CREDIT AGREEMENT by and among

Exhibit 10.15

EXECUTION COPY

 

$370,000,000

CREDIT AGREEMENT

by and among

PASSIVE ASSET TRANSACTIONS, LLC,

as Borrower,

RFC ASSET HOLDINGS II, LLC,

as Borrower,

RESIDENTIAL FUNDING COMPANY, LLC,

as Guarantor,

GMAC MORTGAGE, LLC,

as Guarantor,

RESIDENTIAL CAPITAL, LLC

as Guarantor,

GMAC LLC,

as Initial Lender and as Credit Agent and Omnibus Agent

and

Certain Other Financial Institutions and Persons from

time to time party hereto as Lenders

Dated as of June 1, 2009

 

TABLE OF CONTENTS

 

 

TABLE OF CONTENTS

(continued)

 

 

TABLE OF CONTENTS

(continued)

 

 

SCHEDULES

 

EXHIBITS

 

 

This CREDIT AGREEMENT (as amended or supplemented from time to time, this “ Agreement ”) dated as of June 1, 2009, is by and among Passive Asset Transactions, LLC, a Delaware limited liability company (“ PATI ”), RFC Asset Holdings II, LLC, a Delaware limited liability company (“ RAHI ” and, together with PATI, each a “ Borrower ” and collectively, the “ Borrowers ”), Residential Funding Company, LLC, a Delaware limited liability company (“ RFC ”), Residential Capital, LLC, a Delaware limited liability company (“ ResCap ”), GMAC Mortgage, LLC, a Delaware limited liability company (“ GMAC Mortgage ”, and together with RFC and ResCap, each a “ Guarantor ” and collectively, the “ Guarantors ”), GMAC LLC, a Delaware limited liability company (the “ Initial Lender ”), the financial institutions and other Persons that are or may from time to time become parties hereto as Lenders (together with the Initial Lender and their respective successors and assigns, each a “ Lender ” and collectively, the “ Lenders ”) and GMAC LLC, a Delaware limited liability company, as agent for the Lenders (in such capacity together with its successors and assigns in such capacity, the “ Credit Agent ”) and as Omnibus Agent (as herein defined).

BACKGROUND

The Borrowers desire to obtain Commitments from the Lenders so that the Lenders will from time to time and subject to the terms hereof make revolving Loans to the Borrowers, which Loans are secured by the Collateral.

The Guarantors have entered into this Agreement and have agreed to provide guarantees of the Obligations hereunder and to pledge Collateral to secure such guarantees.

The Lenders are willing, on the terms and subject to the conditions hereafter set forth, to extend the Commitments and make revolving Loans to the Borrowers.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01. Definitions; Construction . (a) Capitalized terms used herein and not otherwise defined herein shall have the meanings specified in Schedule 1.01 .

(b) All capitalized terms used herein, and not specifically defined herein, are used herein as defined in such Article 9 of the UCC to the extent defined therein.

(c) Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

(d) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.

 

(e) Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

(f) The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”.

(g) Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, provided that such successors and assigns are not prohibited by the Facility Documents, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (v) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 1.02. Accounting Matters . Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied in a manner consistent with that used in preparing the financial statements described in Section 7.01(f) hereof.

ARTICLE II

COMMITMENTS, LOANS, BORROWING, PREPAYMENT

Section 2.01. Commitments and Loans . (a) On the terms and subject to the conditions set forth in this Agreement, each of the Lenders severally agrees, from time to time on any Business Day occurring on or after Closing Date but prior to the Commitment Termination Date, to make loans (relative to each Lender, its “ Loans ”) to the Borrowers in an aggregate amount equal to such Lender’s Pro Rata Share of the aggregate amount of the Loans requested by the Borrowers to be made on such Business Day. The Lenders shall distribute the proceeds of such Loan to the Borrowers no later than 11:00 a.m. (New York City time) on the related Funding Date in accordance with Section 2.03 .

(b) On the terms and subject to the conditions hereof, the Borrowers may from time to time borrow, prepay and reborrow Loans. No Lender shall be required to make any Loan if, after giving effect thereto, (i) the Outstanding Aggregate Loan Amount would exceed the Available Amount or (ii) such Lender’s Outstanding Lender Loan Amount would exceed such Lender’s Pro Rata Share of the Available Amount.

 

Section 2.02. Note . (a) The Loans made by each Lender shall be evidenced by a promissory note executed by each Borrower substantially in the form of Exhibit 2.02(a)(i) hereto (a “ Note ”), dated the date hereof, payable to the applicable Lender in a maximum principal amount equal to such Lender’s Pro Rata Share of the Aggregate Commitment Amount. The Borrowers hereby irrevocably authorize each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender’s Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia , the date of, the outstanding principal amount of, and the interest rate and Interest Period applicable to the Loans evidenced thereby. Such notations shall, to the extent not inconsistent with notations made by the Credit Agent in the Register, be conclusive and binding on each Obligor absent manifest error; provided that, the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of any Obligor.

(b) The Borrowers hereby designate the Credit Agent to serve as the Borrowers’ agent, solely for the purpose of this clause, to maintain a register (the “ Register ”) on which the Credit Agent will record each Lender’s Commitments, the Loans (and interest due thereon) made by each Lender and each repayment in respect of the principal amount of the Loans, annexed to which the Credit Agent shall retain a copy of each Assignment and Acceptance, and each participation (as described in Section 9.04 ), delivered to the Credit Agent pursuant to Article IX . Failure to make any recordation, or any error in such recordation, shall not affect any Obligor’s Obligations. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrowers, the Obligors, the Credit Agent and the other Lender Parties shall treat each Person in whose name a Loan is registered as the owner thereof for the purposes of all Facility Documents, notwithstanding notice or any provision herein to the contrary. Any assignment or transfer of a Commitment or the Loans made pursuant hereto shall be registered in the Register only upon delivery to the Credit Agent of an Assignment and Acceptance that has been executed by the requisite parties pursuant to Article IX . Upon its receipt of a duly completed Assignment and Acceptance, the Credit Agent shall record the information contained therein in the Register. No assignment or transfer of a Lender’s Commitment or Loans, including those transfers or assignments to an Affiliate, shall be effective unless such assignment or transfer shall have been recorded in the Register by the Credit Agent as provided in this Section.

(c) The Register shall be available for inspection by the Borrowers or any Lender (but in each case only as to its relevant portion of the Register), at any reasonable time and from time to time upon reasonable prior notice.

Section 2.03. Borrowing Procedures . (a) By delivering a Borrower Funding Request to the Credit Agent on or before 7:00 p.m. (New York City time) on the Business Day prior to any Funding Date, the Borrowers may from time to time irrevocably request that on the requested Funding Date Loans be made in an amount equal to the lesser of the Specified Drawdown Amount and the remaining unused portion of the Loans available to be advanced hereunder; provided that (i) the amount of Loans requested pursuant to any Borrower Funding Request (including the Initial Borrower Funding Request) shall not be greater than the difference between (A) the Available Amount minus (B) the Outstanding Aggregate Loan Amount, (ii) no Borrower Funding Request may be made unless either (A) (1) the Unrestricted ResCap Liquidity at the opening of business on the proposed Funding Date (as estimated by the close of business on the Business Day prior to such Funding Date) is less than the Unrestricted ResCap Liquidity Threshold and (2) based on

 

such estimates, after giving effect to the advance of such Loans and Parallel Loans, the Unrestricted ResCap Liquidity does not exceed the Unrestricted ResCap Liquidity Threshold or (B) (1) the Consolidated Liquidity at the opening of business on the proposed Funding Date (as estimated by the close of business on the Business Day prior to such Funding Date) is less than $800,000,000 and (2) based on such estimates, after giving effect to the advance of such Loans and Parallel Loans, the Consolidated Liquidity does not exceed the Consolidated Liquidity Threshold and (iii) no Loan shall be made on any Funding Date unless the November Loan Agreement Outstandings on such Funding Date (after giving effect to any Parallel Loans made or to be made on such Funding Date) equals the Derivative Adjusted Available Amount (as defined in the November Loan Agreement). On the terms and subject to the conditions of this Agreement, the Loans to be made with respect to any Borrower Funding Request shall be made on the Business Day immediately following the date on which such Borrower Funding Request is delivered. On or before 11:00 a.m., New York City time, on the applicable Funding Date, each Lender shall deposit with the Credit Agent same day funds in an amount equal to such Lender’s Pro Rata Share of the requested Loans. Such deposit will be made to an account which the Credit Agent shall specify from time to time by notice to the Lenders. To the extent funds are received from the Lenders, the Credit Agent shall make such funds available to the Borrowers by wire transfer to the accounts the Borrowers shall have specified in their Borrower Funding Request. No Lender’s obligation to make any Loan shall be affected by any other Lender’s failure to make any Loan.

(b) If the Borrowers determine in good faith on any Business Day that their estimate of Unrestricted ResCap Liquidity or Consolidated Liquidity is incorrect, the Borrowers may request in writing that the Lenders fund Loans on such Business Day. The Lenders may, in their sole discretion, agree to such request, but it is understood and agreed they are not required to do so. In the event that any Lender deposits the proceeds of its Loans prior to the time required under Section 2.03(a) , such deposit shall be deemed a waiver by such Lender of any notice requirements with respect to such Loan under this Agreement.

(c) With respect to any Funding Date and as a condition to the advance of any Loans relating to such Funding Date, the Borrowers shall deliver, on the Business Day prior to such Funding Date, to the Credit Agent a Borrowing Base Report including the Borrowing Base as of such Business Day.

(d) By delivering a Borrower Funding Request, the Borrowers represent and warrant to each Lender that, after giving effect to the making of the requested Loans thereunder, all conditions precedent to such Loan specified in Section 5.02 have been satisfied and all statements in clauses (b) , (c) , (d) , (e), (f), (g)  and (h)  of Schedule 5.02 are true and correct.

Section 2.04. Borrowing Base . (a) On or prior to the Initial Funding Date, the Borrowers shall deliver to the Credit Agent the Initial Collateral Value Report.

(b) After the Initial Funding Date, the Borrowers shall deliver to the Credit Agent an updated Monthly Collateral Report no less frequently than once per calendar month and no later than the eleventh Business Day of each calendar month (commencing with June 2009). In addition, on each REO Supplement Date (commencing with June, 2009) the Borrowers shall deliver to the Credit Agent an REO Supplemental Report. For purposes of preparing each Collateral Value Report, the Borrowers shall calculate the Collateral Value of the Qualifying Collateral in accordance with Schedule 2.04 .

 

(c) The Borrowers shall calculate, or cause to be calculated, the Collateral Value of the Qualifying Collateral in accordance with Schedule 2.04 and the Borrowing Base on every Business Day following the Initial Funding Date; it being understood that the Collateral Value of assets consisting of Eligible Warehouse Loans or Supporting Assets for a European Note or any other Asset which the Credit Agent may so designate in the applicable Collateral Addition Designation Notice may be calculated using the most recent Carrying Value for such assets as periodically recalculated by the Obligors in accordance with their standard practices and procedures. The Borrowers shall deliver, electronically or otherwise, the results of the calculations required under this clause (b) to the Credit Agent by 7:00 p.m., New York City time, on each Business Day.

(d) At the reasonable request of the Credit Agent, the Borrowers shall provide any reports, files, spreadsheets or other materials used by the Obligors in calculating the Borrowing Base as of any date of determination. If the Credit Agent shall dispute the calculation of the Borrowing Base as of any date of determination, the calculation by the Credit Agent of such Borrowing Base shall be binding for all purposes hereunder and the Borrowers shall make the payment, if any, required by Section 2.08(b) in connection with such recalculated Borrowing Base.

(e) The Borrowers shall notify the Credit Agent if at any time they determine that on any day the Outstanding Aggregate Loan Amount as of such day exceeded the Borrowing Base as of such day.

Section 2.05. Interest . Interest shall accrue on the Outstanding Aggregate Loan Amount for each day during an Interest Period at a rate equal to (a) the sum of (x) the applicable LIBOR Rate for such Interest Period and (y) the Applicable Margin, divided by (b) 360 days. Interest shall accrue on the Loans after their maturity (whether by acceleration or otherwise) and on any other amount not paid when due under the Facility Documents (including without limitation any prepayment due under Section 2.08(b) or 2.08(c) ) for each day during a related Interest Period at a rate equal to (a) the Default Rate, divided by (b) 360 days. Interest shall be payable (i) in arrears with respect to each Interest Period through the final day of each Interest Period (regardless of whether such day is a Business Day), such amount to be payable on the first Business Day following the end of such Interest Period or (ii) on the applicable Loan Repayment Date. The Credit Agent shall determine the LIBOR Rate for the Loans prior to the beginning of each Interest Period, as set forth in the definition of “LIBOR Rate.” The Credit Agent shall also calculate the amount of interest and, if applicable, any Breakage Costs or other amounts due to be paid by the Borrowers from time to time hereunder (including in connection with any prepayment or repayment of Loans permitted hereunder) and shall provide a written statement thereof to the Borrowers at least two Business Days prior to the due date of such payment (or the relevant repayment or prepayment after having received a notice thereof); provided that failure to provide such statements on a timely basis shall not relieve the Borrowers of the obligation to pay any interest and principal due on the applicable payment date (based upon their good faith calculation of the amount due, such amount to be promptly reconciled after receipt of a subsequent statement from the Credit Agent) and other such amounts hereunder promptly upon receipt of such statement.

 

Section 2.06. [Reserved]

Section 2.07. Alternate Rate of Interest; Increased Costs . (a) If, prior to the commencement of any Interest Period, the Credit Agent determines (which determination shall be conclusive absent manifest error) (i) that adequate and reasonable means do not exist for ascertaining the LIBOR Rate for such Interest Period; or (ii) that the LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to any Lender of making or maintaining its Loans; or (iii) that, after notice from an affected Lender, it has become unlawful for such Lender to honor its obligation to make or maintain Loans hereunder using the LIBOR Rate, then the Credit Agent shall give notice thereof to the Borrowers by telephone, facsimile, or other electronic means as promptly as practicable thereafter and, commencing with the Interest Period immediately following the Interest Period during which such notice is provided to the Borrowers until the Credit Agent notifies the Borrowers that the circumstances giving rise to such notice no longer exist, all Loans shall bear interest at a rate per annum equal to the Applicable Margin plus the rate per annum that the Credit Agent determines in its reasonable discretion adequately reflects the cost to the Lenders of making or maintaining the Loans for such Interest Period.

(b) The Borrowers jointly and severally agree to reimburse each Lender for any increase in the cost to such Lender of, or any reduction in the amount of any sum receivable by such Lender in respect of, such Lender’s Commitments and the making, continuing, maintaining or conversion of Loans hereunder that arise in connection with any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase in after the Closing Date of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any Governmental Authority; provided , however , that any such changes with respect to increased capital costs and taxes shall be governed by the terms of Sections 2.07(c) and 3.02 , respectively. For the purposes of this Section 2.07(b) , taxes shall include all present or future taxes, fees, levies, imposts, deductions, duties, withholdings, assessments or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. Each affected Lender shall promptly notify the Credit Agent and the Borrowers in writing of the occurrence of any such event, stating the reasons therefor and the additional amount required fully to compensate such Lender for such increased cost or reduced amount. Such additional amounts shall be payable jointly and severally by the Borrowers directly to such Lender within ten (10) days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrowers.

(c) If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any Governmental Authority affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in good faith but in its sole and absolute discretion) that the rate of return on its or such controlling Person’s capital as a consequence of the Commitments or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then upon notice from time to time

 

by such Lender to the Borrowers (with a copy to the Credit Agent), the Borrowers shall within ten (10) days following receipt of such notice jointly and severally pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. A statement of such Lender as to any such additional amount or amounts shall, in the absence of manifest error, be conclusive and binding on the Borrowers. In determining such amount, such Lender may use any method of averaging and attribution that it (acting reasonably) shall deem applicable.

(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.07 shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender pursuant to Sections 2.07(a) , (b)  or (c)  for any such increased cost or reduction incurred more than one hundred and eighty (180) days prior to the date that such Lender demands, or notifies the Borrowers of its intention to demand, compensation therefor, provided further that, if the circumstance giving rise to such increased cost or reduction is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(e) If any Lender requests compensation under this Section 2.07 , then such Lender will, if requested by the Borrowers, use commercially reasonable efforts to designate another lending office for any Loan affected by such event; provided that such efforts are made on terms that, in the reasonable judgment of such Lender, cause such Lender and its lending office(s) to suffer no material economic, legal or regulatory disadvantage, and provided further that nothing in this Section 2.07(e) shall affect or postpone any of the Obligations of the Borrowers or the rights of such Lender pursuant to Sections 2.07(a) , (b) , (c)  or (d) .

Section 2.08. Mandatory Repayment of Loans . (a) The Borrowers shall jointly and severally repay the Outstanding Aggregate Loan Amount with respect to all Loans and all other amounts owing under this Agreement in full on the Loan Repayment Date. Loans may be prepaid in accordance with the terms of Section 2.09 hereof and, to the extent prepaid, may be re-borrowed hereunder in accordance with the terms hereof (including satisfaction of all conditions precedent contained in Section 5.02 ).

(b) If, on any Business Day (a “ Borrowing Base Shortfall Day ”), the Outstanding Aggregate Loan Amount on such day exceeds the Borrowing Base on such day by an amount equal to or greater than $250,000 (such circumstance, a “ Borrowing Base Deficiency ”), the Borrowers shall, within one (1) Business Day after the Borrowing Base Shortfall Day, jointly and severally repay outstanding Loans in an amount equal to the amount of the Borrowing Base Deficiency. The Borrowers shall deliver a Repayment Notice with respect to each repayment of outstanding Loan amounts made pursuant to this paragraph by 1:00 p.m. (New York time) on the day such repayment is due.

(c) On each Business Day (a “ Test Date ”), the Borrowers shall determine on or before 7:00 p.m. (New York City time) (x) the amount by which the estimated Unrestricted ResCap Liquidity exceeds the Unrestricted ResCap Liquidity Threshold and (y) the amount by which the estimated Consolidated Liquidity exceeds the Consolidated Liquidity Threshold (the  greater of (x) and (y), the “ Liquidity Excess Amount ”). If the Liquidity Excess Amount is greater than $0, no later than 11:00 a.m. (New York City time) on the Business Day following the Test Date, the Borrowers shall jointly and severally repay outstanding Loans and/or Parallel Loans in an

 

amount equal to the highest portion of the Liquidity Excess Amount that could be paid by the Borrowers and still satisfy the requirement that, after giving effect to such payment, (a) the Unrestricted ResCap Liquidity is greater than or equal to the Unrestricted ResCap Liquidity Threshold and (b) the Consolidated Liquidity is greater than or equal to the Consolidated Liquidity Threshold. The Borrowers shall deliver a Repayment Notice with respect to each repayment of outstanding Loan amounts made pursuant to this paragraph by 11:00 a.m. (New York time) on the day such repayment is due.

(d) Notwithstanding any provision of the November Loan Agreement or this Agreement, the Borrowers shall repay any outstanding Loans prior to making any payments of principal on the November Loan Agreement Outstandings (other than any payments made with respect to the Parallel Loans as a result of November Loan Agreement Outstandings exceeding the Derivative Adjusted Available Amount (as defined in the November Loan Agreement).

(e) The Borrowers shall not be required to pay any Breakage Costs incurred by the Lenders in connection with a mandatory repayment pursuant to this Section 2.08 .

Section 2.09. Optional Prepayment . The Borrowers may, at their option, prepay any Loan advanced hereunder in full or in part (as well as all interest accrued and unpaid thereon through the end of the related Interest Period) on the last Business Day of any Interest Period related thereto (each an “ Optional Prepayment Date ”); provided that the Borrowers deliver a Prepayment Notice to each Lender and the Credit Agent, no later than 7:00 p.m. New York City time on a Business Day that is at least two (2) Business Days preceding the Optional Prepayment Date. Any such partial prepayment shall be in a minimum principal amount of not less than $10,000,000 and in increments of $1,000,000 (or, if less, the Outstanding Aggregate Loan Amount). Any such prepayment shall be paid over to the Credit Agent for the account of the Lenders by the Borrowers by 11:00 a.m. (New York City time) on such Optional Prepayment Date, and shall be in an amount equal to the sum of (a) the Loan amount being prepaid on the date of such prepayment, plus (b) all accrued and unpaid interest on such Loan being prepaid as of the date of such prepayment, plus (c) the allocable portion (determined by the Credit Agent in its sole reasonable discretion) of all other amounts due from the Borrowers hereunder. The Borrowers may make a partial or full prepayment on any date other than an Optional Prepayment Date; provided that the Borrowers make a timely delivery of a Prepayment Notice, and in addition to the amount required under items (a) , (b) , and (c)  above, the Borrowers must pay, without duplication, (x) all Breakage Costs, if any, actually incurred by the Lenders and resulting from such prepayment and (y) all accrued and unpaid interest on such Loan being prepaid following the prepayment. Subject to Section 5.02 , in the absence of a timely delivered Prepayment Notice, the Lenders shall automatically and without further action by the Borrowers continue each Loan at the termination of each Interest Period for a successive Interest Period beginning on the day immediately following the final day of the immediately preceding Interest Period.

Section 2.10. Termination of Commitments and Reduction of Aggregate Commitment Amount . (a) Unless previously terminated, the Commitments shall terminate on the Commitment Termination Date. If at any time the Borrowing Base is reduced to zero, then the Commitments shall terminate on the effective date of such reduction.

 

(b) The Borrowers may elect by notice as specified in this clause (b)  to reduce the Aggregate Commitment Amount to such lower amount as the Borrowers shall specify in such notice; provided that (i) immediately after giving effect to such reduction, the Aggregate Commitment Amount as so reduced shall not be lower than the sum of the Outstanding Aggregate Loan Amount, (ii) such reduction shall be in a minimum principal amount of not less than $10,000,000 and in increments of $1,000,000 (or, if less, the remaining unused portion of the Aggregate Commitment Amount), and (iii) all such reductions shall require at least three (3) Business Days’ prior notice to the Credit Agent, shall be permanent, and shall take effect on a Business Day. Such reduction in the Aggregate Commitment Amount shall take effect on the date specified in such notice, which date shall be no earlier than three (3) Business Days from the date of actual receipt of such notice by the Credit Agent.

ARTICLE III

PAYMENTS; COMPUTATIONS; TAXES; EXPENSES

Section 3.01. Payments and Computations, Etc. (a) Unless otherwise expressly stated herein, all amounts to be paid or deposited hereunder shall be paid or deposited in accordance with the terms hereof no later than 1:00 p.m. (New York City time) on the day when due in lawful money of the United States of America in same day funds (and all funds received after such time shall be deemed to have been received on the next succeeding Business Day).

(b) The Borrowers shall, to the extent permitted by law, jointly and severally pay interest on all amounts (including principal, interest and fees) due but not paid on the date such payment is due hereunder as provided herein, for the period from, and including, such due date until, but excluding, the date paid, at the applicable Default Rate, payable on demand; provided , however , that such interest rate shall not at any time exceed the maximum rate permitted by applicable law.

(c) All computations of interest and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

(d) Each Borrower agrees that the principal of and interest on the Loans and all other monetary Obligations shall be the joint and several recourse obligations of the Borrowers.

(e) Except as set forth in Section 3.02 , all payments made by the Borrowers or the other Obligors under this Agreement or any other Facility Document shall be made without set-off, deduction or counterclaim.

(f) After the occurrence and during the continuance of an Event of Default, the Credit Agent may, and upon direction from the Required Lenders, shall, apply all amounts received under the Facility Documents (including from the proceeds of Collateral securing the Obligations) or under applicable Requirements of Law upon receipt thereof to the Obligations as follows: (i) first, to the payment of all Obligations in respect of fees, expense reimbursements, indemnities and other amounts owing to the Credit Agent, in its capacity as the Credit Agent (including the out-of-pocket expenses and reasonable fees of counsel to the Credit Agent), (ii) second,

 

after payment in full in cash of the amounts specified in clause (f)(i) , to the ratable payment of all interest (including interest accruing (or which would accrue) after the commencement of a proceeding in bankruptcy, insolvency or similar law, whether or not permitted as a claim under such law) and fees owing under the Facility Documents, and all costs and expenses owing to the Lender Parties pursuant to the terms of the Facility Documents, until paid in full in cash, (iii) third, after payment in full in cash of the amounts specified in clauses (f)(i) and (f)(ii) , to the ratable payment of the principal amount of the Loans then outstanding, (iv) fourth, after payment in full in cash of the amounts specified in clauses (f)(i) through (f)(iii) , to the ratable payment of all other Obligations owing to the Lender Parties, and (v) fifth, after payment in full in cash of the amounts specified in clauses (f)(i) through (f)(iv) , and following the Commitment Termination Date, to each applicable Obligor or any other Person lawfully entitled to receive such surplus or as may be directed by a court of competent jurisdiction. Proceeds of Collateral shall be allocated to the Secured Parties (as defined in the Omnibus Security Agreement) in such manner as is determined by the Omnibus Agent in its sole discretion.

(g) If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of set-off or otherwise) on account of any Loans (other than pursuant to the terms of Sections 2.07(b) , 2.07(c) , 3.02 or Article X or in respect of Breakage Costs) in excess of its pro rata share of payments obtained by all Lender, such Lender shall purchase from the other Lender such participations in Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably (to the extent such other Lenders were entitled to receive a portion of such payment or recovery) with each of them; provided that, if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender that has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender’s ratable share (according to the proportion of (i) the amount of such selling Lender’s required repayment to the purchasing Lender to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Each of the Obligors agrees that any Lender purchasing a participation from another Lender pursuant to this clause (g)  may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 3.04) with respect to such participation as fully as if such Lender were the direct creditor of the Obligors in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law any Lender receives a secured claim in lieu of a set-off to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

Section 3.02. Taxes . (a) All payments by the Borrowers or Guarantors (each a “ Credit Party ”) of principal of, and interest on, the Loans and all other amounts payable hereunder (including fees) shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, levies, imposts, deductions, duties, withholdings, assessments or other charges of any nature whatsoever imposed by any Governmental Authority, but excluding (i) taxes imposed on or measured by the overall net income, overall receipts or overall assets of any Lender by any Governmental Authority, (ii) franchise taxes or

 

branch profits taxes or any similar tax imposed on any Lender by the United States of America (or any political subdivision thereof) of the jurisdiction of the Lender, as the case may be, in which it is organized or is operating or is otherwise subject to tax as a result of any connection unrelated to this Agreement, and (iii) any U.S. backup withholding taxes (other than due to a change in law as provided in Section 3.02(f)) (such non-excluded taxes, fees, levies, imposts, deductions, duties, withholdings, assessments or other charges, herein “ Taxes ”). Notwithstanding the foregoing sentence, in the event that any such Taxes are required to be deducted or withheld from any payment required to be made to any Lender as a result of Requirements of Law, the Credit Party shall (a) promptly notify the applicable Lender, in writing, of such requirement, (b) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid to the applicable Lender pursuant to this paragraph), and (c) jointly and severally pay to the applicable Lender such additional amounts as may be necessary in order that the net amount received by such Lender after such withholding or deduction shall equal the full amounts of moneys which would have been received by such Lender in the absence of such withholding or deduction. Notwithstanding the foregoing, the Credit Party shall not be required to increase any amounts payable to a Lender that is a Non-U.S. Lender (as defined in Section 3.02(f) ) with respect to any Taxes (x) if and to the extent that such taxes would not have been imposed but for such Non-U.S. Lender’s failure to provide (or the Credit Agent’s failure to provide) to the Borrower the Internal Revenue Service Forms required to be provided to the Borrower pursuant to Section 3.02(f) or (y)  that are imposed on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party hereto (or designates a new lending office) other than due to a change in law as provided in Section 3.02(f) .

(b) In addition, the Borrowers agree to pay any current or future stamp, recording, documentary, excise or property or similar taxes, charges or levies (including, without limitation, mortgage recording taxes and similar fees, but excluding such amounts imposed as a result of an assignment or the transfer of a participation) imposed by any Governmental Authority that arise from any payment made under this Agreement or any other Facility Document, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Facility Document and the transactions contemplated thereunder (“ Other Taxes ”).

(c) The Borrowers shall indemnify each Lender for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.02) paid by such Lender and any liability (including taxes, penalties, interest and expenses) arising therefrom or with respect thereto; provided , however , that when making a demand for indemnity payment a Lender shall provide each Borrower, at its address referred to in Schedule 13.02 , with a certificate from the relevant taxing authority or from a Responsible Officer of such party stating or otherwise evidencing, in reasonable detail, that such Lender has made payment of (and the basis of calculation for) such Taxes or Other Taxes. This indemnification shall be made within thirty (30) days from the date a Lender provides written demand therefor, accompanied by the aforementioned certificate.

(d) Within thirty (30) days after the date of receiving an official receipt for any payment of Taxes or Other Taxes contemplated by this Section 3.02 , the Borrower shall furnish to the relevant Lenders, at their addresses set forth in Schedule 13.02 (or such other address as provided by a Lender, in the case of an assignee), appropriate evidence of payment thereof.

 

(e) If a Lender shall become aware that it is entitled to receive a refund or credit (such credit to include any increase in any foreign tax credit) as a result of Taxes (including any penalties or interest with respect thereto) as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section 3.02 , it shall promptly notify such Borrower of the availability of such refund or credit and shall, within 30 days after receipt of a request by such Borrower, apply for such refund or credit at such Borrower’s expense, and in the case of any application for such refund or credit by such Borrower, shall, if legally able to do so, deliver to the Borrower such certificates, forms or other documentation as may be reasonably necessary to assist such Borrower in such application. If a Lender has determined in its sole judgment that it has received a refund or credit (such credit to include any increase in any foreign tax credit) in respect to any Taxes as to which it has been indemnified by the Borrowers or with respect to which a Borrower has paid additional amounts pursuant to this Section 3.02 , it shall promptly notify the Borrowers of such refund or credit and shall, within sixty (60) days after receipt of such refund or the benefit of such credit (such benefit to include any reduction of the Taxes for which a Lender would otherwise be liable due to any increase in any foreign tax credit available to a Lender), repay the amount of such refund or benefit of such credit (with respect to the credit, as determined by a Lender in its sole, reasonable judgment) to the Borrowers (to the extent of amounts that have been paid by a Borrower under this Section 3.02 with respect to Taxes giving rise to such refund or credit), plus any interest received with respect thereto, net of all reasonable out-of-pocket expenses of the Lender and without interest (other than interest actually received from the relevant taxation authority or other Governmental Authority with respect to such refund or credit); provided , however , that each Borrower, upon the request of the Lender, agrees to return the amount of such refund or benefit of such credit (plus interest) to the Lender in the event the Lender is required to repay the amount of such refund or benefit of such credit to the relevant taxation authority or other Governmental Authority.

(f) If a Lender is not a United States Person (within the meaning of Section 7701(a)(30) of the Internal Revenue Code) (a “ Non-U.S. Lender ”), it shall, on or prior to the Closing Date or, in the case of a Non-U.S. Lender that is an assignee, on the date of such assignment to such Non-U.S. Lender, provide to the Borrowers and Credit Agent (i) two (2) accurate and complete original signed copies of Internal Revenue Service Form W-8ECI or Form W-8BEN (or successor forms) certifying that such Non-U.S. Lender is entitled as of such date to a complete exemption from United States withholding tax pursuant to an applicable income tax treaty with respect to payments of interest to be made under this Agreement (or, in the case of an assignee, entitlement to a withholding tax rate that does not exceed the withholding tax rate in respect of those Taxes in respect of interest for which the assignor was entitled to additional payments under Section 3.02(a) at the time of the assignment), (ii) with respect to a Non-U.S. Lender claiming exemption from United States withholding tax pursuant to its portfolio interest exception, (x) a statement of such Non-U.S. Lender, signed under penalty of perjury, that it is not (A) a “bank” as described in Section 881(c)(3)(A) of the Internal Revenue Code, (B) a 10% shareholder of a Borrower (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code), or (C) a controlled foreign corporation related to a Borrower within the meaning of Section 864(d)(4) of the Internal Revenue Code (an “ Exemption Certificate ”), and (y) two properly completed and executed original signed copies of Internal Revenue Service Form W-8BEN (or successor form) certifying that such Non-U.S. Lender is entitled as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement, (iii) two (2) accurate and complete original

 

signed copies of Internal Revenue Service Form W-8IMY with any accompanying statement and certificate, or (iv) two (2) accurate and complete original signed copies of any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from United States federal withholding tax, with such supplementary documentation as may be prescribed by Requirements of Law to permit Borrowers to determine the withholding or deduction required to be made. In addition, each Non-U.S. Lender agrees that from time to time after the Closing Date, when the passage of time or a change in facts or circumstances renders the previous certification obsolete or inaccurate in any material respect, or on the Borrowers’ reasonable request, such Non-U.S. Lender will deliver to the Borrowers two (2) new accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to a complete exemption under an income tax treaty), Form W-8BEN (with respect to the portfolio interest exemption) and an Exemption Certificate, or Form W-8IMY with any accompanying statement or certificate, as the case may be, and such other forms as may be required in order to confirm or establish that such Non-U.S. Lender is entitled to a continued exemption from United States withholding tax with respect to payments under this Agreement, or such Non-U.S. Lender shall immediately notify the Borrowers of its inability to deliver any such form or Exemption Certificate, in which case such Non-U.S. Lender shall not be required to deliver any such form or Exemption Certificate. Notwithstanding anything to the contrary contained in this Section 3.02 , the Borrowers agree to pay any additional amounts and to indemnify each Non-U.S. Lender in the manner set forth in Sections 3.02(a) and (c)  in respect of any United States Taxes deducted or withheld by the Borrowers or paid by a Lender, if and to the extent that such Taxes would not have been deducted or withheld or payable (and in the case of a payment by a Lender, no exception is available to the making of such payment, as determined in the sole discretion of such Lender) but for any change after the Closing Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof. Prior to withholding any amount due a non-U.S. Lender because of such Lender’s failure to provide tax forms or certifications under this Section 3.02 , the Borrowers shall notify such non-U.S. Lender of its intention to withhold not less than five (5) Business Days prior to such withholding.

(g) Notwithstanding anything to the contrary contained in this Agreement, this Section 3.02 shall govern exclusively any increased costs relating to Taxes resulting from any change in law.

Section 3.03. Fees and Expenses . The Borrowers agree to jointly and severally pay to the Credit Agent and the Lenders any expenses (including reasonable fees and expenses of each Lender’s counsel) incurred in connection with the negotiation, execution, delivery, administration and enforcement of this Agreement and the Facility Documents (and any amendments, supplements, modifications, consents or waivers thereto).

Section 3.04. Set-off . The Obligors agree that each Lender has all rights of set-off provided by applicable law, and in addition thereto, the Obligors agree that at any time any Default exists, each Lender may appropriate and apply to the payment of any obligations of the Obligors hereunder owed to it, whether or not then due, any and all balances, credits, deposits, accounts or moneys of the Obligors then or thereafter maintained with or held by such Lender; provided that any such appropriation and application shall be subject to Section 3.01(g) . Each Lender shall promptly notify the applicable Obligors after making such exercise of the right of set-off; provided that failure to give such notice shall not affect the validity of the set-off.

 

ARTICLE IV

ACCOUNTS AND COLLECTIONS

Section 4.01. Collections Deposited to Collection Accounts . The Borrowers shall establish and maintain the Collection Accounts in accordance with the provisions of Section 4.01 of the November Loan Agreement and the Omnibus Security Agreement (provided that if the November Loan Agreement is terminated, such Collection Accounts will continue to be established and maintained in accordance with such Section 4.01 as in effect at the time of termination). Any Collections with respect to the Collateral shall be deposited by the Obligors in a Collection Account no later than the Applicable Deposit Date. To the extent that any funds are not deposited or held in the Collection Accounts in accordance with the preceding sentence, such funds shall be deemed to be held by such Obligor in trust for the Lenders, and shall not be used by any Obligor for any purposes whatsoever.

Section 4.02. Collections with Respect to European Collateral . The Borrowers shall establish and maintain the European SPV Accounts in accordance with the provisions of Section 4.02 of the November Loan Agreement and the Omnibus Security Agreement (provided that if the November Loan Agreement is terminated, such European SPV Accounts will continue to be established and maintained in accordance with such Section 4.02 as in effect at the time of termination). Any Collections with respect to the Supporting Assets for a European Note shall be deposited in the applicable European SPV Accounts in accordance with the terms of the applicable European Security Documents. Any Collections with respect to a European Note shall be deposited by the Obligors in a Collection Account no later than the Applicable Deposit Date; it being understood that the Obligors may deposit such Collections in the applicable European Hedging Account prior to deposit in a Collection Account on or prior to the Applicable Deposit Date.

Section 4.03. Withdrawals from Collection Accounts . So long as (a) no Default has occurred and is continuing and (b) no Borrowing Base Deficiency would result from such withdrawal, the Obligors shall be permitted to withdraw funds from each Collection Account from time to time for use in accordance with Section 7.01(k) .

Section 4.04. Cash and Cash Equivalents . Deposits in each Collection Account may be held in cash or Cash Equivalents. To the extent that any funds that do not constitute Collateral or proceeds of Collateral are deposited to any of such Accounts, as such funds shall be released in accordance with Section 4.04 of the November Loan Agreement.

Section 4.05. Account Exception . GMAC, in its capacity as “Lender Agent” and sole “Lender” under the Senior Debt Loan Agreement, agrees that (i) the requirements of Sections 4.01 and 4.02 shall be an “Account Exception” for purposes of the Senior Debt Loan Agreement, and (ii) such requirements shall not violate Section 7.01(l) of the Senior Debt Loan Agreement.

 

ARTICLE V

CONDITIONS PRECEDENT

Section 5.01. Conditions Precedent . The obligation of the Lenders to make the initial Loan shall be subject to the condition precedent that (a) the Credit Agent shall have received (or waived delivery of) each of the items set forth in Schedule 5.01 (unless otherwise indicated) dated as of such date, and in such form and substance as is satisfactory to the Credit Agent; and (b) the other conditions specified in Schedule 5.01 have been satisfied or waived by the Credit Agent.

Section 5.02. Further Conditions Precedent . The funding of each Loan hereunder (including the initial Loan), and the automatic continuation of each Loan after the termination of the immediately preceding Interest Period related to any Loan, shall in all events be subject to satisfaction of the further conditions precedent set forth in Schedule 5.02 as of the making of such Loan; provided that with respect to the automatic continuation of each Loan after the termination of the immediately preceding Interest Period related to any Loan in accordance with Section 2.09 of this Agreement, only the conditions precedent set forth in paragraphs (b)-(e)  of Schedule 5.02 shall be required to be satisfied.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

Section 6.01. Representations and Warranties of the Obligors . Each Obligor represents and warrants to each Lender Party that throughout the term of this Agreement (including but not limited to as of the date of each borrowing of a Loan):

(a) Organization and Good Standing . Each of such Obligor and each of its Subsidiaries has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, and has all requisite corporate or limited liability company power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, all necessary power, authority and legal right to own the portion of the Collateral that it owns.

(b) Due Qualification . Each of such Obligor and each of its Subsidiaries is duly qualified to do business, and has obtained all necessary licenses and approvals, in all jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals, except to the extent failure to so qualify or to obtain licenses and approvals could not reasonably be expected to have a Material Adverse Effect.

(c) Power and Authority; Due Authorization . Each of such Obligor and each of its Subsidiaries (i) has all necessary power and authority and legal right to (A) execute and deliver each of the Facility Documents to be executed and delivered by it in connection herewith, (B) carry out the terms of the Facility Documents to which it is a party and (C) borrow the Loans or

 

provide the Guarantee hereunder (as applicable) and grant a security interest or lien in the portion of the Collateral that it owns on the terms and conditions herein provided or as otherwise required by the Facility Documents and (ii) has taken all necessary corporate, partnership or limited liability company action to duly authorize (A) such borrowing, guarantee and/or grant, as appropriate and (B) the execution, delivery, and performance of this Agreement and all of the Facility Documents to which it is a party.

(d) Binding Obligations . Each Facility Document to which such Obligor and any of its Subsidiaries is a party constitutes, or when duly executed and delivered by such Obligor or Subsidiary will constitute, the legal, valid and binding obligations of such Obligor or such Subsidiary enforceable against it in accordance with its respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) No Violation . Except for those consents required in connection with the Lenders exercising their rights under Section 8.02 hereof, neither the execution and delivery of the Facility Documents, nor the consummation of the transactions contemplated hereby and thereby, will conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice, lapse of time or both) a default under, its organizational documents or any indenture, loan agreement, mortgage, deed of trust, or other material agreement or instrument to which such Obligor or any of its Subsidiaries is a party or by which any of them or their property is otherwise bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument, other than this Agreement and the Security Documents, or violate any Requirements of Law applicable to it of any Governmental Authority having jurisdiction over it or any of its properties if such violation, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect.

(f) No Proceedings . There are no proceedings or investigations pending, or to the best of such Obligor’s knowledge threatened in writing, against it before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (i) asserting the invalidity of any Facility Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by any Facility Document, or (iii) seeking any determination or ruling that could reasonably be expected to have a Material Adverse Effect; provided , however , that this representation shall not apply to (x) matters that have been disclosed to the Credit Agent in writing prior to closing, or (y) matters arising from the attempts of the Obligors to enforce their rights with respect to the Collateral other than purported or certified class action law suits involving any portion of the Collateral or Supporting Assets consisting of mortgage loans which have a material impact on the enforceability or value of the such mortgage loans or the Lender’s security therein.

 

(g) Government Approvals . No authorization, consent, approval, or other action by, and no notice to or filing with, any court, governmental authority or regulatory body or other Person, domestic or foreign, is required for the due execution, delivery or performance of any Facility Document to which such Obligor is a party except for (i) consents that have been obtained in connection with transactions contemplated by the Facility Documents, (ii) filings to perfect the security interest created by the Security Documents, and (iii) consents required in connection with the Credit Agent exercising its rights under Section 8.02 hereof.

(h) [Reserved]

(i) Margin Regulations . Margin Stock (as defined in the regulations of the Board) constitutes less than 25% of the value of those assets of it that are subject to any limitation on sale, pledge, or other restriction hereunder. No Obligor is engaged in the business of extending credit for the purpose of buying or carrying Margin Stock, and no proceeds of Loans will be used to purchase or carry Margin Stock or otherwise for a purpose that violates, or would be inconsistent with, F.R.S. Board Regulations T, U or X.

(j) Accurate Reports . No written information, exhibit, financial statement, document, book, record, or report furnished or to be furnished or caused to be furnished by such Obligor to the Credit Agent or any Lender in connection with the Facility Documents was inaccurate in any material respect as of the date it was dated or (except as otherwise disclosed in writing to the Lenders or the Credit Agent at such time) as of the date so furnished, or contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; provided that any such inaccuracy, misstatement or omission in any Borrowing Base calculation (including such calculations as included in any Borrowing Base Report) that is not part of the Monthly Collateral Report or any calculation of the Unrestricted ResCap Liquidity derived from the ResCap Liquidity Balance Rollforward shall not constitute a breach of this paragraph if such calculation was prepared in good faith, based on the actual knowledge of the ResCap treasury group located in Minneapolis, MN available at the time and in accordance with ResCap’s general accounting and business policies as in effect as of the date such information was furnished.

(k) No Default . No Default has occurred and is continuing.

(l) Investment Company Act . Neither such Obligor nor any of its Subsidiaries is required to register as an “investment company” under the Investment Company Act.

(m) Taxes . Each of such Obligor and each of its Subsidiaries has filed all material United States federal tax returns and all other material returns that are required to be filed, and has paid all material taxes due pursuant to said returns or pursuant to any assessment received by it, except such taxes, if any, as are being contested in good faith by appropriate proceedings diligently conducted and as to which adequate reserves have been provided in accordance with GAAP. The charges, accruals and reserves on the books of such Obligor in respect of taxes and other governmental charges are, in the opinion of such Obligor, adequate.

 

(n) Approved Servicer . Other than as disclosed to the Credit Agent prior to the Closing Date, with respect to the Guarantors (other than ResCap) only, each such Guarantor is approved by Fannie Mae as an approved lender, and GMAC Mortgage is approved by Freddie Mac as an approved seller, HUD pursuant to Sections 203 and 211 of the National Housing Act, the FHA as an FHA Approved Mortgagee and Servicer, and the VA as a VA Approved Lender. GMAC Mortgage is approved by Freddie Mac and Fannie Mae as an approved servicer. In each such case, (w) each such Guarantor is in good standing with Freddie Mac, HUD, the FHA, and/or the VA, as applicable, (x) no Guarantor has received from Freddie Mac, Ginnie Mae, HUD, the FHA or the VA any notice revoking or suspending, or indicating any adverse fact or circumstance which could reasonably be expected to entitle Freddie Mac, HUD, the FHA or the VA, as the case may be, to revoke or suspend any of the aforementioned approvals, and (y) each FHA Insurance Contract and VA Guaranty Agreement applicable to the Guarantors (other than ResCap) or their Subsidiaries is in full force and effect.

(o) Financial Statements . (i) ResCap has delivered to the Credit Agent a copy of (1) ResCap’s audited, consolidated financial statements dated as of December 31, 2008, comprised of the consolidated statements of income or operations and cash flows for the preceding twelve (12) month period and the consolidated balance sheet as at December 31, 2008, and (2) ResCap’s quarterly consolidated financial report for the period ended March 31, 2009; each was prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, subject to ordinary, good faith year-end audit adjustments; and each of (1) and (2) are correct in all material respects and fairly present the consolidated financial condition of ResCap and its consolidated Subsidiaries, as of the dates thereof and consolidated results of operations for the periods covered thereby and (ii) as of the date of this Agreement, since March 31, 2009, other than as has been previously disclosed by the Guarantors or ResCap to the Lenders or the Credit Agent prior to the date hereof, there has been no change in such financial condition or results of operation that is reasonably likely to have a Material Adverse Effect. Except as discussed in the financial statements, it is not subject to any contingent liabilities or commitments that, individually, or in the aggregate, have or could reasonably be expected to have a Material Adverse Effect.

(p) Chief Executive Office . PATI’s chief executive office is located at 1100 Virginia Drive, Fort Washington, PA 19034 or at such other location as hereafter disclosed to the Credit Agent in writing. RAHI’s chief executive office is located at 3993 Howard Hughes Parkway, Suite 250, Las Vegas, NV 89169 or at such other location as hereafter disclosed to the Credit Agent in writing. The chief executive office of the Guarantors are as set forth in Schedule I to the Fourth Security Agreement or at such other locations as hereafter disclosed to the Credit Agent in writing. RFC’s chief executive office is located at One Meridian Crossings, Suite 100, Minneapolis, MN 55423 or at such other location as hereafter disclosed to the Credit Agent in writing.

 

GMAC Mortgage’s chief executive office is located at 1100 Virginia Drive, Fort Washington, PA 19034 or at such other location as hereafter disclosed to the Credit Agent in writing. ResCap’s chief executive office is located at One Meridian Crossings, Suite 100, Minneapolis, MN 55423 or such other location as hereafter disclosed to the Credit Agent in writing.

(q) Location of Books and Records . The location where such Obligor keeps its books and records, including all electronic files and records relating to the Collateral that it owns, is its chief executive office or such other location as disclosed to the Credit Agent in writing.

(r) Compliance with Laws . It is in compliance in all material respects with all applicable Requirements of Law.

(s) Representations and Warranties under the Underlying Documents . Each of the representations and warranties it has made or any Subsidiary of ResCap has made under the Underlying Documents are true and correct in all material respects, and to the best of its knowledge all of the representations and warranties of all other parties to such agreements are true and correct in all material respects.

(t) ERISA . Each Pension Plan is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Internal Revenue Code and all other applicable Federal and State laws, and no event has occurred or is reasonably expected to occur with respect to any such Pension Plan or any Multiemployer Plan that has resulted in or is reasonably expected to result in a Material Adverse Effect.

ARTICLE VII

COVENANTS

Section 7.01. Affirmative Covenants of the Obligors . Each Obligor covenants and agrees with the Lender Parties that, until all Loans and other Obligations have been paid in full in cash and the Commitments have terminated or expired, such Obligor will perform or cause to be performed the obligations set forth below in this Article VII :

(a) Compliance with Laws, Etc . Each of such Obligor and each of its Subsidiaries shall comply in all material respects with all applicable Requirements of Law.

(b) Performance and Compliance with Agreements . Each Obligor and each Subsidiary thereof shall comply with all provisions, covenants and other promises required to be observed by it under each of the Facility Documents to which it is a party (subject to all applicable grace periods as provided therein).

 

(c) Taxes . Each of such Obligor and each of its Subsidiaries shall pay and discharge promptly when due all material taxes and governmental charges imposed upon it or upon its income or profits or in respect of its property, in each case before the same shall become delinquent or in default and before penalties accrue thereon, unless and to the extent such taxes are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves shall, to the extent required by GAAP, have been set aside.

(d) Due Diligence . Such Obligor agrees and acknowledges that (i) the Credit Agent, at the Credit Agent’s own expense except as set forth as provided herein, has the right to perform continuing due diligence reviews with respect to the Collateral, for purposes of verifying compliance with the representations, warranties, and specifications made hereunder and under the other Facility Documents, or otherwise, and (ii) the Credit Agent and its Responsible Officers will be permitted during normal business hours to examine, inspect, make copies of, and make extracts of, any and all documents, records, agreements, instruments or information relating to the Collateral in its possession. Notwithstanding anything to the contrary herein, the Borrowers shall jointly and severally reimburse the Credit Agent for any and all out-of-pocket costs and expenses reasonably incurred by the Credit Agent and its respective designees and agents in connection with the ongoing due diligence and auditing activities (A) not more than once a year, if no Event of Default has occurred and is continuing and (B) at all times during any period in which an Event of Default has occurred and is continuing.

(e) Legal Existence, etc . Such Obligor shall (i) preserve and maintain its legal existence and good standing and the legal existence and good standing of its Subsidiaries, except to the extent such failure to so preserve and maintain is in connection with a Permitted Dissolution; (ii) preserve and maintain all of its rights, privileges, authorizations, approvals, licenses and franchises, except to the extent such failure to so preserve and maintain relates to a Permitted Dissolution or is not reasonably expected to have a Material Adverse Effect; and (iii) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, or with local laws, as applicable.

(f) Financial Statements . ResCap shall deliver each of the following to the Credit Agent:

(i) as soon as available, but not later than forty-five (45) calendar days after the end of each fiscal quarter ending on March 31, June 30 and September 30, ResCap’s unaudited consolidated balance sheet as at the end of such fiscal quarter, the related unaudited, consolidated statement of income for such quarter and the portion of the fiscal year through the end of such quarter and the related unaudited consolidated statements of retained earnings and cash flows for the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year;

 

(ii) as soon as available, but not later than ninety (90) days after the end of each fiscal year ResCap’s audited consolidated balance sheet as at the end of such fiscal year and the related consolidated statements of income and retained earnings and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous year, and accompanied by the opinion of an independent certified public accountant of recognized national standing, which report shall state that such consolidated financial statements present fairly ResCap’s consolidated financial position and the results of its operations for the periods indicated in conformity with GAAP. Such opinion shall not be qualified or limited because of a restricted or limited examination by the independent auditor of any material portion of its books and records and shall have no “going concern” qualification;

(iii) as soon as available, but not later than thirty (30) days after the end of each calendar month ResCap’s consolidated balance sheet as at the end of such calendar month and the related consolidated statements of income for such calendar month, setting forth in each case in comparative form the figures for the previous calendar month, fairly presenting in all material respects, in accordance with GAAP, as at the end of, and for such period, ResCap’s consolidated financial position and the results of ResCap’s consolidated operations; and

(iv) concurrently with the delivery of the financial statements referred to in subsections 7.01(f)(i) , (ii) , and (iii) , a duly completed Compliance Certificate executed by a Responsible Officer of ResCap.

(g) Required Reports; Additional Information . The Borrowers will promptly furnish to the Credit Agent all notices of all final written audits, examinations, evaluations, reviews and reports of the Obligors’ origination and servicing operations by any state mortgage banking licensing agency or instrumentality (including those prepared on a contract basis for any such agency) in which there are material adverse findings, including without limitation notices of termination or impairment of approved status, and notices of probation, suspension or non-renewals, and such other information, documents, records or reports with respect to the Collateral or the conditions or the Obligors’ operations, financial or otherwise, as the Credit Agent may from time to time reasonably request.

(h) Peak Score . GMAC Mortgage shall maintain either (i)(1) at all times while Fannie Mae is utilizing the monthly Peak Score rating system, a monthly Peak Score which equates to “Excellent” or better or (2) at all times after Fannie Mae has developed and implemented a replacement rating system for the monthly Peak Score rating system, a score or rating in respect of such replacement rating system that is reasonably equivalent to a monthly Peak Score of “Excellent” or better, as agreed upon by the Credit Agent and GMAC Mortgage, or (ii) an Investor Reporting and Remitting rating from Freddie Mac which equates to “Tier 2” or better.

 

(i) Quality Control . Each Guarantor and each of its Subsidiaries shall conduct quality control reviews of its servicing operations in accordance with industry standards and past practice. Each Obligor shall report to the Credit Agent quality control findings as such reports are produced and upon reasonable request by the Credit Agent.

(j) Insurance . Such Obligor shall maintain such insurance with financially sound and reputable insurance companies, and with respect to property and risks of a character usually maintained by entities engaged in the same or similar business similarly situated, against loss, damage and liability of the kinds and in the amounts customarily maintained by such entities.

(k) Use of Proceeds and Withdrawn Collections . The Obligors shall use the proceeds of the Loans and any Collections withdrawn from the Collection Accounts in accordance with Section 4.03 for budgeted working capital and general corporate expenses in the ordinary course of business.

(l) Accounts . The Obligors will (subject to and in accordance with the provisions of Sections 4.01 and 4.02 ) insure that all Collections with respect to Collateral are deposited into the Collection Accounts.

(m) Custodial Procedures . The Obligors will use commercially reasonable efforts to cause the custodians under the Custody Agreements to have obtained and verified their possession of all notes, and other documents described in the Custody Agreements as being deliverable to such custodians no later than August 19, 2009, and any US Mortgage Loans for which the applicable custodian has not verified possession of the related Mortgage Note by August 20, 2009 shall no longer constitute Eligible Assets after such applicable date unless otherwise agreed in writing by the Credit Agent. The Obligors and the Lender shall discuss in good faith how the items included on each custodian’s exception report shall be addressed prior to September 2, 2009. It is understood and agreed that the Credit Agent may adjust the Specified Percentage of all or a portion of the US Mortgage Loans in response to the exceptions described therein.

(n) Transfer of Rights or Benefits . If requested to do so by the Credit Agent, the Obligors will cooperate, to the fullest extent reasonably possible, with actions taken by a Lender under the Facility Documents, the GMAC MSR Facility, the GX Security Documents and the Viaduct Security Documents that enable such Lender to effect a transfer of servicing, legal title or other rights or benefits in an efficient and orderly manner upon exercise of remedies with respect to any collateral (including Collateral hereunder) maintained for such Lender’s benefit.

(o) GSAP Modification Conditions . At the request of the Credit Agent, the Obligors shall use their reasonable best efforts to cause the GSAP Modification Conditions to be satisfied as promptly as practicable, and (without limiting the foregoing) shall take all actions reasonably requested by the Credit Agent to consummate the transactions contemplated by the definition of “GSAP Modification Conditions.” The parties agree to cooperate to amend this Agreement in good faith so as to accomplish such modification.

 

(p) Servicing of Collateral . Such Obligor will ensure, and will direct its Subsidiaries to ensure, that the Collateral owned by it or its Subsidiaries (as applicable) is serviced and administered at all times in accordance with the procedures (including but not limited to collection and enforcement procedures, the maintenance of insurance, custodial arrangements, documentation retention, and the making of servicer advances, including servicer advances with respect to residential mortgage assets) that each Borrower or other Obligor (as the case may be) customarily employs and exercises (or requires to be employed or exercised by those servicing its other assets) in its good faith business judgment and which are normal and usual in the servicing of its other assets, and that such servicing and administration is conducted in the best interest of and for the benefit of the Lender Parties.

(q) REO Property . No later than June 5, 2009, the Obligors and Credit Agent shall agree upon a structure and implementation process and timeline to protect the Credit Agent’s interest in REO Property resulting from the foreclosure of US Mortgage Loans.

(r) Further Assurances . Such Obligor will, and will cause each of its Subsidiaries to, at its own expenses promptly execute and deliver to the Credit Agent and the Collateral Holders all such other documents, agreements and instruments reasonably requested by the Credit Agent or a Collateral Holder to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Borrowers and the Guarantors in the Facility Documents, if requested, or to further evidence and more fully describe the collateral intended as security for the Obligations, or to correct any omissions in this Agreement or the Facility Documents, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to any of the Security Documents or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be reasonably necessary or appropriate, in the sole discretion of the Credit Agent or a Collateral Holder, in connection therewith. Each Obligor hereby authorizes, without obligation, the Lender Parties to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of any Collateral or any part thereof or any other collateral without the signature of any Obligor where permitted by law. Without limiting the foregoing, each Obligor agrees that the Credit Agent and the Collateral Holders are each hereby authorized to file, at such times as the Credit Agent or a Collateral Holder deems necessary or desirable, UCC financing statements naming it and its Subsidiaries as debtor and describing the collateral as “all personal property” or “all assets” of such debtor whether now or hereafter acquired, or words of like import.

(s) Terms of Bilateral Facilities . The Obligors shall (i) give not less than ten (10) Business Days’ prior written notice to the Credit Agent of any amendment of any Bilateral Facility to (x) the definition of “Solvent” or any equivalent or any representation relating to solvency contained in any such Bilateral Facility, (y) the definition of “Change of Control” or the

 

equivalent in any such Bilateral Facility, or (z) any of the definitions of the terms that comprise the definitions referenced in clauses (x)  or (y)  above or the representation related to solvency contained in any such Bilateral Facility, and (ii) no later than the date on which such provisions) shall be amended under any Bilateral Facility, enter into such amendments hereto as may be required by the Credit Agent to conform in all material respects to the related provisions of this Agreement to such amendments(s).

(t) Underlying Documents Obligations and Contractual Exercise of Rights and Remedies . Each Obligor shall (i) perform all of its obligations under the Underlying Documents in all material respects, and (ii) take such actions to exercise its rights and remedies with respect to the Underlying Documents as the Credit Agent shall direct in accordance with the terms of the applicable agreement;

(u) Underlying Documents Reports and Notices . The Obligors shall promptly deliver to the Credit Agent all reports, notices and certificates delivered to them or by them pursuant to the terms of the Underlying Documents; provided that with respect to the Warehouse Facility Documents the Obligors shall only be required to deliver notices and certificates relating to any event of default under, breach of the terms of, or request for amendment or modification of, any Warehouse Facility Document.

(v) Instructions under Flume No. 8 Agreements and GX II Agreements . ResCap shall, at the specific written direction of the Credit Agent, give (or refrain from giving) any instructions permitted to be given under the European Security Documents.

(w) Approved Additional Collateral . The Obligors shall provide not less than the Specified Days prior written notice to the Credit Agent of any proposed Approved Additional Collateral which they request to be added to the Collateral, and shall deliver such documents, agreements, schedules and other information as the Credit Agent shall request in connection with any such proposed Approved Additional Collateral including, without limitation, all information with respect to any equity in joint ventures or other Assets acquired by Equity Investment I. The Credit Agent shall act in good faith to discuss any such request from the Obligors.

If any proposed Approved Additional Collateral consists of US Mortgage Loans, the Obligors shall deliver to the Credit Agent a schedule of the proposed Approved Additional Collateral, which schedule shall include loan data, with the same detail and in the same format, as the data file delivered to the Credit Agent in connection with the first Group A Loans included in the Collateral (or such other data, detail or format as the Credit Agent and the Obligors shall mutually agree), and in any event sufficient data to identify each Mortgage Loan thereon and shall include both (i) US Mortgage Loans proposed to be added to the Group A Loans and the Group B Loans and (ii) Group A Loans and Group B Loans included in the Collateral at the time such schedule is delivered. In connection with the delivery of the Collateral Addition Designation Notice, the Obligors shall (i) deliver a Mortgage Schedule to the Credit Agent and the Omnibus Agent and a final data file in the same format and containing the same information as the original data file, but containing only those loans included on the Mortgage Schedule and

 

those US Mortgage Loans included in the Collateral at the time such Mortgage Schedule is delivered, (ii) prepare and file a UCC-3 financing statement adding a description of the Mortgage Schedule to the financing statements outstanding at such time, which shall be in form and substance acceptable to the Credit Agent and its counsel and (iii) deliver any lien releases and related UCC-3 financing statements required to release any outstanding liens on such Mortgage Loans, which shall be in form and substance acceptable to the Credit Agent and its counsel. Each Obligor shall promptly mark its books and records to indicate that all Mortgage Loans included on a Mortgage Schedule have been pledged to the Credit Agent for so long as such Mortgage Loan constitutes Collateral.

The Obligors shall cooperate with the Credit Agent with respect to any due diligence the Credit Agent reasonably requires with respect to such proposed Approved Additional Collateral and shall enter into any amendments to the existing Security Documents, and enter into any additional documentation or authorize any filings with respect to the Credit Agent’s security interest in any such Approved Additional Collateral, as the Credit Agent shall reasonably request. No proposed Approved Additional Collateral shall become Approved Additional Collateral without the prior written consent of the Credit Agent, as evidenced by its execution of a Collateral Addition Designation Notice, which notice may set out certain terms and conditions governing the Collateral Value of such Approved Additional Collateral and additional covenants, representations or eligibility requirements, which additional terms shall apply to such Approved Additional Collateral as if set forth hereunder unless otherwise later specified by the Credit Agent in writing.

(x) Unrestricted ResCap Liquidity . The Obligors will provide to the Credit Agent, on a daily basis, the ResCap Liquidity Balance Rollforward, prepared in a manner consistent with the methods used by the management of the Guarantors prior to the Closing Date, and the Obligors shall endeavor, taking into account ordinary course business expenses and receipts and acting in good faith, to maintain Unrestricted ResCap Liquidity in excess of $300,000,000 at all times.

Section 7.02. Negative Covenants of the Obligors . Each Obligor covenants and agrees with the Lender Parties that, until all Loans and other Obligations have been paid in full in cash and the Commitments have terminated or expired, it shall not, and shall not permit any Subsidiary to:

(a) take any action that would directly or indirectly materially impair or materially adversely affect its title to, or the value of, the Collateral; provided that (i) actions in accordance with the Credit and Collection Policies, (ii) modifications implemented in a good faith attempt to increase the recovery on, or collectibility of, delinquent or distressed Collateral or (iii) Collateral Dispositions that comply with Section 7.02(k) shall not constitute a violation of this Section 7.02(a) ;

 

(b) engage in any line of business activity other than the businesses in substantially the same fields of enterprise as are conducted on the date hereof by any Obligor or Subsidiary of an Obligor;

(c) amend, modify or waive any term or condition of any Facility Document, or consent to any amendment, modification or waiver of any term or condition of any Facility Document, without the prior written consent of the requisite Lenders (as specified in Section 13.01 );

(d) change its name, organizational identification number, organizational structure or its state of incorporation, organization or formation unless it shall have given the Credit Agent at least thirty (30) days’ prior written notice thereof and unless, prior to any such change, it shall have filed, or caused to be filed, such financing statements or amendments and taken such further action as any Lender or the Credit Agent determines may be reasonably necessary to continue the perfection and priority of the applicable Collateral Holder’s interest (on behalf of the Lender Parties) in the Collateral, provided however that this Section 7.02(d) shall only apply to Obligors and issuers of notes, securities or other interests included in the Schedules to the Fourth Security Agreement;

(e) at any time create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of any Indebtedness (including Acquired Indebtedness) other than Permitted Indebtedness; it being understood, for the avoidance of doubt, that (a) the Guarantors may incur unsecured intercompany Indebtedness to the Borrowers as long as any funds advanced by the Borrowers are (x) to the extent they constitute Collections, deposited and maintained in accordance with Article IV and (y) to the extent they constitute proceeds of Loans hereunder, subject to Section 7.01(k) and (b) the Borrowers may incur unsecured intercompany Indebtedness to the GSAP Preferred Share SPVs as long as any funds advanced by the GSAP Preferred Share SPVs are deposited and maintained in accordance with Article IV .

(f) permit any GSAP Preferred Share SPV to at any time create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of any Indebtedness (including Acquired Indebtedness);

 

(g) (1) directly or indirectly make any Restricted Payment unless, at the time of and after giving effect to the proposed Restricted Payment, either (i) (A) no Default shall have occurred and be continuing or will occur as a consequence thereof and (B) after giving effect to such Restricted Payment on a pro forma basis, the aggregate amount expended or declared for all Restricted Payments made on or after the Closing Date (excluding Restricted Payments described in clauses (b) , (c) , (d) , (e)  and (f)  of the definition of Permitted Restricted Payments) shall not exceed the Restricted Payment Maximum Amount or (ii) such Restricted Payment is a Permitted Restricted Payment; or (2) permit any GSAP Preferred Share SPV to (i) make any dividend or distribution of the GSAP Class A-1 Preference Shares or the GSAP Class A-2 Preference Shares without the written consent of the Credit Agent, (ii) make any other payments or distributions with respect to dividends, distributions or other payments by a Borrower with respect to its equity interests, or any repurchase by a GSAP Preferred Share SPV of any outstanding equity interest issued by a GSAP Preferred Share SPV without the written consent of the Credit Agent unless no Default shall have occurred and be continuing or will occur as a consequence thereof or (iii) other than as contemplated by Section 7.02(e) , act as lender or guarantor with respect to any Indebtedness incurred by the Borrowers, the Guarantors or any of their Subsidiaries or Affiliates without the written consent of the Credit Agent;

(h) at any time create or suffer to exist any Lien (other than any Permitted Liens) on any of its assets or property (whether now owned or hereafter acquired) which are Collateral or permit any GSAP Preferred Share SPV to at any time create or suffer to exist any Lien on any of its assets or property (whether now owned or hereafter acquired) which are Supporting Assets for Collateral;

(i) [Reserved]

(j) permit, as of the last Business Day of each fiscal month of ResCap, the Consolidated Tangible Net Worth of ResCap to be less than $250,000,000;

(k) consummate a Collateral Disposition unless (i) the related Collateral Disposition Proceeds are deposited as Collections in accordance with Article IV , (ii) the Credit Agent shall have consented to such Collateral Disposition unless such Collateral Disposition consists of (A) the Transfer of whole Mortgage Loans in the ordinary course of business and the Collateral Disposition Proceeds resulting from such Transfer (or a related series of Transfers) is less than $20,000,000, or (B) the Transfer of First Savings Mortgage Loans to First Savings Mortgage Corporation pursuant to the First Savings Repurchase Agreement, and (iii) except for a Collateral Disposition of whole Mortgage Loans securing Eligible Warehouse Loans, the Collateral Disposition Proceeds deposited as provided in clause (i) above represents the fair market value of such the Assets Transferred.

 

(l) except for Affiliate Transactions engaged by or with any Excluded Subsidiary, directly or indirectly, engage in any Affiliate Transaction which is not a Permitted Affiliate Transaction unless (i) such Affiliate Transaction is on terms that are not materially less favorable to it or the relevant Subsidiary than those that could reasonably have been obtained in a comparable arm’s length transaction by it or such Subsidiary with an unaffiliated party ( provided that any transactions between Obligors shall be in compliance with the corporate governance policies of each such Obligor), (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $250,000,000, it delivers to the Credit Agent a resolution adopted in good faith by the majority of its Board of Directors approving such Affiliate Transaction and set forth in an officers’ certificate certifying that such Affiliate Transaction complies with clause (i)  above, and (iii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $500,000,000, it obtains and delivers to the Credit Agent a written opinion of a nationally recognized independent third-party investment banking, accounting or appraisal firm acceptable to the Credit Agent stating that the transaction is fair to it or such Subsidiary, as the case may be, from a financial point of view;

(m) amend or otherwise modify its organizational documents if the result would have a material adverse effect on the Lender Parties (including on the rights or remedies of the Lender Parties);

(n) enter into any agreement (other than a Facility Document) prohibiting, restricting or otherwise limiting (i) the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired (other than limits permitted or arising under Senior Debt Documents, including agreements governing Permitted Funding Indebtedness and Permitted Refinancing Indebtedness restricting Liens on any collateral covered by Permitted Liens arising under such agreements), (ii) the ability of any Obligor to amend or otherwise modify any Facility Document, or (iii) the ability of any Obligor or other Significant Subsidiary to make any payments, directly or indirectly, to the Borrowers or any Guarantor, including by way of dividends, distributions, advances, repayments of loans, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments (including, without limitation, entering into any agreement by any Obligor or other Significant Subsidiary that requires distributions otherwise payable to the Borrowers to be escrowed or to be subject to a sinking fund or other similar restriction or to be paid to another Person);

(o) permit ResCap, the Borrowers, any other Obligor or any Significant Subsidiary of ResCap to merge or consolidate with any other corporation or other entity or sell, assign, transfer, lease or otherwise convey all or substantially all of its property or assets to any Person, or permit any Subsidiary of such foregoing entities to do so, unless (i) such entity is the survivor or such entity’s successor is a person organized and existing under the laws of the United States or a state thereof and expressly assumes all of such entity’s obligations under this Agreement and the other Facility Documents; (ii) immediately after giving effect to such consolidation, merger, sale or conveyance, no Default shall have occurred and be continuing; and (iii) each Guarantor

 

confirms that each of its guarantees with respect to the Facility Documents shall remain in full force and effect; provided that none of ResCap, the Borrowers, any other Obligor or any Significant Subsidiary of ResCap shall merge or consolidate with GMAC Bank such that GMAC Bank is the surviving entity or sell, assign, transfer, lease or otherwise convey all or substantially all of its property or assets to GMAC Bank, or permit any of their Subsidiaries to do so;

(p) permit ResCap to directly own any assets other than (i) Equity Interests of the other Obligors, (ii) assets in respect of hedging arrangements, (iii) so long as no Event of Default has occurred and is continuing, cash and cash equivalents and other immaterial assets in the ordinary course of business consistent with past practice, (iv) assets which are subject to a Lien as Collateral under the Security Documents and (v) the Exempted Cash Reserve Account (as defined in the Senior Loan Facility);

(q) without the prior written consent of the Credit Agent, terminate the administrator under the European Security Documents or take any other action under the European Security Documents which could reasonably be expected to adversely affect the Lender or the Credit Agent or the value of the related European Note, provided , however, that this Section shall not apply to automatic termination of the administrator under the applicable agreements;

(r) agree to amend, modify or waive any provision of any Underlying Document or the organizational documents of the GSAP Preferred Share SPVs without the written consent of the Credit Agent;

(s) agree to terminate any Underlying Document without the written consent of the Credit Agent.

Section 7.03. Notice of Certain Occurrences . Each Obligor covenants and agrees with the Lender Parties that, until all Loans and other Obligations have been paid in full in cash and the Commitments have terminated or expired:

(a) Defaults . As soon as possible, but in any event within one Business Day, after any Obligor obtains knowledge of any Default, it shall furnish or cause to be furnished to the Credit Agent a written statement of a Responsible Officer of the Borrowers setting forth details of such Default and the action that it proposes to take with respect thereto;

(b) Litigation . As soon as possible, but in any event within ten (10) Business Days, after any Obligor obtains knowledge thereof, it shall furnish or cause to be furnished to the Credit Agent, notice of any material action, suit or proceeding instituted by or against it or any of its Subsidiaries in any federal or state court or before any commission, regulatory body or Governmental Authority, and of any material adverse development in any such action, suit or proceeding which either (i) arises with respect to any Indebtedness of ResCap or its Subsidiaries, or arises under any servicing contract pursuant to which a Guarantor services assets for a third party owner of such assets (including an Agency or special purpose vehicle and other

 

securitization vehicle) and is instituted by such owner, or a trustee or administrator on such owner’s behalf, or an insurer or guarantor with respect to amounts owed to or by such owner; provided that with respect to servicing contracts related to whole loan mortgage sales to an entity other than an Agency, a special purpose vehicle or any other securitization vehicle, such notice shall only be required if the applicable material adverse development could reasonably be expected to give rise to a Material Adverse Effect, or (ii) in all cases, is reasonably likely to result in a Material Adverse Effect;

(c) Material Adverse Effect . Within one Business Day of it becoming aware of any event or circumstance that could reasonably be expected to have a Material Adverse Effect, it shall furnish or caused to be furnished to the Credit Agent written notice of such event or circumstance;

(d) Change of Control . It shall furnish or caused to be furnished to the Credit Agent notice of any Change of Control upon the occurrence of such event;

(e) Event of Default . Within three Business Days after any Obligor obtains knowledge thereof, it shall furnish or cause to be furnished to the Credit Agent notice of any default or event of default under any organizational or constitutive document of any Obligor;

(f) Adverse Judgment . Within three Business Days after the entry of a judgment or decree against any Obligor in an amount in excess of $25,000,000, it shall furnish or cause to be furnished to the Credit Agent notice thereof;

(g) Accounting Policies . It shall furnish or cause to be furnished to the Credit Agent within three Business Days notice of any material change in accounting policies or financial reporting practices of the Obligor, except for those changes that are in conformity with new or revised GAAP;

(h) Rating . Within three Business Days after any Obligor obtains knowledge thereof, it shall furnish or cause to be furnished to the Credit Agent the notice of any decrease in the servicer rating of any Servicer by any Agency;

(i) Agency Termination . Upon the receipt by any Guarantor of any notice received from Freddie Mac, Fannie Mae or Ginnie Mae terminating, or indicating any intent to terminate, or indicating any adverse fact or circumstance which could reasonably be expected to entitle Freddie Mac, Fannie Mae or Ginnie Mae to terminate, such Guarantor for cause from any servicing arrangement with such agency, it shall furnish or cause to be furnished to the Credit Agent notice thereof;

(j) Agency Suspension . Upon the receipt by any Guarantor of any notice received from any Freddie Mac, Fannie Mae, Ginnie Mae, HUD, the FHA or the VA revoking or suspending, or indicating any intent to revoke or suspend, or indicating any adverse fact or circumstance which could reasonably be expected to entitle such agency to revoke or suspend any of the approvals granted to such Guarantor that are referenced in Section 6.01(n) hereof, it shall furnish or cause to be furnished to the Credit Agent notice thereof;

 

(k) Insurance Coverage . Within three Business Days after any Obligor obtains knowledge thereof, it shall furnish or cause to be furnished to the Credit Agent notice of any material change in the insurance coverage maintained by such Obligor or any other person to comply with the requirements of this Agreement, with a copy of evidence of the same.

(l) ERISA . As soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of any Obligor knows, or with respect to any Pension Plan or Multiemployer Plan to which any Obligor or any of their respective Subsidiaries makes direct contributions, has reason to believe, that any of the events or conditions specified below with respect to any such Pension Plan or Multiemployer Plan has occurred or exists, such Obligor will deliver to the Credit Agent a statement signed by a senior financial officer of the relevant Obligor setting forth details respecting such event or condition and the action, if any, that such Obligor or one of its Subsidiaries proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Obligor or such Subsidiary with respect to such event or condition):

(A) any reportable event, as defined in Section 4043(b) of ERISA, with respect to a Pension Plan, as to which the PBGC has not by regulation or otherwise waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event ( provided that a failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code or Section 302 of ERISA, such that Section 430(k) of the Internal Revenue Code would apply, shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(c) of the Internal Revenue Code) and any request for a waiver under Section 412(c) of the Internal Revenue Code for any Pension Plan;

(B) the distribution under Section 4041(c) of ERISA of a notice of intent to terminate any Pension Plan or any action taken by any Obligor or one of their respective Subsidiaries to terminate any Pension Plan;

(C) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or the receipt by any Obligor or one of their respective Subsidiaries of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan;

(D) the complete or partial withdrawal from a Multiemployer Plan by any Obligor or any of their respective subsidiaries that results in liability to such Obligor or Subsidiary under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by any Obligor from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA;

 

(E) the institution of a proceeding by a fiduciary of any Multiemployer Plan against any Obligor or one of their subsidiaries to enforce Section 515 of ERISA, which proceeding is not dismissed within thirty (30) calendar days; and

(F) the failure of any Pension Plan to meet the requirements of Section 436 of the Internal Revenue Code, resulting in a loss of tax-exempt status of the trust of which such Pension Plan is a part under Section 401(a)(29) of the Internal Revenue Code.

(m) Collateral Impairment . Promptly after any Obligor obtains knowledge thereof, it shall furnish or cause to be furnished to the Credit Agent notice of any fact, circumstance or development could reasonably be expected to result in a material reduction in the value of any material portion of the Collateral or the ability of the Obligors or the Credit Agent to realize the value in respect of any material portion of the Collateral.

(n) Underlying Documents . Promptly after any Obligor obtains knowledge thereof, it shall furnish or cause to be furnished to the Credit Agent notice of any material default by any Person in the performance of such Person’s obligations in the Underlying Documents.

(o) Other . Promptly, from time to time, it will furnish to the Credit Agent and each Lender such other information, documents, records or reports with respect to the Collateral or its corporate affairs, conditions or operations, financial or otherwise, as the Credit Agent, or any Lender may from time to time reasonably request.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.01. Events of Default . The following events shall be “ Events of Default ”:

(a) The Borrowers shall fail to pay the principal of, or interest on, any Loan when due (whether at stated maturity, in accordance with Section 2.08(b) , upon acceleration or otherwise); or any Obligor shall fail to make any other payment or deposit to be made by them hereunder or under any Facility Document when due and such failure shall continue for two (2) Business Days;

(b) Any representation or warranty made or deemed to be made by an Obligor (or any of such Obligor’s officers) under or in connection with this Agreement or any other Facility Document, or any written information, certificate, or report delivered pursuant hereto or to any Facility Document shall prove to have been false or misleading in any material respect when made or repeated or deemed to have been made, furnished or repeated after the earlier of (i) such Obligor having actual knowledge thereof and (ii) written notice of such default from any Lender or the Credit Agent;

 

(c) Any Obligor (i) shall fail to comply with the requirements of any of Section 7.01(e) , 7.01(k) , 7.02(a) , 7.02(h) through (l) , 7.02(o) , 7.03(a) , 7.03(c) , 7.03(i) or 7.03(j) hereof or (ii) shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Facility Document (other than with respect to the making of any payment or other breach under this Article VIII or as set forth in clause (i) of this Section 8.01(c) ) on its part to be performed or observed and any such failure shall remain unremedied for ten (10) Business Days after the earlier of (x) any Obligor having actual knowledge thereof and (y) written notice of such default from the Credit Agent or any Lender to the Borrowers;

(d) An Event of Bankruptcy shall have occurred with respect to any Obligor;

(e) Any Indebtedness arising under a Bilateral Facility or any other Indebtedness (excluding Non-Recourse Debt) of ResCap or any of its Subsidiaries in excess of $25,000,000, individually or in the aggregate, (i) is not paid when due or within any applicable cure period set forth in any agreement or instrument relating to such indebtedness, (ii) is declared due and payable before its normal or agreed maturity by reason of default (however described) or (iii) is the subject of any other “event of default” or other breach or failure to perform, in either case which remains after the expiration of any applicable grace period under such agreement;

(f) The failure by any Obligor to pay one or more final judgments for the payment of money aggregating in excess of $25,000,000 rendered against such Person which are not, within 30 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 30 days after the expiration of such stay;

(g) This Agreement, any Note, any Facility Document or any Security Document shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any Obligor party thereto, or the Lien granted under the Security Documents ceases to be in full force and effect or, in each case, any Obligor or any other Person shall contest in any manner such effectiveness, validity, binding nature or enforceability;

(h) A Collateral Holder (for the benefit of the Lender Parties) does not, or ceases to, have a perfected security interest in the Collateral or any material part thereof (other than with respect to Permitted Liens) other than as a result of a release of such security interest by a Collateral Holder in accordance with the Facility Documents, and such default continues unremedied for a period of one (1) Business Day after the earlier of (i) either Borrower having actual knowledge thereof and (ii) written notice of such default from the Credit Agent, a Collateral Holder or any Lender to the Borrowers;

 

(i) A Change of Control shall occur with respect to any Obligor, without the prior written consent of each Lender, which consent shall not be unreasonably withheld;

(j) An event of default, early amortization event or other similar event occurs under the Underlying Documents, and the Credit Agent specifies such failure as an Event of Default in writing;

(k) (i) Any Person shall engage in any non-exempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Pension Plan; (ii) any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA) applicable to such Pension Plan, that has not been waived, shall exist with respect to any Pension Plan; (iii) any Lien in favor of the PBGC or a Pension Plan shall arise on the assets of any Obligor; (iv) a reportable event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Pension Plan, which reportable event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Credit Agent, likely to result in the termination of such Pension Plan for purposes of Title IV of ERISA; (v) any Pension Plan shall terminate for purposes of Title IV of ERISA in a distress termination as defined in Section 4041 of ERISA; (vi) any Obligor shall, or in the reasonable opinion of the Credit Agent is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan; (vii) the assets of any Obligor are treated as “plan assets” within the meaning of 29 C.F.R. 2510.3-101 as modified by Section 3(42) of ERISA; or (viii) any other event or condition shall occur or exist with respect to a Pension Plan or Multiemployer Plan; and in each case in clauses (i)  through (viii)  above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect or a material adverse effect on the Collateral, or any of the Lenders’ rights therein;

(l) Any Subsidiary of ResCap shall fail to perform its obligations under the ResMor Purchase Agreement or the RFOC Loan Agreement, and such failure shall continue for the applicable grace period (if any) specified therein; or the ResMor Purchase Agreement, in whole or in part, shall terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any such Subsidiary, or any such Subsidiary shall contest in any manner such effectiveness, validity, binding nature or enforceability;

(m) The Obligors shall fail to satisfy any of the Post Closing Requirements in all material respects, and the Credit Agent specifies such failure as an Event of Default in writing; or

(n) (i) an “Event of Default” or “Termination Event” shall have occurred under any Derivative Agreement (as such terms are defined in the applicable Derivative Agreement), (ii) a “Default” shall have occurred under the Master Netting Agreement (as such term is defined in the Master Netting Agreement), (iii) an “Event of Default” shall have occurred under any “Facility Document” (as such terms are defined in the MSR Loan Agreement) or (iv) an “Event of Default” shall have occurred under any Facility Document (as such terms are defined in the November Loan Agreement).

 

Section 8.02. Remedies .

(a) Optional Acceleration . Upon the occurrence of an Event of Default (other than an Event of Default described in Section 8.01(d) ), the Credit Agent may (and shall if directed by the Required Lenders), by written notice to the Borrowers, terminate the Facility, terminate the Commitments, and declare all Loans and all other Obligations to be immediately due and payable.

(b) Automatic Acceleration . Upon the occurrence of an Event of Default described in Section 8.01(d) , the Commitments shall automatically terminate and the Loans and all other Obligations shall be immediately due and payable, without demand or notice of any kind.

(c) Remedies . Upon any acceleration of the Loans pursuant to this Section 8.02 , the Lender Parties, in addition to all other rights and remedies under this Agreement or otherwise, shall have all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. Each of the Obligors agrees, upon the occurrence of an Event of Default and notice from the Credit Agent, to assemble, at their expense, all of the Collateral that is in their possession (whether by return, repossession, or otherwise) at a place designated by the Credit Agent. All costs incurred by the Lender Parties in the collection of all Obligations, and the enforcement of their rights hereunder, including attorneys’ fees and legal expenses, shall constitute Obligations and be paid out of the Collateral. Without limiting the foregoing, upon the occurrence of an Event of Default and the acceleration of the Loans pursuant to this Section 8.02 , the Credit Agent and any Lender may, to the fullest extent permitted by applicable law, without notice, advertisement, hearing or process of law of any kind, (i) enter upon any premises where any of the Collateral which is in the possession of any Obligor (whether by return, repossession, or otherwise) may be located and take possession of and remove such Collateral, (ii) sell any or all of such Collateral, free of all rights and claims of the Obligors therein and thereto, at any public or private sale, and (iii) bid for and purchase any or all of such Collateral at any such sale. Any such sale shall be conducted in a commercially reasonable manner and in accordance with applicable law. Each of the Obligors hereby expressly waives, to the fullest extent permitted by applicable law, any and all notices, advertisements, hearings or process of law in connection with the exercise by the Lender Parties of any of their rights and remedies upon the occurrence of an Event of Default. Each of the Lender Parties and the Obligors shall have the right (but not the obligation) to bid for and purchase any or all Collateral at any public or private sale. Each of the Obligors hereby agrees that in any sale of any of the Collateral, the Lender Parties are hereby authorized to comply with any limitation or restriction in connection with such sale as they may be advised by counsel is necessary in order to avoid any violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval

 

of the sale or of the purchaser by any Governmental Authority, and each of the Obligors further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner. The Lender Parties shall not be liable for any sale, private or public, conducted in accordance with this Section 8.02(c) . If an Event of Default occurs, and upon acceleration of the Loans hereunder, the Loans and all other Obligations shall be immediately due and payable, and collections on the Collateral and proceeds of sales and securitizations of Collateral will be used to pay the Obligations. At any time after an Event of Default has occurred and is continuing, the Credit Agent may (and shall at the direction of any Lender) appoint, at its own expense, one or more third parties to service all or a portion of the Collateral by giving written notice thereof to the Obligors; provided that any such appointment shall not conflict with any existing contractual servicing arrangements with respect to the Collateral. Each Obligor agrees that it will cooperate with and assist any such third-party servicer (including providing access to, and transferring, all records and allowing the new servicer to use (to the extent legally permissible) all licenses, hardware or software necessary or desirable to service the Collateral).

ARTICLE IX

ASSIGNMENT, PARTICIPATION

Section 9.01. Assignments . (a) No Obligor may assign its rights, interests, liabilities or obligations hereunder or under the other Facility Documents without the prior written consent of each Lender.

(b) Any Lender may, with the prior written consents of the Credit Agent and (so long as no Default exists and provided that such consent shall not be unreasonably withheld, delayed or conditioned) the Borrowers, at any time assign and delegate to one or more commercial banks or financial institution or other Eligible Assignees (an “ Assignee ”) all or any fraction of such Lender’s rights under this Agreement (including all or a portion of its outstanding Loans and Commitment); provided that:

(i) the amount of the Commitments (which for this purpose includes Loans outstanding thereunder) of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Credit Agent) shall not be less than $10,000,000, unless (A) the Credit Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise consent (each such consent not to be unreasonably withheld, conditioned or delayed); (B) such assignment is an assignment of the entire remaining amount of the assigning Lender’s Commitments and Loans at the time owing to it; (C) such assignment is an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender; or (D) such assignment is to one or more Eligible Assignees managed by an Affiliate of such Eligible Assignee(s) and the aggregate amount of such assignments is not less than $10,000,000;

 

(ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans, and/or the Commitments assigned; and

(iii) the assigning Lender and the Assignee shall have executed and delivered to the Borrowers and the Credit Agent an Assignment and Acceptance, together with any documents required to be delivered thereunder, together with a processing and recordation fee of $3,500 to the Credit Agent (which fee may be waived or reduced by the Credit Agent in its sole discretion) and, if such Assignee is not then a Lender, administrative details information with respect to such Assignee.

(c) Upon acceptance thereof by the Credit Agent, from and after the effective date specified in each Assignment and Acceptance, (i) the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and (ii) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, subject to Section 13.11 , be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto, but shall continue to be entitled to the benefits of any provisions of this Agreement that by their terms survive the termination of this Agreement). If the consent of the Borrowers to an assignment is required hereunder, each Borrower shall be deemed to have given its consent ten (10) days after the date notice thereof has been delivered by the assigning Lender unless such consent is expressly refused by a Borrower prior to such tenth day.

(d) The Credit Agent shall record each assignment made in accordance with this Section in the Register pursuant to Section 2.02(b) and periodically give the Borrowers notice of such assignments. The Register shall be available for inspection by the Borrowers and any Lender, as to its Commitment and outstanding Loans only, at any reasonable time and from time to time upon reasonable prior notice.

(e) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(f) Any attempted assignment and delegation not made in accordance with this Section 9.01 shall be null and void.

Section 9.02. Evidence of Assignment . Within five (5) Business Days after effectiveness of any assignment, the Borrowers shall execute and deliver to the Credit Agent (a) for delivery to the Assignee, a new Note or, if the Assignee was already a holder of a Note immediately prior to such effectiveness, a replacement Note in the appropriate principal amount based on such Assignee’s Commitments after giving effect to such assignment; and (b) if the assigning Lender still holds any Commitment, for delivery to the assigning Lender, a replacement Note in the appropriate principal amount based on such Assignee’s Commitments after giving effect to such assignment. Each such Note shall be dated the effective date of such assignment.

 

Section 9.03. Rights of Assignee, Evidence of Assignment . From and after the date on which the conditions described in Section 9.01(b) have been met, the assigning Lender shall be released from its obligations hereunder to the extent of the rights and obligations hereunder that have been assigned pursuant to the Assignment and Acceptance. Accrued interest on that part of the predecessor Note being assigned shall be paid as provided in the Assignment and Acceptance. Accrued interest and fees on that part of the predecessor Note not being assigned shall be paid to the assigning Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Note and in this Agreement.

Section 9.04. Participations . (a) Any Lender may at any time sell to one or more commercial banks or other Persons participating interests in any Loan owing to such Lender, any Note held by any Lender, the obligations to make revolving Loans of such Lender or any other interest of such Lender hereunder (any Person purchasing any such participating interest being herein called a “ Participant ”) provided that so long as no Default exists any such participation shall be subject to the consent of each Borrower (such consent not to be unreasonably withheld, delayed or conditioned). In the event of a sale by any Lender of a participating interest to a Participant, (a) such Lender shall remain the holder of its Note for all purposes of this Agreement, (b) the Obligors shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations hereunder and (c) all amounts payable by the Obligors shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender. No Participant shall have any direct voting rights hereunder. The Obligors agree that if amounts outstanding under this Agreement and the Notes are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or such Note; provided that if any Lender or any Participant shall obtain any payment or other recovery (whether voluntary, involuntary, by application of set-off or offset or otherwise) on account of principal of or interest on any Loan in excess of its pro rata share of payments (after giving effect to all participations hereunder) and other recoveries obtained by such Lender and the Participants on account of principal of and interest on the Loans then held by them, such Lender or the applicable Participant (as the case may be) shall purchase from the other party or parties such participations in the Loans held by them as shall be necessary to cause such purchasing Person to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Person, the purchase shall be rescinded and the purchase price restored to the extent of such recovery. Each Obligor also agrees that each Participant shall be entitled to the benefits of Sections 2.07(b) , 2.07(c) and 3.02 as if it were a Lender and had acquired its interest by assignment ( provided that such Participant shall have complied with the requirements of said Section as though it were a Lender that acquired its interest by assignment).

 

(b) In the event that a Lender sells participations in any Loan, Note or the obligation to make Loans or any interest of such Lender, such Lender shall maintain a register on which it enters the name of all participants in the Loan or Note held by it and the principal amount (and interest thereon) of the portion of the Loan or Note which is the subject of the participation (the “ Participant Register ”). A Loan or Note may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide). Any participation of such Loan or Note may be effected only by the registration of such participation on the Participant Register. The Participant Register shall be available for inspection by the Borrowers at any reasonable time and from time to time upon reasonable prior notice.

ARTICLE X

INDEMNIFICATION

Section 10.01. Indemnities by the Borrowers . Without limiting any other rights which any such Person may have hereunder or under applicable law, and in consideration of the execution and delivery of this Agreement and the Facility evidenced by the Facility Documents, the Borrowers hereby agree to jointly and severally indemnify the Lenders, the Credit Agent, each Collateral Holder and their respective Affiliates, successors, permitted transferees and assigns and all officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing (each an “ Indemnified Party ”), forthwith on demand, from and against any and all damages, losses, claims, liabilities, obligations penalties, causes of action, demands, judgments, suits and related costs and expenses, including reasonable attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “ Indemnified Amounts ”) awarded against or incurred by any of them arising out of or as a result of (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan; (b) the entering into and performance of any Facility Document by any of the Indemnified Parties; (c) the Facility Documents, the Loans and the extension of the Commitments, the failure of any Obligor to comply with the terms of the Facility Documents or Requirements of Law, the inaccuracy of any representation or warranty of any Obligor set forth in the Facility Documents or in a certificate, instrument or document delivered in connection therewith, and the use by any Obligor of the proceeds of any Loans; (d) any investigation, litigation or proceeding related to any acquisition or proposed acquisition by any Obligor or any Subsidiary thereof of all or any portion of the capital stock or assets of any Person, whether or not an Indemnified Party is party thereto; and (e) any transaction contemplated under the Facility Documents; excluding , however , (i) Indemnified Amounts to the extent a court of competent jurisdiction in a final non-appealable judgment determines that they resulted from gross negligence, bad faith or willful misconduct on the part of such Indemnified Party; (ii) any lost profits (other than in connection with Breakage Costs) or indirect, exemplary, punitive or consequential damages of any Indemnified Party; and (iii) any and all present or future taxes, fees, levies, imposts, deductions, duties, withholdings, assessments or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto, which shall be governed by the terms of Section 3.02 . Without limiting the foregoing, in any suit, proceeding or action brought by any Indemnified Party in connection with any Collateral for any sum owing thereunder, or to enforce any provisions of any Collateral, the Borrowers will save, indemnify and hold the applicable Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense,

 

set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by either Borrower of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from the Borrowers. The Borrowers also agree to reimburse the Indemnified Parties as and when billed by such party for all out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the enforcement or the preservation of such party’s rights under this Agreement, the Notes, any other Facility Document, any Security Document, any Underlying Document or any transaction contemplated hereby or thereby, including without limitation the fees and disbursements of its counsel. The Borrowers hereby acknowledge that, notwithstanding the fact that the Notes are secured by the Collateral, the obligation of the Borrowers under the Notes are recourse obligations of the Borrowers. Under no circumstances shall any Indemnified Party be liable to the Borrowers for any lost profits (other than in connection with Breakage Costs) or indirect, exemplary, punitive or consequential damages.

Section 10.02. General Provisions . If for any reason the indemnification provided above in Section 10.01 (and subject to the limitations on indemnification contained therein) is unavailable to an Indemnified Party or is insufficient to hold an Indemnified Party harmless on the basis of public policy, then the Borrowers shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnified Party on the one hand and the Borrowers on the other hand but also the relative fault of such Indemnified Party as well as any other relevant equitable considerations.

The provisions of this Article X shall survive the termination or assignment of this Agreement, the payment of the Obligations and the resignation or removal of any of the Indemnified Parties.

ARTICLE XI

GUARANTEE

Section 11.01. Unconditional Guarantee . To induce the Lenders to enter into this Agreement, each of the Guarantors jointly and severally, absolutely, unconditionally and irrevocably guarantees to the Lender Parties and their successors and permitted assigns (a) the prompt and complete payment and performance when due (whether at stated maturity, or otherwise by required prepayment, declaration, acceleration, demand or otherwise) of the Obligations now or hereafter owing; and (b) all renewals, rearrangements, increases, extensions for any period, substitutions, modification, amendments or supplements in whole or in part of any of the Facility Documents or obligations (in each case including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)).

 

Section 11.02. Nature of Guarantee . Each Guarantor’s obligations hereunder (a) are continuing, absolute, unconditional and irrevocable; (b) shall remain in full force and effect until all Obligations are paid in full in cash and the Commitments have terminated or expired (unless this Guarantee is reinstated pursuant to the terms of this Article XI ); and (c) shall not be affected by (i) the existence, validity, enforceability, perfection or extent of any collateral therefor, the validity, regularity or enforceability of the Facility Documents, (ii) the absence of any action to enforce any Obligor’s obligations under any of the Facility Documents or to otherwise assert any claim or enforce any right of any Lender Party under the Facility Documents or in or to the Collateral, (iii) any waiver or consent by any Obligor with respect to any provisions of this Agreement or any other Facility Document, (iv) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other extension, increase, compromise or renewal of any Obligation, (v) any reduction, limitation, impairment or termination of any Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Guarantor hereby waives any right to or claim of) any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations, (vi) any amendment to, extension, variance, alteration, rescission, waiver, increase, or other modification of, or any consent to departure from, any of the terms of this Agreement or any other Facility Document including, without limitation, any increase or reduction to the rate of interest on all or any of the Obligations, (vii) any addition, exchange, release, surrender or non-perfection of any Collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any other guaranty or any other security document, held by a Lender Party, (viii) the insolvency of any other Obligor, or (ix) any other circumstance relating to the Obligations that might otherwise constitute a legal or equitable discharge of or defense to this Guarantee. Each of the Guaranties under this Article XI is a guarantee of payment and not a guarantee of collection, and each Guarantor jointly and severally agrees that any Lender Party may resort to such Guarantor for payment of any of the Obligations owed to it whether or not such Lender Party shall have resorted to any collateral therefor or shall have proceeded against any Person principally or secondarily liable for any of the Obligations, including any Obligor, and whether or not such Lender Party has pursued any other remedy available to it. No Lender Party shall be obligated to file any claim relating to the Obligations in the event that any Obligor becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the applicable Lender Party to so file shall not affect any obligation of a Guarantor hereunder. In the event that any payment to the Lender Parties in respect of any Obligations owed to them is rescinded or must otherwise be returned for any reason whatsoever, the Guarantors shall remain jointly and severally liable hereunder with respect to such Obligations as if such payment had not been made and the Guarantee shall be reinstated, if applicable. At any time and from time to time, upon the written request of any Lender Party, and at the sole expense of the Guarantors, the Guarantors will furnish such information regarding the financial well-being of the Guarantors as may be reasonably requested by such Lender Party.

Section 11.03. Certain Agreements; Waivers of Certain Notices . Each Guarantor authorizes each Lender Party, without notice or demand and without affecting its liability hereunder, from time to time, to forbear, indulge or take other action or inaction in respect of this Guarantee or the Obligations, or to exercise or not exercise any right or remedy hereunder or otherwise with respect to the Obligations. Each Guarantor waives (a) promptness, diligence, presentment, notice of acceptance and any other notice with respect to

 

any of the Obligations and this Article XI and any requirement that any Lender Party protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against the Borrower, any Guarantor or any other Person (including any other guarantor) or any collateral securing the Obligations; (b) all rights that it may have now or in the future under any statute, or at common law, or in law or equity, or otherwise, to the extent allowed under Requirements of Law, to compel any Lender Party to marshal assets or to proceed in respect of Obligations guaranteed hereunder or under any Facility Document against any Borrower or any other Guarantor, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Guarantor; and (c) each and every right to which it may be entitled by virtue of the suretyship under Requirements of Law. It is agreed among each Guarantor and the Lender Parties that the foregoing waivers and the other waivers contained in this Agreement are of the essence of the transaction contemplated by this Agreement (including Article XI ) and the Facility Documents and that, but for the provisions of this Section 11.03 and such waivers, the Lender Parties would decline to enter into this Agreement.

Section 11.04. Waiver of Subrogation . Until two years and one day after the Obligations are repaid in full in cash and the Commitments have expired or terminated, each Guarantor hereby expressly and irrevocably waives any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set-off and any and all defenses available to a surety, guarantor or accommodation co-obligor. If any amounts are paid to the Guarantors in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Lender Parties and shall forthwith be paid to the Credit Agent for the account of the Lender Parties to reduce the amount of outstanding Obligations, whether matured or unmatured. Subject to the foregoing, upon payment of any of the Obligations, the Guarantors shall be subrogated to the rights of the Lender Parties against other Obligors with respect to such Obligations.

Section 11.05. Taxes . All payments by the Guarantors hereunder will be subject to Section 3.02 .

Section 11.06. Payments . Each Guarantor hereby jointly and severally guarantees that the Obligations will be paid to each Lender Party without set-off or counterclaim, in lawful currency of the United States of America at the offices of each Lender Party specified by each Lender Party for such payment. The obligations of the Guarantors hereunder shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency except to the extent to which such tender or recovery shall result in the effective receipt by each applicable Lender Party of the full amount of the currency or currencies owing under this Guarantee, and the Guarantors shall jointly and severally indemnify each applicable Lender Party (as an alternative or additional cause of action) for the amount (if any) by which such effective receipt shall fall short of the full amount of currency or currencies owing under this Guarantee and such obligation to indemnify shall not be affected by judgment being obtained for any other sums due hereunder.

 

Section 11.07. Severability of Article XI . Wherever possible, each provision of this Article XI will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Article XI is prohibited by or invalid under such law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Article XI . Consistent with the foregoing, and notwithstanding any other provision of this Article XI to the contrary, in the event that any action or proceeding is brought in whatever form and in whatever forum seeking to invalidate any Guarantor’s obligations under this Article XI under any fraudulent conveyance, fraudulent transfer theory, or similar avoidance theory, whether under state or federal law, such Guarantor (the “ Affected Guarantor ”), automatically and without any further action being required of such Affected Guarantor or any Lender Party, shall be liable under this Article XI only for an amount equal to the maximum amount of liability that could have been incurred under applicable law by such Affected Guarantor under any guaranty of the Obligations (or any portion thereof) at the time of the execution and delivery of this Article XI (or, if such date is determined not to be the appropriate date for determining the enforceability of such Affected Guarantor’s obligations hereunder for fraudulent conveyance or transfer (or similar avoidance) purposes, on the date determined to be so appropriate) without r