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Exhibit 10.5
 
 

THE HUNTINGTON NATIONAL BANK
Amended and Restated Promissory Note
(D Note)

$5,000,000.00
 
December 28, 2007 (the “Effective Date”)

RECITALS

WHEREAS, each of the borrowers set forth on Schedule 1 attached to the
Forbearance Agreement (as defined below) (individually a “Borrower” and
collectively, “Borrowers”) has executed and delivered that certain Forbearance
Agreement and Amendment to Credit Agreements, dated as of the Effective Date, by
and among Franklin Credit Management Corporation (“FCMC”), Borrowers, and The
Huntington National Bank, successor by merger to Sky Bank (“Bank”), (the
“Forbearance Agreement”), and Borrowers and Bank desire to amend and restate the
original notes as set forth on Schedule 2 to the Forbearance Agreement (the
“Original Notes”); and

WHEREAS, Borrowers and Bank intend that (i) this Amended and Restated Promissory
Note (D Note) (this "Note") will not constitute a novation, (ii) this Note will
amend and restate a portion of the indebtedness, obligations and liabilities
under the Original Notes, and (iii) from and after the Effective Date, the
Original Notes shall be of no force or effect, except to evidence the incurrence
of Borrowers’ obligations thereunder; and

WHEREAS, Borrowers and Bank acknowledge and agree that this revolving note is
the amended and restated promissory note intended to evidence the indebtedness
in respect to the Tranche D Advances;

NOW THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrowers hereby
jointly and severally agree as follows:

PROMISE TO PAY

FOR VALUE RECEIVED, each of Borrowers, jointly and severally, promises to pay to
the order of Bank, at 10 East Main Street, Salineville, Ohio 43945, or such
other address as Bank in writing shall provide to FCMC (as defined below), the
sum of Five Million and 00/100 Dollars ($5,000,000.00) (the “Principal Sum”), or
if less, the aggregate unpaid principal amount of all Tranche D Advances made by
Bank to the Borrowers, together with interest as hereinafter provided and
payable at the times and in the manner hereinafter provided.  All payments made
with respect to this Note shall be made to Bank in immediately available funds.

This Note is issued pursuant to, and/or is entitled to the benefits of, the
Forbearance Agreement; the Credit Agreements; and the Loan Documents.
 
 

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It is expressly understood and agreed by the parties hereto that this Note is
not intended to constitute a novation of the obligations and liabilities of
Borrowers under any Credit Agreement or the Original Notes and is not a payment
of any amounts due from any Borrower.

The proceeds of the indebtedness evidenced hereby may be advanced, repaid and
readvanced in partial amounts during the term of this revolving note and prior
to maturity.  Each such advance shall be made to Borrowers upon receipt by Bank
of the application by a Borrower therefor and disbursement instructions, shall
be in such form as Bank shall from time to time prescribe.  Bank shall be
entitled to rely on any oral or telephonic communication requesting an advance
or providing disbursement instructions hereunder, which shall be received by it
in good faith from anyone reasonably believed by Bank to be a Borrower, or the
authorized agent of a Borrower.  Borrowers agree that all advances made by Bank
will be evidenced by entries made by Bank into its electronic data processing
system and/or internal memoranda maintained by Bank.  Borrowers further agree
that the sum or sums shown on the most recent printout from Bank’s electronic
data processing system and/or on such memoranda shall be conclusive and binding
evidence (absent manifest error) of the amount of the Principal Sum and of the
amount of any accrued interest.

INTEREST

(a)            Interest shall be calculated and will accrue on the unpaid
balance of the Principal Sum at the applicable Interest Rates as provided in the
Forbearance Agreement.

(b)            The books and records of Bank, absent manifest error, shall
constitute binding and conclusive evidence of the principal balance of the
outstanding Principal Sum and other amounts outstanding hereunder, and the date
and amount of each payment of principal and interest and applicable Interest
Rates and other information with respect thereto.

MANNER OF PAYMENT; PRINCIPAL BALANCE

(a)            The entire unpaid balance of the Principal Sum (including,
without limitation, all indebtedness in respect to Letters of Credit) shall be
due and payable on the Tranche D Termination Date, and at maturity, whether by
demand, acceleration or otherwise.

(b)            In addition to any other amounts due and payable under this Note,
Borrowers shall deliver to Bank any other amounts due and payable from time to
time under the Forbearance Agreement in respect to the Tranche D Advances and
Tranche D Note.

(c)            Bank and each Borrower hereby agrees and confirms that the
outstanding principal balances as of December 28, 2007, without giving effect to
the forgiveness of debt set forth in Section 1(c) of the Forbearance Agreement,
in respect to each of the Original Notes are as set forth on Schedule 2 to the
Forbearance Agreement.
 
 
 
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SECURITY

This Note is secured by the security interests, assignments, and mortgages
granted or referenced in the Credit Agreements, the Forbearance Agreement, and
the Loan Documents.

DEFAULT

If a Forbearance Default has occurred and is continuing, Borrowers shall be
obligated to pay Bank interest on the outstanding Principal Sum at the
Post-Default Rate (as defined in the Forbearance Agreement).  Additionally, upon
the occurrence and continuation of a Forbearance Default, the unpaid balance of
Principal Sum and all accrued interest may be declared to be due and payable all
in the manner, upon the conditions and with the effect provided in the
Forbearance Agreement.

GENERAL PROVISIONS

Each Borrower is accepting joint and several liability hereunder in
consideration of the financial accommodations to be provided by Bank under this
Note, for the mutual benefit, directly and indirectly, of each Borrower and in
consideration of the undertakings of each Borrower to accept joint and several
liability for all indebtedness, obligations and liabilities evidenced by this
Note.  Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, as a surety and as a co-debtor, joint and several
liability with each other Borrower, with respect to the payment and performance
of all of the indebtedness, obligations and liabilities evidenced by this Note,
it being the intention of the parties hereto that all of the indebtedness,
obligations and liabilities evidenced by this Note shall be the joint and
several obligations of each Borrower without preferences or distinction among
them.  The obligations of each Borrower under this paragraph shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower.  The joint and several liability of each Borrower hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, constitution or place
of formation of any other Borrower or Bank.  The provisions of this paragraph
are made for the benefit of Bank and  its respective successors and assigns, and
may be enforced by it from time to time against any or all Borrowers as often as
occasion therefore may arise and without requirement on the part of Bank (or its
successors or assigns), first to marshal any of its claims or to exercise any of
its rights against any other Borrower or to exhaust any remedies available to it
against any other Borrower hereunder or to elect any other remedy.  The
provisions of this paragraph shall remain in effect until all of the
indebtedness, obligations and liabilities evidenced by this Note shall have been
paid in full or otherwise fully satisfied.  If at any time, any payment, or any
part thereof, made in respect to any indebtedness, obligations or liabilities
evidenced by this Note, is rescinded or must otherwise be restored or returned
by Bank for any reason, the provisions of this paragraph will forthwith be
reinstated in effect, as though such payment had not been made.  The obligations
of each Borrower under this paragraph constitute the absolute and unconditional,
full recourse obligations of each Borrower enforceable against each such
Borrower to the full extent of its
 
 
 
 
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properties and assets, irrespective of the validity, regularity or
enforceability of this Note or any other circumstances whatsoever.  Each
Borrower, and any indorser, surety, or guarantor, hereby jointly and severally
waives notice of acceptance of its joint and several liability, presentment,
notice of dishonor, protest, notice of protest, and diligence in bringing suit
against any party hereto, waives the defenses of impairment of collateral for
the obligation evidenced hereby, impairment of a person against whom Bank has
any right of recourse, and any defenses of any accommodation maker and consent
that without discharging any of them, the time of payment and any other
provision of this Note may be extended or modified an unlimited number of times
before or after maturity without notice to Borrowers.  Each Borrower jointly and
severally agrees that it will pay the obligations evidenced hereby, irrespective
of any action or lack of action on Bank’s part in connection with the
acquisition, perfection, possession, enforcement, disposition, or modification
of all the obligations evidenced hereby or any and all security therefore, and
no omission or delay on Bank’s part in exercising any right against, or taking
any action to collect from or pursue Bank’s remedies against any party hereto
will release, discharge, or modify the duties of Borrowers, or any of them, to
make payments hereunder.  Each Borrower agrees that Bank, without notice to or
further consent from any Borrower, may release or modify any collateral,
security, guaranty or other document now held or hereafter acquired, or
substitute other collateral, security or other guaranties, and no such action
will release, discharge or modify the duties of Borrowers, or any of them,
hereunder.  Each Borrower waives any claim or other right which it might now
have or hereafter acquire against any other person or entity that is primarily
or contingently liable on the obligations that arise from the existence or
performance of each Borrower’s obligations under this Note, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, or any right to participate in any claim or remedy of Bank or
any collateral security which Bank now has or hereafter acquires, whether such
claim, remedy or right arises in equity, under contract or statute, at common
law, or otherwise.

No reference herein to the Credit Agreements, the Forbearance Agreement, or the
Loan Documents shall alter or impair the obligations of each Borrower, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place and at the respective times herein prescribed.  Each Borrower promises
to pay all costs and expenses, including reasonable attorneys’ fees and
disbursements incurred in the collection and enforcement of this Note or any
appeal of a judgment rendered thereon.

Capitalized terms used herein, but not defined herein, shall have the meanings
subscribed to such terms as set forth in the Forbearance Agreement.

The captions used herein are for references only and shall not be deemed a part
of this Note.  If any of the terms or provisions of this Note shall be deemed
unenforceable, the enforceability of the remaining terms and provisions shall
not be affected.  This Note shall be governed by and construed in accordance
with the law of the State of Ohio.

[SIGNATURE PAGE FOLLOWS]
 
 

 

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IN WITNESS WHEREOF, this Note is effective as of the date first appearing above
notwithstanding the date it is actually executed.

BORROWERS:

Each Borrower listed on Schedule 1 attached hereto:

By: /s/ Alexander Gordon Jardin
Name: Alexander Gordon Jardin
Title: Chief Executive Officer,  as an authorized officer of,
                    and on behalf of, each such Borrower listed on Schedule 1
attached hereto

THE OBLIGATIONS OF THE BORROWERS UNDER THIS AMENDED AND RESTATED PROMISSORY NOTE
ARE GUARANTEED BY FRANKLIN CREDIT MANAGEMENT CORPORATION PURSUANT TO A GUARANTY
DATED DECEMBER 28, 2007 IN FAVOR OF THE HUNTINGTON NATIONAL BANK.

 
 

 

 
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