SECURITIES & 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): December 28, 1996
Commission File Number: 33-7811-NY
GRAFIX TIME CORPORATION
(Exact name of registrant as specified in its charter)
New York 93-0943925
(State of Incorporation) (I.R.S. Employer I.D. Number)
2901 Suffolk Ct. East, Suite 130, Fort Worth, TX 76133
(Address of principal executive offices and Zip Code)
(800) 789-7736
(Registrant's telephone number, including area code)
This filing consists of 6 sequentially numbered pages. The Exhibit Index
is located at page 3.
<PAGE>
Item 5. Other Events.
On December 23, 1996, Grafix Time Corporation (the "Company") executed a
financing agreement with Monte Ahuja (the "Agreement"), a copy of which is filed
as an exhibit herewith, and whose terms are incorporated herein by reference.
Mr. Ahuja owns all 500,000 authorized, issued and outstanding shares of the
Company's Preferred Series A stock. Mr. Ahuja signed the Agreement on
December 28, 1996.
Pursuant to the terms of the Agreement, Mr. Ahuja or his designee(s) has
agreed to provide financing of up to $1,500,000 to the Company, in the form of
one or more loans, guarantees, letters of credit, or other financial
instruments, all pursuant to a definitive financial plan to be agreed between
the parties. The Agreement further calls for Mr. Ahuja or his designee(s) to
provide interim financing to the Company in the amount of $300,000, which Mr.
Ahuja provided in the form of a secured loan on January 2, 1997. Mr. Ahuja
provided an additional $500,000 secured loan to the Company on January 10,
1997. The Company has pledged its receivables, purchase orders, inventory, and
intangible assets as security for these loans.
In return for the interim funding and financing commitment from Mr. Ahuja,
the Company has agreed to modify the Statement of Series Shares pertaining to
the Preferred Series A stock owned by Mr. Ahuja, to allow conversion of the
Preferred Series A stock into a number of shares of the Company's common
stock representing (after conversion of all outstanding notes, options, and
warrants) seventy-five percent (75%) of the issued, outstanding, and committed
common stock of the Company. Conversion of the Preferred Series A Shares will
occur when Mr. Ahuja or his designee(s) make all of the agreed funding
available, pursuant to the terms of the Agreement.
The Agreement also provides that Mr. Ahuja and/or his designee(s) will
provide ongoing financial services to the Company, including a thorough review
of the Company's financial status and systems. The Company has agreed to retain
Mr. Ahuja and/or his designee(s) to manage the financial affairs of the
Company. The Company's Board of Directors approved the terms of the Agreement
on December 23, 1996. The Agreement is subject to ratification by the
Company's shareholders.
On December 22, 1996, Messrs. Timothy O'Brien and Arnold P. Guttenberg
resigned as directors of the Company. Neither indicated in his written notice
of resignation that his resignation was due to a disagreement with the Company
relating to its operations, policies, or practices. The remaining directors
have provided signed, undated resignations to the Company's counsel, pursuant
to the terms of the Agreement. In addition, Messrs. Honda, Sims, and Walker
(the remaining directors) have delivered irrevocable proxies in favor of Mr.
Ahuja, granting Mr. Ahuja the right to vote the shares of common stock they own
in any manner. Messrs. Honda, Sims, and Walker also have executed agreements to
terminate their current employment agreements with the Company, and to waive any
claims they may have under those agreements.
If the Agreement with Mr. Ahuja is consummated, Mr. Ahuja or his
designee(s) will own seventy-five percent (75%) of the issued and outstanding
common stock of the Company, and will control the Company's Board of Directors.
<PAGE>
Item 7. Exhibits.
2.1 Financing Agreement between the Company and Mr. Ahuja.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GRAFIX TIME CORPORATION
By: /S/ TED HONDA
Date: January 10, 1997 Ted Honda, President and Director
EXHIBIT INDEX
CURRENT REPORT ON FORM 8-K DATED DECEMBER 28, 1996
GRAFIX TIME CORPORATION
Exhibit No. Document Description Page No.
2.1 Financing Agreement between the Company and Mr. Ahuja 4
<PAGE>
EXHIBIT 2.1
GRAFIX TIME CORPORATION
4155 East Jewell Avenue
Suite 500
Denver, Colorado 80222
(303) 758-0073
December 23, 1996
Via Facsimile and U.S. Mail
Mr. Monte Ahuja
c/o Martin A. Traber, Esq.
Foley & Lardner
100 North Tampa Street, Suite 2700
Tampa, Florida 33602
RE: Financing CommitmentModification of Statement of Series Shares -
Preferred Series A
Dear Monte:
This letter is intended to summarize the principal elements of our
agreement regarding modifying and clarifying certain terms of the Statement of
Series Shares (the "Statement") adopted by the Board of Directors of Grafix Time
Corporation d/b/a Carrera Golf ("Carrera" or the "Company") on February 14,
1996, as well as our general obligations toward one another.
(1) Financing Commitment. In return for the modifications to the
Statement set forth below, you (individually, or through one or more of your
designees) will provide immediate financing to the Company, in the form of a
loan, guarantee, letter of credit, or other financial instrument immediately
accessible by the Company, in an amount of up to $1,500,000 to be funded based
upon a financial plan which is to be worked out between you and the Company's
representatives. Security for the amount funded to the Company pursuant to
this paragraph, as well as all terms of repayment, shall be evidenced by normal
and customary legal documents in form satisfactory to your counsel. The amount
to be funded to the Company pursuant to this paragraph shall be deposited in the
Company's bank account (the "Account") to be established at Huntington National
Bank, Cleveland, Ohio. You or your designee(s) will be the signer on the
Account. No funds shall be dispersed from the Account without your prior
approval.
Prior to completion of definitive agreements, the Company will execute
and deliver to you a demand promissory note at 10% per annum interest in the
amount of $300,000, and you shall deposit $300,000 in the Account ("Interim
Funding"). The Interim Funding shall be secured by all inventory, purchase
orders, accounts receivable and trade rights of the Company.
<PAGE>
Mr. Monte Ahuja
December 23, 1996
Page Two
(2) Modifications to Statement - Conversion Ratios. Carrera agrees to
modify Section 5 of the Statement upon availability of funding as set forth
above, to provide that the 500,000 shares of Series A Preferred stock currently
issued and outstanding, and all of which are owned by you, shall be immediately
convertible into a number of restricted Common Shares of the Company
representing, after conversion, seventy-five percent (75%) of the issued,
outstanding and committed Common Stock of the Company. "Committed" means any
shares currently reserved by Carrera for future issuance pursuant to the terms
of any outstanding warrants, options, convertible notes, or any other
instruments or agreements.
(3) Ongoing Financial Services. Current principals of Carrera will meet
with you and your representatives at your earliest convenience, to complete your
review of the financial status of the Company, the evaluation of the Company's
financial systems, and to address any suggested changes to the financial
structure of the Company. Carrera will retain you and/or your designees, either
as employees or consultants, to manage the financial affairs of the Company from
the date of the funding set forth above, all pursuant to the terms of one or
more definitive agreements to be drafted by counsel. Carrera shall make all
books and records immediately available to you and/or your designees. Carrera
shall immediately change all bank accounts to require the signature of Ted Honda
and your designee.
(4) Financial Plan. You are currently reviewing the financial condition
of the Company, its need for liquidity and capital. Based upon this review, the
Company and your representatives will agree to a financial and management plan
for the Company to be implemented with the funds described in Paragraph 1,
above. In addition, the plan and further financing activity is predicated upon
a conversion of the notes payable identified in Schedule A, attached hereto, to
common equity. These are, along with others, if any, the notes referred to in
paragraph 2, above.
(5) Board Approval/Shareholder Ratification. Carrera shall obtain
approval of the terms of this letter by its Board of Directors on or before the
date of execution by the parties hereto. Carrera shall take all actions
necessary to obtain shareholder approval of the terms of this letter as soon as
possible following the date of execution, if necessary.
(6) Board Control. Carrera's current Board of Directors consists of
Walter Sims, Ted Honda, Tim O'Brien, Russell Walker and Arnold Guttenberg.
Messrs. Sims, O'Brien, Walker and Guttenberg shall resign as officers and
directors of the Company upon confirmation that you have made the funds
available to Carrera as set forth above. Each shall deliver to you undated
resignations upon the Interim Funding which reference effectiveness upon the
funding described in paragraph 1, above. Each will deliver an irrevocable
proxy, coupled with an interest to vote all their shares upon the Interim
Funding. Mr. Honda shall appoint four new directors named by you or your
designee the ("Ahuja slate") to fill the vacancies created by the resignations
of Messrs. Sims, O'Brien, Walker and Guttenberg. Each officer shall release his
current employment contract and all accrued claims thereunder. The Ahuja slate
shall serve until the next annual meeting of shareholders (April, 1997),
at which time they may stand for reelection.
<PAGE>
Mr. Monte Ahuja
December 23, 1996
Page Three
This letter is an agreement in principle. The parties will execute and
deliver appropriate documents necessary to consummate the transaction described
herein.
Yours truly,
GRAFIX TIME CORPORATION:
/S/ TED HONDA
Ted Honda, President
APPROVED AND ACCEPTED THIS 28th DAY OF DECEMBER, 1996:
/S/ MONTE AHUJA
Monte Ahuja
