Exhibit 10.1





Exhibit
10.1




Execution Copy




September 16, 2010




Franklin Credit Holding Corporation

Franklin Credit Management Corporation

101 Hudson Street, 25th Floor

Jersey City, New Jersey 07302

Attention: Thomas J. Axon, Chairman




Dear Tom:



We have discussed (1) a proposed sale of substantially all consumer loans (the “Loan Sale”)
presently owned by Franklin Mortgage Asset Trust 2009-A (“Seller”), an indirect subsidiary of The
Huntington National Bank (“Huntington”), to a company or trust controlled by Thomas J. Axon to be
established (“Purchaser”) pursuant to terms agreeable to Seller and Purchaser, (2) Huntington’s
consent to the sale, restructuring or spin off, which shall be subject to Huntington’s prior
approval (the “Restructuring”) by Franklin Credit Holding Corporation (“Holding”) of its ownership
interests in its servicer subsidiary, Franklin Credit Management Corporation (whether before or
after the Restructuring, “FCMC”), (3) Huntington’s efforts as Administrative Agent under the Legacy
Credit Agreement (as defined below) to obtain consent of the requisite lenders to release the
security interest in the capital stock in FCMC in exchange for certain payments described below, to
release FCMC from its obligations under a certain limited guaranty agreement, to release certain
mortgages in favor of Huntington as Administrative Agent on certain real estate owned by FCMC, and
the release of a limited amount of cash collateral (collectively, the “Collateral Release”), and
(4) the extension of maturity (“Extension”) of the Licensing Credit Agreement (as defined below) to
September 30, 2011. With respect to the Loan Sale, the Restructuring, the Collateral Release and
the Extension, Seller, Huntington, in its capacity as Administrative Agent and a Lender under each
of the Licensing Credit Agreement and the Legacy Credit Agreement, Holding, FCMC and Thomas J. Axon
(“Axon”) hereby agree to the terms and conditions of this letter agreement and the summary of terms
in Annex A and each exhibit and schedule attached hereto or thereto (together, this “Restructure
Agreement”). The agreements of the parties herein shall be subject to the consummation, no later
than September 22, 2010, of all of the actions and transactions, the terms of which are set forth
in Annex A, including but not limited to the Loan Sale, the payments of the amounts specified
herein in connection with release of the pledged stock in FCMC and the release of certain other
real property mortgaged to Huntington as Administrative Agent and the execution and delivery of
agreements, certificates, instruments, release documents and the other loan documents described
herein or otherwise contemplated by this Restructure Agreement, in all respects satisfactory to
Huntington and, as applicable, the requisite lenders. The failure of FCMC, Holding, Purchaser,
Axon or any affiliate thereof to consummate any of such actions and transactions on or before
September 22, 2010, shall permit Huntington and Seller, in their sole discretion, to terminate this
Restructure Agreement in whole or in part without any notice or cure.


 


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Huntington, Seller, FCMC, Holding and Axon agree that this Restructure Agreement is for their
confidential use only and will not be disclosed by any of them to any person other than their
accountants, attorneys, and other advisors, and then only in connection with the transactions
contemplated hereby and on a confidential basis, except that Huntington, Seller, FCMC, Holding and
Axon may make such public disclosures of the terms and conditions hereof as they are required by
law to make, in the opinion of their counsel.



This Restructure Agreement shall be governed by, and construed in accordance with, the laws of
the State of Ohio. Delivery of an executed counterpart of this Restructure Agreement by telecopier
or PDF shall be effective as delivery of a manually executed counterpart of this Restructure
Agreement.



Promptly after full execution and delivery of this Restructure Agreement by all parties, the
parties shall commence preparation of definitive documentation that provides for the transactions
described herein.




We hereby refer to the following existing agreements:



(1) a certain Amended and Restated Credit Agreement (Licensing) dated March 31, 2009, among The
Huntington National Bank, as Administrative Agent, The Huntington National Bank, and Huntington
Finance LLC, as lenders, and Franklin Credit Management Corporation and Franklin Credit Holding
Corporation, as borrowers (as amended prior to the date hereof, the “Licensing Credit Agreement”);
and



(2) a certain Amended and Restated Credit Agreement dated March 31, 2009, among The Huntington
National Bank, as Administrative Agent, The Huntington National Bank, Huntington Finance LLC, M&I
Marshall & Ilsley Bank and BOS (USA) Inc., as lenders, and Franklin Credit Asset Corporation,
Franklin Asset, LLC and multiple subsidiary borrowers, as borrowers (as amended prior to the date
hereof, the “Legacy Credit Agreement”).



The agreements of Huntington and Seller hereunder are made solely for the benefit of the
parties hereto and may not be relied upon or enforced by any other person. The terms and
conditions of this Restructure Agreement may be modified only in writing.



Each party hereto irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this
Restructure Agreement or the transactions contemplated hereby or the actions of Huntington or
Seller in the negotiation, performance or enforcement hereof.



Please evidence your acceptance of the provisions of this Restructure Agreement by signing a
copy of this Restructure Agreement and returning it to the undersigned at or before 5:00 p.m.
(eastern time) on September 16, 2010, the time at which this Restructure Agreement (if not so
accepted prior thereto) will expire.


 


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	 	 	THE HUNTINGTON NATIONAL BANK  
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David L. Abshier	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	David L. Abshier	 	 
	 

	 	Title:
	 	Authorized Signer	 	 
	 
	 	 	 	 	 	 
	 	 	FRANKLIN MORTGAGE ASSET TRUST 2009-A
	 	 	By:	 	The Huntington National Bank, not in its individual capacity, but solely as a Certificate Trustee
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Schultz	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	 	 	 	 	 






	 	 	 	 	 
	ACCEPTED AND AGREED this 16th day of September, 2010
	 
	 	 	 	 
	FRANKLIN CREDIT HOLDING CORPORATION
	 
	 	 	 	 
	By:

	 	/s/ Thomas J. Axon
 

	 	 
	 
	 	 	 	 
	Title:

	 	Thomas J. Axon, President	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	FRANKLIN CREDIT MANAGEMENT CORPORATION
	 
	 	 	 	 
	By:

	 	/s/ Thomas J. Axon	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Thomas J. Axon, President	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	THOMAS J. AXON, ON BEHALF OF BOSCO CREDIT II, LLC
	 
	 	 	 	 
	/s/ Thomas J. Axon	 	 
	 	 	 
	Thomas J. Axon, on behalf of Bosco Credit II, LLC
	 
	 	 	 	 
	/s/ Thomas J. Axon	 	 
	 	 	 
	Thomas J. Axon, individually,	 	 
	as Guarantor of the TJA Secured Note defined below, owner of the Guarantor Collateral defined below
and an obligor under a Deferred Payment Agreement defined below.






cc: Kevin P. Gildea, Chief Legal Officer


 


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Annex A — Summary of Terms





	1.	 	Consummation of Sale. Seller and Purchaser shall enter into binding agreements
regarding the Loan Sale in form acceptable to Seller and Purchaser. Each of Seller and
Purchaser shall pay its own transaction costs.

	 
	2.	 	Change in Control and Cross Defaults under Servicing Agreement. In connection with a
certain Amended and Restated Servicing Agreement dated August 1, 2010 (the “Servicing
Agreement”), between Franklin Mortgage Asset Trust 2009-A, as Owner and FCMC, as Servicer,
Franklin Mortgage Asset Trust 2009-A will consent to the change in control of FCMC
resulting from the Restructuring and agree to eliminate any “cross-default” provisions in
the Servicing Agreement resulting from any default under the Legacy Credit Agreement.

	 
	3.	 	Release of Pledged Stock in FCMC; Release of Real Estate and Certain Cash Collateral.
Contemporaneously with the consummation of the Loan Sale, and after obtaining the written
agreement of the Required Lenders under the Legacy Credit Agreement, in exchange for (i)
the delivery to the Administrative Agent under the Legacy Credit Agreement of $4,000,000 in
cash at closing, (ii) the payment by FCMC to Seller of $643,671.20 (an amount equal to
servicing fees paid for August 2010 under the Servicing Agreement, which may be paid from
the proceeds received from the Stonecrest litigation, and if paid from other resources,
such amount shall be released to FCMC from the secured collateral account), (iii) the
execution and delivery of a waiver by FCMC of any servicing fees due for September 2010
under the Servicing Agreement in respect of the assets sold in the Loan Sale, and (iv) the
execution and delivery of the Deferred Payment Agreement (as defined below), Huntington
and the Required Lenders under the Legacy Credit Agreement shall consent to the release of
the pledge and security interests of the Administrative Agent in the 70% of the capital
stock in FCMC and all distributions made thereunder under the applicable loan documents
executed in connection with the Legacy Credit Agreement.

	 
	 	 	     In addition, subject to having obtained the written agreement of the Required Lenders
under the Legacy Credit Agreement, in exchange for the delivery of an additional $1,000,000
in cash paid at closing to the Administrative Agent under the Legacy Credit Agreement,
Huntington and the Required Lenders under the Legacy Credit Agreement shall consent to the
release of existing mortgages on property owned by FCMC commonly known as (i) Unit 6, 6
Harrison Street, New York, New York, and (ii) 350 Albany Street, New York, New York
(collectively, the “FCMC Real Estate”).

	 
	 	 	     In the event that FCMC is unable to make the $1,000,000 payment required for the
release of the FCMC Real Estate by closing of the Loan Sale and the Restructuring, FCMC
shall have the option to obtain the release of the FCMC Real Estate from such mortgages by
satisfying the following conditions in full: (1) FCMC shall execute and deliver in lieu of
such payment, the TJA Secured Note (as defined below), pursuant to which, inter alia,
$1,000,000 is paid in cash to the Administrative Agent under the Legacy Credit Agreement no
later than November 22, 2010, (2) the existing mortgages on the FCMC Real Estate shall
remain in place until such payment is made, and (3) Thomas J. Axon and affiliates shall have
executed and delivered the other guaranties and loan documents granting and perfecting liens on the Guarantor Collateral (as defined below), in all respects
satisfactory to such Administrative Agent.




 


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	4.	 	Consent of Required Lenders to Collateral Release, Legacy Amendment. The Required
Lenders (as defined under the Legacy Credit Agreement) shall have consented to (i) the
release of 70% of the capital stock in FCMC and all distributions payable with respect
thereto as collateral pursuant to the Legacy Credit Agreement, (ii) the sale or spin off of
FCMC in connection with the Restructuring in form satisfactory to Huntington, (iii) the
release of FCMC from a certain Limited Recourse Guaranty dated March 31, 2009, and (iv) the
release of the mortgages against the FCMC Real Estate pursuant to the terms hereof, in each
instance, pursuant to a Second Consent Agreement in form satisfactory to such Required
Lenders. In addition, such Required Lenders and the borrowers under the Legacy Credit
Agreement shall have executed and delivered to the Administrative Agent under the Legacy
Credit Agreement amendments to (i) the Legacy Credit Agreement, inter alia, consenting to a
change in control of FCMC, waiving any defaults resulting from the Restructuring and
amending the definition of “Collateral” and (ii) a certain Amended and Restated Pledge
Agreement dated March 31, 2009, amending certain restrictive covenants regarding FCMC, each
in form satisfactory to such Administrative Agent.

	 
	5.	 	TJA Secured Note. To the extent FCMC is unable to make the cash payment called for in
the second paragraph of Paragraph 3 above, FCMC shall execute and deliver to the
Administrative Agent under the Legacy Credit Agreement, a secured promissory note for
$1,000,000 (the “TJA Secured Note”), in form substantially similar to Exhibit 5 attached
hereto. The TJA Secured Note shall be due and payable in full to the Administrative Agent
under the Legacy Credit Agreement on November 19, 2010, and shall be in form satisfactory
to such Administrative Agent. The TJA Secured Note shall be guaranteed by a payment
guaranty from Thomas J. Axon, and such guaranty shall be secured by the “Guarantor
Collateral” as defined under the Licensing Credit Agreement and shall include the
following:







(i) an open end mortgage, assignment of rents and security agreement (“Mortgage”)
from James Thomas Realty LLC on certain commercial real property, commonly known as 6
Harrison Street, Unit 5, New York, New York, subject only to a lien in favor of the
Communication Workers of America securing Indebtedness not to exceed the principal
sum of $550,000; and




(ii) a first and exclusive lien and security interest on each of the following
promissory notes secured by Mortgages on certain real property:




(A) promissory note dated June 21, 1994, in the original principal amount of
$525,708.41 from 18 Harrison Street Development Associates held by Harrison
Street Realty Corp., secured by a first Mortgage on certain commercial real
property known as 18 Harrison Street, New York, New York, with an outstanding
principal balance of $1,014,098.92 as of the date hereof;




(B) promissory note dated March 25, 2009, in the original principal amount of
$1,005,820.10 from 18 Harrison Street Development Associates held by Harrison Street Realty Corp., secured by a second Mortgage on certain
commercial real property known as 18 Harrison Street, New York, New York with
an outstanding principal balance of $1,005,820.10 as of the date hereof; and


 


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(C) promissory noted dated March 25, 2009, in the original principal amount
of $1,315,382 secured by a first Mortgage on commercial real property known
as 185 Franklin Street, New York, New York, with an outstanding principal
balance of $1,315,382 as of the date hereof.




	 	 	All of the loan documents evidencing the Guarantor Collateral shall have been amended and
modified in form satisfactory to the Administrative Agent under the Legacy Credit Agreement,
and all payments made under any of the above promissory notes pledged to such Administrative
Agent shall be made directly to such Administrative Agent for application to the TJA Secured
Note.

	 
	6.	 	Deferred Payment Agreement. FCMC and Axon shall have executed and delivered to the
Administrative Agent for the Legacy Credit Agreement an agreement satisfactory to such
Administrative Agent (the “Deferred Payment Agreement”) pursuant to which upon each
Transaction (as defined below), FCMC and Axon are obligated to pay to such Administrative
Agent, for the benefit of the lenders under the Legacy Credit Agreement, a deferred payment
amount equal to (i) ten percent (10%) (each such payment, a “Deferred Payment”) of (ii) (A)
the Aggregate Value (as defined below) of such Transaction, minus (B) $4 million from such
Aggregate Value in respect of all Transactions. The Deferred Payment Agreement will
expire, and any obligation of FCMC and Axon to make Deferred Payments will cease, on March
20, 2019. “Transaction” means the occurrence of any monetizing transaction, dividend or
distribution (other than the Restructuring) involving FCMC (or any successor) and shall
include any merger, acquisition, consolidation, sale, sale of any substantial asset, stock
transfer, reorganization, recapitalization, equity or preferred stock issuance, joint
venture or other transaction or series or combination of related transactions in which Axon
or any other Equity Holder of FCMC receives a dividend, distribution or proceeds in
connection with such Transaction. “Aggregate Value” shall be defined more particularly in
the Deferred Payment Agreement and shall include the aggregate value of FCMC implicit in
each Transaction, based on the aggregate consideration directly or indirectly paid or
payable, in one or more dividends or distributions, whether in cash or stock, to FCMC and
any shareholder, partner and member, as well as any holder of options, warrants,
convertible securities, phantom equity and similar rights (each an “Equity Holder”) in
connection with or as a result of the Transaction (including retained assets and equity).
The Deferred Payment Agreement shall provide that any agreement, instrument, certificate or
other document evidencing the rights or interests of Axon bear a legend substantially as
follows:







THE EQUITY INTERESTS REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
DEFERRED PAYMENT AGREEMENT BY AND AMONG FCMC, THE HUNTINGTON NATIONAL BANK, AS
ADMINISTRATIVE AGENT AND THE OTHER PARTIES NAMED THEREIN, DATED AS OF SEPTEMBER 22,
2010, AS AMENDED FROM TIME TO TIME, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF FCMC. THE SALE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF THE EQUITY INTERESTS
IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE EQUITY INTERESTS ARE TRANSFERABLE
OR OTHERWISE DISPOSABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.


 


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	7.	 	Extension of Licensing Facility. The lender and the borrower under the Licensing
Credit Agreement shall have executed and delivered to the Administrative Agent under the
Licensing Credit Agreement an amendment to such credit agreement in form satisfactory to
such Administrative Agent, inter alia, consenting to a change in control of FCMC,
eliminating any “cross-default” provisions in the Licensing Credit Agreement resulting from
any default under the Legacy Credit Agreement, conforming the definition of “Collateral” to
permit the release of the FCMC Real Estate, removing any requirement to make distributions,
and extending the maturity of the letter of credit facility and the revolving facility
thereunder to September 30, 2011.

	 
	8.	 	Corporate Authority. By the close of business on September 16, 2010, an officer of
FCMC and Holding shall provide and certify that resolutions of their respective boards of
directors have been adopted which approve and ratify all of the actions contemplated in
this Restructure Agreement.

	 
	9.	 	EBITDA Payment. Upon the closing, in exchange for the payments to be made and the
delivery of the instruments and agreements required pursuant to Paragraphs 3, 4, 5 and 6
above, Huntington will agree that the “EBITDA Payment” described in the July Letter
Agreement (as defined below), shall no longer be in force or have any effect.

	 
	10.	 	Termination of Servicing Agreement for Loan Sale. FCMC agrees that by execution of
this Restructure Agreement FCMC shall be deemed in all respects to have been provided
proper, adequate and timely notice of the termination of the Servicing Agreement with
respect to the loans being sold pursuant to the Loan Sale, and that in addition to the
agreements regarding the refund and waiver of servicing fees contained in Paragraph 3
above, no servicing fees or other amounts with respect to such loans shall be due or
payable by Seller to FCMC with respect to any period of time from and after the closing of
the Loan Sale.

	 
	11.	 	Agreements under Letter Agreement. Reference is hereby made to a certain letter agreement
dated July 16, 2010, (the “July Letter Agreement”) between and among Franklin Credit Holding
Corporation, Franklin Credit Management Corporation, Thomas J. Axon, The Huntington National Bank
and Franklin Mortgage Asset Trust 2009-A. Except to the extent that paragraphs 9 and 10 hereof
amend or modify the July Letter Agreement, all of shall remain as written originally and in full
force and effect in accordance with their respective terms, and each of the parties hereto that are
parties to the July Letter Agreement hereby ratify and confirm all such the representations,
warranties, terms, covenants and conditions of the July Letter Agreement and the other agreements
and documents executed in connection therewith, and nothing herein shall affect, modify, limit or
impair any of the rights and powers which the parties thereto may have thereunder.







 


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