Document:

ex10-1.htm

     

     

    
 

    Exhibit
10.1

    NINETEENTH AMENDMENT TO
FORBEARANCE AGREEMENT

    

    This
Nineteenth Amendment to Forbearance Agreement (the “Amendment”) is
entered into as of this 16th day
of July, 2010 by and among RCLC, Inc. (formerly known as Ronson Corporation), a
New Jersey corporation (“Parent”), RCPC
Liquidating Corp. (formerly known as Ronson Consumer Products Corporation), a
New Jersey corporation (“RCPC”), Ronson
Aviation, Inc., a New Jersey corporation (“RAI”) and RCC Inc.
(formerly known as Ronson Corporation of Canada Ltd.), an Ontario corporation
(“Ronson
Canada”) (RCPC and RAI are collectively and individually referred to as
the “Domestic
Borrower” or “Domestic Borrowers”;
the Domestic Borrower and Ronson Canada are collectively and individually
referred to as the “Borrower” or “Borrowers”, and the
Borrowers, together with Parent are collectively and individually referred to as
the “Obligors”)
and Wells Fargo Bank, National Association (“Lender”), acting
through its Wells Fargo Business Credit operating division.

     

    RECITALS:

     

    Borrowers
and Lender are parties to a certain Credit and Security Agreement dated as of
May 30, 2008 (as amended, modified, supplemented or restated from time to time,
the “Credit
Agreement”), relating to financing by Lender to
Borrowers.  Capitalized terms used but not specifically defined herein
shall have the meanings provided for such terms in the Credit
Agreement.

     

    Certain
Events of Default occurred under the Credit Agreement and, as a result thereof,
Lender and Borrowers entered into that certain Forbearance Agreement dated as of
March 29, 2009 (as amended modified, supplemented or restated from time to time,
the “Forbearance
Agreement”), whereby Lender agreed to forbear from exercising certain of
its rights and remedies available under the Loan Documents as a result of the
Existing Events of Default.

     

    The
Forbearance Agreement expires pursuant to its terms not later than July 16,
2010.

     

    On
February 2, 2010, Parent, RCPC and Ronson Canada consummated a transaction (the
“Zippo Sale”)
pursuant to which RCPC and Ronson Canada sold substantially all of their assets
to Zippo Manufacturing Company and Nosnor, Inc., pursuant to an Asset Purchase
Agreement dated as of October 5, 2010.  The net proceeds of the Zippo
Sale were delivered to Lender in accordance with the terms of that certain
letter agreement by and among Lender and Obligors dated as of February 2, 2010
and applied by Lender in accordance with and subject to the Thirteenth Amendment
to Forbearance Agreement dated as of April 1, 2010.

     

    The
Eighteenth Amendment to Forbearance Agreement dated as of June 11, 2010 (the
“Eighteenth
Amendment”) required the Obligors to, among other things, deliver to
Lender on or before June 18, 2010, an executed letter of intent for the sale
substantially all of the assets of RAI (the “LOI”).  Obligors
failed to deliver the executed LOI to Lender until June 23, 2010, resulting in a
Termination Event under the Forbearance Agreement (the “LOI
Default”).

     

    Obligors
have requested that Lender waive the LOI Default, amend the definition of
Termination Event to, among other things, extend the stated expiration date in
the Forbearance

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agreement
from July 16, 2010 to July 21, 2010 in order to provide Borrowers with
additional time to negotiate and execute an asset purchase agreement (the “Landmark APA”) with
Landmark Aviation Trenton, LLC (“Landmark”) for the
sale of substantially all of RAI’s assets to Landmark and amend certain terms
and conditions of the Credit Agreement.

     

    Lender
has considered Borrowers’ requests and, in an effort to continue working with
Borrowers, hereby agrees to (i) waive the LOI Default and (ii) amend the
Forbearance Agreement and the Credit Agreement on the terms and conditions set
forth below.

     

    NOW,
THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

     

    1.            Amendment to Forbearance
Agreement.  As of the date hereof, Section 2(b) of the
Forbearance Agreement shall be amended and restated in its entirety to read as
follows:

     

    (b)           For
purposes of this Agreement, a “Termination Event”
shall mean the earliest to occur of (i) July 21, 2010 and (ii) any one or more
of the following:

     

    (A)           the
failure of the Obligors to comply with the terms, covenants, agreements and
conditions of this Agreement;

     

    (B)           any
representation or warranty made herein shall be incorrect in any material
respect;

     

    (C)           the
occurrence of any Event of Default under the Credit Agreement, other than (i)
the Existing Events of Default or (ii) breach by Obligors of their obligation
pursuant to (a) Section 6.1(a) of the Credit Agreement to deliver audited year
end annual financial statements for the fiscal year ending December 31, 2008
within 90 days of the end of such fiscal year, (b) Section 6.1(c) of the Credit
Agreement to deliver monthly financial statements to Lender for the months
ending October 31, 2009, November 30, 2009, December 31,
2009,  January 31, 2010, February 28, 2010, March 31, 2010, April 30,
2010 and May 31, 2010 within 30 days of the end of such months or (c) the LOI
Default;

     

    (D)           Obligors
shall fail to employ a CRO (as defined below) throughout the term of this
Agreement;

     

    (E)           subject
to Paragraph 6(b) below, Obligors shall fail to employ an investment banking
firm reasonably acceptable to Lender to market and sell RAI or its assets
throughout the term of this Agreement and/or such investment banking firm shall
fail to diligently pursue such sale consistent with the terms of its
retention;

     

    (F)           in
the Lender’s discretion, it determines that Parent is no longer actively
pursuing a Liquidity Transaction;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (G)           any
Person, other than Lender, shall exercise its rights and remedies against the
Obligors as a result of defaults or events of defaults arising under any
agreement between Obligors and such Person due to cross-defaults arising from
the Existing Events of Default; and

     

    (H)           Obligors
shall have executed the Landmark APA and the Freeholders of Mercer County, New
Jersey shall have formally approved the assignment of that certain lease by and
between Ronson Helicopters, Inc. (now known as RAI), as lessee, and County of
Mercer, as lessor, dated May 14, 1975 (as amended, the “Lease”) to
Landmark.

     

    2.            Funding of RAI Pending
Closing of the RAI Sale.  Obligors acknowledge and agree that
as a result of the consummation of the Zippo Sale, RCPC and Ronson Canada shall
no longer be permitted to request Advances under the Credit Agreement and any
remaining assets of RCPC and/or Ronson Canada shall no longer be considered in
any borrowing base calculation.  Notwithstanding the foregoing, Lender
and Obligors agree that RAI shall be authorized, until the occurrence of a
Termination Event, to request Advances subject to the terms of the Credit
Agreement as modified by this Amendment.  Obligors and Lender further
agree that Lender shall have no obligation to make Advances to
RAI  after the occurrence of a Termination Event.

     

    3.            Limited
Waiver.  Lender hereby waives the LOI Default.  This
waiver shall be effective upon Obligor’s execution and delivery of this
Amendment to Lender.  This waiver is being given as a one time
accommodation only and shall not obligate Lender, or be construed to require
Lender, to waive any other or future Defaults or Events of Default under the
Credit Agreement, the Forbearance Agreement or any other or future defaults or
events of default under any other Loan Document.  This waiver shall
not release Obligors in any way from any of their duties, obligations, covenants
or agreements under the Loan Documents or the Forbearance Agreement or from the
consequences of any other or future Defaults or Events of Default under the
Credit Agreement, the Forbearance Agreement or from any other or future defaults
or events of default under the other Loan Documents.

     

    4.            Amendments to Credit and
Security Agreement.  The following definitions set forth in
section 1.1 of the Credit Agreement shall be amended and restated in their
entirety to read as follows:

     

    “Accommodation
Overadvance Limit” means an amount up to  $1,325,000 from the date of
that certain Seventeenth Amendment to Forbearance Agreement through the
occurrence of a Termination Event (as such term is defined in the Forbearance
Agreement); provided however, if Lender
receives evidence, satisfactory to Lender in its sole discretion, on or before
June 25, 2010, that Obligors have executed a letter of intent for an Alternate
Transaction, acceptable to Lender in form and substance and which Lender
determines in its reasonable discretion provides proceeds sufficient to repay
and satisfy the Indebtedness in full and in cash, the Accommodation Overadvance
Limit shall automatically be increased to $1,500,000 effective as of June 26,
2010.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.           Interest Rate on
Accommodation Overadvance.  Obligors acknowledge and agree that
interest on the Accommodation Overadvance shall accrue at a rate equal to the
Prime Rate plus eight percent (8.00%) per annum.

     

    6.            Conditions.  Lender’s
agreement to further forbear from exercising its rights and remedies pursuant to
this Agreement is conditioned upon:

     

    (a)           execution
and delivery by the Obligors and Lender of this Agreement; and

     

    (e)           such
other matters as Lender may reasonably require.

     

    7.            Sums Secured;
Estoppel.  The Obligors acknowledge and reaffirm that their
obligations to Lender as set forth in and evidenced by the Loan Documents are
due and owing without any defenses, set-offs, recoupments, claims or
counterclaims of any kind as of the date hereof.  To the extent that
any defenses, set-offs, recoupments, claims or counterclaims may exist as of the
date hereof, the Obligors waive and release Lender from the same.

     

    8.            No Other Changes.
Except as explicitly amended by this Amendment, all of the terms and conditions
of the Forbearance Agreement shall remain in full force and effect.

     

    9.            References.  All
references in the Forbearance Agreement to “this Agreement” shall be deemed to
refer to the Forbearance Agreement as amended hereby.

     

    10.            No Waiver. Except as
specifically set forth in Paragraph 3 above, the execution of this Amendment
shall not be deemed to be a waiver of any Default or Event of Default under the
Credit Agreement, a waiver of any Termination Event under the Forbearance
Agreement or breach, default or event of default under any Loan Documents or
other document held by Lender, whether or not known to Lender and whether or not
existing on the date of this Amendment.

     

    11.            Waiver and Release of Claims
and Defenses.  The Obligors hereby waive and release all claims
and demands of any nature whatsoever that they now have or may have against
Lender, whether arising under the Loan Documents or by any acts or omissions of
Lender, or any of its directors, officers, employees, affiliates, attorneys or
agents, or otherwise, and whether known or unknown, existing as of the date of
the execution of this Amendment, and further waive and release any and all
defenses of any nature whatsoever to the payment of the Obligations or the
performance of their obligations under Loan Documents.

     

    12.            Reaffirmation of Loan
Documents.  The Obligors hereby agree with, reaffirm and
acknowledge their representations and warranties contained in the Loan
Documents.  Furthermore, the Obligors represent that their
representations and warranties contained in the Loan Documents continue to be
true and in full force and effect.  This agreement, reaffirmation and
acknowledgment is given to Lender by the Obligors without defenses, claims or
counterclaims of any kind.  To the extent that any such defenses,
claims or counterclaims against Lender may exist, the Obligors waive and release
Lender from same.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    13.            Ratification and
Reaffirmation of Loan Documents.  The Obligors ratify and
reaffirm all terms, covenants, conditions and agreements contained in the Loan
Documents.

     

    14.            No Preferential
Treatment.  No Obligor has entered into this Amendment to
provide any preferential treatment to Lender or any other
creditor.  No Obligor intends to file for protection or seek relief
under the United States Bankruptcy Code or any similar federal or state law
providing for the relief of debtors.

     

    15.            Legal
Representation.  Each of the parties hereto acknowledge that
they have been represented by independent legal counsel in connection with the
execution of this Amendment, that they are fully aware of the terms and
conditions contained herein, and that they have entered into and executed the
within Amendment as a voluntary action and without coercion or duress of any
kind.

     

    16.            Partial Invalidity; No
Repudiation. If any of the provisions of this Amendment shall contravene
or be held invalid under the laws of any jurisdiction, this Amendment shall be
construed as if not containing such provisions and the rights, remedies,
warranties, representations, covenants, and provisions hereof shall be construed
and enforced accordingly in such jurisdiction and shall not in any manner affect
such provision in any other jurisdiction, or any other provisions of this
Amendment in any jurisdiction.

     

    17.            Binding
Effect.  This Amendment is binding upon the parties hereto and
their respective heirs, administrators, executors, officers, directors,
representatives and agents.

     

    18.            Governing
Law.  This Amendment shall be governed by the laws of the State
of New York.

     

    19.            WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL
BY JURY, AS TO ANY ACTION WHICH MAY ARISE AS A RESULT OF THE LOAN DOCUMENTS, THE
FORBEARANCE AGREEMENT, THIS AMENDMENT OR ANY DOCUMENT EXECUTED IN CONNECTION
HEREWITH.

     

    20.            Counterparts.  This
Amendment and/or any documentation contemplated or required in connection
herewith may be executed in any number of counterparts, each of which shall be
deemed an original and all of which shall be considered one and the same
document.  Delivery of an executed counterpart of a signature page of
this document by facsimile shall be effective as delivery of a manually executed
counterpart of this document.

     

    [Signature
pages follow]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, do
hereby execute this Amendment the date and year first above
written.

     

    
      	
              RCLC,
      INC. (f/k/a RONSON CORPORATION)

               

               

              By:
      /s/ Joel
      Getzler                                                            
      

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

               

            
	
              RCPC
      LIQUIDATING CORP. (f/k/a/ RONSON CONSUMER PRODUCTS
      CORPORATION)

               

               

              By:
      /s/ Joel
      Getzler                                                            

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

               

            
	
              RONSON
      AVIATION, INC.

               

               

              By:
      /s/ Joel
      Getzler                                                            

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

               

            
	
              RCC
      INC. (f/k/a RONSON CORPORATION OF CANADA LTD.)

               

               

              By:
      /s/ Joel
      Getzler                                                            

              Print
      Name: Joel Getzler

              Print
      Title: Chief Restructuring Officer

               

            

    

    

    
      	
              WELLS
      FARGO BANK, NATIONAL ASSOCIATION

               

              By:          /s/ Peter
      Gannon                                               
                                                          

              Peter Gannon, Vice
      Presidentkl07010_ex10-1.htm

 

 

Exhibit 10.1

 

 

July 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:

Based on our discussions in connection with a proposed sale of certain identified consumer mortgage loans (the “Loan Sale”) by Franklin Mortgage Asset Trust 2009-A (“Seller”), an indirect subsidiary of The Huntington National Bank (“Huntington”), to Vantium Capital Markets, L.P. (“Purchaser”) pursuant to a Loan Sale Agreement between such parties dated as of July 20, 2010 (the “Sale Agreement”), Huntington’s reasonable efforts to assist in a potential restructuring or spin off (the “Potential Restructuring”) by Franklin Credit Holding Corporation (“Holding”) of its ownership interests in Franklin Credit Management Corporation (“FCMC”), its wholly owned servicer subsidiary, and the entry into a servicing agreement (the “New Legacy Servicing Agreement”) between Seller and FCMC to service consumer loans that are not sold in the Loan Sale, Huntington, Holding and FCMC have agreed, in connection with the Loan Sale, the Potential Restructuring and the New Servicing Agreement, and subject to the consummation of the Sale Agreement, to the terms and conditions contained in this letter agreement and in Annex 1 attached hereto (together, the “Letter Agreement”).

You agree that the Letter Agreement is for your confidential use only and will not be disclosed by you to any person other than your accountants, attorneys, and other advisors, and then only in connection with the transactions contemplated hereby and on a confidential basis, except that you may make such public disclosures of the terms and conditions hereof as you are required by law to make, in the opinion of your counsel.

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

Promptly after full execution and delivery of this Letter 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 Servicing Agreement dated as of March 31, 2009 (the “Existing Servicing Agreement”) by and between Franklin Mortgage Asset Trust 2009-A and Franklin Credit Management Corporation;

(2) 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 (the “Licensing Credit Agreement”);

 

 

 

  

1

  

 

(3) 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 (the “Legacy Credit Agreement”); and

(4) a certain Transfer and Assignment Agreement dated March 31, 2009, (the “Transfer Agreement”) among Franklin Mortgage Asset Trust 2009-A, as purchaser, Franklin Credit Asset Corporation, Franklin Credit Management Corporation, Tribeca Lending Corp., and each of their respective listed subsidiaries, as sellers.

The agreements of Huntington 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 Letter 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 Letter Agreement or the transactions contemplated hereby or the actions of Huntington in the negotiation, performance or enforcement hereof.

Please evidence your acceptance of the provisions of this Letter Agreement by signing a copy of this letter agreement and returning it to the undersigned at or before 9:00 a.m. (eastern time) on July 16, 2010, the time at which this Letter Agreement (if not so accepted prior thereto) will expire.

 

 

  

2

  

 

Very truly yours,

 

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 July, 2010

FRANKLIN CREDIT HOLDING CORPORATION

By: /s/ Thomas J. Axon

Title: Chairman and President

FRANKLIN CREDIT MANAGEMENT CORPORATION

By: /s/ Thomas J. Axon

Title: Chairman and President

Acknowledgement, Consent, and Agreement to provide Guaranty and Guarantor collateral as described in item # 5 of the Letter Agreement below, this 16th day of July, 2010.

/s/ Thomas J. Axon

Thomas J. Axon, individually

cc Kevin P. Gildea, Chief Legal Officer

  

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Annex 1

	
1.  

	
Consummation of Sale Agreement: FCMC agrees to use its best efforts to cooperate with and assist Huntington and Seller in consummating the Sale Agreement and any subsequent loan sale agreements between Seller and Purchaser, curing title, documentation, assignment, file and other issues or deficiencies until such time as Seller receives all of the payment due or potentially due to Seller as part of the purchase price and the release of any holdback amount pursuant to periods specified therefor in the Sale Agreement or any other loan sale agreements between Seller and Purchaser, and FCMC ratifies and reaffirms each of its obligations under the Transfer Agreement or the Existing Servicing Agreement in respect of any such issues or deficiencies.

	
2.  

	
Reduction of Licensing Facility:  FCMC agrees on July 20, 2010 to (i) use unpledged cash to reduce the outstanding balance on the revolving line of credit under the Licensing Credit Agreement to zero, and (ii) permanently reduce such revolving line of credit to $1,000,000.

	
3.  

	
Reduction of Legacy Facility:  As a result of the permanent reduction pursuant to item # 2, clause (ii) above, Huntington agrees to release $1,000,000 of cash collateral under the Licensing Credit Agreement, and the parties agree that on July 20, 2010, such released cash collateral shall be applied as a $1,000,000 voluntary payment under the terms of the Legacy Credit Agreement.  In furtherance of the foregoing, Huntington and FCMC agree to execute an amendment to the Licensing Credit Agreement to be effective as of July 20, 2010, no later than such date to incorporate the terms of items 2 and 3 hereof.

	
4.  

	
Servicing Expense Settle-Up:  FCMC agrees that on July 20, 2010, it shall pay to Seller and Huntington the aggregate sum of $1,000,000.  Such payment shall be made from an offset in the amount of $1,000,000 for amounts owed to FCMC from Seller as of June 30, 2010, for unpaid servicing advances under the Existing Servicing Agreement.

	
5.  

	
Spinoff of FCMC/EBITDA Payment:  As consideration for Huntington’s reasonable efforts to obtain consents to the Potential Restructuring, efforts to obtain consent of the required lenders under the Legacy Credit Agreement to the same, for its efforts in consummating the Sale Agreement, and for its execution of the New Legacy Servicing Agreement with FCMC, upon condition that (i) the Potential Restructuring is acceptable to Huntington, and the administrative agent and the required lenders under the Legacy Credit Agreement in each such party’s sole discretion, and (ii) the Potential Restructuring does not result in material tax, legal, regulatory or accounting impediments or issues for Holding or FCMC:

(A) FCMC agrees pay up to an aggregate amount of $3,000,000 to Huntington, for the benefit of the administrative agent and the lenders under the Legacy Credit Agreement, which payment shall be made through contingent semi-annual payments (the “EBITDA Payment”) equal to (i) 50% of FCMC’s GAAP EBITDA for each period, for the first 18 months after closing of the Sale Agreement and (ii)  70% of FCMC’s GAAP EBITDA for each period thereafter; and

(B) Thomas J. Axon agrees to continue his existing guaranty to extend to the EBITDA Payment pursuant to an amendment to his existing guaranty in form

 

 

 

  

4

  

 

 

satisfactory to Huntington, which will also provide that to the extent the amount of the EBITDA Payment received from FCMC in respect of any semi-annual period as calculated pursuant to subparagraph (A) above is less than $500,000, Mr. Axon will pay any such shortfall pursuant to the guaranty.  Each such obligation of Mr. Axon will be secured and continue to be secured by the Guarantor Collateral (as defined under the Licensing Credit Agreement).  The amended guaranty agreement and collateral documents in respect of such Guarantor Collateral shall be satisfactory to Huntington, the administrative agent and the required lenders.

Notwithstanding anything to the contrary herein, the aggregate amount which the administrative agent and the lenders under the Legacy Credit Agreement shall be entitled to receive under this paragraph 5, shall not exceed $3,000,000 (the “Maximum Amount”).  Additionally, the Maximum Amount shall be reduced to the extent that any distribution made by FCMC after the date of this Letter Agreement to its shareholders results in the application of any payments to the administrative agent and the lender under the Legacy Credit Agreement.  Additionally, any payments made under this paragraph 5 shall be a credit against future amounts FCMC would otherwise be obligated to pay to the administrative agent and the lender under the Legacy Credit Agreement in respect of any distributions made by FCMC after the date of this Letter Agreement to its shareholders.

In the event that the above conditions are satisfied, Huntington agrees to use its reasonable efforts to assist Holding and FCMC in connection with such Potential Restructuring in obtaining approval of the required lenders under the Legacy Credit Agreement for such Potential Restructuring and will consent to the change of control under the Licensing Credit Agreement in connection with such Potential Restructuring.  In connection therewith, FCMC or Holding shall reimburse and hold harmless Huntington and such lenders from any reasonable expense incurred thereby in connection with any such Potential Restructuring

	
6.  

	
FCMC releases all claims under the Existing Servicing Agreement with respect to the mortgage loans sold pursuant to the Loan Sale as of the date of such Loan Sale, except in respect of unpaid servicing advances for services incurred prior to June 30, 2010, minus the offset described in item 4 above.  As a further inducement to entering into this Letter Agreement, FCMC hereby represents and warrants to Seller and Huntington that FCMC has agreed with Purchaser or its designees to the terms of one or more servicing agreements for the mortgage loans being purchased pursuant to the Sale Agreement.

	
7.  

	
No later than July 20, 2010, FCMC shall refund to Seller the full amount of the servicing fees paid in advance to FCMC under the Existing Servicing Agreement for the month of July 2010 and which relates to any period on or after July 1, 2010, attributable solely to the mortgage loans being sold pursuant to the Sale Agreement.

	
8.  

	
Upon the consummation of the Sale Agreement, FCMC agrees that the Existing Servicing Agreement will be deemed to be terminated in all respects as of July 1, 2010, as to the mortgage loans sold pursuant to such Sale Agreement, except for FCMC’s obligations thereunder to remedy deficiencies of the type described in item # 1 above and the assistance and cooperation to be provided by FCMC pursuant to the provisions of this Letter Agreement.  No later than July 23, 2010, FCMC and Seller agree to terminate effective August 1, 2009, in all respects the Existing Servicing Agreement as to the loans which are 

 

 

 

  

5

  

 

 

not sold pursuant to the terms of such Sale Agreement, and to enter into the New Legacy Servicing Agreement effective as of August 1, 2010, on market terms as determined by Seller in good faith.  The New Legacy Servicing Agreement shall be terminable without cause by Seller at any time on (i) 90 days prior written notice, or (ii) in connection with the sale of some or all of the loans, at any time on 30 days prior written notice.

 

	
9.  

	
 By the close of business on July 15, 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 Letter Agreement.

 

 

 

 

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