Exhibit 10.8
MODIFICATION AGREEMENT
This Modification Agreement is entered into this 19th day of March,
2003 by and between Sky Bank, f/k/a The Citizens Banking Company, hereinafter
referred to as "Sky", and Franklin Credit Management Corporation, hereinafter
referred to as "Franklin", for the purpose of modifying that certain agreement
previously entered into by and between the parties, dated March 20, 1997 and the
subsequent modifications and/or addendums to such agreement, dated December 1,
1998, April 1, 2000 and December 14, 2001 copies of which are attached hereto.
The agreement, and all prior modifications or addendums are hereinafter referred
to as the "Agreement".
WHEREAS, Sky and Franklin have found it necessary to modify the terms
of said Agreement;
AND WHEREAS, the parties desire to restate the modified terms of said
Agreement so that there shall be no misunderstanding of the matter. This
Agreement shall be in place until DECEMBER 31, 2004.
THEREFORE, it is hereby agreed that, as of March 1, 2003, the interest
rate applied to all loans closed by Franklin other than the Prime Loans (defined
below) (the "FHLB Loans") shall be based upon the Federal Home Loan Bank of
Cincinnati (FHLB) thirty (30) day advance rate (code "FHL5LBR1") (the "Index").
During the term of this agreement, said Index shall be adjusted on the 1st day
of each month based upon the rate as of that date and shall be effective until
the 1st day of the subsequent month.
FURTHER, in addition to payments pursuant to the Index, Franklin shall
also pay Sky an additional spread (the "Spread") of 3.50% (350 basis points) for
all FHLB Loans. The Spread shall remain at 3.50% (350 basis points) until such
time as the Index exceeds 2.00% (200 basis points) at which point it will revert
back to 3.25% (325 basis points). Further, Sky Bank will reduce the Spread to
3.00% (300 basis points) in the event that the Index exceeds 4.75% (475 basis
points).
FURTHER, it is agreed that for new loans closed after March 1, 2003 the
interest rate on those loans shall reflect the same Index and Spread as
identified above for FHLB Loans.
HOWEVER, for all existing loans, where the rate applicable thereon is
based upon a Prime index plus a spread (the "Prime Loans"), those loans shall
remain priced accordingly. Exhibit A, attached hereto, identifies the Prime
Loans.
FURTHER, as Franklin achieves certain net income targets, Sky shall
release additional cash for other growth opportunities. Accordingly, for every
dollar of annualized net income in excess of $2,400,000 ($600,000 quarterly)
earned by Franklin, Sky will release cash flow of $.50 up to $1,200,000
annually. In no event shall this amount exceed $400,000 in any given quarter.
Said thresholds and limits shall be evaluated annually for future distributions.
In all other respects, said Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SKY BANK
/s/ Jerry S. Sutherin
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BY: JERRY S. SUTHERIN
VICE PRESIDENT
FRANKLIN CREDIT MANAGEMENT CORPORATION
/s/ Seth Cohen
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BY: SETH COHEN
CEO
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