AMENDMENT NO. 1 TO FIRST AMENDED AND RESTATED FORBEARANCE AGREEMENT AND AMENDMENT TO CREDIT AGREEMENTS
Exhibit
10.1
AMENDMENT
NO. 1 TO
FIRST
AMENDED AND RESTATED FORBEARANCE AGREEMENT
AND
AMENDMENT TO CREDIT AGREEMENTS
THIS AMENDMENT NO. 1 TO FIRST AMENDED
AND RESTATED FORBEARANCE AGREEMENT AND AMENDMENT TO CREDIT AGREEMENTS (this
“Amendment”),
is effective as of the 20th day of April, 2009 (the “Amendment Effective
Date”), by and among FRANKLIN CREDIT MANAGEMENT CORPORATION (“FCMC”), FRANKLIN
CREDIT ASSET CORPORATION (“Franklin Asset”),
FRANKLIN CREDIT HOLDING CORPORATION (“Holding”), Flow 2006
F CORP., XXXX 0000 M CORP., FCMC 2006 K CORP. and THE HUNTINGTON NATIONAL BANK
(“Lender”). This
Amendment amends and modifies a certain First Amended and Restated Forbearance
Agreement and Amendment to Credit Agreements, dated as of December 19, 2008 (the
“Forbearance
Agreement”) by and among the parties hereto and certain other borrowers
party to such Forbearance Agreement. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Forbearance Agreement. FCMC, Franklin Asset, Holding, and each Static
Loan Borrower (as defined below) shall be individually an “Amendment Loan Party”
and together the “Amendment Loan
Parties.”
WHEREAS, Flow 2006 F Corp., FCMC 2006 M
Corp., and FCMC 2006 K Corp. (together, the “Static Loan
Borrowers”), FCMC, certain other borrowers party thereto, and Lender are
parties to that certain Master Credit and Security Agreement, dated as of
October 13, 2004, as the same has been amended, supplemented, restated, or
otherwise modified prior to the date of this Amendment (the “Franklin Master
Agreement”), pursuant to which Lender holds certain outstanding loans
evidenced by (i) a certain Flow 2006 F Corp. note dated December 1, 2006, in the
original principal amount of $19,863,972.93, (ii) a certain XXXX 0000 M Corp.
amended and restated note dated August 30, 2006, in the original principal
amount of $16,183,766.66, and (iii) a certain FCMC 2006 K Corp. amended and
restated promissory note dated August 30, 2006, in the original principal amount
of $14,433,383.90 (collectively, the “Static
Loans”);
WHEREAS, the Static Loan Borrowers have
defaulted and may continue to default under the Forbearance Agreement, the
Franklin Master Agreement and the promissory notes and other Loan Documents
executed in connection therewith in respect of (i) their failure to make
scheduled principal and interest payments when due thereunder, and (ii) their
failure after the Amendment Effective Date to make any scheduled principal and
interest payments due thereunder as a result of the cash flow from the Mortgage
Loans securing the Static Loans being insufficient to pay such amounts
(collectively the defaults under clauses (i) and (ii) above shall be referred to
as the “Identified
Forbearance Defaults”);
WHEREAS, pursuant to the terms of the
Forbearance Agreement, Lender has agreed not to exercise its rights to initiate
proceedings to foreclose or otherwise realize upon the Mortgage Loans securing
the Static Loans prior to May 15, 2009, and the Static Loan Borrowers have
requested that Lender extend such forbearance through and including June 30,
2009;
WHEREAS, in connection with the
Forbearance Agreement, Franklin Asset, Holding, and FCMC, among other
Affiliates, entered into the Reorganization, in which, among other things, FCMC
became a wholly-owned subsidiary of Holding, and Franklin Asset became the
holder of 100% of the Capital Stock of, among other Subsidiaries, the Static
Loan Borrowers;
WHEREAS, since the Forbearance
Effective Date, Franklin Asset, certain other borrowers party to the Legacy Loan
Credit Agreement (as defined below), Lender, in its capacity as administrative
agent and a lender and certain other lenders party to such Legacy Loan Credit
Agreement have entered into a certain Amended and Restated Credit Agreement
dated as of March 31, 2009 (as amended, restated, supplemented or otherwise
modified from time to time, the “Legacy Loan Credit
Agreement”), pursuant to which, among other things, (i) all of the
Franklin Master Term Loans other than the Static Loans were made subject to the
Legacy Loan Credit Agreement and (ii) FCMC was released from its Guaranty of any
obligation under, among other loan documents, the Forbearance Agreement and the
Franklin Master Agreement, and FCMC has requested that Lender clarify that FCMC
has no further obligation under the Forbearance Agreement and the Franklin
Master Agreement.
NOW, THEREFORE, the parties hereto
agree as follows:
1. Extension of Forbearance for
the Static Loans. The first and second sentences of Section
1(a) of the Forbearance Agreement are deleted in their entirety and are hereby
replaced with the following:
Absent
the occurrence and continuance of a Forbearance Default other than an Identified
Forbearance Default, prior to June 30, 2009 (the “Forbearance Date”),
Lender agrees not to initiate collection proceedings or exercise its remedies
under the Loan Documents in respect of any Static Loan against any Loan Party or
any Collateral for such Static Loan or elect to have interest accrue under the
respective Loan Documents at the stated rate applicable after
default.
2. Amendment of Franklin Master
Agreement. As of the Amendment Effective Date, all
references to the “Company” in the Franklin Master Agreement shall mean Franklin
Credit Asset Corporation, and not Franklin Credit Management
Corporation.
3. Conditions of
Effectiveness. This Amendment shall become effective as of the
Amendment Effective Date, upon satisfaction of all of the following conditions
precedent:
(a) Lender
shall have received execution and delivery of, to the satisfaction of Lender and
its counsel, three (3) duly executed copies of this Amendment;
(b) The
representations contained in the immediately following paragraph shall be true
and accurate.
4. Representations and
Warranties. Each Amendment Loan Party represents and warrants
to Lender as follows: except in respect of the Identified Forbearance Defaults,
(a) the execution, delivery, and performance of this Amendment by each Amendment
Loan Party has been duly authorized by all requisite corporate or organizational
action on the part of such
Amendment
Loan Party and will not violate any of its organizational
documents; (c) this Amendment has been duly executed and delivered by each
Amendment Loan Party, and each of this Amendment, the Forbearance Agreement, and
each other Loan Document as amended hereby constitutes the legal, valid, and
binding obligation of each Amendment Loan Party, enforceable against such
Amendment Loan Party in accordance with the terms thereof; and (d) no event has
occurred and is continuing, and no condition exists, which would constitute a
Forbearance Default.
5. Ratification and
Reaffirmation. Each Amendment Loan Party agrees (i) that all
the obligations, indebtedness, and liabilities of each Static Loan Borrower to
Lender under the Forbearance Agreement are the valid and binding obligations of
such Static Loan Borrower; (ii) that the obligations, indebtedness, and
liabilities of each Static Loan Borrower evidenced by each Loan Document
executed and delivered by each Static Loan Borrower is valid and binding without
any present right of offset, claim, defense, or recoupment of any kind and are
hereby ratified and confirmed in all respects; and (iii) that the Liens and
security interests granted to Lender as security for all obligations and
liabilities of each Static Loan Borrower under the Forbearance Agreement and the
other Loan Documents are valid and binding and are hereby ratified and confirmed
in all respects.
6. Reference to and Effect on
the Loan Documents. Upon the effectiveness of this Amendment,
each reference in the Forbearance Agreement to “Forbearance Agreement and
Amendment to Credit Agreements,” “Forbearance Agreement,” “Agreement,” the
prefix “herein,” “hereof,” or words of similar import, and each reference in the
Loan Documents to the Forbearance Agreement, shall mean and be a reference to
the Forbearance Agreement as amended hereby. In respect of each
Static Loan Borrower, except to the extent amended or modified hereby, all of
the representations, warranties, terms, covenants, and conditions of the
Forbearance Agreement and the other Loan Documents shall remain as written
originally and in full force and effect in accordance with their respective
terms and are hereby ratified and confirmed, and nothing herein shall affect,
modify, limit, or impair any of the rights and powers which Lender may have
hereunder or thereunder. Nothing in this Amendment shall constitute a
novation. The amendments set forth herein shall be limited precisely
as provided for herein, and shall not be deemed to be a waiver of, amendment of,
consent to, or modification of any of Lender’s rights under, or of any other
term or provisions of, the Forbearance Agreement or any other Loan Document, or
of any term or provision of any other instrument referred to therein or herein
or of any transaction or future action which would require the consent of
Lender.
7. Waiver and Release of All
Claims and Defenses; Communications.
(a) Each
Amendment Loan Party, for itself and its respective successors and assigns,
agents, employees, officers, and directors, hereby forever waive, relinquish,
discharge, and release all defenses and Claims of every kind or nature, whether
existing by virtue of state, federal, or local law, by agreement, or otherwise,
against (i) Lender, its successors, assigns, directors, officers, shareholders,
agents, employees, and attorneys, and (ii) all participants in any Commercial
Loans or Advances, such participants’ successors, assigns, directors, officers,
shareholders, agents, employees, and attorneys, (iii) any obligation evidenced
by any Credit Agreement, any promissory note, instrument, or other Loan Document
in connection therewith,
and (iv)
any Collateral, in each instance, which any Amendment Loan Party, may have or
may have made at any time up through and including the date of this Amendment,
including without limitation, any affirmative defenses, counterclaims, setoffs,
deductions, or recoupments, by any Amendment Loan Party. “Claims” means all
debts, demands, actions, causes of action, suits, dues, sums of money, accounts,
bonds, warranties, covenants, contracts, controversies, promises, agreements, or
obligations of any kind, type, or description, and any other claim or demand of
any nature whatsoever, whether known or unknown, accrued or unaccrued, disputed
or undisputed, liquidated of contingent, in contract, tort, at law, or in
equity, which any Amendment Loan Party, claimed to have, now has, or shall or
may have. The term Claims also includes all causes of action,
liabilities, and rights arising under or by virtue of any Credit Agreement,
promissory note, or other document or any transaction entered into in connection
therewith. Nothing contained in this Amendment prevents enforcement
of this waiver and release.
(b) Each
party to this Amendment acknowledges and agrees that one purpose of this
Amendment is to facilitate the resolution of the Identified Forbearance Defaults
and that, consistent with such purpose, no part of any oral or written
communications between or among any Amendment Loan Party or Lender regarding the
transactions contemplated in this Amendment, exclusive of this written Amendment
itself (collectively, “Communications”),
shall be utilized or deemed to be admissible as evidence in any litigation
involving any party to this Amendment. Communications shall be deemed
to constitute “compromise negotiations,” and not to constitute evidence that is
“discoverable,” as those phrases are used in the Federal Rules of Evidence and
any applicable state rules of evidence, and no Communications shall be deemed to
constitute evidence that is otherwise admissible for any other
purpose.
(c) The
release and communication provisions provided by paragraphs (a) and (b) of this
Section, shall survive and continue in full force and effect notwithstanding the
occurrence of a Forbearance Default under the terms of this Amendment or the
termination of this Amendment.
8. No
Waiver. Nothing in this Amendment shall be construed to waive,
modify, or cure any default or Event of Default or Forbearance Default (other than the
Identified Forbearance Defaults) that exist that exists or may exist
under the Forbearance Agreement or other Loan Document.
9. Waiver of Right to Trial by
Jury. EACH PARTY TO THIS AMENDMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1)
ARISING UNDER THIS AMENDMENT OR ANY LOAN DOCUMENT, OR (2) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
10. Counterparts. This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, and all of which together will constitute one and the same
instrument. Receipt by Lender of a facsimile copy of an executed
signature page hereof will constitute receipt by Lender of an executed
counterpart of this Amendment.
11. Costs and
Expenses. Each Amendment Loan Party agrees to pay on demand
all costs and expenses of Lender in connection with the preparation,
reproduction, execution, and delivery of this Amendment and all other Loan
Documents entered into in connection herewith, including the reasonable fees and
out-of-pocket expenses of Lender’s counsel with respect thereto.
12. Further
Assurances. Each Amendment Loan Party agrees to execute and
deliver such additional documents, instruments, and agreements reasonably
requested by Lender as may be reasonably necessary or appropriate to effectuate
the purposes of this Amendment.
13. Governing
Law. This Amendment and the rights and obligations of the
parties hereto shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Ohio.
14. Headings. Section
headings in this Amendment are included herein for convenience of reference only
and will not constitute a part of this Amendment for any other
purpose.
15. Patriot Act
Notice. Lender hereby notifies each Amendment Loan Party that
pursuant to the requirements of the USA Patriot Act (Title III of Pub.L. 10756,
signed into law October 26, 2001) (the “Act”), it is required
to obtain, verify, and record information that identifies each party hereto,
which information includes the name and address of each Amendment Loan Party and
other information that will allow Lender to identify each such party in
accordance with the Act.
[Signature
page follows.]
IN
WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
Amendment Effective Date.
AMENDMENT LOAN
PARTIES:
FRANKLIN CREDIT ASSET
CORPORATION
By: /s/ Xxxxxxxxx Xxxxxx
Jardin
Name: Xxxxxxxxx
Xxxxxx Jardin
Title: Chief
Executive Officer
Address for
Notices:
000 Xxxxxx Xx., 00xx
Xxxxx
Xxxxxx Xxxx, Xxx
Xxxxxx 00000
Fax: (000)
000-0000
Attention: General
Counsel
FRANKLIN CREDIT
MANAGEMENT CORPORATION
By: /s/ Xxxxxxxxx Xxxxxx
Jardin
Name: Xxxxxxxxx
Xxxxxx Jardin
Title:
Chief Executive Officer
Address for
Notices:
Same as
above
FRANKLIN CREDIT
HOLDING CORPORATION
By: /s/ Xxxxxxxxx Xxxxxx
Jardin
Name: Xxxxxxxxx
Xxxxxx Jardin
Title:
Chief Executive Officer
Address for
Notices:
Same as
above
FLOW 2006 F
CORP.
By: /s/ Xxxxxxxxx Xxxxxx
Jardin
Name: Xxxxxxxxx
Xxxxxx Jardin
Title: Chief
Executive Officer
Address for
Notices:
Same as
above
XXXX 0000 M
CORP.
By: /s/ Xxxxxxxxx Xxxxxx
Jardin
Name: Xxxxxxxxx
Xxxxxx Jardin
Title: Chief
Executive Officer
Address for
Notices:
Same as
above
XXXX 0000 K
CORP.
By: /s/ Xxxxxxxxx Xxxxxx
Jardin
Name: Xxxxxxxxx
Xxxxxx Jardin
Title: Chief
Executive Officer
Address for
Notices:
Same as
above
LENDER:
THE HUNTINGTON
NATIONAL BANK
By: /s/ Xxxx X.
Xxxxx
Name: Xxxx X.
Xxxxx
Title:
Senior Vice President
Address for
Notices:
0000 Xxxxx
Xxxx
XX0X00
Xxxxxxxx, Xxxx
00000
Attn: Special
Assets
Telephone
No.: (000) 000-0000
Telecopier
No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx Xxxxxx
& Xxxxxx LLP
00 Xxxxx Xxxx
Xxxxxx
Xxxxxxxx, Xxxx
00000
Attn: Xxxxxxx
X. Xxxxx, Esq.
Telecopier
No.: (000) 000-0000
Telephone
No.: (000) 000-0000
