Sub Filer Id
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 14, 2007
FRANKLIN
CREDIT MANAGEMENT CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
|
0-17771
|
75-2243266
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
file number)
|
(I.R.S.
employer
identification
no.)
|
101
Hudson Street
Jersey
City, New Jersey
(Address
of principal executive offices)
|
|
07302
(Zip
code)
|
Registrant’s
telephone number, including area code: (201) 604-4402
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):
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):
r
Written
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
r
Soliciting
material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240. 14a-12)
r
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
r
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 14, 2007, Tribeca Lending Corp. (“Tribeca”), a New York corporation and
wholly-owned subsidiary of Franklin Credit Management Corporation, a Delaware
corporation (the “Company”), entered into an Asset Purchase and Sale Agreement
(the “Agreement”) with The New York Mortgage Company, LLC (“NYMC”), a New York
limited liability company and wholly-owned subsidiary of New York Mortgage
Trust, Inc., a Maryland corporation(“NYMT”). On February 14, 2007, the Company
issued a press release announcing its entry into the Agreement, a copy of which
is attached hereto as Exhibit 99.1.
Pursuant
to the Agreement, Tribeca will offer employment to the personnel of NYMC’s
wholesale mortgage loan origination business (the “Business”), including Richard
Payne and Joseph Gorton, the President and Director of Operations, respectively,
of the Business. Accordingly, the acquisition will significantly increase
Tribeca’s resources and cost base.
Pursuant
to the Agreement, Tribeca will also assume NYMC’s agreements with approximately
250 mortgage brokers to the extent they relate to originations of mortgages
after effectiveness of the closing, assume NYMC’s lease for the space in
Bridgewater, New Jersey used in the Business (the “Lease”), acquire the
furniture, fixtures and equipment used in the Business, and assume certain
mortgage applications previously put in process by NYMC (the
“Pipeline”).
Tribeca
will pay NYMC approximately $485,000 at closing, representing the net book
value
of the furniture fixtures and equipment purchased. Tribeca will also pay NYMC
50
basis points of the principal amount of each Pipeline mortgage closed during
the
first ninety days after closing of the acquisition.
Additionally,
a payment will be made by one party to the other reflecting the changes from
the
date of the applicable rate-lock to the closing date of the acquisition in
the
cost to hedge any rate-locked fixed rate mortgage applications in the Pipeline.
In the event the cost of such hedges has risen, the payment will be made by
Seller to Buyer. If they have declined, the payment will be made by Buyer to
Seller.
Tribeca’s
indemnification obligations under the Agreement are guaranteed by the Company,
and NYMC’s indemnification obligations under the Agreement are guaranteed by
NYMT. The Agreement contains representations, warranties, covenants and
conditions that are usual and customary for this type of transaction. The
acquisition is expected to close on or about February 22, 2007 (the “Closing”).
The
Lease
relates to approximately 14,070 rentable square feet of office space leased
from
First States Investors 5200 LLC (the “Landlord”) at 1125 Route 22 West,
Bridgewater, New Jersey (the “Property”). The space has been leased for use by
the Business since June 2005. The initial term of the lease expires on January
31, 2011, subject to a five (5) year tenant renewal option which must be
exercised prior to August 4, 2010. Under the Lease, the Landlord retained the
right to relocate the tenant to comparable space in another unidentified
building owned by Landlord in the event that another tenant demands such
relocation in connection with such other tenant's enforcement of the exclusive
use provisions of such other tenant's lease. If there is no other available
space owned by Landlord within a five (5) mile radius of the Property, tenant
and Landlord each may terminate the Lease.
The
Lease
provides for base rent of approximately $20,621 per month which increases in
increments to a base rent of approximately $21,996 per month in the last year
of
the Lease term. The base rent for the renewal term is 95% of Landlord's then
current market rental rate. In addition to the base rent, tenant is responsible
for paying Landlord on account of each calendar year during the lease
term,
14.7147%
of the difference between (x) the Operating Expenses (as hereinafter defined)
for such calendar year minus (y) the Operating Expenses for calendar year 2005.
The term “Operating Expenses” is defined in the Lease to include all of
Landlord's expenses and real estate taxes incurred in operating and maintaining
the Property. The Company will guarantee Tribeca’s obligations under the Lease
and NYMC will be released from any further obligation under the
lease.
Item
9.01 Financial
Statements and Exhibits.
(d)
Exhibits
Exhibit
No.
|
Description
|
99.1
|
Press
Release, dated February 15, 2007.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
FRANKLIN
CREDIT
MANAGEMENT CORPORATION
By:
/s/ Paul D.
Colasono
Name:
Paul
D.
Colasono
Title:
Chief
Financial Officer and
Executive
Vice President
Date: February
15, 2007