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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: January 29, 1998
COVENTRY INDUSTRIES CORP.
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(Exact name of registrant as specified in its charter)
FLORIDA 000-22653 65-0353816
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
7777 Glades Road, Suite 211
Boca Raton, Fl 33434
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(Address of executive offices and Zip Code)
Registrant's telephone number, including area code: 561-488-4802
not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On January 16, 1998 Coventry Industries Corp., a Florida corporation
(the "Company") sold 1,750 shares of its 5% Convertible Preferred Stock
("Preferred Stock"), at a purchase price of $1,000 per share, to an unaffiliated
third party in a private transaction exempt from registration under the
Securities Act of 1933, as amended (the "Act") in reliance on Section 4(2)
thereof and Regulation D promulgated thereunder. The designations, rights and
preferences of the Preferred Stock, which are included as Exhibit 3(i) to Item
7.(c) of this Report, generally provide that (i) the shares of Preferred Stock
have no voting rights, (ii) the holders receive cumulative dividends at the rate
of $50 per share per annum, payable in cash or stock at the Company's option,
(iii) in the event of a liquidation, dissolution or winding up of the Company,
the holders receive a liquidation preference of $1,000 per share of Preferred
Stock plus any accrued but unpaid dividends, and (iv) the shares of Preferred
Stock are convertible at the holder's option into shares of common stock at a
conversion price determined by dividing the liquidation value of $1,000 per
share by the conversion price, i.e., 80% of the average closing bid price of the
common stock as report on The Nasdaq SmallCap Market for the five (5) trading
days immediately preceding the date of conversion. The Company has agreed to
register the shares of Common Stock underlying the Preferred Stock (the
"Registerable Securities") under the Act in a registration statement on Form S-3
to be filed with the Securities and Exchange Commission (the "Commission") no
later than 30 days from the closing date of the transaction. In the event such
registration statement is not declared effective the Commission within 121 days
from the closing date, the Company is subject to a penalty of 2% of the purchase
price per month until the effectiveness thereof.
The ability of the purchaser to convert the shares of Preferred Stock
is presently limited to a conversion of up to 526,034 shares of common stock,
being a maximum of 19.95% of the Company's currently issued and outstanding
common stock, until such time as the Company's shareholders shall have approved
the issuance of the Registerable Securities. $500,000 of the purchase price and
a certificate for 500 shares of Preferred Stock have been deposited in escrow by
the purchaser with Atlas, Pearlman, Trop & Borkson, P.A., counsel for the
Company, pending such approval. Pursuant to the terms of the private placement,
should the Company obtain shareholder approval, the purchaser shall acquire an
additional 750 shares of Preferred Stock upon the same terms and conditions. In
connection therewith, the Company will hold a special meeting of its
shareholders on March 26, 1998 for the purposes of voting on the approval of the
issuance of the Registerable Securities in excess of 19.95% of the currently
issued and outstanding shares of common stock of the Company.
In connection with this placement, the Company paid the placement agent
a fee equal to 10% of the gross proceeds plus warrants to acquire 125,000 shares
of the Company's common stock at an exercise price of $4.36 per share.
Further, on January 16, 1998 the Company acquired 750,000 shares of the
common stock of Regenesis Holdings, Inc., a Florida corporation ("Regenesis"),
representing approximately 51% of Regenesis' issued and outstanding common
stock, from a shareholder of Regenesis in a private transaction exempt from
registration under the Act in reliance upon Section 4(2) thereof. The Company
issued 75,000 shares of its restricted common stock to the seller as full
consideration for the purchase. Regenesis, a publicly-traded company (OTC
Bulletin Board: RGNS), through its
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Latour International, Inc. subsidiary owns the rights to acquire a Canadian peat
moss harvesting and processing facility in the Quebec Province. Robert Hausman,
the Company's President and Chairman of the Board, is a member of the Board of
Directors of the Regenesis and C. Lawrence Rutstein, a member of the Board of
Directors and President of Regenesis, is a member of the Board of Directors of
the Company. The transaction was approved by the Company's disinterested
directors.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro forma Financial Information.
Not applicable.
(c) Exhibits.
No. Description
3(i) Designations, rights and preferences of the 5% Convertible
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.
Date: January 29, 1998 By: /s/ Robert Hausman
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Robert Hausman,
President and Chief Executive Officer
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EXHIBIT 3(i)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
COVENTRY INDUSTRIES CORP.
The undersigned, being a natural person competent to contract, does
hereby make, subscribe and file the Articles of Amendment to the Articles of
Incorporation of Coventry Industries Corp., formerly known as Workforce Systems
Corp., a Florida corporation, pursuant to Sections 607.0602 and 607.10025 of the
Florida Business Corporation Act:
1. The name of the corporation is Coventry Industries Corp. (the
"Company").
2. The text of the resolution of the Board of Directors on January 14,
1998 setting forth amendments to the designations, rights and privileges of the
Company's 5% Convertible Preferred Stock is as set forth on Schedule 1 attached
hereto and incorporated herein by reference.
3. The foregoing resolutions were duly adopted by unanimous vote of the
Board of Directors held on January 14, 1998 and shareholders' action was not
required.
IN WITNESS WHEREOF, this Articles of Amendment to the Articles of
Incorporation has been executed on the 15th day of January, 1998.
oventry Industries Corp.
By: /s/ Robert Hausman
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Robert Hausman,
President and Chairman
of the Board of Directors
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SCHEDULE 1
COVENTRY INDUSTRIES CORP.
RESOLUTION ESTABLISHING RIGHTS AND PREFERENCES
FOR 5% CONVERTIBLE PREFERRED STOCK
RESOLVED, that there shall be a series of shares of the Corporation
designated "5% Convertible Preferred Stock"; that the number of shares of such
series shall be 2,500 and that the rights and preferences of such series (the
"5% Preferred") and the limitations or restrictions thereon, shall be as set
forth herein.
The following shall be adopted and incorporated by reference into the
foregoing resolutions as if fully set forth therein:
1. Dividends.
(a) The holders of the 5% Preferred shall be entitled to receive out of
any assets legally available therefor cumulative dividends at the rate of $50
per share per annum, accrued daily and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year in preference and priority to
any payment of any dividend on the Common Stock or any other class or series of
stock of the Corporation. Such dividends shall accrue on any given share from
the day of original issuance of such share and shall accrue from day to day
whether or not earned or declared. If at any time dividends on the outstanding
5% Preferred at the rate set forth above shall not have been paid or declared
and set apart for payment with respect to all preceding periods, the amount of
the deficiency shall be fully paid or declared and set apart for payment, but
without interest, before any distribution, whether by way of dividend or
otherwise, shall be declared or paid upon or set apart for the shares of any
other class or series of stock of the Corporation.
(b) Any dividend payable on a dividend payment date may be paid, at the
option of the Corporation, either (i) in cash or (ii) in shares of the
Corporation's Common Stock, $.001 par value per share (the "Common Stock"), if
the Common Stock issuable upon conversion of such shares has been registered for
resale under the Securities Act of 1933, as amended (the "Act"), and the
registration statement including a current prospectus with respect thereto
remains in effect at the date of delivery of such shares, and if the Corporation
shall have given written notice of its intention to pay such dividend in Common
Stock to all holders of the 5% Preferred at least ten (10) days before the
record date for such dividend.
2. Liquidation Preference; Redemption.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the 5% Preferred
shall be entitled to receive, prior and in preference to any distribution of any
assets of the Corporation to the holders of any other class or series of shares,
the amount of $1,000 per share plus all accrued but unpaid dividends (the
"Liquidation Preference").
(b) A consolidation or merger of the Corporation with or into any other
corporation or
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corporations, or a sale of all or substantially all of the assets of the
Corporation (other than a sale or transfer to a wholly-owned subsidiary of the
Corporation), shall, at the option of the holders of the 5% Preferred, be deemed
a liquidation, dissolution or winding up within the meaning of Section 2(a)
hereof if the shares of stock of the Corporation outstanding immediately prior
to such transaction represent immediately after such transaction less than a
majority of the voting power of the surviving corporation (or of the acquirer of
the Corporation's assets in the case of a sale of assets). Such option may be
exercised by the vote or written consent of holders of a majority of the 5%
Preferred at any time within thirty (30) days after written notice (which shall
be given promptly) of the essential terms of such transaction shall have been
given to the holders of the 5% Preferred in the manner provided by law for the
giving of notice of meetings of shareholders.
(c) The Corporation, at its option, may cause any or all outstanding
shares of the 5% Preferred to be redeemed at any time beginning on the one
hundred twenty first (121st) day following the Closing Date, provided the
Corporation has given notice of its intention to redeem to the holders of the 5%
Preferred at least twenty (20) days prior to the redemption date. On the
redemption date, the Corporation shall pay such holders by cashier's check or
wire transfer in immediately available funds the amount of $1,300 per share,
plus all accrued but unpaid dividends payable under Section 1 hereof and any
other amounts and liquidated damages due with respect to the Shares. Promptly
thereafter, the holders shall surrender the certificate or certificates
representing the 5% Preferred, duly endorsed, at the office of the Corporation
or of any transfer agent for such shares, or at such other place designated by
the Corporation.
3. 5% Preferred - Optional Conversion. The holders of the 5% Preferred
shall have optional conversion rights as follows:
(a) Right to Convert. Shares of 5% Preferred shall be convertible, at
the option of the holder thereof, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing (x) the
Liquidation Preference of the 5% Preferred determined pursuant to Section 2
hereof on the date the notice of conversion is given, by (y) the Conversion
Price determined as hereinafter provided in effect on the applicable conversion
date. Notwithstanding any provision to the contrary, in no event shall the
Company be required to issue more than 526,034 shares of Common Stock upon
conversion of the 5% Preferred (the "Maximum Common Shares") without first
having obtained the stockholder approval of the issuance of 5% Preferred, the
Common Stock pursuant to the conversion of the 5% Preferred and payment of
dividends under the 5% Preferred. If the Corporation's stockholders disapprove
of the foregoing or such approval has not been obtained by March 31, 1998, the
Company shall on the day following issuance of the Maximum Common Shares redeem
all remaining 5% Preferred in accordance with the second sentence of Section
2(c) hereof.
(b) Mechanics of Conversion. To convert shares of 5% Preferred into
shares of Common Stock under Section 3(a), the holder shall give written notice
to the Corporation (which notice may be given by facsimile transmission) that
such holder elects (with the right to revoke) to convert the shares and shall
state therein date of the conversion, the number of shares to be converted and
the name or names in which such holder wishes the certificate or certificates
for shares of Common Stock to be issued. Promptly thereafter, the holder shall
surrender the certificate or certificates
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representing the shares to be converted, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares, or at such other place
designated by the Corporation; provided, that the holder shall not be required
to deliver the certificates representing such shares if the holder is waiting to
receive all or part of such certificates from the Corporation. The Corporation
shall immediately issue and deliver to or upon the order of such holder, against
delivery of the certificates representing the shares which have been converted,
a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled. The Corporation shall cause such issuance to be
effected within five (5) business days and shall transmit the certificates by
messenger or overnight delivery service to reach the address designated by such
holder within five (5) business days after the receipt of such notice. The
notice of conversion may be given by a holder at any time during the day up to
5:00 p.m. Boca Raton, Florida time and such conversion shall be deemed to have
been made immediately prior to the close of business on the date such notice of
conversion is given. 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 at the close of
business on such date.
(c) Conversion and Redemption Required. The Corporation acknowledges
and understands that a delay in the issuance of the Common Stock or redemption
pursuant to the provisions hereof could result in economic loss to the holders
of the 5% Preferred. As compensation to any holder when the Corporation has
failed with respect to such holder to comply with the Corporation's obligations
under this Section, and not as a penalty, the Corporation shall pay to such
holder liquidated damages of $500 per day plus an amount equal to two percent
(2%) of the total Purchase Price of Shares for the first thirty (30) day period
after the date on which the Common Stock should have been issued by the
Corporation (i.e., the end of the five (5) business day period described in
Subsection (b)) or shares of 5% Preferred redeemed, plus amount equal to three
percent (3%) of the total Purchase Price of Shares for each subsequent thirty
(30) day period thereafter. Amounts payable shall be pro-rated daily as to a
periods of less than thirty (30) days. Such amounts shall be paid to the holder
immediately by cashier's check or wire transfer in immediately available funds
to such account as shall be designated in writing by the holder.
(d) Determination of Conversion Price.
(i) The "Conversion Price" shall be equal to eighty percent
(80%) of the average of the closing bid prices of the Common Stock as reported
by NASDAQ during the five (5) consecutive trading days preceding the conversion
date (but not including such date).
(ii) The "closing bid price" of the Common Stock on a trading
day shall be the closing bid price of the Common Stock on NASDAQ or any other
principal securities price quotation system or market on which prices of the
Common Stock are reported. The term "trading day" means a day on which trading
is reported on the principal quotation system or market on which prices of the
Common Stock are reported.
(iii) If, during the period of consecutive trading days
provided for above, the Corporation shall declare or pay any dividend on the
Common Stock payable in Common Stock or in rights to acquire Common Stock, or
shall effect a stock split or reverse stock split, or a
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combination, consolidation or reclassification of the Common Stock, the
Conversion Price shall be proportionately decreased or increased, as
appropriate, to give effect to such event.
(e) Distributions. If the Corporation shall at any time or from time to
time make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation or any of its subsidiaries other than additional
shares of Common Stock, then in each such event provision shall be made so that
the holders of 5% Preferred shall receive, upon the conversion thereof, the
securities of the Corporation which they would have received had they been the
owners on the date of such event of the number of shares of Common Stock
issuable to them upon conversion.
(f) Certificates as to Adjustments. Upon the occurrence of any
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause the independent
public accountants regularly employed to audit the financial statements of the
Corporation to verify such computation and prepare and furnish to each holder of
5% Preferred 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 reasonable written request at any time of any
holder of 5% Preferred, furnish or cause to be furnished to such holder a like
certificate prepared by the Corporation setting forth (i) such adjustments and
readjustments, and (ii) the number of other securities and the amount, if any,
of other property which at the time would be received upon the conversion of 5%
Preferred with respect to each share of Common Stock received upon such
conversion.
(g) Notice 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 security or
right convertible into or entitling the holder thereof to receive additional
shares of Common Stock, or 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 5%
Preferred at least ten (10) 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, security or right and the amount and character of
such dividend, distribution, security or right.
(h) Issue Taxes. The Corporation shall pay any and all issue and other
taxes, excluding any income, franchise or similar taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of 5% Preferred pursuant hereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such conversion.
(i) 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 5% Preferred, 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 5% Preferred, and if at any time the number of
authorized but unissued shares of
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Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the 5% Preferred, the Corporation will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain any requisite
shareholder approval.
(j) Fractional Shares. No fractional shares shall be issued upon the
conversion of any share or shares of 5% Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
5% Preferred by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction on the
date of conversion (as determined in good faith by the Board of Directors of the
Corporation or an authorized Committee thereof).
(k) Notices. Any notice required by the provisions of this Section to
be given to the holders of shares of 5% Preferred shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at its address appearing on the books of the Corporation.
(l) Reorganization or Merger. In case of any reorganization or any
reclassification of the capital stock of the Corporation or any consolidation or
merger of the Corporation with or into any other corporation or corporations or
a sale of all or substantially all of the assets of the Corporation to any other
person (other than a sale or transfer to a wholly-owned subsidiary of the
Corporation), and the holders of 5% Preferred do not elect to treat such
transaction as a liquidation, dissolution or winding up as provided in Section 2
hereof, then, as part of such reorganization, consolidation, merger or sale,
provision shall be made so that each share of 5% Preferred shall thereafter be
convertible into the number of shares of stock or other securities or property
(including cash) to which a holder of the number of shares of Common Stock
deliverable upon conversion of such share of 5% Preferred would have been
entitled upon the record date of (or date of, if no record date is fixed) such
event and, in any case, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of the 5%
Preferred, to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as equivalent as is practicable, in relation to any shares
of stock or the securities or property (including cash) thereafter deliverable
upon the conversion of the shares of 5% Preferred.
4. Re-issuance of Certificates. In the event of a conversion (or, if
applicable, redemption) of 5% Preferred in which less than all of the shares of
5% Preferred of a particular certificate are converted or redeemed, as the case
may be, the Corporation shall promptly (within three (3) business days) cause to
be issued and delivered to the holder of such certificate, a certificate
representing the remaining shares of 5% Preferred which have not been so
converted or redeemed.
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5. Other Provisions. For all purposes of this Resolution, the term
"date of issuance" and the terms "Closing" or "Closing Date" shall mean the day
on which the 5% Preferred is first issued by the Corporation. Any provision
herein which conflicts with or violates any applicable usury law shall be deemed
modified to the extent necessary to avoid such conflict or violation. The term
"NASDAQ" herein refers to the principal market on which the Common Stock of the
Corporation is traded. If the Common Stock is listed on a securities exchange,
or if another market becomes the principal market on which the Common Stock is
traded or through which price quotations for the Common Stock are reported, the
term "NASDAQ" shall be deemed to refer to such exchange or other principal
market.
6. Restrictions and Limitations. The Corporation shall not undertake
the following actions without the consent of the holders of a majority of the 5%
Preferred: (i) modify its Certificate of Incorporation or Bylaws so as to amend
or change any of the rights, preferences, or privileges of the 5% Preferred,
(ii) authorize or issue any other preferred equity security senior to or on a
parity with the 5% Preferred as to dividends, liquidation preferences,
conversion rights, redemption rights or other rights, preferences or privileges
for a period of thirty (30) days after Closing, as applicable or (iii) purchase
or otherwise acquire for value any Common Stock or other equity security of the
Corporation either junior or senior to or on a parity with the 5% Preferred
while there exists any arrearage in the payment of cumulative dividends
hereunder.
7. Voting Rights. Except as provided herein or as provided for by law,
the 5% Preferred shall have no voting rights.
8. Attorneys' Fees. Any holder of 5% Preferred shall be entitled to
recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with enforcement by such holder of any
obligation of the Corporation hereunder.
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