Exhibit 10.4
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT, dated as
of May 12, 2008 (this “ Agreement ”), is entered
into among DWFC, LLC and Deerfield TRS (Bahamas) Ltd. (together,
the “ Borrowers ” and each a “
Borrower ”), Deerfield Capital LLC, as Originator (the
“ Originator ”) and as Servicer (the “
Servicer ”), each of the Conduit Purchasers, the
Institutional Purchasers (collectively, and together with the
Swingline Purchaser (as defined below), the “ Lenders
”) and the Purchaser Agents from time to time party to the
Sale and Servicing Agreement referenced below, Wachovia Bank,
National Association, as Swingline Purchaser (the “
Swingline Purchaser ”), Wachovia Capital Markets, LLC,
as Administrative Agent (the “ Administrative Agent
”), and Wachovia Bank, National Association, as Hedge
Counterparty (the “ Hedge Counterparty ”).
Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Sale and Servicing Agreement
(as defined below).
RECITALS
WHEREAS, the Borrowers, the
Originator, the Servicer, the Lenders, the Purchaser Agents, the
Swingline Purchaser, the Administrative Agent, Lyon Financial
Services, Inc. (d/b/a/ U.S. Bank Portfolio Services), as Backup
Servicer (the “ Backup Servicer ”), U.S. Bank
National Association, as Collateral Custodian (the “
Collateral Custodian ”) and the Hedge Counterparty
have entered into that certain Sale and Servicing Agreement dated
as of March 10, 2006 (as amended prior to the date hereof, the
“ Sale and Servicing Agreement ”).
WHEREAS, it is anticipated that as of
the required reporting date for the fiscal quarters ending as of
March 31, 2008 and June 30, 2008 (pursuant to
Section 6.10(d) of the Sale and Servicing Agreement),
Deerfield Capital LLC will have failed to maintain
stockholder’s equity of $240,000,000 plus 90% of the proceeds
raised from equity issuers, which shall constitute a Servicer
Default under Section 6.15(j) of the Sale and Servicing
Agreement (and, accordingly, a Termination Event under
Section 10.1(d) of the Sale and Servicing Agreement (the
“ Acknowledged Termination Event ”).
WHEREAS, the Borrowers, the
Originator and the Servicer (collectively, the “ Loan
Parties ”) have requested that the Administrative Agent
and the Lenders (i) forbear from exercising certain rights and
remedies arising from the Acknowledged Termination Event, (ii)
forbear from exercising any right to terminate the rights and
obligations of the Servicer arising from the Acknowledged
Termination Event and (iii) waive application of the
Concentration Limits set forth in clause (a) of the definition
of “Concentration Limits” in each case, during the
Forbearance Period.
WHEREAS, the Administrative Agent and
the Lenders have agreed to do so, but only pursuant to the terms
set forth herein.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants hereinafter contained, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
1. Estoppel, Acknowledgement
and Reaffirmation . The Loan Parties hereby acknowledge their
obligations under the respective Transaction Documents to which
they are party and reaffirm that each of the liens and security
interests created and granted in or pursuant to the Transaction
Documents is valid and subsisting and that this Agreement shall in
no manner impair or otherwise adversely effect such liens and
security interests.
2. Forbearance . Subject
to the terms and conditions set forth herein, the Administrative
Agent and the Lenders agree that they shall, during the Forbearance
Period (as defined below), (i) forbear from exercising any and
all rights or remedies available to them under the Sale and
Servicing Agreement, the other Transaction Documents and Applicable
Law as a result of the Acknowledged Termination Event, but only to
the extent such rights or remedies arise exclusively as a result of
the Acknowledged Termination Event and (ii) waive application
of the Concentration Limit set forth in clause (a) of the
definition of “Concentration Limits”; provided
that the Administrative Agent and the Lenders shall be free to
exercise any or all of their rights and remedies arising on account
of the Acknowledged Termination Event and the limited waiver
described in clause (ii) above shall terminate and the
Concentration Limits described in clause (a) of the definition
thereof shall be applied, at any time upon or after the end of the
Forbearance Period (as defined below).
3. Forbearance Termination
Events . Nothing set forth herein or contemplated hereby is
intended to constitute an agreement by the Administrative Agent or
the Lenders to forbear from exercising any of the rights available
to them under the Sale and Servicing Agreement, the other
Transaction Documents, or Applicable Law (all of which rights and
remedies are hereby expressly reserved by the Administrative Agent
and the Lenders) upon or after the occurrence of the end of the
Forbearance Period. As used herein, a “ Forbearance
Termination Event ” shall mean the occurrence of any
Termination Event other than the Acknowledged Termination Event.
The period from the date hereof to (but excluding) the earliest to
occur of (a) if the ratio of the Advances Outstanding at the
close of business on July 17, 2008 to the sum of the Borrowing
Base calculated at the close of business on July 17, 2008
(including 60% of the Outstanding Loan Balance as of July 17, 2008
due from Synventive Acquisition Inc.) plus Collections
received but not applied to the reduction of the Advances
Outstanding as of the close of business on July 17, 2008 is
greater than 55%, July 17, 2008 (b) September 10,
2008 and (c) the date on which a Forbearance Termination Event
occurs shall be referred to as the “ Forbearance
Period ”.
4. Effectiveness . This
Agreement shall be effective as of the date when the following
conditions shall have been satisfied in form and substance
satisfactory to the Administrative Agent shall have received
(i
