AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT (LICENSING)
Franklin Credit Management Corporation 10-12G
Exhibit 10.13
Exhibit 7
AMENDMENT NO. 3 TO
AMENDED AND RESTATED CREDIT AGREEMENT (LICENSING)
AMENDED AND RESTATED CREDIT AGREEMENT (LICENSING)
THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT (LICENSING) (this “Amendment”)
is entered into as of September 22, 2010 (the “Amendment Effective Date”), by and among
FRANKLIN CREDIT MANAGEMENT CORPORATION, a Delaware Corporation, and FRANKLIN CREDIT HOLDING
CORPORATION, a Delaware corporation (each, a “Borrower” and collectively
“Borrowers”), THE FINANCIAL INSTITUTIONS PARTY HERETO AS LENDERS (each, a “Lender”
and collectively, the “Lenders”) and THE HUNTINGTON NATIONAL BANK, a national banking
association (“Huntington”), as administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, the “Administrative Agent”).
This Amendment further amends and modifies a certain Amended and Restated Credit Agreement
(Licensing) dated as of March 31, 2009 (as amended, supplemented, restated or otherwise modified
from time to time prior to the date hereof, the “Credit Agreement”) by and among Borrowers,
the Lenders, the Administrative Agent and Issuing Bank. Capitalized terms used in this Amendment
and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
RECITALS:
A. As of March 31, 2009, Borrowers, the Lenders, the Administrative Agent and Issuing Bank
executed the Credit Agreement setting forth the terms of certain extensions of credit to the
Borrower; and
B. As of March 31, 2009, Borrowers executed and delivered to the Administrative Agent, inter
alia, a Revolving Promissory Note (Licensing) in the original principal sum of Two Million Dollars
($2,000,000), which principal sum was thereafter reduced to One Million Dollars ($1,000,000); and
C. As of March 31, 2009, and at various other times, Borrowers executed and delivered to the
Administrative Agent, inter alia, one or more Applications and Agreements for Letter of Credit in
connection with Issuing Bank’s issuance of Letters of Credit for the account of one or more of the
Borrowers; and
D. As of May 31, 2010, the Draw Loan Commitment expired by its terms and Borrowers have no
right to obtain any Draw Loan Advances under the Credit Agreement; and
E. Borrowers have requested that (i) the Administrative Agent and the Lenders under the Credit
Agreement and that the administrative agent under the Legacy Loans Credit Agreement consent to the
sale, restructuring or spin off by Holding of its ownership interests in FCMC, subject to the
further written consent of the Administrative Agent at the time such Restructuring is accomplished,
(ii) the Administrative Agent release its Liens in certain real property owned by FCMC, commonly
known as (A) 0 Xxxxxxxx Xxxxxx, Xxxx 0, Xxx Xxxx, Xxx Xxxx, and (B) 000 Xxxxxx Xx. Xxx Xxxx, Xxx Xxxx), (xxx) discharge FCMC from any liability under a
certain Limited Recourse Guaranty dated as of March 31, 2009, (iv) consent to a Change of Control
of FCMC resulting from the Restructuring, (v) waive any other Events of Default resulting from the
Restructuring, (vi) extend the maturity of the Revolving Loan Commitment and the Letter of Credit
Commitment and (vii) amend and modify certain other terms and covenants in the Credit Agreement,
and each Lender, the Administrative Agent and the Issuing Bank, are willing to do so upon the terms
and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and promises contained
herein, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereto for themselves and their successors and assigns do hereby agree,
represent and warrant as follows:
16. The definitions of “Change of Control”, “Collateral”, “Loan
Documents” “Mandatory Prepayment Event”, and “Termination Date” set forth in
Section 1.01, “Certain Defined Terms,” of the Credit Agreement are hereby amended to
recite as follows:
“Change of Control” shall mean, other than in connection with the
Restructuring: (a) with respect to any Borrower, the replacement of a
majority of the board of directors from the directors who constituted the
board of directors on the Effective Date for any reason other than death or
disability, and such replacement shall not have been approved by such board
of directors, as constituted on the Effective Date (or as changed over time
with the approval of the then existing board of directors of Holding); or
(b) a Person or Persons acting in concert, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases,
exercise of the stock pledge or otherwise, shall have become the beneficial
owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of equity securities of any Borrower representing more
than 20% of the combined voting power of the outstanding securities of such
Person, ordinarily having the right to vote in the election of directors
from the beneficial owners as of the Effective Date.
“Collateral” shall have the meaning assigned to such term in the
Security Agreement, Mortgage, or any other Loan Document executed and
delivered to the Administrative Agent by any Loan Party, unless released
from time to time pursuant to the terms of this Agreement or the Restructure
Agreement, and shall include without limitation:
| (i) | a first and best Lien on FCMC’s Cash or Cash Equivalents in
account number 01892543486 at Huntington, maintained in an amount satisfactory
to the Administrative Agent, but not less than $7,500,000; |
| (ii) | a Mortgage in the FCMC Real Estate, subject to the existing
Lien of Huntington, as agent for certain lenders on 0 Xxxxxxxx Xx., Xxxx 0, Xxx Xxxx,
Xxx Xxxx under the Legacy Loans Credit Agreement, and subject to the
agreement of the applicable administrative agents and the lenders to release
the FCMC Real Estate pursuant to the terms of the Restructure Agreement; |
| (iii) | a first and best Lien on all FCMC’s now owned or hereafter
acquired right, title, and interest in personal property; |
| (iv) | any monies or sums due FCMC in respect of any program sponsored
by any Governmental Authority, including without limitation any fees received,
directly or indirectly, under the U.S. Treasury Homeowners Affordability and
Stability Plan. |
“Loan Documents” shall mean, collectively, this Agreement, the Notes, the
Security Agreement, each agreement in respect of a Blocked Account, Disbursement
Account, Collection Account, or Reserve Account, each deposit account control
agreement, each Application and Agreement for Letter of Credit, letter of credit
reimbursement agreement, pledge agreement, joinder agreement, collateral
assignments, Guarantee, banking services agreement, cash management agreement,
amendment, modification agreement, instrument, financing statements and each other
document or agreement relating to this Agreement or the transactions contemplated by
this Agreement; provided, however, no Transaction Document shall be a Loan
Document, and the FCMC Limited Recourse Guaranty shall not be a Loan Document.
“Mandatory Prepayment Event” shall mean:
(a) other than with respect to the Restructuring, any sale, transfer,
or other disposition of any Property of any Borrower or any property
constituting Collateral pursuant hereto; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any Property
of any Borrower or any Collateral; or
(c) other than with respect to the Restructuring, the issuance by any
Borrower of any Equity Interests, or the receipt by Borrower of any capital
contribution; or
(d) the incurrence by any Borrower of any Subordinated Indebtedness; or
(e) the receipt by any Borrower of the proceeds of any settlement or
monetary judgment in respect of any litigation or other similar proceeding.
“Termination Date” shall mean (i) in respect of the Revolving Loan
and the Revolving Loan Commitment and the Letters of Credit and the Letter
of Credit Commitment, September 30, 2011, or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law, and (ii) in respect of the Draw Loan and the Draw Loan
Commitment May 31, 2010, which Draw Loan and Draw Commitment have expired
and are of no force and effect.
17. New Defined Terms. The following defined terms are hereby added to Section 1.01,
“Certain Defined Terms,” of the Credit Agreement in their correct alphabetical order and
shall recite as follows:
“Amendment No. 3” means a certain Amendment No. 3 to Amended and Restated
Credit Agreement (Licensing) between and among the Administrative Agent, the Lenders
and the Borrowers dated September 22, 2010.
“Deferred Payment Agreement” means a certain Deferred Payment Agreement
entered into as of the effective date of Amendment No. 3.
“FCMC Limited Recourse Guaranty” means a certain Limited Recourse
Guaranty dated as of March 31, 2009, executed and delivered in connection
with the Legacy Loans Credit Agreement.
“FCMC Real Estate” means certain real property owned by FCMC,
commonly known as (i) 0 Xxxxxxxx Xxxxxx, Xxxx 0, Xxx Xxxx, Xxx Xxxx, and
(ii) 000 Xxxxxx Xx. Xxx Xxxx, Xxx Xxxx).
“Restructure Agreement” means that certain Restructure Agreement,
dated as of the date of Amendment No. 3, by and among, inter alia, the
Borrowers, the Administrative Agent, and Franklin Mortgage Asset Trust
2009-A.
“Restructuring” means the sale, restructuring or spin off by Holding
of its ownership interests in FCMC, which shall be in form acceptable to the
Administrative Agent.
“TJA Secured Note” means a secured promissory note issued by FCMC for
$1,000,000, guaranteed in full by Xxxxxx X. Xxxx, and secured by the Guarantor
Collateral.
18. Section 7.04, Prohibition of Fundamental Changes; Subsidiaries,” of the Credit
Agreement is hereby amended to recite as follows:
Section 7.04 Prohibition of Fundamental Changes; Subsidiaries. No
Borrower shall enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell any substantial portion of
its assets other than pursuant to the Transaction Documents or in connection
with the Restructuring. No Borrower shall permit to exist or establish any
Subsidiary (other than a Subsidiary existing as of the Effective Date).
19. Section 7.05, “Restricted Payments,” of the Credit Agreement is hereby amended to
recite as follows:
Section 7.05 Restricted Payments. No Borrower shall make or
declare any Restricted Payment without the prior written consent of the
Administrative Agent.
20. Section 7.11, “Limitation on Indebtedness,” of the Credit Agreement is hereby
amended to recite as follows:
Section 7.11 Limitation on Indebtedness. Except with the prior written
consent of the Administrative Agent, which consent shall not be unreasonably
withheld or delayed, no Borrower shall incur any liabilities for Indebtedness, other
than (i) the Advances, (ii) the Letters of Credit, (iii) the TJA Secured Note, and
(iv) liabilities owing under the Deferred Payment Agreement.
21. Subsection 8.01(n) of the Credit Agreement is hereby amended to recite as follows:
(n) [Intentionally Deleted];
22. Consent to Restructuring. Each of the Administrative Agent and the Lenders
hereby consents to the Restructuring and the discharge of FCMC from the FCMC Limited Recourse
Guaranty, upon fulfillment of all terms and conditions of the Restructure Agreement.
23. Agreement to Release Certain Liens. Each of the Administrative Agent and the
Lenders hereby agree to the release of the Liens on the FCMC Real Estate granted in connection
with the Credit Agreement upon fulfillment of all terms and conditions contemplated by the
Restructure Agreement.
24. Conditions of Effectiveness. This Amendment shall become effective as of the
Amendment Effective Date, upon satisfaction of all of the following conditions precedent:
(a) The Administrative Agent shall have received execution and delivery of, by all
parties signatory hereto, originals, or completion as the case may be, to the satisfaction
of the Administrative Agent and its counsel, of three duly executed originals of this
Amendment;
(b) The representations contained in the immediately following paragraph shall be true
and accurate;
(c) The Administrative Agent shall have received all of the documents and deliveries
required by the Restructure Agreement; and
(d) The Borrowers shall have paid a nonrefundable extension fee of $0.00 in connection
with this Amendment.
25. Representations and Warranties. Each Borrower represents and warrants to the
Administrative Agent and each Lender as follows: (a) after giving effect to this Amendment, each
representation and warranty made by or on behalf of such Borrower in the Credit Agreement and in
any other Loan Document is true and correct in all material respects on and as of the date hereof
as though made on and as of such date, except to the extent that any such representation or
warranty expressly relates solely to a date prior hereto; (b) the execution, delivery and
performance by such Borrower of this Amendment and each other Loan Document have been duly
authorized by all requisite corporate or organizational action on the part of such Borrower and
will not violate any Requirement of Law applicable to each Borrower; (c) this Amendment has been
duly executed and delivered by each Borrower, and each of this Amendment, the Credit Agreement and
each other Loan Document as amended hereby constitutes the legal, valid and binding obligation of
each Borrower, enforceable against such Borrower in accordance with the terms thereof; and (d) no
event has occurred and is continuing, and no condition exists, which would constitute an Event of
Default or a Default.
26. Ratification and Reaffirmation. Each Borrower agrees (i) that all the
obligations, indebtedness and liabilities of such Borrower to the Administrative Agent and the
Lenders under the Credit Agreement are the valid and binding obligations of such Borrower; (ii)
that the obligations, indebtedness and liabilities of such Borrower evidenced by each Note executed
and delivered by such Borrower are 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 the Administrative Agent with respect to the
Obligations as security for all obligations and liabilities of such Borrower under the Credit
Agreement, each Application and Agreement for Letter of Credit and the Revolving Loan Note are
valid and binding and are hereby ratified and confirmed in all respects.
27. Reference to and Effect on the Loan Documents. (a) Upon the effectiveness of this
Amendment, each reference in the Credit Agreement to “Amended and Restated Credit Agreement
(Licensing),” “Credit Agreement,” “Agreement,” the prefix “herein,” “hereof,” or words of similar
import, and each reference in the Loan Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby. (b) Except to the extent amended or modified
hereby, all of the representations, warranties, terms, covenants and conditions of the Credit
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 the Administrative Agent 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 the Administrative Agent’s or any Lender’s rights under, or of any other
term or provisions of, the Credit 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 on the
part of any Borrower which would require the consent of the Lender.
28. Waiver and Release of All Claims and Defenses. Each Borrower hereby forever
waives, relinquishes, discharges and releases all defenses and claims of every kind or nature,
whether existing by virtue of state, federal, or local law, by agreement or otherwise, against the
Administrative Agent and the Lenders, and all of their successors, assigns, directors, officers,
shareholders, agents, employees and attorneys, the Obligations or the Collateral, whether
previously or now existing or arising out of or related to any transaction or dealings between the
Administrative Agent, any Lender and any Borrower or any of them, which any Borrower 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
Borrower, and all of their representatives, successors, assigns, agents, employees, officers,
directors and heirs. “Claims” includes 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 or contingent, in contract, tort, at law or in equity, any of them ever had, claimed to
have, now has, or shall or may have. Nothing contained in this Amendment prevents enforcement of
this release.
29. No Waiver. Nothing in this Amendment shall be construed to waive, modify, or cure
any default or Event of Default that exists or may exist under the Credit Agreement or any other
Loan Document.
30. 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.
31. 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 the Administrative Agent of a facsimile copy of an executed signature page hereof will
constitute receipt by the Administrative Agent of an executed counterpart of this Amendment.
32. Costs and Expenses. Each Borrower agrees to pay on demand in accordance with the
terms of the Credit Agreement all costs and expenses of the Administrative Agent 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 the Administrative Agent’s counsel with respect thereto.
33. 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.
34. 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.
35. Patriot Act Notice. The Administrative Agent hereby notifies each Borrower 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 Borrower, which information includes the name and address of each Borrower and
other information that will allow the Administrative Agent to identify each Borrower in accordance
with the Act.
[Signature Page Follows.]
IN WITNESS WHEREOF, the Borrowers, the Administrative Agent, the Lenders and Issuing Bank have
hereunto set their hands as of the date first set forth above.
| BORROWERS: | ||||||
| FRANKLIN CREDIT MANAGEMENT CORPORATION | ||||||
| By: | /s/ Xxxxxx X. Xxxx | |||||
| Title: President | ||||||
| FRANKLIN CREDIT HOLDING CORPORATION | ||||||
| By: | /s/ Xxxxxx X. Xxxx | |||||
| Title: President | ||||||
| ADMINISTRATIVE AGENT AND ISSUING BANK: | ||||||
| THE HUNTINGTON NATIONAL BANK | ||||||
| By: | /s/ Xxxxxxx X. Cheap | |||||
| Title: General Counsel and Secretary | ||||||
| LENDER AND RISK PARTICIPANT: | ||||||
| HUNTINGTON FINANCE, LLC | ||||||
| By: | /s/ Xxxxxxx X. Cheap | |||||
| Title: Vice President | ||||||
