Document:

EX-10.6

Exhibit 10.6

LIMITED RECOURSE GUARANTY

          This LIMITED RECOURSE GUARANTY (this “Guaranty”), dated as of March 31, 2009 (the
“Effective Date”), is made by FRANKLIN CREDIT HOLDING CORPORATION, a Delaware corporation
(“Holding” or the “Guarantor”), in favor of THE HUNTINGTON NATIONAL BANK, a
national banking association, as Administrative Agent for the Lenders (as those terms are defined
below).

RECITALS

          WHEREAS, pursuant to that certain Amended and Restated Credit Agreement, dated as of the
Effective Date (as amended, supplemented or otherwise modified from time to time in accordance with
the provisions thereof, the “Credit Agreement”), among Franklin Credit Asset Corporation,
Tribeca Lending Corp. and their Subsidiaries as borrowers (collectively, “Borrowers” and
individually, a “Borrower”), the financial institutions party thereto from time to time as
lenders (each, a “Lender”, and, collectively, the “Lenders”), and The Huntington
National Bank (“Huntington”), as administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, the “Administrative Agent”), the
Administrative Agent and the Lenders have agreed to make and/or maintain 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 Credit Agreement; and

          WHEREAS, it is a condition precedent to the obligations of the Administrative Agent and the
Lenders to make and/or maintain Advances and the financial accommodations provided under the Credit
Agreement, that the Guarantor shall have executed and delivered this Guaranty to the Administrative
Agent for the benefit of the Lenders, and contemporaneously herewith the Guarantor is being
released from its obligations under a certain Guaranty of payment in favor of The Huntington
National Bank dated as of December 19, 2008; and

          WHEREAS, the Guarantor acknowledges that the making and/or maintaining of the Advances and the
other financial accommodations to the Guarantor and the Borrowers under the Credit Agreement will
inure to the substantial benefit of the Guarantor.

          NOW, THEREFORE, in consideration of the premises and in order to induce the Administrative
Agent and the Lenders to enter into the Credit Agreement and to make and/or maintain 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 Administrative
Agent as follows:

          1. Guaranty. (a) Subject to the terms of this Guaranty, the Guarantor hereby
unconditionally and irrevocably guarantees to the Administrative Agent, 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 Administrative Agent and each 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 and/or any other guarantor 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 Administrative Agent on account of its liability hereunder, it will notify the
Administrative Agent 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 or any other guarantor shall be applied to reduce the Obligations unless and until the
Administrative Agent shall have made a demand for payment under this Guaranty.

          2. Pledge Agreement. As security for the performance of the obligations of the
Guarantor hereunder, the Guarantor has granted to the Administrative Agent a security interest in
specified equity interests in Franklin Credit Management Corporation, a Delaware corporation, 100%
of its equity interests in all other direct and indirect subsidiaries of the Guarantor and all
dividends, distributions and other payments in respect of such equity interests, (the “Pledged
Collateral”), all as described in a certain Pledge Agreement dated of even date herewith (the
“Pledge Agreement”).

          3. Limited Recourse Liability of the Guarantor. (a) Unless an Exception to
Non-Recourse has occurred, the Administrative Agent hereby agrees that, in the event it becomes
necessary to enforce the terms of this Guaranty, (i) it will exercise any and all remedies against
the Guarantor under this Guaranty only against the property encumbered by the Pledge Agreement and
the sale and insurance proceeds related thereto (collectively, the “Encumbered Property”)
for the satisfaction of its legal or equitable remedies against the Guarantor, (ii) the Guarantor
shall have no other liability for the payment of the Obligations or any other obligation hereunder,
and (iii) in any action or proceeding brought hereunder or under the Pledge Agreement, the
Administrative Agent shall not seek any deficiency judgment against the Guarantor.

          (b) An “Exception to Non-Recourse” means any of the following events, activities, or
omissions by the Guarantor, its duly authorized designee, Responsible Officer (as defined in the
Credit Agreement), Subsidiary, or anyone acting under the authority of any such person: (i) the
commission of fraud or material misrepresentation in respect of the Pledged Collateral; (ii) the
diversion, embezzlement or misapplication of proceeds, funds or money and/or other property
relating in any way to the Pledged Collateral or the Obligations; (iii) the breach of any covenant
under Article IV of the Pledge Agreement; or (iv) the conduct of any business activities to perform
diligence services, to service Mortgage Loans or REO Properties (each as defined in the Credit
Agreement) or any related activities, directly or indirectly, other than by Franklin Credit
Management Corporation and Franklin Credit Loan Servicing, LLC (to the extent set forth in Section
7.08 of the Credit Agreement). If an Exception to Non-Recourse occurs, then the limitations set
forth in Section 3(a) above shall be of no force and effect, and the Administrative Agent or any
Lender shall not be restricted thereby.

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          4. Representations, Warranties and Covenants of the Guarantor. This Guaranty is
delivered pursuant to the Credit Agreement and the Guarantor hereby confirms to the Administrative
Agent and the Lenders each of its representations and warranties as set forth in the Credit
Agreement.

          5. Right of Set-off. Upon the occurrence of an Event of Default, the Guarantor hereby
irrevocably authorizes the Administrative Agent (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 Administrative Agent (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
Administrative Agent may elect, against and on account of the obligations and liabilities of the
Guarantor to the Administrative Agent hereunder and claims of every nature and description of the
Administrative Agent (or any of its Affiliates) against the Guarantor, in any currency, whether
arising hereunder or under any other Loan Document, as the Administrative Agent (or any of its
Affiliates) may elect, regardless of whether the Administrative Agent (or such Affiliate) has made
any demand for payment and although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent (or its Affiliate) shall notify the Guarantor promptly of any
such set-off and the application made by the Administrative Agent 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 Administrative Agent (and its Affiliates) under this Section
are in addition to other rights and remedies (including, without limitation, other rights of
set-off) that the Administrative Agent (and such Affiliates) may have under the Credit Agreement,
at law or in equity.

          6. 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 Administrative Agent (or
any of its Affiliates), the Guarantor shall be not be entitled to be subrogated to any of the
rights of the Administrative Agent (or any of its Affiliates) against the Borrowers or any other
guarantor or any Collateral or guarantee or right of offset held by the Administrative Agent (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
Administrative Agent (or its Affiliates) and the Lenders on account of the Obligations are paid in
full and the Credit Agreement 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
Administrative Agent (and its Affiliates), segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Administrative Agent in the exact
form received by the Guarantor (duly indorsed by the Guarantor to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine. To the extent permitted by applicable Law, and without
limiting anything set forth herein, (a) the Guarantor waives all claims, damages and demands it may
acquire against the Administrative Agent arising out of the exercise by the Administrative Agent of
any rights hereunder; (b) If any

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notice of a proposed sale or other disposition of Collateral shall be required by Law, such
notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or
other disposition; (c) the Guarantor waives any claims or other rights which the Guarantor might
now have or hereafter acquire against any Borrower or any other Person that is primarily or
contingently liable on the obligations that arise from the existence or performance of the
Guarantor’s obligations under this Agreement, including, without limitation, any right of
subrogation, suretyship, reimbursement, exoneration, contribution, indemnification, or any right to
participate in any claim or remedy of the Administrative Agent or any Lender against any Borrower
or any collateral security therefore which the Administrative Agent or any Lender now has or
hereafter acquires until the Obligations have been indefeasibly paid in full in cash; whether such
claim, remedy or right arises in equity, under contract or statute, at common law, or otherwise.
The waivers contained in this Section inure only to the benefit of the Administrative Agent and
each Lender, and their respective successors and assigns, and not to any other parties.

          7. 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 Administrative Agent may be rescinded by the Administrative Agent and any
of the Obligations continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor 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 Administrative Agent, and the
Credit 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 Administrative
Agent may deem advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent (and its Affiliates) for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. The Administrative Agent
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 Administrative Agent may, but shall be under no
obligation to, make a similar demand on any Borrower or any other guarantor, and any failure by the
Administrative Agent 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 Administrative Agent
against the Guarantor. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.

          8. 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
Administrative Agent 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 Administrative Agent, 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,

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protest, demand for payment and notice of default or nonpayment to or upon the Borrowers or
the Guarantor with respect to the Obligations.

          9. 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 the Borrowers of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the Administrative Agent
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 Credit 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 Administrative Agent or
any Affiliate of Administrative Agent, (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 Administrative Agent or any of its Affiliates, (c) any document presented in
connection with the Credit 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 Administrative Agent may, but shall be under no obligation to,
pursue such rights and 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 Administrative
Agent or any of its Affiliates with respect thereto, and any failure by the Administrative Agent 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 Administrative Agent (or any of its Affiliates) against the 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 Administrative Agent (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 Credit 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.

          10. 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 Administrative Agent 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.

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          11. Payments. The Guarantor hereby guarantees that payments hereunder will be paid to
the Administrative Agent without set-off or counterclaim in United States dollars in accordance
with the wiring instructions of the Administrative Agent. 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 Administrative Agent in accordance with the Credit
Agreement, or other Loan Documents. When pursuing its rights and remedies hereunder against the
Guarantor, the Administrative Agent 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 Administrative Agent 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 Administrative Agent against the Guarantor.

          12. Indemnification. The Guarantor hereby agrees to:

          (i) pay or reimburse the Administrative Agent 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 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 Administrative Agent;

          (ii) pay on demand all reasonable costs and expenses of the Administrative Agent,
including without limitation the reasonable fees and disbursements of counsel to the
Administrative Agent, 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 Administrative Agent hereunder or under any other Loan
Document;

          (iii) pay and hold the Administrative Agent (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 Administrative Agent (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 Administrative Agent, 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

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reasonable fees and disbursement of counsel to the Administrative Agent, 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
Administrative Agent 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 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.

          13. 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.

          14. 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.

          15. Integration. This Guaranty, the Credit 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 Administrative Agent relative to the subject matter
hereof or thereof not reflected herein or therein.

          16. 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 Administrative Agent; provided that
any provision of this Guaranty may be waived by the Administrative Agent.

          (b) Neither the Administrative Agent nor any of its Affiliates shall by any act of (except by
a written instrument pursuant to Section 16(a) hereof) delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default
or in any breach of any of the terms and conditions hereof or of the Credit Agreement, or any other
Loan Document. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any of its Affiliates, any right, power or privilege hereunder or under the
Credit Agreement, or any other Loan Document shall operate as a waiver

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thereof. No single or partial exercise, on the part of the Administrative Agent, of any
right, power or privilege hereunder or under the Credit 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 Administrative Agent of any right or remedy hereunder or under the
Credit Agreement, or any other Loan Document on any one occasion shall not be construed as a bar to
any right or remedy that the Administrative Agent would otherwise have on any future occasion.

          (c) The rights and remedies provided herein and in the Credit 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.

          17. 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.

          18. 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 Administrative Agent
and its successors and assigns; provided that this Guaranty may not be assigned by the
Guarantor without the express written consent of the Administrative Agent.

          19. 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.

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

          21. Recourse. The Guarantor and the Administrative Agent agree that the Obligations
shall be recourse obligations of the Borrowers as and to the extent set forth in the Credit
Agreement 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
Credit Agreement.

[SIGNATURE PAGE FOLLOWS]

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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 HOLDING CORPORATION

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

	 	 	 	 	 
	 	ACCEPTED AND AGREED

as of the date first above written:

THE HUNTINGTON NATIONAL BANK,

as Administrative Agent

 	 
	 	By:  	/s/ Alan D. Seitz 	 
	 	 	Name:  	Alan D. Seitz 	 
	 	 	Title:  	Senior Vice President 	 
	 

Signature Page to Limited Recourse GuarantyEX-10.7

Exhibit 10.7

LIMITED RECOURSE GUARANTY

          This LIMITED RECOURSE GUARANTY (this “Guaranty”), dated as of March 31, 2009 (the “Effective Date”), is made by FRANKLIN CREDIT MANAGEMENT CORPORATION, a Delaware
corporation (the “Guarantor”), in favor of THE HUNTINGTON NATIONAL BANK, a national banking
association, as Administrative Agent for the Lenders (as those terms are defined below).

RECITALS

          WHEREAS, pursuant to that certain Amended and Restated Credit Agreement, dated as of the
Effective Date (as amended, supplemented or otherwise modified from time to time in accordance with
the provisions thereof, the “Credit Agreement”), among Franklin Credit Asset Corporation,
Tribeca Lending Corp. and their Subsidiaries as borrowers (collectively, “Borrowers” and
individually, a “Borrower”), the financial institutions party thereto from time to time as
lenders (each, a “Lender”, and, collectively, the “Lenders”), and The Huntington
National Bank (“Huntington”), as administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, the “Administrative Agent”), the
Administrative Agent and the Lenders have agreed to make and/or maintain 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 Credit Agreement; and

          WHEREAS, it is a condition precedent to the obligations of the Administrative Agent and the
Lenders to make and/or maintain Advances and the financial accommodations provided under the Credit
Agreement, that the Guarantor shall have executed and delivered this Guaranty to the Administrative
Agent for the benefit of the Lenders, and contemporaneously herewith the Guarantor is being
released from its obligations under a certain Guaranty of payment in favor of The Huntington
National Bank dated as of December 28, 2007; and

          WHEREAS, the Guarantor acknowledges that the making and/or maintaining of the Advances and the
other financial accommodations to the Guarantor and the Borrowers under the Credit Agreement will
inure to the substantial benefit of the Guarantor.

          NOW, THEREFORE, in consideration of the premises and in order to induce the Administrative
Agent and the Lenders to enter into the Credit Agreement and to make and/or maintain 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 Administrative
Agent as follows:

          1. Guaranty. (a) Subject to the terms of this Guaranty, the Guarantor hereby
unconditionally and irrevocably guarantees to the Administrative Agent, 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 Administrative Agent and each 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 and/or any other guarantor 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 Administrative Agent on account of its liability hereunder, it will notify the
Administrative Agent 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 or any other guarantor shall be applied to reduce the Obligations unless and until the
Administrative Agent shall have made a demand for payment under this Guaranty.

          2. Pledge Agreement. As security for the performance of the obligations of the Loan
Parties under the Credit Agreement and for the performance of the obligations of Franklin Credit
Holding Corporation (“Holding”) under a certain Limited Recourse Guaranty dated of even
date hereof, Holding has granted, inter alia, to the Administrative Agent a security
interest in specified equity interests in the Guarantor and all dividends, distributions and other
payments in respect of such equity interests, (the “Pledged Collateral”) all as described
in a certain Pledge Agreement dated of even date herewith (the “Pledge Agreement”).

          3. Limited Recourse Liability of Guarantor. (a) Unless an Exception to Non-Recourse
has occurred, the Administrative Agent hereby agrees that, in the event it becomes necessary to
enforce the terms of this Guaranty, (i) it will exercise any and all remedies against the Guarantor
under this Guaranty only against the property encumbered by the Pledge Agreement and the sale and
insurance proceeds related thereto (collectively, the “Encumbered Property”) for the
satisfaction of its legal or equitable remedies against the Guarantor, (ii) the Guarantor shall
have no other liability for the payment of the Obligations or any other obligation hereunder, and
(iii) in any action or proceeding brought hereunder or under the Pledge Agreement, the
Administrative Agent shall not seek any deficiency judgment against the Guarantor.

          (b) An “Exception to Non-Recourse” means any of the following events, activities, or
omissions by the Guarantor, its duly authorized designee, Responsible Officer (as defined in the
Credit Agreement), Subsidiary, or anyone acting under the authority of any such person: (i) the
commission of fraud or material misrepresentation in respect of the Pledged Collateral; (ii) the
diversion, embezzlement or misapplication of proceeds, funds or money and/or other property
relating in any way to the Pledged Collateral or the Obligations; (iii) the breach of any covenant
under Article IV of the Pledge Agreement; or (iv) the conduct of any business activities to perform
diligence services, to service Mortgage Loans or REO Properties (each as defined in the Credit
Agreement) or any related activities, directly or indirectly, other than by the Guarantor or
Franklin Loan Servicing, LLC (to the extent set forth in Section 7.08 of the Credit Agreement). If
an Exception to Non-Recourse occurs, then the limitations set forth in Section 3(a) above shall be
of no force and effect, and the Administrative Agent or any Lender shall not be restricted thereby.

          4. Representations, Warranties and Covenants of the Guarantor. This Guaranty is
delivered pursuant to the Credit Agreement and the Guarantor hereby confirms to the

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Administrative Agent and the Lenders each of its representations and warranties as set forth
in the Credit Agreement.

          5. Right of Set-off. Upon the occurrence of an Event of Default, the Guarantor hereby
irrevocably authorizes the Administrative Agent (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 Administrative Agent (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
Administrative Agent may elect, against and on account of the obligations and liabilities of the
Guarantor to the Administrative Agent hereunder and claims of every nature and description of the
Administrative Agent (or any of its Affiliates) against the Guarantor, in any currency, whether
arising hereunder or under any other Loan Document, as the Administrative Agent (or any of its
Affiliates) may elect, regardless of whether the Administrative Agent (or such Affiliate) has made
any demand for payment and although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent (or its Affiliate) shall notify the Guarantor promptly of any
such set-off and the application made by the Administrative Agent 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 Administrative Agent (and its Affiliates) under this Section
are in addition to other rights and remedies (including, without limitation, other rights of
set-off) that the Administrative Agent (and such Affiliates) may have under the Credit Agreement,
at law or in equity.

          6. 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 Administrative Agent (or
any of its Affiliates), the Guarantor shall be not be entitled to be subrogated to any of the
rights of the Administrative Agent (or any of its Affiliates) against the Borrowers or any other
guarantor or any Collateral or guarantee or right of offset held by the Administrative Agent (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
Administrative Agent (or its Affiliates) and the Lenders on account of the Obligations are paid in
full and the Credit Agreement 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
Administrative Agent (and its Affiliates), segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Administrative Agent in the exact
form received by the Guarantor (duly indorsed by the Guarantor to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine. To the extent permitted by applicable Law, and without
limiting anything set forth herein, (a) the Guarantor waives all claims, damages and demands it may
acquire against the Administrative Agent arising out of the exercise by the Administrative Agent of
any rights hereunder; (b) If any notice of a proposed sale or other disposition of Collateral shall
be required by Law, such notice shall be deemed reasonable and proper if given at least ten (10)
days before such sale or other

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disposition; (c) the Guarantor waives any claims or other rights which the Guarantor might now
have or hereafter acquire against any Borrower or any other Person that is primarily or
contingently liable on the obligations that arise from the existence or performance of the
Guarantor’s obligations under this Agreement, including, without limitation, any right of
subrogation, suretyship, reimbursement, exoneration, contribution, indemnification, or any right to
participate in any claim or remedy of the Administrative Agent or any Lender against any Borrower
or any collateral security therefore which the Administrative Agent or any Lender now has or
hereafter acquires until the Obligations have been indefeasibly paid in full in cash; whether such
claim, remedy or right arises in equity, under contract or statute, at common law, or otherwise.
The waivers contained in this Section inure only to the benefit of the Administrative Agent and
each Lender, and their respective successors and assigns, and not to any other parties.

          7. 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 Administrative Agent may be rescinded by the Administrative Agent and any
of the Obligations continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor 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 Administrative Agent, and the
Credit 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 Administrative
Agent may deem advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent (and its Affiliates) for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. The Administrative Agent
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 Administrative Agent may, but shall be under no
obligation to, make a similar demand on any Borrower or any other guarantor, and any failure by the
Administrative Agent 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 Administrative Agent
against the Guarantor. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.

          8. 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
Administrative Agent 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 Administrative Agent, 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.

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          9. 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 the Borrowers of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the Administrative Agent
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 Credit 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 Administrative Agent or
any Affiliate of Administrative Agent, (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 Administrative Agent or any of its Affiliates, (c) any document presented in
connection with the Credit 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 Administrative Agent may, but shall be under no obligation to,
pursue such rights and 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 Administrative
Agent or any of its Affiliates with respect thereto, and any failure by the Administrative Agent 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 Administrative Agent (or any of its Affiliates) against the 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 Administrative Agent (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 Credit 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.

          10. 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 Administrative Agent 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.

          11. Payments. The Guarantor hereby guarantees that payments hereunder will be paid to
the Administrative Agent without set-off or counterclaim in United States dollars in

5

 

accordance with the wiring instructions of the Administrative Agent. 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 Administrative Agent in accordance with the
Credit Agreement, or other Loan Documents. When pursuing its rights and remedies hereunder
against the Guarantor, the Administrative Agent 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 Administrative Agent 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 Administrative Agent against the Guarantor.

          12. Indemnification. The Guarantor hereby agrees to:

          (i) pay or reimburse the Administrative Agent 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 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 Administrative Agent;

          (ii) pay on demand all reasonable costs and expenses of the Administrative Agent,
including without limitation the reasonable fees and disbursements of counsel to the
Administrative Agent, 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 Administrative Agent hereunder or under any other Loan
Document;

          (iii) pay and hold the Administrative Agent (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 Administrative Agent (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 Administrative Agent, 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 Administrative Agent, and such other parties, that are
incurred by any of them in connection with, arising out of or in any way

6

 

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
Administrative Agent 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 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.

          13. 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.

          14. 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.

          15. Integration. This Guaranty, the Credit 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 Administrative Agent relative to the subject matter
hereof or thereof not reflected herein or therein.

          16. 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 Administrative Agent; provided that
any provision of this Guaranty may be waived by the Administrative Agent.

          (b) Neither the Administrative Agent nor any of its Affiliates shall by any act of (except by
a written instrument pursuant to Section 16(a) hereof) delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default
or in any breach of any of the terms and conditions hereof or of the Credit Agreement, or any other
Loan Document. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any of its Affiliates, any right, power or privilege hereunder or under the
Credit Agreement, or any other Loan Document shall operate as a waiver thereof. No single or
partial exercise, on the part of the Administrative Agent, of any right, power or privilege
hereunder or under the Credit Agreement, or any other Loan Document shall

7

 

preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent of any right or remedy hereunder or under the
Credit Agreement, or any other Loan Document on any one occasion shall not be construed as a bar to
any right or remedy that the Administrative Agent would otherwise have on any future occasion.

          (c) The rights and remedies provided herein and in the Credit 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.

          17. 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.

          18. 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 Administrative Agent
and its successors and assigns; provided that this Guaranty may not be assigned by the
Guarantor without the express written consent of the Administrative Agent.

          19. 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.

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

          21. Recourse. The Guarantor and the Administrative Agent agree that the Obligations
shall be recourse obligations of the Borrowers as and to the extent set forth in the Credit
Agreement 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
Credit Agreement.

[SIGNATURE PAGE FOLLOWS]

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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 	 
	 

	 	 	 	 	 
	 	ACCEPTED AND AGREED

as of the date first above written:

THE HUNTINGTON NATIONAL BANK,

as Administrative Agent

 	 
	 	By:  	/s/ Alan D. Seitz 
	 
	 	 	Name:  	Alan D. Seitz 	 
	 	 	Title:  	Senior Vice President 	 
	 

Signature Page to Limited Recourse Guaranty

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