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: March 4, 1999
(Date of earliest event reported)
COMPU-DAWN, INC.
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(Exact name of Registrant as specified in charter)
Delaware 000-22611 11-3344575
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(State or other jurisdiction (Commission File No.) (IRS Employer Identification
of incorporation) Number)
77 Spruce Street, Cedarhurst, New York 11516
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 374-6700
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Item 5. Other Information
On March 4, 1999, Compu-DAWN, Inc. (the "Company") become aware of a
summons and complaint of Rugby National Corp. ("Rugby"), Harvey Weinstein
("Weinstein") and Credomarka National Corp. ("Credomarka") against the Company,
Rugby Acquisition Corp. ("RAC") and Mark Honigsfeld. The action was brought in
the Supreme Court of the State of New York, Nassau County.
In the complaint, the plaintiffs allege, among other things, (i) that the
Company willfully failed without good cause to consummate the Agreement and Plan
of Merger among Rugby, Weinstein, Compu-DAWN and RAC dated April 22, 1998 (the
"Merger Agreement"), (ii) that Rugby's business was allegedly damaged after the
Company consummated its $5,000,000 private placement to JNC Opportunity Fund
Ltd. and JNC Strategic Fund Ltd. (the "Private Placement") and subsequently
terminated the Merger Agreement (iii) that the Company's alleged breach of the
Merger Agreement was a breach under that certain Loan and Security Agreement
(the "Loan and Security Agreement") between the Company, as lender, and Rugby,
as borrower, which was entered into contemporaneously with the Merger Agreement
and (iv) that Mark Honigsfeld, the Chief Executive Officer of the Company,
falsely induced Rugby and Weinstein to give their consent to the Company's
$5,000,000 Private Placement. The plaintiffs are claiming damages in the
aggregated amount of $6,000,000, are seeking a declaratory judgment that (i) the
Loan and Security Agreement and related pledge agreements are unenforceable, and
(ii) that the collateral securing Rugby's obligations for the Loan and Security
Agreement be returned.
The Company and Mr. Honigsfeld believe that they have meritorious defenses
to all of the plaintiffs claims. The Company terminated the Merger Agreement in
accordance with its terms, including, among other things, that all of the
conditions to the Company's obligation to close were not satisfied, as
previously reported in the Company's Current Report on Form 8-K for an event
dated September 1, 1998. The Merger Agreement contains a $1,000,000 liquidated
damage provision as the sole and exclusive remedy if the Company fails to
consummate the transactions contemplated by the Merger Agreement and each and
every condition to the Company's obligation close has been satisfied in a timely
manner. Rugby remains in default under the Loan and Security Agreement.
The Company intends, and Mr. Honigsfeld has advised the Company that he
intends, to vigorously defend this action and each will consider pursuing
counterclaims they may have against the plaintiffs. Due to the inherent
uncertainties in litigation, the Company cannot predict nor guarantee nor the
outcome of this litigation.
Forward Looking Statements
Certain information contained in this Current Report are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, and is subject to the safe harbor created by that act. Compu-DAWN
cautions readers that certain important
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factors may affect Compu-DAWN's actual results and could cause such results to
differ materially from any forward-looking statements which may be deemed to
have been made in this Current Report or which are otherwise made by or on
behalf of Compu-DAWN. For this purpose, any statements contained in this Current
Report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative variations thereof or
comparable terminology are intended to identify forward-looking statements.
Factors which may affect Compu-DAWN's results include, but are not limited to,
the risks and uncertainties associated with litigation. Compu-DAWN is also
subject to other risks detailed herein or detailed from time to time in
Compu-DAWN's SEC filings.
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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 hereunto duly authorized.
COMPU-DAWN, INC.
Dated: March 8, 1999 By: /s/ Mark Honigsfeld
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Mark Honigsfeld, Chief Executive
Officer
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