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 12, 2004
FRANKLIN CREDIT MANAGEMENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
75-2243266
(I.R.S. employer identification no.)
0-17771
Commission file number)
Six Harrison Street
New York, New York
(Address of principal executive offices)
10013
(Zip code)
Registrant's telephone number, including area code: (212) 925-8745
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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))
CURRENT REPORT
TABLE OF CONTENTS
Page
Item 1.01 Entry into a Material Definitive Agreement.....................3
Item 5.02. Departure of Directors or Principal Officers;
Election of Directors; Appointment of Principal
Officers........................................................4
Item 9.01 Exhibits........................................................4
Signature ................................................................5
Item 1.01 Entry into a Material Definitive Agreement.
Please see Item 5.02(c) below for a description of the material terms of a
binding term sheet entered into by the Company and Jeffrey R. Johnson (the "Term
Sheet") who was elected to the Board of Directors and as the Company's new
President and Chief Executive Officer on October 12, 2004.
Item 5.02. Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers
(c) At a board meeting on October 12, 2004, Jeffrey R.Johnson, age 54,
was appointed by the Board of Directors of the Company to the positions of
President, Chief Executive Officer and Director of the Company. On October 20,
2004, the Company will issue a press release, a copy of which is attached
hereto as Exhibit 99.1, announcing Mr. Johnson's appointment.
Mr. Johnson has over twenty years experience in the mortgage and
financial services industry. From 2003 until his engagement by the Company, Mr
. Johnson pursued private equity investments in the mortgage and financial
services industry. From 2000 until 2002, Mr. Johnson served as President and
Chief Executive Officer of GMAC Bank, a wholly-owned subsidiary of the General
Motors Corporation, which provides banking services to the various affiliates
and customers of GM. From 1997 until 2000, he served as President and Chief
Executive Officer of Equifax Secure, a wholly-owned subsidiary of Equifax Inc.,
which provided advanced technology solutions that allow consumers and companies
to securely conduct financial transactions and exchange information over the
Internet. From 1989 until 1997, he served as President and Chief Executive
Officer of The Prudential Bank & Trust Company, a wholly-owned subsidiary of
The Prudential Insurance Company, where he created a remote consumer banking
business with over 1.5 million customer relationships. The bank offered an
array of retail and commercial products including credit cards, home equity
loans, consumer deposits and trust services. Mr. Johnson also held managerial
and executive positions with Citibank, NationsBank, The Clorox Company and
Colgate Palmolive.
Pursuant to the Term Sheet, the Company shall employ Mr. Johnson for a
period of 5 years, commencing October 4, 2004. Mr.Johnson shall receive an
annual base salary of not less than $325,000 and is eligible to receive a bonus
that is equal to 2.5% of after tax profits of the Company in excess of $500,000,
provided that certain corporate and personal performance goals are met. For
fiscal 2004, Mr. Johnson will receive a bonus pro-rated for the number of months
worked that year.
Pursuant to the Term Sheet, Mr. Johnson will be reimbursed by the
Company for certain expenses associated with his relocating, and be entitled to
certain payments in the event of his termination by the Company without cause,
or in connection with a change of control, each of which will be addressed in
greater detail in Mr. Johnson's final employment agreement, which is currently
being negotiated. Until such final agreement is negotiated, the Term Sheet
shall be a binding agreement.
Pursuant to the Term Sheet, Mr. Johnson is entitled to a restricted
stock grant of 100,000 shares of Company common stock of which 10,000 shall
vest on January 1, 2005, 5,000 shall vest on the first day after each fiscal
quarter from April 1, 2005 until January 1, 2007 and 6,250 shares shall vest on
the first day after each fiscal quarter from April 1, 2007 until January 1,
2009, so long as Mr. Johnson remains in the employ of the Company. Mr. Johnson
shall make an 83(b) election with respect to the restricted shares and the
Company shall reimburse him on a grossed up basis for any taxes due from having
made such election.
Pursuant to the Term Sheet, Mr. Johnson agreed to purchase 20,000 shares
of Company stock directly from the Company at a purchase price per share equal
to the weighted average closing price of the Company's stock during the month
of September 2004 and will be granted certain registration rights with respect
to such shares.
Also, pursuant to the Term Sheet, the Company agreed that Mr. Johnson
would be elected to the Company's Board of Directors.
There are no family relationships between Mr. Johnson and any director
or officer of the Company.
(d) On October 12, 2004, Mr. Johnson was elected by the Company's
Board of Directors to fill a vacancy on the board, in
accordance with the provisions set forth in the Term Sheet.
Item 9.01. Exhibits.
(c)
Exhibit No. Description
99.1 Press release, dated October 20, 2004, entitled "Jeff Johnson
Joins Franklin Credit Management Team as Chief Executive
Officer"
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Franklin
Credit Management Corporation has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: October 20th, 2004
FRANKLIN CREDIT MANAGEMENT
CORPORATION
By: /s/ Thomas J Axon
Name: Thomas J Axon
Title:Chairman
Exhibit 99.1
For Immediate Release
Contact: Alan Joseph, CFO
Franklin Credit Management Corp.
(212) 925-8745 ext. 169
ajoseph@franklincredit.com
JEFF JOHNSON JOINS FRANKLIN CREDIT MANAGEMENT TEAM AS CHIEF EXECUTIVE OFFICER
NEW YORK, New York (October 20, 2004) - Franklin Credit Management Corp. (OTC
BB: FCSC), a specialty financial services company that acquires, manages and
sells sub-prime residential mortgage assets, today announced that Jeffrey R.
Johnson has joined the Company's management team as President and Chief
Executive Officer. Mr. Johnson has also been elected to the Company's Board of
Directors.
Mr. Johnson brings to Franklin a wealth of executive experience within the
residential mortgage and financial service industries. He served as the founding
President and CEO of GMAC Bank, a wholly-owned subsidiary of the General Motors
Corporation. This multi-billion dollar bank provides captive banking services to
various GM affiliates, especially their residential mortgage operation.
From 1997 to 2000, Mr. Johnson served as President and CEO of Equifax Secure, a
wholly-owned subsidiary of Equifax, a global provider of credit, financial,
public record, demographic and marketing information. Equifax Secure provides
advanced technology solutions that allow consumers and companies to securely
conduct financial transactions and exchange information over the Internet.
From 1989 to 1997, Mr. Johnson was the President and CEO of the Prudential Bank
and Trust Company, a wholly-owned subsidiary of The Prudential Insurance
Company, where he created a $4 billion remote consumer banking business with
over 1.5 million customer relationships. The bank offered an array of retail and
commercial products including credit cards, home equity loans, consumer deposits
and trust services.
Prior to joining Prudential, Mr. Johnson held executive positions in marketing
and finance with Nations Bank, Citicorp, the Clorox Company and Colgate
Palmolive.
"We are extremely pleased to welcome Jeff Johnson as our new Chief Executive
Officer," stated Thomas J. Axon, Chairman of Franklin Credit Management Corp.
"His extensive management experience in finance, marketing, and strategic
planning should prove invaluable as our Company pursues a more aggressive growth
strategy in coming years."
About Franklin Credit Management Corp.
Franklin Credit Management Corporation ("FCMC", and together with its
wholly-owned subsidiaries, the "Company") is a specialty consumer finance and
asset management company primarily engaged in the acquisition, origination,
servicing and resolution of performing, sub-performing and non-performing
residential mortgage loans and residential real estate. The Company acquires
these mortgages from a variety of mortgage bankers, banks, and other specialty
finance companies. These loans are generally purchased in pools at discounts
from their aggregate contractual balances, from sellers in the financial
services industry. Real estate is acquired in foreclosure or otherwise and is
also generally acquired at a discount relative to the appraised value of the
asset. The Company conducts its business from its executive and operational
headquarters in New York City and through its website www.franklincredit.com.
Its common stock trades on the OTC Bulletin Board under the symbol "FCSC".
Statements contained herein that are not historical fact may be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
that are subject to a variety of risks and uncertainties. There are a number of
important factors that could cause actual results to differ materially from
those projected or suggested in forward-looking statements made by the Company.
These factors include, but are not limited to: (i) unanticipated changes in the
U.S. economy, including changes in business conditions such as interest rates,
and changes in the level of growth in the finance and housing markets; (ii) the
status of relations between the Company and its sole Senior Debt Lender and the
Senior Debt Lender's willingness to extend additional credit to the Company;
(iii) the availability for purchases of additional loans; (iv) the status of
relations between the Company and its sources for loan purchases; (v)
unanticipated difficulties in collections under loans in the Company's
portfolio; and (vi)other risks detailed from time to time in the Company's SEC
reports. Additional factors that would cause actual results to differ materially
from those projected or suggested or suggested in any forward-looking statements
are contained in the Company's filings with the Securities and Exchange
Commission, including, but not limited to, those factors discussed under the
caption "Real Estate Risk" in the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, which the Company urges investors to consider.
The Company undertakes no obligation to publicly release the revisions to such
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrences of unanticipated events,
except as other wise required by securities and other applicable laws. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation to
release publicly the results on any events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
For further information, please contact:
Alan Joseph, CFO of Franklin Credit Management Corp. at 212-925-8745 (Ext. 169)