SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE FRANKLIN HOLDING CORPORATION (DELAWARE)
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE FRANKLIN HOLDING CORPORATION (DELAWARE)
450 PARK AVENUE
NEW YORK, NEW YORK 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 1996
------------------------
The Annual Meeting of Stockholders of The Franklin Holding Corporation
(Delaware) will be held on May 10, 1996 at 10 o'clock a.m., New York Time, at
the offices of Weil, Gotshal & Manges LLP, 30th Floor, 767 Fifth Avenue, New
York, New York, for the following purposes:
1. To elect seven (7) directors to hold office until the next Annual
Meeting of Stockholders and until their successors have been duly elected
and have qualified;
2. To ratify the appointment by the Board of Directors of Arthur
Andersen LLP to serve as independent auditors for the fiscal year ending
December 31, 1996; and
3. To consider and transact such other business as may properly come
before the meeting or any adjournment or postponement thereof.
The Board has fixed the close of business on April 10, 1996 as the record
date for the determination of the stockholders entitled to notice of, and to
vote at, the meeting or any adjournment or postponement thereof. Each
stockholder is entitled to one vote for each share of Common Stock, $1.00 par
value, held on the record date.
If you cannot attend the meeting, please sign and return the enclosed proxy
card as soon as possible in order that you may be represented at the meeting. If
you attend the meeting, you may vote in person even though you have sent in a
proxy.
By Order of the Board of Directors,
SPENCER L. BROWN
Secretary
New York, New York
April 10, 1996
THE FRANKLIN HOLDING CORPORATION (DELAWARE)
450 PARK AVENUE
NEW YORK, NEW YORK 10022
Dear Fellow Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of The Franklin Holding Corporation (Delaware), scheduled to be held at 10:00
a.m. on Friday, May 10, 1996 at 767 Fifth Avenue, 30th Floor, New York, New
York. At the meeting, Franklin's stockholders will consider and act on the
matters described in the accompanying Notice of Annual Meeting and Proxy
Statement.
1995 HIGHLIGHTS
In December Franklin paid all shareholders a special dividend of
$1.00 per share;
Franklin's net asset value at year end, after the payment of a $1.00
per share special dividend was $14.67;
Franklin's wholly owned subsidiary, Excelsior Communications Corp.,
sold its two Louisville radio stations to Cox Broadcasting Inc. for
$8.5 million.
In 1996, we will continue to seek investment opportunities which will yield
above average returns for Franklin's stockholders.
Whether or not, you plan to attend the Annual Meeting, please sign, date
and complete the accompanying proxy card and return it promptly in the enclosed
postage-paid return envelope.
Respectfully,
STEPHEN L. BROWN
Chairman
April 10, 1996
THE FRANKLIN HOLDING CORPORATION (DELAWARE)
450 PARK AVENUE
NEW YORK, NEW YORK 10022
------------------------
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished by the Board of Directors of The Franklin
Holding Corporation (Delaware), a Delaware corporation (the 'Corporation'), in
connection with the solicitation by the Corporation of proxies for use at the
Annual Meeting of Stockholders (the 'Meeting') to be held on May 10, 1996, at 10
o'clock a.m., New York Time, at the offices of Weil, Gotshal & Manges LLP, 30th
Floor, 767 Fifth Avenue, New York, New York.
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies may revoke them at any time before they
are voted, by delivering to Mr. Spencer L. Brown, Secretary of the Corporation,
at the offices of the Corporation at 450 Park Avenue, 10th Floor, New York, New
York, 10022, before the ballot is cast, either an instrument revoking the proxy
or a duly executed proxy bearing a later date, or by attending the Meeting and
voting in person. A proxy, when executed and not so revoked, will be voted in
accordance with the specifications contained therein. If no contrary
specification is indicated on the proxy, the shares represented thereby will be
voted for the election of the seven (7) nominees for directors, and in favor of
the ratification of the appointment of Arthur Andersen LLP as the Corporation's
independent auditors. In the event that the persons named as proxies propose one
or more adjournments to permit further solicitation with respect to any proposal
to be voted upon at the Meeting, any such adjournments would require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The proxyholders will vote in favor
of such an adjournment with respect to those proxies which instruct them to vote
in favor of such proposal (including proxies which have no contrary
specification with respect to such proposal), and will vote against such an
adjournment with respect to those proxies which instruct them to vote against or
abstain from voting with respect to such proposal. No adjournment will be for
any period later than June 10, 1996.
EXPENSES OF SOLICITATION OF PROXIES
The expenses of solicitation will be borne by the Corporation. The
solicitation will be conducted by mail, except that in a limited number of
instances proxies may be solicited by directors, officers and other employees of
the Corporation personally, by telephone or by telecopier. In addition, the
Corporation has retained D.F. King & Co. Inc. to solicit proxies. The
Corporation estimates that the fees of D.F. King & Co. Inc. for solicitation
will not exceed $15,000. This proxy statement and form of proxy are first being
sent to stockholders on or about April 10, 1996. THE CORPORATION WILL FURNISH,
WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT AND MOST RECENT SEMI-ANNUAL REPORT
TO STOCKHOLDERS TO A STOCKHOLDER UPON REQUEST IN WRITING ADDRESSED TO 'THE
FRANKLIN HOLDING CORPORATION (DELAWARE), 450 PARK AVENUE, NEW YORK, NEW YORK
10022, ATTENTION: STOCKHOLDER RELATIONS' OR BY CALLING COLLECT TO (212)
486-2323.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on April 10, 1996, the record date for the
Meeting, the outstanding voting securities of the Corporation consisted of
801,198 shares of Common Stock, each of which is entitled to one vote.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
holdings of any person, including any 'group' as that term is defined in Section
13(d)(3) of the Securities Exchange Act of 1934 (as amended, the '1934 Act'),
who was known to the Corporation to be the beneficial owner, as defined in Rule
13(d)(3) under the 1934 Act, of more than 5% of the outstanding Common Stock at
the close of business on March 29, 1996. The following information is based
solely on a review by the Corporation of the Common Stock transfer records of
the Corporation and of publicly available filings made with the Securities and
Exchange Commission by or on behalf of stockholders of the Corporation.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ---------------------- ------------------------------------------- ---------- --------
Common Stock.......... Stephen L. Brown, Chairman 264,812(1) 33.1%
c/o The Franklin Holding
Corporation (Delaware)
450 Park Avenue
New York, New York 10022
Common Stock.......... S.L. Brown & Company, Inc. 250,000 31.2%
450 Park Avenue
New York, New York 10022
Common Stock.......... Joseph S. Dresner, Milton H. Dresner 142,165(2) 17.7%
Jay B. Langner and Charles Reinwald
c/o Robinson Brog Leinwand Reich
Genovese & Gluck P.C.
1345 Avenue of the Americas
New York, NY 10105
Attention: Richard W. Cohen
- ------------------
(1) Includes the 250,000 shares of Common Stock owned by S.L. Brown & Company,
Inc. ('SLB & Co., Inc.'). Mr. Brown has, subject to certain limitations,
voting and investment power over the voting securities owned by SLB & Co.,
Inc. and is Chairman of SLB & Co., Inc. Does not include 1,250 shares owned
by Mr. Brown's children or 2,000 shares owned by Mr. Brown's wife. Mr. Brown
disclaims beneficial ownership of such shares.
(2) Represents the aggregate number of shares owned by Messrs. Joseph Dresner,
Milton Dresner, Langner and Reinwald as reflected on a statement of
beneficial ownership on Schedule 13D (the '13D') as filed with the
Securities and Exchange Commission on or about March 23, 1995. The
Corporation expressly disclaims any responsibility for accuracy and
completeness of the reporting contained in the 13D.
2
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
Common Stock beneficially owned, as defined in Rule 13(d)(3) under the 1934 Act,
by each director of the Corporation, each nominee for director, each named
executive officer and by all directors and named executive officers of the
Corporation as a group, at the close of business on March 29, 1996. Except as
otherwise indicated, each of the persons named in the table below as
beneficially owning the shares set forth therein has sole voting power and sole
investment power with respect to such shares.
AMOUNT PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ---------------------------------------------------------------------- ------------------ --------
Stephen L. Brown...................................................... 264,812(1) 33.1%
Miles L. Berger....................................................... 10,000 1.2%
Carl D. Glickman...................................................... 4,753(2) *
Irving Levine......................................................... 2,400 *
Jonathan A. Marshall.................................................. 5,500 *
Jeffrey J. Steiner.................................................... 5,253(2) *
John Greenbaum........................................................ 4,600(3) *
Spencer L. Brown...................................................... 1,637(2) *
Stephen J. Mayer...................................................... 0 *
All officers and directors
as a group (8 persons).............................................. 298,955 37.3%
- ------------------
* Less than 1%
(1) Includes 250,000 shares of Common Stock owned by SLB & Co., Inc. Mr. Brown
has, subject to certain limitations, voting and investment power over the
voting securities of SLB & Co., Inc. and is Chairman of SLB & Co., Inc. Does
not include 1,250 shares owned by Mr. Brown's children or 2,000 shares owned
by Mr. Brown's wife. Mr. Brown disclaims beneficial ownership of such
shares.
(2) Does not include 250,000 shares of Common Stock owned by SLB & Co., Inc.
Messrs. Glickman, Steiner and Spencer Brown are direct or indirect
stockholders of SLB & Co., Inc. Each of these individuals disclaims
beneficial ownership of the shares of Common Stock owned by SLB & Co., Inc.
(3) Ownership is through Greenbaum Brothers Partnership in which Mr. Greenbaum
has a 33% general partnership interest.
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
At the Meeting, the stockholders will elect seven directors, constituting
the entire Board of Directors, to hold office until the next Annual Meeting of
Stockholders and until their respective successors have been duly elected and
have qualified. Each stockholder of record at the close of business on April 10,
1996 is entitled to one vote for each share of Common Stock registered in the
name of such stockholder on the books of the Corporation.
The term of the present directors of the Corporation expires at the Meeting
when their respective successors have been duly elected and have qualified.
3
Information with respect to the nominees for election as directors of the
Corporation follows:
POSITION WITH DIRECTOR
NAME AGE THE CORPORATION SINCE
- --------------------------------------------------------- ---- ------------------------------------- --------
Stephen L. Brown*........................................ 57 Chairman of the Board, 1986
Chief Executive Officer and Director
Miles L. Berger.......................................... 65 Director 1996
Carl D. Glickman*........................................ 69 Director 1986
John Greenbaum*.......................................... 45 Chief Financial Officer, Treasurer 1992
and Director
Irving Levine............................................ 74 Director 1990
Jonathan A. Marshall..................................... 57 Director 1987
Jeffrey J. Steiner....................................... 59 Director 1986
- ------------------
* Mr. Brown is an 'interested person' of the Corporation within the meaning of
the Investment Company Act of 1940 (as amended, the '1940 Act') by reason of
his position as Chairman and Chief Executive Officer of the Corporation and
his beneficial ownership of shares of Common Stock of the Corporation owned by
SLB & Co., Inc. Mr. Glickman is an 'interested person' by reason of his
position as a director of The Bear Stearns Companies Inc., an 'affiliated
person' (within the meaning of the 1940 Act) of Bear, Stearns & Co. Inc., a
registered broker-dealer. Mr. Greenbaum is an 'interested person' by reason of
his position as Chief Financial Officer and Treasurer of the Corporation which
he assumed on March 25, 1996.
Stephen L. Brown, Chairman of the Board of Directors of the Corporation,
has been Chairman and Chief Executive Officer since October 1986. Since June
1984, Mr. Brown has been Chairman of SLB & Co., Inc., a private investment firm.
Mr. Brown is a director of Copley Financial Services Corporation (advisor to
Copley Fund, Inc., a mutual fund) and Chairman, Chief Executive Officer and
President of Excelsior Communications Corporation, a wholly-owned subsidiary of
the Corporation ('Excelsior').
Miles L. Berger, a director of the Corporation, has been Vice Chairman of
the Board of Heitman Financial Ltd., a real estate service company for more than
the past five years. Mr. Berger is Chairman of the Board of Mid Town Bank of
Chicago, Vice Chairman of Columbia National Bank of Chicago, and a director of
Innkeepers USA Trust, a Maryland real estate investment trust.
Carl D. Glickman, a director of the Corporation, has been President of The
Glickman Organization, a real estate investment firm, for more than the past
five years. Mr. Glickman is a director of The Bear Stearns Companies Inc.,
Alliance Tyre & Rubber Co., Andal Corp., Continental Health Affiliates, Inc.,
Custodial Trust Co., Infu Tech, Inc., Jerusalem Economics Corp., LTD, Lexington
Growth Properties, Office Max, Inc., Excelsior and SLB & Co., Inc.
John Greenbaum, a director of the Corporation, has been Chief Financial
Officer and Treasurer of the Corporation since March 25, 1996. Mr. Greenbaum
acted as principal of Digital Media Group, a venture capital firm, from October
1994 through March 1996. From March 1988 to September 1994 he was Vice President
of the Corporation and from May 1992 to September 1994 acted as Secretary of the
Corporation. He was also a director, Vice President and Secretary of Excelsior
from September 1992 to September 1994.
Irving Levine, a director of the Corporation, has been Chairman of the
Board and President of Copley Fund, Inc., a mutual fund, since 1978 and Chairman
and Treasurer of Stuffco International, Inc., a ladies handbag processor and
chain store operator, since 1978. Mr. Levine is also President and a director of
Copley Financial Services Corporation (advisor to Copley Fund, Inc.), and a
director of Rexnord Holdings, Inc.
4
Jonathan A. Marshall, a director of the Corporation, is a Senior Partner in
the law firm of Pennie & Edmonds and has been a member of that firm since 1974.
He is a member of the Bar of the State of New York and is admitted to practice
before the United States Supreme Court and the United States Patent and
Trademark Office.
Jeffrey J. Steiner, a director of the Corporation, has been Chairman and
Chief Executive Officer of The Fairchild Corporation, an aviation services
company, since October 1985. Mr. Steiner is also Chairman, Chief Executive
Officer and director of Banner Aerospace, Inc., a Vice Chairman and director of
Shared Technology Fairchild, Inc., and a director Copley Financial Services
Corporation.
EXECUTIVE OFFICERS
In addition to Mr. Brown, the following individuals are executive officers
of the Corporation:
Spencer L. Brown, Age 30. Mr. Brown has been Senior Vice President of the
Corporation since November 1995, Secretary of the Corporation since October 1994
and was Vice President from August 1994 to November 1995. He has also been Vice
President and Secretary of Excelsior, since May 1995. From September 1993 to
July 1994 Mr. Brown was an attorney with the firm of Wilson, Elser, Moskowitz,
Edelman & Dicker and from September 1991 to September 1993 he was an attorney
with the firm of Weil, Gotshal & Manges. Mr. Brown is the son of Mr. Stephen L.
Brown, the Chairman and Chief Executive Officer of the Corporation.
Stephen J. Mayer, Age 43. Mr. Mayer has been Vice President and Controller
of the Corporation since December 1994 and Treasurer of Excelsior since May
1995. From April 1994 to October 1994 Mr. Mayer was Chief Financial Officer of
Biltmore Mortgage Corp. From February 1992 to April 1994 he was Vice President
and Controller of Midcoast Mortgage Corp., and from August 1987 to February 1992
he was Vice President, Strategic Planning of Arbor National Mortgage, Inc.
The term of office of the executive officers of the Corporation expires at
the meeting of the Board of Directors when their respective successors have been
elected and have qualified. The Corporation anticipates that each such officer
will be re-elected at the meeting of the Board of Directors to be held
immediately after the Annual Meeting of Stockholders.
5
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth information with respect to all cash
remuneration paid or accrued by the Corporation for services by the
Corporation's directors and three most highly paid executive officers whose
compensation exceeded $60,000 for the year ended December 31, 1995:
PENSION OR
AGGREGATE RETIREMENT
COMPENSATION BENEFITS ACCRUED
FROM THE AS PART OF
NAME OF PERSON POSITION CORPORATION CORPORATION EXPENSES
- ------------------------------------------------- ------------------------ ------------ --------------------
Stephen L. Brown................................. Chairman and $422,500 $9,240
Chief Executive Officer
Spencer L. Brown................................. Senior Vice President 97,500 5,850
and Secretary
Carl D. Glickman................................. Director 54,000 0
John Greenbaum................................... Director 18,000 0
Irving Levine.................................... Director 18,000 0
Jonathan A. Marshall............................. Director 18,000 0
Stephen J. Mayer................................. Vice President 97,500 0
Jeffrey J. Steiner............................... Director 18,000 0
Each director of the Corporation, other than Mr. Brown, receives a
director's fee of $18,000 per annum. Mr. Brown, Chairman of the Board of the
Corporation, is employed under a contract with the Corporation at a base salary
of $390,000 per annum. The initial term of such employment contract expired on
December 31, 1995, and is automatically extended from year to year thereafter
unless the Corporation elects not to extend the term. Mr. Glickman, as Chairman
of the Executive Committee of the Board of Directors as well as serving as a
Director of Excelsior, receives a fee of $36,000 per annum in addition to his
fee as a director. During the year ended December 31, 1995, the Corporation
reimbursed directors other than Mr. Brown who is an officer, for certain
receipted expenses incurred in connection with the performance of their duties,
including attendance at Board and Committee meetings, in the aggregate amount of
$4,255. Mr. Brown received no such reimbursement.
COMPENSATION PURSUANT TO PLANS
All employees of the Corporation, who have been employed for a minimum of
six months, are eligible to participate in The Franklin Holding Corporation
(Delaware) Profit Sharing Retirement Savings Plan (the 'Savings Plan'), a
defined contribution plan under Section 401(k) of the Internal Revenue Code of
1986 (as amended, the 'Internal Revenue Code'). The Savings Plan purchases
shares of Common Stock of the Corporation and/or securities of several mutual
funds. Under the terms of the Savings Plan, the Corporation matches the
voluntary contributions of employees up to 6% of their compensation.
Participants may contribute up to an additional 7% of their compensation. The
Savings Plan was established in 1967 and the Corporation does not maintain any
other compensation, profit-sharing or deferred compensation plan. Total
contributions by employees and the Corporation to the Savings Plan for the year
ended December 31, 1995 amounted to $47,514. The employer contributions for the
account of all officers as a group were $20,130, constituting 83.0% of the total
employer contributions to the account of all employees participating in the
Savings Plan. Directors who are not salaried employees of the Corporation are
not permitted to participate in the Savings Plan.
6
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 31, 1995, the Board of Directors met on six
occasions and did not act without a meeting by unanimous written consent.
The Audit Committee held one meeting during the year ended December 31,
1995. The Audit Committee meets with the Corporation's independent auditors to
review the Corporation's financial statements and the adequacy of internal
controls and accounting systems. The members of the Audit Committee are Messrs.
Levine (Chairman), Glickman* and Marshall.
The Executive Committee meets between meetings of the Board of Directors.
The Executive Committee generally may exercise the authority of the Board of
Directors and may approve financings not to exceed $500,000. The Executive
Committee held two meetings during the year ended December 31, 1995. The members
of the Executive Committee are Messrs. Glickman (Chairman)*, Brown* and
Marshall.
The Compensation Committee meets to consider compensation of executive
officers of the Corporation. The Compensation Committee met once during the year
ended December 31, 1995. The members of the Compensation Committee are Messrs.
Marshall (Chairman), Glickman* and Greenbaum*.
Each director, with the exception of Mr. Steiner, attended at least 75% of
the aggregate number of meetings of the Board of Directors and of Board
Committees on which he served. There is no Nominating Committee.
BROKERAGE TRANSACTIONS
During the year ended December 31, 1995, the Corporation paid aggregate
brokerage commissions of approximately $36,908, none of which was paid to Bear,
Stearns & Co. Inc. ('Bear Stearns'). Mr. Glickman is a director of Bear Stearns'
parent company.
Brokers are selected by the Corporation's Board of Directors, whose primary
considerations are the cost and efficiency of execution of brokerage orders. At
the present time, no person acting on behalf of the Corporation is authorized to
pay a brokerage commission to a broker in excess of that which another broker
might have charged for effecting the same transaction in recognition of the
value of research services provided by the broker.
INVESTMENT ADVISOR
The Corporation does not engage the services of an investment advisor,
principal underwriter or administrator.
AFFILIATED TRANSACTIONS
TRANSACTIONS WITH CONTROLLED AFFILIATES
Franklin Communications Partners, L.P. ('FCP'), a limited partnership of
which Excelsior had a 48.5 percent ownership share, was formed in September
1992. From its inception, FCP acquired seven radio stations. Pursuant to an
agreement of its limited partners, FCP was dissolved by its general partner,
WESHAM Broadcasting Company ('WESHAM'), on August 2, 1994. Prior to its
dissolution, FCP sold six of its stations. Effective July 1, 1994, as part of
the dissolution plan, Excelsior received substantially all the assets of FCP
used primarily in the operation of radio station WRKA-FM in Louisville, Kentucky
(including its accounts
- ------------------
* Interested person.
7
receivable), in satisfaction of substantially all of its rights to the proceeds
of the sale of the other radio stations and the dissolution of FCP. As
consideration for receiving the distribution, Excelsior also contributed
$1,763,000 to FCP. As part of the plan, the partners of FCP agreed to value the
assets associated with WRKA-FM at $6.25 million, exclusive of the radio
station's net receivables. The plan also specified that Excelsior was deemed to
have received cash to the extent that the aggregate amount of WRKA's accounts
receivable distributed to Excelsior exceeded the aggregate amount of the
accounts payable and accrued expenses assumed by Excelsior, a net amount of
approximately $416,000. WESHAM was also dissolved and included in the amount
distributed as part of this plan.
For the years ended December 31, 1995 and 1994, the Corporation's income
from controlled affiliates consisted of a management fee of $750,000 and
$341,000, respectively, and interest income, net of related expenses, of $0 and
$23,133, respectively.
During 1994 and 1993, the Corporation purchased artwork totaling
approximately $87,000 from an affiliated company. The purchase price was based
upon the affiliated company's original cost and an independent appraisal. The
artwork had been used by the Corporation at its offices at 767 Fifth Avenue
since 1986 and continues to be used at the Corporation's offices at 450 Park
Avenue. The artwork was repurchased by the affiliated company in June 1995, at
the cost to the Corporation, approximately $87,000.
OTHER SIGNIFICANT EVENTS
On August 30, 1995, Excelsior purchased the assets of radio station WAJE-FM
for $1.035 million, including cash of $342,750 and a note payable to the seller
of $692,250. The station, a start-up operation whose primary coverage area
includes the City of Louisville, Kentucky, is licensed in New Albany, Indiana.
On December 31, 1995, Excelsior sold the broadcast assets of its two
Louisville radio stations, WRKA-FM and WAJE-FM, to Cox Broadcasting, Inc. for a
total price of $8.5 million in cash. Excelsior retained the cash and accounts
receivable of the station in excess of its accounts payable and accrued
liabilities, a total of approximately $565,000. Excelsior utilized a portion of
the funds received from this sale to fully satisfy its obligations under the
note payable due on the purchase of WAJE-FM.
CERTAIN LITIGATION
In March 1995, a complaint was filed in the United States District Court
for the Southern District of New York by a former director of Franklin Holding
(who, in 1990, was not renominated for election to the Board of Directors)
against the Corporation, its chairman, certain of its directors and an
affiliated company. The action was purportedly brought both on behalf of a class
of minority shareholders of Franklin Holding and derivatively on behalf of the
Corporation. The action, in substance, alleged that the Corporation's Board did
not comply with the 'interested persons' provisions of the Investment Company
Act of 1940; that there had not been full disclosure about various matters,
including with respect to the Corporation's application to deregister as an
investment company and about the business relationships between defendants in
proxy statements from 1989 through 1994; and that management's and directors'
compensation and benefits were excessive in relation to the financial
performance of the Corporation. The complaint asserted claims under the Act and
rules of the Securities and Exchange Commission promulgated thereunder and under
common law. In May 1995, an amended complaint was filed containing in substance,
the same claims as the original complaint, but purporting to assert additional
derivative and class action claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The amended complaint alleged that the
Corporation and its Board failed to disclose facts in various documents,
including the Corporation's 1994 Annual Report and 1993 and 1994 Proxy
Statements, with respect to, among
8
other things, the Corporation's investment through Excelsior in various radio
stations and the current status of the Corporation's operations.
In June 1995, the Corporation and the other defendants moved to dismiss the
amended complaint for failure to make the required demand upon the Board of
Directors (as to purported derivative claims), for lack of standing to assert
the purported derivative claims, for failure to state a claim upon which the
requested relief can be granted and for failure to plead the claims for fraud
with the required specificity. Plaintiff filed a second amended complaint in
August 1995 containing in substance the same claims as the amended complaint,
but including additional factual allegations. The second amended complaint seeks
unspecified monetary relief from the individual defendants and equitable and
declaratory relief with respect to the Corporation, including setting aside the
election of directors held at the Corporation's annual meeting in August 1994
and 1995 and Board action since August 1994, declaring the chairman's employment
contract void, an accounting by defendants, and an injunction directing the
liquidation of the Corporation and the appointment of a special fiscal agent,
receiver or conservator to oversee same. The plaintiff and the defendants
submitted supplemental briefings concerning the issue of whether the second
amended complaint should be dismissed.
In January 1996, the Court issued an opinion partially granting and
partially denying defendants' motion to dismiss. The Court dismissed plaintiff's
derivative claims for failure to make the required demand and abstained from
entertaining plaintiff's request that the Corporation be dissolved and that a
special fiscal agent, receiver or conservator be appointed. The Court denied
defendants' motion to dismiss with respect to the remainder of plaintiff's
claims.
Management believes the plaintiff's claims are without merit and intends to
continue vigorously defending the action. During the year ended December
31,1995, the Corporation expended $420,038 defending this action as well as a
related proxy contest.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that stockholders vote FOR the persons
named herein to serve as directors until the next Annual Meeting of Stockholders
and until their respective successors have been duly elected and have qualified.
Under Delaware law, directors are elected by a plurality of the votes of the
shares present in person or represented by proxy and entitled to vote in the
election of directors.
All nominees have consented to stand for election and to serve if elected.
If any nominee should be unable to serve in such position, an event not
presently anticipated, the proxies will be voted for such a person, if any, as
shall be designated by the Board of Directors to replace any such nominee,
unless the Board of Directors reduces the number of directors constituting the
whole Board.
In the absence of contrary instructions, the Corporation intends to vote
all proxies FOR the election of the seven (7) listed above as Directors of the
Corporation. In tallying the vote, abstentions and broker non-votes will be
considered to be shares of Common Stock present at the Meeting, but not voting
in favor of the election of the nominees (i.e., they will have the same legal
affect as a vote 'against' the election of the nominees).
PROPOSAL TO APPROVE SELECTION OF
ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP as the
Corporation's independent auditors for the fiscal year ending December 31, 1996.
The audit services performed by Arthur Andersen LLP for the year
9
ended December 31, 1995 included an examination of the financial statements
included in the 1995 Annual Report to Stockholders. Arthur Andersen LLP also
performed certain tax and special consulting services.
Arthur Andersen LLP has advised the Corporation that it has neither any
direct nor any material indirect financial interest in the Corporation. It is
expected that a representative of Arthur Andersen LLP will be present at the
Meeting and will have an opportunity to make a statement if he desires to do so
and to respond to appropriate questions.
The Board of Directors recommends that stockholders vote FOR ratification
of the appointment of Arthur Andersen LLP as independent auditors for the year
ending December 31, 1996.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting must be received in writing by the Corporation not later than March 1,
1997 in order to be considered for inclusion in the proxy statement relating to
such meeting, which the Corporation anticipates will be held in June 1997.
OTHER MATTERS
The Board of Directors does not know of any other matters that may properly
be brought, and which are likely to be brought, before the Meeting. However,
should other matters be properly brought before the Meeting, the persons named
on the enclosed proxy or their substitutes will vote in accordance with their
best judgement on such matters.
By Order of the Board of Directors,
SPENCER L. BROWN
Secretary
April 10, 1996
10
PROXY THE FRANKLIN HOLDING CORPORATION (DELAWARE)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1996
The undersigned hereby appoints Stephen L. Brown and Carl D. Glickman, or
either of them, as attorneys and proxies to vote all the shares of common stock,
par value $1.00 per share, of The Franklin Holding Corporation (Delaware) (the
'Corporation'), which are outstanding in the name of the undersigned and which
the undersigned would be entitled to vote as of April 10, 1996, at the Annual
Meeting of Stockholders of the Corporation (the 'Meeting'), to be held at the
offices of Weil, Gotshal & Manges LLP, 30th Floor, 767 Fifth Avenue, New York,
New York, on Friday, May 10, 1996, at 10 o'clock a.m., New York Time, and at any
or all adjournments or postponements thereof; and the undersigned hereby
instructs and authorizes said attorneys to vote as indicated on the reverse
side.
The shares represented hereby will be voted in accordance with the
instructions contained on the reverse side. If no instructions are given the
shares will be voted FOR the election of all seven nominees in item 1 and FOR
item 2 below, both of said items being more fully described in the Notice of
Meeting and accompanying Proxy Statement, receipt of which is hereby
acknowledged. In the event of any proposed adjournment of the Meeting to permit
further solicitation of proxies with respect to any proposal listed below,
shares will be voted FOR adjournment with respect to such proposal if they were
to be voted FOR such proposal (including if there were no specifications), and
AGAINST adjournment with respect thereto if such shares were to be voted AGAINST
or to have ABSTAINED from voting with respect to such proposal.
(Continued and to be signed on reverse side)
1. ELECTION OF DIRECTORS: Stephen L. Brown, Miles L. Berger, Carl D. Glickman,
John Greenbaum, Irving Levine, Jonathan A. Marshall, Jeffrey J. Steiner
FOR the election of all nominees WITHHOLD AUTHORITY
listed above (except as marked to vote for all
to the contrary below) nominees listed above
/ / / /
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
________________________________________________________________________________
2. Ratification of appointment of Arthur Andersen LLP to serve as independent
auditors of the Corporation for the fiscal year ending December 31, 1996.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, on such other matters as may properly come before the
Meeting (other than adjournments with respect to any proposal as described on
reverse).
Dated __________________________________, 1996
_______________________________________________
_______________________________________________
Signature(s) of Stockholder(s)
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
THIS PROXY MAY BE REVOKED PRIOR TO ITS
EXERCISE.
PLEASE DATE, SIGN AND MAIL PROXY CARD
IN THE ENCLOSED ENVELOPE.