kl01002_ex10-11.htm


    
      

    

     

    
      Exhibit
10.11

      
 

      GUARANTY

       

      This
        GUARANTY (this “Guaranty”), dated
        as
        of December 28, 2007 (the “Effective Date”), is
        made by FRANKLIN CREDIT MANAGEMENT CORPORATION, a Delaware corporation (“FCMC”
or the “Guarantor”), in favor
        of THE HUNTINGTON NATIONAL BANK, a national banking association (the “Lender”).

       

      RECITALS

       

      WHEREAS,
        pursuant to that certain Tribeca Forbearance Agreement and Amendment To Credit
        Agreements, dated as of the Effective Date (as amended, supplemented or
        otherwise modified from time to time in accordance with the provisions thereof,
        the “Forbearance
        Agreement”), among the Borrowers party thereto (the “Borrowers”),
        Tribeca
        Lending Corp., a New York corporation, in its individual capacity (“Tribeca”), FCMC,
        in
        its capacities as defined in the Forbearance Agreement, and the Lender, the
        Lender has agreed to make Advances and other financial accommodations to
        and for
        the benefit of the Borrowers, upon the terms and subject to the conditions
        set
        forth in the Forbearance Agreement; and

       

      WHEREAS,
        it is a condition precedent to the obligations of the Lender to make Advances
        and the financial accommodations provided under the Forbearance Agreement,
        that
        the Guarantor shall have executed and delivered this Guaranty to the Lender;
        and

       

      WHEREAS,
        the Guarantor acknowledges that the making of the Advances and the other
        financial accommodations to the Guarantor and the Borrowers under the
        Forbearance Agreement will inure to the substantial benefit of the
        Guarantor;

       

      NOW,
        THEREFORE, in consideration of the premises and in order to induce the Lender
        to
        enter into the Forbearance Agreement and to make the extensions of credit
        contemplated thereby, and for other good and valuable consideration, the
        receipt
        and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees
        with the Lender as follows:

       

      1.    Guaranty.  (a)  The
        Guarantor hereby unconditionally and irrevocably guarantees to the Lender,
        and
        its successors, endorsees, transferees and assigns, the prompt and complete
        payment and performance by the Borrowers of all Obligations when and as the
        same
        shall become due (whether at stated maturity, by acceleration or
        otherwise).  The Guarantor further agrees to pay any and all expenses
        (including, without limitation, all reasonable fees and disbursements of
        counsel) that may be paid or incurred by the Lender in enforcing any rights
        with
        respect to, or collecting, any or all of the Obligations and/or enforcing
        any
        rights with respect to, or collecting against, the Guarantor under this
        Guaranty.  This Guaranty shall remain in full force and effect until
        the Obligations are paid in full in cash, notwithstanding that from time
        to time
        prior thereto the Borrowers may be free from any Obligations.

       

      (b) The
        Guarantor agrees that whenever, at any time or from time to time, it shall
        make
        any payment to the Lender on account of its liability hereunder, it will
        notify
        the Lender in writing that such payment is made under this Guaranty for such
        purpose; provided, however,
        that no
        payment made by the Guarantor through or on behalf of any Borrower shall
        be
        applied to reduce the Obligations unless and until the Lender shall have
        made a
        demand for payment under this Guaranty.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.    Representations,
        Warranties
        and Covenants of the Guarantor.  This Guaranty is delivered
        pursuant to the Forbearance Agreement and the Guarantor hereby confirms to
        the
        Lender each of its representations and warranties as set forth in the
        Forbearance Agreement.

       

      3.    Right
        of
        Set-off.  Upon the occurrence of a Forbearance Default, the
        Guarantor hereby irrevocably authorizes the Lender (and its Affiliates),
        at any
        time and from time to time and without notice to the Guarantor, any such
        notice
        being expressly waived by the Guarantor, to set-off and appropriate and apply
        any and all property and deposits (general or special, time or demand,
        provisional or final), in any currency, and any other credits, indebtedness
        or
        claims, in any currency, in each case whether direct or indirect, absolute
        or
        contingent, matured or unmatured, at any time held or owing by the Lender
        (or
        any of its Affiliates) to or for the credit or the account of the Guarantor,
        or
        any part thereof in such amounts as the Lender may elect, against and on
        account
        of the obligations and liabilities of the Guarantor to the Lender hereunder
        and
        claims of every nature and description of the Lender (or any of its Affiliates)
        against the Guarantor, in any currency, whether arising hereunder
        or  under any other Loan Document, as the Lender (or any of its
        Affiliates) may elect, regardless of whether the Lender (or such Affiliate)
        has
        made any demand for payment and although such obligations, liabilities and
        claims may be contingent or unmatured.  The Lender (or its Affiliate)
        shall notify the Guarantor promptly of any such set-off and the application
        made
        by the Lender or such Affiliate; provided that the
        failure to give such notice shall not affect the validity of such set-off
        and
        application.  The rights of the Lender (and its Affiliates) under this
        Section 3 are in addition to other rights and remedies (including, without
        limitation, other rights of set-off) that the Lender (and such Affiliates)
        may
        have under the Forbearance Agreement, at law or in equity.

       

      4.    No
        Subrogation.  Notwithstanding any payment or payments made by
        the Guarantor hereunder or any set-off or application of funds of the Guarantor
        by the Lender (or any of its Affiliates), the Guarantor shall be not be entitled
        to be subrogated to any of the rights of the Lender (or any of its Affiliates)
        against the Borrowers or any other guarantor or any Collateral or guarantee
        or
        right of offset held by the Lender (or its Affiliates) for the payment of
        the
        Obligations, nor shall the Guarantor seek or be entitled to seek any
        contribution or reimbursement from the Borrowers or any other guarantor in
        respect of payments made by the Guarantor hereunder, in each case until all
        amounts owing to the Lender (or its Affiliates) on account of the Obligations
        are paid in full and the Forbearance Agreement, the Credit Agreements and
        all
        other Loan Documents are terminated.  If any amount shall be paid to
        the Guarantor on account of such subrogation rights at any time when all
        of the
        Obligations shall not have been paid in full, such amount shall be held by
        the
        Guarantor in trust for the Lender (and its Affiliates), segregated from other
        funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor,
        be
        turned over to the Lender in the exact form received by the Guarantor (duly
        indorsed by the Guarantor to the Lender, if required), to be applied against
        the
        Obligations, whether matured or unmatured, in such order as the Lender may
        determine.

       

      5.    Amendments,
        Etc. with
        Respect to the Obligations.  The Guarantor shall remain
        obligated hereunder notwithstanding that, without any reservation of rights
        against the Guarantor and without notice to or further assent by the Guarantor,
        any demand for payment of any of the Obligations made by the Lender may be
        rescinded by the Lender and any of the Obligations continued, and the
        Obligations, or the liability of any other party upon or for any
        part

       

       

      
        
          
          

        

        
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      thereof,
        or any collateral security or guarantee therefore or right of offset with
        respect thereto, may, from time to time and in whole or in part, be renewed,
        extended, amended, modified, accelerated, compromised, waived, surrendered
        or
        released by the Lender, and the Forbearance Agreement, and any other documents
        executed and delivered in connection therewith may be amended, restated,
        modified, supplemented or terminated, in whole or in part, as the Lender
        may
        deem advisable from time to time, and any collateral security, guarantee
        or
        right of offset at any time held by the Lender (and its Affiliates) for the
        payment of the Obligations may be sold, exchanged, waived, surrendered or
        released.  The Lender shall not have any obligation to protect,
        secure, perfect or insure any Lien at any time held by it as security for
        the
        Obligations or for this Guaranty or any assets subject thereto.  When
        making any demand hereunder against the Guarantor, the Lender may, but shall
        be
        under no obligation to, make a similar demand on any Borrower or any other
        guarantor, and any failure by the Lender to make any such demand or to collect
        any payments from a Borrower or any such other guarantor or any release of
        a
        Borrower or such other guarantor shall not relieve the Guarantor of its
        respective obligations or liabilities hereunder, and shall not impair or
        affect
        the rights and remedies, express or implied, or as a matter of law, of the
        Lender against the Guarantor.  For the purposes hereof “demand” shall
        include the commencement and continuance of any legal proceedings.

       

      6.    Waiver
        of
        Rights.  The Guarantor waives any and all notice of the
        creation, renewal, extension or accrual of any of the Obligations, and notice
        of
        or proof of reliance by the Lender upon this Guaranty or acceptance of this
        Guaranty.  The Obligations, and any of them, shall conclusively be
        deemed to have been created, contracted or incurred, or renewed, extended,
        amended or waived, in reliance upon this Guaranty, and all dealings between
        the
        Borrowers and the Guarantor, on the one hand, and the Lender, on the other
        hand,
        likewise shall be conclusively presumed to have been had or consummated in
        reliance upon this Guaranty.  The Guarantor waives diligence,
        presentment, protest, demand for payment and notice of default or nonpayment
        to
        or upon the Borrowers or the Guarantor with respect to the
        Obligations.

       

      7.    Guaranty
        Absolute and
        Unconditional.  The Guarantor understands and agrees that this
        Guaranty shall be construed as a continuing, absolute, unconditional guarantee
        of the full and punctual payment and performance by Borrowers of the Obligations
        and not of their collectibility only and is in no way conditioned upon any
        requirement that the Lender or any other party first attempt to collect any
        of
        the Obligations from the Borrowers, without regard to (a) the validity,
        regularity or enforceability of the Forbearance Agreement, any other Loan
        Document, any of the Obligations or any other Collateral security therefor
        or
        guarantee or right of offset with respect thereto at any time or from time
        to
        time held by the Lender or any Affiliate of Lender, (b) any defense, set-off
        or
        counterclaim (other than a defense of payment or performance) that may at
        any
        time be available to or be asserted by the Borrowers against the Lender or
        any
        of its Affiliates, (c) any document presented in connection with the Forbearance
        Agreement, or any other Loan Documents or this Guaranty proving to be forged,
        fraudulent, invalid or insufficient in any respect of any statement therein
        being untrue or inaccurate in any respect, or (d) any other circumstance
        whatsoever (with or without notice to or knowledge of the Borrowers or the
        Guarantor) that constitutes, or might be construed to constitute, an equitable
        or legal discharge of the Borrowers from the Obligations, or of the Guarantor
        from this Guaranty, in bankruptcy or in any other instance.  When
        pursuing its rights and remedies hereunder against the Guarantor, the Lender
        may, but shall be under no obligation to, pursue such rights and 

       

       

      
        
          
          

        

        
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      remedies
        as it may have against the Borrowers or any other Person or against any
        collateral security or guarantee for the Obligations or any right of offset
        of
        Lender or any of its Affiliates with respect thereto, and any failure by
        the
        Lender to pursue such other rights or remedies or to collect any payments
        from
        the Borrowers or any such other Person or to realize upon any such collateral
        security or guarantee or to exercise any such right of offset, or any release
        of
        the Borrowers or other Person or any such collateral security, guarantee
        or
        right of offset, shall not relieve the Guarantor of any liability hereunder,
        and
        shall not impair or affect the rights and remedies, whether express, implied
        or
        available as a matter of law, of the Lender (or any of its Affiliates) against
        any Guarantor. This Guaranty shall remain in full force and effect and be
        binding in accordance with and to the extent of its terms upon the Guarantor
        and
        the successors and assigns thereof, and shall inure to the benefit of the
        Lender
        (and its Affiliates) and its respective successors, endorsees, transferees
        and
        assigns, in each case until all the Obligations and the obligations of the
        Guarantor under this Guaranty shall have been satisfied by payment in full
        and
        the Forbearance Agreement, and the other Loan Documents shall be terminated,
        notwithstanding that from time to time during the term of such agreement
        the
        Borrowers may be free from any Obligations.

       

      8.    Reinstatement.  This
        Guaranty shall continue to be effective or be reinstated, as the case may
        be, if
        at any time payment, or any part thereof, of any of the Obligations is rescinded
        or must otherwise be restored or returned by the Lender or any of its Affiliates
        upon the insolvency, bankruptcy, dissolution, liquidation or reorganization
        of
        any Borrower or the Guarantor, or upon or as a result of the appointment
        of a
        receiver, intervenor or conservator of, or trustee or similar officer for,
        any
        Borrower or the Guarantor or any substantial part of its respective assets,
        or
        otherwise, all as though such payments had not been made.

       

      9.    Payments.  The
        Guarantor hereby guarantees that payments hereunder will be paid to the Lender
        without set-off or counterclaim in United States dollars in accordance with
        the
        wiring instructions of the Lender.  Payments and performance required
        under this Guaranty shall be payable and performed whenever any amount or
        performance guaranteed hereunder has not been promptly made to the Lender
        in
        accordance with the Forbearance Agreement, or other Loan
        Documents.  When pursuing its rights and remedies hereunder against
        the Guarantor, the Lender may, but shall be under no obligation to, pursue
        the
        rights, remedies, powers and privileges as it may have against the Borrowers
        or
        any other Person or against any collateral security or guaranty for the
        Obligations or any right of offset with respect thereto.  Any failure
        by Lender or any of its Affiliates to pursue the other rights, remedies,
        powers
        or privileges or to collect any payments from the Borrowers or any other
        Person
        or to realize upon any collateral security
        or guaranty or to exercise any right of offset, or any release of the Borrowers
        or any other Person or of any collateral security, guaranty or right of offset,
        shall not relieve the Guarantor of any liability hereunder, and shall not
        impair
        or affect the rights, remedies, powers or privileges, whether express, implied
        or available as a matter of law, of the Lender against the
        Guarantor.

       

      10.    Indemnification.  The
        Guarantor hereby agrees to:

       

      (i) pay
        or
        reimburse the Lender on demand for all reasonable out-of-pocket costs and
        expenses incurred in connection with the development, preparation and execution
        of, and any amendment, modification or supplement to, or any

       

       

      
        
          
          

        

        
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      waiver
        under, this Guaranty and any other document prepared in connection herewith,
        and
        the consummation and administration of the transactions contemplated hereby
        and
        thereby, including without limitation the reasonable fees and disbursements
        of
        counsel to the Lender;

       

      (ii) pay
        on
        demand all reasonable costs and expenses of the Lender, including without
        limitation the reasonable fees and disbursements of counsel to the Lender,
        in
        connection with the occurrence or continuance of a default under this Guaranty
        and the enforcement, collection, protection or preservation (whether through
        negotiations, legal proceedings or otherwise) of this Guaranty, any Obligation
        or any right, remedy, power or privilege of the Lender hereunder or under
        any
        other Loan Document;

       

      (iii) pay
        and
        hold the Lender (and its Affiliates) harmless from and against any and all
        present and future stamp, excise, recording or other similar taxes or fees
        payable in connection with the execution, delivery, recording and filing
        of this
        Guaranty and hold the Lender (and its Affiliates) harmless from and against
        any
        and all liabilities with respect to or resulting from any delay or omission
        to
        pay such taxes or fees; and

       

      (iv) indemnify
        the Lender, its Affiliates, and each of their respective directors, officers,
        employees and agents and hold each of them harmless from and against, any
        and
        all liabilities, losses, damages, penalties, actions, judgments, suits, claims,
        costs, expenses and disbursements, including without limitation the reasonable
        fees and disbursement of counsel to the Lender, and such other parties, that
        are
        incurred by any of them in connection with, arising out of or in any way
        relating to any investigation, claim, litigation or other proceeding, pending
        or
        threatened (regardless of whether any of them is designated a party thereto),
        in
        any such case arising out of or principally with respect to this Guaranty
        or any
        other Loan Document or the transactions contemplated herein or therein; provided that neither
        the Lender nor any of its Affiliates  shall be entitled to any
        indemnification for any of the foregoing resulting from its gross negligence
        or
        willful misconduct.

       

      If
        and to
        the extent that the indemnification obligations of the Guarantor under this
        Section 10 may be unenforceable for any reason, the Guarantor hereby agrees
        to make the maximum contribution to the payment and satisfaction of each
        of such
        indemnity obligations that is permissible under applicable law.  This
        indemnification and contribution shall survive the termination of this Guaranty
        and the other Loan Documents.

       

      11.    Notices.  All
        notices, requests and other communications provided for herein (including
        without limitation any modifications of, or waivers, requests or consents
        under,
        this Guaranty) shall be given or made in writing (including without limitation
        by telex or telecopy) and delivered to the intended recipient at the applicable
        address set forth on the signature pages hereof; or, as to any party, at
        such
        other address as shall be designated by such party in a written notice to
        each
        other party.  All such communications shall be deemed to have been
        duly given when transmitted by telex or telecopy or personally delivered
        or, in
        the case of a mailed notice, upon receipt, in each case given or addressed
        as
        aforesaid.

       

       

      
        
          
          

        

        
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      12.    Severability.  Any
        provision of this Guaranty which is prohibited or unenforceable in any
        jurisdiction shall, as to such jurisdiction, be ineffective to the extent
        of
        such prohibition or unenforceability without invalidating the remaining
        provisions hereof, and any such prohibition or unenforceability in any
        jurisdiction shall not invalidate or render unenforceable such provision
        in any
        other jurisdiction.

       

      13.    Integration.  This
        Guaranty, the Forbearance Agreement, and the other Loan Documents represent
        the
        agreement of the Guarantor with respect to the subject matter hereof and
        thereof
        and there are no promises or representations by the Lender relative to the
        subject matter hereof or thereof not reflected herein or therein.

       

      14.    Amendments
        in Writing; No
        Waiver; Cumulative Remedies.  (a)  None of the terms
        or provisions of this Guaranty may be waived, amended, supplemented or otherwise
        modified except by a written instrument executed by the Guarantor and the
        Lender; provided that any
        provision of this Guaranty may be waived by the Lender.

       

      (b) Neither
        the Lender nor any of its Affiliates shall by any act of (except by a written
        instrument pursuant to Section 14(a) hereof) delay, indulgence, omission
        or
        otherwise be deemed to have waived any right or remedy hereunder or to have
        acquiesced in any Forbearance Default or Event of Default or in any breach
        of
        any of the terms and conditions hereof or of the Forbearance Agreement, or
        any
        other Loan Document.  No failure to exercise, nor any delay in
        exercising, on the part of the Lender or any of its Affiliates, any right,
        power
        or privilege hereunder or under the Forbearance Agreement, or any other Loan
        Document shall operate as a waiver thereof.  No single or partial
        exercise, on the part of the Lender, of any right, power or privilege hereunder
        or under the Forbearance Agreement, or any other Loan Document shall preclude
        any other or further exercise thereof or the exercise of any other right,
        power
        or privilege.  A waiver by the Lender of any right or remedy hereunder
        or under the Forbearance Agreement, or any other Loan Document on any one
        occasion shall not be construed as a bar to any right or remedy that the
        Lender
        would otherwise have on any future occasion.

       

      (c) The
        rights and remedies provided herein and in the Forbearance
        Agreement,  and the other Loan Documents are cumulative, may be
        exercised singly or concurrently and are not exclusive of any other rights
        or
        remedies provided by law.

       

      15.    Section
        Headings.  The section headings used in this Guaranty are for
        convenience of reference only and are not to affect the construction hereof
        or
        be taken into consideration in the interpretation hereof.

       

      16.    Successors
        and
        Assigns.  This Guaranty shall be binding upon the respective
        successors and assigns of the Guarantor and shall inure to the benefit of
        the
        Lender and its successors and assigns; provided that this
        Guaranty may not be assigned by the Guarantor without the express written
        consent of the Lender.

       

      17.    Governing
        Law.  This Guaranty shall be governed by the local laws of the
        State of Ohio without reference to the choice of laws doctrines
        thereof.

       

       

      
        
          
          

        

        
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      18.    Termination.  This
        Guaranty shall terminate upon the final payment in full of the Obligations
        and
        the termination of the Forbearance Agreement, the Credit Agreements, and
        the
        other Loan Documents.

      


      19.    Recourse.  The
        Guarantor and the Lender agree that the Obligations shall be recourse
        obligations of the Borrowers as and to the extent set forth in the Forbearance
        Agreement, the Credit Agreements, and the other Loan Documents.

       

      20.    Defined
        Terms.  Capitalized terms used but not defined herein (except
        when each letter is capitalized for emphasis) shall adopt their respective
        meanings as set forth in the Forbearance Agreement.

      


       

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      IN
        WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed
        and delivered by its duly authorized officer as of the day and year first
        above
        written.

       

                         
        FRANKLIN CREDIT MANAGEMENT CORPORATION

       

       

                      By:
/s/
        Thomas J.
        Axon          


                      Name:
        Thomas J.
        Axon

                 
        Title: President