AMENDMENT NO. 2 TO
TRIBECA FORBEARANCE AGREEMENT
THIS AMENDMENT NO.
2 TO TRIBECA FORBEARANCE AGREEMENT (this “
Amendment ”) is entered into at Columbus, Ohio,
as of August 15, 2008 (the “ Amendment Effective
Date ”), by and among the BORROWERS listed on
Schedule 1 hereto (each, a “
Borrowe r ” and collectively, the
“ Borrowers ”), including without
limitation, TRIBECA LENDING CORP., a New York corporation (“
Tribeca ”), FRANKLIN CREDIT MANAGEMENT
CORPORATION, a Delaware corporation, in its capacity as Guarantor
hereunder and in its capacity as servicer (“
FCMC ” or “ Guarantor
”), and THE HUNTINGTON NATIONAL BANK (“
Huntington ” or “ Lender
”). This Amendment further amends and modifies a certain
Tribeca Forbearance Agreement and Amendment to Credit Agreements
dated as of December 28, 2007 (as amended, supplemented,
restated or otherwise modified from time to time prior to the date
hereof, the “ Forbearance Agreement ”),
by and among the Borrowers, Tribeca, FCMC and Lender. All
capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Forbearance
Agreement.
A. As of
December 28, 2007, the Borrowers, Tribeca, FCMC and Lender
executed the Forbearance Agreement amending and restating the terms
of certain extensions of credit to the Borrowers and Tribeca, as
applicable, and in respect of the Forbearance Agreement, each of
the Acknowledged Defaults are continuing; and
B. As of
December 28, 2007, the Borrowers executed and delivered to
Lender, inter alia , an Amended and Restated Promissory Note
(A Note) in the original principal sum of $400,000,000, which was
thereafter amended and restated by a certain Second Amended and
Restated Promissory Note (A Note) dated March 31, 2008, in the
original principal sum of $410,859,753.55 (the “
Tranche A Note ”); and
C. As of
December 28, 2007, the Borrowers executed and delivered to
Lender, inter alia , an Amended and Restated Promissory Note
(B-1 Note) in the original principal sum of $22,783,296.75, which
was thereafter amended and restated by a certain Second Amended and
Restated Promissory Note (B-1 Note) dated March 31, 2008, in
the original principal sum of $24,131,090.30 (the “
Tranche B-1 Note ”); and
D. As of
December 28, 2007, the Borrowers executed and delivered to
Lender, inter alia , an Amended and Restated Promissory Note
(B-2 Note) in the original principal sum of $22,783,296.75, which
was thereafter amended and restated by a certain Second Amended and
Restated Promissory Note (B-2 Note) dated March 31, 2008, in
the original principal sum of $24,881,090.30 (the “
Tranche B-2 Note ”); and
E. As of
December 28, 2007, the Borrowers executed and delivered to
Lender, inter alia , an Amended and Restated Promissory Note
(B-3 Note) in the original principal sum of $22,783,296.75, which
was thereafter amended and restated by a certain Second Amended and
Restated Promissory Note (B-3 Note) dated March 31, 2008, in
the original principal sum of $24,881,090.30 (the “
Tranche B-3 Note ”); and
F. As of
December 28, 2007, the Borrowers executed and delivered to
Lender, inter alia , an Amended and Restated Promissory Note
(B-4 Note) in the original principal sum of $22,783,296.75, which
was thereafter amended and restated by a certain Second Amended and
Restated Promissory Note (B-4 Note) dated March 31, 2008, in
the original principal sum of $24,881,090.30 (the “
Tranche B-4 Note ” and together with the
Tranche A Note, the Tranche B-1 Note, the Tranche B-2 Note and the
Tranche B-3 Note, collectively, the “ Notes
”); and
G. Tribeca,
FCMC and the applicable Borrowers have failed to comply with
(i) certain provisions of Section 11, “ Certain
Post-Closing Deliverables ,” of the Forbearance Agreement
by failing to comply with items 4 and 6 of Schedule 11 to
Amendment No. 1 in respect of post-closing deliverables or
requirements, schedules, documents and other items as required by
the Forbearance Agreement, and (ii) Section 12(b),
“ Minimum Net Worth ,” of the Forbearance
Agreement for the period ending June 30, 2008, by failing to
maintain the minimum Net Worth required by such section
(collectively, the “ Identified Forbearance
Defaults ”); and
H. FCMC,
Tribeca and the other Borrowers have requested that Lender waive
the Identified Forbearance Defaults, amend and modify certain terms
and financial covenants in the Forbearance Agreement, and extend
the time periods or modify the requirements for FCMC, Tribeca and
the other Borrowers to satisfy certain post-closing deliverables
composing the Identified Forbearance Defaults, and Lender is
willing to do so upon the terms and subject to the conditions
contained herein; and
I. Lender and
each participant of Lender have fully performed all of their
respective promises and agreements to FCMC, Tribeca and the other
Borrowers and are under no obligation to amend any terms or
covenants of any Loan Document or otherwise waive the Identified
Forbearance Defaults, as requested by FCMC, Tribeca and the other
Borrowers.
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:
1.
Definitions Added . The following defined terms are
hereby added to Section 2, “ Certain Defined
Terms ,” of the Forbearance Agreement in their correct
alphabetical order and shall recite as follows:
“
Amendment No. 2 ” shall mean a certain Amendment
No. 2 to Tribeca Forbearance Agreement dated as of
August 15, 2008.
“ Cash
Flow Available for Debt Service ” shall have the meaning
assigned to that term in Section 12(d).
“ Debt
Service ” shall have the meaning assigned to that term in
Section 12(d).
2.
Amendments to Section 12 . Paragraphs (b)
“ Minimum Net Worth ,” and (d) “
Interest Coverage Ratios ” of Section 12, “
Covenants ,” of the Forbearance Agreement are hereby
replaced in their entirety with the paragraphs set forth below and
are amended respectively to recite as follows:
(b)
Intentionally Left Blank .
(d) Cash Flow
Coverage . Until such time as all Tranche A Advances and
Tranche B Advances are indefeasibly paid in full, Guarantor and
each Subsidiary on a consolidated basis shall maintain as of the
end of each quarterly period a ratio of Cash Flow Available for
Debt Service to Debt Service of not less than 1.20 to 1.00, with
such ratio being determined (i) initially as of
September 30, 2008, for the period from January 1, 2008,
through and including September 30, 2008 (on a year-to-date
basis), and (ii) as of December 31, 2008,
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and continuing
as of the end of each quarter thereafter, for the most
recently-ended twelve consecutive (12) month period ending on
such date.
“ Cash
Flow Available for Debt Service ” shall mean for any
period all Collections (which term includes without limitation all
servicing fees paid in cash, net payments received in cash pursuant
to Interest Rate Hedge Agreements, due diligence fees paid in cash,
interest payments and dividends paid in cash and any other cash
payments); provided that for the purposes of the determination of
Cash Flow, each such item of Collection shall be required to be
received by Lender in the Lock Box or turned over to Lender by the
Borrower and deposited in one of the Blocked Accounts at
Huntington, and in each instance (i) applied to the
Obligations (other than to principal of the Tranche D Advances,
unless such application is accompanied by a permanent reduction
thereof) or (ii) used to establish or augment any
Reserves.
“ Debt
Service ” shall mean for any period the sum of
(i) Interest Expense, plus (ii) scheduled
principal payments on Indebtedness. “ Interest Expense
” shall mean for any period total interest expense (other
than PIK Interest), whether paid or accrued or due and payable
(including without limitation in respect of all Advances and any
Subordinated Indebtedness), plus the interest component of capital
lease obligations for such period, plus all bank fees capitalized
pursuant to GAAP (other than the Restructuring Fee), plus net costs
under Interest Rate Hedge Agreements.
3. Waiver
of Identified Forbearance Defaults . Lender hereby waives the
Identified Forbearance Defaults for the period through and
including June 30, 2008.
4.
Schedule 11 . Schedule 11 to the Forbearance
Agreement is hereby amended with the schedule attached to this
Amendment as Schedule 11 .
5.
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, by all parties signatory
thereto, originals, or completion as the case may be, to the
satisfaction of Lender (or as waived by Lender) and its counsel,
co
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