UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 13, 2004
Franklin Credit Management Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation)
0-17771
(Commission File Number)
75-2243266
(I.R.S. Employer Identification No.)
6 Harrison Street, New York, New York
(Address of Principal Executive Offices)
10013
(Zip Code)
Registrant's telephone number, including area code: (212) 925-8745
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. Entry into a Material Definitive Agreement.
On October 13, 2004, Franklin Credit Management Corporation ("Franklin")
entered into a Master Credit and Security Agreement (the "Agreement") with Sky
Bank, an Ohio banking corporation ("Bank") and each subsidiary of Franklin which
is or from time to time may become a party thereto (each, a "Company Subsidiary"
collectively with Franklin, the "Borrowers"). The Agreement amends and restates
into a single agreement the Borrowers' previous loan agreements with the Bank,
under which an aggregate principal balance of approximately $747,000,000 was
outstanding immediately prior to the execution of the Agreement. In addition,
approximately $67,000,000 of new loans were made concurrently with the execution
of the Agreement.
The Bank has the right to participate out its loans (or portions thereof)
to the Borrowers without the consent of the Borrowers; and the Bank has
participated a portion of the Borrowers' outstanding indebtedness to other
financial institutions. The Agreement provides for additional loans to be
made, subject to the Bank's consent, until October 13, 2006.
The unpaid principal balance of each loan is amortized over ten years, but
matures three years after it was incurred. A substantial majority of the loans
under the Agreement bear interest at a floating rate of interest, adjusted
monthly, equal to the Federal Home Loan Bank of Cincinnati 30 day advance rate
(the "Index"), plus the applicable margin in accordance with the following
matrix:
Index Bank Margin
<201 350
201 - 475 325
Greater than 475 300
The Borrowers' obligations under the Agreement are secured by a first
priority lien on the mortgage loans ("Mortgage Loans")financed by proceeds from
the Agreement. The Mortgage Loans securing each Borrower's obligations under the
Agreement also secure each other Borrower's obligations under the Agreement. The
Agreement contains customary affirmative and negative covenants and conditions
regarding the Borrowers' finances and operations and customary events of
default.
Each loan is also subject to an origination fee of 1% or such other fees as
is or was agreed upon by the parties, as well as a 0.50% back-end participation
payment.
The Agreement also clarifies how payments are allocated among the Bank and
any other participants, and provides that payments made on the Mortgage Loans
will be applied first to pay servicing and other fees and expenses required to
be paid on the Mortgage Loans, then towards principal, interest and other
amounts fees due on the loans in the manner set forth in the Agreement. Any
remaining amounts will be applied in the manner the Bank may determine.
ITEM 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
See Item 1.01 of this Current Report on Form 8-K, which is incorporated
herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: October 21, 2004
FRANKLIN CREDIT MANAGEMENT CORPORATION
By: /s/ Jeffrey R Johnson
Name: Jeffrey R Johnson
Title: Chief Executive Officer