Document:

kl01002_ex10-4.htm

    
      

    

     

    Exhibit
10.4

    
 

    THE
      HUNTINGTON NATIONAL BANK

    Amended
      and Restated Promissory Note

    (C
      Note)

    

    

    

    
      	
              $125,000,000

            	 	
              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
      (C
      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 Note is the amended and
      restated promissory note intended to evidence the indebtedness in respect to
      the
      Tranche C Advance;

    

    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 One Hundred Twenty-Five Million and 00/100 Dollars ($125,000,000.00)
      (the
“Principal
      Sum”), 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.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    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.

    

    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)           
      Beginning on the initial Payment Date and continuing on each Payment Date
      thereafter through and including the Tranche C Termination Date (as such terms
      are defined in the Forbearance Agreement) Borrower shall pay interest and the
      Principal Sum in the amounts, at the times and in the manner set forth in the
      Forbearance Agreement.

    

    (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 C Advances and Tranche
      C
      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.

    

    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.

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    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 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,

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    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]

     

     

     

    

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    

    

    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
      1attached
      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.

    

     

     

     

    
 

     

    5kl01002_ex10-5.htm

    
      

    

    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.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    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.

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    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

     

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    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]

     

     

    
 

    

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    

    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.

    

     

     

    
 

    

     

    5

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