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 18, 1999
MERCHANTONLINE.COM, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-22607 84-1233073
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State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
in Company)
1600 South Dixie Highway
Boca Raton, Florida 33432
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 395-3585
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On October 18, 1999, Tarek Kirschen and Stephen Landau, who together owned
14,175,000 shares of the 18,025,000 issued and outstanding shares of
Merchantonline.com, Inc. (the "Company") agreed to convert 13,000,000 of these
shares into shares of Series A Preferred Stock. The Board of Directors of
Merchantonline.com, Inc. approved a resolution creating the Series A Preferred
Stock, a copy of which is filed as an exhibit to this report.
The conversion was completed on the advice of the Company's financial
advisors. The result of this conversion is to lower the number of shares of
outstanding common stock from 18,025,000 shares to 5,025,000 shares, of which
3,275,000 shares are currently restricted and not eligible for trading and of
which 1,750,000 shares are freely tradable.
The 13,000,000 shares of Common Stock were converted into 13,000 shares of
Series A Preferred Stock. Each share of Series A Preferred Stock is convertible
into Common Stock upon the earliest of: (1) any merger of the Company with or
into any other Company or other entity or person, or an other corporate
reorganization in which the Company shall not be the continuing or surviving
entity of such merger or reorganization or any transaction or series of related
transactions by the Company in which in excess of 50% of the Company's voting
power is transferred;
(2) a sale or other disposition of all or substantially all of the assets
of the Company; or
(3) October 18, 2002.
If in any fiscal year prior to October 18, 2002 the Company's revenues are
at least $5 million, an aggregate of 2,600 shares of Series A Preferred Stock,
pro rata among all holders, shall automatically be converted into shares of
Common Stock upon filing of the Company's Annual Report on Form 10-K with the
Securities and Exchange Commission.
Each share of Series A Preferred Stock has 1,000 votes and votes as a class
with the Common Stock.
The Series A Preferred Stock has a liquidation preference of $1.00 per
share and will get annual dividends of 5% or $.05 per share.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
3.4 Certificate of Designation for Series A Preferred Stock.
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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.
MERCHANTONLINE.COM, INC.
Date: October 18, 1999 By: /s/ Tarek Kirschen
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Tarek Kirschen, President
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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3.4 Certificate of Designation for Series A Preferred Stock.
Exhibit 3.4
Certificate of Amendment of
Articles of Incorporation of
Merchantonline.com, Inc.
Creating Series A Preferred Stock
Merchantonline.com, Inc., a Florida corporation (the "Corporation"), hereby
certifies pursuant to Section 607.0602 of the Florida Business Corporation Act,
its Board of Directors unanimously adopted the following resolution on October
18, 1999, which remains in full force and effect on the date hereof.
WHEREAS, the Board of Directors is hereby authorized by the Articles of
Incorporation to determine the preferences, limitations and relative rights and
to fix by resolution the designation of each series of Preferred Stock of the
Corporation; and
WHEREAS, it is the desire of the Board of Directors of the Company to
authorize and fix the terms of a series of Preferred Stock and the number of
shares constituting such series.
NOW THEREFORE, BE IT RESOLVED, that there is hereby authorized such series
of Preferred Stock on the terms and with the provisions herein set forth.
1. Designation. The number of shares constituting the Series A Preferred Stock
shall be 13,000 shares. The par value of the Series A Preferred Stock shall be
$1.00 per share.
2. Dividends. The holders of the outstanding shares of Series A Preferred Stock
shall be entitled to receive, out of any funds legally available thereof, annual
dividends payable at a rate of 5% of the Liquidation Preference (as defined
below) of $.05 per share, if, as and when declared by the Board of Directors of
the Corporation. In the event that the Board of Directors of the Corporation
shall declare a dividend payable upon the then-outstanding shares of Common
Stock (other than a stock dividend on the Common Stock distributed solely in the
form of additional shares of Common Stock), the holders of the Series A
Preferred Stock shall be entitled to dividends in an amount per share of the
Series A Preferred Stock, as would be declared payable on the largest number of
whole shares of Common Stock into which each share of Series A Preferred Stock
held by each holder thereof could be converted pursuant to the provisions of
this Section 4 hereof, such number determined as of the record date for the
determination of holders of Common Stock entitled to receive such dividend.
3. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of the shares of the Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders in cash or in property taken at
its fair market value as determined by the Board of Directors, before any
distribution of assets shall be made to the holders of the Common Stock or any
other junior stock an amount equal to $1.00 per share (the "Liquidation
Preference"). Such amount shall be subject to equitable adjustment whenever
there shall occur a stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving a change in
the capital structure of the Series A Preferred Stock. If upon liquidation,
dissolution or winding-up of the Corporation, the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the
holders of the Series A Preferred Stock the full amounts to which they
respectively shall be entitled, then the holders of the Series A Preferred Stock
shall share ratably in any such distribution of assets of the Corporation
according to the respective amounts which would be payable in respect to the
shares held by them upon such distribution if all amounts payable on or with
respect to said shares paid in full.
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(b) The merger of the Corporation with another corporation or the sale,
transfer or lease of all or substantially all of the assets of the Corporation
shall not be deemed a liquidation, dissolution or winding up of the Corporation
as those terms are used in Section 3. 4. Conversion. The holders of the Series A
Preferred Stock shall have the conversion rights set forth below (the
"Conversion Rights"):
(a) The term "Conversion Ratio" shall mean 1,000 shares of Common
Stock for each share of Series A Preferred Stock (subject to adjustment in
accordance with the terms of Section 4(h) hereof).
(b) Automatic Conversion.
(i) All outstanding shares of Series A Preferred Stock shall
automatically be converted into shares of Common Stock
immediately upon the earliest to occur of the following:
(1) any merger of the Corporation with or into any other corporation or other
entity or person, or an other corporate reorganization in which the Corporation
shall not be the continuing or surviving entity of such merger or reorganization
or any transaction or series of related transactions by the Corporation in which
in excess of 50% of the Corporation's voting power is transferred;
(2) a sale or other disposition of all or substantially all of the assets of the
Corporation; or (3) October 18, 2002.
(ii) If in any fiscal year prior to October 18, 2000 the
Corporation's revenues are at least $5 million, an aggregate of
2,600 shares of Series A Preferred Stock, pro rata among all
holders, shall automatically be converted into shares of Common
Stock upon filing of the Corporation's Annual Report on Form 10-K
with the Securities and Exchange Commission.
(c) Optional Conversion. The holder shall not have any optional
conversion rights.
(d) Conversion Rate. Each share of Series A Preferred Stock which is
converted pursuant to Section 4(b) or Section 4(c) shall be converted into
the number of shares of Common Stock which is equal to the product obtained
by multiplying (i) the number of shares of Series A Preferred Stock being
converted, by (ii) the Conversion Ratio, as last adjusted pursuant to
subsection 4(h) hereof and then in effect. (e) Mechanics of Conversion.
Before any holder of Series A Preferred Stock shall be entitled to convert
the same into shares of Common Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, to the Secretary of
the Corporation or any transfer agent for the Series A Preferred Stock
designated and appointed by the Corporation and shall state in writing to
the Secretary the name or names in which such holder wishes a certificate
or certificates for shares of Common Stock to be issued. The Corporation
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shall, as soon as practicable thereafter, issue and deliver to such holder
of Series A Preferred Stock or to such holder's nominee or nominees a
certificate or certificates for the number of full shares of Common Stock
to which such holder shall be entitled together with cash in lieu of any
fraction of a share as hereinafter provided. The conversion shall be deemed
to have been made at the date and time specified in Section 4(b) (the
"Conversion Date"). The person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on
the Conversion Date. (f) No Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion, and the Corporation shall, in
lien of issuing such fractional shares, make payment in cash based upon the
fair market value (as determined in good faith by the Corporation's Board
of Directors) of the fraction of a share on the Conversion Date. The number
of full shares issuable upon conversion shall computed on the basis of the
aggregate number of shares of the Series A Preferred Stock evidenced by
certificates surrendered for conversion at one time by the same holder. (g)
Partial Conversion. In the event some but not all of the shares of Series A
Preferred Stock represented by a certificate(s) surrendered by a holder are
converted, the Corporation shall execute and deliver to or on the order of
the holder, at the expense of the Corporation, a new certificate
representing the number of shares of Series A Preferred Stock which were
not converted. (h) Stock Splits, Stock Dividends And Recapitalizations. (i)
In the event the Corporation should at any time or from time to time after
the Certificate Date fix a record date to effect a split or subdivision of
the outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable
in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (for purposes of this
subsection 4(h) referred to as "Common Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or
the Common Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date
(or the date of such dividend distribution, split or subdivision if no
record date is fixed), the Conversion Ratio of the Series A Preferred Stock
shall be appropriately increased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of outstanding shares.
(ii) If the number of shares of Common Stock outstanding at any time after
the Certificate Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such
combination, the Conversion Ratio for the Series A Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares. (iii) If at any time or
from time to time there shall be a recapitalization of the Common Stock
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(other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in this Section 4 or Section 5)
provision shall be made so that the holders of the Series A Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series A
Preferred Stock the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the
rights of the holders of the Preferred Stock after the recapitalization to
the end that the provisions of this Section 4 (including adjustment of the
Conversion Prices then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable. (i) Other Distributions.
In the event the Corporation shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options
or rights not referred to in subsection 4(h)(iii), then, in each such case
for the purpose of this subsection 4(i), the holders of Series A Preferred
Stock shall be entitled to a proportionate share of any such distribution
as though they were the holders of the number of shares of Common Stock of
the corporation into which their shares of Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common
Stock of the corporation entitled to receive such distribution.
(j) No Fractional Shares And Certificate As To Adjustments.
(i) No fractional shares shall be issued upon conversion of the Series
A Preferred Stock, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Whether or not fractional
shares are issuable upon such conversion shall be determined on the basis
of the total number of shares of Series A Preferred Stock the holder is at
the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of any
Conversion Price of the Series A Preferred Stock pursuant to this Section
4, the Corporation, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish
to each holder of such Series A Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (A)
such adjustment and readjustment, (B) the Conversion Ratio at the time in
effect, and (c) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of a share of Series A Preferred Stock. (k) Notices of Record
Date. In the event of any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities
or property, or to receive any other right, the Corporation shall mail to
each holder of Series A Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and
the amount and character of such dividend, distribution or right.
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(l) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the shares of
the Series A Preferred Stock such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of the Series A Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series A Preferred Stock,
in addition to such other remedies as shall be available to the holder of such
Preferred Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes. (m) Notices. Any notice required by the provisions of this Section 4
to be given to the holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at the address appearing on the books of the Corporation. 5.
Voting Rights. The holder of each share of Series A Preferred Stock shall have
the right to one vote for each share of Common Stock into which such share of
Series A Preferred Stock could then be converted (initially 1,000 votes for each
share of Series A Preferred Stock), and with respect to such vote, such holder
shall have full voting rights and powers equal to the voting rights and powers
of the holders of Common Stock, and shall be entitled, notwithstanding any
provision hereof, to notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation, and shall be entitled to vote, together with holders
of Common Stock, with respect to any question upon which holders of Common Stock
have the right to vote.
6. Creation of Senior Securities. The Board of Directors may authorize classes
or series of Stock having rights, preferences and/or priorities superior to or
on a parity with those of the Series A Preferred Stock. 7. Status of Converted
or Redeemed Stock. In the event any shares of Preferred Stock shall be redeemed
or converted pursuant to Section 4 hereof, the shares so converted or redeemed
shall be canceled and shall not be issuable by the Corporation, and the Articles
of Incorporation of the Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed this 18th day of October, 1999.
Tarek Kirschen, President
