’ allocation provisions contain a
so-called “Qualified Income Offset” and comply with all provisions relating to the allocation of
so-called “Nonrecourse Deductions” and “Member Nonrecourse Deductions” and the chargeback thereof
as set forth in the Treasury Regulations under Section 704(b) of the Code (“Regulatory
Allocations”); provided, however, it is the intent of the Members that, to the extent possible, all
Regulatory Allocations that may be required shall be offset by other Regulatory Allocations or
special allocations of items such that each Member’s share of the Net Profit, Net Loss and Capital
of a Series will be the same as it would have been had the events requiring the Regulatory
Allocations not occurred. To this end the Series Managers, based on the advice of the Company’s
auditors or tax counsel, are hereby authorized to make such special curative allocations of items
as may be necessary to minimize or eliminate any economic distortions that may result from any
required Regulatory Allocations.

     7.10. Tax Allocations: Code Section 704(c) and Unrealized Appreciation or Depreciation.

     7.10.1. In accordance with Section 704(c) of the Code, income, gain, loss and deduction
with respect to any property contributed to a Series with an adjusted basis for federal
income tax purposes different than the initial Asset Value at which such property was
accepted by such Series shall, solely for tax purposes, be allocated among the Members of
such Series so as to take into account such difference in a manner that complies with
Section 704(c) and the applicable Treasury Regulations.

     7.10.2. If upon the acquisition of additional Units in a Series by a new or existing
Member the Asset Value of any of the assets of such Series are adjusted pursuant to Section
3.6, subsequent allocations of income, gain, loss and deduction with respect to such assets
shall, solely for tax purposes, be allocated among the Members of such Series so as to take
into account such adjustment in a manner that complies with Section 704(c) of the Code and
the applicable Treasury Regulations.

25

 

     7.10.3. The allocations required by this Section 7.10 are solely for purposes of
federal, state and local income taxes and shall not affect the allocation of Net Profits or
Net Losses as between Members of a Series or any Member’s Series Capital Account of
such Series. All tax allocations required by this Section 7.10 shall be made using the
so-called “traditional method” described in the Treasury Regulations 1.704-3(b).

     7.11. Changes in Members’ Series Interest. If during any Fiscal Year of a Series there is a change
in any Member’s Series Interest in such Series, the applicable Series Manager shall confer with the
tax advisors to the Company and, in conformity with such advice allocate the Net Profit or Net Loss
to the Members of such Series so as to take into account the varying Series Interests of the
Members of such Series in a manner that complies with the provisions of Section 706 of the Code and
the Regulations thereunder.

     7.12. Credits. All foreign tax credits of a Series for a fiscal year (or portion thereof, if
appropriate) shall be allocated among the Members of such Series in the same proportion as the net
income and gains of such Series that were subject to the foreign taxes that gave rise to such
credits. All other items of federal income tax credit and items of tax credit recapture shall be
allocated among the Members of such Series in accordance with such Members’ Series Interests in
such Series as of the time the tax credit or credit recapture arises, as provided in Regulation
Section 1.704-1(b)(4)(ii).

     7.13. Tax Treatment of Class B Units. Except to the extent a Member has contributed capital in
respect of Class B Units, the Company, each Series and each Member agree to treat each Class B Unit
issued and reflected on Schedule 3.7 (and, to the extent the Managers so desires, any other
Class B Unit issued) as a separate “profits interest” within the meaning of Rev. Proc. 93-27, and
it is the intention of the Members that distributions pursuant to Article VII hereof to each Member
holding such Class B Units be limited to the extent necessary so that such Class B Units qualify as
a “profits interest” under Rev. Proc. 93-27, and this Agreement shall be interpreted accordingly.
In the event that distributions to a Member holding Class B Units are limited as a result of the
first sentence of this Section 7.13, the respective Series Managers are authorized to adjust future
distributions to the Members in whatever manner they deem appropriate so that, after such
adjustments are made, each Member receives, to the extent possible, an amount of distributions
equal to the amount of distributions such Member would have received if such sentence was not part
of this Agreement. In accordance with Rev. Proc. 2001-43, 2001-34 IRB 1 (August 2, 2001), and so
long as no conversion of the Company has occurred pursuant to Section 16.1 hereof, the Company and
each Series shall treat a Member holding Class B Units as the owner of such Class B Units from the
date it is granted, and shall file its IRS form 1065, and issue appropriate Schedule K-1s to such
Member, allocating to such Member its distributive share of all items of income, gain, loss,
deduction and credit associated with such Class B Units as if it were fully vested. Each Member
agrees to take into account such distributive share in computing its federal income tax liability
for the entire period during which it holds such Class B Units. The Company, each Series and each
Member agree not to claim a deduction (as wages, compensation or otherwise) for the fair market
value of any Class B Units constituting a “profits interest” and issued to a Member, either at the
time of grant of the Class B Units or at the time the Class B Units become substantially vested.
The undertakings contained in this 7.13 shall be construed in accordance with Section 4 of Rev.
Proc. 2001-43. The

26

 

provisions of this Section 7.13 shall apply regardless of whether or not the
Class B Holder files an election pursuant to Section 83(b) of the Code. All references in this
Section 7.13 to a Member, Class B Units and a holder or owner of Class B Units shall include each
member of the Class B Holder, all issued membership interests in the Class B Holder, respectively.

     7.14. Tax Treatment of Company Match Class A Units.

     7.14.1. Each Series and each Management Holder shall for federal income tax purposes
treat all amounts realized upon the vesting of such Management Holder’s Company Match Class
A Units, or if an election is made by such Management Holder under Section 83(b) of the Code
shall treat such amounts immediately, as ordinary income. The amount of capital deemed to
shift to each such Management Holder upon vesting in accordance with Section 9.10 and
Schedule 3.7 shall be the amount so treated, which amount shall also be deductible by the
Company as the party from which such shift in capital was made.

     7.14.2. The Management Holders of Company Match Class A Units shall be entitled to
receive their proportionate share of all Distributions, whether or not their ownership of
the Company Match Class A Units has vested, but shall be allocated Net Profits and Net
Losses solely with respect to their vested Class A Units.

ARTICLE VIII

TAX MATTERS MEMBER; OTHER TAX MATTERS

     8.1. Tax Matters Member. Each Series Manager shall designate one or more Members of such Series to
be the “tax matters partner” of such Series as provided in the Regulations under Code Section 6231
and any analogous provisions of state law (each a “Tax Matters Member”). Unless and until another
Member(s) is designated as the Tax Matters Member by a Series Manager, Fortress Investment Fund III
LP and Fortress Investment Fund IV (Fund A) L.P. shall be the Tax Matters Members of each Series.
The Tax Matters Member, on behalf of the Series and its respective Members, shall be permitted to
make any election under the Code, the Regulations or other legal requirements relating to taxes
that it in good faith believes to be in the best interests of the Series or its respective Members.

     8.2. Certain Authorizations. The Tax Matters Member shall represent its Series, at such Series’
expense, in connection with all examinations of such Series’ affairs by tax authorities including
any resulting administrative or judicial proceedings. Without limiting the generality of the
foregoing, the Tax Matters Member of a Series is hereby authorized, but not required, on behalf of
a Series:

     8.2.1. to enter into any settlement with the Internal Revenue Service or the Secretary
of the Treasury or his delegate (the “Secretary”) with respect to any tax audit or judicial
review, in which agreement the Tax Matters Member may expressly state that such agreement
shall bind the other Members of such Series except that such settlement agreement shall not
bind any Member of such Series that (within the time prescribed pursuant to the Code and
Regulations) files a statement with the Secretary providing that

27

 

the Tax Matters Member
shall not have the authority to enter into a settlement agreement on behalf of such Member;

     8.2.2. if a notice of a final administrative adjustment at the Series level of any item
required to be taken into account by a Member for tax purposes is mailed to the Tax
Matters Member, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court, the District Court of the United States
for the district in which such Series’ principal place of business is located, or elsewhere
as allowed by law, or the United States Claims Court;

     8.2.3. to intervene in any action brought by any other Member of such Series for
judicial review of a final adjustment;

     8.2.4. to file a request for an administrative adjustment with the Secretary at any
time and, if any part of such request is not allowed by the Secretary, to file a petition
for judicial review with respect to such request;

     8.2.5. to enter into an agreement with the Internal Revenue Service to extend the
period for assessing any tax that is attributable to any item required to be taken into
account by a Member of such Series for tax purposes, or an item affected by such item; and

     8.2.6. to take any other action on behalf of the Members of such Series (with respect
to such Series) or such Series in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or the Regulations.

     8.3. Indemnity of Tax Matters Member. Each Series shall, to the fullest extent permitted by law,
indemnify and reimburse its Tax Matters Member for all expenses (including legal and accounting
fees) incurred as Tax Matters Member pursuant to this Article VIII in connection with any
administrative or judicial proceeding with respect to the tax liability of the Members of such
Series as long as the Tax Matters Member has determined in good faith that its course of conduct
was in, or not opposed to, the best interests of the Members of such Series. The payment of all
outstanding expenses shall be made before any subsequent Distributions are made to the Members of
such Series, and shall not be considered a Distribution hereunder. The taking of any action and
the incurring of any expense by the Tax Matters Member in connection with any such proceeding,
except to the extent provided herein or required by law, is a matter in the sole discretion of the
Tax Matters Member and the provisions on limitations of liability of the Tax Matters Member and
indemnification set forth in Article XIII shall be fully applicable to the Tax Matters Member in
its capacity as such; provided, however, that the foregoing shall not apply to any action or
failure to act by the Tax Matters Member which constitutes gross negligence or willful misconduct
of the Tax Matters Member.

     8.4. Information Furnished. To the extent and in the manner provided by applicable law and
Regulations, the Tax Matters Member shall furnish the name, address, profits interest, and taxpayer
identification number of each Member of the Series it serves as Tax Matters Member for or any
Assignee to the Secretary.

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     8.5. Notice of Proceedings, etc. Each Tax Matters Member shall use its reasonable efforts to keep
each Member of its Series informed of any administrative and judicial proceedings for the
adjustment at the Series level of any item required to be taken into account by a Member of such
Series for income tax purposes or any extension of the period of limitations for making assessments
of any tax against a Member of such Series with respect to any Series
item, or of any agreement with the Internal Revenue Service that would result in any material
change either in income or loss as previously reported.

     8.6. Notices to Tax Matters Member. Any Member that receives a notice of an administrative
proceeding under Code Section 6233 relating to a Series shall promptly notify the Tax Matters
Member of the treatment of such Series item on such Member’s federal income tax return that is or
may be inconsistent with the treatment of that item on such Series’ return. Any Member that enters
into a settlement agreement with the Secretary with respect to any Series item shall notify the Tax
Matters Member of such agreement and its terms within sixty days after its date.

     8.7. Elections with Respect to Issuance of Class B Units.

	 	(a)	 	Management LLC (the “Election Member”) is hereby authorized and
directed to cause Series 1 and Series 2 to make an election to value any Class
B Units of such Series at liquidation value (the “Safe Harbor Election”), as
the same may be permitted pursuant to or in accordance with the finally
promulgated successor rules to Proposed Regulations Section 1.83-3(l) and IRS
Notice 2005-43 (collectively, the “Proposed Rules”). The Election Member shall
cause Series 1 and Series 2 to make any allocations of items of income, gain,
deduction, loss or credit (including forfeiture allocations and elections as to
allocation periods) necessary or appropriate to effectuate and maintain the
Safe Harbor Election.

	 	(b)	 	Any such Safe Harbor Election shall be binding on Series 1 and
Series 2 and on all of their respective Members with respect to all Transfers
of Class B Units thereafter made, except for any such Transfers made after
revocation of such Safe Harbor Election. A Safe Harbor Election once made may
be revoked by the Election Member as permitted by the Proposed Rules or any
applicable rule.

	 	(c)	 	Each Member (including any person to whom a Class B Unit is
Transferred in connection with the performance of services), by signing this
Agreement or by accepting such Transfer, hereby agrees to comply with all
requirements of the Safe Harbor Election with respect to all Class B Units
Transferred while the Safe Harbor Election remains effective.

	 	(d)	 	The Election Member shall file or cause each Series to file all
returns, reports and other documentation as may be required to perfect and

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	 	 	 	maintain the Safe Harbor Election with respect to Transfers of Class B Units
covered by such Safe Harbor Election.

	 	(e)	 	Notwithstanding anything to the contrary contained herein, the
Company Manager is hereby authorized and empowered, without further vote or
action of the Members, to amend this Agreement as necessary to comply with the
Proposed Rules or any rule, in order to provide for a Safe Harbor
Election and the ability to maintain or revoke the same, and shall have the
authority to execute any such amendment by and on behalf of each Member.
Any undertakings by the Members necessary to enable or preserve a Safe
Harbor Election may be reflected in such amendments and to the extent so
reflected shall be binding on each Member, respectively.

	 	(f)	 	Each Member agrees to cooperate with the Election Member to
perfect and maintain any Safe Harbor Election, and to timely execute and
deliver any documentation with respect thereto reasonably requested by the
Election Member.

	 	(g)	 	No Transfer of any Series Interest by a Member shall be
effective unless prior to such Transfer the transferee of such Series Interest
shall have agreed in writing to be bound by the provisions of this Section 8.7,
in form satisfactory to the applicable Series Manager.

	 	(h)	 	Costs and expenses incurred by the Election Member in making
and preserving (or if revoked, revoking) the Safe Harbor Election shall be paid
by the Series on whose behalf the Election Member is acting.

ARTICLE IX

TRANSFERS OF SERIES INTERESTS; CALL RIGHTS,

TAG ALONG RIGHTS, DRAG ALONG OBLIGATIONS

AND OTHER RIGHTS AND OBLIGATIONS

     9.1. Transfer by Members. Prior to a Qualified Public Offering, no Management Holder shall
Transfer all or any part of the economic or other rights that comprise any Class A Units, Class C
Preferred Units or Class D Preferred Units unless either (i) such holder has received prior written
consent of the Company Manager and applicable Series Manager with respect to any such Transfer and
has complied with the provisions of Sections 9.2 and 9.3 or (ii) such Transfer is conducted
pursuant to Section 9.6, 9.7 or 9.11 and in accordance with the provisions of Sections 9.2 and 9.3;
provided that the foregoing restrictions shall not apply with respect to a Transfer by any
Management Holder (who is a natural person) (x) to a Member of the Immediate Family of such
Management Holder for estate planning purposes or (y) by testamentary or intestate disposition.

     9.2. Conditions to Transfer. No Transfer (other than pursuant to Sections 9.6, 9.7 or 9.11 or
pursuant to the conversion of the Company to a corporation as contemplated in Article XVI)
permitted under Section 9.1 of all or any part of a Member’s Series Interest may be

30

 

made unless and
until the Company Manager and applicable Series Manager shall have received all of the following
(to the extent applicable to the proposed Transfer):

	 	(a)	 	if requested by the Company Manager or applicable Series
Manager, an opinion of responsible counsel (who may be counsel for the
Company), reasonably satisfactory in form and substance to such Manager, to the
effect that:

	 	(i)	 	such Transfer would not violate the Securities
Act or any state securities or blue sky laws applicable to the Company
or the Series Interest to be transferred;

	 	(ii)	 	such Transfer would not cause the Company or
Series to be considered a publicly traded partnership under Section
7704(b) of the Code;

	 	(iii)	 	such Transfer would not cause the Company or
Series to lose its status as a partnership for federal income tax
purposes; and

	 	(iv)	 	such Transfer would not require the Company,
Series, Company Manager or Series Manager to register as an investment
adviser under the Investment Advisers Act of 1940, as amended, or to
register as an investment company under the Investment Company Act of
1940, as amended;

	 	 	 	provided that such opinion shall not be required if such Transfer is
being made to (i) Members of the Immediate Family of the transferor
for estate planning purposes or (ii) by testamentary or intestate
disposition, in each of which events the transferor or his or her
representative shall certify as to the matters specified in this
clause (a);

	 	(b)	 	the agreement in writing of such Assignee to comply with all of
the terms and provisions of this Agreement and the grant of the power of
attorney set forth in Section 18.4, and the acknowledgment in writing of such
Assignee of each of the representations, warranties and covenants set forth in
Article XIV; and

	 	(c)	 	if the Member’s Series Interest is represented by one or more
Unit Certificates, the applicable Unit Certificates for cancellation
accompanied by a transfer power duly executed in blank.

     9.3. Member’s Agreement. Each Member hereby severally agrees that:

	 	(a)	 	it will not transfer all or any part of its Series Interest in
the Company except as permitted by this Agreement; and

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	 	(b)	 	in no event shall all or any part of a Series Interest be
transferred to a minor or an incompetent except in trust or pursuant to the
Uniform Gifts to Minors Act or similar applicable state statute.

     9.4. Records. In the event of a Transfer and the admission of any Assignee as a Member of a
Series, (a) the Series Manager shall cause the books and records of such Series to be amended
promptly to reflect such Transfer and admission and (b), in the event that the Transferred Series
Interest is represented by a Unit Certificate, the Series Manager shall cause such Series to issue
a new Unit Certificate to the Assignee for the number and Class of Units
being Transferred and, if applicable, a new Unit Certificate to the assigning Member for that
number and Class of Units represented by the canceled Unit Certificate that are not being
Transferred.

     9.5. Additional Transfer Restrictions.

     9.5.1. Any attempted Transfer of Units by a Management Holder not permitted by this
Article IX shall be null and void, and the Company and such Series shall not in any way give
effect to any such impermissible Transfer.

     9.5.2. The Class B Holder shall not Transfer any part of the economic or other rights
that comprise its Series Interest to any other Person.

     9.5.3. The foregoing provisions of this Section 9.5 shall expire upon the closing of a
Qualified Public Offering and shall not apply to any Units which have been Sold in a Public
Sale.

     9.6. Tag Along.

     9.6.1. If the Fortress Holders desire to Transfer 25% or more of their collective Class
A Units in a Series (a “Class A Transfer”), or more than 50% of their collective Class C
Preferred Units or Class D Preferred Units (a “Preferred Transfer”), for value to any
Prospective Buyer, whether in one bona fide, arm’s length transaction or a series of related
contemporaneous or contemporaneously agreed upon transactions and whether to one Prospective
Buyer or more than one Prospective Buyer (a “Sale”) such Fortress Holders may only do so in
the manner and on the terms set forth in this Section 9.6. Any attempted Transfer of Units
subject to this Section 9.6 and not permitted by this Section 9.6 shall be null and void,
and the Company and such Series shall not in any way give effect to any such impermissible
Transfer.

     9.6.2. A written notice (the “Tag Along Notice”) shall be furnished by the Fortress
Holders to (i) in the case of a Class A Transfer, each other holder of a Class A Unit of the
Series proposed to be sold, and (ii) in the case of a Preferred Transfer, each other holder
of a Class C Preferred Unit or Class D Preferred Unit, as the case may be (collectively, the
“Tag Along Offerors”), at least 20 business days prior to such Transfer. The Tag Along
Notice shall include:

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	 	(a)	 	The principal terms of the proposed Sale insofar it relates to
the Units proposed to be so sold (the “Affected Units”) including the number of
Units to be purchased from the Fortress Holders, the percentage of all Affected
Units held by the Fortress Holders which such number of Units proposed to be so
purchased constitutes the “Tag Along Sale Percentage,” the expected per Unit
purchase price (which, in the case of Class C Preferred Units or Class D
Preferred Units, shall be expressed as a specified percentage of the Series 1
Class C Preferred Priority Return (in the case of Class C Preferred Units) or
Series 1 Class D Preferred Priority Return (in the case of Class D Preferred
Units) of the Units to be sold), the
name and address of the Prospective Buyer, a good-faith estimate of the
amounts described in Section 9.8.4; and

	 	(b)	 	An invitation to each Tag Along Offeror to make an offer to
include in the proposed Sale to the Prospective Buyer an additional number of
Affected Units, but only including the vested portion of any Company Match
Class A Units of such Series (not in any event to exceed the Tag Along Sale
Percentage of the Affected Units owned by such Tag Along Offeror) owned by such
Tag Along Offeror, on the same terms and conditions with respect to each Unit
sold (subject to Section 9.8), as the Fortress Holders shall Sell each of their
Units. Notwithstanding the foregoing, in the event Fortress Holders are
Transferring 100% of their collective economic or other rights that comprise
their Series Interest in a Series in a Sale, the unvested portion of the
Affected Units may be included in such proposed Sale pursuant to the terms of
this Section 9.6.

     9.6.3. Within 15 business days after the receipt (in accordance with Section 18.3) of
the Tag Along Notice, each Tag Along Offeror desiring to make an offer to include Affected
Units in the proposed Sale (each a “Participating Seller” and, together with the Fortress
Holders, collectively, the “Tag Along Sellers”), shall send a written offer (the “Tag Along
Offer”) to the Fortress Holders specifying the number of Units (not in any event to exceed
the Tag Along Sale Percentage of the Affected Units owned by such Participating Seller)
which such Participating Seller desires to have included in the proposed Sale. Each Tag
Along Offeror who does not return the Tag Along Offer within such 15 business day period
shall be deemed to have waived all of such Tag Along Offeror’s rights with respect to such
Sale, and the Tag Along Sellers shall thereafter be free to Sell to the Prospective Buyer,
at a per Unit price no greater than 105% of the per Unit price set forth in the Tag Along
Notice and on other terms which are not materially more favorable to the Tag Along Sellers
than those set forth in the Tag Along Notice, without any further obligation to such
non-accepting Tag Along Offerors.

     9.6.4. The Fortress Holders shall attempt to obtain the inclusion in the proposed Sale
of the entire number of Affected Units which the Tag Along Sellers desire to have included
in the Sale (as evidenced in the case of the Fortress Holders by the Tag Along Notice and in
the case of each Participating Seller by such Participating Seller’s Tag Along Offer). In
the event the Fortress Holders shall be unable to obtain the inclusion of

33

 

such entire number
of Affected Units in the proposed Sale, the number of Affected Units to be sold in the
proposed Sale by each Tag Along Seller shall be reduced on a pro rata basis according to the
proportion which the number of all Affected Units which each such Tag Along Seller desires
to have included in the Sale bears to the aggregate number of all Affected Units which all
of the Tag Along Sellers desire to have included in the Sale.

     
9.6.5. The offer of each Participating Seller contained in such Participating Seller’s
Tag Along Offer shall be irrevocable, and, to the extent such offer is accepted, such
Participating Seller shall be bound and obligated to Sell in the proposed Sale on the same
terms and conditions, with respect to each Affected Unit sold (subject to Section 9.8), as
the Prospective Selling Holders, up to such number of Affected Units as such
Participating Seller shall have specified in such Participating Seller’s Tag Along
Offer; provided, however, that (a) if the principal terms of the proposed Sale change with
the result that the price per Affected Unit shall be less than 95% of the price per Affected
Unit set forth in the Tag Along Notice or the other terms shall be materially less favorable
to the Tag Along Sellers than those set forth in the Tag Along Notice, each Participating
Seller shall be permitted to withdraw the offer contained in his Tag Along Offer and shall
be released from such Participating Seller’s obligations thereunder and (b) if, at the end
of the 120th day following the date of the effectiveness of the Tag Along Notice (provided,
that if the only condition, other than the making of payments or delivery of documents at
such closing, to the completion of the proposed Sale is one or more regulatory or
governmental approvals or consents, such 120 day period shall automatically be extended for
an additional 45 days), the Fortress Holders have not completed the proposed Sale, each
Participating Seller shall be permitted to withdraw the offer contained in his Tag Along
Offer and shall be released from such Participating Seller’s obligations thereunder, unless
the failure to complete such Sale resulted from any failure by such Participating Seller to
comply with the terms of this Section 9.6.

     9.6.6. If, prior to consummation, the terms of the proposed Sale shall change with the
result that the price per Affected Unit to be paid in such proposed Sale shall be greater
than 105% of the price per Affected Unit set forth in the Tag Along Notice or the other
terms of such proposed Sale shall be materially more favorable to the Tag Along Sellers than
those set forth in the Tag Along Notice, the Tag Along Notice shall be null and void, and it
shall be necessary for a separate Tag Along Notice to be furnished, and the terms and
provisions of this Section 9.6 separately complied with, in order to consummate such
proposed Sale pursuant to this Section 9.6.

     9.6.7. Notwithstanding the foregoing provisions of this Section 9.6, no other holder of
Units shall have any tag along right pursuant to the provisions of this Section 9.6 with
respect to any Transfer of Units by the Fortress Holders:

	 	(a)	 	pursuant to the exercise of their “drag along” rights contained
in Section 9.7;

	 	(b)	 	to an Affiliate of any of the Fortress Holders or to partners,
members, managing directors and principals of any of the Fortress Holders that
is a partnership or limited liability company; provided that such transferee

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	 	 	 	shall agree to be bound by the provisions of this Section 9.6 to the same
extent as if such transferee were a Fortress Holder; or

	 	(c)	 	in a Public Sale.

     9.6.8. The foregoing provisions of this Section 9.6 shall expire upon the closing of a
Qualified Public Offering and shall not apply to any Units which have been Sold in a Public
Sale.

     9.7. Drag Along.

     9.7.1. In connection with a Sale of a Series by the Series Majority Class A Holders
(each such holder, a “Prospective Selling Holder”) to one or more Persons that are not
Affiliates of such Series Majority Class A Holders (collectively, the “Prospective Buyer”)
(the percentage of the Affected Units held by the Prospective Selling Holders which such
number of units to be so sold by the Prospective Selling Holders represents is referred to
herein as the “Drag Along Sale Percentage”), each holder of an Affected Unit hereby agrees,
if the Prospective Selling Holders give the Drag Along Notice referred to in Section 9.7.2,
to Sell or otherwise dispose of or exchange Units representing, with respect to such
Affected Units held by such holder, the Drag Along Sale Percentage of such Affected Units,
which will first include vested Units and then, after all vested Units have been included,
unvested Units, in the manner and on the terms set forth in this Section 9.7.

     9.7.2. If the Prospective Selling Holders elect to exercise their rights under this
Section 9.7, a written notice (the “Drag Along Notice”) shall be furnished by the
Prospective Selling Holders to each other holder of Affected Units. The Drag Along Notice
shall set forth the principal terms of the proposed Sale of a Series including the number,
Series and Classes of Units to be acquired or exchanged by the Prospective Buyer in the Sale
of a Series, the number of Units to be acquired or exchanged from the Prospective Selling
Holders, the manner in which such Units are to be sold or exchanged, the Drag Along Sale
Percentage, the per Unit consideration to be received in the proposed Sale of a Series
(which may be estimated if the price is determined by a formula including variables which
cannot be precisely determined until closing) and the name of the Prospective Buyer. The
Prospective Selling Holders shall not be entitled to exercise any rights under this Section
9.7 in connection with a Sale of Class C Preferred Units or Class D Preferred Units unless
the Fortress Holders propose to sell at least 50% of their aggregate holdings of Class C
Preferred Units or Class D Preferred Units.

     9.7.3. If the Prospective Selling Holders consummate the proposed Sale of a Series to
which reference is made in the Drag Along Notice, each other holder of Affected Units (each
a “Participating Seller,” and, together with the Prospective Selling Holders, collectively,
the “Drag Along Sellers”) shall be bound and obligated to Sell, exchange or otherwise
dispose of Units representing, with respect to such Affected Units held by such holder, the
Drag Along Sale Percentage of such Affected Units in the proposed Sale of a Series on the
same terms and conditions with respect to each Unit sold, exchanged or otherwise disposed of
(subject to Section 9.8), as the Prospective

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Selling Holders shall Sell, exchange or
otherwise dispose of each Unit in the Sale of a Series; provided, however, that, in the case
of a sale, exchange or disposition of Class C Preferred Units or Class D Preferred Units,
the price or value assigned to such Units shall be expressed as a specified percentage of
the Series 1 Class C Preferred Priority Return (in the case of Class C Preferred Units) or
Series 1 Class D Preferred Priority Return (in the case of Class D Preferred Units) of the
Units to be sold, exchanged or disposed of. Notwithstanding any provision contained herein
to the contrary, except as provided in Section 9.7.1, no holder of Units shall have the
right to exercise any tag along rights contained in Section 9.6 in connection with the
proposed Sale of a Series to which
reference is made in the Drag Along Notice. If at the end of the 120th day following
the date of the effectiveness of the Drag Along Notice (provided, that if the only
condition, other than the making of payments or delivery of documents at such closing, to
the completion of the proposed sale is one or more regulatory or governmental approvals or
consents, such 120 day period shall automatically be extended for an additional 45 days),
the Prospective Selling Holders have not completed the proposed Sale of a Series, each
Participating Seller shall be released from his obligation under the Drag Along Notice, the
Drag Along Notice shall be null and void, and it shall be necessary for a separate Drag
Along Notice to be furnished and the terms and provisions of this Section 9.7 separately
complied with, in order to consummate such proposed Sale of a Series pursuant to this
Section 9.7.

     9.7.4. The foregoing provisions of this Section 9.7 shall expire upon the closing of a
Qualified Public Offering and shall not apply to any Units which have been Sold in a Public
Sale.

     9.8. Miscellaneous Provisions Relating to Sales or Sale of Series Interests under Section 9.6 and
9.7. The following provisions shall be applied to any Sale or Sale of Series Interests to which
Section 9.6 or 9.7 applies:

     9.8.1. Each Participating Seller, whether in his capacity as a Participating Seller,
holder of Units, officer or Manager of such Series, or otherwise, shall take or cause to be
taken all such actions as may be reasonably necessary or desirable in order expeditiously to
consummate each Sale or Sale of a Series pursuant to Section 9.6 or 9.7 and any related
transactions, including executing, acknowledging and delivering consents, assignments,
waivers and other documents or instruments; furnishing information and copies of documents;
filing applications, reports, returns, filings and other documents or instruments with
governmental authorities; and otherwise cooperating with the Prospective Selling Holders and
the Prospective Buyer; provided, however, that Participating Sellers shall be obligated to
become liable in respect of any representations, warranties, covenants, indemnities or
otherwise to the Prospective Buyer solely to the extent provided in the immediately
following sentence. Without limiting the generality of the foregoing, each Participating
Seller agrees to execute and deliver such agreements as may be reasonably specified by the
Prospective Selling Holders to which such Prospective Selling Holders will also be party,
including agreements to (a) make individual representations, warranties, covenants and other
agreements as to the unencumbered title to its Units and the power, authority and legal
right to Transfer such

36

 

Units and (b) be severally (with all other sellers) liable (whether
by purchase price adjustment, indemnity payments or otherwise) in respect of
representations, warranties, covenants and agreements in respect of the Series or the
Company and its Subsidiaries; provided, however, that, except with respect to individual
representations, warranties, covenants, indemnities and other agreements of Participating
Sellers of the type described in clause (a) above, the aggregate amount of such liability
shall not exceed the lesser of (i) such Participating Seller’s pro rata portion of any such
liability, to be determined in accordance with such Participating Seller’s portion of the
aggregate proceeds to all holders of Units in connection with such Sale or Sale of a Series,
or (ii) the proceeds received by such Participating Seller in connection with such Sale or
Sale of a Series; and
provided, further, that the nature and extent of such representations, warranties,
covenants and indemnities shall be the same with respect to each Class of Units being sold
in such Sale.

     9.8.2. All reasonable costs and expenses incurred by any Prospective Selling Holder or
Series in connection with any proposed Sale or Sale of a Series pursuant to Section 9.6 or
9.7 (whether or not consummated), including all attorneys fees and charges, all accounting
fees and charges and all finders, brokerage or investment banking fees, charges or
commissions, shall be paid from the sales proceeds prior to distribution and shall be borne
by the Prospective Selling Holders and the Participating Sellers pro rata based on the
proceeds which would otherwise be received by them. The Series may retain legal counsel and
other advisors, if necessary, to assist with the Sale or Sale of a Series.

     9.8.3. The closing of a Sale or Sale of a Series pursuant to Section 9.6 or 9.7 shall
take place at such time and place as the Prospective Selling Holders shall specify by
reasonable notice to each Participating Seller. At the closing of any Sale or Sale of a
Series under Section 9.6 or 9.7, each Participating Seller shall deliver any certificates
evidencing the Units to be Sold by such Participating Seller, duly endorsed, or with
transfer powers duly endorsed, for transfer with signature guaranteed, free and clear of any
liens or encumbrances, with any stock (or equivalent) transfer tax stamps affixed, against
delivery of the applicable consideration. It is understood and agreed that no holder of
Units shall have any liability to any other holder of Units arising from, relating to or in
connection with any proposed Sale or Sale of a Series which has been the subject of a Tag
Along Notice or a Drag Along Notice whether or not such proposed Sale or Sale of a Series is
consummated (except solely to the extent, if any, as such holder may agree in the
documentation specifically relating to such Sale or Sale of a Series).

     9.8.4. Subject to Section 9.8.2, the Participating Sellers shall receive their pro rata
portion of the consideration for the Units sold or otherwise disposed of pursuant to the
Sale or Sale of a Series (after deduction of the proportionate share of (i) amounts paid
into escrow or held back, in the reasonable determination of the Prospective Selling
Holders, for indemnification or post-closing expenses and (ii) amounts subject to
post-closing purchase price adjustments, provided that upon determination of such purchase
price adjustment or indemnification or post-closing expenses and upon release of any such
escrow or hold-back, as applicable, such amounts will be distributed to the

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Participating
Sellers so that the total amount distributed is in accordance with the provisions of Section
9.8.5) from the Prospective Buyer concurrently with the receipt of consideration by the
Prospective Selling Holders.

     9.8.5. The relative amounts of consideration to be received in respect of each Unit in
a Sale or Sale of a Series pursuant to Section 9.6 or 9.7 shall be based upon the
Pre-Transaction Value of such Unit. Notwithstanding the fact that the Units to be sold by
Prospective Selling Holders may be of one or more Classes of Units, each holder of each such
Class of Units shall be entitled to the benefits, and subject to the obligations, of
Sections 9.6 and 9.7 and this Section 9.8 with respect to all Units of the Series to be sold
in a Sale or Sale of a Series held by such holder as if such Units were of the same Class,
subject only to possible differences in the per-Unit consideration to be paid in
accordance with the immediately preceding sentence.

     9.9. Pre-Emptive Rights. Except for (a) any Units issued to a Fortress Holder or any Affiliate of
a Fortress Holder in exchange for Transaction Related Invested Capital or (b) any issuance of Class
D Preferred Units, neither the Company nor a Series shall Issue or sell any Units to a Fortress
Holder or any Affiliate of a Fortress Holder, or any options, warrants or other rights to acquire
any Units, or any securities convertible into or exchangeable for, directly or indirectly, any
Units to a Fortress Holder or any Affiliate of a Fortress Holder or take any loan pursuant to
Section 3.15 (except 3.15.2) from a Fortress Holder or any Affiliate of a Fortress Holder (each
such Issuance or receipt of a loan, an Issuance of “Subject Securities”), except in compliance with
the provisions of this Section 9.9; provided, however, that, if in the reasonable judgment of the
Company Manager or Applicable Series Manager, the Issuance of such Subject Securities is necessary
or other exigent circumstances making such Issuance desirable exist, then the Company or applicable
Series may Issue such Subject Securities without first complying with the provisions of this
Section 9.9; provided, further that the provisions of this Section 9.9 are complied with as
reasonably promptly as possible following such Issuance of Subject Securities.

     9.9.1. Not fewer than 20 business days prior to the consummation of the Issuance of
Subject Securities, a written notice (the “Participation Notice”) shall be given by the
applicable Series to each Management Holder. The Participation Notice shall include:

	 	(a)	 	The principal terms of the proposed Issuance, including (i) the
number and kind of Subject Securities to be included in the Issuance, (ii) the
price per unit of the Subject Securities and (iii) (x) in the case of the
Issuance of Units of an existing Series, the percentage represented by the
number of Class A Units of the Series of which the Subject Securities will be
designated owned, beneficially and of record, by such Management Holder
immediately prior to the Issuance divided by the aggregate number of Class A
Units of the Series of which the Subject Securities will be designated then
outstanding owned by all Members of such Series immediately prior to such
Issuance or (y) in the case of the Issuance of Units of an Additional Series,
the percentage represented by the number of Series 1 Class A Units designated
owned, beneficially and of record, by 

38

 

	 	 	 	such Management Holder immediately prior
to the Issuance divided by the aggregate number of Series 1 Class A Units owned
by all Members immediately prior to such Issuance (the percentage resulting
from clause (x) and (y), as the case may be, the “Participation Portion”);
provided that if the consideration to be paid by the Fortress Holders for the
Subject Securities contains non-cash consideration, then the Participation
Notice shall also specify the Fair Market Value of such non-cash consideration;
and

	 	(b)	 	An offer by such Series to Issue to such Management Holder such
portion (not in any event to exceed such Management Holder’s Participation
Portion of the total amount of Subject Securities to be included in the
Issuance) of the Subject Securities to be included in the Issuance as may be
requested by such Management Holder, at the same price and otherwise on the
same terms and conditions, with respect to each unit of Subject Securities
issued to such Management Holder, as the Issuance to the Fortress Holders,
provided, that if the consideration to be paid by the Fortress Holders for
the Subject Securities contains non-cash consideration, then such offer
shall give each such Management Holder the option to pay, in lieu of
delivery of such non-cash consideration, cash in the amount of the Fair
Market Value of such non-cash consideration.

     9.9.2. Each Management Holder desiring to accept the offer contained in the
Participation Notice shall send an irrevocable commitment (each a “Participation
Commitment”) to the applicable Series within ten business days after the receipt of the
Participation Notice specifying the amount or proportion (not in any event to exceed such
Management Holder’s Participation Portion of the total amount of Subject Securities to be
included in the Issuance) of Subject Securities which such Management Holder desires to be
issued (each a “Participating Buyer”). Subject to Section 9.9.8, each Management Holder
that has not so accepted such offer shall be deemed to have waived all of such Management
Holder’s rights with respect to the Issuance under this Section 9.9, and the Series shall
thereafter be free to Issue Subject Securities to the Fortress Holders and any Participating
Buyers, at a price no less than 95% of the price set forth in the Participation Notice and
on other terms not materially more favorable to the Fortress Holders and Participating
Buyers than those set forth in the Participation Notice, without any further obligation to
such non-accepting Management Holder under this Section 9.9.

     9.9.3. The acceptance of each Participating Buyer shall be irrevocable and each such
Participating Buyer shall be bound and obligated to acquire in the Issuance such amount or
proportion of Subject Securities as such Participating Buyer shall have specified in such
Participating Buyer’s Participation Commitment.

     9.9.4. Each holder of Series Interests of the same Series as the Subject Securities,
whether in his capacity as a Participating Buyer, holder of such Series Interests, officer
or Manager of the Series, or otherwise, shall take or cause to be taken all such reasonable
actions as may be reasonably necessary or desirable in order to consummate expeditiously
each Issuance pursuant to this Section 9.9 and any related

39

 

transactions, including
executing, acknowledging and delivering consents, assignments, waivers and other documents
or instruments, filing applications, reports, returns, filings and other documents or
instruments with governmental authorities, and otherwise cooperating with the Series, the
Fortress Holders and the Participating Buyers (if any).

     9.9.5. All costs and expenses incurred by any holder of Series Interests of the same
Series as the Subject Securities or the Series in connection with any proposed Issuance of
Subject Securities (whether or not consummated), including all attorney’s fees and charges,
all accounting fees and charges and all finders, brokerage or investment banking fees,
charges or commissions, shall be borne by such holder.

     9.9.6. The closing of an Issuance pursuant to this Section 9.9 shall take place at such
time and place as the Series shall specify by notice to each Participating Buyer given not
less than three business days prior to the closing of the Issuance.

     9.9.7. The terms and conditions of this Section 9.9 may be waived on behalf of all
Management Holders by the written consent of the Majority Management Holders, in which case,
no Management Holder shall have a pre-emptive right to the Issuance of such Subject
Securities.

     9.9.8. If any Management Holder shall not elect to be issued such Management Holder’s
Participation Portion of the total amount of Subject Securities to be included in any
Issuance (the “Unaccepted Participation Portion”), the Participating Buyers may elect to be
issued all or any portion of such Unaccepted Participation Portion in accordance with the
terms and conditions of this Section 9.9, on a pro rata basis in accordance with the amounts
of their respective Participation Commitments, or on such other basis as such Participating
Buyers shall agree.

     9.9.9. By their execution of this Fourth Amended and Restated Limited Liability Company
Agreement, each of the Management Holders hereby irrevocably waives its right to preemptive
rights pursuant to this Section 9.9 with respect to any Set Aside Capital.

     9.10. Forfeiture of Class A Units.

     9.10.1. Notwithstanding anything herein to the contrary, any Management Holder whose
Employment is terminated by the Company or any of its Subsidiaries for any reason shall
vest, if at all, in the Company Match Class A Units according to the Vesting Schedule set
forth on Schedule 3.7 and shall automatically forfeit to the applicable Series
without consideration therefor (and each Series shall promptly thereafter cancel and retire)
any unvested Company Match Class A Units as of the date of such termination; provided,
however, that if the Company or any of its Subsidiaries terminates such Management Holder’s
Employment without Cause, such Management Holder resigns for Good Reason or such Management
Holder’s Employment terminates due to death or Disability, such Management Holder shall be
vested in the next higher level of vesting pursuant to the Vesting Schedule as of the date
of such termination. Failure to renew a Management Holder’s Employment agreement (which
failure is not otherwise related to

40

 

the termination of such Member’s Employment) shall have
no effect on the vesting of Company Match Class A Units. In the case of any such
forfeiture, such Management Holder shall tender any and all certificates representing its
Class A Units of such Series to the applicable Series (along with such other documentation
as the applicable Manager may reasonably request) and each such Series shall issue a
replacement certificate to such Management Holder representing the number of vested Class A
Units of such Series held by such Management Holder.

     9.10.2. Distributions made with respect to the Company Match Class A Units shall
constitute an immediate vesting event as to the amount so distributed, which shall first be
deemed to constitute a distribution of aggregate Net Profits previously or
concurrently allocated to such Company Match Class A Units and then as a Distribution
of capital that, by virtue of such Distribution, shall vest and is therefore includible in
income by the holder of such Class A Unit and deductible by the Company.

     9.10.3. Upon a forfeiture of an individual’s Class A Units pursuant to this Section
9.10, if the individual fails or refuses to execute such documents or instruments of
transfer as requested by the applicable Series Manager, the applicable Series Manager may
appoint any Person to act as attorney-in-fact for such Person in order to execute such
documents or instruments of transfer.

     9.11. Repurchase Rights.

     9.11.1. Each Series shall have the right (but not the obligation, except as provided in
Section 9.11.5) to exercise its right to purchase all or a portion of the Class A Units of
such Series (but in the case of the Company Match Class A Units, only the vested portion as
the unvested portion shall be automatically forfeited in accordance with Section 9.10) held
by a Management Holder within thirty (30) days after such Management Holder’s termination of
Employment (for any reason) with the Company or its Subsidiaries (the “Repurchase Rights”).

     9.11.2. If such Series does not exercise its Repurchase Rights, the Fortress Holders
shall have the right (but not the obligation) to exercise the Repurchase Rights on the same
terms and conditions as applicable to such Series in this Section 9.11 and all references to
such Series in this Section 9.11 shall be read to include the Fortress Holders to the extent
the Fortress Holders exercise Repurchase Rights.

     9.11.3. If such Series exercises its Repurchase Rights in respect of a Management
Holder whose Employment with the Company or its Subsidiaries is involuntarily terminated by
the Company or its Subsidiary without Cause, who terminates his or her Employment for Good
Reason, or whose Employment terminates due to death or Disability, such Management Holder
shall receive an amount equal to the greater of (i) the sum of (a) the amount paid by the
Management Holder for the Class A Units purchased by such Management Holder (the “Purchased
Units”) and (b) in respect of the vested portion of the Company Match Class A Units, an
amount equal to the number of such vested Company Match Class A Units multiplied by the per
Unit dollar amount paid by such Management Holder for the Purchased Units and
(ii) the current Fair Market

41

 

Value of the Class A Units purchased and the vested portion of
the Company Match Class A Units.

     9.11.4. If such Series exercises its Repurchase Rights in respect of a Management
Holder whose Employment with the Company or its Subsidiaries is terminated for any reason
other than by the Company or its Subsidiaries without Cause, by the Management Holder for
Good Reason or due to death or Disability, such Management Holder will receive an amount
equal to the lesser of (i) the sum of (a) the amount paid by the Management Holder for the
Class A Units purchased and (b) in respect of the vested portion of the Company Match Class
A Units, an amount equal to the number of such vested Company Match Class A Units multiplied
by the per Unit dollar amount paid by
such Management Holder for the Purchased Units and (ii) the current Fair Market Value
of the Class A Units purchased and the vested portion of the Company Match Class A Units.
Such Management Holder will forfeit the unvested portion of such Management Holder’s Company
Match Class A Units as of the date of termination and shall not be entitled to receive any
benefit attributable to the unvested portion of the Company Match Class A Units on or after
the date of such termination.

     9.11.5. A Management Holder may elect to require a Series to exercise its Repurchase
Rights with respect to the Class A Units of such Series purchased by the Management Holder
plus the vested portion of the Company Match Class A Units of such Series if the Management
Holder’s Employment with the Company or its Subsidiaries is terminated (i) by reason of
death or Disability, (ii) by the Company without Cause, or (iii) by the Management Holder
for Good Reason, for a period of thirty (30) days after such termination, in which case such
Management Holder shall receive the current Fair Market Value of such Class A Units and
vested Company Match Class A Units.

     9.11.6. In connection with any exercise of Repurchase Rights pursuant to this Section
9.11, the Management Holders agree to execute, acknowledge, and deliver, or cause to be
executed, acknowledged, and delivered, all instruments and documents that may be reasonably
requested by such Series in connection therewith.

     9.11.7. Notwithstanding anything herein to the contrary, except for the required
exercise of Repurchase Rights pursuant to Section 9.11.5, each Series shall have the right
to not exercise its Repurchase Rights if a Management Holder (an “Objecting Management
Holder”) provides such Series with a written objection of such Series’ determination of the
Fair Market Value of such Units to be repurchased (a “Fair Market Value Objection”) within
10 days after such Series’ determination of such Fair Market Value and, after complying with
the provisions of Section 9.11.8, the Arbitrator determines that the Valuation Expert’s
determination of Fair Market Value shall be used instead of such Series’ determination of
Fair Market Value.

     9.11.8. (a) For a period of 30 days following such Series’ receipt of a Fair Market
Value Objection, such Series and Objecting Management Holder shall endeavor in good faith to
agree upon the Fair Market Value of such Class A Units and shall execute a written
instrument specifying the Fair Market Value thereof.

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	 	(b)	 	If during such 30-day period such Series and Objecting
Management Holder have not reached an agreement on the Fair Market Value of
such Class A Units, the Objecting Management Holder may retain an independent
valuation expert with experience in valuing financial companies and mortgage
originators (the “Valuation Expert”) to provide such Series with its
determination of the Fair Market Value of such Class A Units.
	 
	 	(c)	 	If such Series does not agree with the Valuation Expert’s
determination of Fair Market Value, such Series and Objecting Management Holder
shall engage a mutually agreed upon nationally recognized arbitrator with
experience in valuing financial companies and mortgage originators (the
“Arbitrator”), or if the parties cannot so agree, each will select a nationally
recognized arbitrator with experience in valuing financial companies and
mortgage originators and the two arbitrators so selected will select a third
nationally recognized arbitrator with experience in valuing financial companies
and mortgage originators to act as the Arbitrator, and the Arbitrator shall
determine if the Fair Market Value to be used is that of such Series or the
Valuation Expert, it being expressly understood that the Arbitrator shall not
be entitled to select any value other than those presented by such Series and
Objecting Management Holder.
	 
	 	(d)	 	The fees and expenses of the Valuation Expert and Arbitrator
shall be borne equally by such Series and Objecting Management Holder, taking
into account, in respect of such Objecting Management Holder’s portion of such
fees and expenses, such Objecting Management Holder’s proportionate share of
such Series’ portion of the fees and expenses.

     9.11.9. Sections 9.11.3, 9.11.4 and 9.11.5 shall not apply to Class A Units held by the
Designated Management Holders, which are subject to modified Repurchase Rights, as set forth
in separate agreements between them and the Company.

9.12. Management Loan.

     9.12.1. At the election of each Management Holder (an “Electing Management Holder”),
the Company or applicable Series will provide to such Management Holder a nonrecourse loan
pursuant to a promissory note substantially in the form attached hereto on Schedule
9.12 (or such other documentation as reasonably determined by the Managers) (a
“Management Loan”) in respect of such Management Holder’s federal and state income tax
liability on Company Match Class A Units and Class B Units held by Management LLC for the
benefit of such Electing Management Holder; provided, however, that a Management Holder may
only elect to receive a Management Loan if (i) such Management Holder makes an election
pursuant to Section 83(b) of the Code at the time a Series grants the Company Match Class A
Units to such Management Holder or at the time Management LLC receives any Class B Units for
the benefit of such Management Holder or (ii) such Management Holder (x) incurs tax
liability upon the vesting of his or her Company Match Class A Units or the Class B Units
held by

43

 

Management LLC for the benefit of such Electing Management Holder in excess of all net
after-tax Distributions (excluding any Tax Distribution) made with respect to such Electing
Management Holder’s Class A Units and any Class B Units held by Management LLC for the
benefit of such Electing Management Holder determined as of the date the Electing Management
Holder is required to pay such tax liability and (y) remains an employee of the Company or
one of its Subsidiaries immediately after the vesting of his or her Company Match Class A
Units or the Class B Units held by Management LLC for the benefit of such Electing
Management Holder that resulted in such tax liability; provided, further, that, the amount
of such Management Loan shall not exceed (x) in the case of clause (i) in the preceding
proviso, the federal and state income tax liability incurred by such Electing Management
Holder as a result of the receipt of such Management Holder’s Company Match Class A Units or
the Class B Units held by Management LLC for the benefit of such Electing Management Holder
or (y) in the case of clause (ii) in the preceding proviso, such Electing Management
Holder’s income tax liability incurred upon vesting of the Company Match Class A Units or
the Class B Units held by Management LLC for the benefit of such Electing Management Holder
minus all net after-tax Distributions (excluding any Tax Distribution) made with respect to
such Electing Management Holder’s Class A Units and any Class B Units held by Management LLC
for the benefit of such Electing Management Holder determined as of the date the Electing
Management Holder is required to pay such tax liability.

     9.12.2. Interest shall accrue on the outstanding principal amount of a Management Loan,
compounded on a quarterly basis, at a rate equal to the prime rate (as set forth
in the Wall Street Journal on the date such Management Loan is made) per annum.

     9.12.3. All cash payments (including in the form of compensation for Employment) and
Distributions (excluding any Tax Distribution) to be made to (a) an Electing Management
Holder by the Company and its Subsidiaries or a Series or (b) Management LLC by the Company
and its Subsidiaries or a Series (in respect of any Class B Units held by Management LLC for
the benefit of such Electing Management Holder), including any amount paid by the Company or
any of its Subsidiaries or a Series (or pursuant to Section 9.11.2, the Fortress Holders) to
such Electing Management Holder to repurchase such Electing Management Holder’s Class A
Units (but excluding base salary and 50% of any cash bonus) during, or following the
termination of, such Electing Management Holder’s Employment with CHEC or its Affiliates
shall be remitted to the Company or Series, as applicable, and shall be credited against the
outstanding balance of such Electing Management Holder’s Management Loan.

     9.12.4. In the event that the Company or Series is required to withhold any amount on
account of taxes in connection with any rights of an Electing Management Holder in
connection with the Company Match Class A Units or such Electing Management Holder’s
Management Loan, such amounts shall be treated for all purposes as having been distributed
to the Electing Management Holder.

     9.12.5. A Management Loan shall be secured by all Class A Units held by the Electing
Management Holder, any Class B Units held by Management LLC for the benefit of such Electing
Management Holder and any equity interests in Management

44

 

LLC held by such Electing Management Holder to whom such loan is provided. A
Management Loan (and any interest thereupon) may be repaid by a Management Holder at any
time without penalty.

     9.12.6. If a Management Holder’s Employment with the Company or a Subsidiary is
terminated for any reason, then such Management Holder’s Management Loan, if any, shall
become due and payable thirty (30) days after such termination and, at the election of an
Electing Management Holder, that number of Class A Units held by the Electing Management
Holder, Class B Units held by Management LLC for the benefit of such Electing Management
Holder and equity interests in Management LLC held by such Electing Management Holder with a
Fair Market Value equal in value to the unpaid amount of such Management Loan, or if the
Electing Management Holder shall so determine, all of the Class A Units held by such
Electing Management Holder, all Class B Units held by Management LLC for the benefit of such
Electing Management Holder and all equity interests in Management LLC held by such Electing
Management Holder, may be tendered to the Company or Series at any time after such
termination, in either case in full repayment of such Management Loan.

9.13. Class B Employment Termination Redemption Rights.

     9.13.1. Within thirty (30) days after the termination of a Management LLC Member’s
Employment with the Company or a Subsidiary for any reason other than those listed in
Section 9.13.2, Series 1 and Series 2, as applicable, shall have the right (but not the
obligation, except as provided in Section 9.13.2) to exercise their right to purchase (the
“Class B Termination Redemption Rights”) all of the applicable Allocated Class B Interests
held by Management LLC (the “Affected Allocated Class B Interest”). If Series 1 and/or
Series 2 exercises its Class B Termination Redemption Rights, the Class B Holder shall
receive an amount equal to the Deemed Series 1 Class B Sale Proceeds and/or Deemed Series 2
Class B Sale Proceeds, as the case may be; and all Affected Allocated Class B Interests
shall be cancelled and retired.

     9.13.2. If a Management LLC Member’s Employment with the Company or a Subsidiary is
terminated (i) by reason of death or Disability, (ii) by the Company without Cause, or (iii)
by the Management LLC Member for Good Reason, then, during the thirty (30) day period
commencing on the nine month anniversary of such termination, Series 1 and Series 2 shall
have the right to exercise its Class B Termination Redemption Rights. The Management LLC
Member whose Employment is so terminated shall, during the thirty (30) day period commencing
on the nine month anniversary of such termination, have the right to exercise its right
under the Management LLC Agreement to have its ownership in Management LLC redeemed, in
which case the Class B Holder will elect to require Series 1 and Series 2 to exercise their
Class B Termination Redemption Rights with respect to the applicable Affected Allocated
Class B Interest, in which case the Class B Holder shall receive an amount equal to the
Deemed Class B Sale Proceeds and all Affected Allocated Class B Interests shall be cancelled
and retired.

     9.13.3. If a Management LLC Member’s Employment is terminated for any of the reasons
listed in Section 9.13.2 and Series 1 and/ or Series 2, as the case may be, elects to

45

 

exercise their Class B Termination Redemption Rights (as opposed to the required
exercise of the Class B Termination Redemption Rights at the election of the Management LLC
Member whose Employment is terminated) and the Fortress Holders dispose of more than 50% of
their Series 1 Class A Units and/or their Series 2 Class A Units, as the case may be, to an
unaffiliated third party within three months before and nine months after such termination,
the Deemed Series 1 Class B Sale Proceeds and Deemed Series 2 Class B Sale Proceeds to which
such Management LLC Member is entitled shall be calculated assuming that such Management LLC
Member was fully vested in his Affected Allocated Class B Interests at the time of any such
disposition by the Fortress Holders.

     9.13.4. In connection with any exercise of Class B Termination Redemption Rights
pursuant to this Section 9.13, the Class B Holder agrees to execute, acknowledge, and
deliver, or cause to be executed, acknowledged, and delivered, all instruments and documents
that may be reasonably requested by Series 1 and Series 2 in connection therewith.

     9.13.5. Notwithstanding anything herein to the contrary, except for the required
exercise of Class B Termination Redemption Rights pursuant to Section 9.13.2, Series 1 and
Series 2 shall have the right to not exercise their Class B Termination Redemption Rights if
the Class B Holder, on behalf of a Management LLC Member (an “Objecting Class B Holder"),
provides Series 1 and/or Series 2, as applicable, with a written objection of such
determination of the Fair Market Value of the Affected Allocated Class B Interests to be
repurchased (a “Class B Fair Market Value Objection") within 10 days after such Series’
determination of such Fair Market Value and, after complying with the provisions of Section
9.11.8, the Arbitrator determines that the Valuation Expert’s determination of Fair Market
Value shall be used instead of Series 1’s and/or Series 2’s determination of Fair Market
Value, as applicable, in which case the fees and expenses of the Valuation Expert and
Arbitrator shall be borne by Series 1 or Series 2, as applicable.

9.14. Class B Sale Repurchase Right.

     9.14.1. In the event of a Sale in which the Fortress Holders dispose of all of their
Series 1 Class A Units (a “Complete Series 1 Fortress Sale”) all Series 1 Class B Units
shall become fully vested and shall be entitled to receive a portion of the proceeds of such
Complete Series 1 Fortress Sale to the extent provided in, and in accordance with the terms
of, Section 9.15, and all Series 1 Class B Units shall be cancelled and retired and the
Class B Holder shall cease to be a Member of Series 1 and, if the Class B Holder is not a
Member of any other Series, the Company.

     9.14.2. In the event of a Sale in which the Fortress Holders dispose of all of their
Series 2 Class A Units (a “Complete Series 2 Fortress Sale”) all Series 2 Class B Units
shall become fully vested and shall be entitled to receive a portion of the proceeds of such
Complete Series 2 Fortress Sale to the extent provided in, and in accordance with the terms
of, Section 9.15, and all Series 2 Class B Units shall be cancelled and retired and the
Class B Holder shall cease to be a Member of Series 2 and, if the Class B Holder is not a
Member of any other Series, the Company.

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     9.15. Proceeds of Sale Transaction. In the event of any Sale of Class A Units (whether or not the
same shall constitute a Sale of a Series hereunder), if the Class B Holder would be entitled to
some portion of the proceeds of such Sale if the proceeds thereof had been distributed by the
Company pursuant to Section 7.2 or Section 7.3, as applicable, the Class B Holder shall, as a
condition to completion of such Sale, receive a payment equal to such portion of such proceeds at
the time of consummation of such sale.

ARTICLE X

ADMISSION OF ASSIGNEE AS MEMBER

     10.1. Requirements. A Person that has validly (including in compliance with Article IX) acquired a
Series Interest by a Transfer from a Member shall be admitted to such Series as a Member upon
compliance with each of the following conditions:

	 	(a)	 	A duly executed and acknowledged written instrument of Transfer
is filed with the Company and such Series, specifying the Series Interests
being transferred and setting forth the intention of the Member effecting the
Transfer that the Assignee succeed to a portion or all of such Member’s Series
Interest as a Member;
	 
	 	(b)	 	The Assignee qualifies as an Accredited Investor or is a Member
of the Immediate Family of the Member making such Transfer and such Transfer
has been made for estate planning purposes or by testamentary or intestate
disposition;
	 
	 	(c)	 	If requested by the Company Manager and applicable Series
Manager, the Assignee delivers to the Company and such Series an opinion of
counsel, in form and substance satisfactory to such Manager, to the effect
provided in clause (a) of Section 9.2 with respect to the admission of the
Assignee as a Member, unless such an opinion would not be required by virtue of
the proviso to said clause (a);
	 
	 	(d)	 	The Member effecting the Transfer and Assignee execute and
acknowledge any other instruments that the Company Manager and applicable
Series Manager deem reasonably necessary or desirable for admission of the
Assignee, including the written acceptance and adoption by the Assignee of the
provisions of this Agreement (including the representations, warranties and
covenants set forth in Article XIV) and execution, acknowledgment, and delivery
to the Manager of a special power of attorney as provided in Section 18.4;

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	 	(e)	 	The Member effecting the Transfer or the Assignee pays to the
Company or such Series a transfer fee sufficient to cover all reasonable
expenses connected with the admission; and
	 
	 	(f)	 	Article IX of this Agreement has been or is complied with;

provided, however, that, notwithstanding the foregoing, in no event shall a competitor of the
Company or any Subsidiary (as determined in good faith by the Company Manager) be admitted as a
Member without the prior written consent of the Company Manager.

     10.2. Consent. Each Member hereby agrees that upon satisfaction of the terms and conditions of
this Article X with respect to any proposed Transfer, the Person proposed to be such transferee may
be admitted as a Member.

     10.3. Withdrawal of Member; No Dissolution. If a Member Transfers all of its Series Interest
pursuant to Article IX and the transferee of such interest is admitted as a Member pursuant to
Section 10.1, such Person shall be admitted to such Series as a Member effective on the effective
date of the Transfer or such other date as may be specified when the Member is admitted, and,
immediately following such admission, the Member effecting the Transfer shall cease to be a Member
of such Series. Upon the resignation or withdrawal from such Series of the Member effecting the
Transfer, the resigning or withdrawing member shall not be entitled to any Distributions (including
any Distributions under Section 18-604 of the Act) from and after the date of such resignation or
transfer, other than any Tax Distribution payable in accordance with Section 7.4 hereof.

ARTICLE XI

RIGHTS AND POWERS OF THE MEMBERS

     11.1. No Management and Control. In no event shall any Member, in its capacity as such, have any
right or authority to act for or bind the Company or any Series, and, except as expressly provided
in this Agreement or any other agreement between such Member and the Company or any Series, no
Member in its capacity as such shall take part in or interfere in any manner with the management of
the business and affairs of the Company or any Series.

     11.2. Specific Limitations. No Member shall have the right or power to: (a) withdraw or reduce
its capital contribution except as a result of the dissolution of the Company or any Series or as
otherwise provided by law or in this Agreement, (b) make voluntary capital contributions or
contribute any property to the Company or any Series other than cash, (c) bring an action for
partition against the Company or any Series or any Company or Series assets, (d) to the fullest
extent permitted by law, cause the dissolution of the Company or any Series, except as set forth in
this Agreement, or (e) upon any Distribution, including any liquidating Distribution, require that
property other than cash be distributed in return for its capital contribution. Each Member hereby
irrevocably waives any and all rights that it may have to maintain an action for partition of any
of the Company’s or any Series’ property. Except as otherwise set forth in this Agreement, no
Member shall have priority over any other Member either as to the return of its capital
contribution or as to any allocation of Net Profit or Net Loss, or as to Distributions.

48

 

Other than
upon the termination and dissolution of the Company or any Series as provided by this Agreement,
there has been no time agreed upon when Distribution in liquidation of a Member’s Series Interest
will be made.

11.3. Amendments to Certificate and Agreement; Voting.

     11.3.1. Except as otherwise expressly provided herein, including Section 3.7, Section
3.8, Section 5.3 and Section 11.3.5, either this Agreement or the Certificate (or both) may
be modified or amended with and by (but only with and by) the written consent of the
Majority Class A Holders. A Member’s execution and delivery of this Agreement shall be
deemed its consent and approval of any and all amendments to the Previous Agreements that
are reflected in this amended and restated limited liability company agreement.

     11.3.2. The Company Manager shall cause to be prepared and filed any amendment or
restatement to the Certificate that may be approved in accordance with this Agreement.

     11.3.3. Any modification or amendment to the Certificate or this Agreement pursuant to
this Article XI shall be binding on all Members and Assignees. Each Member and Assignee
shall be bound by this Agreement whether or not such Member or Assignee has executed this
Agreement.

     11.3.4. For all purposes hereunder and under the Act, all holders of Units of a
particular Series shall vote together as a single class, with (a) each holder of Class A
Units of such Series entitled to a number of votes equal to the number of Class A Units of
such Series of which it is the record holder and (b) the Class B Holder, each holder of
Class C Preferred Units and each holder of Class D Preferred Units shall have no vote with
respect to its Class B Units, Class C Preferred Units or Class D Preferred Units, as
applicable.

     11.3.5. Notwithstanding the foregoing, (i) none of Article XVII or Sections 3.8, 3.15,
3.16, 5.3, 7.2, 7.4, 9.6, 9.7, 9.8, 11.3, 16.1, 18.5, 18.7 of this Agreement or, to the
extent used in Article XVII or Sections 3.8, 3.15, 3.16, 5.3, 7.2, 7.4, 9.6, 9.7, 9.8, 11.3,
16.1, 18.5, 18.7, any of the Specified Defined Terms, or any other Defined Term contained in
Schedule 1 hereto to the extent used in any Specified Defined Term, may be modified or
amended without the consent of the Majority Management Holders, which consent may not be
unreasonably withheld, conditioned or delayed and (ii) none of those rights, preferences or
privileges of the Management Holders, the Class B Holder, or the Management Holders and the
Class B Holder, contained in Article IX that are specific or unique to the Management
Holders, the Class B Holder, or the Management Holders and the Class B Holder, or, to the
extent used in the provisions of Article IX which set forth such rights, preferences or
privileges, any of the Defined Terms contained in Schedule 1 hereto or any other Defined
Term contained in Schedule 1 hereto to the extent used in any Specified Defined Term, may be
modified or amended in a manner adverse to the Management Holders or Class B Holder, as
applicable, without the consent of the

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Majority Management Holders and/or Majority Class B
Holder Members, as applicable, which consent may not be unreasonably withheld, conditioned
or delayed.

ARTICLE XII

DISSOLUTION OF COMPANY

     12.1. Termination of Membership. No Member shall resign or withdraw from the Company or any Series
except that, subject to the restrictions set forth in Articles IX and X, any Member may Transfer
its Series Interests to an Assignee and an Assignee may become a Member in place of the Member
which assigned its Series Interests with respect to the Series Interests Transferred. The death,
retirement, resignation, expulsion, bankruptcy or dissolution of any Member or the occurrence of
any other event that terminates the continued membership of any Member shall not in and of itself
cause the Company or any Series to be dissolved or its affairs to be wound up, and upon the
occurrence of any such event, the Company or such Series shall be continued without dissolution.

     12.2. Events of Dissolution or Liquidation. The Company shall be dissolved upon the happening of
any of the following events: (a) the determination of the Company Manager, (b) the sale or other
disposition of all of the Company’s and each Series’ assets and receipt of the final payment of all
installment obligations received as a result of such sale or other disposition, (c) upon the
termination of all Series pursuant to the next sentence, (d) upon the affirmative vote or other
written consent of all holders of Class A Units or (e) the entry of a decree of judicial
dissolution under Section 18-802 of the Act. A Series shall be dissolved upon the happening of any
of the following events: (a) the affirmative vote or written consent of all Members of such Series
at any time to terminate and dissolve such Series, (b) the determination of the Series Manager, (c)
the dissolution of the Company pursuant to the previous sentence, (d) the sale or disposition of
all of such Series’ assets and receipt of the final payment of all installment obligations received
as a result of such sale or other disposition or (e) the occurrence of any other event that causes
the termination of such Series under the Act.

     12.3. Liquidation. Upon dissolution of the Company or any Series for any reason, the Company or
such Series shall immediately commence to wind up its affairs. A reasonable period of time shall
be allowed for the orderly termination of the Company’s or such Series’ business, discharge of its
liabilities, and distribution or liquidation of the remaining assets so as to enable the Company or
such Series to minimize the normal losses attendant to the liquidation process. The Company’s
property or such Series’ and assets or the proceeds from the liquidation thereof shall be
distributed so as not to contravene the Act and upon satisfaction (whether by payment or the making
of reasonable provision for payment) of the Company’s or such Series’ liabilities, in accordance
with Section 7.2. A full accounting of the assets and liabilities of the Company or such Series
shall be taken and a statement thereof shall be furnished to each Member of the Company or such
Series, as applicable, within thirty days after the distribution of all of the assets of the
Company or such Series. Such accounting and statements shall be prepared under the direction of
the applicable Manager. In the case of the liquidation of the Company, upon such final accounting,
the Company Manager shall cancel the Certificate in accordance with the Act and the Company’s
existence as a separate legal entity shall terminate.

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     12.4. No Action for Dissolution. The Members acknowledge that irreparable damage would be done to
the goodwill and reputation of the Company and each Series if any Member should bring an action in
court to dissolve the Company or any Series under circumstances
where dissolution is not required by Section 12.2. This Agreement has been drawn carefully to
provide fair treatment of all parties and equitable payment in liquidation of the Series Interests
of all Members. Accordingly, except where the Company Manager or applicable Series Manager has
failed to liquidate the Company or any Series as required by Section 12.2 and except as
specifically provided in Section 18-802 of the Act, each Member hereby waives and renounces its
right to initiate legal action to seek dissolution or to seek the appointment of a receiver or
trustee to liquidate the Company or any Series.

     12.5. No Further Claim. Upon dissolution, each Member shall look solely to the assets of the
Company or Series for the return of its capital, and if the Company’s or such Series’ property
remaining after payment or discharge of the debts and liabilities of the Company or such Series,
including debts and liabilities owed to one or more of the Members, is insufficient to return the
aggregate capital contributions of each Member, such Members shall have no recourse against the
Company or any Series, any member of the Managers or any other Member.

ARTICLE XIII

INDEMNIFICATION

     13.1. General. The Company or any Series, as applicable shall, to the fullest extent permitted by
law, indemnify, defend, and hold harmless the Company Manager, each Series Manager and each Member,
including the Tax Matters Members, and each such Person’s officers, directors, partners, members,
shareholders, employees, and agents, and the employees, officers, and agents of the Company or
applicable Series, (all indemnified persons being referred to as “Indemnified Persons” for purposes
of this Article XIII), from any liability, loss, or damage incurred by the Indemnified Person by
reason of any act performed or omitted to be performed by the Indemnified Person in connection with
the business of the Company or applicable Series and from liabilities or obligations of the Company
or applicable Series imposed on such Person by virtue of such Person’s position with the Company or
applicable Series, including reasonable attorneys’ fees and costs and any amounts expended in the
settlement of any such claims of liability, loss, or damage; provided, however, that, if the
liability, loss, damage, or claim arises out of any action or inaction of an Indemnified Person,
indemnification under this Section 13.1 shall be available only if (a) either (i) the Indemnified
Person, at the time of such action or inaction, believed, in good faith, that its, his or her
course of conduct was in, or not opposed to, the best interests of the Company or applicable
Series, or (ii) in the case of inaction by the Indemnified Person, the Indemnified Person did not
intend its, his or her inaction to be harmful or opposed to the best interests of the Company or
applicable Series, and (b) the action or inaction did not constitute fraud, gross negligence, or
willful misconduct by the Indemnified Person; and provided, further, that indemnification under
this Section 13.1 shall be recoverable only from the assets of the Company or Series, as
applicable, and not from any assets of the Members or any other Series. The Company or applicable
Series may, as determined by the Company Manager or applicable Series Manager, advance or reimburse
attorneys’ fees of an Indemnified Person as incurred. The Company or applicable Series may

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pay for
insurance covering liability of the Indemnified Persons for negligence in operation of the
Company’s or applicable Series’ affairs.

     13.2. Exculpation. No Indemnified Person shall be liable, in damages or otherwise, to the Company,
any Series or to any Member for any loss that arises out of any act performed or omitted to be
performed by it or him pursuant to the authority granted by this Agreement if (a) either (i) the
Indemnified Person, at the time of such action or inaction, believed, in good faith, that such
Indemnified Person’s course of conduct was in, or not opposed to, the best interests of the Company
or such Series, or (ii) in the case of inaction by the Indemnified Person, the Indemnified Person
did not intend such Indemnified Person’s inaction to be harmful or opposed to the best interests of
the Company or such Series, and (b) the conduct of the Indemnified Person did not constitute fraud,
gross negligence, or willful misconduct by such Indemnified Person.

     13.3. Persons Entitled to Indemnity. Any Person who is within the definition of “Indemnified
Person” at the time of any action or inaction in connection with the business of the Company or
Series, as applicable, shall be entitled to the benefits of this Article XIII as an “Indemnified
Person” with respect thereto, regardless whether such Person continues to be within the definition
of “Indemnified Person” at the time of such Indemnified Person’s claim for indemnification or
exculpation hereunder.

     13.4. Procedure Agreements. The Company and any Series may enter into an agreement with any of
their respective officers, employees and agents, Members or Manager, setting forth procedures
consistent with applicable law and this Agreement for implementing the indemnities provided in this
Article XIII.

     13.5. Interested Transactions. To the fullest extent permitted by law, neither the Company Manager
or Series Manager nor any Member shall be deemed to have breached his or her duty of loyalty to the
Company, any Series or the Members (and such Company Manager or Series Manager or Member shall not
be liable to the Company, any Series or to the Members for breach of any duty of loyalty or
analogous duty) with respect to any action or inaction in connection with or relating to any
transaction that was approved in accordance with, or contemplated by, the terms hereof.

     13.6. Business Opportunities. To the fullest extent permitted by law, the doctrine of corporate
opportunity, or any analogous doctrine, shall not apply to the Company Manager and Series Manager
or the Fortress Holders. The Company and each Series renounce any interest or expectancy of the
Company or such Series in, or in being offered an opportunity to participate in, business
opportunities that are from time to time presented to the Managers or the Fortress Holders.
Neither the Managers nor any Fortress Holder who acquires knowledge of a potential transaction,
agreement, arrangement or other matter that may be an opportunity for the Company or any Series
shall have any duty to communicate or offer such opportunity to the Company or any Series, and such
Manager or Fortress Holder shall not be liable to the Company or any Series or to the Members for
breach of any fiduciary or other duty by reason of the fact that such member Manager or Fortress
Holder pursues or acquires for, or directs such opportunity to another Person or does not
communicate such opportunity or information to the Company or any Series. No amendment or repeal
of this Section 13.6 shall apply to or have any effect on the

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liability or alleged liability of the
Managers or the Fortress Holders for or with respect to any opportunities of which the Managers or
Fortress Holder become aware prior to such amendment or repeal.

13.7. Fiduciary and Other Duties.

     13.7.1. An Indemnified Person acting under this Agreement shall not be liable to the
Company, any Series or to any other Indemnified Person for its, his or her good faith
reliance on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they expressly limit the duties (including fiduciary duties) and liabilities of
an Indemnified Person otherwise existing at law or in equity, are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.

     13.7.2. Notwithstanding any other provision of this Agreement or otherwise applicable
law, whenever in this Agreement an Indemnified Person is permitted or required to make a
decision (a) in its, his or her discretion or under a grant of similar authority, the
Indemnified Person shall be entitled to consider only such interests and factors as such
Indemnified Person desires, including its, his or her own interests, and shall, to the
fullest extent permitted by applicable law, have no duty or obligation to give any
consideration to any interest of or factors affecting the Company, any Series or any other
Person, or (b) in its, his or her good faith or under another express standard, the
Indemnified Person shall act under such express standard and shall not be subject to any
other or different standards.

     13.8. Amendment. The provisions of this Article XIII may be amended or repealed in accordance with
Section 11.3; provided, however, that no amendment or repeal of such provisions that adversely
affects the rights of any Indemnified Person under this Article XIII with respect to its acts or
omissions at any time prior to such amendment or repeal shall apply to any Indemnified Person
without its prior written consent.

     13.9. Survival. The provisions of this Article XIII shall survive any termination of this
Agreement.

     13.10. No Inconsistent Amendments to Certificate. No amendments to the Certificate shall be made
to the extent such amendments are contrary to, or not consistent with, the provisions of this
Article XIII.

ARTICLE XIV

REPRESENTATIONS AND COVENANTS BY THE MEMBERS

     Each Member hereby represents and warrants to, and agrees with, the Managers, the other
Members, the Company and each Series, severally and as to itself, as follows:

     14.1. Investment Intent. It is acquiring its Series Interests with the intent of holding the same
for investment for its own account and without the intent or a view of participating directly

53

 

or
indirectly in any distribution of such Series Interests within the meaning of the Securities Act or
any applicable state securities laws in a manner that would violate such laws.

14.2. Securities Regulation.

     14.2.1. It acknowledges and agrees that its Series Interests are being issued and sold
in reliance on the exemption from registration contained in Section 4(2) of the Securities
Act and exemptions contained in applicable state securities laws, and that its Series
Interests cannot and will not be sold or transferred except in a transaction that is exempt
under the Securities Act and those state acts or pursuant to an effective registration
statement under the Securities Act and those state acts or in a transaction that is
otherwise in compliance with the Securities Act and those state acts.

     14.2.2. It understands that it has no contractual right under this Agreement for the
registration under the Securities Act of its Series Interests for public sale and that,
unless its Series Interests are registered or an exemption from registration is available,
its Series Interests may be required to be held indefinitely.

     14.3. Knowledge and Experience. It has such knowledge and experience in financial, tax, and
business matters as to enable it to evaluate the merits and risks of its investment in the Company
and each applicable Series and to make an informed investment decision with respect thereto.

     14.4. Economic Risk. It is able to bear the economic risk of its investment in its Series
Interests.

     14.5. Binding Agreement. It has all requisite power and authority to enter into and perform this
Agreement and that this Agreement is and will remain its valid and binding agreement, enforceable
in accordance with its terms (subject, as to the enforcement of remedies, to any applicable
bankruptcy, insolvency, or other laws affecting the enforcement of creditors rights).

     14.6. Tax Position. Unless it provides prior written notice to the Company and applicable Series,
it will not take a position on any federal, state, foreign or other income tax return, in any claim
for refund, or in any administrative or legal proceedings that is inconsistent with any information
return filed by the Company or such Series or with the provisions of this Agreement.

     14.7. Information. It has received all documents, books, and records pertaining to an investment
in the Company and applicable Series requested by it. It has had a reasonable opportunity to ask
questions of and receive answers concerning the Company and applicable Series, and all such
questions have been answered to its satisfaction.

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ARTICLE XV

COMPANY AND SERIES REPRESENTATIONS

     In order to induce the Members to enter into this Agreement and to make the Capital
Contributions contemplated hereby, the Company and each Series hereby, severally and not jointly,
represent and warrants to each Member as follows:

     15.1. Organization, etc. The Company is a duly formed and validly existing limited liability
company under the Act and the Certificate has been duly filed as required by the Act. The Company
has all necessary power and authority under the Act to issue the Series Interests to be issued to
the Members hereunder.

     15.2. Series Interests. When the Series Interests are issued to the Members as contemplated by
this Agreement and the capital contributions required to be made by such Members are made, the
Series Interest issued to such Members will be duly and validly issued and no liability for any
additional capital contributions or for any obligations of the Company or Series will attach
thereto, except to the extent required by the Act or this Agreement.

ARTICLE XVI

RIGHT TO CONVERT TO CORPORATE FORM

     16.1. Conversion of Company. With the prior written consent of the Company Manager and each Series
Manager, but without any need for consent or approval of any other Member, the Majority Class A
Holders may elect to require that the Company be converted into a corporation having, immediately
prior to such conversion, no assets, liabilities, debts or other material obligations (other than
those associated with its formation and initial capitalization), which conversion shall occur in
anticipation of or in connection with a Qualified Public Offering by such corporation, and shall be
effected by a merger, a tax-free contribution under Section 351 of the Internal Revenue Code or by
such other form of tax-free transaction as may be available under applicable law. In such
conversion, each Member’s direct or indirect ownership percentage of the Pre-Transaction Value of
all Units outstanding immediately prior to such conversion shall be the basis for the allocation of
shares or options in the corporation (a) all Class A Units of each Series shall be converted into
common stock of the corporation of the same class and with the same rights and obligations, (b) all
Class B Units outstanding immediately prior to such conversion shall be converted into or exchanged
for shares or, if agreed to by the Majority Management Holders, options, in the corporation, and
(c) all Class C Preferred Units and Class D Preferred Units outstanding immediately prior to such
conversion shall be converted into preferred or common stock of the corporation having rights and
preferences substantially similar to such Class C Preferred Units or Class D Preferred Units prior
to such conversion. It is the intent of the Members that the conversion of the Company into
corporate form and the conversion or reorganization of any of the Company’s operating divisions,
whether currently existing or existing in the future, into corporate form are part of each Member’s
investment decision with respect to the Units of such Member. The Members agree that, to the
extent reasonably practicable, they shall work together in good faith to effect such conversion on
a non-detrimental tax basis for all holders.

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     16.2. Execution of Documents. Upon an election pursuant to Section 16.1, the Members shall, at the
expense of the Company, as soon as practicable thereafter execute, acknowledge, and deliver, or
cause to be executed, acknowledged, and delivered, all instruments and documents that may be
reasonably requested by the Majority Class A Holders to best effectuate the conversion of the
Company to a corporation while continuing in full force and effect, to the extent consistent with
such conversion, the terms, provisions, and conditions of this Agreement, including all rights,
protections and benefits afforded to parties to this Agreement,
and including those provisions granting the Managers exclusive authority to manage the operations
and affairs of the Company and each Series, those provisions restricting the assignment of Units,
those provisions granting rights to repurchase or sell Units or rights to participate in certain
transactions and those provisions relating to confidentiality, indemnification and limitation of
the Company’s and Series’ activities; provided, however, that in no event shall the rights or
obligations contained in Article IX be of any force or effect after the closing of a Qualified
Public Offering. Each Member hereby agrees that it will execute and deliver all votes or written
consents that the Majority Class A Holders may deem reasonably necessary or advisable in order to
best effectuate the conversion of the Company to a corporation pursuant to this Section 16.

ARTICLE XVII

LIMITED LIABILITY

     Except as otherwise required by the Act, the debts, obligations and liabilities of the Company
or a Series, as the case may be, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company or such Series, as the case may be, and no
Indemnified Person (including a Member) shall be obligated personally for any such debt, obligation
or liability of the Company or such Series, as the case may be, solely by reason of being an
Indemnified Person. All persons dealing with the Company or a Series, as the case may be, shall
look solely to the assets of the Company or such Series, as the case may be, for the payment of the
debts, obligations or liabilities of the Company or such Series, as the case may be.

ARTICLE XVIII

MISCELLANEOUS

     18.1. Additional Documents. At any time and from time to time after the date of this Agreement,
upon the request of the Company Manager or a Series Manager and at the expense of the Company or
such Series, each Member shall do and perform, or cause to be done and performed, all such
additional acts and deeds, and shall execute, acknowledge, and deliver, or cause to be executed,
acknowledged, and delivered, all such additional instruments and documents, as may reasonably be
required to effectuate the purposes and intent of this Agreement.

     18.2. General. This Agreement: (i) shall be binding upon the Managers, the Members, the
Assignees, and the executors, administrators, estates, heirs, and legal successors of the Members
and the Assignees whether or not such Managers, Members or Assignees execute this

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Agreement; (ii)
shall be governed by and construed in accordance with the laws of the State of Delaware; and (iii)
together with any employment agreements between a Member and the Company or any of its
Subsidiaries, any subscription or purchase agreements pursuant to which Units were purchased or
awarded, the Management LLC Agreement or any Management Loan, contains the entire contract among
the Members as to the subject matter hereof and supersedes all prior agreements with respect to
such subject matter. The waiver of any of the provisions,
terms, or conditions contained in this Agreement shall not be considered as a waiver of any of the
other provisions, terms, or conditions hereof.

     18.3. Notices, etc.All notices and other communications required or permitted hereunder shall be
effective if in writing and (i) delivered personally, (ii) sent by facsimile, (iii) sent by
nationally recognized overnight courier, or (iv) sent by registered or certified mail, postage
prepaid, in each case, addressed as follows:

     If to any Member, at the address of such Member set forth in the records of the Company or at
such other address as such Member shall have furnished to the Company in writing as the address to
which notices are to be sent hereunder, and in the case of any Management Holder, with a copy to:

Seyfarth Shaw LLP

131 South Dearborn Street

Chicago, Illinois 60603

Facsimile: (312) 460-7828

Attention: Steven R. Lifson

     If to the Company to:

FIF HE Holdings LLC

c/o Fortress Investment Group, L.L.C.

1345 Avenue of the Americas

New York, New York 10105

Facsimile: (212) 798-6137

Attention: Randal A. Nardone

                 Pete Smith

     If to Series 1 to:

FIF HE Holdings LLC Series 1

c/o Fortress Investment Group, L.L.C.

1345 Avenue of the Americas

New York, New York 10105

Facsimile: (212) 798-6137

Attention: Randal A. Nardone

                 Pete Smith

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     If to Series 2 to:

FIF HE Holdings LLC Series 2

c/o Fortress Investment Group, L.L.C.

1345 Avenue of the Americas

New York, New York 10105

Facsimile: (212) 798-6137

Attention: Randal A. Nardone

                 Pete Smith

     If to the Company Manager to:

FIF HE Holdings LLC

c/o Fortress Investment Group, L.L.C.

1345 Avenue of the Americas

New York, New York 10105

Facsimile: (212) 798-6137

Attention: Randal A. Nardone

                 Pete Smith

     With a copy, whether to the Company, Series 1, Series 2 or the Company Manager, to:

Skadden, Arps, Slate, Meagher & Flom LLP

300 S. Grand Avenue, Suite 3400

Los Angeles, California 90071

Facsimile: (213) 687-5600

Attention: Jonathan Friedman

     If to the Class B Holder to:

Nationstar Investment Holdings LLC

c/o Fortress Investment Group, L.L.C.

1345 Avenue of the Americas

New York, New York 10105

Facsimile: (212) 798-6137

Attention: Randal A. Nardone

                 Pete Smith

     With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

300 S. Grand Avenue, Suite 3400

Los Angeles, California 90071

Facsimile: (213) 687-5600

Attention: Jonathan Friedman

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     Unless otherwise specified herein, such notices or other communications shall be deemed
effective, (a) on the date received, if personally delivered or sent by facsimile during normal
business hours, or (b) if delivered by registered or certified mail or by overnight courier, on the
date delivered as established by return receipt or courier service confirmation or the date on
which the return receipt or courier service confirms that acceptance of delivery was returned by
the addressee. Each of the parties hereto shall be entitled to specify a different address by
giving notice as aforesaid to each of the other parties hereto.

     18.4. Execution of Papers. With respect to the Company or any Series to which a Member is a
Member, the Members agree to execute such instruments, documents, and papers at the Company’s or
such Series, as the case may be, expense as are reasonably necessary or appropriate to carry out
the intent of this Agreement. Each Member, including each new and substituted Member and each
Assignee, by the execution of this Agreement or any Previous Agreement, by agreeing in writing to
be bound by the provisions of this Agreement or any Previous Agreement, or if such Member or
Assignee has not executed this Agreement or a Previous Agreement, or agreed in writing to be bound
by the provisions of this Agreement or any Previous Agreement, by virtue of the provisions of the
Act that make each Member and each Assignee bound by this Agreement, whether or not such Member or
Assignee executes the Agreement, irrevocably constitutes and appoints the Company Manager, with
respect to the Company, and the respective Series Managers, with respect to each such Series to
which such Member is a Member, or any Person designated by the Company Manager or such Series
Manager to act on such Member’s behalf with respect to the Company or such Series, as the case may
be, for purposes of this Section 18.4 as its true and lawful attorney-in-fact with full power and
authority in its name, place, and stead to execute, acknowledge, deliver, swear to, file, and
record at the appropriate public offices such documents as may be necessary or appropriate to carry
out the provisions of this Agreement, including but not limited to:

	 	(a)	 	all certificates and other instruments (specifically including
counterparts of this Agreement), and any amendment thereof adopted in
accordance with the terms hereof, that the Company Manager or Series Manager,
as the case may be, deems appropriate to qualify or continue the Company or
such Series as a limited liability company in any jurisdiction in which the
Company or such Series may conduct business or in which such qualification or
continuation is, in the opinion of the Company Manager or Series Manager, as
the case may be, necessary to protect the limited liability of the Members;
	 
	 	(b)	 	all amendments to this Agreement adopted in accordance with the
terms hereof and all instruments that the Company Manager or Series Manager, as
the case may be, deems appropriate to reflect a change or modification of the
Company or such Series, as the case may be, in accordance with the terms of
this Agreement; and
	 
	 	(c)	 	all conveyances and other instruments that the Company Manager
or Series Manager, as the case may be, deems appropriate to reflect the
dissolution of the Company or such Series, as the case may be, in accordance
with the terms hereof.

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The appointment by each Member of the Company Manager or Series Manager, as the case may be, as
such Member’s attorney-in-fact shall be deemed to be a power coupled with an interest, in
recognition of the fact that each of the Members under this Agreement will be relying upon the
power of the Company Manager or Series Manager, as the case may be, to act as contemplated by this
Agreement in any filing and other action by him or her on behalf of the Company or such Series, as
the case may be, and shall survive the bankruptcy, dissolution, death, adjudication of incompetence
or insanity of any Member giving such power and the transfer or assignment of all or any part of
such Member’s Series Interest; provided, however, that in the event of a Transfer by a Member of
all of its Series Interest, the power of attorney given by the transferor shall survive such
assignment only until such time as the Assignee shall have been admitted to the Company or such
Series, as the case may be, as a substituted Member and all required documents and instruments
shall have been duly executed, filed, and recorded to effect such substitution.

     18.5. Arbitration. The parties agree that any and all disputes, controversies or claims that may
arise out of the transactions, activities, payments, awards and/or benefits contemplated by this
Agreement, or the breach, termination or invalidity thereof (other than a suit to obtain specific
performance of the provisions of this Agreement or obtain other injunctive relief), shall be
submitted to, and determined by, binding arbitration in accordance with the following procedures:

     18.5.1. Either the Company or any Member may submit a dispute, controversy or claim to
arbitration by giving the other party written notice to such effect, which notice shall
describe, in reasonable detail, the facts and legal grounds forming the basis for the filing
party’s request for relief. The arbitration shall be held before one neutral arbitrator in
Wilmington, Delaware.

     18.5.2. Within thirty (30) days after the other party’s receipt of such demand, the
parties shall mutually agree upon a neutral arbitrator. If the parties are unable to agree
on a neutral arbitrator within that time period, the parties will request that the American
Arbitration Association (“AAA”) submit a panel of five neutral arbitrators who have a
background in, and knowledge of the financial services industry and shall otherwise be an
appropriate person based on the nature of the dispute. If a person with experience in such
matters is not available, the parties will request that the AAA submit a panel of five
retired federal judges from a pool maintained by AAA. If the parties are unable to mutually
agree on a neutral arbitrator from the panel submitted by AAA, the parties will alternate in
striking names from the pool of neutral arbitrators, with the Company striking the first
name.

     18.5.3. The arbitration shall be governed by the Commercial Arbitration Rules of AAA
and administered by the AAA, except as otherwise expressly agreed to by the parties.

     18.5.4. Discovery shall be limited to the request for and production of documents,
depositions and interrogatories, except as otherwise expressly agreed to by the parties.
All discovery shall be guided by the Federal Rules of Civil Procedure. All issues

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concerning discovery upon which the parties cannot agree shall be submitted to the
arbitrator for determination.

     18.5.5. In rendering an award, the arbitrator shall determine the rights and
obligations of the parties under this Agreement according to the substantive and procedural
laws of the State of Delaware, except as otherwise expressly agreed to by the parties.

     18.5.6. The decision of, and award rendered by, the arbitrator shall (unless the
arbitrator determines that this time frame is impracticable) be determined no more than 30
days after the selection of the arbitrator (or such longer period as the arbitrator may
require and the parties reasonably agree upon) and shall be final and binding on the parties
and shall not be subject to appeal. Judgment on the award may be entered in and enforced by
any court of competent jurisdiction.

     18.5.7. Each party shall bear its own costs and expenses (including filing fees) with
respect to the arbitration, including one-half of the fees and expenses of the arbitrator.

     18.6. Matters of Interpretation.

     18.6.1. Whenever required by the context, as used in this Agreement the singular number
shall include the plural, the plural shall include the singular, and all words herein in any
gender shall be deemed to include the masculine, feminine and neuter genders.

     18.6.2. Unless otherwise explicitly provided, references to Articles and Sections are
to Articles and Sections of this Agreement, and references to Schedules are to Schedules to
this Agreement.

     18.6.3. Any reference to “this Agreement” or “herein” or “hereof,” or other similar
reference, shall, unless otherwise provided, be deemed to be a reference to this entire
Agreement, including all Schedules, and not to any specific Article or Section of this
Agreement or any specific Schedule to this Agreement.

     18.6.4. The headings used in this Agreement are used for administrative convenience
only and do not constitute substantive matter to be considered in construing the terms of
this Agreement.

     18.6.5. The word “including” shall be construed as “including without limitation”.

     18.6.6. References to statutes include all rules and regulations thereunder, and all
amendments and successors thereto, and interpretations thereof, all as in effect from time
to time.

     18.6.7. References to actions that are or may be taken by a Series shall be construed
as actions that are or may be taken by the Company with respect to such Series.

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     18.7. Subsidiary Matters. To the extent that the Company or any Series proposes to accept any
equity or debt investment into any Subsidiary in exchange for equity or debt interests in such
Subsidiary, such investment shall be subject to the applicable provisions of this Agreement as if
and to the extent such investment was proposed to be made directly into the Company or any Series,
including without limitation Sections 3.15, 3.16 and 9.9 hereof, and no such investment shall be
made without compliance with all such provisions.

     18.8. Severability. If any provision of this Agreement is determined by a court to be invalid or
unenforceable, that determination shall not affect the other provisions hereof, each of which shall
be construed and enforced as if the invalid or unenforceable portion were not contained herein.
That invalidity or unenforceability shall not affect any valid and enforceable application thereof,
and each said provision shall be deemed to be effective, operative, made, entered into or taken in
the manner and to the full extent permitted by law. Notwithstanding the foregoing, if any such
invalidity or unenforceability shall deprive any party hereto of a material portion of the benefits
intended to be provided to such party hereby, the parties shall in good faith seek to negotiate a
substitute benefit for such Person, it being understood that it is possible that no such substitute
benefit will be able to be so negotiated, in which event the other provisions of this Section 18.8
shall govern.

     18.9. No Third Party Rights. The provisions of this Agreement are for the benefit of the Company,
each Series, the Managers, the Members, the Assignees and the Indemnified Persons and no other
Person, including creditors of the Company or any Series shall have any right or claim against the
Company, any Series, the Managers or any other Member by reason of this Agreement or any provision
hereof or be entitled to enforce any provision of this Agreement.

     18.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

[The remainder of this page has intentionally been left blank]

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     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	FORTRESS INVESTMENT FUND III LP

FORTRESS INVESTMENT FUND III (Fund B) LP

FORTRESS INVESTMENT FUND III (Fund C) LP

FORTRESS INVESTMENT FUND III (Fund D) L.P.

FORTRESS INVESTMENT FUND III (Fund E) L.P.

 	 
	 	By:  	Fortress Fund III GP LLC,
 the general partner of the foregoing entities
 	 
	 	 	 
	 	By:  	       /s/ Randal A. Nardone
 	 
	 	 	Name:  	Randal A. Nardone 	 
	 	 	Title:  	Chief Operating Officer  	 
	 
	 	FIF III B HE BLKR LLC 	 
	 
	 	By:  	       Fortress Investment Fund III (Fund B) LP, its member
 	 
	 	 	 
	 	By:  	       Fortress Fund III GP LLC, its general partner
 	 
	 	 	 
	 	By:  	       /s/ Randal A. Nardone
 	 
	 	 	Name:  	Randal A. Nardone 	 
	 	 	Title:  	Chief Operating Officer 	 
	 
	 	FIF III C HE BLKR LLC

 	 
	 	By:  	Fortress Investment Fund III (Fund C) LP, its member
 	 
	 	 	 
	 	By:  	       Fortress Fund III GP LLC, its general partner
 	 
	 	 	 
	 	By:  	                                      /s/ Randal A. Nardone
 	 
	 	 	Name:  	Randal A. Nardone 	 
	 	 	Title:  	Chief Operating Officer 	 
	 

Signature Page

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	FORTRESS INVESTMENT FUND IV (Fund A) L.P.

FORTRESS INVESTMENT FUND IV (Fund B) L.P.

FORTRESS INVESTMENT FUND IV (Fund C) L.P.

FORTRESS INVESTMENT FUND IV (Fund D) L.P.

FORTRESS INVESTMENT FUND IV (Fund E) L.P.

FORTRESS INVESTMENT FUND IV (Fund F) L.P.

FORTRESS INVESTMENT FUND IV (Fund G) L.P.

 	 
	 	By:  	Fortress Fund IV GP L.P.,
 the general partner of the foregoing entities
 	 
	 	 	 
	 	By:  	    Fortress Fund IV GP Holdings Ltd., its general partner
 	 
	 	 	 
	 	By:  	      /s/ Randal A. Nardone
 	 
	 	 	Name:  	Randal A. Nardone 	 
	 	 	Title:  	Chief Operating Officer 	 
	 
	 	FIF IV B HE BLKR LLC

 	 
	 	By:  	Fortress Investment Fund IV (Fund B) L.P., its member
 	 
	 	 	 
	 	By:  	      Fortress Fund IV GP L.P., the general partner of the foregoing entities
 	 
	 	 	 
	 	By:  	      Fortress Fund IV GP Holdings Ltd., its general partner
 	 
	 	 	 
	 	By:  	       /s/ Randal A. Nardone
 	 
	 	 	Name:  	Randal A. Nardone 	 
	 	 	Title:  	Chief Operating Officer 	 
	 
	 	FIF IV CFG HE BLKR LLC

 	 
	 	By:  	Fortress Investment Fund IV (Fund C) L.P., Fortress Investment Fund IV (Fund F) L.P. and Fortress Investment Fund IV (Fund G) L.P., its members
 	 
	 	 	 
	 	By:  	                  Fortress Fund IV GP L.P., their general partner
 	 
	 	 	 
	 	By:  	                  Fortress Fund IV GP Holdings Ltd., its general partner
 	 
	 	 	 
	 	By:  	                                      /s/ Randal A. Nardone
 	 
	 	 	Name:  	Randal A. Nardone 	 
	 	 	Title:  	Chief Operating Officer 	 
	 

Signature Page

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	                                            /s/ Anthony H. Barone
 	 
	 	Anthony H. Barone 	 
	 	 	 

Signature Page

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	                              /s/ Jesse K. Bray
 	 
	 	Jesse K. Bray 	 
	 	 	 

Signature Page

 

 

     IN
WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/ [*]
 	 
	 	[*] 	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
                                          /s/
[*]
 	 
	 	[*]	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/ [*]
 	 
	 	 [*]	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	/s/ [*]

	 	[*] 	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/ [*]
 	 
	 	[*] 	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	/s/ [*]
 	 
	 	[*] 	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	/s/ [*]
 	 
	 	[*] 	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/     [ * ]
 	 
	 	[ * ]	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/     [ * ]
 	 
	 	[ * ]	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	                                           /s/ Amarkumar R. Patel
 	 
	 	Amarkumar R. Patel 	 
	 	 	 

Signature Page

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/     [ * ]
 	 
	 	[ * ]	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	
/s/     [ * ]
 	 
	 	[ * ]	 
	 	 	 

Signature Page

 

			
	*	 	[Confidential treatment requested]

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	 	 
	 	                                    /s/  Robert L. Appel
 	 
	 	Robert L. Appel 	 
	 	 	 

Signature Page

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Limited Liability Company Agreement as
of the day and year first set forth above.

	 	 	 	 	 
	 	NATIONSTAR INVESTMENT HOLDINGS LLC

 	 
	 	By:  	/s/ Pete Smith
 	 
	 	 	Name:  	Pete Smith 	 
	 	 	Title:  	Manager 	 

Signature Page

 

 

Schedule 1

DEFINED TERMS

     “AAA” is defined in Section 18.5.2.

     “Accredited Investor” has the meaning assigned to such term under Regulation D promulgated
pursuant to Section 4(2) of the Securities Act.

     “Act” shall mean the Delaware Limited Liability Company Act as amended and in effect from time
to time.

     “Additional Series” is defined in Section 3.2(b).

     “Affected Class” shall mean, with respect to any action, all Units in a Class which is subject
to such action.

     “Affected Units” is defined in Section 9.6.2(a).

     “Affiliate” shall mean, with respect to any specified Person, any Person that directly or
through one or more intermediaries controls or is controlled by or is under common control with the
specified Person. As used in this definition, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or otherwise, and the
possession, directly or indirectly, of 10% or more of the voting power of the equity issued by any
Person shall be deemed to constitute such control.

     “Agreement” shall mean this Limited Liability Company Agreement of the Company, as further
amended or restated from time to time.

     “Affected Allocated Class B Interest” is defined in Section 9.13.1.

     “Allocated Class B Interest” shall mean, the interests in the Class B Units held by the Class
B Holder that is designated under the Management LLC Agreement as attributable to Series 1 or
Series 2, as the case may be, and to a particular Management LLC Member.

     “Allocated Management LLC Unit Percentage” shall mean, the percentage of Units (as defined in
the Management LLC Agreement) then allocated under the Management LLC Agreement (obtained by
dividing the number of Units then issued and outstanding by the total number of authorized Units).
By way of illustration, if Management LLC has issued and outstanding 80 of 100 Units, the
“Allocated Management LLC Unit Percentage” would be 80% (80/100).

     “Arbitrator” is defined in Section 9.11.8.

     “Asset Value” of any tangible or intangible property of the Company or a Series (including
goodwill) shall mean its adjusted basis for federal income tax purposes unless:

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     (a) the property was accepted by the Company or such Series as a contribution to
capital at a value different than its adjusted basis in which event the initial Asset Value
for such property shall mean the gross fair market value of the property agreed to by the
Company or such Series and the contributing Member; or

     (b) the property of the Company or such Series is revalued in accordance with Section
3.11, in which case the Asset Value for such property shall mean the Asset Value of the
property determined thereunder.

As of any date, references to the “then prevailing Asset Value” of any property shall mean the
Asset Value last determined for such property less the depreciation, amortization and cost recovery
deductions taken into account in computing Net Profit or Net Loss in fiscal periods subsequent to
such prior determination date.

     “Assignee” shall mean a Person that has validly acquired a Series Interest from a Member
pursuant to a Transfer permitted under the terms of this Agreement but who has not become a Member
of such Series pursuant to the terms of this Agreement.

     “Cause” means, in the case of any employee or other service provider who was issued Units as
consideration for such Person’s Employment or services rendered to or on behalf of the Company or
its Affiliates, “Cause” as defined in such Person’s written contract of Employment or engagement,
if any, as may be in effect at the time of the occurrence of any acts or omissions that may
constitute “Cause”; provided, however, that in the case of any Person who is not party to any such
written contract or whose written contract does not contain a definition of “Cause,” “Cause” shall
mean any of the following, as determined by the Company Manager in good faith: (a) fraud,
embezzlement, material dishonesty, conviction or pleading of nolo contendere to a felony or a crime
involving moral turpitude or (b) a material breach of, a material failure to perform, or material
negligence in performance of, the duties of Employment or other engagement by the Company or any of
its Affiliates.

     “Certificate” is defined in the recitals.

     “CHEC” means Centex Home Equity Company, LLC.

     “Class,” when used with reference to a Unit, shall mean the Series and Class of Units of which
such Unit is a part.

     “Class A Approval” shall mean the approval of each of (i) the Majority Class A Holders and
(ii) the Majority Management Holders.

     “Class A Holder” means any holder of a Class A Unit.

     “Class A Transfer” is defined in Section 9.6.

     “Class A Units” shall mean, collectively, the Series 1 Class A Units and the Series 2 Class A
Units.

2

 

     “Class A Voting Interest” shall mean with respect to a Member at any time (a) with respect to
the Company as a whole, the aggregate number of Series 1 Class A and Series 2 Class A Units held by
such Member divided by the aggregate number of all Series 1 Class A and Series 2 Class A Units or
(b) with respect to a particular Series, the aggregate number of such Member’s Units of such Series
divided by the aggregate number of all Class A Units of such Series.

     “Class B Approval” shall mean the approval of the Majority Class B Holder Members.

     “Class B Fair Market Value Objection” is defined in Section 9.13.7.

     “Class B Holder” shall mean Management LLC.

     “Class B Holder Members” shall mean the members of Management LLC.

     “Class B Termination Redemption Right” is defined in Section 9.13.1.

     “Class B Units” shall mean the Series 1 Class B Units and the Series 2 Class B Units.

     “Class C Preferred Approval” shall mean the approval of the Majority Class C Preferred
Holders.

     “Class C Preferred Holder” means any holder of a Class C Preferred Unit.

     “Class D Preferred Approval” shall mean the approval of the Majority Class D Preferred
Holders.

     “Class D Preferred Holder” means any holder of a Class D Preferred Unit.

     “Closing” shall mean the consummation of the transaction contemplated by the Securities
Purchase Agreement.

     “Code” or “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the corresponding provisions of any future federal tax law.

     “Company” is defined in the introductory paragraph to this Agreement.

     “Company Manager” means the Manager of the Company.

     “Company Match Class A Units” shall mean, collectively, those Series 1 Class A Units and
Series 2 Class A Units granted to a Management Holder.

     “Complete Series 1 Fortress Sale” is defined in Section 9.14.1.

     “Complete Series 2 Fortress Sale” is defined in Section 9.14.2.

     “Deemed Series 1 Sale Proceeds” means, as of a particular date, the proceeds that would be
received upon a Sale of all Series 1 Class A Units held by the Fortress Holders and

3

 

Management Holders as of such date and assuming that such Units were sold at the Fair Market
Value of such Units as of such date.

     “Deemed Series 2 Sale Proceeds” means, as of a particular date, the proceeds that would be
received upon a Sale of all Series 2 Class A Units held by the Fortress Holders and Management
Holders as of such date and assuming that such Units were sold at the Fair Market Value of such
Units as of such date.

     “Deemed Series 1 Class B Sale Proceeds” means, as of a particular date, that portion of the
Deemed Series 1 Sale Proceeds, if any, that the Class B Holder would receive in respect of a
particular Management LLC Member’s Affected Allocated Class B Interest in Series 1 if the Deemed
Series 1 Sale Proceeds were distributed by the Company or Series 1 pursuant to the terms of Section
7.2.

     “Deemed Series 2 Class B Sale Proceeds” means, as of a particular date, that portion of the
Deemed Series 2 Sale Proceeds, if any, that the Class B Holder would receive in respect of a
particular Management LLC Member’s Affected Allocated Class B Interest in Series 2 if the Deemed
Series 2 Sale Proceeds were distributed by the Company or Series 2 pursuant to the terms of Section
7.3.

     “Designated Management Holders” means Anthony Barone, Jesse Bray, Amarkumar Patel and Robert
L. Appel.

     “Disability” means, in the case of any employee or other service provider who was issued Units
as consideration for such Person’s Employment or services rendered to or on behalf of the Company
or its Affiliates, “Disability” as defined in such Person’s written contract of Employment or
engagement, if any, as may be in effect at the time of the occurrence of any acts or omissions that
may constitute “Disability”; provided, however, that in the case of any Person who is not party to
any such written contract or whose written contract does not contain a definition of “Disability,”
“Disability” shall mean any of the following, as determined by the Manager in good faith: such
Person’s inability, due disability or incapacity, to perform all of his duties hereunder on a
full-time basis (i) for periods aggregating 90 days, whether or not continuous, in any continuous
period of 365 days or (ii) where such Person’s absence is adversely affecting the performance of
the Company or its Subsidiaries in a significant manner for periods greater than 30 days and such
Person does not resume his duties on a full-time basis within 10 days of receipt of written notice
of the Company’s determination under this clause (ii).

     “Distributable Cash Flow” means, with respect to each Series, for any period or at any time,
such portion of the cash on hand or in bank accounts of such Series that: (a) has been derived
from and in connection with the assets or activities of such Series; and (b) in the reasonable
judgment of the applicable Series Manager, is available for distribution to its Members after
reasonable provision has been made for the current liabilities, obligations, and operating expenses
of the Series and reasonable reserves (in the reasonable judgment of the Series Manager) have been
established for the operating expenses, obligations, and liabilities of such Series.

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     “Distribution” shall mean, with respect to a Series, cash or property (net of liabilities
assumed or to which the property is subject) distributed to a Member in respect of the Member’s
Series Interest in such Series, but shall not include (i) any transfer of REMIC regular interests
from one Series to the other, whether such transfer is effected by a transfer to the Members of
such Series and subsequent contribution from such Members to the other Series or by a direct
transfer from such Series to the other Series or (ii) any distributions of cash or other assets to
Members of a Series that is approximately contemporaneously contributed to that Series or the other
Series.

     “Drag Along Notice” is defined in Section 9.7.2.

     “Drag Along Sale Percentage” is defined in Section 9.7.1.

     “Drag Along Sellers” is defined in Section 9.7.3.

     “Economic Interest” shall mean all of the rights of an Assignee with respect to a Series
Interest.

     “Effective Date” shall have the meaning set forth in the first paragraph of this Agreement.

     “Electing Management Holder” is defined in Section 9.12.1.

     “Election Member” is defined in Section 8.7(a).

     “Employment” shall mean an individual’s employment or other service relationship with the
Company or any of its Subsidiaries. An employee will be deemed to cease Employment when the
individual incurs a “separation from service” from the applicable service recipient for purposes of
Sections 409A and 457A of the Code.

     “Equity Purchase Agreement” means the Equity Purchase Agreement dated on or about the date
hereof between the Company and a particular Member.

     “Fair Market Value” shall mean, (a) with respect to cash, the amount thereof, (b) with respect
to all other consideration, the fair market value thereof as determined as of the applicable
reference date in good faith by the applicable Manager. If such determination is with respect to
securities for which there is no established trading market, then it shall be made by reference to
prevailing conditions in capital markets generally, including (to such extent, if any, as the
applicable Manager in good faith deems relevant) the possibility of a public offering for such
securities or a private sale of such securities, and financial statements of the issuer thereof
prepared on a pro forma basis after giving effect to the events in question and considering, among
other factors, the price per security paid by a bona fide, non-Affiliate purchaser in an
arms’-length transaction, the existence and nature of any recent or pending transactions or
transaction proposals, book value, replacement value, earnings and the value of future cash flows
of such issuer as an on-going enterprise, both the sale of various combinations of the individual
assets of such issuer as well as a sale of such issuer as a whole, and shall make no deduction,
discount or other subtraction whatsoever for the possible minority status of the holder of such
security or for any lack of marketability of such security (other than by virtue of conditions in

5

 

capital markets generally) or any restrictions on the transfer thereof; provided, however,
that if such determination is with respect to securities of, or a direct or indirect interest in,
the Company or any Series and is being made at the time of a sale of material amount of similar
securities of, or a similar direct or indirect interest in, the Company or any Series to a bona
fide purchaser which is not an Affiliate of the Seller, then the Fair Market Value of such security
or interest shall be conclusively deemed to be the Fair Market Value of the consideration being
paid by such purchaser. Additionally, such determination shall be made without consideration of
premiums for control or discounts for minority interests or other disparities in valuation arising
from the distinctive characteristics of a particular class of securities (other than (x) any
preferences upon a sale or liquidation of the Company or a Series or (y) differences in rights to
Distributions, all of which shall be taken into effect in making such determination).

     “Fair Market Value Objection” is defined in Section 9.11.7.

     “Fortress Holders” means, Fortress Investment Fund III LP, Fortress Investment III (Fund B)
LP, Fortress Investment III (Fund C) LP, Fortress Investment III (Fund D) L.P., Fortress Investment
III (Fund E) LP, Fortress Investment Fund IV (Fund A) L.P., Fortress Investment Fund IV (Fund B)
L.P., Fortress Investment Fund IV (Fund C) L.P., Fortress Investment Fund IV (Fund D) L.P.,
Fortress Investment Fund IV (Fund E) L.P., Fortress Investment Fund IV (Fund F) L.P. and Fortress
Investment Fund IV (Fund G) L.P.

     “Fortress Series 2 Class A Distribution Percentage” means, as of the date of a Distribution
from Series 2, the percentage equal to 100 minus the Series 2 Class B Distribution Percentage (as
of such date). By way of illustration, if the Series 2 Class B Distribution Percentage is 8.25%,
the Fortress Series 2 Class A Distribution Percentage would be 91.75% (100%-8.25%).

     “Fortress Series 1 Distribution Percentage” means, as of the date of a Distribution from
Series 1, the percentage equal to 100 minus the Series 1 Class B Distribution Percentage (as of
such date). By way of illustration, if the Series 1 Class B Distribution Percentage is 8.25%, the
Fortress Series 1 Distribution Percentage would be 91.75% (100%-8.25%).

     “Fourth Amended and Restated Agreement” is defined in the recitals.

     “Further Investment” is defined in Section 3.16.

     “Good Reason” means, in the case of any employee or other service provider who was issued
Units as consideration for such Person’s Employment or services rendered to or on behalf of the
Company or its Affiliates, “Good Reason” as defined in such Person’s written contract of Employment
or engagement, if any, as may be in effect at the time of the occurrence of any acts or omissions
that may constitute “Good Reason”; provided, however, that in the case of any Person who is not
party to any such written contract or whose written contract does not contain a definition of “Good
Reason,” “Good Reason” shall mean any of the following, as determined by the Manager in good faith:
(i) a material reduction in such Person’s base salary or (B) any relocation of such Person more
than 50 miles from such Person’s existing place of Employment.

     “Indemnified Persons” is defined in Section 13.1.

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     “Initial Capital Account” is defined in Section 3.5.

     “Initial Public Offering” shall mean a public offering and sale of equity securities of any
successor to the Company for cash pursuant to an effective registration statement under the
Securities Act of 1933, as amended, registered on Form S-1 (or any successor form under said
Securities Act).

     “Initial Series 1 Liquidity Distribution” means an amount equal to (a) the Series 1 Class B
Distribution Percentage divided by 10 multiplied by the amount of the Fortress Holders’ and
Management Holders’ Invested Capital in Series 1 minus (b) any proceeds received by the Class B
Holder pursuant to any Sale of Series 1 Class A Units pursuant to Section 9.15.

     “Initial Series 2 Liquidity Distribution” means an amount equal to (a) the Series 2 Class B
Distribution Percentage divided by 10 multiplied by the amount of the Fortress Holders’ and
Management Holders’ Invested Capital in Series 2 minus (b) any proceeds received by the Class B
Holder pursuant to any Sale of Series 2 Class A Units pursuant to Section 9.15.

     “Invested Capital” shall mean, with respect to each Series and each Member of such Series, the
amount invested in such Series (including by way of the purchase price paid for Series Interests in
such Series) by such Member, plus all subsequent cash or other contributions (including
in-kind contributions and the value of any services contributed) made to such Series by such
Member, and minus, in the case of Series 1 Class C Preferred Units, the aggregate amount of
all distributions paid to Class C Preferred Holders pursuant to Section 7.2(ii)(y), and in the case
of Series 1 Class D Preferred Units, the aggregate amount of all distributions paid to Class D
Preferred Holders pursuant to Section 7.2(i)(y). For the avoidance of doubt, “Invested Capital”
shall not include (i) any amount invested in a Series pursuant to a transfer of REMIC regular
interests from one Series to the other, whether such transfer is effected by a transfer to the
Members of such Series and subsequent contribution from such Members to the other Series or by a
direct transfer from such Series to the other Series, or (ii) any amount that was invested in a
Series that is distributed to Members of such Series or another Series and is approximately
contemporaneously contributed to or invested in that Series or the other Series.

     “Issuance” shall mean any issuance by the Company or a Series of Units and the term “Issue” or
“Issued” shall have correlative meanings.

     “Majority Class A Holders” shall mean the holders of a majority of the Class A Voting
Interests.

     “Majority Class B Holder Members” shall mean the holders of at least 66 2/3% of the Membership
Units (as defined in the Management LLC Agreement) held by all Management LLC Members at a given
time.

     “Majority Class C Preferred Holders” shall mean the holders of a majority of the Class C
Preferred Units.

     “Majority Class D Preferred Holders” shall mean the holders of a majority of the Class D
Preferred Units.

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     “Majority Management Holders” shall mean the holders of at least 66 2/3% of the Class A Voting
Interests held by all Management Holders at a given time.

     “Management Holder” shall mean each Designated Management Holder and each holder of Class A
Units whose primary Employment responsibilities were, as of December 31, 2008, to CHEC and its
Subsidiaries, each of whom is identified on Schedule 3.7 (which shall be supplemented and
amended from time to time) and any Person who acquires Class A Units from a Management Holder in
accordance with the terms of this Agreement.

     “Management LLC” means Nationstar Investment Holdings LLC, a Delaware limited liability
company.

     “Management LLC Agreement” means the limited liability company agreement dated on or about the
date hereof (as hereafter may be amended) among Management LLC and the other parties thereto.

     “Management LLC Member” means a member of Management LLC.

     “Management Loan” is defined in Section 9.12.1.

     “Manager” means, the Company Manager and the Series Manager, as the case may be, as determined
by the Majority Class A Holders or Series Majority Class A Holders, respectively.

     “Mandatory Series Capital Contribution” is defined in Section 3.6.

     “Material Subsequent Investment” means any contribution of or investment in Invested Capital
into the Company, Series 1 or Series 2, excluding the Transaction Related Invested Capital, which
shall exceed $5 million with respect to any single contribution or investment or any related or
approximately contemporaneous contributions or investments, or which shall exceed $20 million with
respect to all contributions into the Company, Series 1 and Series 2, in the aggregate.

     “Members” shall mean those Persons admitted as members of a Series pursuant to Section 2.7 or
Section 10.1 or shall mean the Persons to whom a Series has issued Units pursuant to a writing
signed by a Person authorized by the applicable Manager and who have been admitted as members of
such Series and in each case are identified on the books and records of the Company and such Series
as members of the Company or such Series, in each such Person’s capacity as a member of the Company
or such Series.

     “Members of the Immediate Family” shall mean, with respect to any individual, (i) each spouse,
child or grandchild of such individual, child or grandchild of such individual’s spouse, or spouse
of any child or grandchild of such individual or such individual’s spouse, (ii) each trust created
solely for the benefit of one or more of such individual and the Persons listed in clause (i)
above, (iii) each custodian or guardian of any property of one or more of the Persons listed in
clause (i) above, in his capacity as such custodian or guardian and (iv) each limited partnership
or limited liability company controlled by such individual or one or more of the Persons listed in
clause (i) above for the benefit of one or more of such Persons.

8

 

     “Net Profit” and “Net Loss” are defined in Section 7.8.

     “Objecting Class B Holder” is defined in Section 9.13.4.

     “Objecting Management Holder” is defined in Section 9.11.7.

     “Participating Buyer” is defined in Section 9.9.2.

     “Participating Seller” is defined in Sections 9.6.3 and 9.7.3.

     “Participation Commitment” is defined in Section 9.9.2.

     “Participation Notice” is defined in Section 9.9.1.

     “Participation Portion” is defined in Section 9.9.1(b).

     “Person” shall mean an individual, partnership, joint venture, association, corporation,
trust, estate, limited liability company, limited liability partnership, or any other legal entity.

     “Pre-Transaction Value” of a Unit shall mean: (a) if being calculated in connection with a
Transfer of a material number of Units, an amount calculated based on the aggregate consideration
to be paid in respect of all Units being Transferred in the applicable transaction, the aggregate
value of all of the equity of the Series derived from such aggregate consideration, and the
relative amounts which would be paid in respect of each Series and Class of Units were such
aggregate value of all such equity to be paid out in accordance with the provisions of Section 7.2,
but shall not take into account any differences in voting rights or any other rights other than
such rights upon a liquidation of the Company or a Series; and (b) in all other events, the Fair
Market Value thereof.

     “Preferred Transfer” is defined in Section 9.6.

     “Preferred Yield Net Profit” is defined in Section 7.8.

     “Preferred Yield Net Profit Allocation” is defined in Section 7.8.

     “Previous Agreements” is defined in the recitals.

     “Proposed Rules” is defined in Section 8.7(a).

     “Prospective Buyer” is defined in Section 9.7.1.

     “Prospective Selling Holder” is defined in Sections 9.6.1 and 9.7.1.

     “Public Offering” means a public offering and sale of the common equity of the Company (or a
successor corporation) for cash registered under the Securities Act.

     “Public Sale” means a Public Offering or a Sale to the public pursuant to and in compliance
with Rule 144 or any successor rule promulgated under the Securities Act.

9

 

     “Purchased Units” is defined in Section 9.11.3.

     “Qualified Public Offering” shall mean a Public Offering, other than any Public Offering or
sale pursuant to a registration statement on Form S-8 or comparable form, in which the aggregate
price to the public of all such common equity sold in such offering shall exceed $125,000,000.

     “Regulation” is defined in Section 5.5.

     “Regulation D” means Regulation D under the Securities Act.

     “Regulatory Allocation” is defined in Section 7.9.

     “Regulations” or “Treasury Regulations” shall mean the Treasury regulations, including
temporary regulations, promulgated under the Code, as such regulations may be amended from time to
time (including the corresponding provisions of any future regulations).

     “Rev. Proc. 93-27” is defined in Section 3.7.2.

     “Sale” is defined in Section 9.6.1, and “Sell” means to effect a Sale.

     “Sale of a Series” shall mean a bona fide, arm’s length transaction or series of transactions
that results in any Person or group of Persons (as the term “group” is used under the Securities
and Exchange Act of 1934, as amended) (other than, in the case of clause (i) below, a current
Member) acquiring (including by merger, consolidation, share exchange, sale of assets or transfer
of a Series’ Units): (i) (y) ownership of a majority of the then outstanding Class A Units of a
Series or (z) beneficial ownership of capital stock, or other equity interests in, the entity
surviving a merger, consolidation, share exchange or the voting power under normal circumstances to
elect a majority of such surviving entity’s board of directors, managers or trustees or (ii) all or
substantially all of the assets of any Series or the Company and its Subsidiaries.

     “Safe Harbor Election” is defined in Section 8.7(a).

     “Secretary” is defined in Section 8.2.1.

     “Securities Act” shall mean the Securities Act of 1933, as amended.

     “Securities Purchase Agreement” shall mean that certain Securities Purchase Agreement dated as
of March 30, 2006 among Centex Home Equity Company, LLC, Centex Financial Services, LLC and the
Company.

     “Series” shall mean a separate and distinct series of the Company established either by this
Agreement or by the Company Manager after the date hereof.

     “Series 1 Class A Units” is defined in Section 3.7.1(a).

10

 

     “Series 1 Class B Distribution Percentage” shall mean at the date of a Distribution from
Series 1, the percentage equal to (a) the lesser of (i) the number of Series 1 Class A Units issued
for the Transaction Related Invested Capital (which, for the avoidance of doubt, shall not include
any Company Match Class A Units) or (ii) the total number of Series 1 Class A Units then
outstanding and held by the Fortress Holders and Management Holders, multiplied by (b) the then
current Allocated Management LLC Unit Percentage multiplied by (c) 6.3595% divided by (d) the total
number of Series 1 Class A Units (which shall not include any Company Match Class A Units) then
outstanding and held by the Fortress Holders and Management Holders.  By way of
illustration, if (w) 600 Series 1 Class A Units were received for the Transaction Related Invested
Capital, (x) 750 Series 1 Class A Units are outstanding and held by the Fortress Holders and
Management Holders and (y) the Allocated Management LLC Unit Percentage is ninety percent (90%),
the “Series 1 Class B Distribution Percentage” would be 4.843% (600*90%*6.3595%/700).

     “Series 1 Class B Units” is defined in Section 3.7.1(b).

     “Series 1 Class C Preferred Units” is defined in Section 3.7.1(c).

     “Series 1 Class D Preferred Units” is defined in Section 3.7.1(d).

     “Series 1 Company Match Class A Units” shall mean those Series 1 Class A Units granted to a
Management Holder and set forth under the heading “Series 1 Company Match Class A Units” in
Schedule 3.7 hereto, as supplemented from time to time.

     “Series 1 Class C Preferred Priority Return” shall mean the Invested Capital attributable to a
Series 1 Class C Preferred Unit together with the Series 1 Class C Preferred Yield for such Series
1 Class C Preferred Unit.

     “Series 1 Class C Preferred Yield” with respect to a Series 1 Class C Preferred Unit shall
mean the amount accruing on such Series 1 Class C Preferred Unit on a daily basis, at the rate of
15.0% per annum, compounded (to the extent not then paid) on the last day of each calendar year, on
(a) the Invested Capital attributable to such Series 1 Class C Preferred Unit plus (b) the Series 1
Class C Preferred Yield thereon for all prior years to the extent such Series 1 Class C Preferred
Yield has not been distributed to the holder of such Series 1 Class C Preferred Unit pursuant to
Section 7.2(ii). In determining the amount of Series 1 Class C Preferred Yield during a year, such
Series 1 Class C Preferred Unit’s Series 1 Class C Preferred Yield for the portion of such year
elapsing before such determination is made shall be included as part of such Series 1 Class C
Preferred Unit’s Series 1 Class C Preferred Yield.

     “Series 1 Class D Preferred Priority Return” shall mean the Invested Capital attributable to a
Series 1 Class D Preferred Unit together with the value of the Series 1 Class D Preferred Yield for
such Series 1 Class D Preferred Unit.

     “Series 1 Class D Preferred Yield” with respect to a Series 1 Class D Preferred Unit shall
mean the amount accruing on such Series 1 Class D Preferred Unit on a daily basis, at the rate of
20.0% per annum, compounded (to the extent not then paid) on the last day of each calendar year, on
(a) the Invested Capital attributable to such Series 1 Class D Preferred Unit plus (b) the

11

 

Series 1 Class D Preferred Yield thereon for all prior years to the extent that cash or other
assets equal in value to such Series 1 Class D Preferred Yield has not been distributed to the
holder of such Series 1 Class D Preferred Unit pursuant to Section 7.2(i). In determining the
amount of Series 1 Class D Preferred Yield during a year, such Series 1 Class D Preferred Unit’s
Series 1 Class D Preferred Yield for the portion of such year elapsing before such determination is
made shall be included as part of such Series 1 Class D Preferred Unit’s Series 1 Class D Preferred
Yield.

     “Series 1 Priority Return” shall mean an amount equal to (i) the Invested Capital of the
Fortress Holders in Series 1 plus (ii) the product of 10% and such Invested Capital; less
any proceeds received by the Fortress Holders pursuant to any Sale of Series 1 Class A Units
(whether or not the same shall constitute a Sale of a Series hereunder), and not including any such
proceeds paid to the Class B Holder pursuant to Section 9.15.

     “Series 2 Class A Units” is defined in Section 3.7.1(b).

     “Series 2 Class B Distribution Percentage” shall mean at the date of a Distribution from
Series 2, the percentage equal to (a) the lesser of (i) the number of Series 2 Class A Units issued
for the Transaction Related Invested Capital (which, for the avoidance of doubt, shall not include
any Company Match Class A Units) or (ii) the total number of Series 2 Class A Units then
outstanding and held by the Fortress Holders and Management Holders multiplied by (b) the then
current Allocated Management LLC Unit Percentage multiplied by (c) 6.3595% divided by (d) the total
number of Series 2 Class A Units (which shall not include any Company Match Class A Units) then
outstanding and held by the Fortress Holders and Management Holders. By way of illustration, if
(w) 550 Series 2 Class A Units were received for the Transaction Related Invested Capital, (x) 650
Series 2 Class A Units are outstanding and held by the Fortress Holders and Management Holders and
(y) the Allocated Management LLC Unit Percentage is ninety percent (90%), the “Series 2 Class B
Distribution Percentage” would be 4.843% (550*90%*6.3595%/650).

     “Series 2 Class B Units” is defined in Section 3.7.2(b).

     “Series 2 Company Match Class A Units” shall mean those Series 2 Class A Units granted to a
Management Holder and set forth under the heading “Series 2 Company Match Class A Units” in
Schedule 3.7 hereto, as supplemented from time to time.

     “Series 2 Priority Return” shall mean an amount equal to (i) the Invested Capital of the
Fortress Holders in Series 2 plus (ii) the product of 10% and such Invested Capital; less
any proceeds received by the Fortress Holders pursuant to any Sale of Series 1 Class A Units
(whether or not the same shall constitute a Sale of a Series hereunder), and not including any such
proceeds paid to the Class B Holder pursuant to Section 9.15.

     “Series Capital Account” is defined in Section 3.10.

     “Series Class A Approval” shall mean, with respect to actions to be taken by the Members of a
particular Series, the approval of each of (i) the Series Majority Class A Holders of such Series
and (ii) the Series Majority Management Holders of such Series.

12

 

     “Series Class A Voting Interest” shall mean with respect to a Series and a Member at any time,
the aggregate number of such Member’s Class A Units for such Series divided by the aggregate number
of all Class A Units of such Series.

     “Series Interest” means, with respect to a Member, such Member’s equity interest in the assets
and liabilities of a particular Series (and not any interest such Member may have as the holder of
debt).

     “Series Liability” is defined in Section 3.4(a).

     “Series Manager” means, with respect to a given Series, the Manager of such Series.

     “Series Majority Class A Holders” shall mean the holders of a majority of the Class A Voting
Interests of a particular Series.

     “Series Majority Management Holders” shall mean the holders of a majority of the Class A
Voting Interests of a particular Series held by all Management Holders at a given time.

     “Series Property” shall mean, as to any Series, at any particular time, all interests,
properties (whether tangible or intangible, and whether real, personal or mixed) and rights of any
type contributed to or acquired by such Series and owned or held by or for the account of such
Series, whether owned or held by or for the account of such Series as of the date of the formation
or establishment thereof or thereafter contributed to or acquired by such Series.

     “Set Aside Capital” is defined in Section 3.16.

     “Specified Defined Terms” is defined in Section 11.3.5.

     “Subject Securities” is defined in Section 9.9.

     “Subsidiary” shall mean any Person which the Company (or other specified Person), directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than 50% of the equity
interests entitled to vote generally or which is controlled, either directly or indirectly, by the
Company (or other specified Person).

     “Tag Along Notice” is defined in Section 9.6.2.

     “Tag Along Offer” is defined in Section 9.6.3.

     “Tag Along Offerors” is defined in Section 9.6.2.

     “Tag Along Sellers” is defined in Section 9.6.3.

     “Tax Distribution” is defined in Section 7.4.

     “Tax Matters Member” is defined in Section 8.1.

13

 

     “Transaction Related Invested Capital” shall mean all Invested Capital contributed or
otherwise invested by the Fortress Holders or Management Holders in the Company or a Series in
connection with the transactions contemplated by the Securities Purchase Agreement or Invested
Capital contributed or otherwise invested by the Fortress Holders or Management Holders in the
Company or a Series on or prior to December 31, 2008.

     “Transfer” shall mean a sale, assignment, pledge, encumbrance, abandonment, disposition or
other transfer, whether voluntarily, involuntarily, by operation of law, pursuant to judicial
process or otherwise, including any interspousal transfer incident to a dissolution of marriage,
and may be used either as a verb or a noun.

     “Unaccepted Participation Portion” is defined in Section 9.9.8.

     “Unit” shall mean each of the Class A Units, Class B Units, Class C Preferred Units, Class D
Preferred Units and any other Class of Units which represent a Series Interest in the Company and
which may from time to time be outstanding herewith. Reference to any Unit shall include a portion
of such Unit.

     “Unit Certificate” shall mean a non-negotiable certificate issued by a Series in the form
approved by the Series Manager that evidences the ownership of one or more Units in such Series.

     “Valuation Expert” is defined in Section 9.11.8.

     “Wall-Off Election” is defined in Section 3.16.

14

 

Schedule 3.3

Description of Series Property

Series 1: All of the equity interests in Nationstar Mortgage LLC.

Series 2: All of the equity interests in Nationstar Regular Holdings Ltd.

1

 

Schedule 3.7

Units and Consideration

As of the Effective Date

SERIES 1:

Class A Units

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Company Match Class A	 	Company Match Class A	 	 
	 	 	 	 	 	 	Units Issued Prior to	 	Units Issued on the	 	 
	 	 	 	 	 	 	the Effective	 	Effective	 	 
	Member	 	Class A Units	 	Date(1)(2)	 	Date(1)(3)	 	Consideration
	Fortress Investment Fund
III LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund
III (Fund D) LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund
III (Fund E) LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	FIF III B HE BLKR LLC
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	FIF III C HE BLKR LLC
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund
IV (Fund A) L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund
IV (Fund D) L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund
IV (Fund E) L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	FIF IV B HE BLKR LLC
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	FIF IV CFG HE BLKR LLC
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Anthony Barone
	 	 	67,775	 	 	 	 	 	 	 	136,993	 	 		1,586,661	 
	Jesse Bray
	 	 	17,427	 	 	 	 	 	 	 	153,212	 	 		407,998	 
	[*]
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	[*](4)
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*] 	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Amarkumar Patel
	 	 	3,319	 	 	 	 	 	 	 	64,937	 	 		181,333	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	Robert L. Appel
	 	 	 	 	 	 	 	 	 	 	102,384	 	 	 	 	 

 

			
	(1)	 	No consideration was paid in respect of any Company Match Class A Units.
	 
	(2)	 	Vesting of Company Match Class A Units issued prior to the Effective Date shall occur as
follows, unless the applicable Management Holder provides the Company with written notice of
his or her election to forfeit such vesting Company Match Class A Units prior to the
applicable vesting date (the “Vesting Schedule”) and if a Management Holder elects to so
forfeit such vesting Company Match Class A Units, the schedules hereto shall be updated by the
Company without any further action on the part of the Company or any Management Holder:
	 
	*	 	[Confidential treatment requested]

1

 

	 	 	 	 	 
	Months of continuous Employment with CHEC	 	Vested Percentage
	[*]
	 	 	[*	]
	[*]
	 	 	[*	]
	[*]
	 	 	[*	]
	[*]
	 	 	[*	]

 

			
	(3)	 	Vesting of Company Match Class A Units issued on the Effective Date shall occur on September
17, 2010, June 30, 2011 and June 30, 2012, in the respective amounts indicated below:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Member	 	September 17, 2010	 	June 30, 2011	 	June 30, 2012
	Anthony Barone
	 	 	481	 	 	 	68,256	 	 	 	68,256	 
	Jesse Bray
	 	 	39,452	 	 	 	56,880	 	 	 	56,880	 
	Amarkumar Patel
	 	 	19,433	 	 	 	22,752	 	 	 	22,752	 
	Robert L. Appel
	 	 	34,128	 	 	 	34,128	 	 	 	34,128	 

 

			
	(4)	 	[*] has waived his rights to [*] Company Match Class A Units that would have rested
after 48 months of continuous employment with CHEC. The amount in the table above reflects
this.

     Class B Units

	 	 	 	 	 	 	 	 	 
	Member	 	Class B Units	 	Consideration
	Nationstar Investment
Holdings LLC
	 	 	[*]	 	 	[*]

     Class C Preferred Units

	 	 	 	 	 	 	 	 	 
	Member	 	Class C Preferred Units	 	Consideration
	Fortress Investment Fund III LP
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund III (Fund D) LP
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund III (Fund E) LP
	 	 	[*]	 	 		[*]	 
	FIF III B HE BLKR LLC
	 	 	[*]	 	 		[*]	 
	FIF III C HE BLKR LLC
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund IV (Fund A) L.P.
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund IV (Fund D) L.P.
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund IV (Fund E) L.P.
	 	 	[*]	 	 		[*]	 
	FIF IV B HE BLKR LLC
	 	 	[*] 	 	 		[*]	 
	FIF IV CFG HE BLKR LLC
	 	 	[*]	 	 		[*]	 

Class D Preferred Units

	 	 	 	 	 	 	 	 	 
	Member	 	Class D Preferred Units	 	Consideration
	Fortress Investment Fund III LP
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund III (Fund D) LP
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund III (Fund E) LP
	 	 	[*]	 	 		[*]	 
	FIF III B HE BLKR LLC
	 	 	[*]	 	 		[*]	 
	FIF III C HE BLKR LLC
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund IV (Fund A) L.P.
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund IV (Fund D) L.P.
	 	 	[*]	 	 		[*]	 
	Fortress Investment Fund IV (Fund E) L.P.
	 	 	[*]	 	 		[*]	 
	FIF IV B HE BLKR LLC
	 	 	[*]	 	 		[*]	 
	FIF IV CFG HE BLKR LLC
	 	 	[*]	 	 		[*]	 

 

* [Confidential treatment requested]

2

 

SERIES 2:

     Class A Units

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Company Match Class A	 	Company Match Class A	 	 
	 	 	 	 	 	 	Units Issued Prior to	 	Units Issued On the	 	 
	 	 	 	 	 	 	the Effective	 	Effective	 	 
	Member	 	Class A Units	 	Date(1)(2)	 	Date(1)(3)	 	Consideration
	Fortress Investment Fund III LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund III (Fund B) LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund III (Fund C) LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund III (Fund D) LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund III (Fund E) LP
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund A)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund B)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund C)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund D)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund E)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund F)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Fortress Investment Fund IV (Fund G)
L.P.
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Anthony Barone
	 	 	12,667	 	 	 	 	 	 	 	25,607	 	 		1,913,339	 
	Jesse Bray
	 	 	3,258	 	 	 	 	 	 	 	28,637	 	 		492,002	 
	[*]
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	[*](4)
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	[*]
	 	 	[*]	 	 	 	 	 	 	 	 	 	 		[*]	 
	Amarkumar Patel
	 	 	621	 	 	 	 	 	 	 	12,137	 	 		218,667	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	 	 	 		[*]	 
	Robert L. Appel
	 	 	 	 	 	 	 	 	 	 	19,137	 	 	 	 	 

 

			
	(1)	 	No consideration was paid in respect of any Company Match Class A Units.
	 
	(2)	 	Vesting of Company Match Class A Units issued prior to the Effective Date shall occur as
follows, unless the applicable Management Holder provides the Company with written notice of
his or her election to forfeit such vesting Company Match Class A Units prior to the
applicable vesting date (the “Vesting Schedule”) and if a Management Holder elects to so
forfeit such vesting Company Match Class A Units, the schedules hereto shall be updated by the
Company without any further action on the part of the Company or any Management Holder:

	 	 	 	 	 
	Months of continuous Employment with CHEC	 	Vested Percentage
	[*]
	 	 	[*	]
	[*]
	 	 	[*	]
	[*]
	 	 	[*	]
	[*]
	 	 	[*	]

 

			
	(3)	 	Vesting of Company Match Class A Units issued on the Effective Date shall occur on September
17, 2010, June 30, 2011 and June 30, 2012, in the respective amounts indicated below:
	 
	*	 	[Confidential treatment requested]

3

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Member	 	September 17, 2010	 	June 30, 2011	 	June 30, 2012
	Anthony Barone
	 	 	91	 	 	 	12,758	 	 	 	12,758	 
	Jesse Bray
	 	 	7,373	 	 	 	10,631	 	 	 	10,633	 
	Amarkumar Patel
	 	 	3,631	 	 	 	4,252	 	 	 	4,254	 
	Robert L. Appel
	 	 	6,379	 	 	 	6,379	 	 	 	6,379	 

 

			
	(4)	 	[ * ] has waived his rights to [ * ] Company Match Class A Units that would have rested
after 48 months of continuous employment with CHEC. The amount in the table above reflects
this.

     Class B Units

	 	 	 	 	 	 	 	 	 
	Member	 	Class B Units	 	Consideration
	Nationstar Investment Holdings LLC
	 	 	[*]	 	 	[*]

 

			
	*	 	[Confidential treatment requested]

4

 

Schedule 3.17

Management Holder Unit Exchange

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number of Company	 	 	 	 	 	Number of Company
	 	 	Number of Series 2	 	Match Series 2	 	Number of Series 1	 	Match Series 1
	 	 	Class A Units	 	Class A Units	 	Class A Units	 	Class A Units
	Member	 	Forgone	 	Forgone	 	Received	 	Received
	Anthony Barone
	 	 	13,704	 	 	 	27,410	 	 	 	13,180	 	 	 	26,359	 
	Jesse Bray
	 	 	3,524	 	 	 	7,048	 	 	 	3,389	 	 	 	6,778	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Amarkumar Patel
	 	 	1,566	 	 	 	—	 	 	 	1,506	 	 	 	—	 
	[*]
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 

 

* [Confidential treatment requested]

5

 

Schedule 5.4

OFFICERS

     5.4.1. Officers. Subject to Section 5.4 of the Agreement, officers and agents of the Company
or Series, if any, shall be appointed by the Company Manager or Series Manager, as the case may be,
from time to time in its discretion. An officer may be but none need be a Member. Any two or more
offices may be held by the same person. Any officer may be required by the Company Manager or
Series Manager, as the case may be, to secure the faithful performance of the officer’s duties to
the Company or Series by giving bond in such amount and with sureties or otherwise as the Company
Manager or Series Manager, as the case may be, may determine.

     5.4.2. Powers. Subject to the limitations set forth in Section 5.4 of the Agreement, each
officer shall have, in addition to the duties and powers herein set forth, the duties and powers
set forth in Section 5.4 of the Agreement or delegated to such officer as provided in said Section
5.4.

     5.4.3. Election. Officers may be elected by the Company Manager or Series Manager, as the
case may be, at any time. At any time or from time to time such Manager may delegate to any
officer their power to elect or appoint any other officer or any agents.

     5.4.4. Tenure. Each officer shall hold office until the first meeting of the Company Manager
or Series Manager, as the case may be, following the beginning of the next fiscal year and until
such officer’s respective successor is chosen and qualified unless a shorter period shall have been
specified by the terms of such officer’s election or appointment, or in each case until such
officer sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain its
authority at the pleasure of the Company Manager or Series Manager, as the case may be, or the
officer by whom such agent was appointed or the officer who then holds agent appointive power.

     5.4.5. Resignation; Removal; Vacancies. Any officer or agent may resign by delivering a
written letter of resignation to the Chair, the President, the Secretary or to the Company Manager
or Series Manager, as the case may be, which resignation shall not require acceptance and, unless
otherwise specified in the letter of resignation, shall be effective upon receipt. The Company
Manager or Series Manager, as the case may be, may remove any officer or agent at any time without
giving any reason for such removal and no officer or agent or shall be entitled to any damages by
virtue of such officer’s removal from office or such position as agent. If any office becomes
vacant, the position may be filled by the Company Manager or Series Manager, as the case may be, or
in such other manner as the officer in question was appointed.

     5.4.6. President and Vice President. Unless the Company Manager or Series Manager, as the
case may be, otherwise specifies, the President of the Company or Series shall be the chief
executive officer of the Company or such Series and shall have direct charge of all business
operations of the Company or such Series and, subject to the control of the Company Manager or
Series Manager, as the case may be, shall have general charge and supervision of the business of
the Company or such Series. Any vice presidents of the Company or such Series shall have

1

 

duties as
shall be designated from time to time by the Company Manager or Series Manager, as the case may be,
or the President.

     5.4.7. Treasurer and Assistant Treasurers. Unless the Company Manager or Series Manager, as
the case may be, otherwise specifies, the Treasurer of the Company or such Series shall be the
chief financial officer of the Company or such Series and shall be in charge of its funds and
valuable papers, and shall have such other duties and powers as may be designated from time to time
by the Company Manager or Series Manager, as the case may be, the Chair, or the President. If no
Controller of the Company or such Series is elected, the Treasurer of the Company or such Series
shall, unless the Company Manager or Series Manager, as the case may be, otherwise specifies, also
have the duties and powers of the Controller. Any Assistant Treasurers of the Company or such
Series shall have such duties and powers as shall be designated from time to time by the Company
Manager or Series Manager, as the case may be, the Chair, the President or the Treasurer.

     5.4.8. Controller and Assistant Controllers. If a Controller of the Company or such Series
is elected, the Controller shall, unless the Company Manager or Series Manager, as the case may be,
otherwise specifies, be the chief accounting officer of the Company and be in charge of its books
of account and accounting records, and of its accounting procedures. The Controller shall have
such other duties and powers as may be designated from time to time by the Company Manager or
Series Manager, as the case may be, the Chair, the President or the Treasurer. Any Assistant
Controller of the Series shall have such duties and powers as shall be designed from time to time
by the Company Manager or Series Manager, as the case may be, the Chair, the President, the
Treasurer or the Controller.

     5.4.9. Secretary and Assistant Secretaries. The Secretary of the Company or Series shall
record all proceedings of the Members and the applicable Manager in a book or series of books to be
kept therefor and shall file therein all actions by written consent of the applicable Manager. In
the absence of the Secretary from any meeting, an Assistant Secretary of the Company or Series, or
if there be none or no Assistant Secretary is present, a temporary secretary chosen at the meeting,
shall record the proceedings thereof. The Secretary shall keep or cause to be kept records which
shall contain the names and record addresses of all members. The Secretary shall have such other
duties and powers as may from time to time be designated by the applicable Manager, the Chair or
the President. Any Assistant Secretaries shall have such duties and powers as shall be designated
from time to time by the applicable Manager, the Chair, the President or the Secretary.

2

 

Schedule 5.5

Management Rights Letter

FIF HE Holdings LLC

[1345 Avenue of the Americas, 46th Floor, New York, NY 10105]

[___________, 2006]

[Fund Name]

c/o Fortress Investment Group LLC

1345 Avenue of the Americas, 46th Floor

New York, NY 10105

Ladies and Gentlemen:

          This Management Rights Letter Agreement (“Agreement”) is made as of the date first
written above, by and between FIF HE Holdings LLC, a Delaware limited liability company (the
“Company”) and [Fund Name], a Delaware limited partnership (the “Fund”). This
Agreement may be executed in multiple counterparts, each of which shall be deemed an original for
all purposes but all of which together shall constitute one and the same instrument.

RECITALS

          WHEREAS, the Fund has acquired an interest in the Company and such acquisition was conditioned
upon the execution and delivery of this Agreement between the Company and the Fund;

          NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, each
of the parties hereby agrees as follow:

          This letter will confirm the agreement of the Company that the Fund, in connection with the
Fund’s acquisition of an interest in the Company and its ownership of an interest in the Company,
will be entitled to the following contractual management rights:

          1. The Fund shall be permitted to select one representative (the “Representative”) to
consult with and advise management of the Company on significant business issues, including such
management’s proposed annual operating plans, and management of the Company will make itself
available to meet with such Representative regularly during each year by telephone or at the
Company’s facilities at mutually agreeable times, on reasonable

1

 

prior written notice, for such consultation and advice and to review progress in achieving
such plans.

          2. Initially, [Representative name] shall be appointed as the Representative.

          3. The Company will notify the Representative of any material development to or affecting the
Company’s business and affairs such as significant changes in management personnel and compensation
or employee benefits, introduction of new lines of business, important acquisitions and the
proposed compromise of any significant litigation as soon as reasonably practicable, and the
Company shall provide the Representative with the opportunity, on reasonable prior written notice,
to consult with and advise the Company’s management of its views with respect thereto.

          4. On reasonable prior written notice, the Representative may discuss the business operations,
properties and financial and other condition of the Company with the Company’s independent
certified accountants and investment bankers.

          5. The Representative may examine the books and records of the Company and visit and inspect
its facilities and may reasonably request information at reasonable times and intervals concerning
the general status of the Company’s financial conditions and operations.

          6. The Fund shall be entitled to request that the Company provide it, when available, with
copies of (i) all financial statements, forecasts and projections provided to or approved by its
Manager; (ii) all notices, minutes, proxy materials, consents and correspondence and other material
that it provides to its manager and members; (iii) any letter issued to the Company by its
accountants with respect to the Company’s internal controls; (iv) any documents filed by the
Company with the any regulatory or similar authority; and/or (v) such other business and financial
data as the Representative reasonably may request in writing from time to time.

          The aforementioned rights are intended to satisfy the requirement of management rights for
purposes of qualifying the Fund’s investment in the Company as a “venture capital investment” for
purposes of the Department of Labor “plan assets” regulation, 29 C.F.R. § 2510.3-101 (the
“Regulation”). In the event the aforementioned rights are not satisfactory for such
purpose, the Company and the Fund shall reasonably cooperate in good faith to agree upon mutually
satisfactory management rights that satisfy the Regulation.

          The rights described herein with respect to the Fund shall apply and continue for so long as
the Fund continues to hold any interest in the Company, which interest shall be deemed to be owned
and to remain outstanding notwithstanding any conversion, exercise or exchange of such interest for
other interests.

2

 

	 	 	 	 	 
	 	Very truly yours,

FIF HE HOLDINGS LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Pete Smith 	 
	 	 	Title:  	Manager 	 

	 	 	 	 	 
	 	Agreed and Accepted by:

[Fund Name]

 	 
	 	By:  	[             ], its General Partner
 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

3

 

	 	 	 	 	 

This Promissory Note has not been registered under the Securities Act of 1933, as amended, or
registered or qualified under any state securities laws. This Promissory Note may not be sold,
transferred, pledged or hypothecated unless such sale, transfer, pledge or hypothecation is in
accordance with such Act and applicable state securities laws.

FIF HE HOLDINGS LLC

PROMISSORY NOTE

			
	Principal Amount: ___________________
	 	____________, 2006

     FOR VALUE RECEIVED of ____________ Series 1 Class A Units and ___________ Series 2 Class A
Units (together with the Series 1 Class A Units, the “Company Match Class A Units”) in FIF
HE Holdings LLC, the undersigned, __________________, a resident of the State of [Texas] (the
“Debtor”), hereby promises to pay to the order of FIF HE Holdings LLC, a Delaware limited
liability company (the “Holder”), at FIF HE Holdings LLC, on behalf of [Series 1/Series 2]
of FIF HE Holdings LLC; c/o Fortress Investment Group, L.L.C., 1345 Avenue of the Americas, New
York, New York 10105 or at such other place as the Holder of this Promissory Note (the
“Note”) may designate from time to time in writing, in the lawful money of the United
States of America and in immediately available funds, the principal amount of ____________________
DOLLARS ($______), plus interest from the date hereof (computed on the basis of a 365-day year
based on the actual number of days elapsed) on the whole amount of such principal amount remaining
from time to time unpaid in accordance with Section 2 of this Note.

     1. Acceleration Upon Termination of Employment.

     (a) If Debtor’s employment with the Holder or its Subsidiary is terminated for any
reason, the outstanding principal balance of this Note and accrued and unpaid interest
thereon in full shall become due and payable 30 days after such termination (the
“Accelerated Payment Date”).

     (b) On the Accelerated Payment Date, if Debtor is unable to pay all amounts due and
owing under this Note, the Holder shall have the right to setoff and appropriate and apply
any and all Class A Units held by Debtor, any Class B Units held by Management LLC for the
benefit of Debtor and any equity interests in Management LLC held by Debtor with a Fair
Market Value equal in value to the unpaid amount due under this Note or, all of the Class A
Units held by Debtor, all Class B Units held by Management LLC for the benefit of Debtor and
any equity interests in Management LLC held by Debtor, may be tendered to Holder, in either
case in full repayment hereof.

     (c) All payments received on this Note will be applied first against costs of
collection (if any), then against accrued and unpaid interest, then against outstanding
principal.

4

 

     2. Interest. Interest will accrue on the unpaid principal balance of this Note
commencing on the date hereof and continuing until repayment of this Note in full,
compounded on a quarterly basis, at a rate equal to the prime rate (as set forth in The Wall
Street Journal on the date hereof) per annum.

     3. Amortization; Prepayment. The Debtor may prepay the principal balance of
this Note, in whole or in part, without premium, penalty or fees. Any such prepayment will
be accompanied by a prepayment of all interest accrued and unpaid on the prepaid principal
through the date of prepayment. All prepayments so permitted will be applied in the order
provided in Section 1(c).

     4. Payments. If payment hereunder becomes due and payable on a Saturday,
Sunday or legal holiday under the laws of the State of Delaware, the due date thereof will
be extended to the next succeeding business day, and additional interest will accrue and be
payable for the period of such extension at the rate specified herein.

     5. Prepayments. Debtor may repay the outstanding principal balance of this
Note and accrued and unpaid interest at any time without penalty.

     6. Security Interest. The Debtor hereby grants the Holder a security interest
in the Company Match Class A Units, any Class B Units held by Management LLC for the benefit
of the Debtor and any equity interests in Management LLC held by the Debtor to secure
Debtor’s obligations under this Note. Prior to the exercise of any right or remedy
hereunder by the Debtor, the Debtor shall remain the holder of record of such Company Match
Class A Units, Class B Units and equity interests in Management LLC and shall be entitled to
receive any distributions in connection therewith. This security interest shall be governed
by all applicable provisions of the Uniform Commercial Code as in effect in the State of
Delaware.

     7. Waiver by the Holder. Failure of the Holder at any time or times hereafter
to require strict performance by the Debtor of any of the provisions, terms and conditions
contained in this Note shall not waive, affect or diminish any right of the Holder at any
time or times to demand strict performance thereof and such right shall not be deemed to
have been waived by any act or knowledge of the Holder unless such waiver is in writing
signed by the Holder and directed to the Debtor specifying such waiver. No delay on the
part of the Holder in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Holder of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy.

     8. Successors and Assigns. Whenever in this Note there is a reference made to
either the Holder or the Debtor, such reference shall be deemed to include, as applicable, a
reference to the successors, assigns, or heirs, executors and administrators of said party.
The provisions of this Note shall be binding upon and shall inure to the benefit of said
successors, assigns, or heirs, executors and administrators, as applicable.

     9. Severability; Governing Law. Wherever possible each provision of this Note
shall be interpreted in such a manner as to be effective and valid under the laws of

5

 

the State of Delaware, but if any provision of this Note shall be prohibited by or
invalid under the laws of the State of Delaware, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provision of this Note.

     10. Limited Recourse. Debtor and Holder hereby agree that Holder’s right to
recover amounts payable hereunder shall be limited to all Class A Units held by Debtor, any
Class B Units held by Management LLC for the benefit of Debtor and any equity interests in
Management LLC held by Debtor.

     11. Arbitration. Debtor and Holder agree that any and all disputes,
controversies or claims that may arise out of this Note, or the breach, termination or
invalidity thereof (other than a suit to obtain specific performance of the provisions of
this Note or obtain other injunctive relief), shall be submitted to, and determined by,
binding arbitration in accordance with the following procedures:

     (a) Either Debtor or Holder may submit a dispute, controversy or claim to arbitration
by giving the other party written notice to such effect, which notice shall describe, in
reasonable detail, the facts and legal grounds forming the basis for the filing party’s
request for relief. The arbitration shall be held before one neutral arbitrator in
Wilmington, Delaware.

     (b) Within thirty (30) days after the other party’s receipt of such demand, the parties
shall mutually agree upon a neutral arbitrator. If the parties are unable to agree on a
neutral arbitrator within that time period, the parties will request that the American
Arbitration Association (“AAA”) submit a panel of five neutral arbitrators who have
a background in, and knowledge of the financial services industry and shall otherwise be an
appropriate person based on the nature of the dispute. If a person with experience in such
matters is not available, the parties will request that the AAA submit a panel of five
retired federal judges from a pool maintained by AAA. If the parties are unable to mutually
agree on a neutral arbitrator from the panel submitted by AAA, the parties will alternate in
striking names from the pool of neutral arbitrators, with Holder striking the first name.

     (c) The arbitration shall be governed by the Commercial Arbitration Rules of AAA and
administered by the AAA, except as otherwise expressly agreed to by the parties.

     (d) Discovery shall be limited to the request for and production of documents,
depositions and interrogatories, except as otherwise expressly agreed to by the parties.
All discovery shall be guided by the Federal Rules of Civil Procedure. All issues
concerning discovery upon which the parties cannot agree shall be submitted to the
arbitrator for determination.

     (e) In rendering an award, the arbitrator shall determine the rights and obligations of
the parties under this Agreement according to the substantive and

6

 

procedural laws of the State of Delaware, except as otherwise expressly agreed to by
the parties.

     (f) The decision of, and award rendered by, the arbitrator shall (unless the arbitrator
determines that this time frame is impracticable) be determined no more than 30 days after
the selection of the arbitrator (or such longer period as the arbitrator may require and the
parties reasonably agree upon) and shall be final and binding on the parties and shall not
be subject to appeal. Judgment on the award may be entered in and enforced by any court of
competent jurisdiction.

     (g) Each party shall bear its own costs and expenses (including filing fees) with
respect to the arbitration, including one-half of the fees and expenses of the arbitrator.

     12. Interpretation. Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Amended and Restated Limited Liability
Company Agreement of the Holder, dated as of July 11, 2006.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	[NAME OF DEBTOR] 	 
	 	 	 
	 

7ex4-1.htm

Exhibit 4.1

 

 

 

 

 

CREDIT AGREEMENT

 

among

 

GRUPO CASA SABA, S.A.B. DE C.V.,

as Borrower;

 

CASA SABA, S.A. DE C.V.,

DROGUEROS, S.A. DE C.V.,

FARMACIAS ABC DE MÉXICO, S.A. DE C.V.,

DALTEM PROVEE NACIONAL, S.A. DE C.V.,

PUBLICACIONES CITEM, S.A. DE C.V.,

DALTEM PROVEE NORTE, S.A. DE C.V.,

CENTENNIAL, S.A. DE C.V., and

CONTROLADORA CASA SABA, S.A. DE C.V.,

as Co-Obligors;

 

HSBC MÉXICO, S.A.,

INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO HSBC

 

and

 

BANCO MERCANTIL DEL NORTE, S.A.,

INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO BANORTE,

 

as Lenders;

 

and

 

HSBC MÉXICO, S.A.,

INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO HSBC,

TRUST DIVISION,

solely and exclusively as Mexican Collateral Agent

for the Lenders

 

and

 

HSBC BANK (CHILE),

solely and exclusively as Chilean Collateral Agent

for the Lenders

 

Dated August 30, 2010

 

 

 

  

  

  

Table of Contents

 

 

 

Page

 

	
Representations and Warranties

	
1

	
Articles

	
7

	
ARTICLE ONE. Defintions

	
7

	
ARTICLE TWO. The Loans

	
16

	
ARTICLE THREE. Drawdown of the Loans

	
16

	
ARTICLE FOUR. Fees

	
17

	
ARTICLE FIVE. Interest

	
17

	
ARTICLE SIX. Late Interest

	
18

	
ARTICLE SEVEN. Repayment

	
18

	
ARTICLE EIGHT. Prepayments of Principal

	
18

	
ARTICLE NINCE. Payment Place and Terms; Additional Amounts

	
19

	
ARTICLE TEN. Joint and Several Obligations

	
20

	
ARTICLE ELEVEN. Affirmative Covenants

	
21

	
ARTICLE TWELVE. Negative Covenants

	
28

	
ARTICLE THIRTEEN. Conditions Precedent for the Loans

	
31

	
ARTICLE FOURTEEN. Acceleration Events

	
34

	
ARTICLE FIFTEEN. Legality; Increased Costs

	
37

	
ARTICLE SIXTEEN. Discount; Assignment

	
38

	
ARTICLE SEVENTEEN. Compensation

	
39

	
ARTICLE EIGHTEEN. Credit Reports

	
39

	
ARTICLE NINETEEN. Expedited Execution

	
39

	
ARTICLE TWENTY. Agency; the Mexican Collateral Agent and the Chilean Collateral Agent

	
40

	
ARTICLE TWENTY-ONE. Notices

	
46

	
ARTICLE TWENTY-TWO. Applicable Law

	
47

	
ARTICLE TWENTY-THREE. Jurisdiction

	
47

	
ARTICLE TWENTY-FOUR. Costs and Expenses

	
48

	
ARTICLE TWENTY-FIVE. Indemnity

	
48

	
ARTICLE TWENTY-SIX. Collective Decisions; Amendment and Waiver

	
48

	
ARTICLE TWENTY-SEVEN. Counterparts

	
49

	
ARTICLE TWENTY-EIGHT. Headings

	
49

	
ARTICLE TWENTY-NINE. Exhibits

	
49

	
ARTICLE THIRTY. Special Waiver

	
49

 

 

  

i  

  

 

Exhibits

 

 

	
Exhibit 1

	
Lenders’ Commitments

	
Exhibit A

	
Liens

	
Exhibit B

	
Governmental Authorizations for the Acquisition

	
Exhibit C

	
Excluded Taxes of Fasa and its Subsidiaries

	
Exhibit D

	
Real Property

	
Exhibit E

	
Excluded Items of Property, Licenses and Insurance of Fasa and its Subsidiaries

	
Exhibit F

	
Form of Guaranty Trust Agreement

	
Exhibit G

	
Form of Pledge Agreement Subject to Retained Possession

	
Exhibit H-1

	
Form of Share Pledge Agreement

	
Exhibit H-2

	
Form of Pledge Agreement as with Respect to Inventory and Accounts Receivable

	
Exhibit I

	
Acquisition Documents

	
Exhibit J

	
Form of Drawdown Notice

	
Exhibit K

	
Form of Promissory Note

	
Exhibit L

	
Form of Authorized Officer’s Certificate

	
Exhibit M

	
Material Liabilities

	
Exhibit N

	
Termination Events

	
Exhibit O

	
Fees and Expenses of the Mexican Collateral Agent and the Chilean Collateral Agent

 

 

  

ii  

  

 

CREDIT AGREEMENT (THIS “AGREEMENT”) AMONG GRUPO CASA SABA, S.A.B. DE C.V. (“GCS OR THE “BORROWER”); CASA SABA, S.A. DE C.V., DROGUEROS, S.A. DE C.V., FARMACIAS ABC DE MÉXICO, S.A. DE C.V., DALTEM PROVEE NACIONAL, S. A. DE C.V., PUBLICACIONES CITEM, S.A. DE C.V., DALTEM PROVEE NORTE, S.A. DE C.V., CENTENNIAL, S.A. DE C.V. AND CONTROLADORA CASA SABA, S.A. DE C.V. (COLLECTIVELY, THE “CO-OBLIGORS”); HSBC MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO HSBC (“HSBC MÉXICO”), AND BANCO MERCANTIL DEL NORTE, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO BANORTE (“BANORTE” AND, TOGETHER WITH HSBC MÉXICO, THE “LENDERS”); AND HSBC MÉXICO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO HSBC, TRUST DIVISION, AS MEXICAN COLLATERAL AGENT FOR THE LENDERS (THE “MEXICAN COLLATERAL AGENT”), AND HSBC BANK (CHILE), AS CHILEAN COLLATERAL FOR THE LENDERS (THE “CHILEAN COLLATERAL AGENT”), PURSUANT TO THE FOLLOWING REPRESENTATIONS AND WARRANTIES AND ARTICLES.

 

Capitalized terms used herein have the meaning ascribed to them in Article One hereof.

 

REPRESENTATIONS AND WARRANTIES

 

I.               The Borrower and each Co-Obligor, as applicable, hereby represents and warrants as follows:

 

 (a)             GCS is a limited liability, publicly-traded variable-capital corporation (sociedad anónima bursátil de capital variable) duly organized and existing under the laws of the United Mexican States (“Mexico”); and each Co-Obligor is a limited liability, variable-capital corporation (sociedad anónima de capital variable) duly organized and existing under the laws of Mexico;

 

 (b)             Its corporate purpose authorizes it to enter into and execute each of the Acquisition Documents and Loan Documents (including the Promissory Notes) to which it is a party, and to assume and perform its obligations thereunder;

 

 (c)             It has obtained from the Governmental Authorities all such authorizations and permits as are necessary pursuant to the applicable laws to conduct its operations and business activities as presently conducted and as conducted as of the date of this Agreement;

 

 (d)            The execution by it of the Acquisition Documents and the Loan Documents (including the Promissory Notes), and the assumption and performance of its obligations thereunder, (i) has been authorized by all the requisite corporate actions, (ii) does not violate (1) its corporate bylaws as in effect as of the date hereof or (2) any law, regulation or administrative or contractual provision of any nature whatsoever, or any judicial or administrative order or decision or arbitration award to which it is subject or by which it is bound, and (iii) will not result in the imposition of or an obligation to create any Lien, other than those contemplated by and created pursuant to the Collateral Documents or the existing Liens disclosed in Exhibit A hereto, which existing Liens shall be released on or before the Initial Drawdown Date;

 

 (e)            The execution by it of the Acquisition Documents and the Loan Documents to which it is a party (including the Promissory Notes), the validity or enforceability thereof, and the performance of its obligations thereunder, are not subject to any consent, authorization or registration of any nature whatsoever from or with any Governmental Authority or third party, except (i) for the Governmental Authorizations for the Acquisition identified in Exhibit B hereto, (ii) that the validity of each Pledge Agreement Subject to Retained Possession is conditioned upon (1) generally, its notarization and (2) as with respect to third parties, its registration with the Public Registry of Property and Commerce for the Federal District, in the file maintained thereby in respect of each Co-Obligor, within the term set forth in such agreement, (iii) the validity of the Share Pledge Agreement is conditioned upon (1) its notarization in the Republic of Chile (“Chile”) and (2) the assignment of all rights to the collateral subject matter thereof, and the registration of such agreement in accordance with the specific provisions applicable thereto, and (iv) that the validity of each of the other Chilean Pledge Agreements is conditioned upon (1) its notarization in Chile, (2) the assignment of all rights to the collateral subject matter thereof, and the registration and/or publication of such agreement in accordance with the specific provisions applicable thereto, (3) the receipt of all corporate authorizations required in accordance with the applicable laws and its corporate bylaws, and the consent of the holders of the Bonds in accordance with the documents governing the issuance of the Bonds, and (4) the satisfaction of Fasa’s obligation to create a proportionately equivalent security interest in favor of the holders of the Bonds, and to maintain the indebtedness ratio set forth in the indenture governing the issuance of the Bonds;

 

 

  

1  

  

 

 

 (f)             The validity and enforceability of each of the Acquisition Documents and the Loan Documents (including the Promissory Notes) is not conditioned upon the satisfaction of any formality under the laws of Mexico or Chile, except that the validity of (i) each Pledge Agreement Subject to Retained Possession is conditioned upon (1) generally, its notarization and (2) as with respect to third parties, its registration with the Public Registry of Property and Commerce for the Federal District, in the file maintained thereby in respect of each Co-Obligor, within the term set forth in such agreement, (ii) the Share Pledge Agreement is conditioned upon (1) its notarization in Chile, and (2) the assignment of all rights to the collateral subject matter thereof, and the registration and/or publication of such agreement in accordance with the specific provisions applicable thereto, (3) the receipt of all corporate authorizations required in accordance with the applicable laws and its corporate bylaws, and the consent of the holders of the Bonds in accordance with the documents governing the issuance of the Bonds, and (4) the satisfaction of Fasa’s obligation to create a proportionately equivalent security interest in favor of the holders of the Bonds, and to maintain the indebtedness ratio set forth in the indenture governing the issuance of the Bonds;

 

 (g)            The Share Purchase Commitment (together with its exhibits) constitutes the only Acquisition Document and has been duly executed and delivered to the Lenders together with a certificate as to its authenticity and enforceability. The Acquisition Documents and the Loan Documents constitute, and following their execution the Promissory Notes will constitute, valid obligations of the Borrower and each Co-Obligor, enforceable against each of them in accordance with their respective terms;

 

 (h)            GCS and each of its Subsidiaries has filed all tax, social security, workers’ housing and retirement contribution returns required to be filed by it (in respect of any and all periods) pursuant to the applicable laws, and has withheld and paid when due any and all taxes, duties and other charges payable by it on account of its income, sales or assets, and all  social security, workers’ housing and retirement contributions, except for any taxes, duties or contributions the payment of which is being contested by it in good faith through the appropriate procedures in accordance with the applicable laws and for which it has created, where necessary, the reserves mandated by the applicable Financial Reporting Standards, and which would not have or could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect;

 

 (i)             Except as disclosed in Exhibit C, to the best of its knowledge Fasa and its Subsidiaries: (i) have complied with their obligations to prepare and file when due any and all of the tax returns (including those relating to social security, workers’ housing and retirement contributions) required to be filed by them pursuant to the applicable laws, and when filed each such return was true, complete and correct, including, as the case may be, as with respect to the determination of any tax losses; and no taxing authority has issued any notice, demanded any payment or made any assessment in connection with any such tax return; (ii) have paid the full amount of all taxes (including all social security, workers’ housing and retirement contributions) due and payable by them both as direct obligors and as third-parties liable therefor pursuant to the applicable laws in effect in each relevant jurisdiction, except for those taxes that will become due and payable subsequent to the date of execution of the Acquisition Documents (and for which they have created adequate provisions in accordance with the applicable Financial Reporting Standards), and there is no pending claim in connection with the above; (iii) have not applied for any tax refund which may be contested by the competent authority; and (iv) are not parties to any litigation or administrative proceedings, nor have they received written notice of the commencement or threatened commencement of any inquiry, demand for payment or assessment in respect of any tax return or payment (including those relating to social security, workers’ housing and retirement contributions);

 

 

  

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 (j)             The activities conducted and the real and personal property owned or used by GCS and each of its Subsidiaries are in compliance with all the applicable Environmental Laws as currently in effect, and as of the date hereof neither GCS nor any of its Subsidiaries is required to make any material investment in order to comply with such Environmental Laws;

 

 (k)            To the best of its knowledge, Fasa and its Subsidiaries have complied and are currently in compliance, in all respects, with all the Environmental Laws applicable to them; and as of the date hereof they are not required to make any material investment in order to comply with such Environmental Laws;

 

 (l)             As of the date of this Agreement there is no complaint, action or judicial, administrative or other proceedings pending before any court, Governmental Authority or arbitrator, including in connection with any environmental, tax or labor dispute, which could have or be reasonably expected to have a Material Adverse Effect, or which could affect or be reasonably expected to affect the consummation of the transactions contemplated by the Acquisition Documents or the Loan Documents;

 

 (m)           GCS’ audited consolidated financial statements as of December 31, 2007, 2008 and 2009, and its internal consolidated financial statements as of June 30, 2010, have been prepared in accordance with the Financial Reporting Standards, consistently applied, and accurately, sufficiently and reasonably present GCS’ consolidated financial condition as of each such date. Since June 30, 2010 and through the date of this Agreement, there has been no Material Adverse Effect on the financial condition reflected in such financial statements, nor has there occurred any circumstance, event or condition that may affect the consummation of the transactions contemplated by the Acquisition Documents or the Loan Documents, or the satisfaction of the obligations of the Borrower and its Subsidiaries thereunder. Such documents, duly executed and certified by an Authorized Officer, will be delivered to the Lenders on or before the date of execution of this Agreement;

 

 (n)            Fasa’s audited consolidated financial statements as of December 31, 2009, and its internal consolidated financial statements as of June 30, 2010, have been prepared in accordance with the Financial Reporting Standards, consistently applied, and accurately, sufficiently and reasonably present Fasa’s consolidated financial condition as of each such date. To the best of its knowledge, since June 30, 2010 and through the date of this Agreement, there has been no Material Adverse Effect on the financial condition reflected in such financial statements, nor has there occurred any circumstance, event or condition that may affect the consummation of the transactions contemplated by the Acquisition Documents or the Loan Documents, or the satisfaction of the obligations of the Borrower and its Subsidiaries thereunder. Such documents, duly executed and certified by an Authorized Officer, will be delivered to the Lenders on or before the date hereof;

 

 

  

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 (o)            The book value of each item comprised in the assets, sales and EBITDA of the Borrower and the Co-Obligors, exceeds 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS and its Subsidiaries;

 

 (p)            Following the execution of the Pledge Agreements Subject to Retained Possession, the Mexican Collateral Agent shall have a security interest (for the benefit of the Lenders) on inventories and accounts receivable with a value of Ps.4,570,687,436 (four billion five hundred seventy million six hundred eighty-seven thousand four hundred thirty-six Pesos) and Ps.6,568,692,972 (six billion five hundred sixty-eight million six hundred ninety-two thousand nine hundred seventy-two Pesos), respectively, representing at least 90% (ninety percent) of the total consolidated inventories and accounts receivable of GCS and its Subsidiaries as of the date hereof;

 

 (q)            The value of the items of real property owned by Última del Golfo, S.A. de C.V., Capa, S.A. de C.V., Alta del Centro, S.A. de C.V., Solo, S.A. de C.V., Estrella del Pacífico, S.A. de C.V., Medicamentos Doctorgen, S.A. de C.V., Inmuebles Visosil, S.A. de C.V., Drogueros, S.A. de C.V. and Daltem Provee Nacional, S.A. de C.V., identified in Exhibit D, which contains a description and sets forth the book value of each such item of real property, equals at least 90% (ninety percent) of the aggregate book value of all items of real property owned by the Borrower and its Subsidiaries, each of which is free and clear of any lien or ownership restriction;

 

 (r)             All documents and written information provided to the Lenders by or on behalf of the Borrower and the Co-Obligors for purposes of or in connection with this Agreement and the transactions contemplated hereby, are complete and correct in all material respects as of the date provided and as of the date hereof;

 

 (s)            The payment obligations of the Borrower and each Co-Obligor under this Agreement and the Promissory Notes constitute unconditional, unsubordinated obligations of the Borrower and the relevant Co-Obligor, as the case may be, have been secured pursuant to the Collateral Documents, and rank and shall at all times rank pari passu with all existing and any future secured debt permitted by this Agreement to be incurred by the Borrower and each Co-Obligor (except for any payment obligation ranking senior thereto in status pursuant to the applicable laws);

 

 (t)             As of the date hereof, the Borrower and each Co-Obligor is and, following the Acquisition, each Drawdown hereunder and the allocation of the proceeds hereof, will be in Good Standing;

 

 (u)            Neither the Borrower nor any of its Subsidiaries (including the Co-Obligors) or, to the best of the Borrower’s knowledge, Fasa or any of its Subsidiaries, is in default with any payment obligation or any agreement to which it is a party or by which it is bound, except for any default under any agreement (but not with any payment obligation relating to any Indebtedness) which would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect;

 

 (v)            Fasa, its Subsidiaries and the Borrower’s Subsidiaries are not subject to any legal, contractual other restriction which limits their ability to approve and pay dividends, whether directly or indirectly, to the Borrower (through their payment to the shareholder);

 

 

  

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 (w)           The Borrower, its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and its Subsidiaries, are in compliance with all applicable laws, including any specific order or directive issued by any Governmental Authority, except where their failure to comply with any such law, order or directive would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect;

 

 (x)             The Borrower and each of its Subsidiaries (including the Co-Obligors) (i) is the lawful owner of all items of property used in connection with its activities, (ii) has obtained from all Federal, state, municipal or other authorities all such licenses, certificates and authorizations as are necessary to conduct its business and deal with its property as presently conducted or done, except for any such license, certificate or authorization the lack of which would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, and (iii) has purchased from reputable insurance companies in each relevant jurisdiction, all-risk insurance coverage in respect of its real property, in such amounts and against such risks as are consistent with customary industry’s practice for like companies with similar properties and engaged in the same or similar lines of business as the Borrower and its Subsidiaries, which amounts are at least equal to those required to replace the relevant items of property;

 

 (y)            Except as disclosed in Exhibit E, to the best of its knowledge Fasa and each of its Subsidiaries (i) owns or leases pursuant to valid and effective agreements all the items of property used in connection with its activities, (ii) has obtained all such licenses and authorizations (including health authorizations and municipal patents) as are necessary to conduct its business and deal with its property as presently conducted or done, except for any such license, certificate or authorization the lack of which would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, and (iii) maintains insurance coverage in respect of its inventory, equipment, supplies, real property and fixed assets, whether owned or leased, in such terms and for such amounts as are consistent with customary industry’s practice for like companies with similar properties and engaged in the same or similar lines of business as Fasa and its Subsidiaries, which amounts are at least equal to those required to replace the relevant items of property; and there is no pending litigation or claim by or against Fasa or any of its Subsidiaries in connection with any such policy;

 

 (z)             The Borrower will use the proceeds of the Loans solely and exclusively for the purposes set forth in paragraph (a) of Article Eleven hereof, all of which purposes are lawful, and shall at all times refrain from using such proceeds for any unlawful purpose; it being understood that the Lenders shall be subject to no liability whatsoever as a result of the use of such proceeds;

 

 (aa)          Any and all funds used by it to repay the principal amount of and any interest or other amounts in respect of the Loans, will be of lawful provenance;

 

 (bb)          The Borrower, each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries, is in compliance with any and all collective bargaining agreements to which it is a party, which agreements are in full force and effect; and it has no knowledge of any labor dispute pending or threatened against the Borrower, its Subsidiaries, Fasa or Fasa’s Subsidiaries;

 

 (cc)          The Borrower, each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries is in compliance with all social security, workers’ housing, retirement and similar laws, and has no payment obligation outstanding with any Governmental Authority or its workers on account thereof;

 

 

  

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 (dd)          The Borrower, each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries, has entered into and maintains in full force and effect all such contracts and agreements as are necessary to conduct its business activities in the ordinary course, and is not in default with or subject to any material contingency as a result of any such contract or agreement;

 

 (ee)           The Borrower, each of its Subsidiaries (including the Co-Obligors) and, to the best of the Borrower’s knowledge, Fasa and each of its Subsidiaries, has entered into and maintains in full force and effect all such lease or similar agreements as are necessary to conduct its business activities in the ordinary course, and is not in default with any such lease or agreement;

 

 (ff)            It has sufficient market knowledge and experience to understand the scope, terms and conditions of this Agreement, the Promissory Notes and the other Loan Documents;

 

 (gg)          Given the existing business, corporate, financial, administrative and legal relationships between the Borrower and the Co-Obligors, it is in each Co-Obligor’s interest to enter into this Agreement and become jointly and severally liable to the Lenders for the satisfaction of each and all of the Borrower’s payment obligations under the Loan Documents (including, without limitation, the Promissory Notes), and to guarantee any and all Promissory Notes issued hereunder; and

 

 (hh)         Mr. Manuel Saba Ades has sufficient authority to bind it under each of the Loan Documents (including, without limitation, the Promissory Notes), which authority has not been revoked or limited in any manner whatsoever as of the date of execution of this Agreement.

 

II.              Each Lender hereby represents and warrants as follows:

 

 (a)           It is a retail banking institution (institución de banca múltiple) duly organized under the laws of Mexico, whose corporate purpose authorizes it to enter into and execute this Agreement and to make the Loans;

 

 (b)           Its legal representatives have sufficient authority to bind it hereunder, which authority has not been revoked or limited in any manner whatsoever as of the date hereof;

 

 (c)             It has the ability to make Loans to the Borrower pursuant to this Agreement; and

 

 (d)            Based upon the representations and warranties of the Borrower and each Co-Obligor hereunder, and upon the execution by them of the other Loan Documents, it is willing to make the Loans to the Borrower, subject to the terms and conditions set forth in this Agreement.

 

III.            The Mexican Collateral Agent hereby represents and warrants as follows:

 

 (a)             It is a retail banking institution duly organized under the laws of Mexico, whose corporate purpose authorizes it to enter into and execute this Agreement;

 

 (b)             Its trust officer has sufficient authority to bind it hereunder, which authority has not been revoked or limited in any manner whatsoever as of the date hereof;

 

 (c)             It is willing to accept its appointment as Mexican Collateral Agent on behalf of the Lenders pursuant to Article Twenty hereof, subject to the terms and conditions set forth in this Agreement and in the other Loan Documents; and

 

 

  

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 (d)             It has clearly and unequivocally explained to the parties the meaning, scope and legal consequences of the provisions contained in Article 106(XIX) of the Law of Credit Institutions (Ley de Instituciones de Crédito) and Section 5.5 of Official Communication 1/2005, issued by the Central Bank of Mexico, which are deemed incorporated herein by reference.

 

IV.            The Chilean Collateral Agent hereby represents and warrants as follows:

 

 (a)             It is a retail banking institution (sociedad anónima bancaria) duly organized under the laws of Chile, whose corporate purpose authorizes it to enter into and execute this Agreement;

 

 (b)             Its legal representatives have sufficient authority to bind it hereunder, which authority has not been revoked or limited in any manner whatsoever as of the date hereof; and

 

 (c)             It is willing to accept its appointment as Chilean Collateral Agent on behalf of the Lenders pursuant to Article Twenty hereof, subject to the terms and conditions set forth in this Agreement and in the other Loan Documents.

 

 Now, therefore, the parties hereby agree to the following:

 

ARTICLES

 

                     ARTICLE ONE. Definitions. (a) The following capitalized terms used in this agreement shall have the following meanings (which shall be applicable to both the singular and plural forms thereof):

 

“Acceleration Event” has the meaning assigned thereto in paragraph (A) of Article Fourteen.

 

“Acquisition” has the meaning assigned thereto in paragraph (a) of Article Eleven.

 

“Acquisition Documents” shall mean the Share Purchase Commitment, together with its amendments and exhibits, and each of the Acquisition documents identified in Exhibit I hereto.

 

“Affiliate” shall mean, as with respect to any Person, any other Person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with, such Person.

 

“Agreement” has the meaning assigned thereto in the first paragraph hereof.

 

“Applicable Margin” shall mean the annual percentages set forth below in respect of the Loans, which percentages shall be added to the TIIE at which the Loans shall bear interest pursuant to Article Five:

 

(i)            2.50% (two point fifty percent), from the Drawdown Date for the Initial Drawdown to the Interest Payment Date occurring upon or immediately after the expiration of the six-month period commencing on the Drawdown Date for the Initial Drawdown; and

 

(ii)           3.50% (three point fifty percent) from the Interest Payment Date occurring upon or immediately after the expiration of the six-month period commencing on the Drawdown Date for the Initial Drawdown.

 

“Authorized Officer” shall mean, as with respect to any Person, its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or any other officer holding a similar or equivalent position and having powers and authority to act as such Person’s legal representative.

 

 

  

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“Banorte” has the meaning assigned thereto in the first paragraph hereof.

 

“Banorte Commitment Letter” shall mean the letter of understanding dated June 18, 2010, between GCS and Banorte, as amended on August 30, 2010.

 

“Banorte Loan Account” has the meaning assigned thereto in paragraph (g) of Article Three.

 

“Bonds” shall mean the Series E and Series F bonds issued by Fasa on May 15, 2008, in the aggregate principal amounts of 1,800,000 Stimulus Units (Unidades de Fomento) and 2,200,000 Stimulus Units, respectively, which are registered with Chile’s Securities and Insurance Superintendency (Superintendencia de Valores y Seguros) under registration numbers 531 and 532, effective April 16, 2008.

 

“Borrower” has the meaning assigned thereto in the first paragraph hereof.

 

“Business Day” shall mean any day in which retail banks in Mexico City, Federal District, Mexico, or in Santiago de Chile, Chile, are open for business and are not authorized to remain closed; provided, that for purposes of this Agreement, Saturdays, Sundays and January 1 and December 31 of each year shall not constitute Business Days.

 

“Capital” shall mean the paid-in capital (and related premiums), retained earnings and any mandatorily convertible subordinated debentures.

 

“Capital Expenditures” shall mean, as with respect to any Person, any and all direct or indirect capital expenditures incurred by such Person on account of machinery and equipment, fixed assets or real property (including any improvement thereto or replacement or expansion thereof).

 

“Capital Lease” shall mean, as with respect to any Person, all rent and other payment obligations of such Person, howsoever designated, pursuant to any personal or real property lease (or other agreement conveying the use of such property), or any combination of such property, which obligations are required to be reported and accounted for as a capital lease in the balance sheet of such Person in accordance with the Financial Reporting Standards. For purposes of this Agreement, the amount of such obligations as of any given date shall be the capitalized amount thereof as of such date.

 

“Cash Equivalents” shall mean all cash and cash equivalents, as determined in accordance with the Financial Reporting Standards.

 

“Cash Surplus” shall mean the end-of-quarter amount obtained by adding to or subtracting from the Borrower’s consolidated EBITDA for the four (4) full fiscal quarters immediately preceding the relevant calculation date1, less (i) the Gross Interest Expense to be incurred over the four (4) fiscal quarters immediately following the relevant calculation date, less (ii) the principal amount of any Interest-Bearing Debt that will become due and payable during the four (4) fiscal quarters immediately following the relevant calculation date, less (iii) the estimated amount of all Capital Expenditures to be incurred over the four (4) fiscal quarters immediately following the relevant calculation date (which amounts shall not exceed the maximum set forth in paragraph (t)(iv) of Article Eleven), less (iv) the amount of all taxes paid over the four (4) full fiscal quarters immediately preceding the relevant calculation date.

 

“Change in Control” shall mean the occurrence of one or more of the following events: (i) if any Person or group of Persons other than the Permitted Holders, acting in either case directly or indirectly (by any means or through any company, entity or vehicle, whether or not incorporated), shall have acquired, directly or indirectly, by any means whatsoever, title to or the possession of more than 50% (fifty percent) of the voting shares of stock of GCS (including, as the case may be, any company resulting from the merger of or other corporate transaction involving GCS); (ii) if the Permitted Holders, either individually or as a group, shall have ceased to have the power to appoint a majority of the members of the board of directors of GCS; (iii) if any Person or group of Persons other than the Permitted Holders, acting in either case directly or indirectly (by any means or through any company, entity or vehicle, whether or not incorporated), shall have acquired, directly or indirectly, by any means whatsoever, title to or the possession of more than 30% (thirty percent) of the voting shares of stock of GCS (including, as the case may be, any company resulting from the merger of or other corporate transaction involving GCS), and the approval of any material decision by the shareholders or the board of directors of GCS requires the consent of such Person or group of Persons (whether by means of an affirmative vote or otherwise); or (iv) if Fasa or any of its Subsidiaries shall have transferred directly or indirectly to any third party other than a Subsidiary of the Borrower, by any means whatsoever, either through a single transaction or a series of transactions, any Material Asset. For the avoidance of doubt, in the case of items (i), (ii) or (iii) above, no transfer among the Permitted Holders or acquisition of shares of GCS by the Permitted Holders from a third party, shall constitute a Change in Control.

 

__________________________

1 Translator’s note: sic.

 

 

  

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“Chile” has the meaning assigned thereto in Section I(e) of the Representations and Warranties.

 

“Chilean Collateral Agent”, which term shall include its successors or assigns, has the meaning assigned thereto in the first paragraph hereof.

 

“Chilean Pledge Agreements” shall mean (i) the Share Pledge Agreement, (ii) each of the pledge agreements subject to retained possession to be executed substantially in the form of the document attached hereto as Exhibit H-2, pursuant to Law No. 18.112, in respect of not less than 90% (ninety percent) of the total consolidated inventories and accounts receivable of Fasa and its Subsidiaries, and (iii) any pledge agreement subject to retained possession in respect of not less than 90% (ninety percent) of the total consolidated inventories and accounts receivable of Fasa and its Subsidiaries, other than those referred to in (ii) above, which the applicable laws may permit in the future, executed by the obligor and (if other than such obligor) the pledgor substantially in the form of the document attached hereto as Exhibit H-2, in each case as amended or supplemented from time to time.

 

“CNBV” means Mexico’s National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores).

 

“Collateral Documents” shall mean (i) the Pledge Agreements Subject to Retained Possession, the Guaranty Trust Agreement, the Chilean Pledge Agreements and any other document or instrument directly or indirectly related thereto or contemplated thereby, including its amendments and supplements, and (ii) any other document intended as security for the satisfaction of the Borrower’s obligations under the other Loan Documents, including, without limitation, those referred to in paragraph (r) of Article Eleven.

 

“Commitment” shall mean, as the case may be, Banorte’s obligation to make available Tranche A-1 or HSBC México’s obligation to make available either Tranche A-2 or Tranche B, as applicable, in a principal amounts not to exceed that set forth beside the name of the relevant Lender in Exhibit 1 hereto.

 

“Commitment Letters” means, collectively, the Banorte Commitment Letter and the HSBC Commitment Letter.

 

“Control” shall mean, as with respect to any Person or group of Persons, its ability to (i) impose, directly or indirectly, any decision at the general shareholders’ or partners’ meeting or other equivalent body of a legal entity, or to appoint or remove a majority of the directors, managers or other equivalent persons thereof, (ii) exercise, directly or indirectly, voting rights in respect of more than 50% (fifty percent) of the capital of a legal entity, and (iii) determine, directly or indirectly, the course of the management or the strategies or principal policies of a legal entity, whether through the ownership of securities, by contractual provision or otherwise.

 

 

  

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“Co-Obligors” means the co-obligors identified in the first paragraph hereof, and any Person who may hereafter become a co-obligor pursuant to paragraph (q) of Article Eleven; provided, that each such Person shall also serve as a guarantor under the Promissory Notes.

 

“Dollars” means the legal tender of the United States of America; provided that, except as set forth in paragraph (c) of Article Three, any amount not originally denominated in Dollars but required to be calculated therein pursuant to this Agreement, shall be so calculated based on the exchange rate for the settlement of foreign-denominated obligations payable in Mexico, published by the Central Bank of Mexico in the Official Gazette of the Federation (Diario Oficial de la Federación) on the last Business Day immediately preceding the relevant calculation date, or at the substitute exchange rate published in lieu thereof by the Central Bank of Mexico; provided, that absent such publication the relevant amount shall be calculated based on the average exchange rate obtained by the Lenders, on the relevant calculation date, by adding the preferred spot rate published by and disclosed to its clients by HSBC México on such date, plus the preferred spot rate published and disclosed to its clients by Banorte on such date, plus the spot rate published in www.bloomberg.com/markets/currencies, or any substitute page thereof in effect on such date, and dividing the sum thereof by three (3).

 

“Drawdown” shall mean each drawing pursuant to which the Borrower avails itself of all or a portion of the Loans.

 

“Drawdown Date” has the meaning assigned thereto in paragraph (d) of Article Three.

 

“Drawdown Notice” has the meaning assigned thereto in paragraph (d) of Article Three.

 

“Drawdown Period” shall mean the Tranche A-1 Drawdown Period, the Tranche A-2 Drawdown Period or the Tranche B Drawdown Period, as applicable.

 

“EBITDA” shall mean, as with respect to GCS, as of any calculation date, the sum of (a) its operating income (before taxes, interest expense, depreciation and extraordinary or unusual items) and (b) its depreciation and amortization expense for the relevant period, in each case as determined in accordance with the Financial Reporting Standards consistently applied.

 

“EBITDA/Gross Interest Expense Ratio” shall mean, at any time and as with respect to GCS, the product of dividing its consolidated EBITDA for the four (4) most recent fiscal quarters, by its consolidated Gross Interest Expense for the four (4) fiscal quarters immediately preceding the relevant calculation date.

 

“Effective Date” has the meaning assigned thereto in paragraph (a) of Article Thirteen.

 

“Environmental Laws” shall mean the General Ecological Balance and Environmental Protection Law (Ley General del Equilibrio Ecológico y la Protección al Ambiente) and any other environmental law, regulation, provision, rule or technical guideline issued or adopted by any Governmental Authority (including without limitation, any Governmental Authority in Mexico, Chile, Brazil or Peru) and applicable to the Borrower and its Subsidiaries.

 

“Equity Interests” shall mean the shares of or partnership or other similar interests (howsoever designated) in a company’s capital, any interest in any Person (other than a company), and any and all warrants referred thereto, debentures convertible thereinto and purchase rights or options in respect thereof.

 

 

  

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“Fasa” means Farmacias Ahumada S.A., a limited liability company (sociedad anónima abierta) organized under the laws of Chile and registered with Chile’s Securities and Insurance Superintendency under registration number 629, effective October 15, 1997.

 

“Financial Reporting Standards” means (i) the financial information standards published by the Council for the Research and Development of Financial Reporting Standards (Consejo para la Investigación y Desarrollo de Normas de Información Financiera, A.C.), applicable in Mexico, or (ii) the International Financial Reporting Standards (IFRS) applicable in Chile, as the case may be, as in effect from time to time.

 

“GCS” has the meaning assigned thereto in the first paragraph hereof.

 

“Good Standing” shall mean, at any time and as with respect to any Person, the fact that such Person has not incurred in a reorganization event pursuant to the Corporate Reorganizations Law (Ley de Concursos Mercantiles) (or any successor law) or any other similar, applicable law.

 

“Governmental Authority” shall mean any Federal, state or municipal executive, legislative or judicial authority, howsoever acting, any governmental agency, instrumentality or decentralized or quasi-independent body or similar entity, any state, municipality, department or other political subdivision thereof, or any other governmental body or authority (including any central bank or taxing authority) or any entity (including any court) exercising governmental executive, legislative or judicial powers in any country (including, without limitation, Mexico, Chile, Brazil and Peru).

 

“Governmental Authorizations for the Acquisition” shall mean the authorization of the Federal Competition Commission (Comisión Federal de Competencia) and all other authorization required from any Governmental Authority for the consummation of the Acquisition, as set forth in Exhibit B hereto.

 

“Gross Interest Expense” for any given period shall mean, as with respect to GCS, all interest and financial expenses of any nature whatsoever, accrued by or incurred in connection with GCS’ Indebtedness, whether paid in cash or accrued but payable on a future or over a future period and recorded as a liability, plus any withholding taxes (and other related additional amounts) paid or payable by GCS.

 

“Guaranty Trust Agreement” means the Irrevocable Guaranty Trust Agreement to be executed among the shareholders of each of Última del Golfo, S.A. de C.V., Capa, S.A. de C.V., Alta del Centro, S.A. de C.V., Solo, S.A. de C.V., Estrella del Pacífico, S.A. de C.V., Medicamentos Doctorgen, S.A. de C.V., Inmuebles Visosil, S.A. de C.V., Drogueros, S.A. de C.V., Daltem Provee Nacional, S.A. de C.V., Casa Saba, S.A. de C.V., Farmacias ABC, S.A. de C.V, Publicaciones Citem, S.A. de C.V., Daltem Provee Norte, S.A. de C.V., Centennial, S.A. de C.V. and Controladora Casa Saba, S.A. de C.V., as settlors and second beneficiaries, The Bank of New York Mellon, S.A., Institución de Banca Múltiple, as trustee, and the Mexican Collateral Agent, as first beneficiary on behalf of the Lenders, in respect of the shares of stock of each of Última del Golfo, S.A. de C.V., Capa, S.A. de C.V., Alta del Centro, S.A. de C.V., Solo, S.A. de C.V., Estrella del Pacífico, S.A. de C.V., Medicamentos Doctorgen, S.A. de C.V., Inmuebles Visosil, S.A. de C.V., Drogueros, S.A. de C.V., Daltem Provee Nacional, S.A. de C.V., Casa Saba, S.A. de C.V., Farmacias ABC, S.A. de C.V, Publicaciones Citem, S.A. de C.V., Daltem Provee Norte, S.A. de C.V., Centennial, S.A. de C.V. and Controladora Casa Saba, S.A. de C.V., substantially in the form of the document attached hereto as Exhibit F, as amended or supplemented from time to time.

 

“HSBC Commitment Letter” shall mean the letter of understanding dated April 29, 2010, between GCS and Banorte, as amended on August 30, 2010.

 

“HSBC Loan Account” has the meaning assigned thereto in paragraph (g) of Article Three.

 

 

  

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“HSBC México” has the meaning assigned thereto in the first paragraph hereof.

 

“Indebtedness” shall mean, as with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person under any bonds, debentures, promissory notes or other similar instruments, regardless of their designation or governing law, issued by it, (iii) all deferred payment obligations of such Person on account of the purchase price of any goods or services, excluding any unmatured accounts payable arising in the ordinary course consistent with past practices, maturing in less than 90 (ninety) days, (iv) all obligations of such Person as lessee under any Capital Lease or Sale-Leaseback Transaction, (v) all third-party debt guaranteed by such Person as guarantor or co-obligor, or secured by it by means of a bond or a Lien on any of its assets, up to the amount of such debt, (vi) any letter of credit obtained by such Person and its reimbursement obligations thereunder, excluding any letter of credit issued on behalf of such Person as security for its payment obligations to any vendor in the ordinary course consistent with past practices, until such time as such letter of credit shall have been confirmed and the relevant amount shall have been paid to the applicable vendor by such Person in the ordinary course consistent with past practices, and (vii) any other liability, howsoever designated, whether accrued or contingent, recorded in the balance sheet of such Person in accordance with the Financial Reporting Standards.

 

“Initial Drawdown” shall mean the first Drawdown hereunder; provided, that the Drawdown of Tranche A-1 and the Drawdown of Tranche A-2 shall occur on the same date and shall together constitute the Initial Drawdown, irrespective of whether the Drawdown of Tranche A-1 occurs prior to the Drawdown of Tranche A-2 as contemplated by paragraph (a)(xvi) of Article Thirteen.

 

“Interest-Bearing Debt” shall mean, as with respect to any Person, any Indebtedness accruing interest, fees or other financial expenses; provided, that factoring transactions and the extension of credit by a supplier shall not constitute Interest-Bearing Debt to the extent that the financial cost associated therewith is assumed and paid by such supplier and not by such Person.

 

“Interest Payment Date” has the meaning assigned thereto in paragraph (f) of Article Five.

 

“Interest Period” shall mean each one (1) month period for the calculation of interest on the principal outstanding amount of the Loans; provided, that (i) the first Interest Period for each Drawdown shall run from the Drawdown Date to (but excluding) the last Business Day of the month in which such Drawdown occurs, (ii) each subsequent Interest Period shall run from the last day of the previous Interest Period to (but excluding) the last day of the following month, (iii) any Interest Period ending on a date which is not a Business Day shall be extended to the first Business Day immediately following such date, and the applicable interest shall be determined based on the number of days actually elapsed through the actual Interest Payment Date, and (iv) any Interest Period otherwise ending after the Maturity Date, shall end on the Maturity Date.

 

“Interest Rate” has the meaning assigned thereto in paragraph (a) of Article Five.

 

“Joinder” has the meaning assigned thereto in paragraph (B)(b) of Article Twenty.

 

“Late Interest Rate” has the meaning assigned thereto in Article Six.

 

“Lenders” means, collectively, HSBC México, Banorte, and their respective successors and assigns.

 

“Lien” shall mean, as with respect to any item of property, any mortgage, pledge, guaranty trust, deposit, lien, guaranty, ownership restriction or other encumbrance imposed thereon; provided, that an item of property shall be deemed subject to a Lien if it shall have been the subject matter of a conditional sale, transfer with withholding of title, Capital Lease or other similar arrangement, and an account payable shall be deemed subject to a Lien if assigned or made the subject matter of a factoring transaction, in either case with recourse.

 

 

  

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“Loan Documents” shall mean this Agreement, the Promissory Notes (as the context may require), the Commitment Letters, the Collateral Documents and any other instrument executed and/or issued thereunder, including, as the case may be, any amendment thereto or supplement thereof.

 

“Loans” has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Majority” has the meaning assigned thereto in paragraph (a) of Article Twenty-Six.

 

“Material Adverse Effect” has the meaning assigned thereto in paragraph (A)(1) of Article Fourteen.

 

“Material Assets” shall mean (i) the registration rights to each of the “Fasa,” “Farmacias Ahumada” or “Farmacias Benavides” trademarks, in any class, in the Trademarks Registry (Registro de Marcas Comerciales) maintained by Chile’s Ministry of Economic Development and Reconstruction (Ministerio de Economía, Fomento y Reconstrucción), and (ii) any shares of stock held by Fasa or any of its Subsidiaries, entitling it to appoint a majority of the board of directors or managers of Farmacias Benavides, S.A.B. de C.V.

 

“Maturity Date” has the meaning assigned thereto in Article Seven.

 

“Mexican Collateral Agent”, which term shall include its successors or assigns, has the meaning assigned thereto in the first paragraph hereof.

 

“Mexico” has the meaning assigned thereto in Section I(a) of the Representations and Warranties.

 

“Net Indebtedness/EBITDA Ratio” shall mean, at any time and as with respect to GCS, the product of dividing its consolidated Interest-Bearing Debt less its consolidated Cash Equivalents for the relevant period, by its consolidated EBITDA for the four (4) fiscal quarters immediately preceding the relevant calculation date.

 

“Permitted Liens” has the meaning assigned thereto in paragraph (b) of Article Twelve.

 

“Permitted Holders” shall mean any of Manuel Saba Ades, Alberto Saba Ades or their relatives by blood or marriage in a straight or lateral line within two degrees, whether directly or through any trust or like arrangement established for the exclusive benefit of such persons for estate planning or other similar purposes.

 

“Person” shall mean any individual, entity, corporation, business or other trust operating on a stand-alone basis, joint venture, unregistered entity, partnership or other business entity or Governmental authority, whether incorporated or unincorporated.

 

“Pesos” means the legal tender of Mexico.

 

“Pledge Agreements Subject to Retained Possession” shall mean (i) the pledge agreement subject to retained possession (contrato de prenda sin transmisión de posesión) to be executed between the Borrower and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by the Borrower in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (ii) the pledge agreement subject to retained possession 

 

 

  

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to be executed between Casa Saba, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Casa Saba, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (iii) the pledge agreement subject to retained possession to be executed between Drogueros, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Drogueros, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (iv) the pledge agreement subject to retained possession to be executed between Farmacias ABC de México, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Farmacias ABC de México, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (v) the pledge agreement subject to retained possession to be executed between Daltem Provee Nacional, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Daltem Provee Nacional, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (vi) the pledge agreement subject to retained possession to be executed between Publicaciones Citem, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Publicaciones Citem, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (vii) the pledge agreement subject to retained possession to be executed between Daltem Provee Norte, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Daltem Provee Norte, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, (viii) the pledge agreement subject to retained possession to be executed between Centennial, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Centennial, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, and (ix) the pledge agreement subject to retained possession to be executed between Controladora Casa Saba, S.A. de C.V. and the Mexican Collateral Agent, acting on behalf and for the benefit of the Lenders, in respect of all items of personal property used by Controladora Casa Saba, S.A. de C.V. in connection with its primary business activity, including, without limitation, its inventory and accounts receivable, in each case substantially in the form of the document attached hereto as Exhibit G, as amended or supplemented from time to time.

 

“Principal Payment Date” has the meaning assigned thereto in Article Seven.

 

“Promissory Note” and “Promissory Notes” have the meanings assigned thereto in paragraph (f) of Article Three.

 

“Sale-Leaseback Transaction” shall mean any arrangement pursuant to which a Person shall have sold or transferred any asset and agreed to subsequently lease such or any other asset primarily for its use in connection with the same purposes as the asset so sold or transferred.

 

“Scotiabank Loans” shall mean the loans made pursuant to (i) the loan agreement dated March 25, 2010, among Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, as lender, Casa Saba, S.A. de C.V., as borrower, and GCS and Drogueros, S.A. de C.V., as guarantors, and (ii) the loan agreement dated May 7, 2008, among Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, as lender, Casa Saba, S.A. de C.V., as borrower, and GCS and Drogueros, S.A. de C.V., as guarantors.

 

“Share Pledge Agreement” shall mean the pledge agreement (contrato de prenda mercantil) to be executed by Controladora Casa Saba, S.A. de C.V., in favor of the Chilean Collateral Agent, for the benefit of the Lenders, in respect of the shares of stock of Fasa, substantially in the form of the document attached hereto as Exhibit H-1.

 

 

  

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“Share Purchase Commitment” shall mean the Share Purchase Commitment, dated May 17, 2010, among José Codner Chijner, Inversiones Galia, S.A., Inversiones Los Alpes, S.A., Inversiones JCC Limitada, Asesorías e Inversiones ECD Limitada, Asesoría e Inversiones KCD Limitada, Asesoría e Inversiones DCD Limitada, and GCS.

 

“Special Majority” has the meaning assigned thereto in paragraph (a) of Article Twenty-Six.

 

“Subsequent Transaction” has the meaning assigned thereto in paragraph (s) of Article Eleven.

 

“Subsidiary” shall mean, as with respect to any Person, any company, partnership, trust, estate allocated to a specific purpose or other entity of any nature whatsoever, whether incorporated or unincorporated, howsoever designated, organized or existing, having the requisite legal ability to enter into agreements pursuant to the laws of any jurisdiction, in (or of) which 50% (fifty percent) of (a) if a stock company, the outstanding voting shares of stock, (b) if a limited partnership, joint venture or other similar entity, the partnership or other interests in its capital or profits, or (c) if a trust or other similar entity, the right to participate in its estate, are held or controlled by, directly or indirectly, at any given time, by (x) such Person, (y) such Person and one of more of its Subsidiaries, or (z) one or more of the Subsidiaries of such Person. For the avoidance of doubt, for purposes of this Agreement Fasa and its Subsidiaries shall be deemed to be Subsidiaries of the Lender solely and exclusively after the Acquisition.

 

“TIIE” shall mean, for purposes of any Interest Period, the 28 (twenty-eight) day Interbank Balanced Rate (Tasa de Interés Interbancaria de Equilibrio) published by the Central Bank of Mexico on the first day of the relevant Interest Period; provided, that if the first day of an Interest Period is not a Business Day, then the TIIE shall be the rate published on the last Business Day immediately preceding the commencement of such Interest Period or on the nearest Business Day.

 

“Tranche A-1” has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Tranche A-1 Drawdown Period” has the meaning assigned thereto in paragraph (a) of Article Three.

 

“Tranche A-2” has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Tranche A-2 Drawdown Period” has the meaning assigned thereto in paragraph (b) of Article Three.

 

“Tranche B” has the meaning assigned thereto in paragraph (a) of Article Two.

 

“Tranche B Drawdown Period” has the meaning assigned thereto in paragraph (c) of Article Three.

 

(b)            Except as otherwise expressly provided for herein, all references to any recital, representation, warranty or article, shall be deemed to refer to the representations and warranties hereunder and the articles hereof; and all references to any exhibit shall be to the relevant exhibit hereto, which shall constitute an integral part hereof. The words “hereof”, “herein”, “hereunder”, and others of similar import, shall be deemed to refer to this Agreement as a whole and not to any specific article or provision hereof. All references to a law or regulation shall be deemed to include its amendments and supplements, and any successor provision, law or regulation thereof.

 

 

  

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(c)            Any accounting term not otherwise defined herein, and all the financial information required to be delivered by the Borrower or any Person pursuant hereto, shall be construed, prepared, presented and, as the case may be, consolidated in accordance with the Financial Reporting Standards.

 

(d)            Unless expressly provided that a given period of time shall be comprised by Business Days, all periods of time set forth herein shall be comprised by calendar days.

 

ARTICLE TWO. The Loans. (a) Subject to the terms and conditions set forth herein, each Lender hereby agrees to make available to the Borrower loans in an amount not to exceed (i) in the case of Banorte, Ps.1,950,000,000 (one billion nine hundred fifty million Pesos) (“Tranche A-1”), (ii) in the case of HSBC  México, Ps.5,904,000,000 (five billion nine hundred four million Pesos) (“Tranche A-2”), and (iii) also in the case of HSBC México, the Peso equivalent of $200,000,000 (two hundred million Dollars) (“Tranche B” and, together with Tranche A-1 and Tranche A-2, the “Loans”), exclusive of any interest on or fees and expenses incurred in connection with the Loans.

 

(b)            The amount of the Loan made by each Lender shall not exceed the amount of such Lender’s Commitment (as with respect to the Tranche identified in Exhibit 1).

 

(c)            All Drawdowns shall be made by the Borrower in accordance with Article Three.

 

(d)            Any and all amounts previously drawn and repaid by the Borrower pursuant to this Agreement shall not be subject to further disbursement.

 

                                ARTICLE THREE. Drawdowns. (a) Tranche A-1 shall be requested by GCS and made available thereto by Banorte as a single Drawdown, within 180 (one hundred eighty) days from the Effective Date; provided, that in any event such Drawdown must occur on or before February 28, 2011 (the “Tranche A-1 Drawdown Period”).

 

(b)            Tranche A-2 shall be requested by GCS and made available thereto by HSBC México as a single Drawdown, within (one hundred eighty) days from the Effective Date; provided, that in any event such Drawdown must occur on or before February 28, 2011 (the “Tranche A-2 Drawdown Period”).

 

(c)            Tranche B shall be requested by GCS and made available thereto (or to any direct or indirect Subsidiary thereof indicated in the relevant Drawdown Notice and reasonably acceptable to HSBC México) by HSBC México as a single or multiple Drawdowns in Pesos, at the exchange rate determined by HSBC México (based on market conditions) on the relevant Drawdown Date, within the period commencing on the Effective Date and ending 60 (sixty) days prior to the Maturity Date (the “Tranche B Drawdown Period”).

 

(d)            Each Drawdown on the Loans shall occur on a Business Day (the “Drawdown Date”), in the case of Tranche A-1 within the Tranche A-1 Drawdown Period, in the case of Tranche A-2 within the Tranche A-2 Drawdown Period, and in the case of Tranche B within the Tranche B Drawdown Period; provided, that the Borrower shall have previously delivered to each Lender a notice substantially in the form of the document attached hereto as Exhibit J (the “Drawdown Notice”), executed by an Authorized Officer of the Borrower, containing, at least, (i) the amount of the relevant Drawdown, (ii) the expected Drawdown Date, (iii) the account to which the Lender must deposit the aggregate amount of the Drawdown, and (iv) the certificates referred to in paragraph (a)(xviii) of Article Thirteen. Such Drawdown Notice must be received by each Lender at least five (5) Business Days prior to the Drawdown Date, unless the Lenders shall have agreed to a shorter notice. The relevant Lender’s obligation to make the Loans available in the terms set forth herein, shall remain in effect, in the case of Tranche A-1, throughout the Tranche A-1 Drawdown Period, in the case of Tranche A-2, throughout the Tranche A-2 Drawdown Period, and in the case of Tranche B, throughout the Tranche B Drawdown Period. Consequently, the Lenders’ obligation to make available any unused portion of Tranche A-1, Tranche A-2 or Tranche B, as the case may be, shall terminate upon expiration of the relevant Drawdown Period.

 

 

  

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(e)            The Initial Drawdown shall be subject to the satisfaction of the conditions precedent set forth in paragraph (a) of Article Thirteen, and each Drawdown (including, without limitation, the Initial Drawdown) shall be subject to the conditions precedent set forth elsewhere in Article Thirteen. The determination as to whether the conditions set forth in paragraph (a) of Article Thirteen have been satisfied shall be made by the Lenders, in their own discretion, prior to any Drawdown in respect of either Tranche A-1 or Tranche A-2, and the determination as to whether the conditions precedent set forth in paragraph (b) of Article Thirteen have been satisfied shall be made by HSBC México, in its own discretion, prior to any Drawdown in respect of Tranche B.

 

(f)             Subject to the satisfaction (or waiver) of the conditions precedent for the effectiveness of this Agreement or the availability of the Drawdowns, each Drawdown shall be made in accordance with paragraph (g) below, upon delivery to the relevant Lender of a Promissory Note substantially in the form of the document attached hereto as Exhibit K (each, a “Promissory Note” and, together, the “Promissory Notes”), duly executed by the Borrower, as issuer, and by the Co-Obligors, as guarantors, for an amount equal to the amount of the Drawdown made available by such Lender on the relevant Drawdown Date. The parties agree that in case of conflict between the provisions contained in this Agreement and the provisions contained in any Promissory Note, the provisions contained in this Agreement shall prevail.

 

(g)            The Lenders shall credit the amount of each Drawdown as requested by the Borrower in the relevant Drawdown Notice, in the case of HSBC to account number 021180040471607755, maintained by GCS at HSBC México (the “HSBC Loan Account”) and, in the case of Banorte, to account number 072180006504977918, maintained by GCS at Banorte (the “Banorte Loan Account”), in each case before 2:00 p.m. (Mexico City time) on the Drawdown Date.

 

                                ARTICLE FOUR. Fees.  (a) The Borrower hereby agrees to pay to each Lender and/or its Affiliates, in connection with the Acquisition, the financing of the Acquisition and the Scotiabank Loans, and any other related transaction, the fees set forth in the relevant Commitment Letter or agreed with each Lender and/or its Affiliates in a separate instrument.

 

(b)           The fees referred to in this Article Four shall be subject to the applicable value added tax.

 

                                ARTICLE FIVE. Interest. (a) The Borrower shall pay to each Lender, in respect of each Interest Period and without need for demand, interest on the outstanding principal amount of the Loans made available by such Lender, Period, at an annual rate equal to the TIIE for the relevant Interest Period, plus the Applicable Margin (the “Interest Rate”).

 

(b)            If the Central Bank of Mexico shall have temporarily or permanently discontinued the publication of the TIIE and the rate referred to in paragraph (b) above,2 the interest rate applicable in respect of any Interest Period shall be equal to the Cost of Peso-Denominated Funds (Costo de Captación a Plazo de Pasivos Denominados en Pesos) most recently published by the Central Bank of Mexico in its Internet page prior to the commencement of the relevant Interest Period, plus the Applicable Margin.

 

(c)            If the Central Bank of Mexico shall have temporarily or permanently discontinued the publication of the TIIE, the interest rate applicable in respect of any Interest Period shall be equal to the annual interest rate for new issues of 28 (twenty-eight) day Treasury Certificates most recently published by the Central Bank of Mexico in its Internet page prior to the commencement of the relevant Interest Period, plus the Applicable Margin.

 

 

________________________

2 Translator's note: sic.

 

 

  

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(d)            If the Central Bank of Mexico shall have temporarily or permanently discontinued the publication of the TIIE and the rates referred to in paragraphs (b) and (c) above, the applicable interest rate shall be the interest rate published by the Central Bank of Mexico in lieu of the interest rate referred to in paragraph (c) above, plus the Applicable Margin.

 

(e)            Any substitute rate applicable pursuant to paragraphs (b), (c) and (d) above, shall cease to be in effect beginning on the first Interest Period immediately following the date on which the Central Bank of Mexico resumes publication of the TIIE.

 

(f)             Interest shall be due and payable on the last Business Day of each Interest Period (each such date, an “Interest Payment Date”); provided, that the last Interest Payment Date shall occur on the Maturity Date.

 

(g)            Any and all interest due and payable hereunder shall be calculated based on the number of days actually elapsed in a year comprised by 360 (three hundred sixty) days, including the first but excluding the last day thereof.

 

                                ARTICLE SIX. Late Interest. (a) If any amount due and payable hereunder or under the Promissory Notes is not paid when due, such amount shall accrue late interest from the date on which it became due, to the date on which it shall have been paid in full, at an annual rate equal to the interest rate for the relevant period, multiplied by two (2) (the “Late Interest Rate”).

 

(b)            The amount of late interest accrued on a per-day basis by any past due amount shall be calculated by dividing the applicable Late Interest Rate by 360 (three hundred sixty), which late interest shall be due and payable on demand by the Borrower based on the actual number of days elapsed and for so long as a default shall have occurred and be continuing.

 

                                ARTICLE SEVEN. Repayment. The outstanding principal amount of the Loans made by each lender shall be repaid thereto by the Borrower in a single installment on the date occurring six (6) months after the Drawdown Date for the Initial Drawdown (the “Maturity Date”); provided, that the borrower shall be entitled to extend the Maturity Date of the Loans on a single occasion, upon written notice to each Lender at least 30 (thirty) days prior to the original Maturity Date, to the date which occurring 12 (twelve) months from the Drawdown Date for the Initial Drawdown; provided, further, that in the event of any such extension the Borrower shall be required the then outstanding Promissory Notes for new Promissory Notes duly executed by it and the Co-Obligors, as guarantors.

 

                                ARTICLE EIGHT. Prepayments of Principal. (a) The Borrower shall be entitled to repay the principal amount of the Loans, together with any accrued but unpaid interest thereon and any other amounts due and payable in connection therewith pursuant to this Agreement, prior to its scheduled maturity, upon written notice to each Lender at least 10 (ten) Business Days prior to the proposed date of repayment of such principal amount.

 

(b)            The principal amount of the Loans, net of any applicable taxes, shall be subject to prepayment by the Borrower in the event and with the proceeds of:

 

 (i)              any sale, assignment or other transfer of assets by GCS or any of its Subsidiaries, (including the Co-Obligors) or Fasa or any of its Subsidiaries, other than (1) any sale of its inventories in the ordinary course consistent with past practices, (2) the sale, in a single transaction or a series of successive transactions, of assets representing in value less than $10,000,000 (ten million Dollars) or its equivalent in any other currency, in any fiscal year, provided that the relevant proceeds are used to purchase new assets within 180 (one hundred eighty) days from the drawdown date, and (3) as the case may be, the sale associated with the Subsequent Transaction;

 

 

  

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 (ii)             the issuance of any Equity Interests or the issuance or incurrence of any Indebtedness by GCS or its Subsidiaries (including the Co-Obligors), or Fasa or its Subsidiaries, other than any Indebtedness permitted by paragraph (a) of Article Twelve, for purposes other than repaying the Loans;

 

 (iii)            the transfer of any Equity Interest in its Subsidiaries, or in Fasa or its Subsidiaries;

 

 (iv)           any amount received by GCS or any of its Subsidiaries (including the Co-Obligors) as adjustment to the purchase price or indemnification pursuant to the Acquisition Documents;

 

 (v)            any insurance proceeds obtained as a result of the occurrence of an insured event, if such proceeds are not used to replace the relevant assets; and

 

 (vi)           50% of the Cash Surplus (which shall be due and payable within 10 (ten) Business Days from the delivery of the quarterly financial information referred to in paragraph (b) of Article Eleven).

 

(c)            Any amount repaid pursuant to this Article shall be allocated on a pro rata basis to repay any Loans made available by the Lenders to the Borrower under Tranche A-1, Tranche A-2 and Tranche B.

 

(d)            To the extent that any prepayment is made on an Interest Payment Date, the Borrower shall not be required to pay any fee or penalty to the Lenders. If a prepayment shall occur on a date other than an Interest Payment Date, the Borrower shall pay to each Lender any and all costs and expenses incurred by the latter in connection therewith, within 15 (fifteen) days from the receipt of demand therefor from the relevant Lender; provided, that such Lender shall have delivered to the Borrower a document containing a reasonably detailed breakdown of the calculation of the relevant charges, which document shall have binding effects absent any calculation error.

 

(e)            If the Borrower defaults with any prepayment following the delivery of notice thereof to the Lenders, the Borrower shall pay to each Lender, upon demand, any and all costs and expenses incurred by the latter in connection with such repayment, provided that such Lender shall have delivered to the Borrower a reasonably detailed description of such cost or expense.

 

                                ARTICLE NINE. Payment Place and Terms; Additional Amounts. (a) Any and all payments on account of the principal amount of, interest on, or fees and other amounts payable in connection with the Loans, shall be made by the Borrower net of any and all taxes, fees, contributions, withholdings, deductions, charges or other imposts applicable thereto pursuant to any Mexican or Chilean law, regulation or other legal provision, without offset, in immediately available funds, before 12:00 noon (Mexico City time) on the due date thereof. In the event of applicability of any tax or withholding (including any tax on any interest paid to a Lender’s funding sources), the Borrower shall pay such additional amounts as may be necessary for each Lender to receive the same amount it would have received absent such tax or withholding. The above shall not be applicable to any income or other similar taxes payable by a Lender or its successors or assigns under this Agreement, based on its total income or assets pursuant to the applicable laws, regulations and other legal provisions of Mexico. Each payment shall be made in Pesos, (i) in the case of HSBC, by means of its deposit to the HSBC Loan Account or to such other account as HSBC México shall have notified to the Borrower at least five (5) Business Days in advance, (ii) in the case of Banorte, by means of its deposit to the Banorte Loan Account or to such other account as Banorte shall have notified to the Borrower at least five (5) Business Days in advance, and (iii) in the case of any other Lender, to the account notified by the relevant Lender to the Borrower at least five (5) Business Days in advance. The Borrower hereby authorizes each of HSBC México and Banorte to charge to the HSBC Loan Account and the Banorte Loan Account, respectively, any and all amounts payable to each of them by the Borrower pursuant to this Agreement.

 

 

  

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(b)            Any and all partial installments received by the Lenders shall be allocated as follows:

 

 first, to the payment of any and all collection expenses, including attorney’s fees and litigation expenses, if any;

 

 second, to reimburse the Lenders for any and all costs and expenses remaining unpaid after the date on which they became due and payable (which shall not be less than three (3) Business Days from the receipt of the relevant invoice by the Borrower);

 

 third, to the payment of any and all fees due and payable under the Loan Documents;

 

 fourth, to the payment of any and all accrued, unpaid late interest; and any and all of the costs and expenses referred to in paragraphs (d) and (e) of Article Eight, if any;

 

 fifth, to the payment of any accrued, unpaid regular interest;

 

 sixth, to the payment of the principal amount of the Loans; and

 

 seventh, to the payment of any other amount due and payable hereunder and under the other Loan Documents, if any.

 

(c)            If any of the Borrower’s payment obligations hereunder shall be due on a date which is not a Business Day or which is not included in the relevant month’s calendar, then the relevant amount shall be due and payable on the first Business Day immediately following such date.

 

(d)           The parties hereby agree that any and all payments (including, without limitation, any partial installment) on account of the principal amount of, interest on, or fees or other amounts payable in connection with the Loans (except for any fees or other amounts payable to only one of the Lenders) shall be allocated on a pro rata basis to repay any Loans made available by the Lenders to the Borrower under Tranche A-1, Tranche A-2 and Tranche B, based on each Lender’s Commitment pursuant to Exhibit 1 hereto. Each Lender hereby covenants and agrees, in the event that it were to receive payment of an amount greater than that to which it is entitled, to distribute to the other Lenders the applicable pro rata share of such payment based on each other Lender’s Commitment pursuant to Exhibit 1.

 

                                ARTICLE TEN. Joint and Several Obligations. (a) Pursuant to articles 1,987 (one thousand nine hundred eighty-seven), 1,988 (one thousand nine hundred eighty-eight) and other applicable provisions of the Federal Civil Code (Código Civil Federal), and the corresponding articles of the civil codes for the Federal District and all states of the Mexican Republic, each Co-Obligor hereby agrees to be held jointly and severally liable with the Borrower for the payment, when due, of the principal amount of, interest on, and any fees or other amounts due and payable hereunder and under the Promissory Notes and the other Loan Documents, irrespective of whether their joint and several obligations are expressly referred to in the relevant articles of this Agreement, the Promissory Notes or the other Loan Documents. Accordingly, the Lenders shall be entitled to demand payment of any such amount, indistinctly, to the Borrower and/or any of the Co-Obligors, either jointly or individually.

 

(b)            In addition to its obligations pursuant to the preceding paragraph, each Co-Obligor hereby agrees to execute, as guarantor, any and all Promissory Notes issued hereunder.

 

(c)            If any Co-Obligor shall have paid any amount on behalf of the Borrower, the Borrower and the Co-Obligors hereby agree not to seek its recovery from the other Co-Obligors unless and until the Lenders shall have received payment of any and all amounts due and payable thereto pursuant to this Agreement, the Promissory Notes and the other Loan Documents.

 

 

  

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                                ARTICLE ELEVEN. Affirmative Covenants. For so long as any amount due and payable hereunder or under the Promissory Notes and the other Loan Documents shall remain outstanding, the Borrower and the Co-Obligors, as the case may be, hereby covenant and agree to do the following:

 

(a)            Use of Proceeds. The Borrower shall use and cause to be used (i) all of the proceeds from Tranche A-1, to (1) repay in full the Scotiabank Loans, and for other general corporate purposes, and (2) pay to Banorte the fees set forth in Article Four; (ii) all of the proceeds from Tranche A-2, to (1) finance the one-time acquisition, by Controladora Casa Saba, S.A. de C.V., through a tender offer, of at least 50% (fifty percent) plus one of the outstanding shares of stock of Fasa in accordance with Title XXV of Chile’s Securities Market Law (Ley de Mercado de Valores) (the “Acquisition”), and (2) pay to HSBC México the fees set forth in Article Four; and (iii) all of the proceeds from Tranche B, to (i) refinance the Bonds and, as the case may be, such liabilities of Fasa and its Subsidiaries as the Borrower and HSBC México may agree, and as may be necessary for GCS to satisfy its obligation to consummate the Subsequent Transaction in exactly the terms set forth in paragraph (s) of Article Eleven hereof, (2) pay to HSBC México the fees set forth in Article Four, and (3) pay any and all other fees payable in connection with the transactions contemplated by this Agreement, with the Acquisition and with such other related transactions (including any financial derivative transaction) as the Borrower and HSBC México may agree.

 

(b)            Financial Statements; Other Reports. The Borrower shall deliver to each Lender, complete and correct copies,

 

 (i)              as soon as practicable, but in any event within 130 (one hundred thirty) days from the end of each fiscal year of GCS, Fasa and each Co-Obligor, of the audited consolidated and individual financial statements of GCS and Fasa, and the individual financial statements of each Co-Obligor for the immediately previous fiscal year, including in each case its balance sheet, income statement, statement of changes in financial condition and statement of changes in stockholders’ equity, together with the report thereon of Salles, Sainz – Grant Thorton, S.C. or any other independent accounting firm acceptable to the Lenders, and a certificate from an Authorized Officer of the Borrower to the effect that no Acceleration Event has occurred and is continuing or, if an Acceleration Event shall have occurred and be continuing, containing a description thereof and of the actions taken or proposed to be taken in connection therewith;

 

 (ii)             as soon as practicable, but in any event within 30 (thirty) Business Days from the end of each of the first three (3) quarters of each fiscal year of GCS, Fasa and each Co-Obligor, and within 50 (fifty) days from the end of the last quarter of each fiscal year of GCS, Fasa and each Co-Obligor, of the consolidated and individual financial statements of GCS and Fasa, and the individual internal financial statements of each Co-Obligor for the immediately previous fiscal quarter, including in each case its balance sheet, income statement, statement of changes in financial condition and statement of changes in stockholders’ equity, certified by an Authorized Officer of GCS, Fasa and each Co-Obligor, as the case may be, as being prepared in accordance with the Financial Reporting Standards, together with a certificate from an Authorized Officer of the Borrower to the effect that the terms of this Agreement have been complied with and no Acceleration Event has occurred and is continuing or, if an Acceleration Event shall have occurred and be continuing, containing a description thereof and of the actions taken or proposed to be taken in connection therewith;

 

 (iii)            concurrently with the delivery of the financial information set forth in this Article Eleven, the Borrower shall deliver to each Lender a certificate from an Authorized Officer, substantially in the form of the document attached hereto as Exhibit L, containing all the information and calculations necessary to verify the satisfaction by GCS of its obligations under paragraph (t) of this Article Eleven or, as the case may be, describing the reasons for its failure to comply therewith and a detailed description of the actions taken during such quarter and as of the date relevant in order to comply with the Net Indebtedness/EBITDA Ratio set forth in paragraph (t)(i) of this Article Eleven; and

 

 

  

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 (iv)            within the first 20 (twenty) Business Days from the end of each quarter, the Borrower shall deliver to each Lender a certificate from an Authorized Officer as with respect to (1) the amount of consolidated accounts receivable of each Co-Obligor and, as the case may be, any other Subsidiary required to pledge its accounts receivable pursuant to this Agreement, for the previous fiscal quarter, their age, any reserves created in respect thereof during such quarter, any change in such item as with respect to the previous quarter, and a summary of the reasons for any such change; and (2) the amount of the consolidated inventories of each Co-Obligor and, as the case may be, any other Subsidiary required to pledge its inventories pursuant to this Agreement, for the previous fiscal quarter, their age, any reserves created in respect thereof during such quarter, any change in such item as with respect to the previous quarter, and a summary of the reasons for any such change.

 

(c)            Notices and Reports. The Borrower shall give to the Lenders, immediately upon its occurrence but in any event within five (5) Business Days therefrom, detailed, complete and correct notice of any of the following events: (i) any Acceleration Event (regardless of whether or not continuing after the expiration of the relevant grace period, if any, and irrespective of the delivery of the notice referred to in this paragraph (c)), in the form of a certificate from an Authorized Officer of the Borrower containing a detailed description of such Acceleration Event and the actions taken or proposed to be taken by the Borrower in connection therewith; (ii) any change in the taxes, duties or other contributions payable in Mexico, Chile, Peru or Brazil, or any political subdivision thereof or taxing authority therein, or in any provision applicable in Mexico, Chile, Peru or Brazil, which may affect any amount or the period of time for the receipt of any amount due and payable hereunder or under the Promissory Notes or the other Loan Documents, or the obligations of the Borrower generally; (iii) any default or event of default with any contractual obligation of the Borrower, Fasa or their respective Subsidiaries, resulting or which could be reasonably expected to result, individually or in the aggregate, in a Material Adverse Effect, (iv) the commencement of any litigation, action or proceeding by or before any court, Governmental Authority or arbitration tribunal, resulting or which could be reasonably expected to result, individually or in the aggregate, in a Material Adverse Effect; (v) any threatened strike or stoppage by the workers of the Borrower, Fasa or their respective Subsidiaries; and (vi) any development, event or circumstance, of any nature whatsoever, having or which could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(d)            Compliance with the Law; Satisfaction of Contractual Obligations. The Borrower and each Co-Obligor shall comply, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to comply with (i) any and all laws, regulations, orders, decisions, awards, directives or requirements issued by any Governmental Authority (including as with respect to any license, permit, notice, registration or other governmental authorization, of any nature whatsoever, necessary for its own or hold its property or conduct its business, and including any antitrust, environmental (including any technical guideline and provision applicable to the management and release of hazardous materials or residues), tax, social security, pensions and corrupt practices law), and (ii) each and all of its obligations under any contract or agreement to which it is a party, or under any securities issued by it (by any means whatsoever), except where its failure to comply therewith or its default thereunder would not have or could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(e)            Payment Obligations. The Borrower and each Co-Obligor shall pay, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to pay, before the amount thereof shall become past due, (i) any and all taxes, contributions, fees and other governmental charges of any nature whatsoever, determined against, imposed upon or demanded from it (including, without limitation, those relating to social security, workers’ housing or retirement contributions) and (ii) any and all lawful claims where its failure to make the relevant payment would result or could be reasonably expected to result in the imposition of a Lien on its property; provided, that the neither the Borrower nor any Co-Obligor shall not be required to pay or to cause any of its Subsidiaries, Fasa or any of Fasa’s Subsidiaries to pay, any tax, fee or charge being contested by it in good faith through the appropriate procedures in accordance with the applicable laws, for which it has created appropriate reserves in accordance with the Financial Reporting Standards or with any other generally accepted accounting principles applicable thereto, as the case may be, and which would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 

  

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(f)             Insurance.

 

 (i)              The Borrower and each Co-Obligor shall maintain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to maintain, in full force and effect, all-risk insurance policies in respect of all of its real property, issued by reputable insurance companies in each relevant jurisdiction, in such amounts and against such risks as are consistent with customary industry’s practice for like companies with similar properties and engaged in the same or similar lines of business as the Borrower, its Subsidiaries (including the Co-Obligors), Fasa and Fasa’s Subsidiaries, which amounts shall be at least equal to those required to replace the relevant items of property.

 

 (ii)             Each of the real property insurance policies set forth in Exhibit D hereto shall expressly and irrevocably designate the Lenders as preferred beneficiaries of any insurance payment made thereunder, indicate that the premium payable in respect of its effective period has been paid in full, and that such policy shall be in full force and effect during such period. The Borrower shall provide evidence of the purchase of each such policy, its effectiveness and the designation of the Lenders as beneficiaries thereof, at least three (3) days prior to the Drawdown Date for the Initial Drawdown and within 20 (twenty) days from each anniversary of the purchase of each such policy.

 

(g)            Conduct of Business; Continuing Existence. The Borrower and each Co-Obligor shall remain engaged, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to remain engaged primarily in the same activities and line of business as it is currently engaged, and shall preserve and maintain and cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to preserve and maintain its legal existence, rights, licenses, permits, notices, registrations and, generally, any material authorization for the conduct of its business.

 

(h)            Books and Records. The Borrower and each Co-Obligor shall keep, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to keep adequate books and accounting records, containing complete and correct entries of all of its financial transactions, assets and business, made in accordance with the Financial Reporting Standards or any other generally accepted accounting principles applicable to it.

 

(i)             Right of Inspection. The Borrower and each Co-Obligor shall allow, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to allow the representatives of each Lender (whether jointly or individually) to inspect its accounting records and/or assets. Any such review and inspection shall take place upon at least three (3) days’ written notice to the Borrower (except if an Acceleration Event shall have occurred and be continuing, in which case no notice shall be required). All expenses incurred with any such review or inspection shall be borne by the Borrower, except where the number of inspections in any given year shall have exceeded from three (3), in which case such costs shall be borne by the Lender requesting the inspection (except if an Acceleration Event shall have occurred and be continuing, in which case such expenses shall be borne by the Borrower). Any such review or inspection shall take place during Business Days and business hours, in a manner such that does not disrupt or interrupt the operations of the Borrower, its Subsidiaries, the Co-Obligors, Fasa or Fasa’s Subsidiaries, as the case may be. The Lenders shall keep (and shall cause their representatives to keep) confidential any and all information of the Borrower, its Subsidiaries, the Co-Obligors, Fasa and Fasa’s Subsidiaries obtained by them in connection with any such review or inspection, until such time as such information shall have become publicly available by any means other than its disclosure by the Lenders or its representatives, or unless there shall be a dispute between the Lenders and the Borrower (in which case the Lenders shall be entitled to use such information in connection with such dispute); provided, that the Lenders shall be allowed to disclose such information to the extent required to comply with the applicable laws or with an order of a competent authority.

 

 

  

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(j)             Maintenance of Property. The Borrower and each Co-Obligor shall maintain and preserve, and the Borrower shall cause each of its Subsidiaries, Fasa and each of its Subsidiaries to preserve and maintain in good order and normal condition any and all items of property used by it in connection with or which may be useful for purposes of its business activities, ordinary wear and tear excepted, which obligation shall not prevent the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries, from discontinuing the operation and maintenance of any item of property where necessary for the conduction of its business operations, provided that such discontinuation does not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(k)            Ranking. The Borrower and the Co-Obligors shall do all such things as may be necessary to ensure that their respective obligations hereunder and under the other Loan Documents constitute, at least, general obligations of the Borrower and the Co-Obligors and (i) rank at least pari passu with all other present or future, direct and unsubordinated obligations of the Borrower and the Co-Obligors (except for any payment obligation ranking senior thereto in status pursuant to the law), and (ii) be secured by a first priority lien on the assets subject matter of the Collateral Documents.

 

(l)             Transactions with Affiliates.  The Borrower and each Co-Obligor shall enter, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to enter into any transaction with its Affiliates, exclusively on an arm’s length basis, in terms not less favorable than those it could obtain in a similar transaction from a party other than any of its Affiliates.

 

(m)           Maintenance of the Governmental Authorizations. The Borrower and each Co-Obligor shall maintain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to maintain, in full force and effect, any and all authorizations from and registrations with any Governmental Authority, necessary pursuant to the applicable laws or reasonable industry’s practice to (i) conduct its business (including, without limitation, any financial, antitrust, environmental or health laws), except where the lack of any such authorization or registration would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) comply with its obligation under and preserve the validity and enforceability of this Agreement and the other Loan Documents.

 

(n)            Taxes. The Borrower and each Co-Obligor shall file, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to file, any and all tax returns of any nature whatsoever (including those relating to payroll taxes and social security, workers’ housing and retirement contributions), required to be filed by it in any jurisdiction pursuant to the applicable laws thereof, and to pay any and all taxes due and payable by it in accordance with such tax returns, on or before the date on which each such payment is due pursuant to the applicable laws (which payment shall be included, for purposes of this obligation, within those required to be made by Borrower and the Co-Obligors pursuant to paragraph (d) of this Article Eleven), except for any such tax being contested by it in good faith through the appropriate procedures in accordance with the applicable laws, for which it has created appropriate reserves in accordance with the Financial Reporting Standards, and which would not have and could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 

  

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(o)            Ownership Structure; Voting Rights. GCS shall maintain, at all times during the effective term of this Agreement, (1) title to more than 50% (fifty percent) of the voting Equity Interests of each Co-Obligor and (2) the Control of each Co-Obligor.

 

(p)            Collateral Documents.

 

 (i)             The Borrower and each Co-Obligor shall comply, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries, to the extent a party to the Collateral Documents, to comply with any and all of its obligations thereunder, execute and deliver all such documents or carry out all such acts as the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, may reasonably request from it in order to create, formalize, protect, preserve and maintain in full force and effect the guaranties and liens contemplated thereby, pay any and all costs and expenses incurred in connection with the above, and defend the rights of the Lenders, the Mexican Collateral Agent and the Chilean Collateral Agent in respect of the property and rights subject matter of the Collateral Documents.

 

 (ii)             The Borrower and each Co-Obligor shall execute and cause each of its Subsidiaries to execute the Chilean Pledge Agreements, (1) in the case of the Share Pledge Agreement, including its formalization, within 15 (fifteen) Business Days from the date of the Initial Drawdown, and (2) in the case of the other Chilean Pledge Agreements, within 45 (forty-five) Business Days from the acquisition of 95% (ninety-five percent) or more of the outstanding shares of stock of Fasa by the Borrower, through any of its Subsidiaries, subject to their formalization within an additional 30 (thirty) Business Day period; provided, that (y) the Borrower shall only be required to execute the Chilean Pledge Agreements within such 45 (forty-five) Business Day period if it shall have obtained from the holders of the Bonds (in accordance with the provisions contained in the relevant indenture) such written consents as may be necessary for it to enter into and to execute the Chilean Pledge Agreements; provided, further, that the Borrower shall make and cause Fasa to make its best efforts to obtain such consents and keep the Lenders appraised as with respect thereto, and (z) upon receipt of the consents referred to in item (ii)(y) above, the Lenders and the holders of the Bonds shall each hold a pro rata share of the collateral represented by Fasa’s property.

 

(q)            Additional Co-Obligors. The Borrower shall cause (i) those of its Subsidiaries (including, without limitation, Fasa and its Subsidiaries, subject to the provisions contained hereinbelow) having a combined book value in excess of 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS (including Fasa and its Subsidiaries), calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article, and (ii) any present or future direct or indirect Subsidiary of GCS (including, without limitation, Fasa and its Subsidiaries, subject to the provisions contained hereinbelow), having a book value equal to or greater than 10% (ten percent) of GCS’ consolidated assets, sales and EBITDA, calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article, to execute, to the Lenders’ satisfaction, any such documents as may be necessary for such Subsidiary to become a Co-Obligor under Article Ten hereof, including, without limitation, this Agreement, any amendment or joinder to this Agreement, and the Promissory Notes, as guarantors, within 45 (forty-five) Business Days from the date on which such Subsidiary is first required to become a Co-Obligor; provided, that the obligation set forth in this paragraph (q) shall be effective, as with respect to Fasa and its Subsidiaries, if and only if the Borrower shall have acquired, through any of its Subsidiaries, 95% (ninety five percent) or more of the outstanding shares of stock of Fasa; and provided, further, that if the Borrower does not obtain from the holders of the Bonds, within such period and at no cost (in accordance with the procedure set forth to such effect in the relevant indenture), all such consents as may be necessary for Fasa and its Subsidiaries to become Co-Obligors hereunder, having made and caused Fasa to make its best efforts to obtain such consents and having kept the Lenders appraised as to that respect, then the amount of its obligation hereunder shall not exceed from that necessary to enable Fasa to maintain the maximum indebtedness ratio permitted by the indenture relating to the Bonds.

 

 

  

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(r)             Additional Collateral Documents.

 

 (i)              To the extent permitted by the applicable laws, the Borrower shall cause (1) those of its Subsidiaries (including, without limitation, Fasa and its Subsidiaries, solely and exclusively if the Borrower shall have acquired, through any of its Subsidiaries, 95% (ninety-five percent) or more of the outstanding shares of stock of Fasa) having a combined book value in excess of 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS (including, subsequent to the Acquisition, Fasa and its Subsidiaries), calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article, and (2) any present or future direct or indirect Subsidiary of GCS (including, without limitation, Fasa and its Subsidiaries, solely and exclusively if the Borrower shall have acquired, through any of its Subsidiaries, 95% (ninety-five percent) or more of the outstanding shares of stock of Fasa) having a book value equal to or greater than 10% (ten percent) of GCS’ consolidated assets, sales and EBITDA, calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article, to execute, to the Lenders’ satisfaction, any such documents as may be necessary for such Subsidiary to pledge, for the benefit of the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, in accordance with the applicable law, any and all of the items of personal property used by it in connection with its primary business activity, including, without limitation, its inventories and accounts payable, within 45 (forty-five) Business Days from the date on which such Subsidiary is first required to pledge such assets; provided, as with respect to Fasa and its Subsidiaries, that (y) the Borrower shall be required to create (or cause the creation of) such pledge if and only if it shall have obtained from the holders of the Bonds (in accordance with the provisions contained in the relevant indenture), at no cost and within such term, such written consents as may be necessary for the creation of such pledge, to which effect it shall make and cause Fasa to make its best efforts to obtain such consents and keep the Lenders appraised as with respect thereto, and (z) upon receipt of the consents referred to in item (i)(y) above, the Lenders and the holders of the Bonds shall each hold a pro rata share of the collateral represented by Fasa’s property.

 

 (ii)             To the extent permitted by the applicable laws, the Borrower shall transfer and cause each of its Subsidiaries to transfer, to the trust established pursuant to the Guaranty Trust Agreement, the shares of (1) those of its Mexican Subsidiaries having a combined book value in excess of 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS (including, subsequent to the Acquisition, Fasa and its Subsidiaries), calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article, and (2) any Mexican Subsidiary having a book value equal to or greater than 10% (ten percent) of GCS’ consolidated assets, sales and EBITDA, calculated in each case based on the financial information delivered to the Lenders pursuant to paragraph (b) of this Article; provided, that the obligation set forth in this paragraph (r)(ii) shall be effective, as with respect to Fasa’s Mexican Subsidiaries, if and only if (y) the Borrower shall have acquired, through any of its Subsidiaries, 95% (ninety five percent) or more of the outstanding shares of stock of Fasa, and (z) the Borrower shall have obtained from the holders of the Bonds (in accordance with the procedure set forth to such effect in the relevant indenture), at no cost and within 45 (forty-five) Business Days from the date of its acquisition of 95% (ninety-five percent) of the aforementioned shares, all such consents as may be necessary to make such transfer, to which effect it shall make and cause Fasa to make its best efforts to obtain such consents and keep the Lenders appraised as with respect thereto.

 

 

  

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(s)            Subsequent Transaction. GCS shall acquire, directly or through a Subsidiary organized and existing under the laws of Mexico, all of the outstanding shares of stock of Farmacias Benavides, S.A.B. de C.V. currently held by Fasa, or, if impractical for tax, legal or efficiency reasons (taking into consideration (i) the rights of Fasa’s minority shareholders and (ii) the cost of such acquisition based on the opinion of a recognized independent expert), which GCS shall be required to prove to the Lenders, to their full (and reasonable) satisfaction, then GCS shall do all such reasonable things as are within its control, to ensure that all the unrestricted cash flow generated by Farmacias Benavides, S.A.B. de C.V.’s operations is used to repay the principal of, interest on, and other amounts payable in connection with the Loans, in either case within 24 (twenty-four) months from the Drawdown Date for the Initial Drawdown (either or both such transactions, or any other equivalent transaction, the “Subsequent Transaction”); provided, that the terms of the Subsequent Transaction shall be subject to the Lenders’ consent, which consent shall be granted if and only if, in addition to the approval of the Subsequent Transaction, the Lenders shall have received undisputable evidence to the effect that (1) GCS has taken or will take, within such reasonable period as the parties may agree, any and all such measures as may be necessary to comply with its payment obligations under the Loans (taking into consideration the effective periods and long-term nature thereof, as agreed by the parties in the Commitment Letters), and (2) GCS has in place a plan (which must be sufficiently detailed) and shall take any and all such actions as may be necessary to achieve and maintain a Net Indebtedness/EBITDA Ratio of less than 2.5 (two point five) (including the issuance of equity for the repayment of its Indebtedness) beginning upon the expiration of the 24 (twenty-four) month period following the Drawdown Date for the Initial Drawdown.

 

(t)            Financial Ratios. GCS hereby covenants and agrees as follows:

 

 (i)             Net Indebtedness/EBITDA Ratio. (1) Beginning on the first full quarter following the Drawdown Date for the Initial Drawdown, and during the effective term of this Agreement, GCS shall maintain a Net Indebtedness/EBITDA Ratio no greater than (A) 5.5 to 1, if as a result of the Acquisition GCS shall have acquired, directly or indirectly, more than 66.7% (sixty-six point seven percent) of Fasa’s outstanding shares of stock, and (B) 4.5 to 1, if as a result of the Acquisition GCS shall have acquired, directly or indirectly, less than 66.7% (sixty-six point seven percent) of Fasa’s outstanding shares of stock.

 

  (2)           GCS shall prepare and deliver to the Lenders a detailed plan for the achievement and maintenance, beginning upon the expiration of the 24 (twenty-four) month period following the Drawdown Date for the Initial Drawdown, a Net Indebtedness/EBITDA Ratio lower than 2.50 to 1. Such plan shall be detailed and shall be submitted to the Lenders (together with a progress report as with respect thereto), for their review and approval, on a quarterly basis in accordance with paragraph (b)(iii) of Article Eleven.

 

 (ii)            EBITDA/Gross Interest Expense Ratio. During the effective term of this Agreement, GCS shall maintain an EBITDA/Gross Interest Expense Ratio no lower than (1) 2.25 to 1, if as a result of the Acquisition GCS shall have acquired, directly or indirectly, more than 66.7% (sixty-six point seven percent) of Fasa’s outstanding shares of stock, and (B) 2.75 to 1, if as a result of the Acquisition GCS shall have acquired, directly or indirectly, less than 66.7% (sixty-six point seven percent) of Fasa’s outstanding shares of stock.

 

 (iii)            Minimum Stockholders’ Equity. GCS shall maintain, at a minimum, a consolidated stockholders’ equity of Ps.7,000,000,000 (seven billion Pesos) (which initial amount was determined, for purposes of this Agreement, based on the Borrower’s internal consolidated financial statements as of March 31, 2010), including any subsequent restatement thereof.

 

 (iv)           Capital Expenditures. Subject to paragraph (k) of Article Twelve, during the effective term hereof the Borrower and the Co-Obligors shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and Fasa’s Subsidiaries to refrain from incurring in any Capital Expenditures representing, in the aggregate, more than $45,000,000 (forty-five million Dollars) or its equivalent in any other currency.

 

 

  

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                                ARTICLE TWELVE. Negative Covenants. For so long as any amount owed pursuant to this Agreement, the Promissory Notes and the other Loan Documents shall remain outstanding:

 

(a)            Indebtedness. The Borrower and each Co-Obligor shall refrain from incurring, assuming or suffering the existence of any Indebtedness (in each case, net of all cash and investments constituting cash equivalents) of the Borrower, its Subsidiaries (including the Co-Obligors), Fasa or its Subsidiaries, with:

 

 (i)             any Affiliate, except for any Indebtedness incurred by the Borrower’s Subsidiaries on an arm’s length basis and in the ordinary course consistent with past practices, as with respect to the Borrower; or

 

 (ii)            any third party, except for: (1) the Indebtedness incurred pursuant to this Agreement, the Promissory Notes and any Loan Document; (2) any Indebtedness in the form of customer deposits or advances on account of goods, received in the ordinary course consistent with past practices; (3) any Indebtedness incurred in order to prepay the Loans (provided that such prepayment is made concurrently with the incurrence thereof); (4) any Indebtedness incurred by the Borrower and its Subsidiaries for working capital purposes only, provided that the amount thereof does not exceed, in the aggregate, from Ps.550,000,000 (five hundred fifty million Pesos) or its equivalent in any other currency; and (5) any Indebtedness incurred by Fasa and its Subsidiaries, in an amount not to exceed, in the aggregate, from $175,000,000 (one hundred seventy-five million Dollars) or its equivalent in any other currency; provided, that for purposes of this subparagraph (ii)(5), the term cash and investments constituting cash equivalents shall include the insurance proceeds to be received by Fasa and its Subsidiaries in connection with the insurance claims relating to the earthquake experienced by Chile on February 27, 2010.

 

(b)            Liens. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from creating, assuming or suffering the existence of any Lien, of whichever nature and howsoever designated, on any of its present or future assets, except for the following (the “Permitted Liens”):

 

 (i)              Liens deriving from any tax, employment or social security obligation, or mandated by law, which Liens are being contested by it in good faith through the appropriate procedures and/or for which it has created the requisite reserves or other provisions in accordance with the Financial Reporting Standards, as the case may be;

 

 (ii)             Liens imposed by court order or decision, to the extent that such decision is reversed or stayed by a subsequent court order within 60 (sixty) days from the date thereof;

 

 (iii)            Liens created in connection with the participation of the Borrower or its Subsidiaries in any auction sponsored by and for the benefit of any Governmental Authority, so long as any such Lien does not represent, at any time during the effective term of this Agreement, a liability or obligation in an amount greater than $5,000,000 (five million Dollars); and

 

 (iv)            Liens created as security for the Loans granted by the Lenders to the Borrower pursuant to this Agreement, the Promissory Notes and any Loan Document, instrumented by means of the Collateral Documents.

 

 

  

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(c)            Consolidation; Merger. The Borrower, the Co-Obligors and Fasa shall refrain, except with the prior written consent of each Lender, from (i) consolidating or merging (irrespective of whether the surviving entity) with any other Person, or (ii) transferring, selling or otherwise conveying to any Person, directly or indirectly, all or substantially all of its property, in each case in a single transaction or a series of related transactions, unless, in the case of (i) and (ii) above, immediately after the consummation of such transaction:

 

 (1)             the Person resulting from or surviving such consolidation or merger, if other than the Borrower or a Co-Obligor, or the buyer or assignee of all or a substantial portion of the assets of the Buyer or such Co-Obligor, (i) is Controlled by GCS and (ii) shall expressly assume, pursuant to a written instrument in terms and form satisfactory to the Lenders, the obligations of the Borrower or the Co-Obligors, as the case may be, under the Loan Documents;

 

 (2)             the Borrower, any Co-Obligor or any of their respective successors, as the case may be, shall expressly agree to indemnify each Lender, the Mexican Collateral Agent and the Chilean Collateral Agent, against any tax or governmental contribution or charge, of any nature whatsoever, imposed upon any Lender, the Mexican Collateral Agent or the Chilean Collateral Agent as a result of the relevant transaction, in connection with any payment made pursuant to this Agreement, the Promissory Notes and the other Loan Documents;

 

 (3)             no Acceleration Event or other event or condition which, with the lapse of time, upon notice, or both, would constitute an Acceleration Event, shall have occurred and be continuing; and

 

 (4)             the Borrower shall have delivered to the Lenders a Certificate from an Authorized Officer and a legal opinion issued by an independent law firm acceptable to the Lenders, in each case to the effect that such consolidation, merger, transfer, sale or conveyance, and the agreements executed in connection therewith, are in compliance with the provisions contained in this Article Twelve.

 

(d)            Transfer of Assets. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of its Subsidiaries to refrain from selling or otherwise disposing of any assets (including without limitation, any real property or Equity Interests in a Subsidiary), except for:

 

 (i)              sales or dispositions of inventory in the ordinary course consistent with past practices;

 

 (ii)             sales or dispositions of obsolete or unused assets (excluding the real property identified in Exhibit D);

 

 (iii)            sales or dispositions of assets between the Borrower’s Subsidiaries;

 

 (iv)            the Subsequent Transaction; and

 

 (v)             sales or dispositions of assets at their market value, in any subsequent fiscal year and other than in the ordinary course consistent with past practices, with a value not in excess of $10,000,000 (ten million Dollars) or its equivalent in any other currency (excluding the real property identified in Exhibit D), provided that the proceeds thereof are used to purchase other assets within 180 (one hundred eighty) days from such disposition;

 

provided, notwithstanding the restrictions contained in this paragraph (b), that the Borrower, its Subsidiaries, the Co-Obligors, Fasa and Fasa’s Subsidiaries shall be entitled to sell or transfer any other assets so long as the proceeds of any such sale or transfer are used to repay the Loans in accordance with paragraph (b) of Article Eight.

 

 

  

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(e)            Loans. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from guaranteeing any kind of credit or Loan, whether secured or unsecured, except for (i) any Loan between the Borrower and its Subsidiaries so as to satisfy any payment obligation pursuant to this Agreement, (ii) any Loan between the Borrower’s Subsidiaries so as to enable the borrower thereunder to satisfy any obligation incurred in the ordinary course consistent with past practices, and (iii) any credit to or from customers and vendors in the ordinary course consistent with past practices.

 

(f)             Intercompany Payments. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from making any payment to its Subsidiaries or Affiliates on account of any Indebtedness or other liabilities, if such payment or distribution results or could result in a payment or distribution to a third party other than in the ordinary course consistent with past practices.

 

(g)            Change in Business. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from making any material change in its business activities, as conducted as of the date of this Agreement.

 

(h)            Dividend Payments.

 

 (i)              The Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from incurring or assuming any obligation or entering into any contractual arrangement prohibiting, restricting or seeking to prohibit, restrict or condition, directly or indirectly, the approval or payment of dividends or other distribution to its shareholders, or any Loan or credit from any of the Borrower’s Subsidiaries, Fasa or any of Fasa’s Subsidiaries, to the Borrower or the Co-Obligors.

 

 (ii)             GCS shall refrain from paying any dividend or making any distribution to its shareholders, including through the reduction of their Equity Interests.

 

 (iii)            The Borrower shall do any and all such things as may be necessary to cause its Subsidiaries, to the extent they have reported available profits, to declare and pay to it dividends in such amounts as may be necessary to enable it to satisfy in full and when due its payment obligations in respect of the Loans, including any mandatory dividend payment pursuant to the applicable laws of Chile.

 

(i)             Liquidation, Dissolution, Reorganization. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from approving any resolution as with respect to its dissolution or liquidation (or from entering liquidation or dissolution proceedings), bankruptcy or reorganization (concurso mercantil), except if (i) the relevant Subsidiary is immaterial and (ii) in the Lenders’ opinion, such dissolution and liquidation does not materially affect the Borrower’s obligations hereunder and under the other Loan Documents.

 

(j)             Prepayments of Indebtedness. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from prepaying any Indebtedness, unless such prepayment includes the pro rata prepayment of the Loans.

 

(k)            Acquisition of Assets. The Borrower and each Co-Obligor shall refrain, and the Borrower shall cause each of its Subsidiaries, Fasa and each of Fasa’s Subsidiaries to refrain from acquiring any asset other than as necessary for the conduct of its business (including any real property used primarily in connection with the development of its business activities), or any shares of any company other than a Subsidiary engaged in the same line of business as the Borrower, or in any supplemental line of business; provided, that the Acquisition shall not be limited by the provisions contained in this paragraph (k).

 

 

  

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                                ARTICLE THIRTEEN. Conditions Precedent for the Loans.

 

(a)            Conditions for All Drawdowns. Each Lender’s obligation to make the Loans available to the Borrower, and the Borrower’s right to make any Drawdown, shall be subject to the prior receipt by the Lenders, in form and substance reasonably acceptable to them, of the following documents and information, or the occurrence of the following events, subject to any such information, document or event having been waived by all Lenders (and the second Business Day following the date on which any and all such documents and information shall have been received and any and all such events shall have occurred or been waived by the Lenders, shall be referred to herein as the “Effective Date”):

 

 (i)             this Agreement, duly executed by the Borrower, each Co-Obligor and the other parties, including the ratification of the signatures of the Borrower and each Co-Obligor before a notary public, and subsequently legalized by Chile’s Consul in Mexico, and registered (formalized) by a notary public in Chile;

 

 (ii)            certified copies of all the corporate authorizations and third-party consents necessary for the Acquisition, this Agreement and the other Loan Documents to be valid, effective and enforceable against the Borrower and each Co-Obligor;

 

 (iii)           irrevocable instructions to each Lender, duly executed by the Borrower, authorizing such Lender to charge to the account used by it for purposes of the disbursement of the Initial Drawdown, the amount of any and all fees, expenses (including such Lender’s legal expenses) and taxes incurred on or before the Drawdown Date for the Initial Drawdown pursuant to this Agreement and the other Loan Documents; provided, that such irrevocable instructions may be contained in the Drawdown Notice delivered to each Lender;

 

 (iv)           certified copies of the notarial instruments containing (1) the corporate bylaws of the Borrower and each Co-Obligor as currently in effect, and (2) the powers of attorney of the individuals executing this Agreement, the Promissory Notes and the other Loan Documents (including, without limitation, the Collateral Documents) on behalf of the Borrower and each Co-Obligor.

 

 (v)            (1) Fasa’s audited individual and consolidated financial statements as of December 31, 2007, 2008 and 2009, and GCS’s and Fasa’s internal individual and consolidated financial statements as of June 30, 2010, and (2) the audited individual financial statements of each Co-Obligor as of December 31, 2007, 2008 and 2009, and its internal financial statements as of June 30, 2010, in each case together with a certificate of authenticity executed by an Authorized Officer of the Borrower;

 

 (vi)           (1) a favorable legal opinion issued by Mijares, Angoitia, Cortés y Fuentes, S.C., Mexican counsel to the Borrower and the Co-Obligors, and (2) a favorable legal opinion issued by Carey y Cía., Chilean counsel to the Borrower and the Co-Obligors, in each case in form and substance satisfactory to a Majority of the Lenders;

 

 (vii)          (1) a favorable legal opinion issued by Ritch Mueller, S.C., Mexican counsel to the Lenders, and (2) a favorable legal opinion issued by Claro y Cía., Chilean counsel to the Lenders, in each case in form and substance satisfactory to a Majority of the Lenders;

 

 

  

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 (viii)         the public instruments containing the Pledge Agreements Subject to Retained Possession, duly executed by the Borrower and each Co-Obligor, which shall be valid and enforceable in accordance with their terms, together with evidence to the effect that such instruments have been filed for registration with the Public Registry of Property and Commerce for the Federal District;

 

 (ix)            a certificated issued by the Public Registry of Property and Commerce for the Federal District, to the effect that there is no lien recorded in the files maintained thereby in respect of the Borrower and each Co-Obligor;

 

 (x)             the public instrument containing the Guaranty Trust Agreement, duly executed by all parties thereto, together with evidence as to the transfer of the shares subject matter thereof, to the trustee thereunder;

 

 (xi)           the disclosure to the Lenders by the Borrower, in Exhibit M hereto, of any all credit agreements representing any Indebtedness (whether drawn down or available) in an amount equal to or in excess of $3,000,000 (three million Dollars) or its equivalent in any other currency, which may be then in effect as with respect to the Borrower, its Subsidiaries (including the Co-Obligors), or Fasa and its Subsidiaries;

 

 (xii)          the HSBC Loan Account and the Banorte Loan Account shall have been created and be available for purposes of making deposits;

 

 (xiii)         evidence, to the Lenders’ satisfaction, of the receipt of all Governmental Authorizations for the Acquisition and any other consent or authorization required in connection with the Acquisition, together with a copy of each such authorization, certified by an Authorized Officer of GCS;

 

(xiv)          evidence in the form of a certificate from (1) an Authorized Officer of the Borrower, to the effect that the transactions contemplated by the Acquisition Documents shall be consummated concurrently or successively in accordance with the applicable practices and laws of Chile, within five (5) Business Days from the Effective Date, and (2) an Authorized Officer of the Borrower, and from a legal representative of the Chilean intermediary for the transaction, of the acquisition of at least 50% (fifty percent) plus one of the voting shares of Fasa;

 

 (xv)          (1) irrevocable written instructions to Banorte, duly executed by the Borrower, authorizing Banorte to charge to the Banorte Loan Account such amounts as may be necessary to prepay in full the Scotiabank Loans (including the principal thereof, interest thereon and other ancillary amounts), containing a breakdown of such amounts and the account or accounts to which the relevant payments are to be made; provided, that such irrevocable instructions may be included in the Drawdown Notice delivered to Banorte, and (2) written evidence of the transfer of the relevant funds by Banorte and their receipt by Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, together with an acknowledgement and acceptance of such transfer, duly executed by the Borrower, in each case to the Lenders’ reasonable satisfaction; provided, that the Tranche A-1 Drawdown and the prepayment of the Scotiabank Loans shall occur prior to, but on the same Business Day as the Tranche A-2 Drawdown;

 

(xvi)          the Borrower shall have delivered to each Lender, on the relevant Drawdown Date, a Promissory Note in the amount of such Drawdown, duly executed by the Borrower and guaranteed by the Co-Obligors pursuant to paragraph (c) of Article Three;

 

 

  

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 (xvii)        the Borrower shall have delivered to each Lender the relevant Drawdown Notice, duly executed by an Authorized Officer of the Borrower who is also a legal representative thereof pursuant to Article Three, containing, in addition, a certificate as to the satisfaction of the conditions set forth in this paragraph (a) of Article Thirteen;

 

 (xviii)       no event constituting an Acceleration Event (or which, with the lapse of time, upon notice, or both, would constitute an Acceleration Event) or having a Material Adverse Effect, shall have occurred or will occur as a result of the Drawdown;

 

 (xix)          the representations of the Borrower hereunder shall remain true and correct as of the relevant Drawdown Date;

 

 (xx)           none of the events set forth in Exhibit N shall have occurred;

 

 (xxi)          each beneficiary and the trustee of Trust No. F-790, established by Messrs. Isaac Saba Raffoul (deceased), Alberto Isaac Saba Ades, Manuel Saba Ades and Beki Ades Tawil, and Ixe Banco, S.A., Institución de Banca Múltiple, Ixe Grupo Financiero, on May 8, 2008, shall have entered into an agreement with binding effect upon all parties thereto, to the Lenders’ satisfaction, granting to the Mexican Collateral Agent, for the benefit of the Lenders, the unconditional right to vote all the outstanding shares of stock of GCS constituting the estate of such trust (which shares shall in no event represent less than 51% (fifty-one percent) of the outstanding shares of stock of GCS), at any general shareholders’ meeting held by GCS to consider, or which may consider and approve, any of the following matters: (i) the commencement by GCS of reorganization (concurso mercantil), bankruptcy or other similar proceedings pursuant to the applicable laws of Mexico or any other jurisdiction; (ii) the dissolution or liquidation of GCS; (iii) the payment by GCS of any dividend or similar distribution to its shareholders; (iv) any capital decrease, redemption of shares or other similar event as with respect to GCS, (v) the disposition by GCS of any assets, including any shares, with a value equal to or in excess of $5,000,000 (five million Dollars) or its equivalent in any other currency, in a single transaction or a series of concurrent or successive transactions, within any 360 (three hundred sixty) day period, except for any disposition permitted pursuant to paragraph (d) of Article Twelve; and (vi) any merger, spin-off or other similar transaction as with respect to GCS; provided, that (1) such agreement shall terminate effective as of the date on which the Borrower shall have repaid to the Lenders an amount equal to or greater than Ps.1,950,000,000 (one billion nine hundred fifty million Pesos), so long as the Borrower or any Co-Obligor shall have not incurred in an event of default under the Loan Documents, (2) the parties acknowledge that the terms of such agreement shall be subject to public disclosure in accordance with the Securities Market Law (Ley del Mercado de Valores) and other applicable provisions, (3) the exercise of certain rights under such agreement may be subject to the exceptions agreed by the parties, and (4) each member of the technical committee of such trust shall have acknowledged (including by means of the adoption of resolutions by unanimous consent) that he or she is not entitled to vote in respect of the aforementioned matters, and that the Mexican Collateral Agent shall be entitled to exercise any and all voting rights in respect of any such matter; and

 

 (xxii)         neither the execution of the Loan Documents nor any other transaction contemplated by the Loan Documents or the Acquisition Documents shall conflict with or be in violation or give rise to the acceleration of any agreement or instrument to which the Borrower, any of its Subsidiaries, the Co-Obligors, Fasa or any of Fasa’s Subsidiaries is a party.

 

(b)            Conditions Precedent for the Tranche B Drawdowns. In addition to the conditions set forth in paragraph (a) of this Article Thirteen and subject to the occurrence of the Effective Date, HSBC México’s obligation to make Tranche B available to the Borrower pursuant to this Agreement, and the Borrower’s right to make any Drawdown as with respect to Tranche B, shall be subject to the satisfaction of the following conditions to HSBC México’s satisfaction:

 

 

  

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 (i)             the Initial Drawdown as with respect to each of Tranche A-1 and Tranche A-2 shall have occurred;

 

 (ii)            the Lenders and the Borrower shall have reached an agreement as with respect to the liabilities of Fasa that will be refinanced as part of the Subsequent Transaction, and the terms of such refinancing; and

 

 (iii)           the conditions agreed with the Lenders as with respect to the Subsequent Transaction pursuant to paragraph (s) of Article Eleven, shall have been satisfied.

 

                                ARTICLE FOURTEEN. Acceleration Events. (A) Each Lender shall have the individual right to (i) accelerate the due date for the repayment of the Loans and any accessories thereof, in which case the Borrower and the Co-Obligors shall be required to pay to all Lenders any and all amounts outstanding under the Loans, including any accessories thereof, or (ii) discontinue its obligation to disburse any amount otherwise available under the Loans, if any, in which case all Commitments shall cease to be in effect, in each of (i) and (ii) above, upon written notice to the Borrower and the Co-Obligors, in any of the following events (each, an “Acceleration Event”), without need for demand, resolution, court action or other notice of any nature whatsoever, which is hereby waived by the Borrower and the Co-Obligors:

 

 (a)            Payment Defaults. If the Borrower or any Co-Obligor shall have failed to pay when due any principal, interest or other amounts (including any fees) payable by it pursuant to this Agreement, the Promissory Notes or any of the other Loan Documents, and, in the case of any interest or fees, such default remains uncured for a period of five (5) Business Days as of the date on which the relevant amount became due.

 

 (b)            Representations and Information. If any of the representations of the Borrower or any Co-Obligor hereunder or under any of the Loan Documents, or in any certificate, financial statement or other document provided or delivered pursuant to this Agreement or any Loan Document, or any information or document provided by the Buyer or any Co-Obligor pursuant to this Agreement or any Loan Document, shall prove incomplete, incorrect, false or misleading in any material respect.

 

 (c)            Specific Defaults. If the Borrower or any Co-Obligor shall have incurred in default with any of its obligations under paragraphs (a), (c)(i), (c)(v), (g), (k), (o), (p), (q) or (r) of Article Eleven, or paragraphs (a), (b), (c), (d), (e), (g), (h), (i), (j) or (k) of Article Twelve hereof.

 

 (d)            Other Defaults. If the Borrower or any Co-Obligor shall have incurred in default with its obligations under paragraphs (b)(i), (b)(ii), (b)(iii) or (b)(iv) of Article Eleven, and such default shall have remained uncured for a period of 30 (thirty) days, paragraph (d) thereof, and such default shall have remained uncured for a period of 30 (thirty) days, paragraph (e) thereof, and such default shall have remained uncured for a period of 5 (five) days, paragraph (f) thereof, and such default shall have remained uncured for a period of 15 (fifteen) days, paragraph (h) thereof, and such default shall have remained uncured for a period of 30 (thirty) days, paragraph (m) thereof, and such default shall have remained uncured for a period of 30 (thirty) days, or paragraph (n) thereof, and such default shall have remained uncured for a period of 15 (fifteen) days, or with any of its other obligations hereunder (other than those referred to in paragraphs (a) or (c) above) or under the other Loan Documents, and such default shall have remained uncured for a period of 30 (thirty) days, in each such case from the earlier of (i) the date on which any Authorized Officer of the Borrower acquired knowledge of such default or (ii) the delivery of a notice of default by any Lender to the Borrower.

 

 

  

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 (e)            Defaults with Other Indebtedness. (i) If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have incurred in default or an event of default under any indenture, agreement, credit or other similar instrument relating to any Indebtedness incurred by them (other than the Indebtedness incurred pursuant to this Agreement, the Promissory Notes and the other Loan Documents) in an amount equal to or in excess of $5,000,000 (five million Dollars) or its equivalent in any other currency, which default or event of default could give rise to the acceleration of such Indebtedness, or (ii) if the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have failed to pay when due the principal of, interest on, or any other amount payable by it in connection with any Indebtedness incurred by any of them (other than the Indebtedness incurred pursuant to this Agreement, the Promissory Notes and the other Loan Documents).

 

 (f)             Defaults with Authorities. If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have incurred in default with any obligation with any Governmental Authority, including, without limitation, the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público), the Internal Revenue System (Sistema de Administración Tributaria), the Mexican Institute of Social Security (Instituto Mexicano del Seguro Social), the Institute for the National Workers’ Housing Fund (Instituto del Fondo Nacional para la Vivienda de los Trabajadores) or the Retirement Savings System (Sistema de Ahorro para el Retiro), in an amount exceeding, individually or in the aggregate, $5,000,000 (five million Dollars) or its equivalent in any other currency, and such default shall have remained uncured for a period of 15 (fifteen) days.

 

 (g)            Defaults Under Other Agreements. If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have incurred in default or an event of default with any payment obligation to its suppliers, in an amount exceeding, individually or in the aggregate, $10,000,000 (ten million Dollars) or its equivalent in any other currency, whether in a single occurrence or during any given year.

 

 (h)            Authorizations. If any governmental or other license, consent, registration, concession, permit or authorization necessary for the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries to conduct its business as conducted as of the date this Agreement, or for the execution and performance by it or the validity or enforceability of this Agreement, the Promissory Notes or any of the other Loan Documents, shall have not been obtained or maintained, shall have been revoked or amended, or shall have ceased to be valid.

 

 (i)              Insolvency. (i) If the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall have filed for or entered reorganization (concurso mercantil), insolvency, bankruptcy or debtor relief proceedings seeking (A) to be adjudicated under reorganization, bankrupt, insolvent, under dissolution or liquidation, or subject to court relief as with respect of itself or its debts, under any present or future law of any country (whether in Mexico or abroad), or (B) the appointment of a receiver, mediator, intervenor, visitator, custodian, administrator, conservator or other similar officer, in respect of all or a substantial portion of its assets, or shall have made a general assignment for the benefit of its creditors; (ii) if any of the actions or proceedings referred to in (i) above shall have been commenced against the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries, and such action or proceeding (A) shall have resulted in the issuance of a court relief, reorganization (concurso mercantil), insolvency or other similar order, or in the appointment of an officer responsible of performing any duties associated with such court relief or insolvency, and (B) such action or proceeding shall have remained undismissed or unstayed for a period of 60 (sixty) days; or (iii) if any action or proceeding seeking the issuance of an order of attachment, execution or other similar process in respect of all or a substantial portion of its assets, shall have resulted in the issuance of any such order, and such order shall have remained unrevoked or unstayed for a period of 60 (sixty) days from its date of issue; or (iv) if the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries shall be generally unable or shall have acknowledged in writing its general inability to pay its debts upon their maturity; or (v) if any decision as with respect to the dissolution or liquidation of the Borrower any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries, shall have been issued.

 

 

  

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 (j)             Court Decisions. If any court shall have issued against the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of its Subsidiaries, a final, non-appealable decision requiring it to pay an amount of money in excess, whether individually or in the aggregate, of $10,000,000 (ten million Dollars) or its equivalent in any other currency, and such decision shall have remained unrevoked or unsatisfied for a period of 60 (sixty) days from its date of issue, except where its obligations thereunder have been adequately secured or the enforcement of such order has been stayed or is being contested by it through the appropriate recourses available to it under the applicable laws, and where it has created adequate reserves in respect thereof in accordance with the Financial Reporting Standards.

 

 (k)            Validity of this Agreement and the Loan Documents. (i) If the Borrower, any of its Subsidiaries, any Co-Obligor, de Fasa or any of its Subsidiaries shall have challenged the validity or enforceability of any Loan Document or (ii) if any judicial, arbitration or administrative proceedings challenging the validity or enforceability of any Loan Document shall have been commenced.

 

 (l)             Material Adverse Effect. If there shall have occurred any circumstance, event or condition which could have a material and adverse effect on (a) the activities, condition (financial or otherwise), business operations, property or prospects of the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or Fasa’s Subsidiaries, whether individually or as a whole, or (b) the validity or enforceability of any Loan Document or the rights of any Lender thereunder, or the ability of the Borrower or any of the Co-Obligors to satisfy its obligations hereunder or under the Promissory Notes and the other Loan Documents (each, a “Material Adverse Effect”).

 

 (m)           Collateral. If any security interest on the property and rights subject matter of the Collateral Documents shall have ceased to be in full force and effect, or to constitute a duly perfected, first priority guaranty in favor of the Mexican Collateral Agent, the Chilean Collateral Agent or the Lenders, as with respect to any other creditor of the Borrower, the Co-Obligors or the parties who provided the relevant guaranty.

 

 (n)            Expropriation.  If any Governmental Authority shall have nationalized, seized, assumed the control of or otherwise expropriated all or a substantial portion of the property of or any shares of stock issued or held by the Borrower, any of its Subsidiaries, any Co-Obligor, Fasa or any of Fasa’s Subsidiaries, or shall have taken any action (including any of the above) which prevents the Borrower or any of the Co-Obligors from performing its obligations hereunder or under the Promissory Notes or the other Loan Documents, other than the nationalization, seizure, assumption of control or expropriation of any property with a market value of less than 10,000,000 (ten million Dollars) or its equivalent in any other currency.

 

 (o)            Change in Control. If a Change in Control shall have occurred.

 

 

  

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(B)           Acceleration by a Majority. The Lenders, by Majority, shall have the right to (i) accelerate the due date for the repayment of the Loans and any accessories thereof, in which case the Borrower and the Co-Obligors shall be required to pay to all the Lenders any and all of the amounts outstanding under the Loans, including any accessories, or (ii) discontinue its obligation to disburse any amount otherwise available under the Loans, if any, in which case all the Commitments shall cease to be in effect, in each of the events set forth in (i) and (ii) above, upon written notice to the Borrower and the Co-Obligors, in any of the following Acceleration Events, without need for demand, resolution, court action or other notice of any nature whatsoever, which is hereby waived by the Borrower and the Co-Obligors:

 

 (a)            Specific Defaults. If the Borrower or any Co-Obligor shall have incurred in default with any of its obligations under paragraphs (c)(ii), (i) or (l) of Article Eleven, or paragraph (f) of Article Twelve.

 

 (b)            Other Defaults. If the Borrower or any of the Co-Obligors shall have incurred in default with its obligations under paragraph (j) of Article Eleven, and such default shall have remained uncured for a period of 30 (thirty) days from the earlier of (i) the date on which any Authorized Officer of the Borrower acquired knowledge of such default or (ii) the delivery of a notice of default by any Lender or Co-Obligor to the Borrower.

 

 (c)            Exchange Controls. If any Governmental Authority shall have approved, issued or implemented any provision which limits or restricts, in a material adverse manner, the ability to convert Chilean pesos to Pesos (where necessary), or the ability of the Borrower or any Co-Obligor to make payments outside of Mexico or Chile.

 

(C)           Acceleration by a Special Majority. The Lenders, by Special Majority, shall have the right to (i) accelerate the due date for the repayment of the Loans and any accessories thereof, in which case the Borrower and the Co-Obligors shall be required to pay to all the Lenders any and all of the amounts outstanding under the Loans, including any accessories, or (ii) discontinue its obligation to disburse any amount otherwise available under the Loans, if any, in which case all the Commitments shall cease to be in effect, in each of the events set forth in (i) and (ii) above, upon written notice to the Borrower and the Co-Obligors, in any of the following Acceleration Events, without need for demand, resolution, court action or other notice of any nature whatsoever, which is hereby waived by the Borrower and the Co-Obligors:

 

 (a)            Specific Defaults. If the Borrower or any Co-Obligor shall have incurred in default with any of its obligations pursuant to paragraphs (c)(iii), (c)(iv), (s) or (t) of Article Eleven.

 

 (b)            Loss of Control of Fasa. If GCS shall have ceased to hold, directly or indirectly, the shares of Fasa acquired by it through Controladora Casa Saba, S.A. de C.V. in connection with the Acquisition, or shall have lost the Control of Fasa.

 

                                ARTICLE FIFTEEN. Legality; Increased Costs.

 

(a)            If as a result of the amendment of any law, regulation, rule or other provision applicable to any Lender or office thereof responsible for managing and funding the Loans, or of any change in the interpretation of any of the above by any competent court or Governmental Authority, in each case subsequent to the date of execution of this Agreement, it shall become illegal for such Lender to make or maintain in effect the Loans, the Borrower, upon request of such Lender, shall immediately and without being subject to any penalty prepay to such Lender, directly, the outstanding amount of its Loans, together with any and all interest accrued thereby, any other amount payable in connection therewith, and the amount of any additional costs or expenses incurred by such Lender as a result of such prepayment.

 

 

  

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(b)            If as a result of the amendment of any law, regulation, rule or other provision applicable to any Lender or office thereof responsible for managing and funding the Loans (including, without limitation, as with respect to any capitalization, reserves or deposit requirement, ordinary or extraordinary contribution (payable to a Governmental Authority), taxes or other conditions applicable to such Lender, but excluding any provision as with respect to the income taxes or other similar taxes payable by such Lender (or by its successors, participants or assignees pursuant to Article Sixteen hereof) based on its total income or assets pursuant to the laws, regulations and other provisions applicable to such Lender), or of any change in the interpretation of any of the above by any competent court or Governmental Authority, in each case subsequent to the date of execution of this Agreement, the cost for such Lender of making or maintaining in effect the Loans shall have increased, or the amounts received or receivable by such Lender shall have decreased, the Borrower, upon request of such Lender, shall pay thereto, on the last day of the then current Interest Period or the date occurring 10 (ten) Business Days from the Lender’s request, whichever occurs later, any and all such reasonable and properly documented amounts as may be necessary to compensate such Lender for such cost increase or revenue decrease. The Lender’s request shall include a description of the reasons of such increased costs or reduced income, and all relevant calculations; provided, that absent any calculation error the determination made by such Lender shall be conclusive and binding upon the Borrower.

 

(c)            The Lenders hereby agree to make reasonable efforts to avoid incurring in any of the legal violations, cost increases or revenue decreases referred to in this Article Fifteen, including, exclusively and to the extent practicable, by reassigning the administration of the Loans to a different office, but provided that such reassignment does not involve a material cost for the relevant Lender.

 

                                ARTICLE SIXTEEN. Discount; Assignment. (a) The Lenders shall be authorized to assign, grant participations in or otherwise negotiate all or any portion of the Loans granted by them pursuant to this Agreement or any Promissory Note (or their respective rights under the Loan Documents), including prior to the expiration of this Agreement or the maturity date of any Promissory Note, upon written notice to the Borrower, the other Lenders, the Mexican Collateral Agent and the Chilean Collateral Agent; provided, that (i) any such assignment or participation is made or granted in respect of at least Ps.10,000,000 (ten million Pesos) and multiples of Ps.5,000,000 (five million Pesos) in excess thereof, and (ii) in the event of any assignment, participation or negotiation prior to the occurrence of an Acceleration Event (but not thereafter, in which case any such assignment shall be subject to no restriction whatsoever), los Lenders shall only be entitled to assign, grant participations in or negotiate all or any portion of the Loans and any Promissory Note with (1) Mexican retail or specialty banking institutions, (2) banks organized and authorized to operate as such under the laws of Chile, (3) Mexican multiple purpose financial entities (sociedades financieras de objeto múltiple), (4) Mexican limited purpose financial entities (sociedades financieras de objeto limitado), (5) Mexican corporations or partnerships, of any nature whatsoever, controlled by any of the entities referred to in (1), (3) and (4) above, and (6) foreign financial institutions, of any nature whatsoever, registered with the Registry of Foreign Banks, Financing Entities, Pension Funds and Investment Funds (Registro de Bancos, Entidades de Financiamiento, Fondos de Pensiones y Jubilaciones y Fondos de Inversión del Extranjero) maintained by the Internal Revenue System.

 

(b)            The Borrower and each Co-Obligor hereby agree to exchange, at the request of the relevant Lender, any Promissory Note issued hereunder, following any assignment or participation by such Lender pursuant to this Article. Notwithstanding the above, the Borrower and the Co-Obligors shall not be required to make any such exchange except upon the surrender of the relevant Promissory Note.

 

(c)            No assignment or participation pursuant to this Article shall constitute a novation of the Loans made available hereunder. Following any such assignment or negotiation, the relevant assignee or participant shall be considered a “Lender” for purposes hereof and of the other Loan Documents.

 

 

  

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(d)            Neither the Borrower nor any Co-Obligor may assign its rights or obligations hereunder or under the Promissory Notes or any of the other Loan Documents, except with the prior written consent of the Lenders, which consent shall not be unreasonably withheld; provided, that no reason to withhold such consent shall be deemed to exist if, following any such assignment, GCS and any direct or indirect Subsidiaries thereof representing more than 90% (ninety percent) of the total consolidated assets, sales and EBITDA of GCS (including, subsequent to the Acquisition, Fasa and its Subsidiaries) are the Borrower and Co-Obligors hereunder, and any present or future direct or indirect Subsidiary of GCS, representing 10% (ten percent) or more of GCS’ consolidated assets, sales and EBITDA, is the Borrower or a Co-Obligor hereunder.

 

                                ARTICLE SEVENTEEN. Compensation. (a) To the extent permitted by the applicable laws, the Borrower hereby irrevocably authorizes and empowers the Lenders, in the event of its failure to pay when due any amount owed to the Lenders pursuant to this Agreement, the Promissory Notes or the other Loan Documents, to (1) charge to any account maintained with them by the Borrower, including, without limitation, any deposit, demand, term, savings, temporary, permanent, investment or other account, and (2) compensate against any amount owed by the Lenders to the Borrower for any reason whatsoever, an amount not to exceed that which is owed by the Borrower to the Lenders, without need for demand, notice or requirement of any nature whatsoever.

 

(b)            The relevant Lender shall give the Borrower and the other Lenders, as soon as practicable, notice of any charge or compensation made by it in accordance with this Article; provided, that the failure to give such notice shall not affect in any manner whatsoever the validity of such charge or compensation. The right of the Lenders under this Article shall be in addition to any other right (including other compensation rights) available thereto.

 

(c)             If any Lender shall have charged or compensated an amount greater than that to which it is entitled pursuant to this Agreement, the Lenders hereby acknowledge and agree that the Lender who made such charge or compensation shall be required to distribute to the other Lenders a percentage of the relevant proceeds equal to each Lender’s share of the Commitments described in Exhibit 1, unless a Lender shall have not yet disbursed the amount of a Drawdown, in which case the relevant percentages shall be adjusted accordingly.

 

                                ARTICLE EIGHTEEN. Credit Reports. (a) In order to comply with the provisions contained in the Law for the Regulation of Credit Bureaus (Ley para Regular las Sociedades de Información Crediticia), by their execution of this Agreement the Borrower and the Co-Obligors authorize the Lenders to submit from time to time, to any credit bureau, inquiries with respect to the credit scores of the Borrower, its Subsidiaries, the Co-Obligors, Fasa and Fasa’s Subsidiaries, and to provide to any credit bureau any information in connection with any such Person.

 

(b)             In addition to the persons and authorities referred to in Articles 93 and 117 de la Law of Credit Institutions, the Borrower and the Co-Obligors hereby authorize the Lenders to disclose any information pertaining to the transactions contemplated by this Agreement and the other Loan Documents, to (i) any other financial institution that is a member of the same financial group as the relevant Lender, and to such Lender’s direct or indirect parent company, (ii) the regulatory authorities responsible for overseeing such Lender and its parent company, (iii) the Central Bank of Mexico, (iv) any other person with whom the Lender may enter into any contract, particularly pursuant to Article Sixteen hereof, and (v) such other persons as the parties may agree.

 

                                ARTICLE NINETEEN. Expedited Execution. This Agreement, together with the account statement certified by relevant Lender’s accountants, qualifies for expedited execution pursuant to Article 68 of the Law of Credit Institutions.

 

 

  

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                                ARTICLE TWENTY. Agency; the Mexican Collateral Agent and the Chilean Collateral Agent.

 

(A)           The Mexican Collateral Agent.

 

 (a)             Agency Agreement. Pursuant to Chapter One of Title Three of the Commerce Code (Código de Comercio), the Lenders hereby grant to HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Trust Division, and the latter hereby accepts, a mandate to serve as Mexican Collateral Agent on behalf of the Lenders, and to carry out, in such capacity, through its legal representatives, any and all acts relating to the Collateral Documents in accordance with the terms set forth herein and in the Collateral Documents, in Mexico and any other jurisdiction.

 

 (b)             Appointment of the Mexican Collateral Agent. Each Lender party to this Agreement upon its execution and, in the event of any assignment hereof, the assignor and any assignee, hereby appoint HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, Trust Division, as “Mexican Collateral Agent” and authorize it to act as their agent, in their name and on their behalf, exclusively in accordance with the terms of this Agreement and the other Collateral Documents or, absent any specific provision in this Agreement, in accordance with the express, written instructions of the Lenders.

 

(B)           The Chilean Collateral Agent.

 

 (a)            Appointment of the Chilean Collateral Agent. The Lenders party to this Agreement upon its execution and, in the event of any assignment hereof, the assignor and any assignee, hereby grant to HSBC Bank (Chile) a commercial mandate pursuant to Article 18 of Chile’s Law No. 20.190, enacted June 5, 2007, the provisions as with respect to such mandates contained in the Chile’s Commerce Code (Código de Comercio) and Civil Code (Código Civil), and the provisions of this Agreement, in order for it to act as “Chilean Collateral Agent,” represent them in connection with the creation, amendment or termination of the Chilean Pledge Agreements, exercise their rights under the Chilean Pledge Agreements and, absent any specific provision in this Agreement, proceed in accordance with the express, written instructions of the Lenders. Notwithstanding the above, the Chilean Collateral Agent shall not be precluded from being a Lender hereunder for any reason whatsoever, and shall be entitled to act as any other Lender.

 

 (b)            Joinder. Any Person who may subsequently become a Lender hereunder as a result of any assignment (or other transfer) made specifically in accordance with the provisions of this Agreement, shall become a secured party under the Chilean Pledge Agreements upon delivery of written notice thereof (a “Joinder”) to the Chilean Collateral Agent and its execution by the Chilean Collateral Agent, effective as of the date of execution of such Joinder by the Chilean Collateral Agent; provided, in any event, that:

 

 (i)           any Joinder executed in Chile shall be contained in a public or private instrument, subject, in the latter event, to the authorization of the relevant signatures by a notary public for the relevant jurisdiction;

 

 (ii)          any Joinder executed outside of Chile shall be subject to the confirmation of the relevant signatures;

 

 (iii)         any Joinder so executed, authorized and/or confirmed, as the case may be, shall be notarized; and a Chilean notary public shall make note thereof on the margin of the public instrument containing this Agreement. The Chilean Collateral Agent shall retain in its files a copy of any such Joinder, together with evidence of such notation; and

 

 

  

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 (iv)         the lack of the marginal note referred to in paragraph (b)(iii) above shall not affect the validity of the Joinder not shall it prevent it from becoming fully effective as of its date of execution by the Chilean Collateral Agent.

 

 (c)             Acceptance by the Chilean Collateral Agent. The Chilean Collateral Agent hereby accepts its appointment and mandate by and from the Lenders party to this Agreement, subject to the terms and conditions set forth herein.

 

 (d)            Obligations of the Chilean Collateral Agent. Without prejudice of the obligations of the Chilean Collateral Agent under paragraph (C) of this Article Twenty, the Chilean Collateral Agent shall have broad and express powers and authority, including to enter into any contract with itself, to do the following in the name and on behalf of the Lenders:

 

 (i)           receive and keep custody of any stock certificates, partnership interests, contracts or other documents required to be delivered or received by the Lenders for purposes of the creation and full formalization of the Chilean Pledge Agreements, and keep custody of and execute or endorse any promissory notes. Without prejudice of the above, the Chilean Collateral Agent shall not be required to serve as custodian of any guaranty document, debt instrument or other document relating to any property intended to serve as collateral, unless otherwise required by such guaranty in accordance with the applicable laws. In any event, the Chilean Collateral Agent shall be entitled to entrust the custody of any such document to a bank or any third party designated by it to such effect;

 

 (ii)           enter into and execute any and all such agreements, carry out any and all such acts, issue any and all such public or private documents, obtain any and all such registrations and make any and all such publications as may be necessary and/or advisable for the creation and full and lawful formalization of all the Chilean Pledge Agreements or other guaranties granted pursuant to the Loan Documents, including the authority to request from a notary public the issuance of any and all such notices, registrations, publications and/or notations as may be advisable to such effect in accordance with the applicable laws, and to request or delegate the authority to demand any and all such recordations, preventive registrations and publications as may be necessary or advisable;

 

 (iii)         carry out any and all such judicial or extrajudicial acts and comply with any and all such procedures as may be necessary or advisable for purposes of the execution of the Chilean Pledge Agreements. The Chilean Collateral Agent shall execute the Chilean Pledge Agreements in accordance with the provisions contained in the documents relating to the creation of such collateral, and with the Lenders’ instructions. Absent such instructions, the Chilean Collateral Agent shall be entitled to proceed as it may deem advisable given the nature of its duties, giving primary regard to the interests of the Lenders but without being required to observe, as a result, any specific conduct;

 

 (iv)         represent the Lenders, to the extent necessary or advisable, in any and all trials and proceedings relating to the Chilean Pledge Agreements, held before any regular, special, arbitration, administrative or other tribunal, in which the Lenders have or could have an interest, acting therein as plaintiff, defendant or third party until the enforcement in full of the relevant decision, with full authority to file any ordinary, executive, special, non-litigious, or other action of any nature whatsoever. For purposes of the exercise of this judicial power in connection with the execution of the Chilean Pledge Agreements, the Chilean Collateral Agent shall have all the ordinary and extraordinary powers referred to in both paragraphs of Article Seven of Chile’s Code of Civil Procedures (Código de Procedimiento Civil) to represent the Lenders, each of which is deemed incorporated herein by reference, including, without limitation, the power to file complaints and other litigious and non-litigious actions, accept counterparty complaints, withdraw any motion, waive any recourse or term limit, submit to depositions, submit to arbitration and appoint arbitrators, enter into settlements, approve any agreement and receive payments; it being expressly understood that the authority to settle shall include the power to enter into off-court settlements, receive payments and appoint sponsoring attorneys and attorneys-in-fact vested with all the powers set forth herein. The Chilean Collateral Agent shall be entitled to delegate and resume its powers, in whole or in part, as many times as it may deem necessary or advisable;

 

 

  

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 (v)          refrain from taking or refuse to take any action in connection with this Agreement if (1) in the Chilean Collateral Agent’s discretion such action would be in violation of the applicable law or the terms hereof, or (2) the Chilean Collateral Agent does not have the cooperation of the Lenders, except to the extent that such cooperation is not required pursuant to this Agreement. The Chilean Collateral Agent shall have no liability as a result of any action taken or omitted by it in connection with this Agreement based on the instructions of the Lenders, and any such act or omission shall have binding effects solely upon the Lenders.

 

 (vi)         the Chilean Collateral Agent shall refrain from exercising any right or recourse, or from entering into any agreement intended to amend, modify, supplement or waive any provision of this Agreement, unless otherwise instructed by the Lenders pursuant to this Agreement and the other Loan Documents;

 

 (vii)        each Lender, the Borrower and/or each Co-Obligor shall provide to the Chilean Collateral Agent any and all such information as the Chilean Collateral Agent may reasonably deem necessary or advisable and request from them in writing, so as to perform its duties in accordance with the law.

 

 (e)           Liability.

 

 (i)           The duties of the Chilean Collateral Agent shall be limited to those expressly set forth in this Agreement and the Chilean Collateral Agent shall not be attributed any implied obligation hereunder.

 

 (ii)           The Chilean Collateral Agent shall not be liable (1) for any fault, error or omission in the creation, formalization or protection of the Chilean Pledge Agreements, (2) as a result of any act or omission in connection with the Chilean Pledge Agreements, not attributable to it, and (3) to the Lenders, in any manner whatsoever, for any representation made or information provided by the Borrower, the Co-Obligors and/or any other party or its representatives, contained in any certificate, report, communication, representation or other notice relied upon or received by the Chilean Collateral Agent pursuant to or in connection with any of the Loan Documents, other than as a result of the Chilean Collateral Agent’s gross fault, willful misconduct or bad faith.

 

 

  

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 (iii)         Neither the Chilean Collateral Agent nor any Lender shall be liable to the Borrower or the Co-Obligors for the execution or lack of execution of, or the maximization of the execution proceedings applicable to, the Chilean Pledge Agreements.

 

 (iv)         In any event, the Chilean Collateral Agent shall be required to render a report on its performance upon expiration of its commission.

 

(C)           Common Provisions.

 

(a)             Liability of the Mexican Collateral Agent and the Chilean Collateral Agent.

 

 (i)           For purposes of the transactions contemplated by this Agreement and the Collateral Documents, the Mexican Collateral Agent and the Chilean Collateral Agent shall at all times act solely and exclusively in accordance with the instructions of the Lenders. The Mexican Collateral Agent or the Chilean Collateral Agent shall give the Lenders immediate notice of the receipt of any notice, complaint or information regarding the agency or mandate incorporated into this Agreement.

 

 (ii)          The Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, shall give the Lenders, immediately upon acquiring knowledge thereof, notice of any matter demanding urgent action or the occurrence of any event not contemplated by the Collateral Documents to which the Mexican Agent is a party and where its failure to take immediate action would be clearly detrimental to it, whereupon the Mexican Collateral Agent shall be entitled to proceed as provided by the applicable laws.

 

 (iii)         The Mexican Collateral Agent and the Chilean Collateral Agent shall not be liable for any act carried out by them in accordance with this Agreement, the other Collateral Documents or the instructions of the Lenders. The Mexican Collateral Agent and the Chilean Collateral Agent shall not be responsible for overseeing the Borrower’s performance, or for verifying, analyzing or reviewing the terms of the Loans or any communication received from the Buyer or any third party in connection with this Agreement.

 

 (iv)         Neither the Mexican Collateral Agent nor the Chilean Collateral Agent makes any representation whatsoever as with respect to the validity, value or legitimacy of the Loans, nor shall it be liable for the contents, legality, validity, effectiveness or enforceability of any document issued by any authority or any party to this Agreement, including the Borrower or the Co-Obligors, as a means for the resolution of any dispute; and each of the Mexican Collateral Agent and the Chilean Collateral Agent shall be entitled to act based solely upon the contents of any such document, without any liability.

 

 (v)          Neither the Mexican Collateral Agent nor the Chilean Collateral Agent shall be required to investigate or ascertain whether a default or an Acceleration Event has occurred. In addition, neither the Mexican Collateral Agent nor the Chilean Collateral Agent shall be attributed direct or indirect knowledge of any potential event of default or Acceleration Event hereunder or under the other Loan Documents, unless the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, shall have received notice thereof from the Borrower, the Co-Obligors or any of the Lenders. In the event of receipt of any such notice, the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, shall immediately forward such notice to the Lenders and proceed in accordance with their instructions.

 

 

  

 

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 (vi)         Neither the Mexican Collateral Agent nor the Chilean Collateral Agent shall be liable for (1) the rights or title of any Person to the relevant item of property or the sufficiency of any collateral, (2) the seniority, ranking or formalization of any guaranty, or (3) the existence of any other right which may affect any item of property pledged or assigned in trust hereunder.

 

 (b)            Indemnification. The Borrower, the Co-Obligors and the Lenders, by reason of their respective roles as such, hereby agree to indemnify the Lenders (in proportion to the Loans made available by them), the Mexican Collateral Agent, the Chilean Collateral Agent and their respective trust officers, employees, officers, representatives, attorneys and agents against, and to hold them free and harmless from, any loss, liability, claim, damage, lost profits or expenses suffered or incurred by the Mexican Collateral Agent or the Chilean Collateral Agent as a result of any act or omission hereunder or under the other Loan Documents, or in connection with any claim, proceeding, litigation, complaint, action or decision (including any threatened proceeding or action) filed, commenced, issued or imposed by any person or competent authority in Mexico and/or abroad, against or upon the Mexican Collateral Agent, the Chilean Collateral Agent and/or their respective trust officers, employees, officers, attorneys and agents, other than as a result of the gross negligence, bad faith or willful misconduct of the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be. Neither the Mexican Collateral Agent nor the Chilean Collateral Agent shall be required to incur in any expense using its own funds, or to incur in any financial liability other than those assumed by it in its capacity as agent or representative in compliance with the provisions contained in this Agreement and the Collateral Documents. The obligations of the Borrower and the Co-Obligors under this paragraph (C)(b) of Article Twenty shall survive the termination of this Agreement.

 

 (c)            Fees and Expenses. The Borrower hereby agrees to pay any and all of the fees and reasonable, documented expenses incurred by the Mexican Collateral Agent or the Chilean Collateral Agent pursuant to Exhibit O hereto.

 

 (d)            Resignation. The Mexican Collateral Agent and the Chilean Collateral Agent may resign their appointments upon not less than 60 (sixty) Business Days’ written notice to all the Lenders. In such event, the Lenders shall appoint, by Majority, a new Mexican Collateral Agent. The Mexican Collateral Agent and the Chilean Collateral Agent shall not be released from their duties until the substitute agent shall have assumed its duties.

 

 (e)            Tax Obligations. The parties expressly agree that any and all taxes, contributions, fees or charges of any nature whatsoever, arising in connection with the performance of the Mexican Collateral Agent or the Chilean Collateral Agent under the Collateral Documents to which it is a party, shall be the sole and exclusive responsibility of the Lenders and the Borrower, as applicable in accordance with the law and such Collateral Documents; provided, that at no time shall the Mexican Collateral Agent or the Chilean Collateral Agent be liable for the calculation, withholding or payment of any amount, contribution or fee of a tax nature and, accordingly, the Lenders and the Borrower hereby expressly release the Mexican Collateral Agent and the Chilean Collateral Agent from any liability therefor.

 

 (f)             Instructions Following the Occurrence of an Acceleration Event. The Lenders hereby agree that, except as otherwise determined by all Lenders, in the event of occurrence of an Acceleration Event hereunder, any and all actions commenced against the Borrower or the Co-Obligors as a result of their default with their obligations under any of the Loan Documents shall be brought, whether jointly or individually, by a Majority pursuant to articles Fourteen and Twenty-Six hereof, and the Lenders, either jointly or individually, shall be entitled to instruct the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, to sell the collateral provided pursuant to the Collateral Documents; provided, that (i) no Lender shall be liable for any action commenced individually by any other Lender and (ii) the proceeds of the sale of any collateral provided pursuant to the Collateral Documents shall inure to the benefit of all Lenders in accordance with Article Nine.

 

 

  

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 (g)            Instructions Generally. The Lenders hereby agree that all instructions, notices and other communications required or permitted to be given hereunder and under the Collateral Documents shall be in writing and shall become effective upon their receipt by the Lenders, the Borrower, the Co-Obligors, the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be, at the address set forth in Article Twenty-One hereof, and in the Collateral Documents. The original of any such instruction may be delivered by certified mail, return receipt requested, or transmitted via facsimile or other means of communication (including e-mail, in PDF Acrobat format, duly executed and signed), subject to the satisfaction of the provisions contained in this Article. The Lenders, aware of the risks associated with the delivery of instructions by electronic means, including errors, lack of safety and confidentiality, and the potential for fraud, have agreed with the Mexican Collateral Agent and the Chilean Collateral Agent that any and all instructions relating to this Agreement shall be delivered in the manner set forth in the preceding paragraph. Accordingly, the Lenders hereby authorize the Mexican Collateral Agent and the Chilean Collateral Agent to abide by any instructions received by them through such means, and hereby release them from any and all liability in connection with any such transmission and agree to indemnify them in accordance with paragraph (C) of this Article Twenty. The Mexican Collateral Agent shall not be required to verify the authenticity of any instruction or notice, or the identity of the person issuing or confirming it, so long as it is delivered by a duly authorized officer. Accordingly, the Lenders shall be bound by any instruction or notice sent on their behalf and accepted by the Mexican Collateral Agent or the Chilean Collateral Agent.

 

 (h)            Effective Term. Unless revoked by the Lenders, the agency and authority hereby established and granted shall remain in effect until such time as all the payment obligations that gave rise to the execution of the Collateral Documents, shall have been performed in full to the Lenders’ satisfaction.

 

 (i)             Conflicts of Interest. The parties hereto have accepted and agreed that HSBC México and the Mexican Collateral Agent shall be one and the same entity (although its banking and Loan division and its trust division are not directly dependent upon or subordinated to one another) and, accordingly, the parties have taken all such measures as they have deemed necessary or advisable to address any potential conflict of interests, which measures have been or shall be reproduced in  this Article and in the Collateral Documents to their fullest satisfaction. Accordingly, each party to this Agreement and, in particular, the Borrower, hereby agrees as follows:

 

 (i)            it understands and agrees with the content and legal consequences of this paragraph (C)(i);

 

 (ii)           notwithstanding that one and the same entity shall serve as principal and agent for purposes of this Agreement and the Collateral Documents, the parties hereby recognize and acknowledge the separate nature of its duties as Lender and Mexican Collateral Agent, and hereby expressly authorize HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, to execute the transactions subject matter of this Agreement (including the Collateral Documents), through its authorized officers and trust officers, respectively; and

 

 

 

  

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 (iii)          pursuant to this Article, each and all of the obligations of the Mexican Collateral Agent shall be performed solely and exclusively by its trust division and no such obligation shall terminate by reason of the above.

 

Lastly, if but only if a competent authority were to determine that the execution of this Agreement by different members of a single financial group constitutes a potential conflict of interests, the parties shall replace the agent in accordance with the terms and conditions set forth herein.

 

 (j)             Acknowledgment. The parties hereby acknowledge and agree that the Mexican Collateral Agent has clearly and unequivocally explained to them the meaning, scope and legal consequences of Article 106(XIX) of the Law of Credit Institutions and Section 5.5 of Official Communication 1/2005, issued by the Central Bank of Mexico, which are deemed incorporated herein by reference.

 

 (k)            Identification. Based upon the preceding paragraphs of this Article, the Borrower, the Lenders, the Mexican Collateral Agent and the Chilean Collateral Agent hereby agree to assign identification number C/301515 to the agency agreement incorporated into this Agreement.

 

                                ARTICLE TWENTY-ONE. Notices. (a) The parties hereby designate the following addresses for purposes of any notices hereunder:

 

The Borrower and the Co-Obligors:

 

Paseo de la Reforma 215, Piso 4

Col. Lomas de Chapultepec

11000 Mexico, D.F.

Att: Alejandro Sadurni

Tel: (55) 5284-6669

E-mail: asadurni@casasaba.com

 

The Lenders:

 

HSBC México:

 

HSBC México, S.A., Institución de Banca Múltiple,

Grupo Financiero HSBC

Paseo de la Reforma 347

Col. Cuauhtémoc

06500 Mexico, D.F.

Mexico

Att:   Oswaldo Suárez Flores and/or

  Antonio Garcia Bada González

Tel: (52)(55) 5721-6366

E-mail:    oswaldo.suarez@hsbc.com.mx

antonio.garciabada@hsbc.com.mx

 

 

 

  

46

  

 

 

 

Banorte:

 

Banco Mercantil del Norte, S.A., Institución de Banca

Múltiple, Grupo Financiero Banorte

 

Prolongación Paseo de la Reforma 1230

Col. Cruz Manca

05300 Mexico, D.F.

Att:    Antonio Fernández Montero, and/or

   Ricardo Reyes Hernández

Tel.: (55) 5268-1649

E-mail:    antonio.fernandez@banorte.com

ricardo.reyez@banorte.com

 

The Mexican Collateral Agent:

 

HSBC México, S.A., Institución de Banca Múltiple,

     Grupo Financiero HSBC, Trust Division

Paseo de la Reforma 355, Anexo B, Piso 8

Col. Cuauhtémoc

06500 Mexico, D.F.

Att: División Fiduciaria

Tel.: (52)(55) 5721-2738

E-mail:    miguel.navarrob@hsbc.com.mx

 

The Chilean Collateral Agent:

 

HSBC Bank (Chile)

Av. Isidora Goyenechea 2800, Piso 23

Las Condes

Santiago, Chile

Att:   Claudio Álvarez Puratich, Deputy Operations Manager, and/or

  Juan Eduardo Nogueroles, CMB Manager

Tels:   (+562) 299-7296

(+562) 299-7406

E-mail:    claudio.alvarez@cl.hsbc.com

juan.nogueroles@cl.hsbc.com

 

(b)           All notices hereunder shall be in writing and shall be delivered via courier, facsimile, e-mail or in person, and shall become effective upon their receipt by their addressee or, if transmitted by facsimile or e-mail, upon receipt of confirmation of such transmission.

 

(c)           Absent written notice of a change of address, all judicial and extrajudicial notices or communications served or delivered at the above addresses, shall be fully effective.

 

                                ARTICLE TWENTY-TWO. Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of Mexico.

 

                                ARTICLE TWENTY-THREE. Jurisdiction. For purposes of the interpretation and enforcement of this Agreement, the parties hereby submit to the jurisdiction of the competent courts in the Federal District of Mexico, waiving any other jurisdiction to which they may be now or hereafter entitled.

 

 

  

47

  

 

 

                   ARTICLE TWENTY-FOUR. Costs and Expenses. The Borrower shall reimburse to the Lenders any and all reasonable and properly documented costs and expenses, including attorney’s fees and expenses, incurred by the Lenders in connection with the preparation and execution of this Agreement, any Promissory Note or any Loan Document. In addition, the Borrower shall reimburse to the Lenders, within 30 (thirty) days from the receipt of demand therefor, any and all reasonable and properly documented attorney’s fees and expenses incurred in connection with any amendment to this Agreement, any Promissory Note or any of the other Loan Documents, and any reasonable and justified costs and expenses, if any, incurred in connection with the performance or enforcement of any Loan Document.

 

                   ARTICLE TWENTY-FIVE. Indemnity. The Borrower and the Co-Obligors hereby agree to indemnify the Lenders and their respective directors, officers, employees, advisors and agents, against, and to hold them free and harmless from, any loss, liability, claim, damage or expense incurred by them as a result of any litigation or proceeding (including any threatened litigation or proceeding) relating to this Agreement or any of the Loan Documents or the Acquisition Documents, including, without limitation, any attorneys’ fees and expenses incurred in connection with such litigation or proceeding, including the preparation or analysis thereof (but excluding any loss, liability, claim, damage or expense incurred as a result of the gross negligence, bad faith or willful misconduct of the Person otherwise entitled to such indemnification, as determined by a final decision issued by a competent court). The obligations of the Borrower and the Co-Obligors under this Article Twenty-Five shall survive the termination of this Agreement.

 

                   ARTICLE TWENTY-SIX. Collective Decisions; Amendment and Waiver. (a) Any decision required to be made by the Lenders as a group pursuant to this Agreement, shall be made (i) if prior to the Initial Drawdown, by the Lenders whose Commitments represent, in the aggregate, at least 78% (seventy-eight percent) of all Commitments, (ii) if subsequent to the Initial Drawdown, by the Lenders representing at least 78% (seventy-eight percent) of the aggregate outstanding amount of the Loans as of the relevant date, except (1) in the event set forth in paragraph (c) of this Article Twenty-Six, in which case the decision shall be made by the Lenders representing the aggregate amount of all Loans or (2) as otherwise expressly provided in this Agreement (and for purposes of this Agreement, the applicable percentage or aggregate amount, as the case may be, shall constitute a “Majority”), and (iii) if subsequent to the Initial Drawdown, in the events expressly set forth in this Agreement, by the Lenders representing at least 85% (eighty-five percent) of the aggregate outstanding amount of all Loans as of the relevant date (a “Special Majority”).

 

(b)            Any amendment to this Agreement, the Promissory Notes or the other Loan Documents shall only be valid if evidenced by a written instrument executed by the Lenders representing the percentages set forth in this Article Twenty-Six, the Borrower and the Co-Obligors. The waiver of any right hereunder shall only be valid if evidenced by a written instrument executed by the requisite number of Lenders pursuant to this Article Twenty-Six, the Borrower and the Co-Obligors. A Lender’s failure to exercise or delay in the exercise of any of its rights hereunder or under any Promissory Note or Loan Document shall not be construed as a waiver by such Lender of any of its rights hereunder or thereunder.

 

(c)            Any amendment to this Agreement, the Promissory Notes or the other Loan Documents shall be subject to the consent of Lenders representing and holding at least a Majority of the aggregate principal amount outstanding under all Loans; provided, that the amendment of any of the following terms shall be subject to the consent of Lenders representing 100% (one hundred percent) of the aggregate principal amount outstanding under all Loans:

 

 (i)             the amendment of the aggregate amount of the Loans;

 

 (ii)            the amendment of the Interest Payment Dates or the Maturity Date;

 

 

  

48

  

 

 

 (iii)           the reduction of the outstanding amount of all Loans, or the reduction of any other amount due and payable by the Borrower and the Co-Obligors pursuant to this Agreement or the Promissory Notes (including the interest rate applicable thereto);

 

 (iv)           the terms and conditions for the calculation of the interest payable on the outstanding principal amount of the Loans;

 

 (v)            the release or cancellation of, or any material amendment to, the Collateral Documents; and

 

 (vi)           the amendment of this Article Twenty-Six.

 

(d)            Any amendment to this Agreement, the Promissory Notes or any other Loan Document, as with respect to the obligations, liability or powers and authority of the Mexican Collateral Agent or the Chilean Collateral Agent, shall be subject to the prior written consent of the Mexican Collateral Agent or the Chilean Collateral Agent, as the case may be.

 

(e)            The Lenders shall be entitled to such fees in connection with any waiver in respect of or amendment to any of the Loan Documents requested by the Borrower, as the Lenders may determine and agree with the Borrower prior to the granting of such waiver or the execution of such amendment.

 

                                ARTICLE TWENTY-SEVEN. Counterparts. This Agreement may be executed in such number of counterparts as the parties may determine by mutual consent, all of which shall constitute one and the same Agreement.

 

                                ARTICLE TWENTY-EIGHT. Headings. The parties agree that the headings of the articles hereof are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

                                ARTICLE TWENTY-NINE. Exhibits. The parties agree that the exhibits hereto constitute an integral part hereof and are deemed incorporated herein by reference, and this Agreement shall be interpreted taking into consideration the contents of each such exhibit.

 

                                ARTICLE THIRTY. Special Waiver. To the extent applicable, the parties hereby irrevocably waive their right to file action to rebalance their obligations hereunder and under the Loan Documents pursuant to articles 1796 and 1796-Bis of the Civil Code for the Federal District and the corresponding articles of the civil codes for all states of the Mexican Republic.

 

[The next page is the signatures page.]

 

 

  

49

  

 

This Credit Agreement is executed in Mexico City, Federal District, this 30th day of August, 2010.

 

 

 

	 	
The Borrower:

 

Grupo Casa Saba, S.A.B. de C.V.

 

 

 

	 
	 	 	 
	
 

	
By: 

	Manuel Saba Ades	 
	 	Title:	Attorney-in-fact	 
	 	 	 	 

 

 

 

 

	 	

The Co-Obligors:

 

Casa Saba, S.A. de C.V.,

Drogueros, S.A. de C.V.,

Farmacias ABC de México, S.A. de C.V.,

Daltem Provee Nacional, S.A. de C.V.,

Publicaciones Citem, S.A. de C.V.,

Daltem Provee Norte, S.A. de C.V.,

Centennial, S.A. de C.V., and

Controladora Casa Saba, S.A. de C.V.

 

 

 

 

	 
	 	 	 
	
 

	
By: 

	Manuel Saba Ades	 
	 	Title:	Attorney-in-fact	 
	 	 	 	 

 

 

 

 

	 	
The Lenders:

 

HSBC México, S.A., Institución de Banca Mútliple, Grupo Financiero HSBC

 

 

 

	 
	 	 	 
	
 

	
By: 

	Ignacio de Jesús Zubiria Maqueo	 
	 	Title:	Attorney-in-fact	 
	 	 	 	 

 

 

  

  

  

 

 

	 	
Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte

 

 

	 
	 	 	 
	
 

	
By: 

	Antonio Fernández Montero	 
	 	Title:	Attorney-in-fact	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	By:	Ricardo Reyes Hernández	 
	 	Title:	Attorney-in-fact	 

 

 

 

 

	 	
The Mexican Collateral Agent:

 

HSBC México, S.A., Institución de Banca Mútliple, Grupo Financiero HSBC, Trust Division

 

 

 

	 
	 	 	 
	
 

	
By: 

	Miguel Angel Navarro Bojalil	 
	 	Title:	Trust Officer	 
	 	 	 	 

 

 

 

 

	 	
The Chilean Collateral Agent:

 

HSBC BANK (CHILE)

 

 

 

	 
	 	 	 
	
 

	
By: 

	Ignacio de Jesús Zubiria Maqueo	 
	 	Title:	Attorney-in-fact	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	By:	Leonardo Arana de la Garza	 
	 	Title:	Attorney-in-fact	 

 

 

  

  

  

 

 

	 	
Witnesses:

 

 

 

	 
	 	 	 
	
 

	
Pablo Carrera López

	 
	 	 	 
	 	 	 
	 	 	 
	 	
Andrea Saavedra Mendoza

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