FORBEARANCE AGREEMENT AND AMENDMENT TO CREDIT AGREEMENTS
Exhibit
10.1
FORBEARANCE
AGREEMENT
AND
AMENDMENT
TO CREDIT
AGREEMENTS
THIS
FORBEARANCE AGREEMENT AND
AMENDMENT TO CREDIT AGREEMENTS (this “Agreement”) is
entered into as of the 28th day of December, 2007, (the “Forbearance Effective
Date”) by and among THE BORROWERS listed on Schedule
1 hereto
(each, a “Borrower” and
collectively, the “Borrowers”), FRANKLIN
CREDIT MANAGEMENT CORPORATION, a Delaware corporation, in its capacity as a
borrower under the Franklin Warehousing Agreement and Franklin Term Loan
Agreement (each as defined below),as account party for certain letters of
credit, as Guarantor hereunder and as servicer (“FCMC” or “Guarantor”),
and THE
HUNTINGTON NATIONAL BANK (“Huntington”
or
“Lender”).
RECITALS:
WHEREAS,
certain of the Borrowers, FCMC
and Huntington (as successor-in-interest to Sky Bank) 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 Agreement (the “Franklin Master
Agreement”), pursuant to which Huntington holds certain outstanding loans
made to the applicable Borrowers (the “Franklin Master
Term
Loans”, which term shall be exclusive of loans evidenced by (i) a certain
Flow 2006 F Corp. note in the original principal amount of $19,863,972.93,
(ii)
a certain ▇▇▇▇ ▇▇▇▇ M Corp. note in the original principal amount of
$16,183,766.66, and (iii) a certain FCMC 2006 K Corp. note in the original
principal amount of $14,433,383.90, together the “Static Loans”), which
Franklin Master Term Loans are secured by, among other things, certain Mortgage
Loans as provided in the Franklin Master Agreement and the other agreements
entered into in connection therewith; and
WHEREAS,
FCMC and Huntington (as
successor-in-interest to Sky Bank) are parties to that certain Flow Warehousing
Credit and Security Agreement, dated as of August 11, 2006, as the same has
been
amended, supplemented, restated or otherwise modified prior to the date of
this
Agreement (the “Franklin Warehousing
Agreement”), pursuant to which Huntington holds certain outstanding loans
made to FCMC and in connection therewith has issued certain outstanding letters
of credit for the account of FCMC (collectively, the “Franklin Warehousing
Credits”), which loans and letters of credit are secured by, among other
things, certain Mortgage Loans as provided in the Franklin Warehousing Agreement
and the other agreements entered into in connection therewith; and
WHEREAS,
FCMC and Huntington (as
successor-in-interest to Sky Bank) are parties to that certain Term Loan and
Security Agreement, dated as of February 22, 1995, as the same has been amended,
supplemented, restated or otherwise modified prior to the date of this Agreement
(the “Franklin Term
Loan Agreement”), pursuant to which Huntington holds certain outstanding
loans made to FCMC (the “Franklin Revolving
Loans”), which loans are secured by, among other things, certain Mortgage
Loans as provided in the Franklin Term Loan Agreement and the other agreements
entered into in connection therewith (the Franklin Master Agreement, the
Franklin Warehousing Agreement and the Franklin Term Loan Agreement are
collectively referred to as,
the
“Credit
Agreements,” and the Franklin Master Term Loans, the Franklin Warehousing
Credits and the Franklin Revolving Loans are collectively referred to as the
“Commercial
Loans”); and
WHEREAS,
as of the date hereof certain
of the Borrowers and FCMC are in default of the following provisions of the
Credit Agreements as applicable:
▇. ▇▇▇▇▇▇▇▇
Master Agreement:
(i)
certain of the Borrowers have failed to pay at maturity the following Commercial
Loans: (1) Flow 2001 I Corp. in the original principal sum of $2,954,397.38
dated 11/08/2001 (2) FCMC K Corp. in the original principal sum of $2,390,573.56
dated 11/12/2004, (3) FCMC 2004 K Corp. in the original principal sum of
$7,129,066.00 dated 11/19/2004, (4) FCMC 2001 C Corp. in the original principal
sum of $607,606.49 dated 11/15/2001;
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(ii)
FCMC has failed to deliver to Lender statements of income and cash
flows
and related balance sheet, each for the fiscal quarter ending September
30, 2007, certified by the chief financial officer or other appropriate
officer of FCMC;
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(iii)
FCMC and its Subsidiaries have failed to maintain a minimum net worth
of
not less than $10,000,000; and
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(iv);
FCMC and its Subsidiaries have
failed to comply with the terms of indebtedness in excess of $100,000 owing
to
BOS (USA) Inc. pursuant to a certain Master Credit and Security Agreement dated
March 24, 2006 among BOS (USA) Inc., Tribeca Lending Corp. and certain other
Subsidiaries signatory thereto, as amended, supplemented, restated or otherwise
modified from time to time;
(the
defaults set forth in clauses (A)(i) through (iv) above shall be referred to
as
the “Franklin Master
Acknowledged Defaults”.
▇. ▇▇▇▇▇▇▇▇
Warehousing Agreement:
(i)
the Franklin Master Acknowledged
Defaults are defaults under the FranklinWarehousing Agreement; and
(ii)
certain of the Borrowers may be in
default of various other provisions of the FranklinWarehousing
Agreement;
(the
defaults set forth in clauses (B) (i) and (ii) above shall be referred to as
the
“Franklin Warehousing
Acknowledged Defaults”.
▇. ▇▇▇▇▇▇▇▇
Term Loan Agreement:
(i)
the Franklin Master Acknowledged
Defaults are defaults under the Franklin Term LoanAgreement; and
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(ii)
certain of the Borrowers may be in
default of various other provisions of the FranklinTerm Loan
Agreement
(the
defaults set forth in clauses (C) (i) and (ii) above shall be referred to as
the
“Franklin Term Loan
Acknowledged Defaults”, and together with the Franklin Master
Acknowledged Defaults and the Franklin Warehousing Acknowledged Defaults ,
the
“Acknowledged
Defaults”); and
WHEREAS,
Guarantor and each Borrower
have requested that Lender not exercise its rights to initiate proceedings
to
foreclose or otherwise realize upon the Collateral which secures the Obligations
of Guarantor and Borrowers as a consequence of the Acknowledged Defaults, and
Guarantor and each Borrower acknowledge that Lender is entitled to exercise
all
rights and remedies available to Lender under the Loan Documents;
and
WHEREAS,
Guarantor and each Borrower
acknowledge that Lender is granting the forbearance as provided in this
Agreement in consideration and reliance upon the promises and agreements of
Guarantor and each Borrower contained in this Agreement, and Guarantor and
each
Borrower acknowledge and agree that all actions taken by Lender prior
to the date hereof have been reasonable and appropriate under the circumstances;
and
WHEREAS,
the Borrowers, FCMC, and
Lender wish to make the Credit Agreements subject to the terms of this
Agreement, on the terms and conditions set forth herein, in order to, among
other things, (a) consolidate the Commercial Loans and convert the aggregate
outstanding principal amounts thereof into (i) a term loan facility in the
amount of $600,000,000 (“Tranche A”), (ii) a
term loan facility in the amount of $341,204,494, divided into four (4)
sub-tranches of $79,051,123.50 each and one sub-tranche of $25,000,000 (“Tranche B-1,” “Tranche
B-2,” “Tranche B-3”,
“Tranche
B-4” and
“Tranche B-5”
and, collectively, “Tranche B”) and (iii)
a term loan facility in the amount of $125,000,000 (“Tranche C”), (b)
maintain and increase an existing revolving credit facility to FCMC in the
amount of up to $5,000,000 and an existing letter of credit facility in an
amount not to exceed $5,500,000 for Letters of Credit (together, “Tranche D”), (c) make
each of Tranche A, Tranche B, Tranche C and Tranche D a full recourse obligation
of each Borrower, and make each Borrower jointly and severally liable for the
repayment of Tranche A, Tranche B, Tranche C and Tranche D, and (d) reaffirm
all
obligations, liabilities and Liens on substantially all assets of each Borrower
and Guarantor, including without limitation all of the collateral which secures
the Commercial Loans; and
WHEREAS,
in order to induce Lender to
enter into this Agreement, Guarantor is willing to provide a guaranty agreement
and to secure its obligations thereunder with a Lien on substantially all of
its
assets; and
WHEREAS,
in connection with the Credit
Agreements and the Commercial Loans, certain of the Borrowers and Guarantor
entered into promissory notes, security agreements, certificates, letter of
credit reimbursement agreements, pledge agreements, control agreements, joinder
agreements, counterpart signature pages, assignments, guaranties, banking
services agreements, hedging agreements, cash management agreements, consent
agreements, collateral agreements, amendments, modification agreements,
instruments and financing statements and other loan documents (each of the
foregoing, together with each Credit Agreement, this Agreement, the FCMC
Guaranty and all other agreements executed in connection herewith or therewith,
a “Loan
Document” and collectively, the “Loan Documents”);
and
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WHEREAS,
as of December 28, 2007,
certain Borrowers owe to Lender, without offset, recoupment or dispute, the
outstanding principal balances of the Commercial Loans as are set forth on
Schedule 2 hereto
(the “Commercial Loan
Principal Balances”), together with interest, fees, expenses, and other
charges pursuant to the Credit Agreements, and the Borrowers have requested
Lender to forgive $300,000,000 of the Commercial Loan Principal Balances, and
Lender has agreed to do so in reliance of the agreements of Guarantor and
Borrowers in this Agreement; and
WHEREAS,
by reason of the Acknowledged
Defaults, Lender has no obligation to make any additional advance on any Loan
Document, and Lender is entitled to immediately exercise any right, power or
remedy permitted thereto by law or any provision of the Loan Documents;
and
WHEREAS,
FCMC and the Borrowers have
requested that Lender forbear from exercising rights and remedies under the
respective Loan Documents pursuant to the terms of this Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, Guarantor and each Borrower acknowledge and
agree
that all of the recitals set forth above are true and correct and are
incorporated into this Agreement by this reference, and the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Forbearance,
Ratification
and Reaffirmation, Forgiveness of Indebtedness.
(a)
Absent a Forbearance Default, Lender, prior to May 15, 2009 (the “Forbearance Date”),
agrees not to initiate collection proceedings or exercise its remedies under
the
Loan Documents in respect of any Commercial Loan against Guarantor, any Borrower
or any Collateral or elect to have interest accrue under the respective Loan
Documents at the stated rate applicable after default. In addition,
absent a Forbearance Default, Lender, prior to thirty (30) days after the
Forbearance Effective Date, agrees not to initiate collection proceedings or
exercise its remedies under the Loan Documents in respect of any Static Loan
against Guarantor, any Borrower or any Collateral or elect to have interest
accrue under the respective Loan Documents at the stated rate applicable after
default. Each Borrower and Guarantor acknowledges and agrees that,
except as specifically set forth in this Agreement, Lender (i) reserves the
right to enforce each and every term of any Loan Document; (ii) is under no
duty
or obligation of any kind or any nature to grant Guarantor or any Borrower
any
additional period of forbearance beyond the Forbearance Date; (iii) shall not
be
construed to waive, relinquish or estop Lender from asserting Lender’s rights
under any Loan Document or applicable law; and (iv) shall be under no impediment
to Lender’s right to pursue any and all remedies available to it on or after the
Forbearance Date or immediately upon the occurrence of a Forbearance
Default.
(b) Guarantor
and
each Borrower agree that (i) all Obligations under the Credit Agreements are
the
valid and binding obligations of Guarantor and each Borrower respectively and
are enforceable in accordance with the terms thereof, except as modified by
this
Agreement; (ii) Obligations of each Borrower evidenced by each promissory note
executed in connection with the Credit Agreements, including without limitation,
each promissory note executed in connection with each Commercial Loan, executed
and
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delivered
by each 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 that the outstanding principal balance of each Commercial
Loan as of the date set forth in Schedule 2 hereto is set forth on Schedule
2
hereto; and (iii) the Liens and security interests granted to Lender with
respect to each Mortgage Loan and other Collateral pledged as security for
all
Obligations of Guarantor and each Borrower under the Credit Agreements and
the
promissory notes executed in connection therewith are valid and binding and
are
enforceable in accordance with the terms thereof, except as modified by this
Agreement and are hereby ratified and confirmed in all respects.
(c) As
of the
Forbearance Effective Date, provided that the Borrowers pay to Lender (i) all
interest and other charges owing in respect of the Commercial Loan Principal
Balances as of December 28, 2007, and the Commercial Loans and (ii) the
Restructuring Fee, Lender hereby agrees to forgive and hold harmless Guarantor
and the Borrowers a portion of the Commercial Loan Principal Balances totaling
$300,000,000.
2. Certain
Defined
Terms. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Franklin
Master Agreement. As used herein, the following terms shall have the
following meanings (all terms defined in this Section 2 or in other provisions
of this Agreement in the singular to have the same meanings when used in the
plural and vice versa):
“Accepted
Servicing
Practices” shall mean, with respect to any Mortgage Loan, accepted and
prudent mortgage servicing practices (including collection procedures) generally
acceptable to prudent mortgage lending institutions which service mortgage
loans
of the same type as such Mortgage Loans in the jurisdiction where the related
mortgaged property is located and in a manner consistent with (i) the policies
and practices in existence as of the Forbearance Effective Date for a period
of
60 days after such date and (ii) thereafter with the standards and procedures
described in the policies delivered to Lender pursuant to Section 11(c) (or
if
FMC fails to deliver such standards and policies, with the standards and
policies prescribed by Lender).
“Advance”
or
“Advances”
shall
mean
one or more of the Tranche A Advances, the Tranche B Advances, the Tranche
C
Advances or the Tranche D Advances, or any combination thereof.
“Affiliate”
shall
mean, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, “control” (together with the
correlative meanings of “controlled by” and “under common control with”) means
the possession, directly or indirectly, of the power (a) to vote 10% or more
of
the securities (on a fully diluted basis) having ordinary voting power for
the
directors or managing general partners (or their equivalent) of such Person,
or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
“Applicable
Collections
Amount” shall have the meaning assigned thereto in Section
5(d).
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“Applicable
Margin”
shall mean, with respect to each Advance listed below, the percentage
set forth
below opposite such Advance:
Tranche
A Advance....................... 2.25%
Tranche
B Advance........................ 2.75%
Tranche
D Advance........................ 2.50%
“Application
and Agreement
for Letter of Credit” shall mean an application and agreement for standby
letter of credit by, between and among Guarantor or any Borrowers, on the one
hand, and Lender, on the other hand, in a form provided by Lender, either as
originally executed or as it may from time to time be supplemented, modified,
amended, renewed or extended.
“Approved
Expenses”
shall mean those expenses of Guarantor and its Subsidiaries as shall
be approved
by Lender in its sole discretion, and which shall include the expenses of
Guarantor its Subsidiaries in the ordinary course of business of up to
$2,500,000 per month for the first two months after the Forbearance Effective
Date, including without limitation, all fees and expenses as described in
Section 40 of this Agreement (other than any such amounts paid in January 2008
and February 2008), out-of-pocket collection advances, expenses related to
the
maintenance of REO Properties, all fees and charges in respect of Letters of
Credit and banking services provided for the account of Guarantor and any
Borrower and costs of any litigation to require sellers of Mortgage Loans
pledged to Lender to repurchase such loans because of fraud, misrepresentation
or breach of warranty, in each case at the discretion of Lender.
“Bankruptcy
Code”
shall mean Title 11 of the United States Code (11 U.S.C. Section 101
et seq.),
as amended by the Bankruptcy Reform Act and as further amended from time to
time, or any successor statute.
“Bankruptcy
Reform
Act” shall mean the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005, effective as of October 17, 2005.
“Business
Day” or
“business
day”
shall mean any day other than a Saturday, Sunday or other day on which
commercial banks are required or authorized to close under the laws of the
State
of Ohio, and if such day relates to a determination of LIBOR, means any such
day
on which dealings in U. S. dollar deposits are conducted by and between banks
in
the London interbank eurodollar market.
“Capital
Stock” shall
mean any and all shares, interests, participations or other equivalents (however
designated) of capital stock of a corporation, any other equity interests in
an
entity however designated, any membership interests in a limited liability
company, any and all similar ownership interests in a Person, in each case
whether certificated or uncertificated, and any and all warrants or options
to
purchase any of the foregoing.
“Change
of Control”
shall mean, (a) with respect to FCMC, the replacement of a majority
of the board
of directors of FCMC from the directors who constituted the board of directors
on the date of this Agreement for any reason other than death or disability,
and
such replacement shall not have been approved by such board of directors of
FCMC, as constituted on the date of this Agreement (or as changed over time
with
the approval of the then existing board of directors of FCMC); or (b) with
respect to FCMC, a Person or Persons acting in concert, as a result of a
tender
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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 FCMC representing more than 20% of the combined voting
power of the outstanding securities of FCMC, ordinarily having the right to
vote
in the election of directors from the beneficial owners as of the date of this
Agreement; or (c) with respect to any Borrower, the failure of FCMC to own,
directly or indirectly and free and clear of any adverse claims (other than
Liens securing the Obligations), 100% of the issued and outstanding Capital
Stock of such Borrower.
“Collateral”
shall
have the meaning assigned to such term in a certain Security Agreement dated
November 15, 2007, as well as in the Credit Agreements, executed and delivered
to Lender by Guarantor and the Borrowers and shall include without limitation
all monies owing to Guarantor or any Borrower from taxing
authorities.
“Collections”
shall
mean, without duplication, all collections, distributions, dividends, payments
and other proceeds in respect of principal, interest, net liquidation proceeds
or insurance proceeds, or Interest Rate Hedge Agreements from whatever source,
received by or for the account of Guarantor, any Borrower, or Lender on or
in
respect of any Mortgage Loan(s) or otherwise constituting part of the
Collateral, including without limitation (i) the net cash proceeds received
by any Borrower or any of its Affiliates, together with any non-offered
securities issued, in connection with the securitization or sale of any Mortgage
Loan, and (ii) the related proceeds of any liquidation, collection, sale,
receipt, appropriation or realization upon the Collateral, net of
(iii) cash reserves for Escrow Deposits and Approved Expenses.
“Commitments”
shall
mean, collectively, the Tranche A Commitments, the Tranche B Commitments, the
Tranche C Commitments and the Tranche D Commitments.
“Escrow
Deposits”
shall mean, with respect to any Mortgage Loan, the amounts constituting
ground
rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage
insurance premiums, fire and hazard insurance premiums, condominium charges
and
any other payments actually received by the servicer or Lender, which are
required to be escrowed by the related mortgagor with the related mortgagee
pursuant to any mortgage or any other document.
“FCMC
Guaranty” shall
mean the Guaranty dated as of date hereof and made by Guarantor in favor of
Lender, as the same may be amended, supplemented or otherwise modified and
in
effect from time to time in accordance with the terms thereof.
“Governmental
Authority” shall mean any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator having jurisdiction over the Guarantor or any of
the
Borrowers, any of their Affiliates or any of their properties.
“Indebtedness”
shall
mean, for any Person: (a) obligations created, issued or incurred by such Person
for borrowed money (whether by loan, the issuance and sale of debt securities
or
the sale of property to another Person subject to an understanding or agreement,
contingent or
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otherwise,
to repurchase such property from such Person); (b) obligations of such Person
to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business; (c) indebtedness of
others secured by a Lien on the property of such Person, whether or not the
respective Indebtedness so secured has been assumed by such Person; (d)
obligations (contingent or otherwise) of such Person in respect of letters
of
credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) capital lease obligations of such
Person; (f) obligations of such Person under repurchase agreements or like
arrangements; (g) indebtedness of others guaranteed by such Person; (h) all
obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; (i) indebtedness of general
partnerships of which such Person is a general partner; and (j) any other
indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument.
“Interest
Period”
shall mean, with respect to any Advance, (i) initially, the period commencing
on
any funding date with respect to such Advance and ending on the calendar day
prior to the Payment Date of the next succeeding month, and (ii) thereafter,
each period commencing on the Payment Date of one month and ending on the
calendar day prior to the Payment Date of the next succeeding month; provided, that if
any
Interest Period would otherwise expire on a day which is not a business day,
such Interest Period shall be extended to the next succeeding business day;
provided,
however, that if such next succeeding business day occurs in the
following calendar month, then such Interest Period shall expire on the
immediately preceding business day, and provided further that
interest shall continue to accrue on all amounts due and payable hereunder
that
remain unpaid on the applicable Termination Date until such time as such amounts
are paid in full.
“Interest
Rate” shall
mean, for each day in respect of (a) the Tranche A Advances, the Tranche B
Advances or the Tranche D Advances, as applicable, a per annum rate equal to
LIBOR for that day plus the relevant Applicable Margin, and (b) the Tranche
C
Advances, a rate of 10% per annum.
“Interest
Rate Hedge
Agreement” shall mean an interest rate swap, cap or collar agreement or
any other hedging arrangements providing for protection against fluctuations
in
interest rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
“Letter
of Credit”
means any letter of credit issued by Lender for the account of Guarantor
or any
Borrower, either as originally issued or as the same may, from time to time,
be
amended or otherwise modified, extended or replaced.
“Letter
of Credit Facing
Fee” shall mean, with respect to each issued and outstanding Letter of
Credit, a facing fee payable to Lender, for its own account, at the rate of
0.125% per annum multiplied by the average daily undrawn amount of such Letter
of Credit during the period in respect of which such fee is paid.
“Letter
of Credit
Exposure” shall mean, as of any date of determination, the aggregate
undrawn stated amount of all outstanding Letters of Credit plus the aggregate
of
all amounts drawn under Letters of Credit for which Lender has not yet received
payment or reimbursement
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(whether from
Guarantor, any Borrower or from the proceeds of Tranche D Advances or
otherwise).
“LIBOR”
shall
mean, for each day during an
Interest Period with respect to an Advance, the rate per annum obtained by dividing (1)
the actual or
estimated per annum rate, or the arithmetic mean of the per annum rates, of
interest for deposits in U.S. dollars for one (1) month, as determined by Lender
in its discretion based upon information which appears on page LIBOR01,
captioned British Bankers Assoc. Interest Settlement Rates, of the Reuters
America Network, a service of Reuters America Inc. (or such other page that
may
replace that page on that service for the purpose of displaying London interbank
offered rates; or, if such service ceases to be available or ceases to be use
by
Lender, such other reasonably comparable money rate service as Lender may
select) or upon information obtained from any other reasonable procedure, as
of
two banking days prior to the commencement of such Interest Period; by (2)
an
amount equal to one minus the stated maximum rate (expressed as a decimal),
if
any, of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is specified on each
date LIBOR is determined by the Board of Governors of the Federal Reserve System
(or any successor agency thereto) for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
“Eurocurrency liabilities” in Regulation D of such Board) maintained by a member
bank of such system, or any other regulations of any Governmental Authority
having jurisdiction with respect thereto, all as conclusively determined by
Lender. As used herein, “banking day” shall mean any day other than a
Saturday or a Sunday on which banks are open for business in Columbus, Ohio,
and
on which banks in London, England, settle payments. Subject to any
maximum or minimum interest rate limitation specified herein or by applicable
law, LIBOR shall change automatically without notice to Guarantor or any
Borrower immediately on the first day of each Interest Period, with any change
thereto effective as of the opening of business on the day of any
change.
“LIBOR
Advance” shall
mean an Advance which bears an Interest Rate based on LIBOR.
“Lien”
shall
mean any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), other charge or security interest, or any preference,
priority or other agreement or preferential arrangement of any kind or nature
whatsoever.
“Mandatory
Prepayment
Event” shall mean:
(a)
any sale, transfer or other disposition of any property of any Borrower (other
than Tribeca Lending Corp. (“Tribeca”)) or Guarantor, including without
limitation pursuant to any repurchase of Mortgage Loans; 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
(other than Tribeca) or Guarantor; or
(c)
the incurrence by any Borrower (other than Tribeca) or Guarantor of any
Indebtedness for borrowed money other than Subordinated Indebtedness;
or
(d)
the receipt by any Borrower (other than Tribeca) or Guarantor of the proceeds
of
(i) any settlement or monetary judgment in respect of any claim, litigation
or
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other similar
proceeding or (ii) any tax refund or other amount owing by any taxing authority
or other Governmental Authority.
“Material
Adverse
Effect” shall mean a material adverse effect on (a) the operations,
business, properties, liabilities (actual or contingent), condition (financial
or otherwise) or prospects of any Borrower or Guarantor, (b) the ability of
any
Borrower or Guarantor to perform in all material respects its Obligations under
this Agreement or any obligations under any of the Loan Documents to which
it is
a party, (c) the validity or enforceability in all material respects of any
of
the Loan Documents, (d) the rights and remedies of Lender under any of the
Loan
Documents (including without limitation Lender’s ability to foreclose upon any
Collateral or to exercise any of its other rights or remedies under any of
the
Loan Documents, whether as a secured party under the Uniform Commercial Code,
in
equity, at law or otherwise), (e) the timely payment of the principal of or
interest on the Advances or other amounts payable in connection therewith or
(f) the Collateral.
“Minimum
Tranche A Payment
Amount” shall mean (i) with respect to any Payment Date other than the
Tranche A Termination Date, $5,400,000, and (ii) with respect to the Tranche
A
Termination Date, the amount necessary to repay the aggregate outstanding unpaid
principal balance of the Tranche A Advances in full.
“Minimum
Tranche B Payment
Amount” shall mean (i) with respect to any Payment Date other than the
Tranche B Termination Date, $750,000, which amount will be allocated first
to
Tranche B-1 Advances, second to Tranche B-2 Advances, third to Tranche B-3
Advances, fourth to Tranche B-4 Advances, and fifth to Tranche B-5 Advances
(each in inverse order of maturing payments) and (ii) with respect to the
Tranche B Termination Date, the amount necessary to repay the aggregate
outstanding unpaid principal balance of the Tranche B Advances in
full.
“Mortgage”
shall
mean,
with respect to any Mortgage Loan, the mortgage, deed of trust, security deed
or
other instrument which creates a Lien on the fee simple or a leasehold estate
in
the real property securing such Mortgage Loan.
“Mortgage
Loan” shall
mean any mortgage loan in which any Borrower or Guarantor has an interest,
whether or not any applicable custodian has been instructed to hold for Lender
(pursuant to an applicable custodial agreement or otherwise in the case of
any
Mortgage Loan not held by Lender as custodian) and which mortgage loan includes,
without limitation, (i) a mortgage note, the related Mortgage and all other
mortgage loan documents and (ii) all right, title and interest of Guarantor
or
the applicable Borrower in and to the related mortgaged property.
“Net
Proceeds” shall
mean, with respect to any Mandatory Prepayment Event, (a) the cash proceeds
received in respect of such Mandatory Prepayment Event, including (i) any
cash received in respect of any non-cash proceeds (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise,
but
only as and when received), (ii) in the case of a casualty or other insured
damage to any property or asset of any Borrower or Guarantor, insurance
proceeds, and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, in each case net of
(b) the sum of (i) all reasonable and customary fees and out-of-pocket
expenses paid to third parties (other than Affiliates) in connection with such
Mandatory Prepayment Event,
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and
(ii) in the case of a sale, transfer or other disposition of an asset or a
casualty, a condemnation or similar proceeding, or the receipt of any tax
refund, the amount of all payments required to be made as a result of such
Mandatory Prepayment Event to repay Indebtedness (other than Advances) secured
by such asset.
“Net
Worth” shall
mean, with respect to any Person, the excess of the total assets of such Person
over the total liabilities of such Person, as determined in accordance with
GAAP.
“Note”
shall
mean each
Tranche A Note, Tranche B-1 Note, Tranche B-2 Note, Tranche B-3 Note, Tranche
B-4 Note, Tranche B-5 Note, Tranche C Note or Tranche D Note, as
applicable.
“Obligations”
shall
mean all obligations, loans, advances indebtedness and liabilities of Guarantor
and each Borrower to Lender, whether direct or indirect, joint or several,
absolute or contingent, due or to become due, and whether now existing or
hereafter incurred, which may arise under, out of or in connection with this
Agreement, the Notes, any other Loan Document on account of principal, interest,
reimbursement obligations, fees, indemnities, including without limitation,
any
interest, fee, cost and expense accrued or incurred after the filing of any
petition under any bankruptcy or insolvency law, any cash management or treasury
management agreements, any automated clearinghouse obligation, any obligation
or
liability under any Interest Rate Hedge Agreement, any amount owing pursuant
to
any service performed by Lender or any affiliate thereof for Guarantor or any
Borrower and any amount due or owing Lender pursuant to any Credit Agreement
or
other Loan Document.
“Payment
Date” shall
mean either (a) the fifth (5th) day
of each calendar month or, if such day is not a business day, the next
succeeding business day, or (b) in the case of the final Payment Date for the
Tranche A Advances, the Tranche B Advances, the Tranche C Advances or the
Tranche D Advances, the Tranche A Termination Date, the Tranche B Termination
Date, the Tranche C Termination Date or the Tranche D Termination Date,
respectively; provided, however, payments of interest accrued on the Advances
shall commence on February 5, 2008. If the due date of any payment
due in respect to any Advance shall be a day that is not a business day, such
due date shall be extended to the next succeeding business day; provided, however,
that if such next succeeding business day occurs in the following calendar
month, then such due date shall be the immediately preceding business
day.
“Person”
shall
mean
any individual, corporation, company, voluntary association, partnership, joint
venture, limited liability company, trust, unincorporated association or
government (or any agency, instrumentality or political subdivision
thereof).
“PIK
Interest” shall
have the meaning assigned thereto in Section 5(a)(ii).
“Post-Default
Rate”
shall mean, in respect of any principal of any Advance or any other
amount under
this Agreement, any Note or any other Loan Document that is not paid when due
to
Lender or any Affiliate thereof (whether at stated maturity, by acceleration
or
mandatory prepayment or otherwise), a rate per annum during the period from
and
including the due date to but excluding the date on which such amount is paid
in
full equal to the sum of (x) 5.00% per annum plus (y)(i) the
related fixed or variable Interest Rate otherwise applicable to such
Advance
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or
other
amount or (ii) if no such Interest Rate is otherwise applicable, LIBOR plus the Applicable
Margin in respect of Tranche A.
“Prime
Commercial
Rate” shall mean the commercial lending rate of interest per annum as
fixed from time to time by the management of Huntington and its successors,
at
its main office and designated as its “Prime Commercial Rate,” from time to time
in effect, with each change in the such rate automatically and immediately
changing the interest rate on all applicable Advances without notice to the
Borrowers, subject to any maximum or minimum interest rate limitation specified
by applicable law. Each Borrower hereby waives any right to claim that the
Prime
Commercial Rate is an interest rate other than that rate designated by
Huntington as its “Prime Commercial Rate” on the grounds that: (i) such rate may
or may not be published or otherwise made known to such Borrower or (ii)
Huntington may make loans to certain borrowers at interest rates that are lower
than its “Prime Commercial Rate.”
“REO
Property” shall
mean any real property, the title to which is held by Guarantor, any Borrower
or
one of its Affiliates, together with all buildings, fixtures and improvements
thereon and all other rights, benefits and proceeds arising from and in
connection with such property.
“Required
Payments”
shall have the meaning assigned thereto in Section 5(d).
“Restricted
Payment”
means (i) any dividend or other distribution, direct or indirect, on
account of
any shares of any class of Capital Stock or similar ownership interest of FCMC
now or hereafter outstanding, (ii) any redemption, retirement, sinking fund
or
similar payment, purchase or other acquisition for value, direct or indirect,
of
any shares of any class of Capital Stock or interest of FCMC now or hereafter
outstanding, (iii) any payment made (other than any cashless exercise of stock
options in the Guarantor) to redeem, purchase, repurchase or retire, or to
obtain the surrender of, any outstanding warrants, options or other rights
to
acquire shares of any class of Capital Stock or ownership interest of any
Borrower or FCMC now or hereafter outstanding, and (iv) any payment or
prepayment of principal, premium, if any, or interest, fees or other charges
on
or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim to rescission with respect to,
any
Subordinated Indebtedness.
“Restructuring
Fee”
shall mean the sum of $12,000,000, payable in full at the Forbearance
Effective
Date.
“Responsible
Officer”
shall mean, as to any Person, the chief executive officer or, with respect
to
financial matters, the chief financial officer of such Person; provided, that in
the
event any such officer is unavailable at any time he or she is required to take
any action hereunder, Responsible Officer shall mean any officer authorized
to
act on such officer’s behalf as demonstrated by a certificate of corporate
resolution.
“Security
Agreement”
shall mean each Credit Agreement and the Security Agreement, dated as
of
November 15, 2007, and made by Guarantor and certain Borrowers in favor of
Lender, as the same may be amended, supplemented or otherwise modified and
in
effect from time to time in accordance with the terms thereof.
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“Subordinated
Indebtedness” shall mean any Indebtedness incurred by Guarantor, a
Borrower or any Subsidiary, the payment of which is subject to a debt
subordination agreement or other subordination provisions in favor of Lender,
to
the written satisfaction of Lender and the terms (including, without limitation,
with respect to amount, maturity, amortization, interest rate, premiums, fees,
covenants, subordination terms, events of default and remedies) of which are
reasonably acceptable to Lender.
“Subsidiary”
shall
mean, with respect to any Person, any corporation, limited liability company,
partnership or other entity of which at least a majority of the securities
or
other ownership interests having by the terms thereof ordinary voting power
to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership, limited liability company or other
entity (irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening
of
any contingency) is at the time directly or indirectly owned or controlled
by
such Person or one or more Subsidiaries of such Person or by such Person and
one
or more Subsidiaries of such Person.
“Termination
Date”
shall mean, as applicable, the Tranche A Termination Date, the Tranche
B
Termination Date, the Tranche C Termination Date or the Tranche D Termination
Date.
“Tranche”
shall
mean
each of Tranche A, Tranche B-1, Tranche B-2, Tranche ▇-▇, ▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇
▇-▇, Tranche C and Tranche D.
“Tranche
A” shall have
the meaning assigned to that term in the recitals of this
Agreement.
“Tranche
A Advance”
and “Tranche A
Advances” shall have the meanings assigned to those terms in Section
3(a).
“Tranche
A Commitment”
shall mean the commitment of Lender to make a Tranche A Advance in the
aggregate
amount of $600,000,000.
“Tranche
A Note” shall
mean the amended and restated promissory note provided for Lender’s Tranche A
Advance and any promissory note delivered in substitution or exchange therefor,
in each case as the same shall be modified, supplemented, amended or restated
and in effect from time to time in accordance with the terms of this
Agreement.
“Tranche
A Termination
Date” shall mean the Forbearance Date or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law.
“Tranche
B” shall have
the meaning assigned to that term in the recitals of this
Agreement.
“Tranche
B Advance”
and “Tranche B
Advances” shall have the meanings assigned to those terms in Section
3(b).
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“Tranche
B-1 Advance”,
“Tranche B-2
Advance”, “Tranche B-3
Advance”,
“Tranche B-4
Advance” and “Tranche B-5
Advance”,
and the plural form of each such term, shall have the meanings assigned thereto
in Section 3(b).
“Tranche
B Commitment”
shall mean the commitment of Lender to make a Tranche B Advance in the
original
aggregate amount of $341,204,494.
“Tranche
B Note” shall
mean each of the amended and restated promissory notes provided for Lender’s
Tranche B-1 Advance, Tranche B-2 Advance, Tranche B-3 Advance, Tranche B-4
Advance and Tranche B-5 Advance and any promissory note delivered in
substitution or exchange therefor, in each case as the same shall be modified,
supplemented, amended or restated and in effect from time to time in accordance
with the terms of this Agreement.
“Tranche
B Termination
Date” shall mean the Forbearance Date or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law.
“Tranche
C” shall have
the meaning assigned to that term in the recitals of this
Agreement.
“Tranche
C Advance”
and “Tranche C
Advances” shall have the meanings assigned to those terms in Section
3(c).
“Tranche
C Commitment”
shall mean the commitment of Lender to make a Tranche C Advance in the
original
aggregate amount of $125,000,000.
“Tranche
C Collections
Amount” shall mean, with respect to any Payment Date and the portion of
the Applicable Collections Amount for such Payment Date remaining after giving
effect to the payments provided in clauses first through
tenth
of Section
5(d), (i) 90% of such remaining Applicable Collections Amount for so long as
FCMC is continuing to service the Mortgage Loans pledged as Collateral, and
(ii)
otherwise 100% of such remaining Applicable Collections Amount if FCMC is no
longer servicing such Mortgage Loans until all Tranche C Advances are paid
in
full.
“Tranche
C Note” shall
mean the amended and restated promissory note provided for Lender’s Tranche C
Advance and any promissory note delivered in substitution or exchange therefor,
in each case as the same shall be modified, supplemented, amended or restated
and in effect from time to time in accordance with the terms of this
Agreement.
“Tranche
C Termination
Date” shall mean the Forbearance Date or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law.
“Tranche
D” shall have
the meaning assigned to that term in the recitals of this
Agreement.
“Tranche
D Advance”
and “Tranche D
Advances” shall have the meanings assigned to those terms in Section
3(d).
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“Tranche
D Commitment”
shall mean as to Lender, the commitment of Lender to fund Tranche D
Advances up
to $5,000,000 and issue Letters of Credit, the revolving portion of which shall
not exceed $5,000,000.
“Tranche
D Note” shall
mean the amended and restated promissory note provided for Lender’s Tranche D
Advances and any promissory note delivered in substitution or exchange therefor,
in each case as the same shall be modified, supplemented, amended or restated
and in effect from time to time in accordance with the terms of this
Agreement.
“Tranche
D Termination
Date” shall mean the Forbearance Date or such earlier date on which this
Agreement shall terminate in accordance with the provisions hereof or by
operation of law.
“Tribeca
Advances”
shall means all “Advances” under a certain Forbearance Agreement and Amendment
to Credit Agreements entered into as of the 28th day of December, 2007, by
and
among certain Subsidiaries of Tribeca Lending Corp. signatory thereto, Tribeca
Lending Corp., a New York corporation, and Lender, as amended,
supplemented, restated or otherwise modified from time to time (the “Tribeca Forbearance
Agreement”).
“Uniform
Commercial
Code” shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of Ohio; provided, that if
by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Ohio, “Uniform Commercial Code” shall mean the Uniform Commercial Code as
in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or
non-perfection.
3. Amended
and Restated
Advances. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
of
the Borrowers and Guarantor herein set forth, Lender hereby agrees to make
the
Advances described in this Section 3 and the Borrowers jointly and
severally agree to repay such Advances as follows:
(a)
Tranche A
Advances. Lender agrees, on the Forbearance Effective Date, to
convert a portion of the outstanding principal amount of Lender’s Commercial
Loans equal to Lender’s Tranche A Commitment into a term loan to the Borrowers
(each amount so converted, a “Tranche A Advance” and, collectively, the “Tranche
A Advances”). Any portion of the Tranche A Advances that is
subsequently repaid or prepaid may not be reborrowed.
(b)
Tranche B
Advances. Lender agrees, on the Forbearance Effective Date, to
convert a portion of the outstanding principal amount of Lender’s Commercial
Loans equal to Lender’s Tranche B Commitment into four term loans to the
Borrowers, each in an amount of $79,051,123.50 and one in an amount of
$25,000,000 (each aggregate amount so converted, a “Tranche B Advance” and,
collectively, the “Tranche B Advances”; and each such proportionate portion
thereof a “Tranche B-1 Advance”, “Tranche B-2 Advance”, “Tranche B-3 Advance”,
“Tranche B-4 Advance” and “Tranche B-5 Advance” and, collectively, the “Tranche
B-1 Advances”, “Tranche B-2 Advances”, “Tranche B-3
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Advances”,
“Tranche B-4 Advance” and “Tranche B-5 Advances”). Any portion of the
Tranche B Advances that is subsequently repaid or prepaid may not be
reborrowed.
(c)
Tranche C
Advances. Lender agrees, on the Forbearance Effective Date, to
convert a portion of the outstanding principal amount of Lender’s Commercial
Loans equal to Lender’s Tranche C Commitment into a term loan to the Borrowers
(each amount so converted, a “Tranche C Advance” and, collectively, the “Tranche
C Advances”). Any portion of the Tranche C Advances that is
subsequently repaid or prepaid may not be reborrowed.
(d)
Tranche D
Advances.
(i)
Subject
to
the terms and conditions of this Agreement and in reliance on the
representations, warranties and covenants of the Borrowers and Guarantor herein
set forth, Lender hereby agrees, subject to the limitations set forth below
with
respect to the maximum aggregate amount of Tranche D Advances permitted to
be
outstanding from time to time, to make loans to Guarantor or the
Borrowers and issue Letters of Credit for the account of Guarantor or
any Borrower (each, a “Tranche D Advance” and collectively, the “Tranche D
Advances”), from time to time on any business day during the period from and
including the Forbearance Effective Date to but excluding the Tranche D
Termination Date, in an aggregate amount not exceeding the Tranche D Commitment
to be used in accordance with the terms of this Agreement.
(ii)
Lender’s Tranche D Commitment shall expire on the Tranche D Termination Date and
all Tranche D Advances and all other amounts owed hereunder with respect to
the
Tranche D Advances shall be paid in full no later than the Tranche D Termination
Date.
(iii)
Anything contained in this Agreement to the contrary notwithstanding, the
Tranche D Advances and the Tranche D Commitments shall be subject to the
limitation that in no event shall the sum of the aggregate outstanding principal
amount of the Tranche D Advances plus the Letter of Credit Exposure at any
time
exceed the total Tranche D Commitments then in effect.
(e) Notes.
(i)
Lender’s Tranche A Advance, Tranche B-1 Advance, Tranche B-2 Advance, Tranche
B-3 Advance, Tranche B-4 Advance, Tranche B-5 Advance and Tranche C Advance
each
shall be evidenced by a promissory note of the Borrowers, substantially in
the
form of Exhibit A, Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇, Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇
▇-▇, and Exhibit C, respectively, in each case dated the Forbearance Effective
Date and payable to Lender or its assigns in a principal amount equal to
Lender’s Advance under the applicable Tranche. The revolving portion
of Lender’s Tranche D Advances shall be evidenced by a promissory note of the
Borrowers, substantially in the form of Exhibit D, dated the Forbearance
Effective Date and payable to Lender or its assigns in a principal amount equal
to
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Lender’s
Tranche D Commitment.
(ii)
The date, amount and Interest Rate applicable from time to time in respect
of
each Advance made by Lender to the Borrowers, and each payment made on account
of the principal thereof or interest thereon, shall be recorded by Lender on
its
books and records. Any such recordation or notation shall be conclusive and
binding on the Borrowers, absent manifest error; provided, that the
failure of Lender to make any such recordation or notation shall not affect
the
obligations of any Borrower to make payment when due of any amount owing
hereunder or under such Note in respect of the applicable Advance or
Advances.
4. Inability
to Determine
Rates, Illegality. Anything contained herein to the contrary
notwithstanding, if, prior to or upon any determination of LIBOR:
(a)
Lender determines, which determination shall be conclusive and binding upon
the
Borrowers, that quotations of interest rates for the relevant deposits referred
to in the definition of “LIBOR” are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining rates of interest
for
LIBOR Advances as provided herein; or
(b)
Lender determines, which determination shall be conclusive and binding upon
the
Borrowers, that LIBOR is not likely to adequately cover the cost to Lender
of
making or maintaining the relevant LIBOR Advances; or
(c)
Lender notifies Guarantor that it has become unlawful for Lender to honor its
obligations to make or maintain LIBOR Advances hereunder;
then
Lender shall give Guarantor notice thereof and, so long as such condition
remains in effect, all Advances (other than Tranche C Advances) of Lender shall
bear interest at a rate per annum equal to the Prime Commercial Rate, plus
the
Applicable Margin, minus two percent (2%) per annum.
5. Payments
of Interest and
Principal on the Advances.
(a)
Interest on the
Advances; PIK Interest.
(i)
The
Borrowers shall pay to Lender interest on the aggregate outstanding principal
amount of the Advances of each Tranche for the period from and including the
respective dates of such Advances to but excluding the respective dates such
Advances are paid in full, in each case at a rate per annum equal to the
applicable Interest Rate. Notwithstanding the foregoing, the
Borrowers shall pay to Lender interest at the applicable Post-Default Rate
(i)
on the outstanding principal amount of any Advances during any period when
any
Forbearance Default has occurred and is continuing and (ii) on any interest
or
amount (other than principal of any Advance) payable by the Borrowers hereunder
or under any applicable Note that shall not be paid in full when due, for the
period from and including the due date thereof to but excluding the date the
same is paid in full. Accrued and unpaid interest on each Advance
shall be payable monthly on each Payment Date and on
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the
Tranche A Termination Date, Tranche B Termination Date, Tranche C Termination
Date, or Tranche D Termination Date, as applicable, except that interest payable
at the applicable Post-Default Rate shall accrue daily and shall be payable
promptly upon demand.
(ii) Anything
contained in Section 5 (a)(i) to the contrary notwithstanding, Guarantor, on
behalf of the Borrowers, has elected as of the Forbearance Effective Date and
Lender has consented thereto, to pay the accrued and unpaid interest due in
respect of the Tranche C Advances on any Payment Date by adding the amount
thereof to the outstanding principal amount of the Tranche C Advances (any
such
interest in respect of the Tranche C Advances that is so added to the
outstanding principal amount of the Tranche C Advances being “PIK
Interest”). At any time after Guarantor, on behalf of the
Borrowers, has elected PIK Interest, upon request of Lender, Borrowers will
execute and deliver to Lender an additional Tranche C Note for the amount of
such PIK Interest or a replacement Tranche C Note in a face amount equal to
the
then outstanding principal sum, plus the amount of such PIK Interest; provided,
however, the failure of Lender to request that the Borrowers execute, or the
failure of the Borrowers to provide, any such additional Tranche C Note shall
in
no way affect the Borrowers obligation to pay any such PIK Interest at the
time
and in the manner of other Tranche C Advances.
(b)
Scheduled Principal
Payments in Respect of Tranche A Advances and Tranche B Advances,Principal
Payments. On each Payment Date in respect of the Tranche A
Advances and the Tranche B Advances, the Borrowers shall pay to Lender, the
Minimum Tranche A Payment Amount and the Minimum Tranche B Payment Amount,
as
applicable, for such Payment Date. The Borrowers shall pay all
remaining amounts of Tranche C Advances and Tranche D Advances as set forth
in
paragraphs (d) and (e) below and on the applicable Termination
Date.
(c)
Payment Date
Reports. No later than two business days prior to each Payment
Date, Lender shall provide to Guarantor a report stating (i) the amount of
interest due for the current Interest Period pursuant to Section 5(a),
separately stated for the applicable Tranche A Advances, the Tranche B Advances,
the Tranche C Advances and the Tranche D Advances, (ii) the Minimum Tranche
A
Payment Amount and the Minimum Tranche B Payment Amount for such Payment Date,
and (iii) if such Payment Date occurs on a Termination Date, the aggregate
outstanding principal amount of the Tranche A Advances, Tranche B Advances,
Tranche C Advances and/or Tranche D Advances, as applicable; provided, that the
failure of Lender to make any such report shall not affect the obligations
of
the Borrowers to make payment when due of any amount owing hereunder or under
any Note in respect of the related Advances.
(d)
Collateral
Collection. Without in any way limiting the obligations of the
Borrowers to make the payments of principal and interest that are required
to be
made in respect of the Advances pursuant to Sections 5(a) and 5(b) (with respect
to any Payment Date, the “Required Payments”),
the Borrowers hereby authorize and direct Lender, on each Payment Date, to
apply
all Collections received from and after the immediately preceding Payment Date
(or, in the case of the first Payment Date, from and after the
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Forbearance
Effective Date) to but excluding such Payment Date (the aggregate amount of
such
Collections being the “Applicable Collections
Amount” in respect of such Payment Date) in the following order of
priority:
first,
to the payment
of interest on the Tranche A Advances as calculated for such Payment
Date;
second,
to the
payment of interest on the Tranche B Advances as calculated for such Payment
Date;
third,
to the payment
of interest on the Tranche D Advances as calculated for such Payment
Date;
fourth,
to the
payment of interest on the Tranche C Advances as calculated for such Payment
Date, other than any such interest that is converted to PIK
Interest;
fifth,
to pay any
Letter of Credit Facing Fee or Letter of Credit Fee;
sixth,
to pay the
Minimum Tranche A Payment Amount for such Payment Date;
seventh,
to pay the
Minimum Tranche B Payment Amount for such Payment Date;
eighth,
to prepay the
outstanding principal amount of the Tranche A Advances until the same are paid
in full, with such prepayments being applied in the inverse order of maturity
to
the remaining Minimum Tranche A Payment Amounts;
ninth,
to prepay the
outstanding principal amount of the Tranche B Advances until the same are paid
in full, with such prepayments being applied in the order set forth in the
definition of Minimum Tranche B Payment Amounts;
tenth,
to any unpaid
amounts on the Static Loans;
eleventh,
on a pro rata basis to
repay Tranche D Advances in full, Letter of Credit Exposure in full and any
Obligations under any Interest Rate Hedge Agreement to Lender in
full;
twelfth,
to the
extent of the applicable Tranche C Collections Amount to pay the outstanding
interest and principal amount of the Tranche C Advances until the same are
paid
in full, with such payments being applied first to any
outstanding PIK Interest in respect of the Tranche C Advances and thereafter to the
remaining principal amount thereof; and
thirteenth,
to pay
any unpaid Tribeca Advances until paid in full and then to Guarantor for the
benefit of the Borrowers.
All
Collections in respect of the Static Loans shall be applied pursuant to the
terms of the Franklin Master Agreement.
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(e)
Mandatory
Prepayments. Within two (2) business days after receipt of the
Net Proceeds following any Mandatory Prepayment Event, the Borrowers shall
prepay the Advances in an aggregate amount equal to the Net Proceeds of such
Mandatory Prepayment Event, any such prepayment to be applied in the same manner
as set forth in Section 5 (d).
(f)
Computations. Interest
on the Advances shall be computed on the basis of a 360-day year for the actual
days elapsed (including the first day but excluding the last day) occurring
in
the period for which payable.
6. Letters
of
Credit.
(a)
Letters of
Credit. Subject to the terms and conditions of this Agreement
and any applicable Application and Agreement for Letter of Credit, on any
business day at least 30 business days prior to the Tranche D Termination Date,
Lender, at its discretion may issue such Letters of Credit in such face amounts
as Guarantor may request; provided that: (i)
on
the date of issuance of any Letter of Credit and after giving effect to the
issuance thereof, the Letter of Credit Exposure will not exceed $5,500,000;
and
(ii) the expiry date of any Letter of Credit shall not be later than the date
which is thirty (30) days prior to the Tranche D Termination Date, provided,
however, Guarantor has provided the information necessary for Lender to complete
the form of Letter of Credit, and the issuance of such Letter of Credit would
not violate one or more policies of Lender. On and after the
Forbearance Effective Date, the Letters of Credit issued by Lender for the
account of Guarantor or the Borrowers prior to the date of this Agreement and
set forth on Schedule
6 hereto shall be subject to the terms of this Agreement and deemed
issued pursuant to the terms hereof.
(b)
Payment of Letter
of
Credit. In consideration for the issuance by Lender of the
Letters of Credit, each of Guarantor and the Borrowers hereby authorize, empower
and direct Lender to disburse directly to Lender, as a Tranche D Advance under
this Agreement, an amount equal to the stated amount of each draft drawn under
each Letter of Credit, plus all interest, costs, expenses and fees due to Lender
pursuant to this Agreement or any other Loan Document. Any such
disbursement made on account of a Letter of Credit shall be deemed to be a
Tranche D Advance, and Guarantor shall be deemed to have given to Lender a
notice of borrowing with respect thereto.
(c)
Acceleration of
Undrawn Amounts. Should Lender demand payment of the
Obligations hereunder following a Forbearance Default prior to the Tranche
D
Termination Date, Lender, by written notice to Guarantor, may take one or more
of the following actions: (i) declare any obligation of Lender to issue Letters
of Credit hereunder terminated, whereupon any such obligations shall forthwith
terminate without any other notice of any kind; or (ii) declare the outstanding
Letter of Credit Exposure to be forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby waived,
and demand that Guarantor and the Borrowers pay to Lender for deposit in a
segregated non interest-bearing cash collateral account, as security for the
Obligations, an amount equal to the Letters of Credit Exposure then outstanding
at the time such notice is given. Unless otherwise required by law,
upon the full and final payment of
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the
Obligations, Lender shall return to Guarantor, for the benefit of the Borrowers,
any amounts remaining in said cash collateral account.
(d)
Letter of Credit
Fees. The Borrowers shall pay to Lender: (a) a non-refundable
fee equal to the Applicable Margin in respect of Tranche D Advances multiplied
by the daily face amount of each Letter of Credit, less the amount of any draws
on such Letter of Credit, payable in monthly installments in arrears, commencing
on the issuance date and continuing for so long as such Letter of Credit remains
outstanding; and (b) for the benefit of Lender (i) the Letter of Credit Facing
Fee (ii) Lender’s standard charges for issuing letters of credit and for any
amendments thereto, payable upon demand by Lender.
7. Conditions
Precedent. The obligations of Lender to make the Tranche A
Advances, the Tranche B Advances, the Tranche C Advances and the initial Tranche
D Advances are subject to the satisfaction, immediately prior to or concurrently
with, the making of such Advances of the following conditions precedent, each
of
which shall be in form and substance satisfactory to Lender and its
counsel:
(1)
Lender shall have received this Agreement, executed and delivered by a duly
authorized officer of each Borrower and Guarantor;
(2) Lender
shall
have received the following documents, each of which shall be satisfactory
to
Lender in form and substance:
(i)
Lender’s Notes, duly completed, executed and delivered;
(ii) The
FCMC Guaranty, duly executed and delivered by Guarantor;
(iii) The
Security Agreement, duly executed and delivered by Guarantor and each Borrower
and/or joinder by any Borrower not already a party to the Security
Agreement;
(iv) Guarantor
and each Borrower shall have released all claims against Lender and participants
under any Credit Agreement (and if requested by any participant a separate
release in form satisfactory to such participant); and
(v) Execution
of the Tribeca Forbearance Agreement and any loan document related
thereto.
(3)
Lender shall have received an incumbency certificate of each Borrower and
Guarantor and evidence of all corporate or other authority for each Borrower
and
Guarantor with respect to the execution, delivery and performance of the Loan
Documents executed in connection with this Agreement;
(4)
Lender shall have received one or more legal opinions of counsel to the
Borrowers and Guarantor, in form satisfactory to Lender;
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(5)
Any documents (including, without limitation, financing statements) required
to
be filed, registered or recorded in order to create a first priority Lien,
in
favor of Lender shall have been properly prepared;
(6)
Lender shall have received the Restructuring Fee and all other fees and expenses
required to be paid by the Borrowers on or prior to the Forbearance Effective
Date;
(7)
[Reserved];
(8)
Lender shall have received an Amended and Restated Participation Agreement
with
M & I ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Bank and such bank’s consent to this
Agreement;
(9)
[Reserved];
(10)
Lender, with the consent of its participant M & I ▇▇▇▇▇▇▇▇ & Ilsley
Bank, shall have forgiven an aggregate principal amount of Original Commercial
Loans equal to not less than $300,000,000;
(11)
[Reserved];
(12)
Lender shall have received such other documents as Lender or its counsel may
reasonably request.
8. Amendments
to Credit
Agreements. Section 2.1 of the Franklin Master Agreement, entitled “The Commitment,”
Section 2.1 of the Franklin Warehousing Agreement, entitled “The Commitment,” and
Section 2(a) entitled “Agreement to Make
the
Loan” of the Franklin Term Loan Agreement are each hereby amended to
delete any obligation of Lender to make any further “Subsidiary Loans” (as
defined in the Franklin Master Agreement), “Advances” (as defined in the
Franklin Warehousing Agreement) or “Loan” (as defined in the Franklin Term Loan
Agreement) on and after the Forbearance Effective Date. In addition
Section 8.2 (c)(iv) of the Franklin Master Agreement is hereby amended to delete
the second and third sentences of such section.
9. Representations
and
Warranties. To induce Lender to enter into this Agreement,
Guarantor and each Borrower represents and warrants to Lender as
follows:
(a)
Organization. Each
Borrower and Guarantor is a corporation duly organized, validly existing and
in
good standing under the laws of the state of its incorporation, except where
the
failure to be in good standing shall not cause a Material Adverse
Effect.
(b) Authority. Each
Borrower and Guarantor has full corporate power and authority to execute,
deliver and perform this Agreement and has taken all corporate action required
by law, its articles of incorporation and bylaws to authorize the execution
and
delivery of this Agreement.
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(c)
Consent and
Approvals. No consent or approval of any party is required in
connection with the execution and delivery of this Agreement by any Borrower
or
Guarantor, and the execution and delivery of this Agreement does not (i)
contravene or result in a breach or default under any certificate or articles
of
incorporation, code of regulations or bylaws or any other agreement or
instrument to which any Borrower or Guarantor is a party or by which any of
such
Person’s respective properties are bound, or (ii) violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to any Borrower or Guarantor.
(d)
Completeness of
Collateral. The Collateral constitutes all of the assets and
property, real and personal, tangible and intangible, owned by each Borrower
and
Guarantor or used or held for use in connection with the business of each such
Person.
(e)
Other
Indebtedness. Other than as set forth in Schedule
9(e) hereto
and in respect of Indebtedness owing to Lender, each Borrower and Guarantor
is
in full compliance with the terms of each lending agreement in respect of
Indebtedness.
(f)
Representations
True
and Correct. All representations and warranties contained in
this Agreement, including but not limited to the recitals herein, and in each
Credit Agreement and each other Loan Document are true and correct as of the
date of this Agreement, and all such representations and warranties shall
survive the execution of this Agreement. The Loan Documents represent
unconditional, absolute and valid obligations against each Borrower and
Guarantor and are enforceable in accordance with the terms
thereof. Neither any Borrower nor Guarantor has any claims or
defenses against Lender, any Affiliate thereof, any participant in any
Commercial Loan or any other person or entity which would or might affect (i)
the enforceability of any provisions of any documents or (ii) the collectibility
of sums advanced by Lender in connection with any Obligations subject to this
Agreement. Each Borrower and Guarantor understands and acknowledges
that Lender is entering into this Agreement in reliance upon, and in partial
consideration for, this acknowledgment and representation, and agree that such
reliance is reasonable and appropriate.
(g)
Representations
and
Warranties. Guarantor and each Borrower hereby represent and warrant to
Lender that (i) other than the Acknowledged Defaults no present uncured defaults
or breaches exist under any Loan Document; and (ii) after giving effect to
this
Agreement, no event or condition exists which but for the giving of notice
or
passage of time (or both) would constitute a Default or Event of Default under
any Credit Agreement or any Loan Document; and (iii) this Agreement
has been duly executed and delivered by Guarantor and each Borrower, and this
Agreement, each Credit Agreements as amended hereby and each other Loan Document
constitutes the legal, valid and binding obligation of Guarantor and each
Borrower, enforceable against Guarantor and such Borrower in accordance with
the
terms hereof or thereto.
(h)
Financial
Statement. The consolidated balance sheet of Guarantor and its
Subsidiaries as of June 30, 2007, and the related statements
of income and cashflows for such fiscal period, previously furnished
to Lender, fairly present the financial condition of Guarantor and its
Subsidiaries as of that date and the results of its operations for that
fiscal
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period. Guarantor
and its Subsidiaries had, on that date, no known liabilities, direct or
indirect, fixed or contingent, matured or unmatured, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed
by,
or reserved against in, said balance sheet and related statements, except for
Lender’s extensions of credit to Guarantor and its Subsidiaries.
(i)
Solvency. As
of the date hereof and taking into account the forgiveness of Indebtedness
set
forth in Section 1(c) and immediately after giving effect to each Advance and
the application of the proceeds thereof by the Borrowers, the fair value of
the
consolidated tangible assets of Guarantor is greater than the fair value of
its
consolidated liabilities (including, without limitation, contingent liabilities
if and to the extent required to be recorded as a liability on the financial
statements of Guarantor and the Borrowers in accordance with GAAP) and Guarantor
and its consolidated Subsidiaries are and will be solvent, are and will be
able
to pay its debts as they mature and do not and will not have an unreasonably
small capital to engage in the business in which they are engaged and propose
to
engage. None of Guarantor or any Borrower intends to incur, or
believes that it has incurred, debt beyond its ability to pay such debts as
they
mature. None of Guarantor or any Borrower is contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of such Person or any of its assets. None of
Guarantor or Borrower is pledging or transferring any Assets with any intent
to
hinder, delay or defraud any of its creditors.
10. Financial
Statements. Guarantor and each Borrower shall deliver to
Lender:
(a)
(i) as soon as available and in any event within 45 days after the end of each
of the first three quarterly fiscal periods of each fiscal year of Guarantor,
the consolidated balance sheets of Guarantor and its consolidated Subsidiaries
as at the end of such period and the related unaudited consolidated statements
of income and retained earnings and of cash flows for Guarantor and its
consolidated Subsidiaries for such period and the portion of the fiscal year
through the end of such period, setting forth in each case in comparative form
the figures for the previous year and accompanied by a certificate of the chief
financial officer of Guarantor, which certificate shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of Guarantor and its Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end audit adjustments), and (ii) as soon as
available and in any event within 30 days after the end of each quarterly fiscal
period a budget of cash expenditures for each prospective three (3) month
period, including budget to actual variances for such period;
(b)
as soon as available and in any event within 90 days after the end of each
fiscal year of Guarantor, the audited, consolidated balance sheets of Guarantor
and its consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of cash
flows for Guarantor and its consolidated Subsidiaries for such year, setting
forth in each case in comparative form the figures for the previous year,
accompanied by a certificate of the chief financial officer of Guarantor, which
certificate shall state that said consolidated financial statements
fairly
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present
the consolidated financial condition and results of operations of Guarantor
and
its consolidated Subsidiaries at the end of, and for, such fiscal year in
accordance with GAAP, consistently applied, and a certificate of such chief
financial officer stating that, in making the examination necessary for his
or
her certification, such chief financial officer obtained no knowledge, except
as
specifically stated, of any Forbearance Default;
(c)(i)
as
soon as available and in any event within 30 days after the end of each monthly
fiscal period of each fiscal year of Guarantor, the consolidated balance sheets
of Guarantor and its consolidated Subsidiaries as at the end of such period
and
the related unaudited consolidated statements of income and retained earnings
and of cash flows for Guarantor and its consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period, (ii)
as soon as available and in any event within 20 days after the end of each
monthly fiscal period of each fiscal year of Guarantor, a thirteen (13)
consecutive week cash flow statement, and (iii), setting forth in each case
in
comparative form the figures for the previous year, accompanied by a certificate
of the chief financial officer of Guarantor, which certificate shall state
that
said consolidated financial statements fairly present the consolidated financial
condition and results of operations of uarantor and its Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to normal year-end audit adjustments);
(d)
from time to time such other information regarding the financial condition,
operations, or business of Guarantor and each Borrower as Lender may
request;
(e)
Guarantor and each Borrower shall furnish to Lender, at the time Guarantor
furnishes each set of financial statements pursuant to paragraphs (a),(b) and
(c) above, a certificate of the chief financial officer of Guarantor to the
effect that, to the best of such officer’s knowledge, Guarantor and the
Borrowers, as applicable, during such fiscal period or year have observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Loan Documents to be
observed, performed or satisfied by it, and that such officer has obtained
no
knowledge of any Default, Event of Default or Forbearance Default except as
specified in such certificate (and, if any Default, Event of Default or
Forbearance Default has occurred and is continuing, describing the same in
reasonable detail and describing the action Guarantor or such Borrower, as
applicable, has taken or proposes to take with respect thereto);
and
(f) notice
of any
event or notice from any Governmental Authority which is reasonably likely
to
have or result in a Material Adverse Effect.
11. Certain
Post-Closing
Deliverables.
(a) Within
30 days after the
Forbearance Effective Date, Guarantor and each Borrower will use their best
efforts to cause each of the banks where any deposit account is maintained
to
enter into and deliver to Lender a fully executed control agreement in form
satisfactory to Lender and the deposit account bank for each deposit account
of
Guarantor or any Borrower, and if Guarantor and each Borrower fail to so deliver
such control
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agreements
within such time frame, each such Person shall close such deposit accounts
and
establish replacement accounts at Lender.
(b) Within
30 days after the Forbearance Effective Date, Guarantor will deliver to Lender
a
proposed cash budget for the period commencing on the Forbearance Effective
Date
and ending March 31, 2008.
(c) Within
60 days after the Forbearance Effective Date, Guarantor will deliver to Lender
(i) a detailed written report describing Guarantor’s and the Borrowers’
servicing strategies in accordance with Accepted Servicing Practices, including
specific identifiable compensation and incentives for each employee of Guarantor
or Borrowers in or to be engaged in servicing, employment or other agreements,
as applicable, and such other information with respect thereto as Lender may
request, all in form and substance satisfactory to Lender, (ii) detailed written
collection policies with respect to Mortgage Loans, all in form and substance
satisfactory to Lender, (iii) any revisions to existing policies, practices,
principles and servicing standards for the servicing of the Mortgage Loans
and
(iv) any agreements reasonably required by Lender with respect to back-up
servicing.
(d) At
all times after the date which is 45 days after the Forbearance Effective Date,
Guarantor shall use its best efforts at all times to maintain in effect one
or
more Interest Rate Hedge Agreements with respect to the Advances, in an
aggregate notional principal amount of not less than $600,000,000, which
agreements shall have the effect of establishing a maximum interest rate to
be
agreed by Guarantor and Lender with respect to such notional principal amount,
each such agreement to be in form and substance satisfactory to Lender and
with
a term to be agreed by Guarantor and Lender.
(e) Within
90 days after the Forbearance Effective Date, each Borrower shall transfer
all
REO Properties to a designated Borrower or other Subsidiary satisfactory to
Lender and shall provide to Lender a first and exclusive Lien on the stock
of
such Subsidiary, and a negative pledge on all of the assets of such Subsidiary;
provided, however, to the extent any such transfer would require the payment
of
any material transfer tax or similar tax, such Borrower and Lender may make
other arrangements satisfactory to Lender.
(f) No
later than January 31, ▇▇▇▇, ▇▇▇▇ shall deliver to Lender its financial
statements for the fiscal quarter and year-to-date period ending September
30,
2007.
(g) Within
45 days after the Forbearance Effective Date, Guarantor shall have deposited
with Lender a copy of each software program in which Guarantor has an interest
and any data which are necessary to conduct all loan servicing activities of
Guarantor, except to the extent Guarantor is prohibited by any effective license
agreement from so depositing a copy. Further if Guarantor is
prohibited by any license agreement from so depositing a copy, within 45 days
after the Forbearance Effective Date, Guarantor shall use its best efforts
to
secure a licensor consent to the pledge of such software in form satisfactory
to
Lender.
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12. Covenants.
(a)
Maintenance of
Liquidity. Guarantor and each Borrower on a consolidated basis
shall insure that, as of the end of each calendar month, they have cash
equivalents pledged to Lender in an amount of not less than
$5,000,000.
(b)
Minimum Net
Worth. Guarantor and its Subsidiaries shall at all times
maintain a consolidated Net Worth of at least $5,000,000, plus a percentage
to
be agreed upon between Lender and Guarantor of the proceeds of the issuance
of
Capital Stock or other securities issued after the Forbearance Effective
Date.
(c)
Servicing. As
of the Forbearance Effective Date, each Borrower and Lender hereby revocably
appoint and reaffirm FCMC as servicer, and FCMC hereby reaffirms its acceptance
of such appointment, to act for the benefit of the Borrowers and Lender as
initial servicer of the Mortgage Loans and the REO Properties pledged to Lender;
provided, however, Lender reserves the right to terminate FCMC’s servicing of
the Mortgage Loans and REO Properties (i) upon prior written notice to FCMC
during the occurrence and continuance of a Forbearance Default or (ii) if Lender
provides prior written notice to FCMC, that Lender has determined, in its sole
discretion, that FCMC is not serving the Loans in accordance with Accepted
Servicing Practices. FCMC shall service the Mortgage Loans and the
REO Properties pledged to Lender pursuant to the terms of this Agreement, the
Credit Agreements and in accordance with Accepted Servicing
Practices. Neither Guarantor nor any Borrower shall permit any Person
other than the FCMC to service any Mortgage Loans or REO Properties (other
than
a sub-servicer satisfactory to Lender) in accordance with Accepted Servicing
Practices, without the prior written consent of the Lender.
(d)
Interest Coverage
Ratios. 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 for each monthly period (i) a ratio
of Adjusted EBITDA to Adjusted Interest Expense of not less than 1.25
to 1.00, and (ii) a ratio of Adjusted EBITDA to Interest Expense of not less
than 1.10 to 1.00, with each such ratio being determined as of the end of each
monthly fiscal period for the monthly fiscal period then
ended. “AdjustedEBITDA”
shall
mean
for any period EBITDA, plus any non-cash
expense or charge for loan loss reserve. “EBITDA” shall mean
for any period, the sum of the amounts for such period of (i) the consolidated
net income (or loss) after taxes taken as a single accounting period, (ii)
Interest Expense, (iii) all federal, state, and local income taxes of such
Person (whether paid or deferred)and (iv) depreciation and amortization expense
which were deducted in determining consolidated net income for such period,
with
each component determined in conformity with GAAP. “Adjusted
InterestExpense”
shall
mean
for any period Interest Expense, other than any such Interest Expense in respect
of Tranche B Advances. “InterestExpense”
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 (other than the
Restructuring Fee), plus net costs under Interest Rate Hedge
Agreements.
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(e)
Fundamental
Change. Neither Guarantor nor any Borrower shall enter
into any transaction of merger or consolidation or amalgamation (provided that
any Borrower other than an obligor on the Static Loans, upon 10 days prior
notice to Lender and upon such terms or conditions which Lender may reasonably
require, may merge into another Borrower) or liquidate, wind up or dissolve
itself (or suffer any liquidation, winding up or dissolution) or sell all or
substantially all of its assets other than in connection with a sale of assets,
the proceeds of which shall be used to repay in full all Advances, other amounts
due under this Agreement and other amounts then due and payable hereunder.
Neither Guarantor nor any Borrower shall enter into any material change in
its
capital structure or any change that Lender or third party firm of nationally
recognized independent public accountants with national expertise determines
could cause a consolidation of assets of FCMC with any other Person under FIN
46, without the prior written consent of Lender, which consent will not be
withheld unreasonably.
(f)
Operating
Expenses. No Advance under this Agreement and no Collections
shall be used by Guarantor and its Subsidiaries to pay any operating expenses
of
such Persons in excess of the amount of Approved Expenses.
(g)
Conduct of
Business. Neither Guarantor nor any Borrower shall (i)
originate or acquire any Mortgage Loans or other assets, (ii) perform due
diligence, servicing, broker loans or participate in off-balance sheet joint
ventures and special purpose vehicles (not involving the incurrence of any
Indebtedness), in each instance without the prior written consent of Lender,
which consent shall not be withheld unreasonably. Guarantor and each
Borrower shall limit its activities to such activities as are incident to and
necessary or convenient to accomplish the following purposes: (i) to acquire,
own, hold, pledge, finance or otherwise deal with only mortgage loans similar
to
the Mortgage Loans, and only real estate similar to the REO Properties, in
each
case, as are to be pledged to Lender pursuant to this Agreement and (ii) to
sell, securitize or otherwise liquidate all or any portion of such assets in
accordance with the provisions of this Agreement.
(h)
Interest Rate Hedge
Agreement. At all times after the date which is 45 days after the
Forbearance Effective Date, the Borrowers and Guarantor shall at all times
use
their best efforts to maintain in effect one or more Interest Rate Hedge
Agreements with respect to the Advances, in an aggregate notional principal
amount of not less than $600,000,000, which Interest Rate Hedge Agreements
shall
have the effect of establishing a maximum interest rate to be agreed by Lender
and Guarantor with respect to such notional principal amount, each such Interest
Rate Hedge Agreement to be in form and substance satisfactory to the Lender
and
with a term to be agreed by Lender and Guarantor.
(i)
Restricted
Payments. No Guarantor or Borrower shall make or declare any
Restricted Payment; provided that any Borrower may make a Restricted Payment
to
Guarantor, without the prior written consent of Lender, which consent shall
not
be withheld unreasonably.
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(j)
Limitation on
Liens. Neither the Company nor any Borrower shall, nor will it
permit or allow others to, create, incur or permit to exist any Lien, security
interest or claim on or to any of its Property, except for (i) Liens (not
otherwise permitted hereunder) that are created in connection with the purchase
of fixed assets and equipment necessary in the ordinary course of such
Borrower’s business, subject to the provisions of the Loan Documents (ii) Liens
on the Collateral created pursuant to any Loan Document.
(k)
REO
Properties. Within 30 days after Lender’s request therefor at
any time, Guarantor, the applicable Borrower or such other Subsidiary having
any
REO Property shall grant to Lender a first Lien Mortgage on such Person’s REO
Properties to secure the Advances pursuant to Loan Documents and other closing
documents as are satisfactory to Lender; provided, however, to the extent any
such transfer would require the payment of any material transfer tax or similar
tax, such Borrower and Lender may make other arrangements satisfactory to
Lender. In addition, at all times after the Forbearance Effective
Date, upon any acquisition of each REO Property, each Borrower shall transfer
all REO Properties to a designated Borrower or other Subsidiary satisfactory
to
Lender and shall provide to Lender a first and exclusive Lien on the stock
of
such Subsidiary, and a negative pledge on all of the assets of such Subsidiary;
provided, however, to the extent any such transfer would require the payment
of
any material transfer tax or similar tax, such Borrower and Lender may make
other arrangements satisfactory to Lender.
(l)
Lock Box; Control
Accounts.
(i)
Guarantor and each Borrowers shall maintain its existing lock box with Lender
(the “Lock
Box”) or, at Lender’s discretion, blocked accounts (“Blocked Accounts”)
at
deposit banks satisfactory to Lender, and Guarantor and each Borrower shall
(i)
request in writing and otherwise take such reasonable steps to ensure that
all
obligors under each Mortgage Loan forward all payments in respect of the related
Mortgage Loans directly to the Lock Box, (ii) irrevocably instruct the bank
which maintains the Lock Box to transfer to the cash collection account at
Lender, on each Business Day, cleared funds in respect of all cash, checks,
drafts or other similar items of payment so received in the Lock Box and
(iii) deposit promptly, and in any event no later than the first Business
Day after the date of receipt thereof, any cash, checks, drafts or other similar
items of payment relating to or constituting payments made in respect of any
and
all Collateral that are received directly by such Guarantor or Borrower
(notwithstanding the requirements of clause (i) above) into one or more Blocked
Accounts in such Borrower’s or Guarantor’s name and at Lender.
(ii)
On or before the Forbearance Effective Date (or such later date as Lender shall
consent to), each of Guarantor and Borrowers shall cause each of the banks
where
any deposit account is maintained to enter into tri-party blocked account
agreements with Lender and the applicable Borrower, in form and substance
acceptable to Lender. Neither Guarantor nor any Borrower shall accumulate or
maintain cash in any deposit accounts or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.
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(iii)
The Lock Box, Blocked Accounts and any other deposit accounts shall be cash
collateral accounts, with all cash, checks and other similar items of payment
in
such accounts securing payment of the Advances and all other Obligations, and
in
which each of Guarantor or Borrower shall have granted a Lien to Lender,
pursuant to the Security Agreement or applicable Credit Agreement.
(m) Licenses. Guarantor
and the Borrowers shall maintain and comply in all material respects with all
governmental licenses and authorizations to hold and service Mortgage Loans
and
REO Properties, and at Lender’s request at any time, Guarantor and the Borrowers
shall provide to Lender an officer’s certificates signed by Responsible Officers
of the Borrowers and the Guarantor certifying as to the truth and accuracy
of
the foregoing, which certificates shall specifically include a statement that
FCMC and the Borrowers are in compliance with all material governmental licenses
and authorizations.
(n) Transactions
with
Affiliates. Neither Guarantor nor any Borrower shall enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is (a) otherwise permitted under this
Agreement, or (b)(i) in the ordinary course of Guarantor’s or such
Borrower’s business and (ii) upon fair and reasonable terms no less favorable to
Guarantor or such Borrower than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate, or make a payment that
is
not otherwise permitted by this Section.
(o) WMC
Claim. FCMC and the applicable Borrower agrees to
diligently pursue all claims and demands against WMC Mortgage Corp. and its
successors and assigns and agrees upon Lender’s request to collaterally assign
any commercial tort claim pursuant to Loan Documents satisfactory to
Lender.
(p) Limitation
on
Indebtedness. Neither Guarantor nor any Borrower shall incur
any liabilities for Indebtedness (other than the Advances, the Letters of
Credit, Subordinated Indebtedness and intercompany Indebtedness between
Guarantor and Tribeca) or otherwise other than for trade accounts payable (other
than for borrowed money) arising, and accrued expenses incurred, in the ordinary
course of business so long as such trade accounts payable are payable within
90
days of the date the respective goods are delivered or the respective services
are rendered.
(q) Limitation
on Sale of
Assets. Neither Guarantor nor any Borrower shall convey, sell,
lease, assign, transfer or otherwise dispose of (collectively, “Transfer”), all or
any material portion of its property, business or assets (including, without
limitation, receivables and leasehold interests) whether now owned or hereafter
acquired or allow any Subsidiary to Transfer any material portion or all of
its
assets to any Person other than a “putback” to sellers of Mortgage Loans, the
proceeds of which are used to repay Advances.
(r) Maintenance
of Property;
Insurance. Guarantor and each Borrower shall keep all property
useful and necessary in its business in good working order and
condition. FCMC shall maintain errors and omissions insurance and
blanket bond coverage usually
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maintained
by entities engaged in the same or similar business similarly situated in such
amounts as are in effect on the Forbearance Effective Date (as disclosed to
Lender in writing) and shall not reduce such coverage without the written
consent of Lender, and shall maintain such other insurance with financially
sound and reputable insurance companies, and with respect to property and risks
of a character usually maintained by entities engaged in the same or similar
business similarly situated, against loss, damage and liability of the kinds
and
in the amounts customarily maintained by such entities.
(s) Collateral
Determined to be
Defective. Upon discovery by Guarantor, any Borrower or Lender
of any breach of any material representation or warranty by a seller of Mortgage
Loans constituting Collateral, the party discovering such breach shall promptly
give notice of such discovery to the others.
13. Periodic
Due Diligence
Review. Guarantor and each Borrower acknowledges that Lender
and each of Lender’s participants in any Advance has the right to perform
continuing due diligence reviews with respect to the Collateral and the business
of Guarantor and each Borrower, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise,
and
Guarantor and each Borrower agrees that upon reasonable (but no less than one
(1) Business Day) prior notice to Guarantor (unless Forbearance Default shall
have occurred, in which case prior notice shall not be required), Lender or
its
authorized representatives will be permitted during normal business hours to
examine, inspect, make copies (including electronic copies) of, and make
extracts of, the mortgage files, portfolio information, management databases,
portfolio databases, internal management reports and any and all documents,
records, agreements, instruments or information relating to any such information
in the possession, or under the control, of Guarantor, such Borrower or any
custodian. Guarantor and each Borrower also shall make available to Lender
a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the mortgage files, any servicing files and any other
document or information relating thereto and the Mortgage Loans, REO Properties
and any other Collateral pledged hereunder. Without limiting the generality
of
the foregoing, Guarantor and each Borrower acknowledge that Lender, at its
option, has the right, at any time to conduct a partial or complete due
diligence review on some or all of the Collateral, including, without
limitation, ordering new credit reports, new appraisals on any related mortgaged
properties and otherwise re-generating the information used to originate any
Mortgage Loan, any information or databases in Guarantor’s or any Borrower’s
possession. Guarantor and each Borrower agree to cooperate with
Lender and any third party underwriter in connection with such underwriting,
including, but not limited to, providing Lender and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such assets in the possession, or under the control,
of
Guarantor or such Borrower. In addition, Lender has the right to perform
continuing due diligence reviews of Guarantor, each Borrower and their
respective Affiliates, Subsidiaries, directors, officers, employees and
significant shareholders. Guarantor, each Borrower and Lender further agree
that
all out-of-pocket costs and expenses incurred by Lender in connection with
Lender’s activities pursuant to this Section shall be paid for by Guarantor or
such Borrower.
14. Joint
and Several
Liability.
(a)
Each Borrower is accepting joint and several liability hereunder and
under
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the
other
Loan Documents in consideration of the financial accommodations to be provided
by Lender under this Agreement, for the mutual benefit, directly and indirectly,
of each Borrower and in consideration of the undertakings of each Borrower
to
accept joint and several liability for the Obligations.
(b)
Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, as a surety and as a co-debtor, joint and several liability with each
other Borrower, with respect to the performance of this Agreement and the
payment and performance of all of the Obligations (including, without
limitation, any obligations arising under this Section), it being the intention
of the parties hereto that all the Obligations shall be the joint and several
obligations of each Borrower without preferences or distinction among
them.
(c)
If and to the extent that any Borrower shall fail to make any payment with
respect to any Obligation as and when due or to perform any Obligation in
accordance with the terms thereof, then, in each such event, the other Borrowers
will make such payment with respect to, or perform, such Obligation, as
applicable.
(d)
The obligations of each Borrower under the provisions of this Section constitute
the absolute and unconditional, full recourse obligations of each Borrower
enforceable against each such Borrower to the full extent of its properties
and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
(e)
Except as otherwise expressly provided in this Agreement, each Borrower hereby
waives notice of acceptance of its joint and several liability, notice of any
Advances issued under or pursuant to this Agreement, notice of the occurrence
of
any Default, Event of Default, Forbearance Default or of any demand for any
payment under this Agreement, notice of any action at any time taken or omitted
by Lender under or in respect of any Obligation, any requirement of diligence
or
to mitigate damages and, generally, to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with
this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time
for
the payment of any Obligation, the acceptance of any payment of any Obligation,
the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by Lender at any time or times in respect of any default
by any Borrower in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Lender in respect of any Obligation, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any Obligation or the addition, substitution or release, in whole
or in part, of any Borrower or any part of the security for any Obligation.
Without limiting the generality of the foregoing, each Borrower assents to
any
other action or delay in acting or failure to act on the part of Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section afford grounds for terminating, discharging or relieving any Borrower,
in whole or
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in
part,
from any of its obligations under this Section, it being the intention of each
Borrower that, so long as any of the Obligations hereunder remain unsatisfied,
the obligations of such Borrower under this Section shall not be discharged
except by performance and then only to the extent of such performance. The
obligations of each Borrower under this Section shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrowers.
The joint and several liability of each Borrower hereunder shall continue in
full force and effect notwithstanding any absorption, merger, amalgamation
or
any other change whatsoever in the name, constitution or place of formation
of
any other Borrower or Lender.
(f)
Each Borrower represents and warrants to Lender that such Borrower is currently
informed of the financial condition of each other Borrower and of all other
circumstances which a diligent inquiry would reveal and which bear upon the
risk
of nonpayment of the Obligations. Each Borrower hereby covenants that such
Borrower will continue to keep informed of each other Borrower’s financial
condition, the financial condition of other guarantors, if any, and of all
other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
(g)
The provisions of this Section are made for the benefit of Lender and its
respective successors and assigns, and may be enforced by it from time to time
against any or all Borrowers as often as occasion therefor may arise and without
requirement on the part of Lender, or any or their respective successors or
assigns first to marshal any claims or to exercise any rights against any other
Borrower or to exhaust any remedies available against any other Borrower or
to
resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section shall remain in effect until all of the Obligations shall have been
paid
in full or otherwise fully satisfied. If at any time, any payment, or any part
thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by Lender upon any insolvency proceeding
of
any Borrower, or otherwise, the provisions of this Section will forthwith be
reinstated in effect, as though such payment had not been made.
(h)
Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents,
any
payments made by it to Lender with respect to any Obligations or any collateral
security therefor until such time as all of the Obligations have been paid
in
full in cash. Any claim which any Borrower may have against any other Borrower
with respect to any payments to Lender hereunder or under any other Loan
Documents are hereby expressly made subordinate and junior in right of payment,
without limitation as to any increases in the Obligations arising hereunder
or
thereunder, to the prior payment in full in cash of the Obligations and, in
the
event of any insolvency proceeding relating to any Borrower, its debts or its
assets, whether voluntary or involuntary, all such Obligations shall be paid
in
full in cash before any payment or distribution of any character, whether in
cash, securities or other property, shall be made to any other
Borrower.
(i)
Each Borrower hereby agrees that, after the occurrence and during
the
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continuance
of any Default, Event of Default or Forbearance Default, the payment of any
amounts due with respect to the Indebtedness owing by any Borrower to any other
Borrower is hereby subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default, Event of Default or Forbearance Default, such
Borrower will not demand, ▇▇▇ for or otherwise attempt to collect any
Indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such Indebtedness, such amounts shall be collected, enforced and received
by
such Borrower as trustee Lender.
15. Cooperation
of Borrower and
Guarantor.
(a)
Each Borrower and Guarantor agrees to take any and all actions of any kind
or
nature whatsoever, reasonably requested by Lender to prevent Lender from
suffering any loss with respect to any Obligations owed to Lender or in respect
of any Collateral or any impediment to any rights or remedies of Lender with
respect to such Obligations, the Loan Documents or this Agreement (or the
ability to exercise such any rights or remedies).
(b)
Further
Assurances. Guarantor and each Borrower hereby agree 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 Agreement.
16. The
Credit Agreements and
this Agreement. Notwithstanding the amendment and restatement
of the Commercial Loans by this Agreement, all amounts owing to Lender under
the
Credit Agreements whether on account of principal, interest or otherwise which
remain outstanding as of the date hereof (after giving effect to the forgiveness
of Indebtedness set forth in Section 1(c)) are evidenced by the Notes and shall
constitute Obligations owing under this Agreement and the Credit
Agreements. This Agreement is not given in substitution for each
Credit Agreement, and except to the extent of the forgiveness of Indebtedness
set forth in Section 1(c), is not payment of any amounts due by any Borrower
under any Credit Agreement, and is in no way intended to constitute a novation
of any Credit Agreement or Commercial Loan.
17. Use
of Cash
Collateral. Prior to the Forbearance Date, absent a
Forbearance Default under this Agreement, Lender will permit a portion of
Collections, in such amounts as determined by Lender in its good faith
discretion from time to time, to be used by Guarantor and the Borrowers for
Approved Expenses necessary to continue the operations of the same and in
accordance with the terms of this Agreement. Lender shall have no
obligation to advance any sums pursuant to this Agreement at any time when
a set
of facts or circumstances exist, which, by themselves, upon the giving of
notice, the lapse of time, or any one or more of the foregoing would constitute
a Forbearance Default.
18. Sale
of
Collateral. Upon the earlier of (i) the Forbearance Date or
(ii) the occurrence of a Forbearance Default under this Agreement, Lender shall
have the right to sell, lease or otherwise dispose of any Collateral in
accordance with the terms of any Loan Document, and applicable
law. Each Borrower and Guarantor hereby consents and agrees to such
sale, lease
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or
other
disposition of any Collateral by Lender. Each Borrower and Guarantor
hereby waives, renounces and forever relinquishes all rights to notice prior
to
disposition of any Collateral required by any Loan Document, and all rights
that
may be waived under Article 9 of the Uniform Commercial Code, as enacted in
any
applicable state (and similar provisions of any applicable law of any other
jurisdiction), whether such rights may be waived before or after default,
including without limitation, those rights with respect to the compulsory
disposition of collateral, the redemption of collateral, and the right to notice
of any disposition of any Collateral. Each Borrower and Guarantor
further waives and forever relinquishes any and every right of redemption,
including any statutory right of redemption, any equitable right of redemption,
and any other right of redemption that may exist. This paragraph and
the irrevocable waivers contained herein shall survive the termination of this
Agreement.
19. Terms
and Conditions.
Other than as expressly modified herein, all of the terms, conditions and
covenants of the Credit Agreements and the other Loan Documents shall remain
in
full force and effect and are hereby ratified and confirmed in all respects,
and
this Agreement shall not constitute a novation.
20. Effect
on the Loan
Documents; Controlling Agreement. Upon the effectiveness of
this Agreement, each reference in such Credit Agreement,” “Agreement,” the
prefix “herein,” “hereof,” or words of similar import, and each reference in the
Loan Documents, shall mean and be a reference to a Credit Agreement as amended
or supplemented hereby. Except to the extent amended or
modified hereby, all of the representations, warranties, terms, covenants and
conditions of the Credit Agreements 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 in all respects, and
nothing herein shall affect, modify, limit or impair any of the rights and
powers which Lender may have hereunder or thereunder; provided that, to
the
extent the terms of any Credit Agreement or any Loan Document are inconsistent
with the terms of this Agreement or any Loan Documents executed in connection
herewith, the terms of this Agreement or such Loan Document executed in
connection herewith shall control. The amendments and supplements 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 right
of Lender under, or of any other term or provisions of any 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 Guarantor or any Borrower which would require the consent of
Bank.
21. Headings. Section
headings in this Agreement are included herein for convenience of reference
only
and will not constitute a part of this Agreement for any other
purpose.
22. Default. A
“Forbearance
Default” shall exist under this Agreement if any one or more of the
following events shall have occurred, and with respect to any event, other
than
an event described in clause (j) or (k) below, Lender shall have provided notice
to FCMC of the same:
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(a)
the occurrence of (i) a failure, breach or default under Section 3, 5, 6, 10,
11, or 12 of this Agreement, or (ii) an Event of Default (other than an
Acknowledged Default) shall occur and be continuing under the Franklin Master
Agreement; or
(b)
any breach or default of any term, condition or covenant set forth in, or any
event of default (other than an Acknowledged Default) under any Loan Document
not referred to in clause (a) above now or hereafter executed and delivered
by
any Borrower or Guarantor to Lender shall occur after the date hereof and such
failure to observe or perform shall continue unremedied for a period of five
(5)
days; or
(c)
any breach or default in performance by Guarantor of any of the agreements,
payments, terms, conditions, covenants, warranties or representations set forth
in this Agreement or the FCMC Guaranty; or
(d)
the occurrence of a “Forbearance Default” as defined under the Tribeca
Forbearance Agreement.
(e)
any Borrower shall fail to make a payment of any principal of or interest on
any
Advance or the Guarantor shall fail to make a payment of any amount required
to
be paid by it under the FCMC Guaranty, in each case prior to the close of
business on the date on which such payment is due (whether at stated maturity,
upon acceleration or at mandatory prepayment or otherwise); or
(f)
any representation, warranty or certification made or deemed made in this
Agreement or in any other Loan Document by the Guarantor or any Borrower or
any
certificate furnished to Lender pursuant to the provisions hereof or thereof,
shall prove to have been false or misleading in any material respect as of
the
time made or furnished; or
(g)
[Reserved].
(h)
a final judgment or judgments for the payment of money in excess of, with
respect to Guarantor or any Borrower, $1,000,000 in the aggregate (to the extent
that it is, in the determination of Lender, uninsured and provided that any
insurance or other credit posted in connection with an appeal shall not be
deemed insurance for these purposes) shall be rendered against Guarantor or
such
Borrower by one or more courts, administrative tribunals or other bodies having
jurisdiction over them and the same shall not be discharged (or provision shall
not be made for such discharge) or bonded, or a stay of execution thereof shall
not be procured, within 30 days from the date of entry thereof and such Borrower
or the Guarantor shall not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
or
(i)
any Borrower or the Guarantor shall admit in writing its inability to pay its
debts as such debts become due; or
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(j)
any Borrower or the Guarantor or any of their respective Subsidiaries shall
(i)
apply for or consent to the appointment of, or the taking of possession by,
a
receiver, custodian, trustee, examiner or liquidator of itself or of all or
a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or
winding-up, or composition or readjustment of debts, (v) fail to controvert
in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate or other action for the purpose of effecting any of the foregoing;
or
(k)
a proceeding or case shall be commenced, without the application or consent
of
any Borrower or the Guarantor or any of their respective Subsidiaries, in any
court of competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment
of
its debts, (ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of Guarantor, any Borrower or any such Subsidiary or
of
all or any substantial part of its property, or (iii) similar relief in respect
of any Borrower, the Guarantor or any such Subsidiary under any law relating
to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 or more days; or an
order for relief against any Borrower, the Guarantor or any such Subsidiary
shall be entered in an involuntary case under the Bankruptcy Code;
or
(l)
this Agreement, any Note or any other Loan Document shall for whatever reason
(including an event of default thereunder) be terminated or any Lien on the
Collateral created by any Loan Document or Guarantor’s or any Borrower’s
obligations under this Agreement or the Guarantor’s obligations under the FCMC
Guaranty shall cease to be in full force and effect, or the enforceability
thereof shall be contested by any Borrower or Guarantor; or
(m)
any Change of Control of any Borrower or the Guarantor shall have occurred;
or
(n)
any Borrower or the Guarantor shall grant, or suffer to exist, any Lien on
any
Collateral except the Liens contemplated by this Agreement; or the Liens
contemplated hereby shall cease to be first priority perfected and enforceable
Liens on the Collateral in favor of Lender or shall be Liens in favor of any
Person other than Lender; or
(o)
any Borrower, the Guarantor or any Subsidiary or Affiliate of such entity shall
default under, or fail to perform as required under, or shall otherwise breach
the terms of any material instrument, agreement or contract between such
Borrower, the Guarantor or such other entity, on the one hand, and Lender or
any
of Lender’s or any
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Lender’s
Affiliates on the other, whether or not such default results in the acceleration
or prepayment of any Indebtedness thereunder; or any Borrower, the Guarantor
or
any Subsidiary or Affiliate of such Person shall default under, or fail to
perform in any material respect as requested under, the terms of any repurchase
agreement, credit and security agreement or similar credit facility or agreement
which provides for borrowed funds in an amount in excess of $1,000,000 which
default or failure permits the acceleration or prepayment of any such
Indebtedness thereunder; or
(p)
any Material Adverse Effect occurs with respect to any Borrower, the Guarantor
or any of their respective Subsidiaries or Affiliates, or the Collateral, in
each case as determined by Lender in its good faith discretion, or the existence
of any other condition that, in Lender’s good faith discretion, constitutes a
material impairment of the ability of Guarantor or any Borrower’s ability to
perform its obligations under this Agreement, any Note or any other Loan
Document or the Guarantor’s ability to perform its obligations under the FCMC
Guaranty.
23.
Remedies.
(a)
Upon the occurrence of one or more Forbearance Defaults other than those
referred to in Section 22(j) or (k), Lender may (i) immediately declare the
principal amount of all Advances then outstanding to be immediately due and
payable, together with all interest accrued thereon and all other amounts due
under this Agreement, the Notes and any other Loan Document; provided, that upon
the occurrence of a Forbearance Default referred to in Sections 22(j) or (k),
such amounts shall immediately and automatically become due and payable without
any further action by any Person, (ii) exercise, in
addition to all other rights and remedies granted to it in this Agreement,
the
rights and remedies provided for under the Security Agreement, any Credit
Agreement, and (iii) exercise, in addition to all other rights and remedies
granted to it in this Agreement, the rights and remedies provided for under
applicable law or equity. Upon such declaration or such automatic
acceleration, the unpaid balance of all Advances then outstanding and all other
amounts due under this Agreement and the other Loan Documents shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by Guarantor
and each Borrower, and Lender may thereupon exercise any rights and remedies,
hereunder and under the other Loan Documents including, but not limited to,
the
transfer of servicing or the liquidation of the Collateral on a servicing
released basis. To the extent permitted by applicable law, Guarantor
and each Borrower waive all claims, damages and demands it may acquire against
Lender arising out of the exercise by Lender of any of its rights hereunder
or
under any other Loan Documents, other than those claims, damages and demands
arising from the gross negligence, bad faith or willful misconduct of Lender.
Upon the occurrence of one or more Forbearance Defaults, Lender shall have
the
right to obtain physical possession of the servicing records and all other
files
of Guarantor or the Borrowers relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of any Borrower, the Guarantor, any servicer, or any third party
acting for any Borrower, the
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Guarantor
or any servicer, and each Borrower, the Guarantor and each servicer shall
deliver to Lender such assignments and other documents as Lender shall
request. Lender shall be entitled to specific performance of all
agreements of Guarantor, each Borrower and each servicer contained in this
Agreement and any other Loan Document.
(b)
If a Forbearance Default shall occur and be continuing, Lender may, at its
option, enter into one or more Interest Rate Hedge Agreements covering all
or a
portion of the Mortgage Loans pledged under any Loan Document, and Guarantor
and
the Borrowers shall be responsible for all damages, judgments, costs and
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements) of any kind which may be imposed on, incurred by or asserted
against Lender relating to or arising out of such Interest Rate Hedge
Agreements, including without limitation any losses resulting from such Interest
Rate Hedge Agreements.
(c)
Any money or property collected or otherwise received by Lender in connection
with the exercise of its rights and remedies under this Agreement (including,
without limitation, any money or property received in respect of a liquidation
of any Collateral) shall be applied by Lender in the order of priority set
forth
in Section 5(d).
24. Waiver
and Release of All
Claims and Defenses; Communications.
(a)
Guarantor and each Borrower, 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 Guarantor or any Borrower, may have or may have made at any time up
through and including the date of this Agreement, including without limitation,
any affirmative defenses, counterclaims, setoffs, deductions or recoupments,
by
Guarantor or any Borrower. “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 Guarantor, each Borrower or any or them ever had, 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 Agreement prevents
enforcement of this waiver and release.
(b)
Each party to this Agreement
acknowledges and agrees that one purpose of this Agreement is to facilitate
the
resolution of the Acknowledged Defaults and that,
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consistent
with such purpose, no part of
any oral or written communications between or among any Borrower, Guarantor
or
Lender regarding the transactions contemplated in this Agreement, exclusive
of
this written Agreement itself (collectively, “Communications”),
shall be utilized or deemed to be
admissible as evidence in any litigation involving any party to this
Agreement. 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 Agreement or the termination of
this
Agreement.
25. Setoff. In
addition to any rights now or hereafter granted under applicable law or this
Agreement and not by way of limitation of any such rights, upon the occurrence
of any Forbearance Default, each of Lender and any participant in any Advance
is
hereby authorized by each Borrower and Guarantor, or any of them, at any time
or
from time to time, without notice to any Borrower, Guarantor, or any other
person or entity, any such notice being hereby expressly waived, to setoff,
appropriate and apply against any Obligation owing to Lender or such participant
from any Borrower or Guarantor, in such order as Lender in its sole discretion
shall determine, any and all deposits (general or special, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured, but not including trust accounts), and any other Indebtedness
at
any time owing by Lender or any such participant to any Borrower or Guarantor,
including, but not limited to, all claims of any nature or description arising
out of or connected with any Credit Agreement, any Loan Document or this
Agreement, regardless of whether or not Lender or such participant shall have
made any demand under any such document or otherwise.
26. Indemnification. In
addition to any other obligations of indemnification, each Borrower and
Guarantor hereby jointly and severally assumes responsibility and liability
for,
and hereby holds harmless and indemnifies Lender, its successors, assigns,
directors, officers, shareholders, agents, employees and attorneys, any
participants in any Commercial Loan or Advance, such participants’ successors,
assigns, directors, officers, shareholders, agents, employees and attorneys
(each an “Indemnified
Party”) from and against, any and all, by way of example but without
limitation, liabilities, demands, obligations, injuries, costs, damages (direct,
indirect or consequential), awards, loss of interest, principal or any portion
of the Obligations, charges, expenses, payments of money and reasonable
attorneys’ fees, incurred or suffered, directly or indirectly, by an Indemnified
Party or asserted against an Indemnified Party, by any person or entity
whatsoever, including any Borrower and Guarantor or any of them, arising out
of
this Agreement, or any document executed in connection herewith, or the exercise
of any right or remedy, including the realization, disposition or sale of any
Collateral, or any portion thereof, or the exercise of any right in connection
therewith, or any actions taken by an indemnified party in connection with
this
Agreement or the transactions contemplated by this Agreement, for
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which
an
Indemnified Party may be liable, for any reason whatsoever except for such
an
Indemnified Party’s own acts of gross negligence or willful
misconduct. The
indemnification provisions provided by this Section shall survive and continue
in full force and effect notwithstanding the occurrence of a Forbearance Default
under the terms of this Agreement or the termination of this
Agreement.
27. Consent
to Relief from
Automatic Stay. Each Borrower and Guarantor hereby agrees that
if any such party, individually or jointly, shall (i) file with any bankruptcy
court of competent jurisdiction or be the subject of any petition under Title
11
of the United States Code, as amended, (ii) be the subject of any order for
relief issued under such Title 11 of the U.S. Code, as amended, (iii) file
or be
the subject of any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under
any
present or future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, (iv) seek consent to or acquiesce
in
the appointment of any trustee, receiver, conservator, or liquidator, (v) be
the
subject of any order, judgment or decree entered by any court of competent
jurisdiction approving a petition filed against any Borrower or Guarantor for
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state
act
or law relating to bankruptcy and insolvency, or relief for debtors, Lender
shall thereupon be entitled to relief from any automatic stay imposed by Section
362 of Title 11 of the United States Code, as amended, or from any other stay
or
suspension of remedies imposed in any other manner with respect to the exercise
of the rights and remedies otherwise available to Lender under the terms of
this
Agreement and the Notes and the Loan Documents. Each Borrower agrees
that upon the occurrence of a Forbearance Default hereunder Lender shall be
entitled to appointment of a receiver for any Collateral.
28. Notice. All
notices or demands hereunder to parties hereto shall be sufficient if made
in
writing and sent and confirmed by facsimile, or if sent by prepaid overnight
courier addressed as applicable to Lender or Guarantor for itself and each
Borrower at the address set forth below such party’s signature line to this
Agreement, and such delivery will be deemed complete on the next business
day. Notice to Guarantor shall be deemed notice to each Borrower as
well.
29. Amendments. This
Agreement may not be amended or modified except in a writing signed by Lender,
Guarantor and each Borrower.
30. Successors
and
Assigns. This Agreement shall be binding upon and shall inure
to the benefit of each Borrower, Guarantor and Lender and their respective
successors, and assigns; provided, however, that the foregoing shall not
authorize any assignment by any Borrower or Guarantor of its rights or duties
hereunder. Lender does not undertake to give or to do or refrain from
doing anything directly to or for the benefit of any person other than a
Borrower and, with respect to any Borrower, other than as described
herein. Although third parties may incidentally benefit from this
Agreement, there are no intended beneficiaries other than each Borrower,
Guarantor and Lender.
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31. Indulgence;
Modifications. No delay or failure of Lender to exercise any
right, power or privilege hereunder shall affect such right, power or privilege
nor shall any single or partial exercise thereof preclude any further exercise
thereof, nor the exercise of any other right, power or privilege. The
rights of Lender hereunder are cumulative and are not exclusive of any rights
or
remedies which Lender would otherwise have except as modified
herein. No amendment, modification, supplement, termination, consent
or waiver of or to any provision of this Agreement, the Credit Agreements or
the
Loan Documents, nor any consent to any departure therefrom, shall in any event
be effective unless the same shall be in writing and signed by or on behalf
of
Lender.
32. Waivers
Voluntary. The releases and waivers contained in this
Agreement are freely, knowingly and voluntarily given by each party, without
any
duress or coercion, after each party has had opportunity to consult with its
counsel and has carefully and completely read all of the terms and provisions
of
this Agreement.
33. Governing
Law and
Venue. This Agreement is made in the State of Ohio and the
validity of this Agreement, any documents incorporated herein or executed in
connection herewith, and (notwithstanding anything to the contrary therein)
the
Credit Agreements and other Loan Documents, and the construction, interpretation
and enforcement thereof, and the rights of the parties thereto shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of Ohio, without regard to principles of conflicts of
law. The parties agree that all actions or proceedings arising in
connection with this Agreement, any documents incorporated herein or executed
in
connection herewith, the Credit Agreements, and the other Loan Documents shall
be tried and litigated only in the Federal District Court for the Southern
District of Ohio or the state courts of Franklin County, Ohio. The
parties hereto waive any right each may have to assert the doctrine of forumnonconveniens
or to
object to venue to the extent any proceeding is brought in accordance with
this
Section. Service of process, sufficient for personal jurisdiction in
any action against any Borrower or Guarantor, may be made by registered or
certified mail, return receipt requested, to the address set forth below such
party’s signature to this Agreement.
34. Execution
in
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and
the
same agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
35. Severability. Should
any part, term or provision of this Agreement be by the courts decided to be
illegal, unenforceable or in conflict with any law of the state of Ohio, federal
law or any other applicable law, the validity and enforceability of the
remaining portions or provisions of this Agreement shall not be affected
thereby.
36. Construction;
Conflict. This Agreement shall be deemed to be drafted by all
parties hereto and shall be construed without regard to any presumption or
rule
requiring that it be construed against the party initiating the drafting
hereof. In the event of any conflict or
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discrepancy
between the terms of this Agreement and any of the other Loan Documents, the
terms of this Agreement shall supersede any such conflicting
provision. In addition, from and after the date of this Agreement,
all affirmative, negative and reporting covenants contained in the Franklin
Warehousing Agreement and the Franklin Term Loan Agreement shall be superseded
by the covenants in this Agreement.
37. WAIVER
OF A JURY
TRIAL. LENDER, EACH BORROWER AND GUARANTOR ACKNOWLEDGE AND
AGREE THAT THERE MAY BE A CONSTITUTIONAL RIGHT TO A JURY TRIAL IN CONNECTION
WITH ANY CLAIM, DISPUTE OR LAWSUIT ARISING BETWEEN OR AMONG THEM, BUT THAT
SUCH
RIGHT MAY BE WAIVED. ACCORDINGLY, EACH PARTY, IN CONSIDERATION OF THE
CONSIDERATION EXCHANGED IN THIS AGREEMENT, AGREES THAT NOTWITHSTANDING ANY
CONSTITUTIONAL RIGHT, IN THIS COMMERCIAL MATTER EACH PARTY BELIEVES AND AGREES
THAT IT SHALL BE IN ITS BEST INTEREST TO WAIVE SUCH RIGHT, AND, ACCORDINGLY,
HEREBY WAIVES SUCH RIGHT TO A JURY TRIAL, AND FURTHER AGREES THAT THE BEST
FORUM
FOR HEARING ANY CLAIM, DISPUTE OR LAWSUIT, IF ANY, ARISING IN CONNECTION WITH
THIS AGREEMENT, THE CREDIT AGREEMENTS, ANY LOAN DOCUMENT OR THE RELATIONSHIP
AMONG LENDER, EACH BORROWER AND GUARANTOR SHALL BE A COURT OF COMPETENT
JURISDICTION SITTING WITHOUT A JURY.
38. Integration. This
Agreement and the other Loan Documents are intended by the parties as the final
expression of their agreement and therefor incorporate all negotiations of
the
parties hereto and are the entire agreement of the parties
hereto. Each Borrower and Guarantor each acknowledges that it is
relying on no written or oral agreement, representation, inducement, warranty,
or understanding of any kind made by Lender or any employee or agent of Lender,
except for the agreements by Lender set forth herein or in the other Loan
Documents.
39. Reversal
of
Payments. If Lender receives any payments or proceeds of the
any Collateral which are subsequently invalidated, declared to be fraudulent
or
preferential, set aside or required to be paid to a trustee,
debtor-in-possession, receiver or any other party under any bankruptcy law,
common law, equitable cause or otherwise, then, to such extent, the obligations
or part thereof intended to be satisfied by such payments or proceeds shall
be
reserved and continue as if such payments or proceeds had not been received
by
Lender.
40. Expenses. Each
Borrower and Guarantor shall reimburse Lender and any participant in any
Commercial Loan or Advance promptly upon demand for all costs and expenses,
including without limitation, expenses of appraisers and other advisors with
respect to any Collateral or the business of any Borrower, reasonable attorneys’
fees and expenses (including the fees of Lender’s inside counsel), expended or
incurred by Lender in any arbitration, judicial reference, legal action or
otherwise in connection with (i) the negotiation, preparation, amendment and
enforcement of this Agreement and any Loan Document, including without
limitation, during any workout, attempted workout, and/or in connection with
the
rendering of legal advice as to Lender’s rights, remedies and obligations under
this Agreement or any Loan Document, whether or not any form of legal proceeding
has commenced, (ii) collecting
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any
sum
which becomes due Lender under this Agreement or any Loan Document, (iii) any
proceeding for declaratory relief, any counterclaim to any proceeding, or any
appeal, (iv) the protection, preservation or enforcement of any rights or
remedies of Lender, any Collateral, whether or not any form of legal proceedings
is commenced, or (v) any action necessary to defend, protect, assert, or
preserve any of Lender’s rights or remedies as a result of or related to any
case or proceeding under Chapter 11 of the United States Code, as amended,
or
any similar law of any jurisdiction. All of such costs and expenses
shall bear interest from the time of demand at the highest rate then in effect
under this Agreement.
41. Patriot
Act
Notice. Lender 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 Lender to identify any Borrower in accordance with the
Act.
[Remainder
of page intentionally left blank.]
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IN
WITNESS WHEREOF, Lender, each Borrower and Guarantor has executed this Agreement
as of the date set forth above.
EACH
BORROWER LISTED ON
SCHEDULE
1 ATTACHED
HERETO:
By:
/s/
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Jardin
Name:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Jardin
Title:
as
Chief Executive Officer of, and on
behalf
of, each Borrower listed on Schedule
1
attached
hereto.
Address
for Notices:
▇▇▇
▇▇▇▇▇▇ ▇▇., ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention: General
Counsel
With
a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention: J.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
FRANKLIN
CREDIT MANAGEMENT CORPORATION
By:
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:
President
Address
for
Notices
Same
as
above
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THE
HUNTINGTON NATIONAL BANK
By:
/s/
▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇
▇. ▇▇▇▇▇
Title: Senior
Vice President
Address
for
Notices:
The
Huntington National Bank
▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attn:
Special Assets
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
With
a copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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