UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported):
October
21, 2005
FRANKLIN
COVEY CO.
(Exact
name of registrant as specified in its charter)
Commission
File No. 1-11107
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Utah
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87-0401551
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|
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(State
or other jurisdiction of incorporation)
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(IRS
Employer Identification Number)
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2200
West Parkway Boulevard
Salt
Lake City, Utah 84119-2099
(Address
of principal executive offices)(Zip Code)
Registrant’s
telephone number, including area code: (801)
817-1776
Former
name or former address, if changed since last report: Not
Applicable
______________________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
r Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
r Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
r Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
r Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement
On
October 21, 2005, Franklin Covey Co. (the Company) announced that it had given
notice to the shareholders of its Series A Preferred Stock for the redemption
of
$10.0 million, or approximately 400,000 shares, of currently outstanding Series
A Preferred Stock. The Company’s required 15 business day redemption notice was
dated October 21, 2005 for shareholders of record on that date and provides
for
a $25 per share redemption of preferred stock on November 11, 2005 on a pro-rata
basis.
The
Company also announced that it intends to seek shareholder approval to amend
its
articles of incorporation to extend the period during which it has the right
to
redeem the outstanding preferred stock at 100 percent of the liquidation
preference, or $25 per share plus accrued dividends. The amendment would extend
the current redemption deadline from March 8, 2006 to December 31, 2006. It
would also provide for the right to extend the redemption period for an
additional year to December 31, 2007, if another $10.0 million of preferred
stock is redeemed before December 31, 2006. Knowledge Capital, an entity which
currently holds in excess of 90 percent of the preferred stock outstanding
and
approximately 21 percent of the common stock voting power, on an as-converted
basis, has signed an agreement to vote in favor of the proposal to extend the
redemption period. The Company currently has approximately 2.3 million shares
of
Series A Preferred Stock outstanding.
Item
9.01 Financial
Statements and Exhibits
(c)
Exhibits
99.1
Press Release dated October 21, 2005
99.2
Redemption Extension Voting Agreement between Franklin Covey Co. and Knowledge
Capital Investment Group, dated October 20, 2005.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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FRANKLIN
COVEY CO.
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Date:
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October
24, 2005
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By:
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/s/
STEPHEN D. YOUNG
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Stephen
D. Young
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Chief
Financial Officer
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Exhibit
99.1
News
Bulletin
 |
For
Further Information:
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| 2200 West Parkway Boulevard |
Richard
R. Putnam
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| Salt Lake City, Utah 84119-2331 |
Investor
Relations
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www.franklincovey.com
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(801)
817-1776
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FRANKLINCOVEY
ANNOUNCES
$10
MILLION REDEMPTION OF PREFERRED STOCK
SEEKS
EXTENSION OF REDEMPTION PERIOD
Salt
Lake City, Utah -
October
21, 2005 - FranklinCovey (NYSE:
FC)
today
announced that it has given shareholders of its Series A Preferred Stock
notice
of redemption for $10 million of the current outstanding preferred stock.
The
required 15 business day notice given today for shareholders of record as
of
today will provide for a $25 per share redemption of preferred stock on November
11, 2005 on a prorata basis.
The
Company also announced that it intends to seek shareholder approval to amend
its
articles of incorporation to extend the period during which it has the right
to
redeem the outstanding preferred stock at $25 per share. The amendment would
extend the current redemption deadline from March 8, 2006 to December 31,
2006.
It would also provide for the right to extend the redemption period for an
additional year to December 31, 2007, if another $10 million is redeemed
before
December 31, 2006. Knowledge Capital, an entity which currently holds in
excess
of 90% of the preferred stock outstanding and has approximately 21% of the
common stock voting on an as-converted basis, has signed a voting agreement
to
vote in favor of the proposal to extend the redemption period. There are
approximately 2.3 million shares of the Series A Preferred Stock currently
outstanding.
About
FranklinCovey
FranklinCovey
is a leading learning and performance services firm assisting professionals
and
organizations in measurably increasing their effectiveness in leadership,
productivity, communication and sales. Clients include 91 of the Fortune
100,
more than three-quarters of the Fortune 500, thousands of small and mid-sized
businesses, as well as numerous government entities. Organizations and
professionals access FranklinCovey services and products through consulting
services, licensed client facilitators, one-on-one coaching, public workshops,
catalogs, more than 100 retail stores, and www.franklincovey.com
.
Nearly
1,500 FranklinCovey associates provide professional services and products
in 36
offices in 129 countries.
Safe-Harbor
Statement
This
announcement contains forward-looking statements that necessarily are based
on
certain assumptions and are subject to certain risks and uncertainties,
including general economic conditions, shareholder approval of the extension
proposal and other factors identified and discussed in the Company’s 2004 10-K
report and subsequent 8-K and 10-Q reports filed with the Securities and
Exchange Commission, many of which are beyond the control or influence of
the
Company. There can be no assurance that the Company’s actual future performance
will meet management’s expectations. These forward-looking statements are based
on management’s expectations as of the date hereof, and are subject to the
outcome of various factors, including those listed above, any one of which
may
cause future results to differ materially from the Company’s current
expectations.
REDEMPTION
EXTENSION VOTING AGREEMENT
THIS
REDEMPTION EXTENSION VOTING AGREEMENT (this “Agreement”), dated as of October
__, 2005, is entered into by and between Franklin Covey Co., a Utah corporation
(the “Company”), and Knowledge Capital Investment Group, a Texas general
partnership (“Shareholder”). Capitalized terms used herein but not defined shall
have the meaning assigned to them in the Amended and Restated Shareholders
Agreement between the Company and Shareholder, dated March 8, 2005, and the
Amended and Restated Articles of Incorporation of the Company, dated March
4,
2005 (the “Amended Articles of Incorporation”).
WHEREAS,
Section
7(a) of the Amended Articles of Incorporation of the Company provides that
the
Company may, unless the Company and any holder or holders of Senior Preferred
otherwise agree, redeem shares of Senior Preferred only (i) during the time
period commencing on March 8, 2005 and
ending on March 8, 2006 (the
“Initial Redemption Period”), and (ii) after the fifth anniversary of the
expiration of the Initial Redemption Period (at prices and in accordance
with
the terms and conditions stated in Section 7); and
WHEREAS,
Shareholder
and the Company believe it is in the best interests of all shareholders of
the
Company to amend Section C.7(a) of the Articles by adopting the amendment
attached hereto as Exhibit B (the “Proposed Amendment”); and
WHEREAS,
as
of the
date hereof, Shareholder owns beneficially or of record or has the power
to
vote, or direct the vote of, the number of shares of Series A Preferred
of
the Company and the number of shares of Common Stock of the Company as set
forth
opposite Shareholder’s name on Exhibit A hereto (all such Common Stock and
Series A Preferred and any shares of Common Stock or Series A Preferred of
which
ownership of record or beneficially or the power to vote is hereafter acquired
by Shareholder prior to the termination of this Agreement being referred
to
herein as the “Shares”);
NOW,
THEREFORE,
in
consideration of the premises and of the mutual agreements and covenants
set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Transfer
of Shares.
Shareholder shall not, during the period commencing on the date hereof and
terminating at the conclusion of the next duly convened meeting of the Company’s
shareholders (the “Shareholder Meeting”), directly or indirectly, (a) sell,
pledge, encumber, assign, transfer or otherwise dispose of any or all of
Shareholder’s Shares or any interest in such Shares (other than pursuant to a
redemption by the Company), (b) deposit any Shares or any interest
in such
Shares into a voting trust or enter into a voting agreement or arrangement
with
respect to any Shares or grant any proxy with respect thereto (other than
as
contemplated herein) or (c) enter into any contract, commitment, option
or
other arrangement or undertaking with respect to the direct or indirect
acquisition or sale, assignment, pledge, encumbrance, transfer or other
disposition of any Shares.
2. Agreement
to Vote.
During
the period commencing on the date hereof and terminating at the conclusion
of
the Shareholder Meeting, Shareholder, solely in Shareholder’s capacity as a
shareholder of the Company, agrees to vote (or cause to be voted) all of
the
Shares at any such meeting or any adjournment thereof, and in any action
by
written consent of the shareholders of the Company, (i) in favor of
the
adoption of the Proposed Amendment, (ii) against any action that could
reasonably be expected to delay or compromise approval of the Proposed
Amendment, (iii) against any action or agreement that could reasonably be
expected to result in the Proposed Amendment not being adopted, (iv) in
favor of any other matter reasonably relating to the adoption of the Proposed
Amendment.
3. Entire
Agreement; Amendments.
This
Agreement, the Amendment Agreement and the other agreements referred to herein
and therein constitute the entire agreement of the parties and supersede
all
prior agreements and undertakings, both written and oral, between the parties
with respect to the subject matter hereof. This Agreement may not be amended
or
modified except in an instrument in writing signed by, or on behalf of, the
parties hereto.
4. Assignment.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and permitted assigns;
provided, however, that any assignment, delegation or attempted transfer
of any
rights, interests or obligations under this Agreement by Shareholder without
the
prior written consent of the Company shall be void.
5. Fees
and Expenses.
Except
as otherwise provided herein or in the Amendment Agreement, all costs and
expenses (including, without limitation, all fees and disbursements of counsel,
accountants, investment bankers, experts and consultants to a party) incurred
in
connection with this Agreement and the transactions contemplated hereby shall
be
paid by the party incurring such costs and expenses.
6. Notices.
All
notices, requests, claims, demands and other communications hereunder must
be in
writing and will be given or made (and will be deemed to have been duly given
or
made upon receipt) by delivery in person, by courier services, by cable,
by fax,
by telegram, by telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given
in
accordance with this Section 6):
If
to the
Company:
Franklin
Covey Co.
2200
West
Parkway Boulevard
Salt
Lake
City, Utah 84119-2331
Attention:
Robert A. Whitman
Fax:
(801) 817-8723
with
a
copy to:
Joel
C.
Peterson
Chairman
of the Special Committee of the Board of Directors
c/o
Peterson Partners LP
299
South
Main Street
Suite
2250
Salt
Lake
City, Utah 84111
Fax:
(801) 359-8840
with
a
copy to :
Val
J.
Christensen
2200
West
Parkway Boulevard
Salt
Lake
City, Utah 84119-2331
Fax:
(801) 817-8197
If
to
Shareholder to:
Knowledge
Capital Investment Group
3232
McKinney Avenue
Suite
890
Dallas,
Texas 75204
Attention:
Donald J. McNamara
Fax:
(214) 220-4924
with
a
copy to:
Munsch
Hardt Kopf & Harr, P.C.
1445
Ross
Avenue, Suite 4000
Dallas,
Texas 75202
Attention:
Peter E. Lorenzen
Fax:
(214) 978-4371
7. Headings.
The
headings contained in this Agreement are for reference purposes only and
shall
not affect in any way the meaning or interpretation of this
Agreement.
8. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions
and
provisions of this Agreement shall nevertheless remain in full force and
effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible to the fullest extent permitted by applicable law in an acceptable
manner.
9. Specific
Performance.
The
parties agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. Shareholder agrees that, in the event of
any
breach or threatened breach by Shareholder of any covenant or obligation
contained in this Agreement, the Company shall be entitled (in addition to
any
other remedy that may be available to it, including monetary damages) to
seek
and obtain (a) a decree or order of specific performance to enforce
the
observance and performance of such covenant or obligation, and (b) an
injunction restraining such breach or threatened breach. Shareholder further
agrees that neither the Company nor any other party shall be required to
obtain,
furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 9, and Shareholder
irrevocably waives any right he, she or it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.
10. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Utah applicable to contracts executed in and to be performed
in
that state without regard to any conflicts of laws.
11. No
Waiver.
No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The Company shall not be deemed to
have
waived any claim available to it arising out of this Agreement, or any right,
power or privilege hereunder, unless the waiver is expressly set forth in
writing duly executed and delivered on behalf of the Company. The rights
and
remedies herein provided shall be cumulative and not exclusive of any rights
or
remedies provided by law.
12. Counterparts.
This
Agreement may be executed in two or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall
be
deemed to be an original but all of which taken together shall constitute
one
and the same agreement.
[Signature
page follows.]
IN
WITNESS WHEREOF, each of the Company and Shareholder has executed this Voting
Agreement or has caused this Voting Agreement to be executed by their respective
duly authorized officers as of the date first written above.
COMPANY:
FRANKLIN
COVEY CO.
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By:
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Name:
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Title:
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SHAREHOLDER:
KNOWLEDGE
CAPITAL INVESTMENT GROUP
By: Inspiration
Investments Partners III, L.P.
Its: Manager
By: Inspiration
Investments GenPar III, L.P.
Its: General
Partner
By: Hampstead
Associates, Inc.
Its: Managing
General Partner
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By:
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Name:
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Title:
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EXHIBIT
A
SHARES
OWNED
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Name
of Shareholder
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Number
of Shares of Common Stock Owned Beneficially and of Record
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Number
and Type of Shares of Series A Preferred Owned Beneficially and
of
Record
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Number
and Type of Shares of Common Stock and Series A Preferred Issuable
upon
Exercise of Options, Warrants and Other Rights to Acquire Such
Stock
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Knowledge
Capital Investment Group
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1,015,002
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2,111,438
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0(1)
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(1) Excludes
Common Stock issuable upon exercise of Series A Preferred.
EXHIBIT
B
AMENDMENT
TO AMENDED AND RESTATED ARTICLES OF INCORPORATION OF FRANKLIN COVEY
The
Amended and Restated Articles of Incorporation of Franklin Covey Co., dated
March 4, 2005, are hereby amended by deleting Section C.7(a) in its entirety
and
substituting the following in place thereof:
Section
C.7
(a)
Redemption
Right.
The
shares of Senior Preferred will not be redeemable, except as otherwise agreed
between the Company and any holder or holders of Senior Preferred and except
that:
(i)
during the period beginning on March 8, 2005 and ending on March 8, 2006
(the
“Initial Redemption Period”), the Company may, upon 15 business days prior
notice to the holders of Senior Preferred, redeem all or any portion of the
then-outstanding Senior Preferred at 100% of the then-applicable Liquidation
Price plus accrued and unpaid dividends to the date of payment; and
(ii) provided
it has redeemed during the period from July 15, 2005 through the end of the
Initial Redemption Period at least 400,000 shares of Senior Preferred Stock,
the
Company shall have the right during the period beginning on March 9, 2006
and
ending on December 31, 2006 (the “Second Redemption Period”), upon 15 business
days prior notice to the holders of Senior Preferred, to redeem all or any
portion of the then-outstanding Senior Preferred at 100% of the then-applicable
Liquidation Price plus accrued and unpaid dividends to the date of payment;
and
(iii)
provided the Company has redeemed during the period beginning on July 15,
2005
through the end of the Second Redemption Period at least 800,000 shares of
Senior Preferred Stock, the Company shall have the right during the period
beginning on January 1, 2007 and ending on December 31, 2007 (the “Third
Redemption Period,” each of the Initial Redemption Period, the Second Redemption
Period and the Third Redemption Period being called a “Redemption Period”), upon
15 business days prior notice to the holders of Senior Preferred, to redeem
all
or any portion of the then-outstanding Senior Preferred at 100% of the
then-applicable Liquidation Price plus accrued and unpaid dividends to the
date
of payment; and
(iv)
beginning on the fifth anniversary of the expiration of the last Redemption
Period during which the Company shall have the right to redeem Senior Preferred
Stock based on the Company’s redemption of Senior Preferred pursuant to subparts
(i) through (iii) of this Section 7(a), the Company may, upon 15 business
days
prior notice to the holders of Senior Preferred, redeem all or any portion
of
the then-outstanding Senior Preferred at 101% of the then-applicable Liquidation
Price plus accrued and unpaid dividends to the date of payment.
Any
partial redemption effected pursuant to this Section 7 shall be made on a
pro-rata basis among the holders of Senior Preferred in proportion to the
shares
of Senior Preferred then held by them. Notwithstanding anything to the contrary,
the mandatory conversion of shares of Series A Preferred into shares of Series
B
Preferred pursuant to Section 8 hereof may occur at any time during
the
notice periods set forth in clauses (i) through (iv) of this
Section 7(a).