Exhibit 10.1





Exhibit 10.1




AMENDMENT NO. 7 TO

FIRST AMENDED AND RESTATED FORBEARANCE AGREEMENT

AND AMENDMENT TO CREDIT AGREEMENTS




THIS AMENDMENT NO. 7 TO FIRST AMENDED AND RESTATED FORBEARANCE AGREEMENT AND AMENDMENT TO
CREDIT AGREEMENTS (this “Amendment”), is dated January 7, 2011 and effective as of the
31st day of December, 2010 (the “Amendment Effective Date”), by and among
FRANKLIN CREDIT ASSET CORPORATION (“Franklin Asset”), FRANKLIN CREDIT HOLDING CORPORATION
(“Holding”), Flow 2006 F CORP., FCMC 2006 M CORP., FCMC 2006 K CORP. and THE HUNTINGTON
NATIONAL BANK (“Lender”). This Amendment further amends and modifies a certain First
Amended and Restated Forbearance Agreement and Amendment to Credit Agreements, dated as of December
19, 2008 (as amended, restated, supplemented or otherwise modified from time to time prior to the
Amendment Effective Date, the “Forbearance Agreement”) by and among the parties hereto and
certain other parties to such Forbearance Agreement. All capitalized terms used in this Amendment
and not otherwise defined herein shall have the meanings ascribed to such terms in the Forbearance
Agreement. Franklin Asset, Holding and each Static Loan Borrower (as defined below) shall be
individually an “Amendment Loan Party” and together the “Amendment Loan Parties.”



WHEREAS, Flow 2006 F Corp., FCMC 2006 M Corp., and FCMC 2006 K Corp. (each a “Static Loan
Borrower” and together, the “Static Loan Borrowers”), Franklin Asset, certain other
parties thereto, and Lender are parties to that certain Master Credit and Security Agreement, dated
as of October 13, 2004, as the same has been amended, supplemented, restated, or otherwise modified
prior to the date of this Amendment (the “Franklin Master Agreement”), pursuant to which
Lender holds certain outstanding loans evidenced by (i) a certain Flow 2006 F Corp. note dated
December 1, 2006, in the original principal amount of $19,863,972.93, (ii) a certain FCMC 2006 M
Corp. amended and restated note dated August 30, 2006, in the original principal amount of
$16,183,766.66, and (iii) a certain FCMC 2006 K Corp. amended and restated promissory note dated
August 30, 2006, in the original principal amount of $14,433,383.90 (collectively, the “Static
Loans”);



WHEREAS, the Static Loan Borrowers have defaulted and may continue to default under the
Forbearance Agreement, the Franklin Master Agreement and the promissory notes and other Loan
Documents executed in connection therewith in respect of (i) their failure to make scheduled
principal and interest payments when due thereunder, and (ii) their failure after the Amendment
Effective Date to make any scheduled principal and interest payments due thereunder as a result of
the cash flow from the Mortgage Loans securing the Static Loans being insufficient to pay such
amounts (collectively the defaults under clauses (i) and (ii) above shall be referred to as the
“Identified Forbearance Defaults”);



WHEREAS, pursuant to the terms of the Forbearance Agreement, Lender has agreed not to exercise
its rights to initiate proceedings to foreclose or otherwise realize upon the Mortgage
Loans securing the Static Loans prior to December 31, 2010, and Franklin Asset and the Static Loan
Borrowers have requested that Lender further extend such forbearance; and


 


 









 





WHEREAS, Franklin Asset owns and holds of 100% of the Capital Stock of, among other
Subsidiaries, the Static Loan Borrowers.




NOW, THEREFORE, the parties hereto agree as follows:



1. Extension of Forbearance for the Static Loans. The first sentence of Section 1(a)
of the Forbearance Agreement is deleted and is hereby replaced with the following:




Absent the occurrence and continuance of a Forbearance Default other than an
Identified Forbearance Default, prior to September 30, 2011 (the “Forbearance
Date”), Lender agrees not to initiate collection proceedings or exercise its
remedies under the Loan Documents in respect of any Static Loan against any Loan
Party or any Collateral for such Static Loan or elect to have interest accrue under
the respective Loan Documents at the stated rate applicable after default.



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




(a) Lender shall have received execution and delivery of, to the satisfaction of
Lender and its counsel, two (2) duly executed copies of this Amendment; and




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



3. Representations and Warranties. Each Amendment Loan Party represents and warrants
to Lender as follows: except in respect of the Identified Forbearance Defaults, (a) the execution,
delivery, and performance of this Amendment by each Amendment Loan Party has been duly authorized
by all requisite corporate or organizational action on the part of such Amendment Loan Party and
will not violate any of its organizational documents; (c) this Amendment has been duly executed and
delivered by each Amendment Loan Party, and each of this Amendment, the Forbearance Agreement, and
each other Loan Document as amended hereby constitutes the legal, valid, and binding obligation of
each Amendment Loan Party, enforceable against such Amendment Loan Party in accordance with the
terms thereof; and (d) no event has occurred and is continuing, and no condition exists, which
would constitute a Forbearance Default.



4. Ratification and Reaffirmation. Each Amendment Loan Party agrees (i) that all the
obligations, indebtedness, and liabilities of each Static Loan Borrower to Lender under the
Forbearance Agreement are the valid and binding obligations of such Static Loan Borrower; (ii) that
the obligations, indebtedness, and liabilities of each Static Loan Borrower evidenced by each Loan
Document executed and delivered by each Static Loan Borrower is valid and binding without any
present right of offset, claim, defense, or recoupment of any kind and are hereby ratified and
confirmed in all respects; and (iii) that the Liens and security interests granted to Lender as
security for all obligations and liabilities of each Static Loan Borrower under the
Forbearance Agreement and the other Loan Documents are valid and binding and are hereby
ratified and confirmed in all respects.


 


 









 





5. Reference to and Effect on the Loan Documents. Upon the effectiveness of this
Amendment, each reference in the Forbearance Agreement to “Forbearance Agreement and Amendment to
Credit Agreements,” “Forbearance Agreement,” “Agreement,” the prefix “herein,” “hereof,” or words
of similar import, and each reference in the Loan Documents to the Forbearance Agreement, shall
mean and be a reference to the Forbearance Agreement as amended hereby. In respect of each Static
Loan Borrower, except to the extent amended or modified hereby, all of the representations,
warranties, terms, covenants, and conditions of the Forbearance Agreement 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 Lender 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 Lender’s rights under, or of any other term or provisions of,
the Forbearance Agreement or any other Loan Document, or of any term or provision of any other
instrument referred to therein or herein or of any transaction or future action which would require
the consent of Lender.




6. Waiver and Release of All Claims and Defenses; Communications.




(a) Each Amendment Loan Party, for itself and its respective successors and assigns,
agents, employees, officers, and directors, hereby forever waive, relinquish, discharge, and
release all defenses and Claims of every kind or nature, whether existing by virtue of
state, federal, or local law, by agreement, or otherwise, against (i) Lender, its
successors, assigns, directors, officers, shareholders, agents, employees, and attorneys,
and (ii) all participants in any Commercial Loans or Advances, such participants’
successors, assigns, directors, officers, shareholders, agents, employees, and attorneys,
(iii) any obligation evidenced by any Credit Agreement, any promissory note, instrument, or
other Loan Document in connection therewith, and (iv) any Collateral, in each instance,
which any Amendment Loan Party, 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 Amendment Loan Party.
“Claims” means all debts, demands, actions, causes of action, suits, dues, sums of
money, accounts, bonds, warranties, covenants, contracts, controversies, promises,
agreements, or obligations of any kind, type, or description, and any other claim or demand
of any nature whatsoever, whether known or unknown, accrued or unaccrued, disputed or
undisputed, liquidated of contingent, in contract, tort, at law, or in equity, which any
Amendment Loan Party, claimed to have, now has, or shall or may have. The term Claims also
includes all causes of action, liabilities, and rights arising under or by virtue of any
Credit Agreement, promissory note, or other document or any transaction entered into in
connection therewith. Nothing contained in this Amendment prevents enforcement of this
waiver and release.


 


 









 






(b) Each party to this Amendment acknowledges and agrees that one purpose of this
Amendment is to facilitate the resolution of the Identified Forbearance Defaults and that,
consistent with such purpose, no part of any oral or written communications between or among
any Amendment Loan Party or Lender regarding the transactions contemplated in this
Amendment, exclusive of this written Amendment itself (collectively,
“Communications”), shall be utilized or deemed to be admissible as evidence in any
litigation involving any party to this Amendment. Communications shall be deemed to
constitute “compromise negotiations,” and not to constitute evidence that is “discoverable,”
as those phrases are used in the Federal Rules of Evidence and any applicable state rules of
evidence, and no Communications shall be deemed to constitute evidence that is otherwise
admissible for any other purpose.




(c) The release and communication provisions provided by paragraphs (a) and (b) of this
Section, shall survive and continue in full force and effect notwithstanding the occurrence
of a Forbearance Default under the terms of this Amendment or the termination of this
Amendment.



7. No Waiver. Nothing in this Amendment shall be construed to waive, modify, or cure
any default or Event of Default or Forbearance Default (other than the Identified Forbearance
Defaults) that exist that exists or may exist under the Forbearance Agreement or other Loan
Document.



8. 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.



9. 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 Lender of a facsimile copy of an executed signature page hereof will constitute receipt
by Lender of an executed counterpart of this Amendment.



10. Costs and Expenses. Each Amendment Loan Party agrees to pay on demand all costs
and expenses of Lender 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 Lender’s counsel with respect
thereto.


 


 









 





11. Further Assurances. Each Amendment Loan Party agrees to execute and deliver such
additional documents, instruments, and agreements reasonably requested by Lender as may be
reasonably necessary or appropriate to effectuate the purposes of this Amendment.



12. 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.



13. 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.



14. Patriot Act Notice. Lender hereby notifies each Amendment Loan Party that
pursuant to the requirements of the USA Patriot Act (Title III of Pub.L. 10756, signed into law
October 26, 2001) (the “Act”), it is required to obtain, verify, and record information
that identifies each party hereto, which information includes the name and address of each
Amendment Loan Party and other information that will allow Lender to identify each such party in
accordance with the Act.



[Signature pages follow.]





 


 












 




IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the Amendment
Effective Date.



	 	 	 	 	 
	 	AMENDMENT LOAN PARTIES:



FRANKLIN CREDIT ASSET CORPORATION

 	 
	 	By:  	/s/ Thomas J. Axon
 	 
	 	 	Name:  	Thomas J. Axon 	 
	 	 	Title:  	President	 
	 	
Address for Notices:





101 Hudson St., 25th Floor

Jersey City, New Jersey 07302

Fax: (201) 604-4400

Attention:  General Counsel  



	 	 	 	 	 
	 	FRANKLIN CREDIT HOLDING CORPORATION

 	 
	 	By:  	/s/ Thomas J. Axon
 	 
	 	 	Name:  	Thomas J. Axon 	 
	 	 	Title:  	President	 
	 	


Address for Notices:





Same as above 



	 	 	 	 	 
	 	FLOW 2006 F CORP.

 	 
	 	By:  	/s/ Thomas J. Axon
 	 
	 	 	Name:  	Thomas J. Axon 	 
	 	 	Title:  	President	 
	 	




Address for Notices:





Same as above  



Signature Page to Amendment No. 7 to First Amended and Restated Forbearance Agreement and Amendment to Credit Agreements




 


 









 





	 	 	 	 	 
	 	FCMC 2006 M CORP.

 	 
	 	By:  	/s/ Thomas J. Axon
 	 
	 	 	Name:  	Thomas J. Axon 	 
	 	 	Title:  	President	 
	 	





Address for Notices:





Same as above  



	 	 	 	 	 
	 	FCMC 2006 K CORP.

 	 
	 	By:  	/s/ Thomas J. Axon
 	 
	 	 	Name:  	Thomas J. Axon 	 
	 	 	Title:  	President	 
	 	




Address for Notices:





Same as above  



Signature Page to Amendment No. 7 to First Amended and Restated Forbearance Agreement and Amendment to Credit Agreements




 


 









 





	 	 	 	 	 
	 	LENDER:



THE HUNTINGTON NATIONAL BANK

 	 
	 	By:  	/s/ Mark Taylor Bahlmann
 	 
	 	 	Name:  	Mark Taylor Bahlmann 	 
	 	 	Title:  	Authorized Signer	 
	 	




Address for Notices:





41 South High Street (HC0936)

Columbus, Ohio 43215

Attn: Commercial Lending/Huntington Capital

Telephone No.: (614) 480-4449

Telecopier No.: (614) 480-4999





With a copy to:





Porter Wright Morris & Arthur LLP

41 South High Street

Columbus, Ohio 43215

Attn:  Timothy E. Grady, Esq.

Telecopier No.: (614) 227-2105

Telephone No.: (614) 227-2100  



Signature Page to Amendment No. 7 to First Amended and Restated Forbearance Agreement and Amendment to Credit Agreements