AMENDMENT NO. 2 TO
FIRST AMENDED AND RESTATED FORBEARANCE AGREEMENT
AND AMENDMENT TO CREDIT AGREEMENTS
THIS AMENDMENT NO. 2 TO FIRST AMENDED AND
RESTATED FORBEARANCE AGREEMENT AND AMENDMENT TO CREDIT AGREEMENTS
(this “ Amendment ”), is effective as of
the 10th day of August, 2009 (the “ Amendment Effective
Date ”), by and among FRANKLIN CREDIT ASSET
CORPORATION (“ Franklin Asset ”),
FRANKLIN CREDIT HOLDING CORPORATION (“ Holding
”), Flow 2006 F CORP., FCMC 2006 M CORP., FCMC 2006 K CORP.
and THE HUNTINGTON NATIONAL BANK (“ Lender
”). This Amendment further 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. 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 ”), Franklin Credit Management Corporation
(“ FCMC ”), Franklin Asset, 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
FCMC 2006 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, FCMC was an original party to the
Franklin Master Agreement and the Forbearance Agreement, but, as
clarified by a certain Amendment No. 1 to First Amended and
Restated Forbearance Agreement and Amendment to Credit Agreements
dated April 20, 2009, Franklin Asset is now the
“Company” under such agreements, and FCMC has no
obligation under the Forbearance Agreement and the Franklin Master
Agreement;
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 June 30,
2009, and the Static Loan Borrowers have requested that Lender
extend such forbearance through and including September 30,
2009;
WHEREAS, Franklin Asset owns and holds of 100%
of the Capital Stock of, among other Subsidiaries, the Static Loan
Borrowers;
NOW, THEREFORE,
the parties hereto agree as follows:
1. Extension of Forbearance for the
Static Loans . The first sentence of Section 1(a) of the
Forbearance Agreement is deleted and are hereby replaced with the
following:
Absent the occurrence and continuance of a
Forbearance Default other than an Identified Forbearance Default,
prior to September 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. 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.
3. 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.
4. 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 Sta
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