PLEDGE AND SECURITY AGREEMENT AND IRREVOCABLE PROXY

Exhibit 10.11

Execution Copy

PLEDGE AND SECURITY AGREEMENT AND IRREVOCABLE PROXY

dated as of

November 20, 2008

among

RFC ASSET HOLDINGS II, LLC,

PASSIVE ASSET TRANSACTIONS, LLC

and certain of their Affiliates from time to time parties hereto,

as Grantors

and

GMAC LLC, as Lender Agent

TABLE OF CONTENTS

 

 

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PLEDGE AND SECURITY AGREEMENT AND IRREVOCABLE PROXY

THIS PLEDGE AND SECURITY AGREEMENT AND IRREVOCABLE PROXY (this “Agreement”) dated as of November 20, 2008, is among RFC Asset Holdings II, LLC, a Delaware limited liability company (“ RAHI ”), and Passive Asset Transactions, LLC, a Delaware limited liability company (“ PATI ”; and together with RAHI, each a “ Borrower ” and collectively, the “ Borrowers ”); Residential Capital, LLC, a Delaware limited liability company (“ ResCap ”), Residential Funding Company, LLC, a Delaware limited liability company (“ RFC ”), and GMAC Mortgage, LLC, a Delaware limited liability company (“ GMAC Mortgage ”; and together with ResCap and RFC, each herein a “ Guarantor ” and collectively, the “ Guarantors ”); and each other Person that agrees to become a “Grantor” by executing and delivering a Joinder Agreement pursuant to Section 12 (each Borrower, each Guarantor and each such other Person, together with any successors and assigns, is herein a “ Grantor ” and collectively, the “ Grantors ”); and GMAC LLC, a Delaware limited liability company, as Lender Agent for the Lender Parties.

W I T N E S S E T H:

WHEREAS, pursuant to the Loan Agreement, dated as of the date hereof, among the Borrowers, the Guarantors, and GMAC LLC, as Lender Agent and initial Lender, and certain other financial institutions and Persons from time to time party thereto as Lenders (as amended, supplemented, restated or otherwise modified from time to time, the “ Loan Agreement ”), the Lenders thereunder have agreed to make loans to the Borrowers;

WHEREAS, the Guarantors have pursuant to Article XI of the Loan Agreement guaranteed all “Obligations” as defined in the Loan Agreement (each such guaranty so made by a Guarantor, herein its “ Guaranty ”);

WHEREAS, as a requirement under the Loan Agreement and the making of the Loans under the Loan Agreement, the Grantors are required to execute and deliver this Agreement;

WHEREAS, each Grantor has duly authorized the execution, delivery and performance of this Agreement; and

WHEREAS, it is in the best interests of each Grantor to execute this Agreement inasmuch as each Grantor will derive substantial direct and indirect benefits from the Loans made from time to time to the Borrowers;

NOW, THEREFORE, for and in consideration of any loan, advance or other financial accommodation heretofore or hereafter made to the Borrowers and/or the Grantors under or in connection with the Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions . When used herein and unless the context otherwise requires, (a) capitalized terms which are not otherwise defined herein have the meanings assigned to such terms in Schedule 1.01 to the Loan Agreement; (b) unless otherwise defined herein, the terms Account, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Account, Document, Electronic Chattel Paper, Equipment, Financial Assets, Fixture, Goods, Instrument, Inventory, Investment Property, Letter of Credit, Letter-of-Credit Rights, Money, Payment

Intangibles, Proceeds, Security, Security Entitlement, Securities Account, Supporting Obligations and Uncertificated Security have the respective meanings assigned thereto in Article 8 or Article 9 of the UCC (as defined below); (c) the provisions of clauses (c) through (g) of Section 1.01 of the Loan Agreement are hereby incorporated herein in their entirety; (d) all references herein to Articles, Sections, Exhibits and Schedules herein shall refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement as the same may be amended, supplemented, restated or otherwise modified from time to time; and (d) the following terms have the following meanings (such definitions to be applicable to both the singular and plural forms of such terms):

Bailment Collateral means any Collateral that has been physically delivered to the Lender Agent pursuant to the Facility Documents, and for which the physical possession of such Collateral by the Lender Agent (or its agent, designee or bailee) acts to perfect or grant control over such Collateral to the Lender Agent for purposes of the UCC.

Collateral means, with respect to any Grantor, all property and rights of such Grantor in which a security interest is granted pursuant to the provisions of this Agreement, including without limitation Sections 2 and 12 .

Contribution Agreement means, as the case may be, (a) that certain Contribution Agreement dated as of November 20, 2008, among ResCap, GMAC Residential Holding Company, LLC, GMAC Mortgage, and PATI; or (b) that certain Contribution Agreement dated as of November 20, 2008, among RAHI, PATI, RAHI A, LLC and PATI A, LLC, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time; and Contribution Agreements means both of them.

Distributions means all dividends of stock, membership interests or other ownership interests, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, mergers, consolidations, and all other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Pledged Share, Pledged Interest or other shares of capital stock, member interest or other ownership interests or security entitlements in each case constituting Collateral, but shall not include Dividends.

Dividends means cash dividends and cash distributions with respect to any Pledged Share or any Pledged Interest made in the ordinary course of business and not as a liquidating dividend.

First Savings Warehouse Agreement has the meaning ascribed to it in the Loan Agreement.

First Savings Warehouse Facility Documents means the First Savings Warehouse Agreement, the First Savings Warehouse Note and all other agreements, contracts, documents and instruments evidencing or relating to the First Savings Warehouse Note or the First Savings Warehouse Agreement.

First Savings Warehouse Note means that Promissory Note, dated as of April 1, 2005 and issued by First Savings Mortgage Corporation in favor of RFC, as the same may be amended, supplemented, restated or otherwise modified from time to time, and including any notes given in substitution or replacement therefor.

 

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Flume No. 8 Administration Agreement means the Administration Agreement among the Flume No. 8 SPE, ResCap, GMAC-RFC Limited and the Flume No. 8 Security Trustee dated as of November 14, 2008, as the same may be amended, supplemented, restated or otherwise modified from time to time.

Flume No. 8 Bank Agreement means the Bank Agreement among the Flume No. 8 SPE, GMAC-RFC Limited, Barclays Bank PLC and the Flume No. 8 Security Trustee dated as of November 14, 2008, as the same may be amended, supplemented, restated or otherwise modified from time to time, and together with any successor agreement and any other agreement governing deposit accounts held in the name of the Flume No. 8 SPE.

Flume No. 8 Deed of Assignment means the Deed of Assignment, dated as of November 14, 2008, between ResCap and the Lender Agent, as the same may be amended, supplemented, restated or otherwise modified from time to time.

Flume No. 8 Facility Documents means the Flume No. 8 Notes, the Flume No. 8 Security Documents and all other agreements, contracts, documents and instruments evidencing or relating to the Flume No. 8 Notes or the Flume No. 8 Security Documents.

Flume No. 8 GIC Agreement means the Guaranteed Investment Contract among the Flume No. 8 SPE, GMAC-RFC Limited, Barclays Bank PLC and the Flume No. 8 Security Trustee dated as of November 14, 2008, as the same may be amended, supplemented, restated or otherwise modified from time to time, and together with any successor agreement and any other agreement governing investments of the Flume No. 8 SPE which is not a Flume No. 8 Bank Agreement.

Flume No. 8 Initial Note means that certain Secured Zero Coupon Discount Note of Flume (No. 8) Limited dated as of November 14, 2008, constituted by and issued pursuant to the Flume No. 8 Note Issuance Facility Deed.

Flume No. 8 Loan Sale and Purchase Agreement means the loan sale and purchase agreement dated as of November 14, 2008 between the Flume No. 8 SPE, the Flume No. 8 Sellers and the Flume No. 8 Security Trustee, as the same may be amended, supplemented, restated or otherwise modified from time to time.

Flume No. 8 Note means the Flume No. 8 Initial Note or any other note issued from time to time under and in accordance with the Flume No. 8 Note Issuance Facility Deed, as the same may be amended, supplemented, restated or otherwise modified from time to time, and including any notes given in substitution or replacement therefor; and Flume No. 8 Notes means, collectively, all of them.

Flume No. 8 Note Issuance Facility Deed means the note issuance facility deed dated as of November 14, 2008 between Flume No. 8 SPE, ResCap and the Flume No. 8 Security Trustee, as the same may be amended, supplemented, restated or otherwise modified from time to time.

Flume No. 8 Related Security means all collateral securing obligations of the Flume No. 8 SPE under the Flume No. 8 Notes and Flume No. 8 Facility Documents.

 

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Flume No. 8 Security Documents means the Flume No. 8 Notes, the Flume No. 8 Loan Sale and Purchase Agreement, the Flume No. 8 Note Issuance Facility Deed, the Flume No. 8 Administration Agreement, the Flume No. 8 Bank Agreement, the Flume No. 8 GIC Agreement, the Flume No. 8 Deed of Assignment, and each and every other document, agreement and deed entered into by ResCap, its Subsidiary and/or the Flume No. 8 Security Trustee in connection with the purchase of certain residential mortgage loans, the issuance of the Flume No. 8 Notes and creation of security in respect of the Flume No. 8 Notes in favor of the Flume No. 8 Security Trustee, in each case, by the Flume No. 8 SPE, as all of the foregoing may be amended, supplemented, restated or otherwise modified from time to time, and in each case if and to the extent any of the foregoing evidence or relate to the Flume No. 8 Notes.

Flume No. 8 Security Trustee means Deutsche Trustee Company Limited (in its capacity as security trustee in respect of the Flume No. 8 Notes).

Flume No. 8 Sellers means GMAC-RFC Limited.

Flume No. 8 SPE means Flume (No. 8) Limited.

General Intangibles means, with respect to any Grantor, all of such Grantor’s “general intangibles” as defined in the UCC and, in any event, includes (without limitation) all of such Grantor’s licenses, franchises, tax refund claims, guarantee claims, security interests and rights to indemnification.

Grantor is defined in the preamble.

Lender Parties shall have the meaning given such term in the Loan Agreement.

Non-Tangible Collateral means, with respect to any Grantor, collectively, such portion of such Grantor’s Collateral that constitutes Accounts, Chattel Paper, Deposit Accounts, Documents, General Intangibles, Payment Intangibles, Investment Property, Letter-of-Credit Rights, Letters of Credit and Supporting Obligations.

Obligations means the Obligations (as defined in the Loan Agreement).

Pledged Interest Issuer means each Person identified in Exhibit D of Schedule IV hereto as a Pledged Interest Issuer.

Pledged Interests means (a) all member interests, general or limited partnership interests or other ownership interests of any Pledged Interest Issuer described in Exhibit D of Schedule IV hereto; and (b) all assets, rights or property related to the foregoing (including, without limitation, all registrations, certificates, articles or agreements governing or representing any such interests; all options and other rights, contractual or otherwise, related to such interests; and all Distributions, Dividends and other Property now or hereafter received, receivable or otherwise distributed in respect of or in exchange for any or all of such interests, in each case if and to the extent any of the foregoing evidence or relate to the items described in clause (a)  hereof).

Pledged Note Issuer means each Person identified in Exhibit C of Schedule IV hereto as the issuer of the Pledged Note identified opposite the name of such Person.

 

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Pledged Note Lien means any and all liens or security interests securing the obligation of a Pledged Note Issuer evidenced by the applicable Pledged Note, and all collateral subject to such liens and security interests.

Pledged Notes means (a) all of the promissory notes described in Exhibit C of Schedule IV hereto, as such promissory notes are amended, restated, modified or supplemented from time to time, and any promissory note taken in extension or renewal thereof or substitution therefor; and (b) all assets, rights or property related thereto (including, without limitation, all instruments or agreements governing or representing all or any of such notes; all rights, contractual or otherwise, at any time existing with respect to such notes; and all Distributions, Dividends and other Property now or hereafter received, receivable or otherwise distributed in respect of or in exchange for any or all of such notes, in each case if and to the extent any of the foregoing evidence or relate to the items described in clause (a)  hereof).

Pledged Property means all Pledged Interests, all Pledged Notes, all Pledged Shares, all other securities, all assignments of any amounts due or to become due, all other instruments which are now being delivered by any Grantor to the Lender Agent or may from time to time hereafter be delivered by any Grantor to the Lender Agent for the purpose of pledge under this Agreement or any other Facility Document.

Pledged Share Issuer means each Person identified in Exhibit B of Schedule IV hereto as the issuer of the Pledged Shares identified opposite the name of such Person.

Pledged Shares means (a) all shares of capital stock of any Pledged Share Issuer identified in Exhibit B of Schedule IV hereto; and (b) all assets, rights or property related thereto (including, without limitation, all registrations, certificates, articles, or agreements governing or representing any such interest; all options and other rights, contractual or otherwise, at any time existing with respect to all or any of such shares; and all Distributions, Dividends and other Property now or hereafter received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares, in each case if and to the extent any of the foregoing evidence or relate to the items described in clause (a)  hereof).

Property means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.

Provident Warehouse Agreement has the meaning ascribed to it in the Loan Agreement.

Provident Warehouse Facility Documents means the Provident Warehouse Agreement, the Provident Warehouse Note and all other agreements, contracts, documents and instruments evidencing or relating to the Provident Warehouse Agreement or the Provident Warehouse Note.

Provident Warehouse Note means that Servicing Facility Promissory Note, dated as of June 14, 2007, and issued by Provident Funding Associates, L.P. in favor of RFC, as the same may be amended, supplemented, restated or otherwise modified from time to time, and including any notes given in substitution or replacement therefor.

 

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UCC means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, as used in Section 10(a) hereof, “ UCC ” shall mean the Uniform Commercial Code as in effect from time to time in any applicable jurisdiction.

Underlying Documents has the meaning ascribed to it in the Loan Agreement.

Warehouse Agreement means, as the context may require, the First Savings Warehouse Agreement or the Provident Warehouse Agreement; and Warehouse Agreements means both of them.

Warehouse Facility Document means, as the context may require, a First Savings Warehouse Facility Document or a Provident Warehouse Facility Document; and Warehouse Facility Documents means both of them.

Warehouse Loans mean loans made by RFC pursuant to a Warehouse Agreement to the borrower under such agreement.

2. Grant of Security Interest by Grantors . As security for the prompt payment in full in cash and performance of all Obligations, each of the Grantors hereby pledges to the Lender Agent for the benefit of the Lender Parties, and hereby grants a continuing security interest to the Lender Agent for the benefit of the Lender Parties in, all of each such Grantor’s right, title and interest, in, to, and under, whether now or hereafter existing, owned or acquired and wherever located and howsoever created, arising or evidenced, all of the following:

(a) all Pledged Shares of each Pledged Share Issuer identified in Exhibit B of Schedule IV hereto and all assets, rights or property related thereto;

(b) (i) all Flume No. 8 Notes and all other Pledged Notes (including, without limitation, the Flume No. 8 Initial Note, the First Savings Warehouse Note and the Provident Warehouse Note), and (ii) all assets, rights or property related thereto (including, without limitation, the Flume No. 8 Facility Documents, the Warehouse Loans, the Warehouse Facility Documents and all Pledged Note Liens, if and to the extent the foregoing evidence or relate to the Flume No. 8 Notes or such other Pledged Notes);

(c) (i) all Pledged Interests (including, without limitation, the equity interests owned by RAHI in RAHI A, LLC and by PATI in PATI A, LLC), and (ii) all assets, rights or property related thereto;

(d) (i) all Dividends, Distributions, interest, and (ii) other payments and rights, in each case if and to the extent evidencing or related to the Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents;

(e) all Deposit Accounts, including, without limitation, all Deposit Accounts identified on Exhibit A of Schedule IV , and all Property deposited or carried therein or credited thereto, in each case if and to the extent related to any Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents,

 

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(f) all Securities Accounts including, without limitation, all Securities Accounts identified on Exhibit A of Schedule IV , and all Property, including all Investment Property and Financial Assets, deposited or carried therein or credited thereto, and all permitted investments acquired with funds on deposit in or carried in or credited to such Securities Accounts, in each case if and to the extent related to any Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents;

(g) to the extent not included in the foregoing, the Contribution Agreements and all other agreements, contracts, documents and instruments if and to the extent evidencing or related to any Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents;

(h) (i) all books, records, writings, data bases, information and other property relating to or evidencing any Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents, and (ii) all insurance policies, claims and/or insurance proceeds arising out of the loss, nonconformity or any interference with the use of, or any defect or infringement of rights in, or damage to, any of the foregoing, in each case if and to the extent evidencing or related to any Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents;

(i) to the extent not included in the foregoing, all Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, General Intangibles (including Payment Intangibles), Goods, Instruments, Investment Property, Letter-of-Credit Rights, Letters of Credit, Supporting Obligations, Money and all other personal assets and property of any kind or description, in each case if and to the extent related to any Pledged Shares, Pledged Notes and Pledged Note Liens, Pledged Interests, Flume No. 8 Facility Documents, Warehouse Loans or Warehouse Facility Documents; and

(j) all Proceeds, products, offspring, rents, issues, profits and returns of and from, and all distributions on any of the foregoing.

3. Representations and Warranties .

(a) Each Grantor represents and warrants that:

(i) (A) except for the UCC financing statements amended by those UCC amendments identified on Schedule X hereto, no financing statement (other than the UCC financing statements filed in connection with the Contribution Agreements or any other UCC financing statements which may have been filed on behalf of the Lender Agent or in connection with Liens expressly permitted by the Loan Agreement (“ Permitted Liens ”)) covering any of the Collateral will be on file in any public office, and (B) upon the filing of the UCC amendments identified on Schedule X hereto, no financing statement (other than the UCC financing statements filed in connection with the Contribution Agreements or any other UCC financing statements which may have been filed on behalf of the Lender Agent or in connection with Permitted Liens) covering any of the Collateral will be on file in any public office;

 

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(ii) such Grantor is and will be the lawful owner of all Collateral in which it has rights, free of all Liens and claims whatsoever, other than the security interest hereunder and Permitted Liens, with full power and authority to execute and deliver this Agreement and perform such Grantor’s obligations hereunder, and to subject the Collateral to the security interest hereunder and (ii) none of the Collateral of such Grantor that constitutes Collateral is subject to any Liens other than Permitted Liens;

(iii) all information with respect to the Collateral and Account Debtors set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Grantor to the Lender Agent or any Lender Party is and will be true and correct in all material respects as of the date specified therein (or, if no date is so specified, as of the date furnished);

(iv) such Grantor’s true legal name as registered in the jurisdiction in which such Grantor is organized or incorporated, jurisdiction of organization or incorporation, federal employer identification number, organizational identification number, if any, as designated by the state of its organization, formation or incorporation, chief executive office and principal place of business are as set forth on Schedule I hereto (and such Grantor has not maintained its chief executive office and principal place of business at any other location at any time after January 1, 2003 except as otherwise disclosed in writing to the Lender Agent);

(v) each other location where such Grantor maintains a place of business is set forth on Schedule II hereto or as otherwise disclosed in writing to the Lender Agent;

(vi) except as disclosed on Schedule III hereto, such Grantor is not now known and during the five years preceding the date hereof has not previously been known by any trade name;

(vii) except as disclosed on Schedule III hereto, during the five years preceding the date hereof such Grantor has not been known by any legal name different from the one set forth on the signature page of this Agreement nor has such Grantor been the subject of any merger or other corporate reorganization;

(viii) Schedule V hereto lists all Bailment Collateral that the Grantors are required to deliver to the Lender Agent as of the Closing Date or as of such later date on which an update or supplement to such Schedule is hereafter delivered in accordance with the terms of this Agreement;

(ix) Schedule IX hereto contains a complete listing of all of such Grantor’s Commercial Tort Claims in excess of $10,000,000 in value;

(x) such Grantor is a corporation, limited partnership or limited liability company as specified in Schedule I hereto and is duly organized, validly existing and in good standing under the laws of the state of its incorporation, formation or organization;

 

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(xi) the execution and delivery of this Agreement, the grant of the security interest, proxy and other rights granted herein and the performance by such Grantor of its obligations hereunder are within such Grantor’s corporate, partnership or limited liability company powers, have been duly authorized by all necessary corporate, partnership or limited liability company action, have received all necessary governmental approvals (if any shall be required), and do not and will not contravene or conflict with any provision of law or of the charter or by-laws or other organizational documents of such Grantor or any judgment, order or decree, which is binding upon such Grantor and will not cause a breach, default or event of default under of any agreement, indenture, instrument or other document to which such Grantor is a party;

(xii) this Agreement is a legal, valid and binding obligation of such Grantor, enforceable in accordance with its terms, except that the enforceability of this Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law);

(xiii) such Grantor has not performed any act which might prevent the Lender Agent from enforcing the terms of this Agreement or which could limit the Lender Agent in any such enforcement;

(xiv) no Collateral is in the possession of any Person (other than such Grantor or a custodian, securities intermediary or account bank appointed by such Grantor) asserting any claim thereto or security interest therein (other than Permitted Liens), except that the Lender Agent or its designee or agents may have possession of Collateral as contemplated pursuant to the Facility Documents;

(xv) on or prior to the date hereof, (A) the Flume No. 8 Initial Note has been contributed by ResCap to GMAC Residential Holding Company, LLC, from GMAC Residential Holding Company, LLC to GMAC Mortgage, and from GMAC Mortgage to PATI; (B) the GSAP Class A-1 Preference Shares have been contributed by RAHI to RAHI A, LLC; and (C) the GSAP Class A-2 Preference Shares have been contributed by PATI to PATI A, LLC;

(xvi) this Agreement creates a valid security interest in the Collateral, securing the payment of the Obligations, and all filings and other actions necessary to perfect and protect such security interest under the UCC have been duly taken, and such security interest shall be a first priority security interest as to all Collateral (except for Permitted Liens); provided that to the extent that the Loan Agreement does not require a Deposit Account constituting Collateral to be perfected under the UCC at the time of the making of the representation in this clause (xvi) , the representation in this clause (xvi)  shall not apply to such Deposit Account;

 

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(xvii) in the case of any Pledged Shares constituting Collateral, all of such Pledged Shares when issued will be duly authorized and validly issued, fully paid, and non-assessable, and constitute all of the issued and outstanding shares of capital stock of each Pledged Share Issuer owned by the Grantor set forth across from the name of such Pledged Share Issuer on Exhibit B of Schedule IV hereto, except as otherwise set forth thereon;

(xviii) in the case of each Pledged Note and the Pledged Note Liens, all of such Pledged Notes and Pledged Note Liens, if any, when issued will be duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and are not in default; and each Pledged Note is issued by the Pledged Note Issuer so identified in Exhibit C to Schedule IV and is owned by the Pledged Note Holder so identified in Exhibit C to Schedule IV ;

(xix) in the case of any Pledged Interests constituting Collateral, such Pledged Interests constitute one hundred percent (100%) of the Grantor’s interest in the Pledged Interest Issuer and the percentage of the total membership, partnership or other equity interests in the Pledged Interest Issuer indicated on Exhibit D of Schedule IV hereto, except as otherwise set forth thereon. The Pledged Interests indicated on Exhibit D of Schedule IV hereto are duly registered in the permanent ownership records of the respective Pledged Interests Issuer, and such registration is maintained in the principal office of such issuer. Such registration continues valid and genuine and has not been altered. All Pledged Interests have been duly authorized and validly issued, are fully paid and non-assessable, and were not issued in violation of the preemptive rights, if any, of any Person or of any agreement by which any Grantor is bound. All documentary, stamp or other taxes or fees owing in connection with the registration, issuance, transfer or pledge of Collateral have been paid. No restrictions or conditions exist with respect to the registration, transfer, voting or pledge of any Pledged Interests (other than usual or customary securities laws or ERISA restrictions). All requisite formalities for the granting of a security interest in the Pledged Interests required pursuant to the organizational documents of the Grantors or the Pledged Interest Issuer have been complied with on or prior to the execution and delivery of this Agreement. Each Grantor represents that, as of the date hereof, none of the Pledged Interests is dealt with or traded on any securities exchange or in any securities market; and

(xx) in the case of any Deposit Account identified in Exhibit A of Schedule IV hereto, the only deposits that at any time will be made to such account will consist of proceeds of the Pledged Shares identified on Exhibit B of Schedule IV hereto or Pledged Notes identified on Exhibit C of Schedule IV hereto or Pledged Interests identified on Exhibit D of Schedule IV hereto or of other Collateral acceptable to the Lender Agent;

4. Grantor Remains Liable; Nature of Security Interest; Subrogation, etc .

(a) Anything herein to the contrary notwithstanding, (i) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Agreement had not been executed, (ii) the exercise by the Lender Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral, and (iii) neither the Lender Agent nor any other

 

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Lender Party shall have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Agreement, nor shall the Lender Agent nor any Lender Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

(b) This Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest to the Lender Agent and shall remain in full force and effect until all Obligations have been paid in full in cash and all Commitments have terminated. All rights of the Lender Parties and the security interests granted to the Lender Agent (for its benefit and the benefit of each other Lender Party) hereunder, and all obligations of the Grantors hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of (i) any lack of validity, legality or enforceability of any Facility Document, (ii) the failure of any Lender Party (A) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person under the provisions of any Facility Document or otherwise, or (B) to exercise any right or remedy against any other guarantor of, or collateral securing, any Obligations, (iii) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Obligations, or any other extension, compromise or renewal of any Obligations, (iv) any reduction, limitation, impairment or termination of any Obligations (except until all Obligations have been paid in full in cash and all Commitments have terminated) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, 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 or otherwise, (v) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Facility Document, (vi) any addition, exchange or release of any Collateral of the Obligations, or any surrender or non-perfection of any Collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Lender Party securing any of the Obligations, or (vii) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any other Grantor, any surety or any guarantor.

(c) Until one year and one day after all Obligations have been paid in full in cash and all Commitments have terminated, each Grantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against any Borrower, any other Grantor or any other Grantor that arise from the existence, payment, performance or enforcement of such Grantor’s obligations under this Agreement or any other Facility Document, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy of any Lender Party against any Borrower, any other Grantor or any other Grantor or any Collateral which any Lender Party now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from any Borrower, any Grantor or any other Grantor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Grantor in violation of the preceding sentence and the Obligations shall not have been indefeasibly paid in full in cash or all Commitments have not been terminated, then such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Lender Agent (on behalf of the Lender Parties), and shall forthwith be paid to the Lender Agent to be credited and applied upon the Obligations, whether matured or

 

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unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Loan Agreement and that the waiver set forth in this Section 4(c) is knowingly made in contemplation of such benefits.

(d) Except as otherwise provided in the Loan Agreement, if any Lender Party may, under applicable Requirements of Law, proceed to realize its benefits under this Agreement or the other Facility Documents giving any Lender Party a lien upon any Collateral, either by judicial foreclosure or by non-judicial sale or enforcement, such Lender Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Agreement. If, in the exercise of any of its rights and remedies, any Lender Party shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Grantor or any other Grantor or any other Person, whether because of any applicable Requirements of Law pertaining to “election of remedies” or the like, each Grantor hereby consents to such action by such Lender Party and waives any claim based upon such action, even if such action by such Lender Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Lender Party.

5. Collections, etc . Until such time during the existence of an Event of Default as the Lender Agent shall notify such Grantor of the revocation of such power and authority, each Grantor (a) will, at its own expense, endeavor to collect, as and when due, all amounts due under any of the Non-Tangible Collateral, including the taking of such action with respect to such collection as the Lender Agent may reasonably request or, in the absence of such request, as such Grantor may deem advisable; and (b) may grant, in the ordinary course of business, to any party obligated on any of the Non-Tangible Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral. The Lender Agent, however, may, at any time that an Event of Default has occurred and is continuing, whether before or after any revocation of such power and authority or the maturity of any of the Obligations, notify any party obligated on any of the Non-Tangible Collateral to make payment or otherwise render performance to or for the benefit of the Lender Agent and enforce, by suit or otherwise the obligations of any such party obligated on any Non-Tangible Collateral. In connection therewith, the Lender Agent may surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. Upon request of the Lender Agent following the occurrence and during the continuation of an Event of Default, each Grantor will, at its own expense, notify any party obligated on any of the Non-Tangible Collateral to make payment to the Lender Agent of any amounts due or to become due thereunder.

6. Release . Collateral shall from time to time be released from the security interest created by this Agreement pursuant to and in accordance with the provisions of the Loan Agreement. Upon any such release, the Lender Agent will, at the Grantors’ joint and several expense, deliver to the relevant Grantor, without any representations, warranties or recourse of any kind whatsoever, such released Collateral held by the Lender Agent hereunder, and execute and deliver to the Grantor such documents as such Grantor shall reasonably request to evidence such release.

 

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7. Agreements of the Grantors . (a) Each Grantor:

(i) will execute and/or deliver such financing statements (or any equivalent filings in the United Kingdom or any other jurisdiction) and other documents (and pay the cost of filing or recording the same in all public offices reasonably determined to be appropriate by the Lender Agent) and do such other acts and things (including, without limitation, delivery to the Lender Agent of any Instruments and Certificated Securities which constitute Collateral), all as Lender Agent may from time to time reasonably request, to establish and maintain a valid perfected security interest in the Collateral (free of all other liens, claims and rights of third parties whatsoever, other than Permitted Liens) to secure the payment of the Obligations (and each Grantor authorizes the Lender Agent to file, without limitation, any financing statement (or any equivalent filings in the United Kingdom or any other jurisdiction) that (i) indicates the Collateral (x) as being of an equal or lesser scope or with greater detail, or (y) in any manner that the Lender Agent in good faith deems to be an appropriate or adequate description of the Collateral for purposes of perfection under the UCC or for purposes of notice, and (ii) contains any other information required by Section 5 of Article 9 of the UCC of the jurisdiction wherein such financing statement is filed regarding the sufficiency or filing office acceptance of any financing statement (or any equivalent filings in the United Kingdom), including (x) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (y) in the case of a financing statement (or any equivalent filings in the United Kingdom or any other jurisdiction) filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates;

(ii) will keep all its records regarding Collateral at, and will not maintain any place of business at any location other than, its address(es) shown on Schedules I and II hereto or at such other addresses of which such Grantor shall have given the Lender Agent not less than 30 days’ prior written notice;

(iii) will not change its state of organization or incorporation and will not change its name, identity or corporate structure or its organizational identification number for the state of its incorporation, formation or organization, in each case such that any financing statement filed to perfect Lender Agent’s interests under this Agreement would become seriously misleading, unless such Grantor shall have given the Lender Agent not less than 30 days’ prior notice of such change ( provided that this Section 7(a)(iii) shall not be deemed authorize any change or transaction prohibited under the Loan Agreement) and shall have taken or will timely take all action necessary to maintain continued perfection and priority of the security interest created hereunder following such change;

(iv) to the extent practicable, will keep its records concerning the Collateral in such a manner as will enable the Lender Agent or its designees to determine at any time the status of the Collateral;

(v) to the extent practicable, will furnish the Lender Agent such information as is available to such Grantor concerning such Grantor, the Collateral and the Account Debtors as the Lender Agent may from time to time reasonably request;

 

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(vi) will permit the Lender Agent and its designees, from time to time, on reasonable notice and at reasonable times and intervals during normal business hours (or at any time without notice if a Default has occurred and is continuing) to inspect, audit and make copies of and extracts from all records and all other papers in the possession of such Grantor pertaining to the Collateral and the Account Debtors, and will, upon request of the Lender Agent during the existence of a Default and to the extent practicable, deliver to the Lender Agent all of such records and papers;

(vii) will not sell, lease or assign any Collateral except as permitted by the Facility Documents or create or permit to exist any Lien on any Collateral other than Permitted Liens;

(viii) agrees to provide or furnish to the Lender Agent at the Lender Agent’s request, copies of such Grantor’s insurance policies and certificates constituting any Collateral, and further agrees that if an Event of Default shall have occurred and be continuing, the Lender Agent shall have the right (and the Grantor hereby grants such right the Lender Agent) to direct such Grantor or such Grantor’s insurance companies to apply all proceeds of insurance constituting Collateral against the payment of the Obligations, whether or not due, in such order of application as the Lender Agent may determine;

(ix) will keep all of the Collateral granted by such Grantor, Deposit Accounts and Investment Property in the United States or at such other locations outside of the United States as may be specified in writing to the Lender Agent or consented to by the Lender Agent;

(x) will promptly notify the Lender Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim constituting Collateral which is claiming damages in excess of $10,000,000 (or any lesser amount specified in writing by the Lender Agent, if a Default has occurred and is continuing) after the date hereof against any third party, and concurrently therewith deliver to the Lender Agent, in form and substance satisfactory to the Lender Agent, a supplement to Schedule IX sufficiently identifying such Commercial Tort Claim for purposes of Section 9-108 of the UCC;

(xi) will promptly notify the Lender Agent in writing upon becoming the beneficiary under any letter of credit constituting Collateral in excess of $10,000,000 (or any lesser amount specified in writing by the Lender Agent, if a Default has occurred and is continuing) and, at the request of the Lender Agent, pursuant to an agreement in form and substance satisfactory to the Lender Agent, either (A) arrange for the issuer and any confirmer or other nominated person of such letter of credit to consent to an assignment to the Lender Agent of such letter of credit or (B) arrange for the Lender Agent to become the transferee beneficiary of such letter of credit;

(xii) will promptly notify the Lender Agent in writing if such Grantor holds or acquires an interest in any Electronic Chattel Paper constituting Collateral and, at the request of the Lender Agent, take such action as the Lender Agent may reasonably request to vest control, under Section 9-105 of the UCC, of such Electronic Chattel Paper constituting Collateral in the Lender Agent;

 

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(xiii) acknowledges and agrees that it is not authorized to file any financing statement in favor of the Lender Agent without the prior written consent of the Lender Agent and that it will not do so without the prior written consent of the Lender Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC;

(xiv) promptly deliver to the Lender Agent an appropriately updated Schedule V within five business days (or such later time as consented to by the Lender Agent) after additional Bailment Collateral has been pledged as collateral pursuant to the terms of this Agreement;

(xv) will facilitate the realization of the Collateral and the exercise of all powers, authorities and discretions vested by this Agreement in the Lender Agent; and

(xvi) shall in particular promptly execute all transfers, conveyances, assignments, assurances which the Lender Agent may reasonably request in order to preserve or protect its interest in the Collateral.

Any expenses incurred in protecting, preserving or maintaining any Collateral shall be borne jointly and severally by the Grantors. Notwithstanding the foregoing, the Lender Agent shall have no obligation or liability regarding the Collateral or any proceeds thereof by reason of, or arising out of, this Agreement.

(b) ResCap promptly, but in no event later than three business days after the earlier of the issuance of a new Flume No. 8 Note or the receipt of a written request to do so by the Lender Agent, unless required to do earlier pursuant to the terms of the Facility Documents or the Flume No. 8 Facility Documents, will or will cause each such Flume No. 8 Note to be delivered to the Lender Agent in accordance with Section 8(a) .

8. Agreement as to Investment Property; Voting .

(a) All certificates or Instruments, if any, evidencing or constituting Collateral, including any Pledged Property, shall be delivered to and held by or on behalf of (and, in the case of the Pledged Notes, endorsed to the order of) the Lender Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary endorsements or instruments of transfer or assignment, duly executed in blank.

(b) To the extent any of the Collateral constitutes a “certificated security” (as defined in Section 8-102(a)(4) of the UCC), each Grantor shall take such other actions as necessary to grant “control” (as defined in Section 8-106 of the UCC) to the Lender Agent over such Collateral.

(c) To the extent any of its Collateral constitutes an “uncertificated security” (as defined in Section 8-102(a)(18) of the UCC) with a Carrying Value of $10,000,000 or more, each Grantor shall take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all actions necessary to grant “control” (as defined in Section 8-106 of the UCC) to the Lender Agent over such Collateral including, without limitation, causing delivery of such Collateral or causing the issuer of such Collateral, as appropriate, to agree to comply with the instructions originated by the Lender Agent without further consent by the registered owner thereof;

 

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(d) To the extent any of its Collateral constitutes a “security entitlement” or a “securities account” (as such terms are defined in Sections 8-102(a)(17) and 8-501(a), respectively, of the UCC), each Grantor shall take and cause the appropriate Person (including any securities intermediary thereof) to take all actions necessary to grant “control” (as defined in Section 8-106 of the UCC) to the Lender Agent over such Collateral including, without limitation, causing to be delivered to the Lender Agent an agreement, in form and substance satisfactory to the Lender Agent, executed by the securities intermediary thereof whereby such securities intermediary