Franklin Credit Management Corporation 10-12G









 

Exhibit 10.19

 

AMENDMENT
NO. 5 TO


AMENDED AND RESTATED CREDIT
AGREEMENT (LICENSING)




THIS AMENDMENT NO. 5 TO AMENDED AND
RESTATED CREDIT AGREEMENT (LICENSING) (this "Amendment") is entered into as
of June __, 2012 (the "Amendment Effective Date"), by
and among FRANKLIN CREDIT MANAGEMENT CORPORATION, a Delaware Corporation ("FCMC"), and FRANKLIN CREDIT
HOLDING CORPORATION, a Delaware corporation ("FCHC" and together with FCMC,
each, a "Borrower" and
collectively, the "Borrowers"), THE FINANCIAL
INSTITUTIONS PARTY HERETO AS LENDERS (each, a "Lender" and collectively, the
"Lenders"), THE
HUNTINGTON NATIONAL BANK, a national banking association ("Huntington"), as administrative
agent (in such capacity, together with its successors and assigns in such
capacity, the "Administrative
Agent") for the benefit of the Lenders and the Issuing Bank (as defined
in the Credit Agreement (Licensing) referred to below).  This
Amendment further amends and modifies a certain Amended and Restated Credit
Agreement (Licensing) dated as of March 31, 2009, as amended, supplemented,
restated or otherwise modified from time to time prior to the date hereof,
including a certain Amendment No. 1 to Amended and Restated Credit Agreement
(Licensing) dated March 26, 2010, a certain Amendment No. 2 to Amended and
Restated Credit Agreement (Licensing) dated July 20, 2010, a certain Amendment
No. 3 to Amended and Restated Credit Agreement (Licensing) dated September 22,
2010, and a certain Amendment No. 4 to Amended and Restated Credit Agreement
(Licensing) dated May 23, 2011 (as so amended, the "Credit Agreement
(Licensing)"), by and among Borrowers, the Lenders, the Administrative
Agent and Issuing Bank.  Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings ascribed to such terms in
the Credit Agreement (Licensing).




RECITALS:




A.           As
of March 31, 2009, the Borrowers, the Lenders, the Administrative Agent and
Issuing Bank executed the Credit Agreement (Licensing) setting forth the terms
of certain extensions of credit to the Borrower;




B.           As
of March 31, 2009, Borrowers executed and delivered to the Administrative Agent,
inter alia, a Revolving
Promissory Note (Licensing) in the original principal sum of $2,000,000, which
maximum principal sum was thereafter reduced to $1,000,000;




C.           As
of March 31, 2009, and at various other times, Borrowers executed and delivered
to the Administrative Agent, inter alia, one or more
Applications and Agreements for Letters of Credit in connection with Issuing
Bank's issuance of Letters of Credit for the account of one or more of the
Borrowers;




D.           Pursuant
to a certain Amendment No. 3 to Amended and Restated Credit Agreement
(Licensing) dated September 22, 2010, subject to acceptance of the terms of the
Restructuring to be proposed by FCHC to the Administrative Agent, the Issuing
Bank and the Lenders consented to, inter alia, the
Restructuring;




E.           As
of March 23, 2012, (i) FCHC publicly announced its intention to file a voluntary
petition for relief under the Bankruptcy Code (the "FCHC Bankruptcy Filing"), and
admitted its inability to pay its debts as such debts became due, each of which
results in a Default under Section 8.01(f) of the Credit Agreement (Licensing),
(ii) FCHC publicly announced that it would liquidate its assets, which upon the
commencement of such liquidation will cause a Default of Section 7.04 of the
Credit Agreement (Licensing), (iii) the FCHC Bankruptcy Filing and such
announcements will constitute a Default under Section 7.14 of the Credit
Agreement (Licensing), and (iv) the Pledge Defaults (defined 

 



 













 




 

below)
will result in a Default under the Borrowers' agreements to perform or observe
the terms of any Loan Document under Section 8.01(d) of the Credit Agreement
(Licensing) (collectively, the "Acknowledged
Defaults");




F.           FCHC
has further notified the Administrative Agent that promptly after the Amendment
Effective Date, it will file the FCHC Bankruptcy Filing, which when filed will
cause an Event of Default under Section 8.01(g) of the Credit Agreement
(Licensing) (the "Acknowledged
Event of Default");




G.           An
Event of Default has occurred under the Legacy Loans Credit Agreement by reason
of the failure of the borrowers thereunder to pay in full the amounts due upon
maturity on March 31, 2012, and the FCHC Bankruptcy Filing will further result
in an Event of Default under the Legacy Loans Credit Agreement, each of which
will constitute a "Default" under Section 5.1(a) of a certain Investment
Property Security Agreement dated March 31, 2009 (the "Pledge Agreement") among FCMC,
the Administrative Agent, and the Legacy Administrative Agent (collectively the
"Pledge
Defaults");




H.           In
connection with the FCHC Bankruptcy Filing, the Borrowers have requested that
the Administrative Agent, the Issuing Bank and the Lenders (i) extend the
maturity of the Revolving Loan Commitment and the Letter of Credit Commitment,
and (ii) waive the Acknowledged Defaults and the Acknowledged Event of Default
and (iii) forbear, pursuant to the terms hereof, from exercising their rights
and remedies resulting from the Pledge Defaults, and the Administrative Agent,
the Lenders and the Issuing Bank, are willing to do so upon the terms and
subject to the conditions contained herein; and




I.           Pursuant
to Section 10.04, "Amendments," of the
Credit Agreement (Licensing), the amendments requested by the Borrowers herein
must be contained in a written agreement signed by each Borrower, the
Administrative Agent and the Required Lenders.


 

NOW,
THEREFORE, in consideration of the mutual covenants, agreements and promises
contained herein, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound, the parties hereto for themselves and their
successors and assigns do hereby agree, represent and warrant as
follows:




1. The
definition of "Termination Date" set
forth in Section 1.01, "Certain Defined
Terms," of the Credit Agreement (Licensing) is hereby amended to recite
as follows:




"Termination Date"
shall mean (i) in respect of the Revolving Loan and the Revolving Loan
Commitment and the Letters of Credit and the Letter of Credit Commitment, March
31, 2013, or such earlier date on which this Agreement shall terminate in
accordance with the provisions hereof or by operation of law, and (ii) in
respect of the Draw Loan and the Draw Loan Commitment May 31, 2010, which Draw
Loan and Draw Commitment have expired and are of no force and
effect.

 

2. Sub-Clause
(iii) of clause (b), "Revolving Loan
Advances", of Section 2.01, "Advances", of the
Credit Agreement (Licensing) is hereby amended to recite in its entirety as
follows:




(iii)           The
net proceeds of the Revolving Loan shall be used solely to (A) assure that all
state licensing requirements of FCMC are met and (B) to pay Approved Expenses of
FCMC.

 



 




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3. Section
2.08, "Purpose of
Advances", of the Credit Agreement (Licensing) is hereby amended to
recite in its entirety as follows:




Section
2.08   Purpose of
Advances.  Letters of Credit and Revolving Loan Advances shall
be used solely to (A) assure that all state licensing requirements of FCMC are
met and (B) to pay Approved Expenses of FCMC.




4. Waiver.  The
Administrative Agent and the Required Lenders hereby waive the Acknowledged
Defaults and the Acknowledged Event of Default.




5. Forbearance.                      The
Administrative Agent, the Lenders and the Issuing Bank agree in favor of FCMC
that they shall refrain from taking any action to foreclose or recover the
"Collateral" (as defined in the Pledge Agreement) or otherwise initiate
collection proceedings against FCMC with respect to the Pledge Defaults from the
date hereof through and including the earlier of (i) March 31, 2013, or (ii) the
occurrence of an Event of Default under the Credit Agreement (Licensing) (other
than resulting from an Acknowledged Default, the Acknowledged Event of Default
or a Pledge Default) (the “Forbearance
Period”).  FCMC acknowledges and agrees that, notwithstanding
the foregoing, (a) each of the Administrative Agent, the Lenders and the Issuing
Bank reserves the right to enforce each and every term of the Pledge Agreement
(other than remedies resulting from a Pledge Default during the Forbearance
Period), and is under no duty or obligation of any kind or any nature to grant
FCMC any additional period of forbearance beyond the Forbearance Period;
(b) each action of the Administrative Agent, the Lenders and the Issuing
Bank in entering into this Agreement shall not be construed as a waiver or
relinquishment of, or estoppel to assert, any of Administrative Agent's rights
under the Pledge Agreement or applicable law; and (c) each action of the
Administrative Agent, the Lenders and the Issuing Bank in entering into this
Agreement is without prejudice to the right of the Administrative Agent, the
Lenders and the Issuing Bank to pursue any and all remedies available to any of
them upon expiration of the Forbearance Period or immediately upon the
occurrence of an Event of Default under the Credit Agreement (Licensing) or a
"Default" under the Pledge Agreement (other than a Pledge Default).




6. Conditions of
Effectiveness.  This Amendment shall become effective as of the
Amendment Effective Date, upon satisfaction of all of the following conditions
precedent:




(a)           The
Administrative Agent shall have received execution and delivery of, by all
parties signatory hereto, originals, or completion as the case may be, to the
satisfaction of the Administrative Agent and its counsel, of three duly executed
originals of this Amendment;




(b)           The
Administrative Agent shall have received satisfactory evidence that all
corporate and other proceedings that are necessary in connection with this
Amendment have been taken to the satisfaction of the Administrative Agent and
its counsel, and the Administrative Agent and such counsel shall have received
all such counterpart originals or certified copies of such documents as the
Administrative Agent may request;




(c)            The
Administrative Agent (for the benefit of the Lenders) shall have received a fee
in respect of this Amendment in the amount of $10,000, which fee shall be earned
in full as of the Amendment Effective Date and shall be
non-refundable;

 

(d)           The
Borrowers shall have paid all of the Administrative Agent's costs and expenses
incurred up to the date of this Amendment; and






 




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(e)           The
representations contained in the immediately following paragraph shall be true
and accurate.




7. Representations and
Warranties.  Each Borrower represents and warrants to the
Administrative Agent and each Lender as follows: (a) after giving effect to this
Amendment, each representation and warranty made by or on behalf of such
Borrower in the Credit Agreement (Licensing) and in any other Loan Document is
true and correct in all material respects on and as of the date hereof as though
made on and as of such date, except to the extent that any such representation
or warranty expressly relates solely to a date prior hereto; (b) the execution,
delivery and performance by each Borrower of this Amendment and each other Loan
Document have been duly authorized by all requisite corporate or organizational
action on the part of such Borrower and will not violate any Requirement of Law
applicable to such Borrower; (c) this Amendment has been duly executed and
delivered by each Borrower, and each of this Amendment, the Credit Agreement
(Licensing) and each other Loan Document as amended hereby constitutes the
legal, valid and binding obligation of such Borrower, enforceable against such
Borrower in accordance with the terms thereof; and (d) after giving effect to
this Amendment, no event has occurred and is continuing, and no condition
exists, which would constitute an Event of Default or a Default (other than a
Pledge Default).




8. Ratification and
Reaffirmation.  The Borrowers agree (i) that all the
obligations, indebtedness and liabilities of the Borrowers to the Administrative
Agent and the Lenders under the Credit Agreement (Licensing) are the valid and
binding obligations of the Borrowers; (ii) that the obligations, indebtedness
and liabilities of the Borrowers evidenced by each Note executed and delivered
by the Borrowers are valid and binding without any present right of offset,
claim, defense or recoupment of any kind and are hereby ratified and confirmed
in all respects; and (iii) that the Liens and security interests granted to the
Administrative Agent with respect to the Obligations as security for all
obligations and liabilities of the Borrowers under the Credit Agreement
(Licensing), each Application and Agreement for Letter of Credit and the
Revolving Loan Note are valid and binding and are hereby ratified and confirmed
in all respects.




9. Reference to and Effect on
the Loan Documents.  (a) Upon the effectiveness of this
Amendment, each reference in the Credit Agreement (Licensing) to "Amended and
Restated Credit Agreement," "Credit Agreement," "Agreement," the prefix
"herein," "hereof," or words of similar import, and each reference in the Loan
Documents to the Credit Agreement (Licensing), shall mean and be a reference to
the Credit Agreement (Licensing) as amended hereby.  (b) Except to the
extent amended or modified hereby, all of the representations, warranties,
terms, covenants and conditions of the Credit Agreement (Licensing) and the
other Loan Documents shall remain as written originally and in full force and
effect in accordance with their respective terms and are hereby ratified and
confirmed, and nothing herein shall affect, modify, limit or impair any of the
rights and powers which the Administrative Agent may have hereunder or
thereunder.  Nothing in this Amendment shall constitute a
novation.  The amendments set forth herein shall be limited precisely
as provided for herein, and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any of the Administrative Agent's or any Lender's
rights under, or of any other term or provisions of, the Credit Agreement
(Licensing) 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 the Borrowers which would require the consent of the
Lender.




10. Waiver and Release of All
Claims and Defenses.  Each Borrower hereby forever waives,
relinquishes, discharges and releases all defenses and claims of every kind or
nature, whether existing by virtue of state, federal, or local law, by agreement
or otherwise, against the Administrative Agent, the 

 



 




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Issuing
Bank and the Lenders, and all of their successors, assigns, directors, officers,
shareholders, agents, employees and attorneys, the Obligations or the
Collateral, whether previously or now existing or arising out of or related to
any transaction or dealings between the Administrative Agent, the Issuing Bank,
any Lender and any Borrower or any of them, which any Borrower may have or may
have made at any time up through and including the date of this Amendment,
including without limitation, any affirmative defenses, counterclaims, setoffs,
deductions or recoupments, by any Borrower, and all of their representatives,
successors, assigns, agents, employees, officers, directors and
heirs.   "Claims" includes all debts,
demands, actions, causes of action, suits, dues, sums of money, accounts, bonds,
warranties, covenants, contracts, controversies, promises, agreements or
obligations of any kind, type or description, and any other claim or demand of
any nature whatsoever, whether known or unknown, accrued or unaccrued, disputed
or undisputed, liquidated or contingent, in contract, tort, at law or in equity,
any of them ever had, claimed to have, now has, or shall or may
have.  Nothing contained in this Amendment prevents enforcement of
this release.




11. No
Waiver.  Nothing in this Amendment shall be construed to waive,
modify, or cure any Default or Event of Default that exists or may exist
under the Credit Agreement (Licensing) or any other Loan Document (other than
the Acknowledged Defaults and the Acknowledged Event of Default).




12. Waiver of Right to Trial by
Jury.  EACH PARTY TO THIS AMENDMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1)
ARISING UNDER THIS AMENDMENT OR ANY LOAN DOCUMENT, OR (2) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.




13. Counterparts.  This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, and all of which together will constitute one and the same
instrument.  Receipt by the Administrative Agent of a facsimile copy
of an executed signature page hereof will constitute receipt by the
Administrative Agent of an executed counterpart of this Amendment.




14. Costs and
Expenses.  Each Borrower agrees to pay on demand in accordance
with the terms of the Credit Agreement (Licensing) all costs and expenses of the
Administrative Agent in connection with the preparation, reproduction, execution
and delivery of this Amendment and all other Loan Documents entered into in
connection herewith, including the reasonable fees and out-of-pocket expenses of
the Administrative Agent's counsel with respect thereto.




15. Governing
Law.  This Amendment and the rights and obligations of the
parties hereto shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Ohio.




16. Headings.  Section
headings in this Amendment are included herein for convenience of reference only
and will not constitute a part of this Amendment for any other
purpose.

 



 




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17. Patriot Act
Notice.  The Administrative Agent hereby notifies each Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of
Pub.L.10756 (signed into law October 26, 2001)) (the "Act"), it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of each Borrower and other information
that will allow the Administrative Agent to identify each Borrower in accordance
with the Act.







[Signature
Page Follows.]

 



 




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IN
WITNESS WHEREOF, the Borrowers, the Administrative Agent, the Lenders and
Issuing Bank have hereunto set their hands as of the date first set forth
above.






	 
      	 
      	
      BORROWERS:
	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
      
      FRANKLIN
      CREDIT MANAGEMENT CORPORATION

	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
      By:
	/s/
      Kevin P. Gildea	 
      
	 
      	 
      	
      Name:
	Kevin
      P. Gildea	 
      
	 
      	 
      	
      Title:
	EVP,
      Chief Legal Officer	 
      




 







	 
      	 
      	
      
      FRANKLIN
      CREDIT MANAGEMENT CORPORATION

	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
      By:
	/s/
      Kevin P. Gildea	 
      
	 
      	 
      	
      Name:
	Kevin
      P. Gildea	 
      
	 
      	 
      	
      Title:
	EVP,
      Chief Legal Officer	 
      









	 	 	ADMINISTRATIVE AGENT
      AND ISSUING BANK:	 
	 	 	 	 
	 
      	 
      	
      
      
      THE
      HUNTINGTON NATIONAL BANK


	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
      By:
	/s/
      David L. Abshier	 
      
	 
      	 
      	
      Name:
	David
      L. Abshier	 
      
	 
      	 
      	
      Title:
	Senior
      Vice President	 
      











	 	 	
      LENDER AND RISK
      PARTICIPANT:
	 
	 	 	 	 
	 
      	 
      	
      
      
      
      HUNTINGTON
      FINANCE, LLC



	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
      By:
	/s/
      Donald R. Kimble	 
      
	 
      	 
      	
      Name:
	Donald
      R. Kimble	 
      
	 	 	 	President	 

 






 








Signature
Page to  Amendment No. 5 to Amended and Restated Credit Agreement
(Licensing)