Form 8-K Current Report
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): February 28, 2006
____________
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)
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75-2243266
(I.R.S.
employer identification no.)
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Six
Harrison Street
New
York, New York
(Address
of principal executive offices)
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10013
(Zip
Code)
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Registrant’s
telephone number, including area code: (212) 925-8745
______________________________________________________________________________
Check
the
appropriate box below in 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
February 28, 2006, Tribeca Lending Corporation, a New York corporation and
wholly-owned subsidiary of Franklin Credit Management Corporation, a Delaware
corporation (“Tribeca”), and certain of its subsidiaries entered into a Master
Credit and Security Agreement (the “Credit Agreement”) with its lender Sky Bank
(the “Lender”), pursuant to which certain Tribeca subsidiaries may borrow funds
to finance their acquisition of loans Tribeca previously financed under its
warehouse line of credit with the Lender and consolidate and refinance prior
term loans made by the Lender to such subsidiaries. The facility does not
include a commitment for a specified amount of lendings, which are therefore
subject to the Lender’s discretion, as well as any regulatory limitations to
which the Lender is subject. The facility terminates on February 28, 2008.
Interest on the loans under the facility is payable monthly at a floating rate
equal to the Federal Home Loan Bank of Cincinnati 30 day advance rate (“FHLBC
Rate”) plus the applicable margin as follows for loans which refinance
subsidiary loans which originated prior to July 1, 2005:
If
the FHLBC Rate is
|
The
applicable margin is
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Less
than 2.26%
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350
basis points
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2.26
to 4.50%
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325
basis points
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Greater
than 4.50%
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300
basis points
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For
loans
that are originated after July 1, 2005 or refinance loans originated after
July
1, 2005:
If
the FHLBC Rate is
|
The
applicable margin is
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Less
than 2.26%
|
300
basis points
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2.26
to 4.50%
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275
basis points
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Greater
than 4.50%
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250
basis points
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In
addition, upon each closing of a subsidiary loan, the Lender is entitled to
receive an origination fee equal to one-half of one percent (0.50%) of the
amount of such loan. Upon repayment of subsidiary loans, the Lender is generally
entitled to receive a fee equal to the lesser of (a) fifty (50) percent of
the
remaining payments which are subsequently paid under the remaining pledged
mortgage loans related to a satisfied subsidiary loan or (b) one-half of one
percent (0.50%) of the original principal amount of the relevant subsidiary
loan.
The
unpaid principal balance of each loan will be amortized over a period of twenty
(20) years, but matures three years after the date the loan was made. Tribeca’s
subsidiaries are required to make monthly amortization payments and payments
of
interest on each of their outstanding loans.
The
facility contains affirmative, negative and financial covenants customary for
financings of this type, including, among other things, covenants that require
Tribeca and its subsidiaries, together, to maintain a minimum net worth of
at
least $3,500,000 and rolling four-quarter pretax net income of $750,000. The
facility contains events of default customary for facilities of this
type.
Tribeca’s
and the subsidiary borrowers’ obligations under the facility are secured by a
first priority lien on loans acquired by Tribeca or such subsidiary that are
financed or refinanced by proceeds of loans made to Tribeca or subsidiary
borrowers under the facility. The collateral securing each loan
cross-collateralizes all other loans made under the facility. In addition,
pursuant to a lock-box arrangement, the lender is entitled to receive
substantially all sums payable to Tribeca and any subsidiary borrower in respect
of any of the collateral.
Item
1.02 Termination of a Material Agreement.
On
February 28, 2006, upon execution and delivery of the Credit Agreement, various
outstanding term loan and security agreements between certain of Tribeca’s
subsidiaries and the Lender with respect to approximately $379,000,000 in
indebtedness terminated and the loans outstanding thereunder are now outstanding
under the Credit Agreement described under Item 1.01 above.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
had
duly cause this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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FRANKLIN
CREDIT MANAGEMENT CORPORATION
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Date:
March
6, 2006 |
By: |
/s/
Paul
D.
Colasano |
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Title: Chief
Financial Officer and Executive Vice
President |