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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): April 3, 2002
Franklin Capital Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-9727 13-3419202
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(Commission File Number) (I.R.S. Employer Identification No.)
450 Park Avenue, 10th Floor
New York, New York 10022
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(Address of Principal Executive offices) (Zip Code)
(212) 486-2323
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(Registrant's Telephone Number, Including Area Code
Not Applicable
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(Former Name or Former Address, if changed Since Last Report)
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Items 2 and 5. Acquisition or Disposition of Assets and Other Events.
On April 3, 2002, Dial Communications Global Media, Inc.
("Newco"), a newly formed wholly-owned subsidiary of Excelsior Radio Networks,
Inc. ("Excelsior"), completed the acquisition of substantially all of the assets
of Dial Communications Group, Inc. ("DCGI"), and Dial Communications Group, LLC
("DCGL" and together with DCGI, the "Dial Entities") used in connection with the
Dial Entities' business of selling advertising relating to radio programming
(the "Dial Acquisition"). Excelsior is a majority-owned subsidiary of Franklin
Capital Corporation ("Franklin"). The Dial Acquisition was completed pursuant to
the Asset Purchase Agreement (the "Purchase Agreement"), dated as of April 1,
2002, by and among the Dial Entities, Franklin and Excelsior. Immediately prior
to the closing of the transactions contemplated by the Purchase Agreement,
Excelsior assigned all of its rights and obligations under the Purchase
Agreement, as well as certain other assets and liabilities relating to the
portion of Excelsior's business dedicated to the sale of advertising relating to
radio programming, to Newco.
The total purchase price for the Dial Acquisition will be an
amount between $8,880,000 and $13,557,500. The initial consideration for the
Dial Acquisition consisted of $6,500,000 in cash and a three year promissory
note issued by Newco in favor of DCGL in the aggregate principal amount of
$460,000. In addition, the Purchase Agreement provides for the minimum payment
of $1,920,000 of additional consideration, which is subject to increase to a
maximum amount of $6,597,500 based upon the attainment of certain revenue and
earnings objectives in 2002 and 2003. The additional consideration will be
comprised of both cash and two additional promissory notes issued by Newco in
favor of DCGL, each with an initial aggregate principal amount of $460,000 that
is subject to increase upon the attainment of such revenue and earnings
objectives. Each of the promissory notes issued in consideration of the Dial
Acquisition is convertible into shares of Franklin's common stock at a premium
of 115% to 120% of the average closing prices of Franklin's common stock during
a specified pre and post closing measurement period. Excelsior has paid to
Franklin an amount equal to $300,000 in consideration of Franklin's obligations
in connection with any Franklin common stock that may be issued pursuant to the
terms of the Purchase Agreement or the promissory notes issued in consideration
of the Dial Acquisition.
Change Technology Partners, Inc. ("Change") and Sunshine II,
LLC ("Sunshine"), both existing stockholders of Excelsior, loaned Excelsior an
aggregate amount of $7,000,000 to finance the initial consideration of the Dial
Acquisition. The obligations under the loans are secured by certain of
Excelsior's assets.
As previously reported, Change and Franklin have entered into
an Agreement and Plan of Merger, dated as of December 4, 2001 (the "Merger
Agreement"), pursuant to which, subject to the terms and conditions thereof,
Change has agreed to merge with and into Franklin. Change and Franklin amended
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the Merger Agreement on April 3, 2002 to permit for the loan from Change to
Excelsior to help finance the Dial Acquisition.
A more complete description of the Dial Acquisition, the
payment of initial and additional consideration in connection therewith, the
loans to Excelsior from Change and Sunshine and the grant of security interests
in certain of Excelsior's assets to Change and Sunshine with respect to the Dial
Acquisition can be found in the applicable documents attached to this report as
exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a), (b) Financial statements and pro forma financial
information relative to the Dial Acquisition are not included in this report.
Such financial statements and pro forma financial information will be filed no
later than June 17, 2002.
(c) Exhibits:
Exhibit No. Exhibit
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10.1. Asset Purchase Agreement, dated as of April
1, 2002, by and among the Dial Entities,
Franklin and Excelsior.
10.2 Convertible Promissory Note, dated April 3,
2002, issued by Newco in favor of DCGL.
10.3 Convertible Promissory Note, dated April 3,
2002, issued by Newco in favor of DCGL.
10.4 Convertible Promissory Note, dated April 3,
2002, issued by Newco in favor of DCGL.
10.5 Promissory Note, dated April 3, 2002, issued
by Excelsior in favor of Change
(incorporated by reference to Exhibit 10.1
of Change's current report on Form 8-K,
filed with the Securities and Exchange
Commission on April 4, 2002 (the "Change
8-K").
10.6 Promissory Note, dated April 3, 2002, issued
by Excelsior in favor of Sunshine.
10.7 Security Agreement, dates as of April 3,
2002, by and among Excelsior, Sunshine and
Change (incorporated by reference to Exhibit
10.2 of the Change 8-K).
10.8 Amendment No. 1 to Agreement and Plan of
Merger, dated as of April 3, 2002, by and
between Change and Franklin (incorporated by
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reference to Exhibit 10.3 of the Change 8-
K).
99.1 Press Release dated April 3, 2002.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
FRANKLIN CAPITAL CORPORATION
Date: April 12, 2002 By: /s/ Spencer L. Brown
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Senior Vice-President
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