Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
FRANKLIN CREDIT HOLDING CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
FRANKLIN CREDIT HOLDING CORPORATION
101 Hudson Street
Jersey City, New Jersey 07302
April 29, 2011
To Our Stockholders:
You are cordially invited to attend the 2011 Annual Meeting of Stockholders of Franklin Credit
Holding Corporation (the Company), which will be held at the corporate offices of the Company,
located at 101 Hudson Street,
25th
floor, Jersey City, New Jersey on Tuesday, June 21,
2011, at 2:00 P.M., Eastern Daylight Time.
The Notice of Annual Meeting and Proxy Statement covering the formal business to be conducted
at the Annual Meeting follow this letter and are accompanied by the Companys Annual Report for the
fiscal year ended December 31, 2010.
We welcome you to attend the Annual Meeting in person. Whether or not you plan to attend,
please complete, sign, date and return the enclosed proxy promptly in the accompanying reply
envelope to assure that your shares are represented at the meeting.
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Sincerely yours, |
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/s/ Thomas J. Axon
THOMAS J. AXON
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Chairman and President |
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FRANKLIN CREDIT HOLDING CORPORATION
101 Hudson Street
Jersey City, New Jersey 07302
(201) 604-1800
NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS
June 21, 2011
Notice is hereby given that the Annual Meeting of Stockholders of Franklin Credit Holding
Corporation (the Company) will be held at the corporate offices of the Company, located at 101
Hudson Street 25th floor, Jersey City, New Jersey, at 2:00 P.M., Eastern Daylight Time, on
Tuesday, June 21, 2011 for the following purposes:
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to elect two directors to Class III of the Companys Board of
Directors; |
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to ratify the appointment of Marcum LLP as the Companys
independent registered public accounting firm for the fiscal year ending
December 31, 2011; and |
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to transact such other business as may be properly brought
before the meeting and any adjournment or postponement thereof. |
The Board of Directors unanimously recommends that you vote FOR the election of the nominees
as Class III Directors and FOR the ratification of the appointment of Marcum LLP as the Companys
independent registered public accounting firm for the fiscal year ending December 31, 2011.
Stockholders of record at the close of business on April 22, 2011 are entitled to notice of,
and to vote at, the Annual Meeting and any adjournment or postponement thereof. To obtain
directions to attend the Annual Meeting and vote in person, please telephone the Company at (201)
604-1800.
Whether or not you plan to attend the Annual Meeting in person, please complete, sign, date
and return the enclosed proxy in the reply envelope provided. Stockholders attending the Annual
Meeting may vote in person even if they have returned a proxy. By promptly returning your proxy,
you will greatly assist us in preparing for the Annual Meeting.
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By Order of the Board of Directors, |
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/s/ Thomas J. Axon
THOMAS J. AXON
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Chairman |
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Jersey City, New Jersey
April 29, 2011
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Stockholders to be Held on June 21, 2011.
The Proxy Statement and 2010 Annual Report on Form 10-K
are available through the Franklin Credit Holding Corporation Investor Relations link on our website at
www.franklincredit.com
FRANKLIN CREDIT HOLDING CORPORATION
101 Hudson Street
Jersey City, New Jersey 07302
(201) 604-1800
PROXY STATEMENT FOR
2011 ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 21, 2011
General Information
This Proxy Statement and the enclosed form of proxy are being furnished, commencing on or
about April 29, 2011, in connection with the solicitation of proxies by the Board of Directors of
Franklin Credit Holding Corporation, a Delaware corporation (the Company), for use at the Annual
Meeting of Stockholders (Stockholders) of the Company (the Annual Meeting). The Annual Meeting
will be held at the corporate offices of the Company, located at 101 Hudson Street, 25th floor,
Jersey City, New Jersey, at 2:00 P.M., Eastern Daylight Time, on
Tuesday, June 21, 2011, and at
any adjournment or postponement thereof, for the purposes set forth in the foregoing Notice of 2011
Annual Meeting of Stockholders.
The annual report of the Company, containing financial statements of the Company as of
December 31, 2010, and for the year then ended (the Annual Report), has been delivered to you or
is included with this proxy statement.
A list of the Stockholders entitled to vote at the Annual Meeting will be available for
examination by Stockholders during ordinary business hours for a period of ten days prior to the
Annual Meeting at the Companys offices on the 25th floor of 101 Hudson Street, Jersey
City, New Jersey. A list of the Stockholders will also be available for examination at the Annual
Meeting.
If you are unable to attend the Annual Meeting, you may vote by proxy on any matter to come
before that meeting. The enclosed proxy is being solicited by the Board of Directors. Any proxy
given pursuant to such solicitation and received in time for the Annual Meeting will be voted as
specified in such proxy. If no instructions are given, proxies will be voted (i) FOR the election
as Directors of the nominees named below under the caption Election of Directors to Class III of
the Board of Directors; (ii) FOR the ratification of the appointment of Marcum LLP (Marcum) as
independent registered public accounting firm for the Companys fiscal year ending December 31,
2011, and (iii) in the discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Annual Meeting. Attendance in person at the Annual Meeting
will not of itself revoke a proxy; however, any Stockholder who does attend the Annual Meeting may
revoke a proxy orally and vote in person. Proxies may be revoked at any time before they are voted
by timely submitting a properly executed proxy with a later date or by sending a written notice of
revocation to the Secretary of the Company at the Companys corporate offices.
This Proxy Statement and the accompanying form of proxy are being mailed to Stockholders of
the Company on or about April 29, 2011.
Following the original mailing of proxy solicitation material, executive and other employees
of the Company and professional proxy solicitors may solicit proxies by mail, telephone, telegraph
and personal interview. Arrangements may also be made with brokerage houses and other custodians,
nominees and fiduciaries that are record holders of the Companys common stock, par value $.01 per
share (the Common Stock), to forward proxy solicitation material to the beneficial owners of such
stock, and the Company may reimburse such record holders for their reasonable expenses incurred in
such forwarding. The cost of soliciting proxies in the enclosed form will be borne by the Company.
The Board of Directors unanimously recommends that you vote FOR the election of the nominees
named below under the caption Election of Directors to Class III of the Board of Directors and
FOR the ratification of the
appointment of Marcum as the Companys independent registered public accounting firm for the
fiscal year ending December 31, 2011.
Voting of Shares
The holders of one-half of the outstanding shares entitled to vote, present in person or
represented by proxy, will constitute a quorum for the transaction of business. Shares represented
by proxies that are marked abstain will be counted as shares present for purposes of determining
the presence of a quorum on all matters. Brokers holding shares for beneficial owners in street
name must vote those shares according to specific instructions they receive from the owners of
such shares. If instructions are not received, brokers may vote the shares, in their discretion,
depending on the type of proposals involved. Broker non-votes result when brokers are precluded
from exercising their discretion on certain types of proposals. Brokers have discretionary
authority to vote under the rules governing brokers to vote without instructions from the
beneficial owner on certain routine items such as the ratification of the appointment of the
independent registered public accounting firm (Proposal 2) and, accordingly, your shares may be
voted by your broker on Proposal 2. Brokers do not have discretionary authority to vote on
non-routine matters such as the election of directors (Proposal 1). Shares that are voted by
brokers on some but not all of the matters will be treated as shares present for purposes of
determining the presence of a quorum on all matters, but will not be treated as shares entitled to
vote at the Annual Meeting on those matters as to which authority to vote is withheld by the
broker.
The election of each nominee for Director (Proposal 1) requires a plurality of votes cast.
Accordingly, abstentions and Broker non-votes will not affect the outcome of the election; and
votes that are withheld will be excluded entirely from the vote and will have no effect. The
affirmative vote of the holders of a majority of the shares present in person or represented by
proxy at the meeting and entitled to vote is required for the appointment of the independent
registered public accounting firm (Proposal 2). On this matter the abstentions will have the same
effect as a negative vote. Proxies solicited by the Board of Directors will be voted FOR the
election of the nominees named below under the caption Election of Directors to Class III of the
Board of Directors and FOR the ratification of the appointment of Marcum as independent registered
public accounting firm for the Companys fiscal year ending December 31, 2011, unless Stockholders
specify otherwise. The Company will appoint an inspector to act at the Annual Meeting who will:
(1) ascertain the number of shares outstanding and the voting powers of each; (2) determine the
shares represented at the Annual Meeting and the validity of the proxies and ballots; (3) count all
votes and ballots; (4) determine and retain for a reasonable period of time a record of the
disposition of any challenges made to any determinations by such inspector; and, (5) certify
his/her determination of the number of shares represented at the Annual Meeting and his/her count
of all votes and ballots.
Only stockholders of record at the close of business on April 22, 2011 are entitled to notice
of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. As of the
close of business on April 22, 2011, there were 8,028,795 shares of Common Stock outstanding. Each
share of Common Stock entitles the record holder thereof to one vote on all matters properly
brought before the Annual Meeting and any adjournment or postponement thereof, with no cumulative
voting.
-2-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 22, 2011, with respect to beneficial
ownership of Common Stock and the percentages of beneficial ownership by:
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each person, group or entity known to the Company to beneficially own more than
5% of the Companys outstanding Common Stock; |
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each of the Companys directors and named executive officers; and |
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all of the Companys directors and executive officers as a group. |
The amounts and percentages of Common Stock beneficially owned are reported on the basis of
regulations of the Securities and Exchange Commission (the SEC) governing the determination of
beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a
beneficial owner of a security if that person has or shares voting power, which includes the
power to vote or to direct the voting of that security, or investment power, which includes the
power to dispose of or to direct the disposition of that security. A person is also deemed to be a
beneficial owner of any security as to which that person has a right to acquire beneficial
ownership presently or within 60 days. Under these rules, more than one person may be deemed to be
a beneficial owner to the same securities, and a person may be deemed to be the beneficial owner of
the same securities as to which that person has no economic interest. Including those shares in
the table below does not, however, constitute an admission that the named stockholder is a direct
or indirect beneficial owner of those shares.
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Amount and Nature |
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Name and Address of Beneficial Owner (1) |
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of Class |
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Thomas J. Axon |
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3,628,941 |
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45.2 |
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Michael Bertash |
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21,000 |
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Frank B. Evans, Jr. |
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877,425 |
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10.9 |
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Steven W. Lefkowitz |
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284,650 |
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3.5 |
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Allan R. Lyons |
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97,500 |
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1.2 |
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Paul D. Colasono |
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50,750 |
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Kevin Gildea |
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26,250 |
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Jimmy Yan |
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17,000 |
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All Directors and Executive Officers as a group (8 persons) |
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5,003,516 |
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61.0 |
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Indicates beneficial ownership of less than one (1%) percent. |
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Unless otherwise indicated the address of each beneficial owner identified is c/o
Franklin Credit Holding Corporation, 101 Hudson Street, Jersey City, New Jersey 07302. |
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Includes 21,000 shares issuable upon exercise of options exercisable within sixty days. |
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Includes 34,000 shares issuable upon exercise of options exercisable within sixty days.
Includes 20,000 shares, the aggregate of 5,000 shares beneficially owned by each of four
children for which Mr. Evans is the trustee. |
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Includes 25,000 shares issuable upon exercise of options exercisable within sixty days.
Includes 47,500 shares beneficially owned by Mr. Lefkowitzs wife. |
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Includes 34,000 shares issuable upon exercise of options exercisable within sixty days. |
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Includes 33,750 shares issuable upon exercise of options exercisable within sixty days. |
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Includes 26,250 shares issuable upon exercise of options exercisable within sixty days. |
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Includes 174,000 shares issuable upon exercise of options exercisable within sixty
days. |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act) requires
the Companys Directors and Officers, and persons who own more than ten percent of a class of the
Companys equity securities registered pursuant to Section 12 of the Exchange Act to file with the
SEC initial reports of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, Directors and persons holding greater than ten percent
of the outstanding shares of a class of Section 12-registered securities (Reporting Persons) are
also required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that
they file.
Based solely upon a review of the copies of such Section 16(a) reports furnished to the
Company during 2010 from such Reporting Persons, the Company believes that all Section 16(a) filing
requirements applicable to such Reporting Persons were complied with, except that Mr. Lefkowitz
belatedly filed a report on January 11, 2011 in connection with transactions involving his sales of
certain shares of common stock on December 29 and 30, 2010.
PROPOSALS
The Board of Directors unanimously recommends that you vote FOR the election of the nominees
named below under the caption Election of Directors to Class III of the Board of Directors and
FOR the ratification of the appointment of Marcum LLP as the Companys independent registered
public accounting firm for the fiscal year ending December 31, 2011.
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PROPOSAL 1 ELECTION OF DIRECTORS
Nominees for Election
The Board of Directors is divided into three classes, with one class being elected each year
and members of each class holding office for a three-year term, except to the extent that shorter
terms may be required to effect an appropriate balance among the classes in the event of an
increase in the number of Directors or to the extent any class of preferred stock issued in the
future entitles the holders thereof to designate a Director or Directors with a longer or shorter
term. The Board of Directors is comprised of nine Directors, although there are currently only
five directors serving. It is proposed to elect two directors to Class III of the Board of
Directors, each for a term of three years. Each of the nominees named below is currently a member
of the Board of Directors and has consented to serve if elected. The Board of Directors will seek
to find suitable candidates to fill the remaining four vacancies when it deems appropriate and in
the best interests of the Company.
The Board of Directors has concluded that each of Michael Bertash, Frank B. Evans, Steven W.
Lefkowitz and Allan R. Lyons qualifies as an independent director as defined in NASDAQ Listing Rule
5605.
Unless instructed otherwise, the enclosed proxy will be voted FOR the election of the nominees
named below. Voting is not cumulative. While management has no reason to believe that the
nominees will not be available as candidates, should such a situation arise, proxies may be voted
for the election of such other persons as a Director as the holders of the proxies may, in their
discretion, determine. Proxies cannot be voted for a greater number of persons than the number of
nominees named.
The Board of Directors unanimously recommends a vote FOR the election of each of Thomas J.
Axon and Allan R. Lyons as a Class III Director to hold office until the 2014 annual meeting of
stockholders and until each of their respective successors is elected.
Director Nominee Information
Nominees for Class III Directors with Terms Expiring in 2014
Thomas J. Axon, 58, was elected a Director of the Company in 1988. Mr. Axon has served as
Chairman of the Companys Board of Directors since December 1994, has served as President of the
Company since its inception in 1990 (except for the period of October 2004 until January 2006), and
served as the Companys Chief Executive Officer from January 2006 until April 2006, and from
December 1994 through June 2000. Mr. Axon also served as a member of the Companys Board of
Directors from the Companys inception in 1990 until the Companys merger with Miramar Resources,
Inc. in December 1994. Mr. Axon served as President of Miramar Resources, Inc. from October 1991
until the merger, and as a member of Miramar Resources, Inc.s Board of Directors from its
inception in 1988. Within the last five years, Mr. Axon has been the controlling interest in, and
acted directly and indirectly as a principal of, various private companies, including RMTS, LLC, an
insurance consulting and underwriting company, and its affiliated companies; Axon Associates, Inc.,
Harrison Street Realty Corporation, and its predecessors, 185 Franklin Street Development
Associates, L.P., Harrison Street Development Associates, L.P. and James Thomas Realty LLC, which
hold various real estate interests and/or manage rental commercial space; AIS Ltd., a reinsurance
company; and Bosco Credit, LLC, Bosco Credit II, LLC and Bosco Credit III, LLC (collectively, the
Bosco Entities), which hold various mortgage related assets serviced by the Companys subsidiary,
Franklin Credit Management Corporation (FCMC). Mr. Axon holds a Bachelor of Arts degree in
Economics from Franklin and Marshall College and attended the New York University Graduate School
of Business. Mr. Axon is a co-founder and principal shareholder of the Company and, through the
Bosco Entities, a principal servicing client of FCMC, has led the Company and served on the
Companys Board of Directors since its inception, and provided partial guarantees and collateral so
that the Company could restructure its lending agreements with its lead lending bank in March of
2009 and retain the servicing of loans sold by the trust of The Huntington National Bank in the
third and fourth quarters of 2010. The Company believes that such experience, together with his
general qualifications, attributes and skills, gives Mr. Axon the experience, qualifications,
attributes and skills to serve as a director of the Company.
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Allan R. Lyons, 70, was elected a Director of the Company in 1995. Mr. Lyons is a Certified
Public Accountant and owns and is the managing member of 21st Century Strategic
Investment Planning, LC, a Florida limited liability company, which acts as the managing partner
for two venture capital partnerships and sixteen limited liability companies. Mr. Lyons also acts
as a general partner for two venture capital partnerships and as money manager for select clients.
From 1993 until his retirement in December 1999, Mr. Lyons was Chief Executive Officer of Piaker &
Lyons, P.C., an accounting firm, of which he was a member from 1965 until December 1999. Mr. Lyons
serves on the board of directors of two private companies, and is on the audit committee of one
those companies. From March 2003 until June 2009, Mr. Lyons served as a director and chair of the
audit committee of Source Interlink Companies, Inc., which at the time was a public company. Prior
to his board service with Source Interlink Companies, Inc., he served on the board of directors and
as audit committee chairman of a number of other public companies. Mr. Lyons holds a Bachelor of
Science degree in Accounting from Harpur College (part of Binghamton University) and a Doctorate of
Humane Letters from Binghamton University, as well as a Masters of Business Administration degree
from Ohio State University. Mr. Lyons has served on the Companys Board of Directors since 1995,
has served on the boards and audit committees of a number of other companies, has 40 years of
experience as a Certified Public Accountant, and is an audit committee financial expert as
defined by Regulation S-K under the Securities Act of 1933, as amended (the Securities Act). The
Company believes that such experience, together with his general qualifications, attributes and
skills, gives Mr. Lyons the experience, qualifications, attributes and skills to serve as a
director of the Company.
The Board of Directors unanimously recommends a vote FOR the election of each of the nominees
listed above.
Class I Directors with Terms Expiring in 2012
None.
Class II Directors with Terms Expiring in 2013
Michael Bertash, 58, was elected a Director of the Company in 1998. Mr. Bertash served as
Chief Executive Officer of New York Capital Advisers, LLC, an investment management firm, from
August 2004 until July 2008, and is currently employed at Tocqueville Asset Management. From
February 1997 until July 2004, Mr. Bertash served as a Senior Vice President with J. & W. Seligman
&. Co., an investment management firm. Mr. Bertash was an Associate Director of the asset
management division of Bear, Stearns & Co., Inc., a worldwide investment bank and brokerage firm,
from October 1991 until January 1997. Mr. Bertash holds a Bachelor of Science degree in Operations
Research from Syracuse University and a Master of Business Administration degree from New York
University. Mr. Bertash has served on the Companys Board of Directors since 1998 and is a
seasoned financial advisor, with extensive experience in asset and investment management. The
Company believes that such experience, together with his general qualifications, attributes and
skills, gives Mr. Bertash the experience, qualifications, attributes and skills to serve as a
director of the Company.
Frank B. Evans, Jr., 59, was elected a Director of the Company in 1994. Mr. Evans co-founded
the Company and served as the Companys Vice President, Treasurer, Secretary and Chief Financial
Officer from December 1994 until November 1998. Mr. Evans also served as the Companys Secretary,
Treasurer, a Vice President and a member of the Companys Board of Directors from its inception in
1990 until the Companys merger with Miramar Resources, Inc. in December 1994. Mr. Evans has
served as Chief Executive Officer of Core Engineered Solutions, Inc., a Herndon, Virginia
design/build firm that specializes in fuel and chemical storage systems, since its inception in
1990. Mr. Evans is a Certified Public Accountant and holds a Bachelor of Science degree from the
University of Maryland and a Masters in Business Administration degree from the University of
Southern California. Mr. Evans is a co-founder and beneficial owner of more than ten percent of
the common stock of the Company, was previously a member of the executive management team of the
Company, has served on the Companys Board of Directors since 1990, and is a competent and seasoned
chief executive. The Company believes that such experience, together with his general
qualifications, attributes and skills, gives Mr. Evans the experience, qualifications, attributes
and skills to serve as a director of the Company.
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Steven W. Lefkowitz, 55, was elected a Director of the Company in 1996. Mr. Lefkowitz has
served as the founder and President of Wade Capital Corporation, a privately held investment firm,
since 1990. From 1988 to 1990, Mr. Lefkowitz served as a Vice President of Corporate Finance for
Drexel Burnham Lambert, Incorporated, where he had been employed since 1985. Mr. Lefkowitz serves
on the board of directors of several private companies. Additionally, from time to time he has
served as a consultant to RMTS, LLC on various financial and other matters. Since November 2007,
he has served on the board of directors of Chatsworth Data Solutions, Inc, which was a public
company until January 2009. Mr. Lefkowitz holds a Bachelor of Arts degree in History from
Dartmouth College and a Masters in Business Administration degree from Columbia University. Mr.
Lefkowitz has served on the Companys Board of Directors since 1996 and is a seasoned financial
professional that has led and served on the boards of a number of other companies. The Company
believes that such experience, together with his general qualifications, attributes and skills,
gives Mr. Lefkowitz the experience, qualifications, attributes and skills to serve as a director of
the Company.
No familial relationships exist between any Directors and Executive Officers.
Meetings of the Board of Directors and its Committees
During 2010, there were four meetings of the Board of Directors of the Company, six meetings
of the Audit Committee, one meeting of the Compensation Committee and no meetings of the Nominating
and Corporate Governance Committee (it was the independent members of the Board of Directors that
had recommended a slate of nominees to stand for election as directors at the Annual Meeting). No
Director attended fewer than 75% of the aggregate number of meetings of the Board of Directors and
of any committee on which he served.
Director Attendance at Annual Meetings
Each director of the Company is expected to be present at the annual meetings of stockholders,
absent exigent circumstances that prevent his or her attendance. Where a director is unable to
attend an annual meeting in person but is able to do so by electronic conferencing, the Company
will arrange for the directors participation by means of which the director can hear, and be
heard, by those present at the meeting. All five Directors attended last years annual meeting of
stockholders, with Mr. Evans participating telephonically.
Committees of the Board of Directors
The Board of Directors currently has, and appoints the members of, standing Audit,
Compensation and Nominating and Corporate Governance Committees. Each of these committees has a
written charter approved by the Board of Directors in January 2005. A copy of each committees
charter is posted on the Companys website through the Franklin Credit Holding Corporation Investor
Relations link at www.franklincredit.com.
Audit Committee. The Audit Committee currently consists of, and during 2010 consisted of,
directors Allan R. Lyons (Chairman of the Committee), Michael Bertash and Steven W. Lefkowitz. The
Audit Committee held six meetings during the year. The Board of Directors has determined that each
director who served on the Audit Committee during 2010 is independent as such term is defined by
Rule 5605(a)(2) of the NASDAQ Listing Rules, and that Mr. Lyons is an audit committee financial
expert as defined by Regulation S-K under the Securities Act. The purpose of the Audit Committee
is to assist the Board of Directors in the oversight of the integrity of the financial statements
of the Company, the Companys compliance with legal and regulatory matters, the independent
registered public accounting firms qualifications and independence, and the performance of the
Companys independent registered public accounting firm. The primary responsibilities of the Audit
Committee include the following:
|
|
|
Overseeing the Companys accounting and financial reporting process and audits
of the Companys financial statements on behalf of the Companys Board of
Directors. |
|
|
|
Selecting the independent registered public accounting firm to conduct the
annual audit of the Companys financial statements. |
-7-
|
|
|
Evaluating the qualifications, independence and performance of the Companys
independent auditors. |
|
|
|
Reviewing the proposed scope of the annual audit of the Companys financial
statements. |
|
|
|
Reviewing the Companys accounting and financial controls with the independent
registered public accounting firm and the Companys finanical accounting staff. |
|
|
|
Overseeing the Companys internal controls and risk management procedures. |
|
|
|
Preparing the report required by the rules of the SEC to be included in the
Companys annual proxy statement. |
Compensation Committee. The Compensation Committee currently consists of, and during 2010
consisted of, directors Steven W. Lefkowitz (Chairman of the Committee), Michael Bertash and Frank
B. Evans. The Compensation Committee held one meeting during the year. The Board of Directors has
determined that each director who served on the Compensation Committee during 2010 is independent
as such term is defined by Rule 5605(a)(2) of the NASDAQ Listing Rules. The responsibilities of
the Compensation Committee include the following:
|
|
|
Reviewing and approving the compensation and benefits for the Companys
executive officers. |
|
|
|
Administering the Companys stock plans. |
|
|
|
Making recommendations to the Companys Board of Directors regarding these
matters. |
The Compensation Committee establishes our general compensation policies and reviews and
approves compensation for the executive officers. The Compensation Committee determines the
compensation payable to each of the named executive officers as well as the compensation of the
members of the Board of Directors. The Compensation Committee may delegate authority to one or
more members of the Compensation Committee when appropriate, unless such delegated authority is
required by a law, regulation, or listing standard to be exercised by the Compensation Committee as
a whole. The Compensation Committee may also request that any Directors, Officers, or employees of
the Company whose advice and counsel is sought by the Compensation Committee, attend any meeting to
provide such information as the Compensation Committee requests. The Compensation Committee may
also retain consultants or other advisors that the Compensation Committee determines to employ to
assist in the performance of its duties. The Compensation Committee determines the compensation
paid to each of our named executive officers, which is based upon the recommendations received from
our President, Mr. Axon.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance
Committee currently consists of, and during 2010 consisted of, Allan R. Lyons and Michael Bertash.
Since February 2006, there have been only two directors on the Nominating and Corporate Governance
Committee, which is less than the three directors required by the Committees charter. The
Committee did not hold any meetings in 2010. Accordingly, the independent members of the Board of
Directors recommended a slate of nominees to stand for election as directors at the Annual Meeting.
The Board of Directors has determined that each director who served on the Nominating and
Corporate Governance Committee during 2010 is independent as such term is defined by Rule
5605(a)(2) of the NASDAQ Listing Rules. The responsibilities of the Nominating and Corporate
Governance Committee include the following:
|
|
|
Searching for and recommending to the Board of Directors potential nominees for
Director positions. |
|
|
|
Making recommendations to the Board of Directors regarding the size and
composition of the Board of Directors and its committees. |
|
|
|
Monitoring the Board of Directors effectiveness. |
|
|
|
Developing and implementing the Companys corporate governance procedures and
policies. |
-8-
In identifying and evaluating candidates for the Board of Directors, the Nominating and
Corporate Governance Committee begins by determining whether the incumbent directors whose terms
expire at the annual meeting of stockholders desire and are qualified to continue their service on
the Board of Directors. The Company is of the view that the continuing service of qualified
incumbents promotes stability and continuity in the boardroom, giving the Company the benefit of
the familiarity and insight into the Companys affairs that its directors have accumulated during
their tenure, while contributing to the Board of Directors ability to work as a collective body.
Accordingly, the Nominating and Corporate Governance Committee will, absent special circumstances,
propose for re-election qualified incumbent directors who continue to satisfy the Nominating and
Corporate Governance Committees criteria for membership on the Board of Directors, whom the
Nominating and Corporate Governance Committee believes will continue to make important
contributions to the Board of Directors and who consent to stand for re-election and, if
re-elected, to continue their service on the Board of Directors. If there are positions on the
Board of Directors for which the Nominating and Corporate Governance Committee will not be
re-nominating an incumbent director, or if there is a vacancy on the Board of Directors, the
Nominating and Corporate Governance Committee will consider potential nominees recommended by
members of the Board of Directors, the management of the Company and stockholders. The Nominating
and Corporate Governance Committee may also engage a professional search firm to assist in the
identification of qualified candidates, but did not do so in 2010. As to each recommended
candidate that the Nominating and Corporate Governance Committee believes merits serious
consideration, the Committee will collect as much information, including without limitation,
soliciting views from other directors and the Companys management and having one or more Committee
members interview each such candidate, regarding each candidate as it deems necessary or
appropriate in order to make an informed decision with respect to such candidate. Based on all
available information and relevant considerations, the Nominating and Corporate Governance
Committee will select, for each directorship to be filled, a candidate who, in the view of the
Committee, is most suited for membership on the Board of Directors. In making its selection, the
Nominating and Corporate Governance Committee will evaluate candidates proposed by stockholders
under criteria similar to the evaluation of other candidates, except that the Committee may
consider, as one of the factors in its evaluation of stockholder recommended nominees, the size and
duration of the interest of the recommending stockholder or stockholder group in the equity of the
Company. This consideration may also include how long the recommending stockholder intends to
continue holding its equity interest in the Company.
The Nominating and Corporate Governance Committee has adopted a policy with regard to the
minimum qualifications that must be met by a Committee-recommended nominee for a position on the
Companys Board of Directors, which policy is described in this paragraph. The Nominating and
Corporate Governance Committee considers the overall qualifications of prospective nominees for
director, including the particular experience, expertise and outlook that they would bring to the
Board of Directors. While diversity (however defined) may contribute to this overall evaluation,
it is not considered by the Nominating and Corporate Governance Committee as a separate or
independent factor in identifying nominees for director. The Nominating and Corporate Governance
Committee generally requires that all candidates for the Board of Directors be committed to
representing the Company and all of its stockholders, demonstrate the judgment and knowledge
necessary to assess Company strategy and management, manifest willingness to meaningfully
participate in the governance of the Company, possess the ability to fulfill the legal and
fiduciary responsibilities of a director, undertake to make the appropriate time commitment for
service on the Board of Directors, and maintain standing and reputation in the business,
professional and social communities in which such candidate operates. The Nominating and Corporate
Governance Committee requires that candidates not have any interests that would, in the view of the
Committee, materially impair his or her ability to exercise independent judgment or otherwise
discharge the fiduciary duties owed as a director to the Company and its stockholders. The Company
also requires that at least three of the directors satisfy the financial literacy requirements
required for service on the Audit Committee under the the Audit Committee charter, and that at
least one of the directors qualifies as an audit committee financial expert in accordance with the
rules of the SEC and the Audit Committee charter.
-9-
It is the policy of the Company that the Nominating and Corporate Governance Committee will
consider director candidates recommended by stockholders entitled to vote generally in the election
of directors. The Nominating and Corporate Governance Committee will give consideration to such
stockholder recommendations for positions on the Board of Directors where the Committee has not
determined to re-nominate a qualified incumbent director. While the Nominating and Corporate
Governance Committee has not established a minimum number of
shares that a stockholder must own in order to present a nominating recommendation for
consideration, or a minimum length of time during which the stockholder must own its shares, the
Committee may take into account the size and duration of a recommending stockholders ownership
interest in the Company. The Nominating and Corporate Governance Committee may also consider
whether the stockholder making the nominating recommendation intends to maintain an ownership
interest in the Company of substantially the same size as its interest at the time of making the
recommendation. The Nominating and Corporate Governance Committee may refuse to consider
stockholder-recommended candidates who do not satisfy the minimum qualifications prescribed by the
Committee for board candidates.
The Nominating and Corporate Governance Committee has adopted procedures to be followed by
stockholders in submitting recommendations of candidates for director. The procedures are posted
on the Companys website through the Franklin Credit Holding Corporation Investor Relations link at
www.franklincredit.com, and are described in this paragraph. A stockholder (or group of
stockholders) wishing to submit a recommendation of a candidate for consideration as a potential
director nominee by the Nominating and Corporate Governance Committee should submit such
recommendation in accordance with the timing requirements set forth in connection with the
submission of a stockholders notice of an intent to make a nomination under Article I, Section 11
of the Companys By-laws. All stockholder nominating recommendations should be in writing,
addressed to the Chair of the Nominating and Corporate Governance Committee, 101 Hudson Street,
25th floor, Jersey City, NJ 07302. Submissions should be made by mail, courier or
personal delivery. A nominating recommendation should be accompanied by the information that is
required to be provided in connection with the submission of a stockholders notice of an intent to
make a nomination under Article I, Section 11 of the Companys By-laws, a copy of which is posted
on the Companys website through the Franklin Credit Holding Corporation Investor Relations link at
www.franklincredit.com.
Stockholder Communications with the Board of Directors
Stockholders may send communications to the Board of Directors, any committee of the Board of
Directors or the non-management directors of the Board of Directors. The process for sending such
communications can be found on the Companys website through the Franklin Credit Holding
Corporation Investor Relations link at www.franklincredit.com. All stockholder communications are
sent directly to directors, except for communications that contain offensive, scurrilous or abusive
content, communications that advocate the Company engaging in illegal activities, communications
that have no rational relevance to the business or operations of the Company, and communications
regarding individual grievances or other interests that are personal to the party submitting the
communication and could not reasonably be construed to be of concern to security holders or other
constituencies of the Company generally.
Code of Ethics
The Company has adopted a code of ethics and business conduct that applies to its officers,
directors and employees, including without limitations, the Companys Chief Executive Officer,
President and Chief Financial Officer. The Code of Ethics and Business Conduct is available on the
Companys website through the Franklin Credit Holding Corporation Investor Relations link at
www.franklincredit.com.
Board of Directors Leadership Structure and Role in Risk Oversight
Mr. Axon serves as both the principal executive officer and Chairman of the Board of
Directors. The Company does not have a lead independent director. Except for Mr. Axon, the other
directors are independent, as defined by Rule 5605(a)(2) of the NASDAQ Listing Rules. As of the
date of this filing, the Company has determined that the leadership structure of its Board of
Directors has permitted the Board of Directors to fulfill its duties effectively and efficiently
and is appropriate given the size and scope of the Company and its financial condition; the active
involvement of its independent directors; the Companys relationship with its lead lending bank;
and Mr. Axons status as principal shareholder and co-founder of the Company and, through the Bosco
Entities, a principal servicing client of FCMC.
-10-
The extent of the Board of Directors role in risk oversight of the Company is to oversee
credit, liquidity and operational risks that are reasonably likely to have a material adverse
effect on the Company. The function
primarily resides in the Audit Committee of the Board of Directors, which holds meetings as
needed, but generally no less than on a quarterly basis, with executive management and the
Companys independent auditors, separately or together, to review the financials of and material
risks, including control risks, facing the Company. In addition, the members of the Audit
Committee periodically meet in executive session without management and regularly communicate with
the two directors not on the Committee, Messrs. Axon and Evans, on the business and management of
the Company. The Board of Directors role in risk oversight has not had an effect on the Boards
leadership structure.
Audit Committee Report
The following Report of the Audit Committee does not constitute soliciting material and is not
filed or deemed to be incorporated by reference in any previous or future documents filed by the
Company with the Securities and Exchange Commission under the Securities Act or the Exchange Act,
except to the extent the Company specifically incorporates the Report by reference in any such
document.
The members of the Audit Committee have been appointed by the Board of Directors. During the
2010 fiscal year, the Audit Committee consisted solely of independent directors, as such term is
defined by Rule 5605(a)(2) of the NASDAQ Listing Rules. The Audit Committee operates under a
written charter that was adopted by the Board of Directors in January 2005 in order to assure
continued compliance by the Company with SEC and NASDAQ rules and regulations enacted in response
to requirements of the Sarbanes-Oxley Act of 2002.
The Audit Committee assists the Board of Directors in monitoring the integrity of the
Companys financial statements, the independent registered public accounting firms qualifications
and independence, the performance of the independent registered public accounting firm, and the
compliance by the Company with legal and regulatory requirements. Management is responsible for
the Companys internal controls and the financial reporting process. The independent registered
public accounting firm is responsible for performing an independent audit of the Companys
financial statements in accordance with the Standards of The Public Company Accounting Oversight
Board (United States) and for issuing a report on those financial statements. The Audit Committee
monitors and oversees these processes.
In this context, the Audit Committee has reviewed and discussed the audited financial
statements for the year ended December 31, 2010 with management and with Marcum LLP, the Companys
independent registered public accounting firm. The Audit Committee has discussed with Marcum LLP
the matters required to be discussed by Statement on Auditing Standards No. 61 (Communications with
Audit Committees), which includes, among other items, matters related to the conduct of the audit
of the Companys annual financial statements.
The Audit Committee has also received the written disclosures and the letter from Marcum LLP
required by applicable requirements of the Public Company Accounting Oversight Board for
independent auditor communications with the Audit Committee concerning independence, and has
discussed with Marcum LLP the issue of their independence from the Company and management. In
addition, the Audit Committee has considered whether the provision of non-audit services by the
independent registered public accounting firm in 2010 is compatible with maintaining the auditors
independence and has concluded that it is.
Based on its review of the audited financial statements and the various discussions noted
above, the Audit Committee recommended to the Board of Directors that the audited financial
statements be included in the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2010. The Audit Committee has also appointed, subject to stockholder ratification,
Marcum LLP as the Companys independent registered public accounting firm for the year ending
December 31, 2011.
The members of the Audit Committee are Allan R. Lyons, Michael Bertash and Steven W.
Lefkowitz, none of whom is or, during the fiscal year 2010, was, an employee of the Company.
|
|
|
|
|
Respectfully submitted by the Audit Committee, |
|
|
Allan R. Lyons, Chairman |
|
|
Michael Bertash |
|
|
Steven W. Lefkowitz |
-11-
MANAGEMENT
Executive Officers
The following table sets forth certain information with respect to the executive officers of
the Company:
|
|
|
|
|
Name |
|
Age |
|
Position |
Thomas J. Axon |
|
58 |
|
President and Chairman of the Board of Directors |
Paul D. Colasono |
|
64 |
|
Chief Financial Officer and Executive Vice President |
Kevin Gildea |
|
41 |
|
Chief Legal Officer, Secretary and Executive Vice President |
Jimmy Yan |
|
35 |
|
Managing Director, Loan Servicing and Recovery and Executive Vice President |
Paul D. Colasono has served as the Companys Chief Financial Officer and Executive Vice
President since April 2005. Mr. Colasono has more than 35 years of experience in banking and
mortgage banking in a broad range of senior management positions. From 2003 until his engagement
by the Company, Mr. Colasono served as an independent business consultant providing strategic and
financial consulting services. From September 1997 until September 2001, Mr. Colasono served as
Vice President and Controller of GE Capital Mortgage Services Corporation. From February 1981
until September 1997, Mr. Colasono was employed by The Dime Savings Bank of New York in a variety
of executive and senior management positions. From April 1994 until September 1997, Mr. Colasono
held the titles of Senior Vice President, Chief Administrative Officer and Chief Financial Officer
of Dime Banks mortgage banking business. From November 1990 until April 1994, Mr. Colasono served
as the President and Chief Executive Officer of The Dime Savings Bank of New Jersey, a subsidiary
of Dime Bank. Mr. Colasono began his career with The Chase Manhattan Bank. Mr. Colasono holds a
Bachelor of Science degree in Accounting and a Masters of Business Administration from St. Johns
University.
Kevin P. Gildea has served as the Companys Chief Legal Officer/General Counsel since March
2006, Secretary since August 2006, and Executive Vice President since October 2009. From March
2005 to March 2006, he was Associate General Counsel. Mr. Gildea has been continuously in the
employ of the Company since March 2005, and was previously in the employ of the Company from
February 2000 to November 2001. From November 1995 to February 2000 and from December 2001 to
February 2005, Mr. Gildea was an Administrative Law Judge with the New York State Department of
Labor, Unemployment Insurance Appeal Board. Mr. Gildea, a practicing attorney since 1994, is
admitted to the bars of the State of New York and Commonwealth of Massachusetts, is licensed as an
in-house attorney in the State of New Jersey, is a member of the Administrative Law Committee of
the New York City Bar Association, and holds a Real Estate Brokers License in New York (as a
Corporate Broker) and Massachusetts (as an Attorney Broker). Mr. Gildea holds a Bachelor of Arts
degree in Political Science from Boston College, attended Boston College Law School as a visiting
student and holds a Juris Doctor from Albany Law School of Union University.
Jimmy Yan has served as the Companys Managing Director of its loan servicing and asset
recovery operations and Executive Vice President since January 2010. From June 2005 to December
2009, Mr. Yan was employed by Deutsche Bank Securities Inc. as Vice President, during which time he
was responsible for managing a dozen mortgage servicers. Prior to his position with Deutsche Bank
Securities, Mr. Yan, from August 2000 to June 2005, managed the Companys default operations. Mr.
Yan holds a Bachelor of Science degree in finance from the State University of New York at Buffalo.
See Director Nominee Information, above, for a biography of Thomas J. Axon.
-12-
EXECUTIVE COMPENSATION
Our Named Executive Officers
The following table sets forth all individuals who served as our principal executive officer
at any time during 2010, our principal financial officer, and our two most highly compensated
executive officers other than our principal executive officer who were serving as executive
officers at the end of 2010:
|
|
|
Name |
|
Title |
Thomas J. Axon |
|
President and Chairman of the Board of Directors |
Paul D. Colasono |
|
Chief Financial Officer and Executive Vice President |
Kevin Gildea |
|
Chief Legal Officer, Secretary and Executive Vice President |
Jimmy Yan |
|
Managing Director, Loan Servicing and Recovery and Executive Vice President |
Summary Compensation Table
The following table provides information regarding the compensation earned by our named
executive officers during the fiscal years ended December 31, 2010 and December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
All Other |
|
|
|
|
Name and Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus (2) |
|
|
Awards (3) |
|
|
Compensation (4) |
|
|
Total |
|
Thomas J. Axon, President |
|
2010 |
|
|
$ |
120,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,608 |
|
|
$ |
125,608 |
|
and Chairman of the Board of Directors |
|
2009 |
|
|
|
127,500 |
|
|
|
7,500 |
|
|
|
|
|
|
|
5,913 |
|
|
|
140,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Colasono, Chief Financial Officer |
|
2010 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
23,975 |
|
|
|
223,975 |
|
and Executive Vice President |
|
2009 |
|
|
|
212,500 |
|
|
|
12,500 |
|
|
|
|
|
|
|
25,436 |
|
|
|
250,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Gildea, Chief Legal Officer, |
|
2010 |
|
|
|
212,500 |
|
|
|
|
|
|
|
|
|
|
|
2,643 |
|
|
|
215,143 |
|
Secretary and Executive Vice President |
|
2009 |
|
|
|
187,000 |
|
|
|
11,000 |
|
|
|
|
|
|
|
2,858 |
|
|
|
200,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jimmy Yan, Managing Director, Loan Servicing |
|
2010 |
|
|
|
231,891 |
|
|
|
|
|
|
|
|
|
|
|
3,579 |
|
|
|
235,470 |
|
and Recovery and Executive Vice President(1) |
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Yan became Managing Director, Loan Servicing and Recovery and Executive Vice
President on January 11, 2010. |
|
(2) |
|
The amount of such elective bonuses was equivalent to the salary lost from April
through June 2009 by virtue of salary reductions implemented on April 1, 2009. |
|
(3) |
|
Mr. Yan was granted 17,000 shares of stock of the Company, of which 8,500 vested on
January 1, 2010, the date of grant, and 8,500 shares vested on January 11, 2011. |
|
(4) |
|
Includes matching 401(k) employer contributions in 2010 and 2009 (FCMC maintains a
401(k) retirement plan available to all of its employees over the age of 21, with matching
employer contributions equal to 1/2 of the first 3% of the participants annual contribution
under the plan), respectively, of: (i) $2,025 and $2,250 to Mr. Axon; (ii) $2,125 and
$3,450 to Mr. Colasono; and (iii) $1,980 and $2,149 to Mr. Gildea. The amount also
includes automobile parking expenses (for Messrs. Axon, Colasono and Yan, $3,180 in 2010
and for Messrs. Axon and Colasono, $3,180 in 2009) and life and long-term disability
insurance premiums paid by FCMC (for each of the executives). Mr. Colasono also received
$18,000 as a housing allowance in each of 2010 and 2009. |
Narrative Disclosure to Summary Compensation Table
Employment Agreements with Named Executive Officers
The Companys subsidiary, Franklin Credit Management Corporation (FCMC), has employment
agreements with the following named executive officers: Paul D. Colasono and Jimmy Yan. Each of
these employment agreements are described in detail below and the severance arrangements with
respect thereto (including the definitions contained in each relevant employment agreement of
cause, good reason and Change in Control) are discussed in further detail under the heading
Potential Payments Upon Termination or Change in Control.
-13-
Effective April 1, 2009, Messrs. Axon, Colasono, and Gildea agreed to a 20% reduction in their
base annual salary. Effective January 1, 2010, Mr. Gildeas salary was increased to the level that
had been applicable before the April 1, 2009 reduction. Mr. Gildea agreed to a 13.64% reduction in
his base annual salary, effective October 1, 2010. Mr. Yan agreed to a 20% reduction in his base
annual salary, effective October 1, 2010.
Thomas J. Axon Chairman and President
Thomas J. Axon serves as Chairman and President of the Company, without a written employment
agreement. Mr. Axon has served as Chairman since 1994 and (except for the period of October 2004
until January 2006) as President since 1990. In that capacity, Mr. Axon has been the principal
executive officer of the Company since October of 2009. From January 2008 through March 31, 2009,
Mr. Axon received a base annual salary of $150,000. Effective April 1, 2009, Mr. Axon agreed to a
20% reduction in his base annual salary to $120,000 (which is his current salary rate). In
addition to salary, Mr. Axon is entitled to a monthly parking pass and reimbursement of business
expenses in accordance with the Companys usual reimbursement policies and procedures.
Paul D. Colasono Chief Financial Officer and Executive Vice President
Paul D. Colasono serves as Chief Financial Officer and Executive Vice President of FCMC under
an employment agreement with an effective date of March 28, 2005. Mr. Colasono was appointed to
the position of Chief Financial Officer, effective April 11, 2005. Mr. Colasonos employment term
runs from the effective date of the employment agreement until its termination by FCMC or Mr.
Colasono.
Under the employment agreement, Mr. Colasono was entitled to a base annual salary of $250,000,
subject to adjustment by the Board of Directors, until March 31, 2009, and to participate in an
executive bonus pool of 10% of the after tax consolidated net profits of FCMC in excess of
$500,000, subject to adjustment of the size of the bonus pool in the reasonable discretion of the
Board of Directors. In addition, Mr. Colasono will be entitled to receive an annual bonus based
partially on the net income after taxes of FCMC. Additionally, Mr. Colasono receives a housing
allowance of $1,500 per month. Effective April 1, 2009, Mr. Colasono agreed to a 20% reduction in
his base annual salary to $200,000.
In connection with his entry into the employment agreement, FCMC granted Mr. Colasono 17,000
shares of restricted stock of the Company, of which 2,000 shares vested upon grant, 5,000 shares
vested on March 28, 2006, 5,000 shares vested on March 28, 2007, and 5,000 shares vested on March
28, 2008. Mr. Colasono agreed to make an 83(b) election with respect to the restricted shares and
FCMC agreed to reimburse Mr. Colasono for any federal, state or local taxes due from having made
such election at his incremental tax rate.
Under the employment agreement, Mr. Colasono is subject to covenants not to compete and not to
solicit customers or employees of FCMC for certain periods specified therein.
Pursuant to the employment agreement, FCMC may terminate Mr. Colasonos employment with or
without cause (as defined in the employment agreement) and Mr. Colasono may terminate it without or
for good reason (as defined in the employment agreement) following a Change in Control (as defined
in the employment agreement). Further detail on our severance obligations to Mr. Colasono,
including the definitions contained in his current employment agreement of cause, good reason
and Change in Control is set forth below under the heading Potential Payments Upon
Termination or Change in Control.
In connection with the adoption of a holding company form of organizational structure in
December 2008, FCMC entered into an agreement with Paul D. Colasono acknowledging that the holding
company restructuring would not be deemed a Change in Control under his employment agreement.
-14-
Kevin Gildea Chief Legal Officer, Secretary and Executive Vice President
Kevin Gildea serves as Chief Legal Officer, Secretary and Executive Vice President of the
Company, without a written employment agreement. Mr. Gildea has served as Chief Legal
Officer/General Counsel since March 2006, Secretary since August 2006, and Executive Vice President
since October 2009. From January 2008 through March 31, 2009, Mr. Gildea received a base annual
salary of $220,000. Effective April 1, 2009, Mr. Gildea agreed to a 20% reduction in his base
annual salary to $176,000. Effective January 1, 2010, his base annual salary was increased to
$220,000 and effective, October 1, 2010, reduced to $190,000. In addition to salary, Mr. Gildea is
entitled to reimbursement of business expenses in accordance with the Companys usual reimbursement
policies and procedures, including reimbursement of bar registration fees and the cost of
continuing legal education courses.
Jimmy Yan Managing Director, Loan Servicing and Recovery and Executive Vice President
Jimmy Yan serves as Managing Director of the loan servicing and recovery departments of FCMC
and Executive Vice President under an employment agreement with an effective date of January 11,
2010. Mr. Yans employment term runs for two years from the effective date of the employment
agreement, or until its earlier termination by FCMC or Mr. Yan.
Under the terms of the employment agreement, Mr. Yan was entitled to a base annual salary of
$250,000 (modified on October 1, 2010, as discussed below) subject to adjustment by the Board of
Directors and payable on a semimonthly basis or otherwise in accordance with FCMCs standard
payroll practices, a grant of 17,000 shares of restricted common stock of the Company, of which
8,500 shares vested on January 11, 2010 and 8,500 shares vested on January 11, 2011, and
performance or incentive bonuses that FCMC may award from time to time pursuant to a bonus plan for
senior management employees (which bonuses are subject to a clawback if paid based on performance
objectives achieved through the dishonesty, fraud or other misconduct of Mr. Yan; materially
inaccurate financial statements; or any other materially inaccurate performance metric criteria).
Effective October 1, 2010, Mr. Yan agreed to a 20% reduction in his base salary to $200,000.
Mr. Yan is subject to covenants not to compete and not to solicit customers or employees of
FCMC, the Company, and any affiliates and subsidiaries for certain periods specified therein.
FCMC may terminate Mr. Yans employment with or without cause (as defined in the employment
agreement), in the event of the death of Mr. Yan, or if Mr. Yan is unable to perform his material
duties because of illness or disability for a continuous period of 120 days. Mr. Yan may terminate
the employment agreement for good reason following a Change in Control (as defined in the
employment agreement) or without good reason. Further detail on our severance obligations to Mr.
Yan, including the definitions contained in his current employment agreement of cause, good
reason and Change in Control is set forth below under the heading Potential Payments Upon
Termination or Change in Control.
Potential Payments Upon Termination or Change in Control
As discussed above, we currently have employment agreements with certain of our named
executive officers that contain various provisions relating to severance and change in control
payments. Pursuant to such employment agreements, the following circumstances would trigger
payments or the provision of other benefits:
|
|
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Termination by FCMC without cause or by the executive officer without
good reason; |
|
|
|
Termination by FCMC for cause; |
|
|
|
Termination by the executive officer for good reason following a
Change in Control); and |
|
|
|
Termination due to the executive officers death, illness or disability. |
-15-
The following summaries describe and quantify these potential payments and/or benefits. The
definitions contained in such employment agreements of the terms cause, good reason, and
Change in Control can be found under the subheading Defined Terms.
Severance/Change in Control Arrangement for Mr. Colasono
For Cause, Without Good Reason. In the event that Mr. Colasonos employment is terminated by
FCMC for cause or by Mr. Colasono without good reason, Mr. Colasono shall receive nothing other
than (i) a lump sum in respect of all accrued and unused vacation within ten days after termination
of employment in an amount based on Mr. Colasonos current base salary, and (ii) reimbursement for
expenses already incurred pursuant to the employment agreement. In the event that FCMC terminates
Mr. Colasono for cause and it is later determined by a court of competent jurisdiction that such
cause did not exist, Mr. Colasonos termination shall be deemed to be a termination by FCMC without
cause. In such event, Mr. Colasono shall be entitled to receive severance pursuant to the terms of
the employment agreement as if the termination was made by FCMC without cause.
Without Cause, For Good Reason Following a Change in Control, Death/Disability. In the event
that Mr. Colasonos employment is terminated by FCMC without cause (subject to notice to the extent
provided in the employment agreement) or by Mr. Colasono for good reason following a Change in
Control (other than for cause and subject to notice and opportunity to cure to the extent provided
in the employment agreement), Mr. Colasono shall receive the following payments/benefits: (i) a
lump sum in respect of all accrued and unused vacation within ten days after the termination of his
employment in an amount based on Mr. Colasonos current base annual salary, (ii) reimbursement for
expenses already incurred pursuant to the employment agreement; and (iii) within thirty days after
the termination of his employment, a lump sum amount equal to twelve (12) months, or eighteen (18)
months in the event that termination occurs at the time of or following a Change in Control, of his
current base annual salary. The payment under item (iii), above, shall only be made after Mr.
Colasono has incurred a separation from service as defined under Section 409A of the Internal
Revenue Code of 1986, as amended (the Code). Notwithstanding the foregoing, any payment under
item (iii), above, shall be postponed to the date that is six months and one day following Mr.
Colasonos separation from service to the extent that such postponement is necessary to prevent the
imposition of the additional tax under Section 409A(a)(B) of the Code.
In addition, if Mr. Colasono is enrolled in and covered by a medical insurance plan offered by
FCMC on the date of termination of employment, he shall be entitled, at his election, to receive
either (x) continued health benefits for the periods set forth above (twelve months or eighteen
months at the time of or following a Change in Control), or (y) an amount equal to the medical
insurance premiums paid by FCMC on behalf of Mr. Colasono for the periods set forth above.
For purposes of calculating severance payments under the employment agreement, a termination
due to Mr. Colasonos illness, disability or death shall be deemed a termination by FCMC without
cause.
The following table and footnotes describe and quantify the potential payments upon
termination or a Change in Control for Mr. Colasono, assuming that the termination or Change in
Control was effective as of December 31, 2010:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
Executive Benefits and Payments |
|
Termination |
|
|
For Cause or Without |
|
|
|
|
|
|
Following a Change |
|
Upon Termination |
|
Without Cause |
|
|
Good Reason |
|
|
Death/Disability |
|
|
in Control |
|
Severance Pay |
|
$ |
200,000 |
|
|
$ |
|
|
|
$ |
200,000 |
|
|
$ |
300,000 |
|
Vesting of Stock Options
and Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits |
|
|
9,530 |
(1) |
|
|
|
|
|
|
9,530 |
(1) |
|
|
14,295 |
(2) |
|
|
|
(1) |
|
Employee would have had the option of either 12 months continued health benefits or
$9,530, an amount equal to 12 months of medical insurance premiums which would have been
paid by FCMC on behalf of Mr. Colasono. |
|
(2) |
|
Employee would have had the option of either 18 months continued health benefits or
$14,295, an amount equal to 18 months of medical insurance premiums which would have been
paid by FCMC on behalf of Mr. Colasono. |
-16-
Severance/Change in Control Arrangement for Mr. Yan
For Cause, Without Good Reason. In the event that Mr. Yans employment is terminated by FCMC
for cause or by Mr. Yan without good reason, Mr. Yan shall receive nothing other than (i) accrued
but unpaid salary; (ii) a lump sum in respect of all accrued and unused vacation; and (iii)
reimbursement for expenses already incurred pursuant to the employment agreement. In the event
that FCMC terminates Mr. Yan for cause or Mr. Yan terminates for good reason and it is later
determined by a court of competent jurisdiction that such cause or good reason did not exist, Mr.
Yans termination shall be deemed to be a termination by FCMC without cause or by Mr. Yan without
good reason, as applicable.
Without Cause, For Good Reason Following a Change in Control, Death/Disability. In the event
(i) Mr. Yans employment is terminated by FCMC without cause (subject to notice to the extent
provided in the employment agreement), (ii) Mr. Yan terminates his employment for good reason
following a Change of Control (subject to notice and opportunity to cure to the extent provided in
the employment agreement), (iii) Mr. Yans employment terminates as a result of his death, or (iv)
Mr. Yan is terminated as a result of being unable to perform his material duties because of illness
or disability for a continuous period of 120 days, Mr. Yan will be entitled to receive (a) accrued
but unpaid salary at the rate in effect immediately prior to termination; (b) a lump sum in respect
of all accrued and unused vacation at the rate in effect immediately prior to termination; (c)
reimbursement for expenses already incurred pursuant to the employment agreement, and (d) provided
Mr. Yan executes a general release of claims in a form reasonably acceptable to FCMC no later than
ten (10) days prior to the date payment would otherwise be required to be made (i) a lump sum
payment in an amount equal to twelve (12) months of his base salary at the rate in effect
immediately prior to termination and (ii) to the extent applicable, continuation of FCMC group
health insurance coverage under COBRA for a period not to exceed twelve (12) months, with FCMC to
pay the employer and employee portions of such coverage. The payment under item (d), above, shall
only be made after Mr. Yan has incurred a separation from service as defined under Section 409A
of the Internal Revenue Code of 1986, as amended (the Code). Notwithstanding the foregoing, any
payment under item (d), above, shall be postponed to the date that is six months and one day
following Mr. Yans separation from service to the extent that such postponement is necessary to
prevent the imposition of the additional tax under Section 409A(a)(B) of the Code.
The following table and footnotes describe and quantify the potential payments upon
termination or Change in Control for Mr. Yan, assuming that termination or Change in Control was
effective as of December 31, 2010:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination For Good |
|
|
|
|
|
|
|
Termination For |
|
|
|
|
|
|
Reason Following a |
|
Executive Benefits and Payments |
|
Termination |
|
|
Cause or Without |
|
|
|
|
|
|
Change |
|
Upon Termination |
|
Without Cause |
|
|
Good Reason |
|
|
Death/Disability |
|
|
in Control |
|
Severance Pay |
|
$ |
200,000 |
|
|
$ |
|
|
|
$ |
200,000 |
|
|
$ |
200,000 |
|
Vesting of Stock Options
and Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500 shares of restricted common stock upon a Change in Control |
|
Other Benefits |
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
|
* |
|
To the extent applicable, continuation of health benefits for twelve (12) months.
However, Mr. Yan to date has not participated in FCMCs health plan. |
-17-
Defined Terms
The terms cause, good reason and change in control are defined in the employment
agreements for Mr. Colasono and Mr. Yan as follows (with any variations among the employment
agreements noted).
Cause is generally defined to include the following:
(1) executive officer fails or refuses to perform one or more of his material assigned duties;
(2) executive officer fails or refuses to comply with one or more policies;
(3) executive officer breaches any of the material terms of his employment agreement; or
(4) (i) under Mr. Colasonos employment agreement: executive officer commits any criminal,
fraudulent or dishonest act related to his employment (other than an arms length dispute relating
to the erroneous reporting of an immaterial amount as an expense) relating to FCMC or any of its
assets or opportunities; or
(ii) under Mr. Yans employment agreement: executive officer commits any criminal, fraudulent
or dishonest act related to his employment or FCMC (or the Company, or any affiliates or
subsidiaries) or any of its assets or opportunities (other than an arms length dispute relating to
the erroneous reporting of an immaterial amount as an expense) or is convicted of (or enters a plea
of guilty or nolo contendre to) any felony or a misdemeanor involving, in the good faith judgment
of FCMC, fraud, dishonesty or moral turpitude.
Good Reason
Under Mr. Colasonos agreement Good Reason is limited to the following (1) executive officer
is asked to resign, in writing, by the Board of Directors or is terminated by FCMC without cause;
or (2) any material diminution by FCMC of executive officers duties or responsibilities, except in
connection with the termination of executive officers employment for cause, as a result of
permanent disability, or as a result of executive officers death; (3) Mr. Colasono is removed as
CFO, or Executive Vice President of FCMC and such removal results in a material diminution of Mr.
Colasonos authority, duties or responsibilities.
Pursuant to Mr. Yans employment agreement, Good Reason is defined to be limited to the
following: (1) the Board of Directors of FCMC requests in writing that Mr. Yan resign; (2) a
material diminution by FCMC of Mr. Yans duties or responsibilities, except in connection with a
termination by FCMC with or without cause, termination by Mr. Yan without good reason, termination
due to being unable to perform his material duties because of illness or disability for a
continuous period of 120 days, or termination due to Mr. Yans death, (3) or if Mr. Yan is removed
as Managing Director of the servicing and recovery departments and Executive Vice President of
FCMC, and such removal results in a material diminution of Mr. Yans authority, duties or
responsibilities.
Under both the employment agreements of Messrs. Yan and Colasono, the occurrence of any of the
events described in (1) through (3) above shall not constitute Good Reason unless (i) the executive
officer gives FCMC written notice, within ninety (90) days after the executive has knowledge of the
occurrence of any of the events described in (1) through (3) above, that such circumstances
constitute Good Reason, (ii) FCMC thereafter fails to cure such circumstances within thirty (30)
days after receipt of such notice and (iii) the executive officer terminates employment no later
than two (2) years following the occurrence of such circumstance.
Change in Control
Under Mr. Colasonos employment agreement Change in Control is defined to mean the
occurrence of one or more of the following events:
(1) If (i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of FCMC representing 20% or more of the total voting power represented by
FCMCs then outstanding
voting securities who is not already such as of the date of this Agreement, and (ii) Thomas J.
Axon, members of Mr. Axons family, and entities in which Mr. Axon has an interest shall have
beneficial ownership of less than 20% or more of the total voting power represented by FCMCs then
outstanding voting securities;
-18-
(2) The consummation of a tender or exchange offer; one or more contested elections related to
the election of directors of FCMC; a reorganization, merger or consolidation, or the acquisition of
assets of another corporation, or any combination of the foregoing transactions, which results in a
change in the composition of the Board of Directors of FCMC, as a result of which fewer than 50% of
the directors are incumbent directors.
(3) FCMCs shares shall cease to be registered under Section 12(b) or 12(g) under the Exchange
Act; or
(4) A sale or other disposition of all or substantially all of the assets of FCMC.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred if
FCMC files for bankruptcy protection, or if a petition for involuntary relief is filed against
FCMC.
Under Mr. Yans employment agreement Change in Control is generally defined to mean the
occurrence of one or more of the following events:
(1) the Company, together with its affiliates and The Huntington National Bank and its
transferees, shall be the direct or indirect beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of FCMC representing less than 50% of the
total voting power represented by FCMCs then outstanding voting securities;
(2) any person(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes
the beneficial owner (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of FCMC representing 20% or more of the total voting power represented by FCMCs then
outstanding voting securities who is not already such as of the date of the Agreement, other than
The Huntington National Bank and its transferees;
(3) the consummation of a tender or exchange offer, one or more contested elections related to
the election of directors of FCMC, a reorganization, merger or consolidation, or the acquisition of
assets of another corporation, or any combination of the foregoing transactions (each, a Business
Combination) that results in the replacement of a majority of members of the board of directors of
FCMC during any 12month period by directors whose appointment or election is not endorsed by a
majority of the members of the board of directors of FCMC before the date of the appointment or
election; or
(4) a sale or other disposition of all or substantially all of the assets of FCMC, except to
an affiliate or creditor of either (i) the Company or (ii FCMC, or in connection with an internal
reorganization.
The term Change of Control shall not be deemed to have occurred if FCMC, the Company, or any
affiliates or subsidiaries file for bankruptcy protection, or if a petition for involuntary relief
is filed against FCMC, the Company, or any affiliates or subsidiaries.
-19-
Outstanding Equity Awards at December 31, 2010
The following table provides certain summary information concerning unexercised stock options
and equity incentive plan awards for each named executive officer as of December 31, 2010.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Shares or |
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
Units of |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Stock |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
Stock That |
|
|
That Have |
|
|
|
Options |
|
|
Options |
|
|
Exercise |
|
|
Expiration |
|
|
Have Not |
|
|
Not |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
Price (1) |
|
|
Date |
|
|
Vested |
|
|
Vested (2) |
|
Thomas J. Axon, President
and Chairman of the Board
of Directors |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
Paul D. Colasono,
Chief Financial Officer and
Executive Vice
President |
|
|
22,500 |
|
|
|
22,500 |
|
|
|
1.75 |
|
|
|
4/22/2018 |
|
|
|
|
|
|
|
|
|
Kevin Gildea,
Chief Legal Officer, Secretary
and Executive
Vice President |
|
|
17,500 |
|
|
|
17,500 |
|
|
|
1.75 |
|
|
|
4/22/2018 |
|
|
|
|
|
|
|
|
|
Jimmy Yan, Managing
Director, Loan Servicing
and Recovery and
Executive Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500 |
|
|
|
1,190 |
|
|
|
|
(1) |
|
The Option Exercise Price represents the price quoted in the incentive stock option
grant agreements. The aggregate grant date fair value of equity awards granted in fiscal
year 2010 is computed in accordance with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718, Stock Compensation (FASB ASC Topic
718), at $1.00 per share based on the date of grant, April 22, 2008. For a discussion of
the valuation assumptions utilized in calculating the aggregate grant date fair value of
equity awards under FASB ASC Topic 718, see Note 2, Summary of Significant Accounting
Policies, in the notes to our consolidated financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2010. |
|
(2) |
|
Market value is calculated on the basis of $0.14 per share, which is the closing sale
price for our common stock on December 31, 2010. On January 11, 2011, the referenced 8,500
shares vested. |
-20-
Director Compensation
The following table provides certain summary information regarding the compensation of our
directors earned for their services as members of our Board of Directors or any committee thereof
during the fiscal year ended December 31, 2010. Directors who are also employees of the Company do
not receive any additional compensation for their service as directors.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
Fees Earned |
|
|
|
|
|
|
|
|
|
|
Non Equity |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
or Paid |
|
|
Stock |
|
|
Option |
|
|
Incentive Plan |
|
|
Compensation |
|
|
All Other |
|
|
|
|
Name |
|
in Cash |
|
|
Awards |
|
|
Awards (1) |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
Thomas J. Axon |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Michael Bertash |
|
|
26,250 |
|
|
|
|
|
|
|
390 |
(1) |
|
|
|
|
|
|
|
|
|
|
629 |
(2) |
|
|
27,269 |
|
Frank B. Evans, Jr. |
|
|
21,500 |
|
|
|
|
|
|
|
390 |
(1) |
|
|
|
|
|
|
|
|
|
|
1,714 |
(2) |
|
|
23,604 |
|
Steven W. Lefkowitz |
|
|
26,750 |
|
|
|
|
|
|
|
390 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,140 |
|
Allan R. Lyons |
|
|
36,250 |
|
|
|
|
|
|
|
390 |
(1) |
|
|
|
|
|
|
|
|
|
|
3,384 |
(2) |
|
|
40,024 |
|
|
|
|
(1) |
|
The Option Award represents the aggregate grant date fair value of equity awards
granted in fiscal year 2010, computed in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (FASB
ASC Topic 718), at $0.13 per share based on the date of grant, June 16, 2010. For a
discussion of the valuation assumptions utilized in calculating the aggregate grant date
fair value of equity awards under FASB ASC Topic 718, see Note 2, Summary of Significant
Accounting Policies, in the notes to our consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(2) |
|
Reimbursement for expenses relating to travel expenses to attend meetings. |
The table below provides the aggregate number of option awards and stock awards outstanding at
December 31, 2010 held by each of our Directors:
|
|
|
|
|
|
|
|
|
Name |
|
Option Awards |
|
|
Stock Awards |
|
Thomas J. Axon |
|
|
|
|
|
|
|
|
Michael Bertash |
|
|
21,000 |
|
|
|
|
|
Frank B. Evans, Jr. |
|
|
34,000 |
|
|
|
|
|
Steven W. Lefkowitz |
|
|
25,000 |
|
|
|
|
|
Allan R. Lyons |
|
|
34,000 |
|
|
|
|
|
Narrative to Director Compensation Table
Compensation of Directors
During fiscal year 2010, the Companys non-management directors, Messrs. Bertash, Evans,
Lefkowitz and Lyons, were granted options to purchase 3,000 shares of Common Stock pursuant to the
Companys 2006 Stock Incentive Plan, as amended (the 2006 Plan), upon their election or
re-election to the Board of Directors or the anniversary thereof, and received $1,000 for each
Board of Directors or Committee meeting attended in person and $500 for each Board of Directors or
Committee meeting attended telephonically. The options were vested on the date of grant and are
exercisable at an exercise price equal to the fair market value of the underlying shares on the
date of grant as determined by the Board of Directors.
The director compensation program, as approved by the Board of Directors, consists of the
following:
|
|
|
Each non-employee director will receive an annual retainer fee of $20,000 for
serving on the Board of Directors. |
|
|
|
Each non-employee director who serves as Chairman of the Board of Directors or
Chairman of the Audit Committee will receive an additional retainer fee of $10,000 for
such service. |
-21-
|
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Each non-employee director will receive $500 for each meeting of the Compensation
Committee and the Nominating and Corporate Governance Committee attended in person and
$250 for each such meeting attended telephonically. |
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Each non-employee director will receive $1,000 for each meeting of the Board of
Directors and the Audit Committee attended in person and $500 for each such meeting
attended telephonically. |
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Each non-employee director will be reimbursed for reasonable travel expenses
incurred in connection with serving on the Board of Directors. |
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Each non-employee director will be granted an option to purchase 3,000 shares of
Common Stock of the Company pursuant to the Companys Stock Incentive Plan, as amended,
upon such directors election or re-election to the Board of Directors and, for each
year that such director serves during such directors term on the Board of Directors,
upon the annual anniversary of such directors election or re-election to the Board of
Directors. The options will vest on the date of grant and will be exercisable at an
exercise price equal to the fair market value of the underlying shares of Common Stock
on the date of grant. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Related Persons
Restructuring On March 31, 2009, the Company transferred ten percent of its ownership in
common stock of FCMC to its Chairman and President, Thomas J. Axon, as the cost of obtaining
certain guarantees and pledges from Mr. Axon, which were required by The Huntington National Bank
(the Bank) as a condition of the restructuring entered into by the Company and certain of its
wholly-owned direct and indirect subsidiaries on March 31, 2009. On September 22, 2010, in
consideration for Mr. Axons undertaking the obligations required of him under a series of
transactions, the Company and FCMC entered into with the Bank on that date (which resulted in a
release of the pledge of FCMC stock to the Bank, a significant revision to the Companys legacy
credit agreement and, subject to the final approval of the Bank, the consent to proceed with a
restructuring or spin-off of the ownership of FCMC) and various guarantees and concessions provided
by Mr. Axon for the benefit of both FCMC and the Company, the Company transferred to Mr. Axon an
additional 10% of FCMCs outstanding shares of common stock. When combined with FCMC shares
already directly owned by him, Mr. Axon now directly owns 20% of FCMC, while the remaining 80% of
FCMC is owned by the Company and indirectly by its public shareholders (including Mr. Axon as a
principal shareholder of the Companys publicly owned shares).
Bosco-Related Entities The Companys servicing revenues from the below referenced
Bosco-related entities amounted to $2.5 million and $2.0 million for the year ended December 31,
2010 and 2009, respectively:
Bosco I Servicing Agreement On May 28, 2008, FCMC entered into various agreements,
including a servicing agreement, to service on a fee-paying basis for Bosco Credit, LLC (Bosco I)
approximately $245 million in residential home equity line of credit mortgage loans. Bosco I was
organized by FCMC, and 100% of the membership interests in Bosco I are held by the Companys
Chairman and President, Thomas J. Axon, and a related company of which Mr. Axon is the chairman of
the board and three of the Companys directors serve as board members. The loans that are subject
to the servicing agreement were acquired by Bosco I on May 28, 2008. FCMCs servicing agreement
was approved by its Audit Committee. The Bosco I lending agreement expires, if not renewed, May
28, 2011; and, in the event that Bosco Is lending agreement is not extended or renewed, it is
uncertain whether the lenders would permit FCMC to remain the servicer of the mortgage loans.
FCMC began servicing the Bosco I portfolio in June 2008. Included in the Companys
consolidated revenues were servicing fees recognized from servicing the Bosco I portfolio of
$501,000 and $2,014,000 for the twelve months ended December 31, 2010 and 2009, respectively. The
Company did not recognize any administrative fees for the twelve months ended December 31, 2010 and
Bosco I did not pay for any fees for such services provided during the twelve months ended December
31, 2010. For the twelve months ended December 31, 2009, the Company did not recognize any
administrative fees and wrote off as uncollectible the administrative fees that had been recognized
in 2008.
-22-
On February 27, 2009, at the request of the Bosco I lenders, FCMC adopted a revised fee
structure, which was approved by FCMCs Audit Committee. The revised fee structure provided that,
for the next twelve months, FCMCs monthly servicing fee would be paid only after a monthly loan
modification fee of $29,167 was paid to Bosco Is lenders. Further, the revised fee structure
provided that, on each monthly payment date, if the aggregate amount of net collections was less
than $1 million, 25% of FCMCs servicing fee would be paid only after certain other monthly
distributions were made, including, among other things, payments made by Bosco I to repay its
third-party indebtedness.
On October 29, 2009, at the additional request of the Bosco I lenders in an effort to maximize
cash flow to the Bosco I lenders and to avoid payment defaults by Bosco I, the revised fee
structure relating to deferred fees was adjusted through an amendment to the loan servicing
agreement with Bosco I (the Bosco Amendment), which was approved by FCMCs Audit Committee.
Under the terms of the Bosco Amendment, FCMC is entitled to a minimum monthly servicing fee of
$50,000. However, to the extent that the servicing fee otherwise paid for any month would be in
excess of the greater of $50,000 or 10% of the total cash collected on the loans serviced for Bosco
I (such amount being the Monthly Cap), the excess will be deferred, without the accrual of
interest. The cumulative amounts deferred will be paid (i) with the payment of the monthly
servicing fee, to the maximum extent possible, for any month in which the servicing fee is less
than the applicable Monthly Cap, so long as the sum paid does not exceed the Monthly Cap or (ii) to
the extent not previously paid, on the date on which any of the promissory notes (Notes) payable
by Bosco I to the lenders, which were entered into to finance the purchase of and are secured by
the loans serviced by FCMC, are repaid, refinanced, released, accelerated, or the amounts owing
thereunder increased (other than by accrual or capitalization of interest). If the deferred
servicing fees become payable by reason of acceleration of the Notes, the lenders right to payment
under such Notes shall be prior in right to FCMCs rights to such deferred fees.
The Bosco Amendment did not alter FCMCs right to receive a certain percentage of collections
in the event Bosco Is indebtedness to the Lenders has been repaid in full, the Bosco I equity
holders have been repaid in full the equity investment in Bosco I made prior to Bosco I entering
into the loan agreement with the lenders, and the lenders and Bosco Is equity holders have
received a specified rate of return on their debt and equity investments.
The amount and timing of ancillary administrative fees owed to the Company is the subject of a
good faith dispute between FCMC and the Managing Member of Bosco I, Mr. Axon. However, even if the
parties can resolve their differences amicably, there are no funds available to Bosco I for payment
for such services (short of a capital call), since all funds from collections are required by Bosco
Is agreements with its lenders to repay such lenders, aside from specific amounts required for
servicing fees and other specifically excepted costs. On June 30, 2009, the Company wrote off
$90,000 in internal accounting costs associated with services provided by FCMC to Bosco I. On
December 31, 2009, the Company wrote off $372,000 in additional aged receivables, due to
nonpayment, consisting of (i) legal costs incurred by FCMC in 2008 related to the acquisition by
Bosco I of its loan portfolio and entry into a servicing agreement with Bosco I; (ii) expenses for
loan analysis, due diligence and other services performed for Bosco I by FCMC in 2008 related to
the acquisition by Bosco I of the loan portfolio; and (iii) additional internal accounting costs
for services provided to Bosco I by FCMC through June 30, 2009. In addition, FCMC has not accrued
fees for accounting costs for these services since June 1, 2009.
FCMC determined to accept the deferrals and other amendments described above with respect to
its Bosco I relationship in recognition of the performance of the Bosco I loan portfolio, which has
been adversely impacted by general market and economic conditions, in an effort to maintain the
continued and future viability of its servicing relationship with Bosco I, and in the belief that
doing so is in its best long-term economic interests in light of the fact that the Company believes
FCMCs servicing of the Bosco I portfolio is profitable notwithstanding such deferrals and
amendments. FCMCs determination to not currently take legal action with respect to the
receivables it has written off as described above, which receivables have not been settled or
forgiven by FCMC, was made in light of these same considerations.
-23-
At December 31, 2010, the Company charged off as uncollectible $299,000 of accrued and unpaid
servicing fees due from Bosco I that represented the remaining portion of outstanding servicing
fees due and unpaid prior to August 1, 2009, due to current disputes among Bosco I and its lenders
regarding the May 28, 2011 maturity
of the Bosco I loan agreement. As of December 31, 2010, the Company had no outstanding
accrued and unpaid servicing fees due from Bosco I other than the servicing fee due for the current
month of December 31, 2010, which was received in January 2011, and $8,000 in outstanding
reimbursable third-party expenses incurred by FCMC in the servicing and collection of the Bosco I
loans. As of December 31, 2010, no deferred servicing fees per the Bosco I amendments have been
accrued, and all such amounts remain unpaid.
On March 4, 2010, FCMC entered into an agreement with Bosco I to provide ancillary services
not covered by the Bosco I Servicing Agreement, as amended, related to occupancy verification and
the coordination of on-sight visits with borrowers to facilitate the implementation of loss
mitigation program initiatives at fees ranging from $100-$140 per individual assignment. As of
December 31, 2010 there were no third party expenses reimbursable by Bosco I outstanding for the
services referenced above.
The maturity date of Bosco Is loan agreement with its lenders is May 28, 2011, unless the
loan agreement is earlier terminated in accordance with its terms or by operation of law. In the
event that Bosco Is lending agreement is not extended or renewed, it is uncertain whether the
lenders would permit FCMC to remain the servicer of the mortgage loans.
Bosco II Servicing Agreement On September 22, 2010, FCMC entered into a servicing agreement
(the Bosco II Servicing Agreement) with Bosco Credit II, LLC (Bosco II) and a trust to service
and collect loans purchased by Bosco II from Franklin Mortgage Asset Trust 2009-A, an indirect
subsidiary of the Bank (the Banks Trust). Mr. Axon owns 100% of the membership interest in
Bosco II. The Bosco II Servicing Agreement governs the servicing of approximately 20,000 loans.
Pursuant to the Bosco II Servicing Agreement, FCMC services the loans subject to customary terms,
conditions and servicing practices for the mortgage servicing industry. Under the terms of the
Bosco II Servicing Agreement, FCMC is entitled to a servicing fee equal to a percentage of net
amounts collected and per unit monthly service fee for loans less than thirty days contractually
delinquent and a straight contingency fee for loans equal to or more than thirty days contractually
delinquent, and reimbursement of certain third-party fees and expenses incurred by FCMC. The Bosco
II Servicing Agreement may be terminated without cause and penalty upon thirty days prior written
notice.
FCMC also provided the loan analysis and certain other services for Bosco II for the loans
acquired by Bosco II and will perform various administrative and bookkeeping services for Bosco
Credit II at the rate of $1,500 per month (the administrative services agreement is pending
approval of Bosco IIs lender). FCMCs servicing agreement and administrative services agreement
with Bosco II were approved by its Audit Committee.
Included in the Companys consolidated revenues for the twelve months ended December 31, 2010
were servicing fees recognized from servicing the Bosco II portfolio of approximately $2.0 million.
Bosco III Servicing Agreement and Participation Interest in Unrestructured Debt with the Bank
In December of 2010, FCMC entered into a servicing agreement with Bosco Credit III, LLC (Bosco
III) to service and collect charge-off loans purchased by Bosco III from the Banks Trust (the
remaining loans held by the Banks Trust) and purchased from the Bank a 50% participation interest
in each of the commercial loans to the Company covering that portion of the Companys debt with the
Bank (the Unrestructured Debt) in the amount of approximately $39 million (FMCM is the loan
servicer for certain Company entities that are the beneficial owners of the loans securing the
Unrestructured Debt). Mr. Axon owns 50% of the membership interest in Bosco III.
The Bosco III servicing agreement, as amended in January and April 2011, governs the servicing
of approximately 4,800 loans. Pursuant to the Bosco III servicing agreement, the servicing fees
for second lien mortgage loans are predominately based on the percentage of principal and interest
collected, with a contingency rate dependent on the delinquency of the loan, and a per unit monthly
service fee for those loans less than 30 days delinquent or in a bankruptcy status during the 90
day period following a bankruptcy filing. Otherwise, FCMC receives a monthly servicing fee per
loan per month for first lien mortgage loans less than 120 days delinquent or in foreclosure or
bankruptcy with the amount dependent upon loan status at the end of each month, a monthly fee for
real estate owned properties, a contingency fee for first lien mortgage loans equal to or more than
120 days delinquent and not in foreclosure, resolution and disposition fees based on the unpaid
principal balance of first lien mortgage loans collected from borrowers or gross proceeds from the
sales of a properties, as applicable, in addition to various ancillary fees and reimbursement of
certain third-party expenses. However, discussions are underway
between the Bosco III investors and FCMC regarding a possible revision to the servicing
agreement. FCMCs services may be terminated with respect to some or all of the assets without
cause and without penalty on 30 days prior written notice.
-24-
FCMC also provided the loan analysis and certain other services for Bosco III for the loans
acquired by Bosco III. FCMCs servicing agreement with Bosco III was ratified by its Audit
Committee.
Other Significant Related Party Transactions with the Companys Chairman At December 31,
2010, the Company had an outstanding receivable from an affiliate, RMTS, LLC, of $4,300. This
receivable represents various operating expenses that are paid by the Company and then reimbursed
by RMTS.
On September 13, 2010, FCMCs audit committee authorized a 22% commission (minus certain
expenses) to Hudson Servicing Solutions, LLC (Hudson), a procurer of force-placed insurance
products for FCMC, with respect to force-placed hazard insurance coverage maintained on FCMCs
remaining portfolio of mortgage loans and mortgage loans serviced for third parties. The sole
member of Hudson is RMTS, LLC, of which Mr. Axon, the Companys Chairman and President, is the
majority owner.
FCMC entered into a collection services agreement, effective December 23, 2009, pursuant to
which FCMC agreed to serve as collection agent in the customary manner in connection with
approximately 4,000 seriously delinquent and generally unsecured loans, with an unpaid principal
balance of approximately $56 million, which were acquired by two trusts set up by a fund in which
the Companys Chairman and President is a member, and contributed 50% of the purchase price and
agreed to pay certain fund expenses. Under the collection services agreement, FCMC is entitled to
collection fees consisting of 35% of the gross amount collected. The agreement also provides for
reimbursement of third-party fees and expenses incurred by FCMC. The collection fees earned by
FCMC under this collection services agreement during the twelve months ended December 31, 2010
amounted to approximately $116,000. In December 2010, FCMC entered into an agreement with the fund
to provide certain administrative and bookkeeping services for a fee of $1,500 per month.
On February 1, 2010, FCMC entered into a collection services agreement, pursuant to which FCMC
agreed to serve as collection agent in the customary manner in connection with approximately 1,500
seriously delinquent and generally unsecured loans, with an unpaid principal balance of
approximately $85 million, which were acquired through a trust set up by a fund in which the
Companys Chairman and President is a member, and contributed 25% of the purchase price. Under the
collection services agreement, FCMC is entitled to collection fees consisting of 33% of the amount
collected, net of third-party expenses. The agreement also provides for reimbursement of
third-party fees and expenses incurred by FCMC in compliance with the collection services
agreement. The collection fees earned by FCMC under this collection services agreement during the
twelve months ended December 31, 2010 were not significant.
-25-
PROPOSAL 2 RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed the firm of Marcum LLP as the
Companys independent registered public accounting firm to audit the financial statements of the
Company for the fiscal year ending December 31, 2011, and recommends that stockholders vote for
ratification of this appointment. Marcum LLP was appointed as the Companys independent registered
public accounting firm effective August 31, 2009.
A representative of Marcum LLP is expected to be present at the Annual Meeting and will have
the opportunity to make a statement if he or she desires to do so, and is expected to be available
to respond to appropriate questions.
Audit Fees
Marcum LLP has billed the Company the following fees for professional services rendered in
respect of the years ended December 31, 2010 and 2009:
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2010 |
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2009 |
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Audit Fees |
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316,500 |
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274,000 |
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Audit-Related Fees |
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10,000 |
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10,000 |
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Tax Fees |
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All Other Fees |
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70,800 |
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80,000 |
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Deloitte & Touche LLP (Deloitte), which audited the Companys financial statements from
January 1997 through Marcum LLPs appointment, has billed the Company the following fees for
professional services rendered in respect of the years ended December 31, 2010 and 2009:
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2010 |
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2009 |
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Audit Fees |
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$ |
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$ |
187,445 |
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Audit-Related Fees |
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11,423 |
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Tax Fees |
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378,000 |
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378,000 |
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All Other Fees |
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103,000 |
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226,130 |
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Audit Fees consist of fees for the audit and review of the Companys financial statements,
statutory audits, comfort letters, consents, and assistance with and review of documents filed with
the SEC. Audit-related fees consist of fees for employee benefit plan audits, accounting advice
regarding specific transactions, internal control reviews, various attestation engagements, and
reimbursement of out of pocket expenses related to the audit and review of the Companys financial
statements. Tax fees generally represent fees for tax compliance and advisory services. Other
fees consist of a SAS 70 engagement by Marcum LLP; a tax opinion and review of the Companys March
2009 restructuring by Deloitte; and reimbursement of other out-of-pocket expenses incurred by
Deloitte and Marcum LLP. All fees were approved by the Audit Committee.
Policy on Pre-Approval of Retention of Independent Auditor
The engagement of Marcum LLP for non-audit accounting services performed for the Company is
limited to those instances in which such services are considered integral to the audit services
that it provides or in which there is another compelling rationale for utilizing its services.
Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, all audit and permitted non-audited
services to be performed by Marcum LLP require pre-approval by the Audit Committee. Such
pre-approval may be given by the Chairman of the Audit Committee under certain circumstances, with
notice to the full Committee at its next meeting.
-26-
Vote Required for Ratification of Marcum LLP
Ratification of the appointment of Marcum LLP requires the affirmative vote of a majority of
the shares of Common Stock present at the Annual Meeting and entitled to vote thereon. If the
Stockholders fail to ratify the selection, the Audit Committee will reconsider its selection of
Marcum LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may direct
the appointment of a different independent registered public accounting firm at any time during the
year, if it determines that such change would be in the best interests of the Company and its
Stockholders.
The Board of Directors recommends a vote FOR ratification of the appointment of Marcum LLP as
the Companys independent registered public accounting firm for the fiscal year ending December 31,
2011.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware of any other
matter that is to be presented to Stockholders for formal action at the Annual Meeting. If,
however, any other matter or matters are properly brought before the Annual Meeting or any
adjournment or postponement thereof, it is the intention of the persons named in the enclosed form
of proxy to vote such proxy in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
Any Stockholder proposal intended to be presented at the next annual meeting of stockholders
must be received by the Company at its principal executive offices, 101 Hudson Street, 25th floor,
Jersey City, New Jersey 07302, no later than December 30, 2011 in order to be eligible for
inclusion in the Companys proxy statement and form of proxy to be used in connection with that
meeting pursuant to Rule 14a-8 under the Exchange Act. Such proposals must comply with the
Companys By-laws and the requirements of Regulation 14A of the Exchange Act.
In addition, the Companys By-laws require Stockholders desiring to bring nominations or other
business before an annual meeting of Stockholders to do so in accordance with the terms of the
By-laws advance notice provision regardless of whether the Stockholder seeks to include such
matters in the Companys Proxy Statement pursuant to Rule 14a-8 under the Exchange Act. The
Companys By-laws provide that a notice of the intent of a Stockholder to make a nomination or to
bring any other matter before an annual meeting must be made in writing and received by the
secretary of the Corporation no earlier than the 119th day and not later than the close of business
on the 45th day prior to the first anniversary of the date of mailing of the Corporations proxy
statement for the prior years annual meeting. However, if the date of the annual meeting has
changed by more than 30 days from the date it was held in the prior year or if the Corporation did
not hold an annual meeting in the prior year, then such notice must be received a reasonable time
before the Corporation mails its proxy statement for the annual meeting.
-27-
OTHER INFORMATION
Although it has entered into no formal agreements to do so, the Company will reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding proxy-soliciting materials to their principals. The cost of soliciting proxies on
behalf of the Board of Directors will be borne by the Company. Such proxies will be solicited
principally through the mail but, if deemed desirable, may also be solicited personally or by
telephone, telegraph, facsimile transmission or special letter by directors, officers and regular
employees of the Company without additional compensation.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy
delivery requirements for proxy statements with respect to two or more stockholders sharing the
same address by delivering a single proxy statement addressed to those stockholders. This process,
which is commonly referred to as householding, potentially provides extra convenience for
stockholders and cost savings for companies. We and some brokers household proxy materials,
delivering a single proxy statement or annual report to multiple stockholders sharing an address,
unless contrary instructions have been received from the affected stockholders. Once you have
received notice from your broker or us that they or we will be householding materials to your
address, householding will continue until you are notified otherwise or until you revoke your
consent. If, at any time, you no longer wish to participate in householding and would prefer to
receive a separate proxy statement or annual report, please notify us by sending a written request
to Franklin Credit Holding Corporation, 101 Hudson Street, 25th floor, Jersey City, New Jersey
07302 or by calling us at (201) 604-1800. You may also notify us to request delivery of a single
copy of our annual report or proxy statement if you currently share an address with another
stockholder and are receiving multiple copies of our annual report or proxy statement.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING WHETHER OR NOT YOU EXPECT
TO ATTEND THE ANNUAL MEETING. THE BOARD URGES YOU TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED REPLY ENVELOPE. YOUR COOPERATION AS A STOCKHOLDER, REGARDLESS OF THE NUMBER
OF SHARES OF STOCK YOU OWN, WILL REDUCE THE EXPENSES INCIDENT TO A FOLLOW-UP SOLICITATION OF
PROXIES.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE TELEPHONE THE COMPANY AT
(201) 604-1800.
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Sincerely yours, |
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/s/ Thomas J. Axon
THOMAS J. AXON
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Chairman and President |
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Jersey City, New Jersey
April 29, 2011
-28-
FRANKLIN CREDIT HOLDING CORPORATION
Annual Meeting of Stockholders
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas J. Axon, Paul D. Colasono and Kevin Gildea or if only
one is present, then that individual, with full power of substitution, to vote all shares of
Franklin Credit Holding Corporation (the Company), which the undersigned is entitled to vote at
the Companys Annual Meeting of Stockholders to be held at the corporate offices of the Company, on
Tuesday, June 21, 2011, at 2:00 P.M., Eastern Daylight Time, and at any adjournment or
postponement thereof, hereby ratifying all that said proxies or their substitutes may do by virtue
hereof, and the undersigned authorizes and instructs said proxies to vote as follows:
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ELECTION OF DIRECTORS. To elect the nominees for Class III Director below for a term of three years: |
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FOR ALL NOMINEES LISTED BELOW
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WITHHOLD AUTHORITY |
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(except as marked to the contrary below)
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for all nominees listed below |
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the
nominees name in the list below.)
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Thomas J. Axon |
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Allan R. Lyons |
2. RATIFICATION OF APPOINTMENT OF AUDITORS: To ratify the appointment of Marcum LLP as the
independent registered public accounting firm of the Company for the fiscal year ending December
31, 2011:
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FOR o
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AGAINST o
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ABSTAIN o |
and in their discretion, upon any other matters that may properly come before the meeting or any
adjournments or postponements thereof.
(Continued and to be dated and signed on the other side.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES
LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE: x
Receipt of the Notice of Annual Meeting and of the Proxy Statement and Annual Report of the
Company accompanying the same is hereby acknowledged.
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, 2011 |
(Signature of Stockholder)
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(Signature of Stockholder)
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Your signature should appear the same as your name appears herein. If signing as attorney,
executor, administrator, trustee or guardian, please indicate the capacity in which signing. When
signing as joint tenants, all parties to the joint tenancy must sign. When the proxy is given by a
corporation, it should be signed by an authorized officer.