SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C.
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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): April 14, 2000
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Mark Solutions, Inc.
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(Exact Name as Specified in Charter)
Delaware 0-17118 11-2864481
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Parkway Technical Center 1515 Broad Street, Bloomfield New Jersey 07003
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (973) 893-0500
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(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
On April 14, 2000, Mark Solutions, Inc. ("Mark") effected a $2,250,000 private
placement (the "Private Placement") to three investors, consisting of (i)
$2,250,000 two-year principal amount convertible notes (the "Convertible Notes")
and warrants to purchase 450,000 shares of Common Stock (the "Warrants"). As
partial consideration, the investors exchanged $1,250,000 in short-term debt for
$1,250,000 principal amount of Convertible Notes and 250,000 Warrants. A balance
of $1,000,000 will be funded in two equal additional installments on April 14
and 21, 2000.
The principal terms of the securities issued are set forth below.
Convertible Notes
Principal Amount: $2,250,000
Term: Two years
Interest Rate: Seven (7%) percent per annum.
Conversion Rights: Convertible at the average of the lowest closing price of
three (3) of the ten (10) day immediately preceding the conversion date(s). In
the event Mark effects a convertible securities financing while any portion of
the Convertible Notes are outstanding, the conversion price for the then
outstanding principal amount of the Note will be the conversion price
established in such financing.
Warrants
Shares Purchasable: 450,000 shares
Exercise Price: $5.00 per share provided, however, if Mark effects an equity
financing at less than $5.00 per share while any portion of the Convertible Note
remains outstanding, the exercise price shall be reduced to such per share
purchase price.
Term: Five Years expiring on April 13, 2005.
Miscellaneous
Issuances over Twenty (20%) Percent of the Outstanding Common Stock Pursuant to
Private Placement. In order to satisfy applicable Nasdaq corporate governance
requirements, Mark is prohibited from issuing in excess of 20% or 1,462,973
shares of Common Stock under the Private Placement until it obtains shareholder
approval. Upon request of the investors, Mark is obligated to present the matter
to its shareholders no later than December 31, 2000.
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Based on the closing bid price of Mark's Common Stock on April 14, 2000 of
$2.50, 1,350,000 shares of Common Stock would be issuable under the Private
Placement. Because the conversion of the Convertible Notes is based on the price
of the Common Stock at future dates, the actual number of shares of Common Stock
which will be issued is undeterminable, and may exceed the assumed number given
above.
Anti-dilution Provisions. The Convertible Notes and Warrants contain
anti-dilution provisions in the event of stock dividends, stock splits, reverse
stock splits and similar transactions.
Restriction on Acquiring in Excess of Five (5%) of the Outstanding Common Stock.
Each investor is prohibited from acquiring the beneficial ownership of over five
(5%) percent of Mark's Common Stock through the (i) conversion of the
Convertible Notes or (ii) the exercise of the Warrants.
Registration Rights. Mark is obligated to register for resale under the
Securities Act the Common Stock underlying the Convertible Notes and the
Warrants.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(c) Exhibits.
1. Form of Convertible Note Issued in the April 14, 2000 Private Placement
2. Form of Warrant Issued in the April 14, 2000 Private Placement
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 hereto duly authorized.
MARK SOLUTIONS, INC.
Date: April 14, 2000 By: /s/ Michael Nafash
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Michael Nafash,
Chief Financial Officer
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EXHIBIT1
CONVERTIBLE PROMISSORY NOTE
$[ Fill In Amount] April **, 2000
FOR VALUE RECEIVED, the undersigned, Mark Solutions, Inc. ("Maker"),
promises to pay [Name of Lender] ("Payee"), at [ Address of Lender ],
or such other place as Payee may from time to time designate by written notice
to Maker, in lawful money of the United States of America, the aggregate sum of
[ Principal Amount in Words] DOLLARS ($Principal Amount in Numbers]). All
principal and interest is to be paid without setoff or counterclaim as set forth
below.
Section 1. Interest Rate. Interest shall accrue at a rate of seven
(7%) per annum.
Section 2. Payments. Principal and interest shall due and payable [2
years from Date of Note], subject to acceleration as set forth below (the
"Maturity Date"). Maker shall not have the right to prepay the Note, in whole or
in part, prior to the Maturity Date.
Section 3. Default. It shall be an event of default ("Event of
Default"), and the entire unpaid principal of this Note, together with accrued
interest, shall become immediately due and payable, at the election of Payee,
upon the occurrence of any of the following events:
(a) Any default on the part of Maker to make any payment when due,
whether by acceleration or otherwise, and the continuation of
such failure for a period of fifteen (15) days after written
notice thereof from Payee;
(b) Maker shall commence (or take any action for the purpose of
commencing) any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, moratorium
or similar law or statute;
(c) A proceeding shall be commenced against Maker under any
bankruptcy, reorganization, arrangement, readjustment of debt,
moratorium or similar law or statute and relief is ordered
against it, or the proceeding is controverted, but is not
dismissed within sixty (60) days after the commencement
thereof;
(d) Maker consents to or suffers the appointment of a guardian,
receiver, trustee or custodian to any substantial part of its
assets that is not vacated within sixty (60) days;
(e) The dissolution, termination of existence, or insolvency of
Maker; or
(f) Maker consents to or suffers an attachment, garnishment,
execution or other legal process against any of his assets
that is not released within sixty (60) days.
Section 4. Waivers. Maker waives demand, presentment, protest, notice
of dishonor, and all other notices or demands of any kind or nature with respect
to this Note.
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Section 5. Assignment of Note. Neither Payee nor Maker may assign or
transfer this Note or any of its obligations under this Note in any manner
whatsoever without the prior written consent of the other. Maker agrees not to
assert against any assignee of this Note, any claim or defense that Maker may
have against any assignor of this Note.
Section 6. Conversion Right.
(a) This Note is immediately convertible into shares of Common Stock
(the "Underlying Common Stock") at the Conversion Price, at the option of the
Payee, in whole or in part. This Note may be converted in minimum increments of
$25,000 principal amount by surrendering the Note together with a conversion
notice in the form attached hereto as Exhibit A (a "Conversion Notice"). The
date of delivery of a Conversion Notice is a "Conversion Date". If Payee is
converting less than the entire principal amount represented by the Note, Maker
will deliver to Payee a new Note for the remaining principal amount.
(b) Not later than five (5) Trading Days after the Conversion Date,
Maker will deliver to Payee a certificate or certificates which shall be subject
to restrictive legends and trading restrictions required by law, representing
the number of shares of Common Stock being acquired upon the conversion(s) of
the Note, provided, however, Maker will not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon conversion of the Note,
until the Note is delivered to Maker.
(c) The Conversion Price (the "Conversion Price") in effect on any
Conversion Date will be the average of the lowest Closing Price on three (3) of
the ten (10) Trading Days immediately preceding the Conversion Date. The
"Closing Price" on any Trading Day shall mean the last reported bid price of the
Common Stock as reported the Nasdaq SmallCap Market, on such date or, if the
Common Stock is neither so listed nor so reported, the last reported bid price
of the Common Stock as quoted by a registered broker-dealer for which such
quotes are available on such date. In the event Maker effects a convertible
securities financing while any portion of this Note is outstanding, the
Conversion Price for the then outstanding principal amount of the Note shall be
determined in accordance with the conversion price established in such
financing.
(d) In case of reclassification of the Common Stock, any consolidation
or merger of Maker with or into another person, the sale or transfer of all or
substantially all of the assets of Maker or any compulsory share exchange
pursuant to which the Common Stock is converted into other securities, cash or
property, then the Note then outstanding shall have be convertible into the
shares of stock and other securities and property receivable upon or deemed to
be held by holders of Common Stock following such reclassification,
consolidation, merger, sale, transfer or share exchange, and Payee shall be
entitled upon such event to receive such amount of securities or property as the
shares of the Common Stock into which such Note could have been converted
immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange would have been entitled. This provision shall
similarly apply to successive reclassifications, consolidations, mergers, sales,
transfers or share exchanges.
(e) Upon a conversion, Maker shall not be required to issue stock
certificates representing fractions of shares of Common Stock, but shall issue
that number of shares of Common Stock rounded to the nearest whole number.
(f) Notwithstanding anything herein to the contrary, Payee shall not be
entitled to convert this Note to the extent that such conversion would result in
Payee becoming the "beneficial owner" of five percent (5%) or more of the
outstanding Common Stock as that term is defined in Section 13(d) of the
Securities Exchange Act of 1934. The opinion of legal counsel to Payee, in form
and substance satisfactory to Maker and its counsel, shall prevail in all
matters relating to the determination of Payee's beneficial ownership.
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(g) For the purposes hereof, the following terms shall have the following
meanings:
"Common Stock" means shares now or hereafter authorized of the class of
Common Stock, $.01 par value, of Maker and stock of any other class into which
such shares may hereafter have been reclassified or changed.
"Trading Day" means (a) a day on which the Common Stock is traded on
The Nasdaq Small Cap Market or (b) if the Common Stock is not listed on The
Nasdaq Small Cap Market or any stock exchange, a day on which the Common Stock
is traded in the over-the-counter market, as reported by the Nasdaq, or (c) if
the Common Stock is not quoted on the Nasdaq Stock Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices).
Section 7. Warrants. In partial consideration for making the loan
evidenced by this Note, Maker will issue five-year warrants (the "Warrants") to
purchase [20% of Dollar amount of Note] shares of Common Stock (the "Warrant
Common Stock"). The Warrants shall have an exercise price of $5.00 per share,
provided, however, if the Maker effects an equity financing at less than $5.00
per share while any portion of the Note remain outstanding, the exercise price
of the Warrants shall be reduced to such per share purchase price.
Notwithstanding anything herein to the contrary, Payee shall not be entitled to
exercise the Warrants to the extent that such exercise would result in Payee
becoming the "beneficial owner" of five percent (5%) or more of the outstanding
Common Stock as that term is defined in Section 13(d) of the Securities Exchange
Act of 1934. The opinion of legal counsel to Payee, in form and substance
satisfactory to Maker and its counsel, shall prevail in all matters relating to
the determination of Payee's beneficial ownership.
Section 8. Registration. Maker shall promptly file with the Securities
and Exchange Commission a registration statement covering the Underlying Common
Stock and the Warrant Common Stock and further agrees to file necessary
post-effective amendments. Maker will use its best efforts to cause the
registration statement to be declared effective under the Securities Act of 1933
as promptly as practicable after the filing thereof and to keep the registration
statement effective for two years after the date of this Note and the term of
the Warrants. All fees, disbursements and out-of-pocket expenses (other than
brokerage fees and commissions, applicable transfer taxes and counsel fees and
disbursements) in connection with the registration statement, including
compliance with applicable securities and "blue sky" laws shall be borne by
Maker.
Section 9. Miscellaneous.
(a) This Note maybe altered only by prior written agreement signed by
the party against whom enforcement of any waiver, change, modification, or
discharge is sought. This Note may not be modified by an oral agreement, even if
supported by a new consideration;
(b) Subject to Section 5, the covenants, terms and conditions contained
in this Note apply to and bind the heirs, successors, executors, administrators
and assigns of the parties;
(c) This Note constitutes a final written expression of all the terms
of the agreement between the parties regarding the subject matter thereof, is a
complete and exclusive statement of those terms, and supersedes all prior and
contemporaneous agreements, understandings, and representations between the
parties. If any provision or any word, term, clause, or other part of any
provision of this Note shall be invalid for any reason, the same shall be
ineffective, but the remainder of this Note shall not be affected and shall
remain in full force and effect;
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(d) All notices, consents, or other communications provided for in
this Note or otherwise required by law shall be in writing and may be given to
or made upon the respective parties at the following addresses:
MAKER: MARK SOLUTIONS, INC.
1515 Broad Street
Bloomfield, New Jersey 07003
Attention: Mr. Carl Coppola
Facsimile: 973-893-0049
PAYEE: [Name of Payee]
[Address of
Payee ]
Such addresses may be changed by notice given as provided in this sub-section.
Notices shall be effective upon the date of receipt; provided, however, that a
notice (other than a notice of a change of address) sent by certified or
registered U.S. Mail, with postage prepaid, shall be presumed received no later
than three (3) business days following the date of sending.
IN WITNESS THEREOF, Maker has executed this Note effective as of the
date first set forth above.
MARK SOLUTIONS, INC.
By:
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Carl Coppola, President
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EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered
Holder in Order to Convert the Note)
The undersigned hereby irrevocably elects to convert $____________ of the
enclosed Note into shares of Common Stock, par value U. S. $.01 per share (the
"Common Stock"), of Mark Solutions, Inc. (the "Company") according to the
conditions hereof, as of the date written below.
Conversion Calculations:
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Date to Effect Conversion:
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Principal Amount of Note to be Converted:
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Applicable Conversion Price:
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Signature
Name:
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Address:
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EXHIBIT 2
WARRANT TO PURCHASE COMMON STOCK
VOID AFTER APRIL 6, 2005
MARK SOLUTIONS, INC.
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
NUMBER
PURCHASE WARRANTS
PP ***
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PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES that:
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is the owner of **************** (*****) Warrants, and is entitled
to purchase from MARK SOLUTIONS, INC., a corporation incorporated under the laws
of the State of Delaware (the "Company") fully paid and non-assessable shares of
Common Stock, $.01 par value, of the Company, ("Common Stock"), upon
presentation and surrender of this Warrant with the Subscription Form duly
executed, on or before April 6, 2005 (the "Expiration Date") at the offices of
the Company and upon payment thereof of the purchase price, in lawful money of
the United States of America.
1. Related Note. The Warrant is being issued in connection with the private
placement and issuance to the Holder of a convertible promissory note in the
principal amount of $****************** dated as of April **, 2000 (the
"Promissory Note") pursuant to a Loan agreement dated April 14, 2000 between the
Company and the Holder (the "Loan Agreement").
2. Exercise Price. The purchase price shall be $5.00 per share, provided,
however, if the Company effects an equity financing at less than $5.00 per share
while any portion of the Promissory Note remains outstanding, the purchase price
shall be reduced to such per share purchase price (the "Exercise Price"). The
Exercise Price shall be subject to adjustment as herein provided.
3. Transferability and Divisibility. This Warrant may not be divided and is
not transferable except by operation of law or the laws of intestacy.
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4. Exercise. The Holder may exercise the Warrant with respect to all or any part
of the number of shares of Common Stock then exercisable hereunder by giving the
Secretary of the Company written notice of intent to exercise. The notice of
exercise shall specify the number of shares as to which the Warrant is to be
exercised and the date of exercise thereof.
On the exercise date or as soon thereafter as is practicable, the Company shall
cause to be delivered to the Holder, a certificate or certificates for the
shares then being purchased upon full payment for such shares.
5. Registration Rights. The Company shall promptly file with the Securities and
Exchange Commission a registration statement covering the Warrant Common Stock
and further agrees to file necessary post-effective amendments. The Company will
use its best efforts to cause the registration statement to be declared
effective under the Securities Act of 1933 as promptly as practicable after the
filing thereof and to keep the registration statement effective for two years
after the date of this Note and the term of the Warrants. All fees,
disbursements and out-of-pocket expenses (other than brokerage fees and
commissions, applicable transfer taxes and counsel fees and disbursements) in
connection with the registration statement, including compliance with applicable
securities and "blue sky" laws shall be borne by the Company.
6. Anti-dilution Provisions. The Exercise Price and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as hereinafter
provided. The Exercise Price in effect at any time and the number and kind of
securities purchasable upon exercise of each Warrant shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend or make a distribution on
its share of Common Stock in shares of Common Stock, (ii) subdivide or
reclassify its outstanding Common Stock into a greater number of shares, or (ii)
combine or reclassify its outstanding Common stock into a smaller number of
shares, the Exercise Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
Holder of this Warrant exercised after such date shall be entitled to receive
the aggregate number and kind of shares which, if this Warrant had been
exercised by such Holder immediately prior to such date, he would have owned
upon such exercise and been entitled to receive upon such dividend, subdivision,
combination or reclassification.
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Such adjustment shall be made successively whenever any event listed above
shall occur.
(b) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to Subsection (a) above, the number of Shares purchasable upon
exercise of this Warrant shall simultaneously be adjusted by multiplying the
number of Shares initially issuable upon exercise of this Warrant by the
Exercise Price in effect on the date hereof and dividing the product so obtained
by the Exercise Price, as adjusted.
(c) No adjustment shall be made by reason of the issuance in exchange for
cash, property or services, of shares of Common Stock or any securities
convertible into or exchangeable for shares of Common Stock or carrying the
right to purchase any of the foregoing. There are no other anti-dilution
provisions.
(d) In the event that at any time, as a result of an adjustment made pursuant
to Subsection (a) above, the Holder of this Warrant thereafter shall become
entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained herein.
(e) Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon exercise of this Warrant, Warrants theretofore
or thereafter issued may continue to express the same price and number and kind
of shares as are stated in the similar Warrants initially issuable pursuant to
this Agreement.
7. Consolidations and Mergers. If prior to the Expiration Date, the Company
shall consolidate with, or merge into another company (except for a merger or
consolidation in which the Company is the continuing corporation), the holder of
this Warrant will thereafter be entitled to receive, upon the exercise thereof,
the securities or property to which the holder of the number of shares of Common
Stock then deliverable upon the exercise hereof would have owned or have been
entitled to receive upon such consolidation or merger, and the Company shall
take such steps in connection with such consolidation or merger as may be
necessary to assure that the provisions of this Warrant shall thereafter be
applicable as nearly as reasonably may be, in relation to any securities and
property thereafter deliverable upon the exercise of this Warrant. A sale,
conveyance or lease to another corporation of the assets of the Company as an
entirety or
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substantially as an entirety, in connection which the Company is dissolved,
shall be deemed a consolidation or merger for the foregoing purposes.
8. Fractional Interests. The Company shall not issue fractions of shares of
Common Stock upon exercise of this Warrant but in lieu thereof make payment in
cash based on the Exercise Price in effect at that time or (ii) issue scrip
certificates evidencing such fractional interests which when presented with
other like certificates representing in the aggregate least one whole share, may
be exchanged for whole shares of Common Stock. Such scrip certificates may
become void and of no effect after a reasonable period as specified in such
scrip certificate. The computation of any fractional interest shall be made to
the first two decimal points without rounding.
9. Reservation of Shares; Issuance. The Company shall reserve a sufficient
number of shares of Common Stock to satisfy the requirements of this Warrant.
The Company will take all action necessary to insure that all shares issued upon
exercise of this Warrant will be duly and validly authorized and issued and
fully paid and non-assessable.
10. Notices. Any notices required under this Warrant shall be deemed given on
the date mailed if sent by certified mail, return receipt requested or on the
date of actual receipt by facsimile or other means. All notices to the holder of
this Warrant shall be sent to the address indicated on the Warrant register.
11. Miscellaneous. This Warrant will be governed by the substantive laws of the
State of New Jersey. This Warrant shall be binding upon the successors or
assigns of the Company.
Dated: April 14, 2000
MARK SOLUTIONS, INC.
By:
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Carl Coppola, President
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SUBSCRIPTION FORM
To Be Executed By The Holder in Order
To Exercise The Warrant
To: MARK SOLUTIONS, INC.
The undersigned irrevocably elects to exercise the right of purchase represented
by the within Warrant for, and to purchase thereunder______________ shares of
the stock provided for therein and tenders payment herewith to the order of MARK
SOLUTIONS, INC. in the amount of $_____________________ in accordance with the
terms of the Warrant.
The undersigned requests that the certificates for such shares be issued in the
name of
Insert Social Security Number
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or Other Identifying Number
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of Designated Stockholder
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Dated
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Warrantholder
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