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
Date of Report (Date of earliest event reported): June 9, 2000
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SYMPOSIUM CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 0-25435 13-4042921
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
410 Park Avenue Suite 830
New York, New York 10022
(Address of principal executive offices) (Zip code)
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Registrant's telephone number, including area code: (212) 754-9901
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Item 5. Other Events
New Series of Convertible Preferred Shares
On June 9, 2000, the Company issued and sold 30,375 shares of a newly
designated series of Series A Convertible Preferred Stock (the "New Series A
Shares") and a five-year warrant to purchase 225,000 shares of Common Stock (the
"Warrant") at an initial exercise price of $1.4850 per share (subject to certain
anti-dilution and similar adjustments). The aggregate purchase price for the New
Series A Shares and the Warrant was $2,250,000. The initial aggregate face
amount of the New Series A Shares is $3,037,500. The Company also granted the
purchaser of the New Series A Shares (the "Purchaser") an option, exercisable in
the Purchaser's sole discretion during the sixty day period following June 9,
2000, to purchase up to an additional $2,025,000 face amount of New Series A
Shares and a Warrant to purchase an additional 150,000 shares of Common Stock
for the same purchase price per share.
Dividends accrue on the New Series A Shares at a rate of 10% of the
face amount per annum, payable semi-annually. Dividends may be paid in cash
and/or Common Stock at the Company's option (but until the shares of Common
Stock into which the New Series A Convertible Preferred Shares are convertible
and for which the Warrants are exercisable (collectively, the "Conversion
Shares") are covered by an effective registration statement (the "Registration
Statement"), such dividends must be paid in cash).
After payment or provisions for payment of debts and other liabilities
of the Company, the New Series A Shares are entitled to receive an amount equal
to the sum of their face amount plus any accrued and unpaid dividends thereon
upon the occurrence of a Liquidation Event. For these purposes, a Liquidation
Event includes a liquidation, dissolution or winding up of the Company, the sale
or other disposition of all of substantially all of the Company's assets or the
occurrence of a Fundamental Corporate Change (defined to include, among other
things, a transaction or series of related transactions in which more than 50%
of the voting power of the Company is disposed of). However, in the event of a
Fundamental Corporate Change, the holders of the New Series A Shares may elect
to treat such Fundamental Corporate Change as a Liquidation Event, to receive
the consideration that holders of Common Stock are entitled to receive in
respect of such Fundamental Corporate Change or to receive preferred shares in
the surviving corporation with substantially identical rights, preferences and
privileges as the New Series A Shares. The New Series A Shares rank pari passu
with the Company's Series C Convertible Preferred Shares upon the occurrence of
a Liquidation Event.
The New Series A Shares are convertible into Conversion Shares at any
time commencing on the earlier of 75 days following the filing of the
Registration Statement or the date on which such Registration Statement is
declared effective at a conversion price equal to the lesser of: (i) $1.9250
(110% of the closing bid price of the Common Stock on the date of issuance)
(subject to adjustment for stock splits, reverse stock splits and the like); or
(ii) percentages ranging from 103% to 91% (depending upon the number of days
elapsed from the date of issuance) of the average of the three lowest,
non-consecutive closing bid prices for the
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Common Stock in the ten trading days preceding the date of the holder's
conversion notice to the Company (the "Conversion Notice"). The conversion price
and the exercise price of the Warrants is subject to downward adjustment to
equal the lowest price at which shares of Common Stock or securities convertible
into, or exchangeable or exercisable for, shares of Common Stock are issued
while the New Series A Shares and Warrants remain outstanding (if such price is
lower than the then effective conversion price), subject to certain exceptions.
These exceptions include: (i) the issuance of shares of Common Stock upon
conversion or exercise of presently outstanding options, warrants and
convertible securities in accordance with the terms of such options, warrants or
convertible securities as in effect upon the initial issuance date of the New
Series A Shares (but subject to certain anti-dilution adjustments); and (ii)
certain issuances of securities to, or adjustments in the exercise or conversion
price of outstanding options, warrants or convertible securities held by, the
holders of the Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock, to the extent the number of additional shares of Common Stock
resulting from such issuances and adjustments does not exceed 5,000,000 shares.
However, during the 180-day period commencing on the date of issuance,
the New Series A Convertible Preferred Shares would not be convertible if the
closing bid price of the Common Stock on the date of the Conversion Notice were
below a floor (the "Conversion Floor") of $1.50 per share; and during the next
ninety day period, the New Series A Convertible Preferred Shares would not be
convertible if the closing bid price of the Common Stock on the date of the
Conversion Notice were below a Conversion Floor of $1.10 per share. On and after
the 270th day following the date of issuance, there will be no Conversion Floor.
The conversion provisions of the New Series A Convertible Preferred Shares
create a substantial risk of dilution to the holders of the Company's Common
Stock.
The New Series A Convertible Preferred Shares are redeemable, at the
option of the Company, upon not less than sixty days prior notice to the
holders, at a redemption price of 100% of face value plus any accrued and unpaid
dividends, commencing sixty days following the date of issuance, provided the
average closing asked price of the Common Stock for the twenty trading days
prior to the date on which the Company gives notice of such redemption is less
than $5.00 (subject to adjustment under certain circumstances). The shares
subject to redemption may not be converted once notice of redemption is given by
the Company.
The Purchaser of the New Series A Shares has agreed, and as a condition
to the transfer of New Convertible Preferred Shares, each subsequent holder
would be required to agree, not to engage in short sales, puts or similar
transactions with respect to the Company's Common Stock as long as New Series A
Convertible Preferred Shares or Warrants remain outstanding.
The Company is required to file a registration statement covering the
shares of Common Stock issuable upon conversion of the New Series A Shares and
exercise of the Warrant (including any additional New Series A Shares and the
additional Warrant issuable upon exercise of the Purchaser's option, as
described above) within 120 days following May 15, 2000 and to cause such
registration statement to become effective not later than 195 days following May
15, 2000.
The net proceeds from the issuance and sale of the New Series A Shares
(assuming that the Purchaser's option is not exercised) will be used (i)
together with the proceeds of the
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issuance of additional shares of Series C Convertible Preferred Stock described
below, to redeem the outstanding shares of Series B Convertible Preferred Stock
($1,535,000 plus accrued interest), (ii) to pay the outstanding principal
balance and accrued interest on the bridge loan from D2 Co. LLC, due on July 26,
2000 (approximately $310,000); (iii) if the Company does not come to an
agreement with the holders to extend the maturity of these obligations, to pay
the outstanding principal balance and accrued interest on the bridge loans from
Ari Emanuel and The Management Group (approximately $254,000); (iv) to fund the
Company's commitment to AmeriNet, Inc. (up to $800,000); and (v) for working
capital purposes.
The description of the terms of the New Series A Preferred Shares and
the Warrant set forth herein are summaries and do not purport to be complete.
For a complete description of such terms, reference is made to the Certificate
of Designation and form of Warrant filed as exhibits to this Current Report on
Form 8-K, the terms of which are incorporated by reference herein.
New Issuance Of Series C Convertible Preferred
On June 14, 2000, the Company issued and sold (the "Series C Offering")
7,500 shares of Series C Convertible Preferred Stock, par value $.001 (the
"Series C Preferred") and 250,000 shares of Common Stock, par value $.001, to
Lancer Offshore, Inc. In connection with such issuance and sale, the Company
also agreed to reduce the exercise price of warrants to purchase 2,000,000
shares of Common Stock held by Lancer Offshore, Inc. from $1.00 to $0.50 per
share. The aggregate consideration received for the shares of Series C
Preferred, the Common Stock and the repricing of the warrants was $750,000. The
Company has agreed to apply the proceeds of the Series C Offering to the
redemption of the Company's outstanding shares of Series B Convertible Preferred
Stock.
Each share of Series C Preferred has a stated value of $100 per share.
The Series C Preferred accrues dividends at a rate of 10% per annum, payable
quarterly in arrears. Dividends are payable, at the option of the Company, in
cash or Common Stock. The Series C Preferred is convertible into shares of
Common Stock at an effective conversion price of $1.00. At any time prior to
December 26, 2000, the Company may redeem, without penalty, in whole or in part,
the Series C Preferred by paying to the holders the full (or such lesser amount
in the event that the Company decides to effect a partial redemption) principal
face amount of Series C Preferred then outstanding plus accrued dividends. In
addition to any rights the holders of these Series C Preferred shares may have
under the Certificate of Designation of the Series C Preferred, if the Company
fails to redeem the Series C Preferred by December 26, 2000 the Company has
agreed to reduce the conversion price of the Series C Preferred to $0.25 per
share of Common Stock and to issue to the holders, on the first day of each
month that the Series C Preferred remains outstanding after December 26, 2000,
warrants to purchase 175,000 shares of Common Stock at an initial exercise price
of $0.25 per share.
The holders of Series C Preferred are entitled to demand and
"piggyback" registration rights with respect to: (i) the Common Stock issuable
upon (A) conversion of the Series C Preferred, (B) the exercise of the
previously outstanding warrants issued to such holders and (C)
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the exercise of any warrants that the Company may be required to issue in the
event of a failure to redeem the Series C Preferred on or before December 26,
2000. Lancer Offshore, Inc. is also entitled to the same registration rights
with respect to the 250,000 shares of Common Stock issued to it as described
above. The Company has also agreed to provide Lancer Offshore, Inc. monthly
financial statements of the Company and has granted a designated representative
of Lancer Offshore, Inc. visitation rights with respect to any meeting of the
Company's Board of Directors.
In connection with the transactions described above, the Company has
also agreed to pay a fee to Capital Research, Ltd. consisting of 562.5 Series C
Shares, warrants to purchase 100,000 shares of Common Stock with an exercise
price of $1.87 and 18,750 shares of Common Stock.
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Item 7.
Exhibit Number Description
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3.1 Certificate of Designation of Series A
Convertible Preferred Stock of Symposium
Corporation
10.1 Form of Common Stock Purchase Warrant to
Purchase 225,000 shares of Symposium
Corporation Common Stock, made to the order
of The Shaar Fund
10.2 Form of Registration Rights Agreement, dated
as of June 9, 2000, between Symposium
Corporation and certain holders of New Series
A Shares
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Symposium Corporation has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: June 16, 2000 Symposium Corporation
By: /s/ Tim Ledwick
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Name: Tim Ledwick
Title: Chief Financial Officer
