Exhibit 10.1

 

EXECUTION COPY

 

FIRST AMENDMENT TO
CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is executed as of
October 29, 2010, by and among FCC INVESTMENT TRUST I, a Delaware statutory
trust (the “Borrower”), FORTRESS CREDIT CO LLC, a Delaware limited liability
company (“Fortress”), in its capacity as the administrative agent (the
“Administrative Agent”), FORTRESS CREDIT FUNDING I LP, as a Lender, FORTRESS
CREDIT FUNDING III LP, as a Lender, FORTRESS CREDIT OPPORTUNITIES I L.P., as a
Lender (collectively, the “Lenders”), FCC FINANCE, LLC, a Delaware limited
liability company, as the servicer (the “Servicer”), U.S. BANK NATIONAL
ASSOCIATION, as the collateral custodian (the “Collateral Custodian”) and LYON
FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), as the backup
servicer (the “Backup Servicer”).  Capitalized terms used but not defined herein
have the meanings provided in the Credit Agreement (defined below).

 

PRELIMINARY STATEMENTS

 

WHEREAS, the parties hereto entered into that certain Credit Agreement, dated as
of November 10, 2008 (as further amended, supplemented, modified or restated
from time to time, the “Credit Agreement”);

 

WHEREAS, pursuant to Section 13.1 of the Credit Agreement, the Borrower, the
Servicer, the Administrative Agent and the Required Lenders and, to the extent
affected thereby, the Collateral Custodian and the Backup Servicer may amend and
supplement the provisions of the Credit Agreement; and

 

WHEREAS, in connection with the termination of the Revolving Credit Agreement
(as defined herein) and the related sale and assignment of certain assets from
CLST Asset Trust II to the Borrower, the parties hereto desire to amend the
Credit Agreement in certain respects as provided herein.

 

NOW THEREFORE, in consideration of the premises and the agreements contained
herein, the parties to this Amendment hereby agree to amend the Credit Agreement
as follows:

 

ARTICLE I

 

CONSENT AND WAIVER

 

Section 1.01.  Consent.

 

The Borrower hereby requests that the Administrative Agent and each of the
Lenders consent, and by signing below each of the Administrative Agent and the
Lenders do hereby consent, to the acquisition by the Borrower from CLST Asset
Trust II (“Trust II”) of the portfolio of Receivables set forth on Schedule I to
that certain Sale and Assignment, dated as of August 31, 2010 (the “Sale and
Assignment”) by and among the Borrower, Trust II and the Revolving Agent (as
defined below), and all related security with respect to such Receivables.  

 

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In order to facilitate such acquisition, the Lenders hereby agree to fund an
increase to the existing Loan to the Borrower in an amount equal to the purchase
price for such portfolio of Receivables as set forth in such Sale and
Assignment.  The proceeds of the increased amount of such Loan shall be netted
against and applied to the aggregate “Loans Outstanding” (and interest thereon)
attributable to Trust II under that certain Second Amended and Restated
Revolving Credit Agreement, dated as of December 10, 2008 (the “Revolving Credit
Agreement”), by and among Trust II, Fortress Credit Corp., as the administrative
agent (in such capacity, the “Revolving Agent”), Fortress Credit Opportunities I
L.P., as the sole lender (the “Revolving Lender”), U.S. Bank National
Association and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio
Services).  This consent is a one—time consent and shall not be construed to be
a consent to any other acquisition of Receivables by the Borrower after the date
hereof.  Notwithstanding anything in the Revolving Credit Agreement to the
contrary, each of the Revolving Agent and the Revolving Lender hereby waives any
and all prepayment penalties and fees that might otherwise accrue or become due
pursuant to Section 2.3 of the Revolving Credit Agreement in connection with the
prepayment of the aggregate “Loans Outstanding” (as defined in the Revolving
Credit Agreement) attributable to Trust II under the Revolving Credit
Agreement.  Each of Trust II, the Revolving Agent, the Revolving Lender, U.S.
Bank National Association and Lyon Financial Services, Inc. hereby acknowledge
and agree that (i) upon payment in full of the “Loans Outstanding”, interest
thereon, and all other amounts payable by Trust II under the Revolving Credit
Agreement on the date hereof, the Revolving Credit Agreement and all documents
and agreements related thereto shall be terminated and of no further force and
effect, (ii) Trust II shall have no further obligations under Section 11.1 or
Section 13.9 of the Revolving Credit Agreement or in respect of any breaches of
representations or warranties notwithstanding the survival language in
Section 13.6 of the Revolving Credit Agreement, and Sections 11.1 and 13.9 of
the Revolving Credit Agreement shall be automatically and finally terminated
with respect to Trust II and of no further force and effect, and all claims that
any of the undersigned may otherwise have directly or indirectly had thereunder
or in respect of any breach by Trust II of any representation or warranty shall
be automatically released, and (iii) the Revolving Agent shall, within five
(5) days following such payment, file termination statements with respect to all
liens outstanding against Trust II in connection with the Revolving Credit
Agreement (failing which, Trust II shall be automatically authorized without
further act or deed to file such termination statements).  Furthermore, the
undersigned hereby acknowledge that CLST Asset II, LLC and U.S. Bank Trust
National Association intend to cause Trust II to convert into a Delaware limited
liability company following Trust II’s payment of the “Aggregate Unpaids” (as
defined in the Revolving Credit Agreement), and hereby consent to such
conversion.

 

Section 1.02.  Waiver.

 

The Borrower hereby requests that the Administrative Agent and each of the
Lenders waive, and by signing below each of the Administrative Agent and the
Lenders do hereby waive, (i) the Event of Default resulting from the breach of
the three-month rolling average Annualized Default Rate set forth in
Section 10.1(o) of the Credit Agreement for the September 2009 through and
including the September 2010 Collection Periods, (ii) any Event of Default that
occurred as a result of any payments being made on behalf of an Obligor by any
Person other than the Obligor or any related guarantor prior to the execution
date of this Amendment and (iii) any other Event of Default that arose prior to
the execution date of this Amendment, including

 

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those not declared by the Administrative Agent.  This waiver is a one-time
waiver and shall not be construed to be a waiver as to any event or circumstance
occurring or existing after the date hereof.  For avoidance of doubt, in
connection with the Event of Default waivers granted hereunder, the
Administrative Agent and the Lenders hereby waive accrual and collection of
interest on the Outstanding Loan Balance at the Default Rate for the period from
September 1, 2010 through the execution date hereof (and will instead accrue
interest at the applicable non-default rate for such period).

 

Section 1.03.  Servicer Acknowledgment.

 

The Servicer hereby acknowledges and agrees that, from and after the date
hereof, it shall service those Receivables acquired by the Borrower pursuant to
the Sale and Assignment in accordance with the terms and conditions of the
Credit Agreement.

 

Section 1.04.  Collateral Custodian Acknowledgement.

 

The Collateral Custodian hereby acknowledges and agrees that, from and after the
date hereof, it shall hold all Required Receivables Files related to those
Receivables acquired by the Borrower pursuant to the Sale and Assignment for the
benefit of the Borrower and in accordance with the terms and conditions of the
Credit Agreement.

 

ARTICLE II

 

AGREEMENTS

 

Section 2.01.  Escrow Account.  Each of the Borrower, the Administrative Agent
and the Lenders hereby agree that the $834,991.40 currently on deposit in
account #129306000 held at the Collateral Custodian shall be transferred via
wire transfer on the date hereof to an escrow account (#144154000) to be held at
the Collateral Custodian.  If on the date on which the last Receivable of the
Borrower has been collected or otherwise liquidated, there are insufficient
Available Funds to reduce the Aggregate Unpaids to zero, the Administrative
Agent shall apply the funds on deposit in the escrow account to the Lenders in
reduction of the Aggregate Unpaids.  After the Aggregate Unpaids have been
reduced to zero as set forth in the preceding sentence or after the Aggregate
Unpaids have otherwise been reduced to zero by other means, all amounts
remaining in the escrow account shall be distributed to the Administrative Agent
as a fee (as specified in written directions to the Collateral Custodian at such
time).  Unless and until the Aggregate Unpaids have been reduced to zero, the
Administrative Agent shall not direct the Collateral Custodian, in its capacity
as escrow agent of the escrow account, to disburse any funds from the escrow
account other than (i) escrow fees and expenses which are due and payable to the
escrow agent and (ii) amounts that will be applied toward the Aggregate Unpaids
as described above.  In no event shall the Borrower have access to such escrowed
funds.

 

Section 2.02.  Ineligible Receivables.  On the date hereof, the Borrower shall
sell and assign to Drawbridge Special Opportunities Fund LP (or an affiliate
thereof designated thereby), in accordance with the Purchase Agreement,
$176,964.29 (the “Repurchase Amount”) in Receivables that the Administrative
Agent and CLST have agreed were ineligible pursuant to the terms of the Purchase
Agreement (and which are identified on Schedule A hereto).  An amount equal to
$162,892.21 of the Repurchase Amount shall be distributed to the Borrower and

 

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$14,072.08 of the Repurchase Amount shall be applied to the Outstanding Loan
Balance in respect of Receivable #34178.  The Borrower hereby acknowledges and
agrees that the Repurchase Amount is sufficient to satisfy all outstanding
claims in respect of the aforementioned ineligible Receivables and the Borrower
shall have no further claims regarding the eligibility of any Receivable
purchased under the Purchase Agreement.

 

Section 2.03.  Servicing Fee Credit.  Each of the Servicer, the Administrative
Agent and the Borrower hereby acknowledge and agree that an amount equal to
$72,000 in Servicing Fees charged and paid prior to August 31, 2010 was
mistakenly charged to the Borrower as a result of calculating such Servicing
Fees on the basis of all of the pledged Receivables owned by the Borrower as
opposed to only the Eligible Receivables owned by the Borrower.  Of the $72,000,
an amount equal to $17,537.17 shall be distributed to the Borrower and the
remaining balance of $54,462.83 shall be credited to the Borrower and applied by
the Administrative Agent to the Outstanding Loan Balance.

 

Section 2.04.  Amounts Due and Application of Proceeds.  (a) Attached as Annex A
hereto are calculations of (i) the total amount of Aggregate Unpaids under each
of the Revolving Credit Agreement and the Credit Agreement immediately prior to
giving effect to this Amendment and the Sale and Assignment (including, without
limitation, line item amounts for outstanding principal, accrued interest,
attorneys’ fees, Servicing Fees, Backup Servicing Fees and Collateral Custodian
Fees), (ii) any credits for collections received into any collection or lockbox
accounts under each of the Revolving Credit Agreement and the Credit Agreement
from the period from August 31, 2010 through September 30, 2010, and the parties
to whom such amounts are credited, (iii) the application of the amounts being
advanced by the Lenders toward the purchase price being paid by the Borrower to
Trust II under the Sale and Assignment, and (iv) the Aggregate Unpaids under the
Credit Agreement after giving effect to the payments and applications of funds
described above (including, for the avoidance of doubt, after giving effect to
the Borrower’s purchase of the Receivables under the Sale and Assignment).  The
Borrower, the Administrative Agent and the Lenders hereby acknowledge and agree
that, after giving effect to all of the payments and applications of funds
described above (including those amounts to be distributed to the Borrower), the
Aggregate Unpaids under the Credit Agreement will be as reflected on Annex A,
which amount includes an Outstanding Loan Balance after giving effect to all of
the payments and applications of funds described above of $25,763,950.23.

 

(b)           The parties hereto hereby acknowledge and agree that the advance
rate applicable to the Receivables acquired by the Borrower from Trust II is
based on the “Maximum Advance Rate” as set forth in the Credit Agreement and is
unrelated to the purchase price paid by the Borrower to Trust II under the Sale
and Assignment.

 

Section 2.05.  Legal Fees.  The Administrative Agent acknowledges and agrees
that $4,877.50 shall be credited against the legal fees otherwise payable by the
Borrower in connection with the closing of this Amendment (reflecting a credit
for 9 hours of Chris Duerden time from Invoice 34118601 and 1 hour of J.
Posternak time and 0.5 hour of Sean Scott time from Invoice 34160768), with the
balance of the legal fees payable by Borrower in connection with the closing of
this Amendment to be paid on the first Payment Date following the date hereof
pursuant to Section 2.6 of the Credit Agreement.

 

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ARTICLE III

 

AMENDMENTS TO THE CREDIT AGREEMENT

 

Section 3.01.  Amendments.

 

(a)           Section 1.1 of the Credit Agreement is hereby amended by deleting
the definitions “Fair” and “Fair Servicing Condition” in their entirety. 
Further, any and all references in the Credit Agreement to “Fair”, “Fair
Servicing Condition” or “Fair Finance Company” are hereby deemed to be deleted
and otherwise null and void.

 

(b)           Section 1.1 of the Credit Agreement is hereby amended by adding
the following new definitions in their appropriate alphabetical order:

 

“CLST Receivables”:  That certain portfolio of Receivables purchased by the
Borrower from CLST Asset Trust II with an effective transfer date of August 31,
2010.”

 

“Maximum Advance Rate”:  On any Measurement Date, a percentage equal to
81.43995592% minus any 3% reduction thereto upon satisfaction of the conditions
under Section 2.9.

 

(c)           The definition of “Change of Control” in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“Change of Control”: The failure of CLST to own, directly or indirectly, 100% of
the equity interests in the Borrower free and clear of any Lien (other than
Permitted Liens); provided that, CLST may sell all or a portion of the equity
interests in the Borrower to a third party in the manner permitted by
Section 13.18.

 

(d)           The definition of “Credit and Collection Policy” in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety as follows
(and hereby deemed to be put into the proper alphabetical ordering in
Section 1.1); provided that any and all references to “Credit and Collection
Policy” in the Credit Agreement are hereby deemed to mean “Collection Policy”:

 

“Collection Policy”:  With respect to the initial Servicer, the written
collection policies and procedures manual of FCC Finance, LLC set forth on
Schedule V, as such collection policy may be amended or supplemented from time
to time in accordance with Section 5.3(f), or, with respect to the Backup
Servicer or any successor Servicer, the customary collection policies and
procedures of such successor Servicer.

 

(e)           The definition of “Defaulted Receivable” in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

 

“Defaulted Receivable”:  A Receivable as to which any of the following has
occurred:  (a) all or any portion of a contractual payment due under such
Receivable is 121 or more days

 

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past due, (b) the payment terms related to such Receivable have been
restructured or modified (other than (i) as permitted under Section 6.3 or
Section 6.4(a) with the consent of the Administrative Agent, in its sole
discretion, or (ii) with the consent of both the Borrower and the Administrative
Agent, each in its respective sole discretion) in any way due to credit reasons
or for the purpose of preventing such Receivable from becoming a Defaulted
Receivable after the Closing Date, (c) a charge-off has been taken with respect
to such Receivable as a result of a bankruptcy proceeding or otherwise, (d) the
Servicer has reasonably determined in accordance with the Collection Policy, the
Servicing Standard or otherwise that such Receivable is not collectible or
(e) any of the Borrower, the Servicer, any Affiliate thereof or any other Person
affiliated, under the employ or at the direction of the foregoing has made
(directly or indirectly) any principal, interest or other payments due on such
Receivable on behalf of the related Obligor to prevent such Receivable from
becoming past due or for any other reason.

 

(f)            The definition of “Eligible Receivable” in Section 1.1 of the
Credit Agreement is hereby amended by adding the following new clause (v):

 

“(v)  none of the Borrower, the Servicer, any Affiliate thereof or any other
Person affiliated, under the employ or the direction of the foregoing has made
(directly or indirectly) any principal, interest or other payments due on such
Receivable on behalf of the related Obligor to prevent such Receivable from
becoming past due or for any other reason.”

 

(g)           The definition of “Facility Amount” in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

““Facility Amount”:  $25,763,950.23.”

 

(h)           The definition of “Interest Rate” in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“Interest Rate”:  A per annum interest rate equal to the sum of the LIBOR Rate
and 5.50%.”

 

(i)            The definition of “Maximum Advance” in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“Maximum Advance”:  On any Measurement Date, an amount equal to (i) the sum for
each Eligible Receivable (including, for the avoidance of doubt, each CLST
Receivable that is an Eligible Receivable) of the product of (a) the Maximum
Advance Rate and (b) the Outstanding Receivable Balance of such Receivable on
such Measurement Date.

 

(j)            The definition of “Servicing Fee” in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

 

“Servicing Fee”:  The servicing fee payable to the Servicer or the successor
Servicer on each Payment Date in arrears in respect of each Collection Period,
which fee shall be equal to (a) in the case of the Backup Servicer if appointed
as successor Servicer hereunder, the Successor Servicer Administration Fee (as
defined in the Backup Servicer Fee Letter) or (b) in the case of any other
Servicer, the product of (i) the Servicing Fee Rate, (ii) the aggregate
Outstanding

 

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Receivable Balance of all Receivables being serviced by the Servicer as of the
first Business Day of the related Collection Period and (iii) the actual number
of days in such Collection Period divided by 360.

 

(k)                                  Section 1.4 of the Credit Agreement is
hereby amended by adding the following new clause (h):

 

“(h)  reference to any threshold number in respect of the breach of a
delinquency or default trigger shall be on an absolute basis (i.e., if the
threshold number is 12% there shall be no consideration given as to whether the
breach of such number is minimal if the number calculated is in excess of 12%;
e.g., 12.0001% shall be considered a breach of the trigger).”

 

(l)                                     Section 2.1(a) of the Credit Agreement
is hereby amended by replacing the amount “$34,891,977.97” with the amount
“$25,763,950.23”.

 

(m)                               Section 2.6(e) of the Credit Agreement is
hereby amended and restated in its entirety as follows:

 

(e)           to the Administrative Agent, for the account of each applicable
Lender in reduction of the Outstanding Loan Balance, an amount equal to (i) the
Required Reduction Amount, if any and (ii) if any Event of Default under
Section 10.1(n) or (o) has occurred and is continuing, the three-month rolling
average Annualized Default Rate exceeds 12.0% (or such greater percentage as may
be in effect pursuant to Section 2.9) for the related Collection Period or the
three-month rolling average Delinquent Accounts Ratio exceeds 11.0% (or such
greater percentage as may be in effect pursuant to Section 2.9) for the related
Collection Period, all remaining amounts;

 

(n)                                 Section 2.9 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

 

“Section 2.9.  Trigger Buy-Up.

 

At any time prior to the occurrence of an Event of Default (or after the waiver
of an Event of Default), the Borrower shall be entitled, at its option, to
reduce the Outstanding Loan Balance by making a payment thereon in an amount not
less than the difference between (a) the Outstanding Loan Balance prior to such
reduction minus (b) the Maximum Advance after giving effect to a 3% reduction in
the Maximum Advance Rate, in exchange for an increase in the Annualized Default
Rate triggers in Sections 2.6(e) and 10.1(o) to 13% and an increase in the
Delinquent Accounts Ratio triggers in Sections 2.6(e) and 10.1(n) to 12%;
provided that (i) the Borrower shall give two (2) Business Day’s prior written
notice of such repayment of the Outstanding Loan Balance and reduction of the
Maximum Advance Rate to the Administrative Agent and (ii) such notice shall
specify the amount to be deposited into the Collection Account for application
to the reduction of the Outstanding Loan Balance.  For the avoidance of doubt,
(x) the Borrower must reduce the Outstanding Loan Balance by an amount
sufficient such that after giving effect thereto the Outstanding Loan Balance is
less than the Maximum Advance (after giving effect to the reduction in the
Maximum Advance Rate of 3%), (y) such reduction of the Outstanding Loan Balance
shall be a one-time action and may not occur in increments, and

 

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(z) such increase in the Annualized Default Rate trigger and the Delinquent
Accounts Ratio trigger can only be achieved pursuant to this Section 2.9.”

 

(o)                                 Section 6.4(a) of the Credit Agreement is
hereby amended and restated in its entirety as follows:

 

“(a)                 Collection Efforts, Modification of Collateral.  The
Servicer will use commercially reasonable efforts to collect, or cause to be
collected, all payments called for under the terms and provisions of the
Receivables included in the Collateral as and when the same become due in
accordance with the Collection Policy and the Servicing Standard.  The Servicer
may not waive, modify or otherwise vary any provision of an item of Collateral
without the prior written consent of the Borrower, other than waivers,
modifications and other variances that are expressly permitted by the Collection
Policy or this Section 6.4.”

 

(p)           Section 6.5 of the Credit Agreement is hereby amended and restated
in its entirety as follows:

 

“6.5                 Realization Upon Defaulted Receivables.

 

(a)                                                          The Servicer will
use commercially reasonable efforts consistent with the Servicing Standard and
Applicable Law in realizing upon each Defaulted Receivable and Related Security,
and employ practices and procedures (including commercially reasonable efforts)
to enforce all obligations of Obligors (which may include altering the payment
and interest terms of any Defaulted Receivable with the prior written approval
of the Borrower).  Without limiting the generality of the foregoing, the
Servicer may (a) unless the Administrative Agent has specifically given
instruction to the contrary, (i) foreclose upon any property securing the
Defaulted Receivable and cause the sale of any such property, or (ii) turn the
Defaulted Receivable over to a collection agency for collection, or (b) with the
consent of the Borrower (other than during the existence of any Event of
Default), sell the Defaulted Receivable for its fair market value (as determined
by the Servicer in good faith) to an independent third-party purchaser or alter
the interest rate or other payment terms of the Defaulted Receivable (whether or
not in accordance with the Collection Policy).  The Servicer will remit to the
Collection Account the Recoveries received in connection with the sale or
disposition of a Defaulted Receivable.  In addition, the Borrower, with the
prior written consent of the Administrative Agent (which shall not be
unreasonably withheld), may retain a third party servicer that has been approved
in writing by the Administrative Agent to service all (but not less than all) of
the Defaulted Receivables owned by the Borrower in the event that the Borrower
determines that the Servicer is not servicing the Defaulted Receivables in
accordance with the Collection Policy or in a manner consistent with the
Servicing Standard; provided that (x) the Servicer shall be reimbursed for any
reasonable expenses incurred in such a transition pursuant to
Section 2.6(b) (such expenses to be limited to the actual cost and expenses
incurred by the Servicer, including the cost of any internal employee utilized
in connection with such transition (the cost of such employee not to exceed $125
per hour)) and (y) any such retention of a third party servicer shall be subject
to

 

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an agreement between the Servicer, the Administrative Agent and CLST (or an
Affiliate thereof) whereby CLST (or an Affiliate thereof) shall agree to deposit
into the Collection Account an amount equal to the aggregate amounts distributed
to the Servicer pursuant to the foregoing clause (x) directly as a result of
such transition.

 

(b)                   Beginning on September 20, 2010, the Servicer shall
designate a specified employee whose employment duties shall be restricted
solely to the realization upon Defaulted Receivables owned by the Borrower
(e.g., the Servicer hereby covenants and agrees that such employee shall not be
engaged in the servicing or collection practices for any Receivable not owned by
the Borrower as of September 20, 2010).  The Borrower may from time to time
elect to discontinue the use of such a dedicated Servicer employee and/or to
thereafter elect to recommence such use, in either case by providing 30 days
prior written notice to the Servicer.  The Borrower hereby agrees to reimburse
the Servicer for the related costs of such employee on a monthly basis (by the
15th day of the following calendar month) as set forth on Schedule VI (as
amended from time to time with the consent of the Servicer, the Borrower and the
Administrative Agent), with such reimbursement to be paid by the Borrower out of
funds otherwise available to the Borrower (and not from Available Funds);
provided that no reimbursement obligations with respect to such an employee
shall accrue from the date that is 30 calendar days following the date of any
discontinuance notice furnished by the Borrower to the Servicer until such date,
if any, as the Borrower elects to resume such arrangement and a dedicated
employee is again hired or otherwise assigned on a full-time basis to the
realization of Defaulted Receivables owned by the Borrower.  For avoidance of
doubt, the Borrower shall have no obligation whatsoever to provide benefits to
such employee, and the Borrower’s sole liability related to such employee shall
be limited to reimbursement of the Servicer of the amounts on Schedule VI.  In
the event any such employee is terminated or otherwise resigns from the employ
of the Servicer, the Servicer shall use commercially reasonable efforts to fill
such position unless the Borrower notifies the Servicer such position is no
longer necessary.

 

(q)           Clause (n) in Section 10.1 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(n)                 the three-month rolling average Delinquent Accounts Ratio
shall exceed 11%, or such greater percentage as may be in effect pursuant to
Section 2.9, for (i) three consecutive months or (ii) any four months in a
twelve month period (in each case, beginning the measurements with the
January 2011 Reporting Date for the December 2010 Servicing Report (thereby
encompassing the October 2010, November 2010 and December 2010 Collection
Periods); such that the first month in which the trigger could be breached would
be the March 2011 Reporting Date for the February 2011 Servicing Report); it is
understood and agreed that if the trigger set forth above would not be breached
as of a subsequent Reporting Date, such Event of Default shall be deemed cured
and no longer continuing as of such subsequent Reporting Date; or”

 

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(r)            Clause (o) in Section 10.1 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

“(o)                 the three-month rolling average Annualized Default Rate
shall exceed 12%, or such greater percentage as may be in effect pursuant to
Section 2.9, for (i) three consecutive months or (ii) any four months in a
twelve month period (in each case, beginning the measurements with the
January 2011 Reporting Date for the December 2010 Servicing Report (thereby
encompassing the October 2010, November 2010 and December 2010 Collection
Periods); such that the first month in which the trigger could be breached would
be the March 2011 Reporting Date for the February 2011 Servicing Report); it is
understood and agreed that if the trigger set forth above shall not be breached
as of a subsequent Reporting Date, such Event of Default shall be deemed cured
and no longer continuing as of such subsequent Reporting Date; or”

 

(s)           A new Section 13.18 is hereby added to the end of Article XIII of
the Credit Agreement to read as follows:

 

“Section 13.18.  Sale of Equity Interests.  With the consent of the
Administrative Agent, which consent shall not be unreasonably withheld, CLST may
from time to time sell or transfer all or a portion of the equity interests of
the Borrower to a third party.  For avoidance of doubt, such a transaction shall
not constitute or give rise to an Event of Default.  In connection with any
closing of a sale of equity interests, the Administrative Agent will provide a
certification of amounts outstanding under the Credit Agreement, and of the
absence (or existence, as the case may be) of Events of Default or circumstances
which with the passage of time would constitute an Event of Default.”

 

(t)            Schedule V of the Credit Agreement is hereby amended in its
entirety as set forth on Exhibit A hereto.

 

(u)           The Credit Agreement is hereby amended by adding a Schedule VI
thereto as set forth on Exhibit B hereto.

 

ARTICLE IV

 

MISCELLANEOUS

 

Section 4.01.  Conditions Precedent.  This Amendment shall become effective as
of August 31, 2010 upon (i) receipt by the Administrative Agent of counterparts
of this Amendment (whether by facsimile or otherwise) executed by each of the
other parties hereto, (ii) receipt by the Administrative Agent of a replacement
Note in the amount of $25,763,950.23 executed by the Borrower (and the
substantially contemporaneous return by the Administrative Agent to the Borrower
of the original Note), (iii) receipt by the Administrative Agent of the executed
Sale and Assignment, (iv) receipt by the Borrower of $180,429.38, which shall be
distributed from the Collection Account to an account specified by the Borrower
to the Administrative Agent and the

 

10

--------------------------------------------------------------------------------

 

Collateral Custodian, and (v) receipt by the Administrative Agent of opinions in
form and substance satisfactory to the Administrative Agent.

 

Section 4.02.  Credit Agreement in Full Force and Effect as Amended.  Except as
specifically amended hereby, all of the terms and conditions of the Credit
Agreement shall remain in full force and effect.  All references to the Credit
Agreement in any other document or instrument shall be deemed to mean the Credit
Agreement as amended by this Amendment.  This Amendment shall not constitute a
novation of the Credit Agreement, but shall constitute an amendment thereof. 
The parties hereto agree to be bound by the terms and obligations of the Credit
Agreement, as amended by this Amendment, as though the terms and obligations of
this Amendment were set forth in the Credit Agreement.

 

Section 4.03.  Representations and Warranties.  The Borrower represents and
warrants that immediately after giving effect to this Amendment (i) the
representations and warranties of the Borrower set forth in the Transaction
Documents are true and correct and (ii) no Event of Default or Unmatured Event
of Default has occurred and is continuing.  Each of CLST Financo, Inc., CLST
Asset I, LLC, CLST Asset II, LLC, CLST Asset Trust II and the Borrower
represents and warrants that immediately after giving effect to this Amendment
it will be Solvent.

 

Section 4.04.  Release.

 

(I)  As a material part of the consideration for the Administrative Agent and
Lenders entering into this Agreement, each of CLST Asset I, LLC, CLST
Holdings, Inc., CLST Financo, Inc., CLST Asset II, LLC, CLST Asset Trust II,
Robert Kaiser and the Borrower (the “CLST Parties”) hereby agrees as follows
(the “Fortress Release Provision”):

 

(a)           Release and Discharge.  Each of the CLST Parties hereby releases
and discharges Fortress Credit Co LLC, Fortress Credit Corp., Drawbridge Special
Opportunities Fund LP, Fortress Credit Opportunities I, LP, Fortress Credit
Funding I LP, Fortress Credit Funding III LP, FCC Finance, LLC and their
respective predecessors, successors, assigns, officers, managers, directors,
shareholders, members, partners, employees, agents, attorneys, representatives,
subsidiaries, and affiliates (collectively, the “Fortress Released Parties”)
from any and all claims, counterclaims, demands, damages, debts, agreements,
covenants, suits, contracts, obligations, liabilities, offsets, rights, actions
and causes of action of any nature whatsoever, including, without limitation,
all claims, demands, and causes of action for contribution and indemnity,
whether arising at law or in equity, presently possessed, known or unknown,
whether liability therefor be direct or indirect, liquidated or unliquidated,
presently accrued, absolute or contingent, and whether or not heretofore
asserted, which all or any of the individual CLST Parties may have as of the
execution date of this Agreement against any Fortress Released Party arising
under or related to the Transaction Documents, the Revolving Credit Agreement
(and any transaction documents related thereto) or any other document or
agreement between any Fortress Released Party and any of the CLST Parties.

 

(b)           Representations and Warranties.  Each of the CLST Parties hereby
represents and warrants to each Fortress Released Party that it understands that
the Fortress Release Provision is a required condition to, and was a material
consideration in, the agreement of the Administrative Agent and the Lenders to
enter into this Amendment.

 

11

--------------------------------------------------------------------------------

 

(c)           Broadly Construed.  Each of the CLST Parties hereby confirms that
it is its express intent that the release and discharge set forth in the
Fortress Release Provision be construed as broadly as possible in favor of the
Fortress Released Parties so as to foreclose forever the assertion by any of the
CLST Parties of any claims released hereby against the Fortress Released
Parties.

 

(II)  As a material part of the consideration for the Borrower (and the other
CLST Parties) entering into this Agreement, each of Fortress Credit Co LLC,
Fortress Credit Corp., Drawbridge Special Opportunities Fund LP, Fortress Credit
Opportunities I, LP, Fortress Credit Funding I LP, Fortress Credit Funding III
LP and FCC Finance, LLC (the “Fortress Parties”) hereby agrees as follows (the
“CLST Release Provision”):

 

(a)           Release and Discharge.  Each of the Fortress Parties hereby
releases and discharges CLST Asset I, LLC, CLST Holdings, Inc., CLST Financo,
Inc., CLST Asset II, LLC, CLST Asset Trust II, Robert Kaiser, the Borrower and
their respective predecessors, successors, assigns, officers, managers,
directors, shareholders, members, partners, employees, agents, attorneys,
representatives, subsidiaries, and affiliates (collectively, the “CLST Released
Parties”) from any and all claims, counterclaims, demands, damages, debts,
agreements, covenants, suits, contracts, obligations, liabilities, offsets,
rights, actions and causes of action of any nature whatsoever, including,
without limitation, all claims, demands, and causes of action for contribution
and indemnity, whether arising at law or in equity, presently possessed, known
or unknown, whether liability therefor be direct or indirect, liquidated or
unliquidated, presently accrued, absolute or contingent, and whether or not
heretofore asserted, which all or any of the individual Fortress Parties may
have as of the execution date of this Agreement against any CLST Released Party
arising under or related to the Transaction Documents, the Revolving Credit
Agreement (and any transaction documents related thereto) or any other document
or agreement between any CLST Released Party and any of the Fortress Parties.

 

(b)           Representations and Warranties.  Each of the Fortress Parties
hereby represents and warrants to each CLST Released Party that it understands
that the CLST Release Provision is a required condition to, and was a material
consideration in, the agreement of the Borrower (and the other CLST Parties) to
enter into this Amendment.

 

(c)           Broadly Construed.  Each of the Fortress Parties hereby confirms
that it is its express intent that the release and discharge set forth in the
CLST Release Provision be construed as broadly as possible in favor of the CLST
Released Parties so as to foreclose forever the assertion by any of the Fortress
Parties of any claims released hereby against the CLST Released Parties.

 

Section 4.05.  Prior Understandings.  This Amendment sets forth the entire
understanding of the parties relating to the subject matter hereof, and
supersedes all prior understandings and agreements, written or oral.

 

Section 4.06.  Counterparts.  This Amendment may be executed in any number of
counterparts and by separate parties hereto on separate counterparts, each of
which when executed shall be deemed an original, but all such counterparts taken
together shall constitute one and the same instrument.

 

12

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Section 4.07.  Governing Law.  This Amendment shall be governed by and construed
in accordance with the laws of the State of New York.

 

Section 4.08.  Limitation of Liability.  It is expressly understood and agreed
by the parties hereto that (i) this Amendment is executed and delivered by U.S.
Bank Trust National Association, not individually or personally but solely as
trustee of the Borrower, in the exercise of the powers and authority conferred
and vested in it, (ii) each of the representations, undertakings and agreements
herein made on the part of the Borrower is made and intended not as a personal
representation, undertaking or agreement by U.S. Bank Trust National Association
but is made and intended for the purpose of binding only the Borrower, (iii)
nothing herein contained shall be construed as creating any liability on U.S.
Bank Trust National Association, individually or personally, to perform any
covenant, either expressed or implied, contained herein, all such liability, if
any, being expressly waived by the parties hereto and by any Person claiming by,
through or under the parties hereto and (iv) under no circumstances shall U.S.
Bank Trust National Association be personally liable for the payment of any
indebtedness or expenses of the Borrower or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Borrower under this Amendment or any other related documents; provided,
however, that U.S. Bank Trust National Association shall remain personally
liable for the breach or failure of the representations and warranties made in
its personal capacity in the Trust Agreement.

 

13

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.

 

 

 

FCC INVESTMENT TRUST I,

 

as the Borrower

 

 

 

By:

U.S. Bank Trust National Association, not in its individual capacity but solely
as statutory trustee

 

 

 

 

 

By:

/s/ Michael D. Bengtson

 

Name:

Michael D. Bengtson

 

Title:

Assistant Vice President

 

 

 

 

 

FCC FINANCE, LLC,

 

as the Servicer

 

 

 

 

 

By:

/s/ James D. Borschow

 

Name:

James D. Borschow

 

Title:

President

 

S-1

--------------------------------------------------------------------------------

 

 

FORTRESS CREDIT CO LLC,

 

as the Administrative Agent

 

 

 

 

 

By:

/s/ Constantine M. Dakolias

 

Name:

Constantine M. Dakolias

 

Title:

President

 

S-2

--------------------------------------------------------------------------------

 

 

FORTRESS CREDIT FUNDING I LP,

 

as a Lender

 

 

 

By:

Fortress Credit Funding I GP, LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Constantine M. Dakolias

 

Name:

Constantine M. Dakolias

 

Title:

President

 

 

 

 

 

FORTRESS CREDIT FUNDING III LP,

 

as a Lender

 

 

 

By:

Fortress Credit Funding III GP, LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Constantine M. Dakolias

 

Name:

Constantine M. Dakolias

 

Title:

President

 

 

 

 

 

FORTRESS CREDIT OPPORTUNITIES I L.P.,

 

as a Lender and as the sole Revolving Lender

 

 

 

By:

Fortress Credit Funding I GP, LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Constantine M. Dakolias

 

Name:

Constantine M. Dakolias

 

Title:

President

 

S-3

--------------------------------------------------------------------------------

 

U.S. BANK NATIONAL ASSOCIATION,

 

not in its individual capacity but solely as Collateral Custodian

 

 

 

 

 

By:

/s/ Michael D. Bengtson

 

 

Name:  /s/ Michael D. Bengtson

 

 

Title  Assistant Vice President

 

 

 

LYON FINANCIAL SERVICES, INC.,

 

(d/b/a U.S. Bank Portfolio Services), not in its individual capacity but solely
as Backup Servicer

 

 

 

 

 

By:

/s/ Brad Winkelman

 

 

Name:  Brad Winkelman

 

 

Title  SVP

 

 

S-4

--------------------------------------------------------------------------------

 

Acknowledged and Agreed:

 

 

 

CLST Asset I, LLC

 

By: CLST Financo, Inc., its sole member

 

 

 

 

 

By:

/s/ Robert Kaiser

 

 

Name:  Robert Kaiser

 

 

Title:  President

 

 

 

 

 

CLST Asset II, LLC

 

By:  CLST Financo, Inc., its sole manager

 

 

 

 

 

By:

/s/ Robert Kaiser

 

 

Name:  Robert Kaiser

 

 

Title:  President

 

 

 

 

 

CLST Asset Trust II

 

 

 

By:  U.S. Bank Trust National Association,

 

not in its individual capacity but solely as statutory trustee

 

 

 

 

 

By:

/s/ Michael D. Bengtson

 

 

Name:  Michael D. Bengtson

 

 

Title:  Assistant Vice President

 

 

 

 

 

CLST Financo, Inc.

 

 

 

 

 

By:

/s/ Robert Kaiser

 

 

Name:  Robert Kaiser

 

 

Title:  President

 

 

S-1

--------------------------------------------------------------------------------

 

CLST Holdings, Inc.

 

 

 

 

 

By:

/s/ Robert Kaiser

 

 

Name:  Robert Kaiser

 

 

Title:  President

 

 

 

 

 

ROBERT KAISER

 

 

 

 

 

/s/ Robert Kaiser

 

 

S-2

--------------------------------------------------------------------------------

 

DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP

 

 

 

By:

Drawbridge Special Opportunities GP LLC,

 

 

its General Partner

 

 

 

 

 

By:

/s/ Constantine M. Dakolias

 

Name:

Constantine M. Dakolias

 

Title:

President

 

 

 

 

 

FORTRESS CREDIT CORP.

 

 

 

By:

/s/ Constantine M. Dakolias

 

Name:

Constantine M. Dakolias

 

Title:

President

 

 

S-3

--------------------------------------------------------------------------------

 

Exhibit A

 

SCHEDULE V

to Credit Agreement

 

COLLECTION POLICY

 

[See attached]

 

--------------------------------------------------------------------------------

 

COLLECTIONS

 

POLICY - The FCC Collection Department is responsible for the effective
management of loan receivables. Emphasis in this department is placed on
“delinquency control” while complying with all “Company” and “Fair Debt
Collection” practices. Individual conduct and the methodology used for training
in this department must maintain acceptable industry standards used by prudent
lenders for collecting delinquent accounts. It is the standard operating
procedure of the Company to comply with all state and federal laws while
servicing and collecting accounts. Compliance shall include but not be limited
to Fair Debt Collection Practices as they may be enforced, adopted or amended.
The Company will exercise “zero tolerance” for employee violations that may fall
outside of state and/or federal acceptable collection practices.

 

PROCEDURE — The disciplines, rules and procedures implemented in this department
must be strictly followed for the company to maintain delinquency control.

 

1.     DELINQUENCY CATEGORIES: Accounts are reported in one of five (5) specific
classifications.

 

·      0 to 30 days past the account scheduled due date

 

·      31 to 60 days past the accounts scheduled due date

 

·      61 to 90 days plus past the accounts scheduled due date

 

·      91 to 120 days plus past the accounts scheduled due date

 

·      121+ days plus past the accounts scheduled due date

 

2.     REPORTS: The following reports are utilized on a daily, weekly, monthly
and as need basis to assist the department in measuring individual performance,
department goals and/or specific areas of concern that directly impact
delinquency control.

 

·      Daily reporting includes Delinquency Lists, 1st Payment
Defaults, Individual Collector Portfolio Assignments, Delinquency Comparison
Reports, and individual collector system generated call logs

 

·      Monthly reporting include Bankruptcy, Charge-off and all Delinquency
reports.

 

1

--------------------------------------------------------------------------------

 

PERSONNEL — The collection staff consists of Account Representatives assigned to
a specific portfolio of loans based upon individual qualifications and ability,
as determined by management based on our current asset class. FCC’s objective is
to maintain staffing sufficient to insure less than 1000 accounts per Account
Representative.

 

·      Training: The Collection Manager provides training to Account
Representatives, both on an individual and group basis as warranted by
department performance. The following publications, exercises and management
interaction are required beginning with new employee orientation:

 

a)     Employee is given FCC’s Employee Policy and Procedures Manual for company
philosophy and requirements.

 

b)     Employee is given a copy of the Fair Debt Collection Practices Act and
Employee Handbook. The employee is required to execute an acknowledgment that
these publications have been received, reviewed and understood. Acknowledgments
are retained in the employee’s personnel file.

 

c)     The Collection Manager tours the offices with the new employee to
familiarize the employee with each area, department and other personnel.

 

d)     Orientation includes an initial meeting with management to discuss
responsibilities and expectations regarding performance. This meeting also
provides an opportunity to discuss any employee questions pertaining to company
policy or procedures.

 

e)     Employee training is given on the Collection System to insure
documentation is captured efficiently.

 

f)     Collectors use staff meetings to share and discuss observations of
collection efforts. These meetings are scheduled and supervised by the
Collection Manager.

 

g)    Phone Monitoring is conducted by the Collection Managers to ensure the
quality and performance of each individual Account Representative.

 

·      Evaluation: Each Account Representative is responsible for controlling
delinquency in their assigned portfolio. Evaluations are measured by performance
ratios as compared to company standards. The following is reviewed for each
Account Representative enabling management to evaluate individual efforts and
improve department efficiency:

 

2

--------------------------------------------------------------------------------

 

a)     Daily Call Report (system generated)

 

b)     Periodic Review of individual accounts

 

c)     Call monitoring

 

d)     Any other manual or system generated reporting as the Collection Manager
or management may deem effective

 

·      Work Schedule: The Collection Department Manager schedules times that are
optimal for customer contact. As standard in the industry, hours are staggered
and typically include some evening and Saturday scheduling. The Collection
Manager determines the schedule that is provided in advance each week.

 

COLLECTION PRACTICES & DISCIPLINES - The following procedures are required when
collecting accounts.

 

·      Telephone Collections: This is the primary method used for collecting
past due accounts. Acceptable call hours are from 8:00AM until 9:00PM within a
specific calling area. Phone collection activity can commence when the account
becomes five (5) or more days past due and continue until the delinquency is
resolved.

 

a)     First attempt is to make contact at residence.

 

b)     If unable to reach customer(s) at residence, a call is placed to the
debtor(s) place of employment or other source of contact (unless notated
differently, i.e. not to call at place of employment).

 

c)     Collection calls are made at various times of the day to insure maximum
coverage.

 

d)     All collection efforts must be documented on the Collection System. Once
contact is made the reason for delinquency should be documented in addition to
verifying critical data and obtaining payment or setting a promise date for
payment.

 

·      Collection Guidelines: Delinquency is worked by category

 

0 to 30 Days Delinquent

 

a)     First late notice (Section 16 Exhibit LLL) is system generated at 10 days
delinquent on all accounts.

 

b)     Second late notice is system generated at 20 days delinquent on all
accounts.

 

3

--------------------------------------------------------------------------------

 

c)     The Account Representative will utilize previous pay history to determine
the approach for each account and determine if a specific method or type of
contact has been established to collect the account. If the account reflects
previous delinquency, then standard telephone collection procedures should be
followed. Efforts should continue daily until contact is made and the account
has been set for payment or delinquency has been resolved.

 

d)     At 30-days past due, the Collection Manager reviews the account and
determines if a customized letter should be sent (Section 16 Exhibit MMM). The
Collection Manager during this review may provide further instruction to the
Account Representative in the comment screen to assist in collection efforts.
Examples of such instructions may include ordering the file, field call or skip
tracing.

 

31-Day Plus Delinquent

 

a)     At 45 days past due, the Collection Manager re-evaluates the account
offering suggestions, instruction and/to determine if legal action is
recommended, in such cases executive management then reviews the account for
approval.

 

b)     Based on this review and the Collection Manager documents any additional
instruction for the Account Representative to ensure every effort has been made
to resolve the delinquency.

 

·      Senior Lien Holder Contact: This avenue should only be used in the event
there is difficulty contacting the customer(s) or to verify the status of the
superior lien account. If the senior lien holder is in the process of
foreclosure, the account must be immediately referred to the Collection Manager
to determine the best course of action to protect FCC’s security interest.

 

·      Skip Tracing: is used to establish alternative methods of contact or to
locate a customer(s) when no other means of contact have been successful. The
following are possible sources that may be used to locate or contact the
customer(s). The customer file and Accurint (Accurate Report is an outside skip
tracing system) (Section 16 Exhibit NNN) will be required to accomplish this
task.

 

4

--------------------------------------------------------------------------------

 

a)     Credit Report — obtain a current credit bureau report to search for any
new creditors, inquiries or other pertinent information.

 

b)     Internet — obtain any public information listed on the internet that may
assist locate a customer.

 

c)     Relatives, Friends and Co-Workers — may be used for new information and
usually have the most recent information regarding the customer(s). However,
this method of contact requires that NO DISCLOSURE be made as to the purpose of
the inquiry.

 

·      Field Calls: FCC uses an out source company for face to face contact with
the customer(s). This service can be used by completion of the order form
example in (Section 16 Exhibit OOO). Use of this service requires Collection
Manager approval. If face to face contact is made, they will put the
customer(s) on the phone with the Account Representative. If unable to make
personal contact with customer(s), they will fax and mail a report with
observational information example in (Section 16 Exhibit PPP).

 

·      Judgment: This is a legal remedy available when a customer(s) refuse to
make voluntary efforts to resolve the delinquency. This action requires an
attorney and must be approved by the Collection Manager and the President. This
legal method of collection may allow garnishment of wages or other assets
depending on State and Federal laws in affect where the customer(s) reside.

 

·      Settlement: This is a method to liquidate accounts that will otherwise
continue to affect delinquency and eventually become a charge off. Settlement
can be used to recover charged off accounts. This method of collection requires
Executive Management approval and is used when all other collection remedies
have been exhausted (i.e. no equity in FCC lien position, senior lien holder
foreclosed, customer(s) declared bankruptcy, etc.).

 

BANKRUPTCY - This is the legal method used by customer(s) to liquidate or
reorganize their debts. Once notification of bankruptcy is received (either
written or verbally) all standard collection activity must cease. There are
three stages in the Bankruptcy process; Pre-Bankruptcy, Bankruptcy and
Post-Bankruptcy:

 

1.             Pre-Bankruptcy:

Once FCC is notified that a customer has retained an attorney for Bankruptcy,
the account is placed in the pre-bankruptcy queue and the following steps are
taken:

 

5

--------------------------------------------------------------------------------

 

a)     The attorney is immediately contacted to verify the upcoming bankruptcy
filing and is made aware of FCC being either a secured or unsecured creditor.
Potential case information is also obtained such as chapter, intentions
regarding property if secured, and the possibilities of a reaffirmation.

b)     The account is constantly monitored. Attorneys are called on a weekly or
bi-weekly basis to obtain case information.

c)     Pacer is monitored closely for case information.

d)     Once a bankruptcy case has been filed and obtained, the account then goes
into the second stage of the Bankruptcy process.

 

2.             Bankruptcy: The accounts are segregated by Chapters 7 or 13, all
notifications and documents are then forwarded to the attorney for appropriate
action.

 

a)     Chapter 13 (Secured)

 

1.     All written notifications are sent to attorney

2.     Proof of claim and loan documents are forwarded to attorney for proper
filing

3.     Plan is then reviewed for appropriate filing of secured claim for FCC
under the plan

4.     Accounts are monitored for payments

5.     Trustees are contacted for payments being made through the plan

6.     Debtor’s attorneys are contacted for payments being made directly by
debtor or payments in arrears post petition

7.     When permitted by the debtor’s attorneys, customers are contacted for
payments in arrears

8.     Payment reminders are sent to attorneys

9.     If the FCC is to be paid directly by the trustee, the loan is monitored
to ensure monthly payment is being sent by trustee, if payments are missed
Trustee is contacted for resolution

 

b)     Chapter 13 (Unsecured)

 

1.     All written notifications are sent to attorney

2.     Proof of claim and loan documents are forwarded to attorney for proper
filing

3.     Plan is then reviewed for appropriate filing of unsecured priority claim
for FCC under the plan

4.     Trustees are contacted for payments being made through the plan for
unsecured debt

 

6

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c)     Chapter 7

 

Two Types of Disposition:

 

·      Reaffirmation: debtor intends to retain possession of their home and
continue making the regular monthly payment according to the terms of the
contract. Whenever possible, have the debtor and their attorney execute a
Re-Affirmation Agreement for filing with the court. Monitor for all payments
according to the servicing system due dates.

·      Surrender: debtor no longer wishes to keep their home. Typically, the
debtor surrenders their home to the mortgage lien holders.

 

3.             Post Bankruptcy

 

a)     Dismissal

 

·      Once the bankruptcy is dismissed, contact attorney and trustee for
confirmation of dismissal and continue collection of the account.

 

b)     Discharged

 

·      Under a chapter 7 with reaffirmation, continue normal collection of the
account.

·      Under a chapter 7 without reaffirmation:

·      Secured: lien remains in place and debtor is to continue payments as long
as they intend to keep property

·      Unsecured: Collection efforts must cease as debt has been discharged.

 

CHARGEOFF:

 

Purpose: The purpose for charging accounts to “profit and loss” is to segregate
non-performing loans in order to obtain accurate delinquency and to determine
loan losses.

 

·        Account must be 121-days or more past due or declared currently
uncollectible prior to 120 day delinquency.

·        Each Account is worked for recovery through collecting and legal
channels.

 

7

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Exhibit B

 

SCHEDULE VI

to Credit Agreement

 

Employee Compensation Reimbursement

 

Hourly Rate: $16.00

Monthly Wages: not to exceed $2,560.00

Federal Medicare/EE Tax: $340.50/month

WC: $13.57/month

Health/Dental Insurance Coverage: $330.00/month

Phone Invoice: not to exceed $43.36/month

 

Total Monthly Costs subject to reimbursement by the Borrower shall not exceed
$3,287.43.

 

--------------------------------------------------------------------------------

 

Annex A

 

Servicing Report - FCC Investment Trust

 

Collection Period
Payment Date

 

Aug-10
10/29/2010

 

 

 

 

 

 

 

All balances are inclusive of the August 2010 transactions distributed in
September 2010.

 

 

 

 

 

 

 

Total

 

 

 

Bulk Principal balance (ending August)

 

30,746,992.84

 

 

 

Flow Principal balance (ending August)

 

6,351,447.95

 

 

 

Loans sold

 

—

 

 

 

Plus receivables pledged during the month

 

—

 

 

 

Less FCC principal collections

 

—

 

 

 

Plus/minus other adjustments

 

(267,949.80

)

 

 

I. Total Pledged Receivables

 

36,830,490.99

 

 

 

 

 

 

 

 

 

Less Defaulted Receivables

 

 

 

 

 

Bulk Greater than 120 days delinquent

 

4,930,867.46

 

 

 

Flow Greater than 120 days delinquent

 

246,670.74

 

 

 

 

 

 

 

 

 

 

II.

Total Eligible Receivable Balance

 

31,652,952.79

 

 

 

 

 

 

 

 

 

 

III.

Maximum Advance Rate

 

81.3950926

%

 

 

 

 

 

 

 

 

 

IV.

Eligible Receivable Balance (ERB) x Maximum Advance Percentage

 

25,763,950.23

 

 

 

 

 

 

 

 

 

 

V.

Collection Account Balance (Collection Account Activity during Remittance
Period)

 

 

 

 

 

 

Balance as of prior Cut-off Date

 

—

 

 

 

(+)

Collections on FCC assets

 

—

 

 

 

(+)

Collections on Fair assets

 

—

 

 

 

(+ -)

Other Transfers to/from the Borrower

 

—

 

 

 

(-)

Accrued Yield

 

—

 

 

 

(-)

Accrued Fees

 

—

 

 

 

(-)

Principal Paydown

 

—

 

 

 

(+)

Deposits in Transit (+Account Balance Lockbox as of month end)

 

—

 

 

 

(-)

Third Party Expenes (Backup Servicer, Custodian, Collection Account, Servicer)

 

—

 

 

 

(+)

Wire to correct Deficiency

 

—

 

 

 

(-)

Borrowing Base Surplus taken out (Remittance Date)

 

72,000.00

 

 

 

(+ -)

Other Transfers

 

177,207.35

 

 

 

(+)

Income Collection Account

 

—

 

 

 

 

Collection Account Balance as of month end

 

249,207.35

 

 

 

 

 

 

 

 

 

 

VI.

Collection Account Activity at Remittance Date

 

 

 

 

 

 

 

 

 

 

 

 

(-)

Principal Paydown

 

(68,534.91

)

 

 

(-)

To the Borrower Borrowing Base Deficiency / (Surplus)

 

(180,672.44

)

 

 

 

--------------------------------------------------------------------------------

 

VII.

 

Remittance Date Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

(i)

 

Collateral Custodian Fees (min. $100 per month)

 

—

 

 

 

(ii)

 

Owner Trustee Fee

 

—

 

 

 

(iii)

 

Back-up Servicer Fees

 

—

 

 

 

(iv)

 

Management Fee

 

 

 

 

 

(v)

 

Accrued Yield

 

—

 

 

 

 

 

FCF I

 

—

 

 

 

 

 

FCL

 

—

 

 

 

(vi)

 

Borrowing Base deficiency

 

—

 

 

 

(vii)

 

Other Obligations due to Lender-Legal Invoice

 

—

 

 

 

(viii)

 

After Early Amortization Event - Amount necessary to repay outstanding balance

 

—

 

 

 

(x)

 

Cash Flow Reserve Deposit

 

—

 

 

 

(xii)

 

Overpayments / FCC Cash

 

—

 

 

 

(xiii)

 

US Bank Analysis Fee Reim (50%)

 

—

 

 

 

(xiv)

 

Remaining Balance in Collection Account (after actual close of Remittance
Period)

 

—

 

 

 

 

 

 

 

 

 

 

 

VIII.

 

Capital Limit - the lesser of (a) and (b):

 

 

 

 

 

 

 

Sum of iV + V:        ERB x Maximum Advance Percentage

 

 

 

 

 

 

 

                                 (+) Collection Account Balance

 

25,763,950.23

 

 

 

 

 

 

 

 

 

 

 

IX.

 

Outstanding Loan Amount

 

 

 

 

 

 

 

Beginning Loans Outstanding

 

21,949,046.82

 

 

 

(-)

 

Principal Repayments

 

(68,534.91

)

 

 

(+)

 

Other Borrowings

 

3,383,438.32

 

 

 

 

 

Ending Loans Outstanding

 

25,763,950.23

 

 

 

 

 

 

 

 

 

 

 

X.

 

Accrued Yield and Fees

 

 

 

 

 

(+)

 

Accrued Yield (FCF I)

 

—

 

 

 

(+)

 

Accrued Yield (FCF III)

 

—

 

 

 

 

 

Total Accrued Yield and Fees

 

—

 

 

 

 

 

 

 

 

 

 

 

XI.

 

Facility Amount (DC)

 

25,763,950.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

XII.

 

Borrowing Surplus/ (Deficiency) (VIII - IX)

 

0.00

 

 

 

 

 

 

 

 

 

 

 

XIII.

 

Is Advance Percentage less than or equal to Maximum Advance Percentage?

 

 

 

Yes

 

 

 

Advance Percentage

 

81.40

%

 

 

 

 

Maximum Advance Percentage

 

81.40

%

 

 

 

 

 

 

 

 

 

 

 

XIV.

 

Delinquency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Eligible Receivables

 

Total
Principal Balance (in $)

 

Bulk
Principal Balance (in $)

 

Flow
Principal Balance (in $)

 

 

 

Current - =<30 days

 

29,369,923.68

 

23,433,253.26

 

5,936,670.42

 

 

 

31-60 days

 

967,028.03

 

884,531.72

 

82,496.31

 

 

 

61-90 days

 

728,867.15

 

692,094.11

 

36,773.04

 

 

 

91-120 days

 

587,133.93

 

538,296.49

 

48,837.44

 

 

 

Total

 

31,652,952.79

 

25,548,175.58

 

6,104,777.21

 

 

--------------------------------------------------------------------------------

 

XV. Early Amortization Event Test

 

 

 

 

 

 

 

 

 

 

 

Excess Spread

 

 

 

 

 

Weighted Average APR of all Eligibe Receivables

 

14.41

%

 

 

LIBOR Rate

 

0.25940

%

 

 

Spread (fixed)

 

5.5

%

 

 

Interest Rate

 

5.8

%

 

 

 

 

 

 

 

 

Excess Spread

 

8.65

%

 

 

Is Excess Spread greater or equal to 4.00%?

 

NO HEDGING REQUIRED

 

 

 

If Excess Spread is below 4.00%, has the Borrower entered into a Hedge
Transaction

 

N/A

 

 

 

Is Excess Spread greater or equal to 3.00% ?

 

IN COMPLIANCE

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Delinquent Accounts Ratio

 

 

 

 

 

Pledged Eligible Receivables that were Delinquent Receivables

 

2,283,029.11

 

 

 

Aggregate Outstanding Balance of all Eligible Receivables as of the end of such
Collection Period

 

31,652,952.79

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Delinquent Accounts Ratio

 

7.29

%

 

 

Is 3 Month Rolling Avg Delinquent Accounts Ratio less than or equal to 11.00%?

 

IN COMPLIANCE

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Annualized Default Rate

 

 

 

 

 

Pledged Eligible Receivables that became Defaulted Receivables

 

275,678.33

 

 

 

Aggregate Outstanding Balance of all Eligible Receivables as of the first day of
such Collection Period

 

32,424,840.26

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Annualized Default Rate

 

8.92

%

 

 

Is 3 Month Rolling Avg Annualized Default Rate less than or equal to 12.00%?

 

INCOMPLIANCE

 

 

 

 

The undersigned hereby represents and warrants that this report is a true and
accurate accounting of the Receivables as of the date hereof, in accordance with
the terms and conditions of the First Amendment to the Credit Agreement dated as
of October 29, 2010 among FCC Investment Trust I as Borrower, Fortress Credit
Opportunities I LP and Fortress Credit Funding I LP and Fortress Credit Funding
III LP as Lender, and Fortress Credit Co LLC as Administrative Agent.

 

 

FCC Investment Trust I

Tuesday, August 31, 2010

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Servicing Report - FCC Investment Trust

 

Collection Period
Payment Date

 

Sep-10
10/29/2010

 

All balances are inclusive of the September 2010 transactions distributed in
October 2010.

 

 

 

 

 

 

 

Total

 

 

 

Principal balance (ending prior month)

 

36,830,734.05

 

 

 

Loans sold

 

—

 

 

 

Less principal collections

 

(490,614.95

)

 

 

Plus/minus other adjustments

 

 

 

 

 

I. Total Pledged Receivables

 

36,340,119.10

 

 

 

 

 

 

 

 

 

Less Defaulted Receivables

 

 

 

 

 

Greater than 120 days delinquent (ending prior month)

 

5,177,943.26

 

 

 

New defaults

 

366,982.48

 

 

 

Adjustments

 

—

 

 

 

Recoveries

 

(14,711.50

)

 

 

Greater than 120 days delinquent as of reporting date

 

5,530,214.24

 

 

 

 

 

 

 

 

 

II.

Total Eligible Receivable Balance

 

30,809,904.86

 

 

 

 

 

 

 

 

 

 

III.

Maximum Advance Rate

 

81.43995592

%

 

 

 

 

 

 

 

 

 

IV.

Eligible Receivable Balance (ERB) x Maximum Advance Percentage

 

25.091,572.94

 

 

 

 

 

 

 

 

 

 

V.

Collection Account Balance (Collection Account Activity during Remittance
Period)

 

 

 

 

 

 

Balance as of prior Cut-off Date

 

—

 

 

 

(+)

Collections

 

677,354.16

 

 

 

(+ -)

Other Transfers to/from the Borrower

 

72,000.00

 

 

 

(-)

Accrued Yield

 

—

 

 

 

(-)

Accrued Fees

 

—

 

 

 

(-)

Principal Paydown

 

—

 

 

 

(+)

Deposits in Transit (i.e. Account Balance Lockbox as of month end + Pay by Phone
+ Trans Union)

 

186,173.39

 

 

 

(-)

Third Party Expenes (Backup Servicer, Custodian, Collection Account, Servicer)

 

—

 

 

 

(+)

Wire to correct Deficiency

 

—

 

 

 

(-)

Borrowing Base Surplus taken out (Remittance Date)

 

—

 

 

 

(+ -)

Other Transfers

 

176,964.29

 

 

 

(+)

Interest Income Collection Account less all bank fees

 

(2,715.37

)

 

 

 

Collection Account Balance as of month end

 

1,109,776.47

 

 

 

 

 

 

 

 

 

 

VI.

Collection Account Activity at Remittance Date

 

 

 

 

 

 

 

 

 

 

 

 

(-)

Principal Paydown

 

(740,912.20

)

 

 

(-)

To the Borrower Borrowing Base Deficiency / (Surplus)

 

(180,429.38

)

 

 

 

 

 

 

 

 

 

VII.

Remittance Date Distributions

 

 

 

 

 

 

 

 

 

 

 

 

(i)

Collateral Custodian Fees (min. $100 per month)

 

(931.85

)

 

 

(ii)

Owner Trustee Fee & Collection Account Bank Fees / Expenses

 

(1,900.00

)

 

 

(iii)

Back-up Servicer Fees

 

(2,088.96

)

 

 

(iv)

Management Fee

 

(46,038.42

)

 

 

(v)

Accrued and unpaid Interest

 

 

 

 

 

 

FCF I

 

(7,587.54

)

 

 

 

FCF III

 

(99,331.90

)

 

 

 

FCO I

 

(15,696.94

)

 

 

(vi)

Borrowing Base deficiency

 

—

 

 

 

(vii)

Other Obligations due to Lender

 

—

 

 

 

(viii)

After occurrence and during the continuance of an Event of Default - Amount
necessary to repay outstanding balance

 

—

 

 

 

(x)

Overpayments / FCC Cash

 

(14,859.28

)

 

 

(xii)

Remaining Balance in Collection Account (after actual close of Remittance
Period)

 

(0.00

)

 

 

 

--------------------------------------------------------------------------------

 

VIII.

Capital Limit - the lesser of (a) and (b):

 

 

 

 

 

 

Sum of iV + V:           ERB x Maximum Advance Percentage

 

 

 

 

 

 

                                    (+) Collection Account Balance

 

25,091,572.94

 

 

 

IX.

Outstanding Loan Amount

 

 

 

 

 

 

Beginning Loans Outstanding

 

25,832,485.14

 

 

 

(-)

Required Reduction Amount

 

(740,912.20

)

 

 

 

Ending Loans Outstanding

 

25,091,572.94

 

 

 

 

 

 

 

 

 

 

X.

Accrued Yield and Fees

 

 

 

 

 

(+)

Accrued Yield (FCF I)

 

7,587.54

 

 

 

(+)

Accrued Yield (FCF III)

 

99,331.90

 

 

 

(+)

Accrued Yield (FCO I)

 

15,696.94

 

 

 

 

Total Accrued Yield and Fees

 

122,616.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

XI.

Facility Amount (IX.)

 

25,091,572.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

XII.

Borrowing Surplus / (Deficiency) (VIII - IX)

 

(0.00

)

 

 

 

 

 

 

 

 

 

XIII.

Is Advance Percentage less than or equal to Maximum Advance Percentage?

 

 

 

Yes

 

 

Advance Percentage

 

81.44

%

 

 

 

Maximum Advance Percentage

 

81.44

%

 

 

 

 

 

 

 

 

 

XIV.

Delinquency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Balance (in $)

 

 

 

 

All Eligible Receivables

 

 

 

 

 

 

Current - =<30 days

 

28,628,279.28

 

 

 

 

31-60 days

 

1,109,343.69

 

 

 

 

61-90 days

 

632,647.77

 

 

 

 

91-120 days

 

439,634.12

 

 

 

 

Total

 

30,809,904.86

 

 

 

 

--------------------------------------------------------------------------------

 

XV.

Early Amortization Event Test

 

 

 

 

 

 

 

 

 

 

 

 

Excess Spread

 

 

 

 

 

 

Weighted Average APR of all Eligibe Receivables

 

14.41

%

 

 

 

LIBOR Rate

 

0.25938

%

 

 

 

Spread (fixed)

 

5.5

%

 

 

 

Interest Rate

 

5.8

%

 

 

 

 

 

 

 

 

 

 

Excess Spread

 

8.65

%

 

 

 

Is Excess Spread greater or equal to 4.00%?

 

NO HEDGING REQUIRED

 

 

 

 

If Excess Spread is below 4.00%, has the Borrower entered into a Hedge
Transaction

 

N/A

 

 

 

 

Is Excess Spread greater or equal to 3.00%?

 

IN COMPLIANCE

 

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Delinquent Accounts Ratio

 

 

 

 

 

 

Pledged Eligible Receivables that were Delinquent Receivables

 

2,181,625.58

 

 

 

 

Aggregate Outstanding Balance of all Eligible Receivables as of the end of such
Collection Period

 

30,809,904.86

 

 

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Delinquent Accounts Ratio

 

7.25

%

 

 

 

Is 3 Month Rolling Avg Delinquent Accounts Ratio less than or equal to 11.00%?

 

IN COMPLIANCE

 

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Annualized Default Rate

 

 

 

 

 

 

Pledged Eligible Receivables that became Defaulted Receivables

 

366,982.48

 

 

 

 

Aggregate Outstanding Balance of all Eligible Receivables as of the first day of
such Collection Period

 

31,652,952.79

 

 

 

 

 

 

 

 

 

 

 

3 Month Rolling Avg Annualized Default Rate

 

10.54

%

 

 

 

Is 3 Month Rolling Avg Annualized Default Rate less than or equal to 12.00%?

 

IN COMPLIANCE

 

 

 

 

 

 

 

 

 

 

 

The undersigned hereby represents and warrants that this report is a true and
accurate accounting of the Receivables as of the date hereof, in accordance with
the terms and conditions of the First Amendment to the Credit Agreement dated as
of October 29, 2010 among FCC Investment Trust I as Borrower, Fortress Credit
Opportunities I LP and Fortress Credit Funding I LP and Fortress Credit Funding
III LP as Lender, and Fortress Credit Co LLC as Administrative Agent.

 

 

 

FCC Investment Trust I

Thursday, September 30, 2010

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

--------------------------------------------------------------------------------