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): July 6, 2000
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ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21456 06-1361276
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(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification No.)
incorporation or
organization)
488 Main Avenue, Norwalk, Connecticut 06851
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: 203-849-2500
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Item 2. Acquisition or Disposition of Assets.
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On July 6, 2000 (the "Closing"), the Registrant completed the
private exchange of $76,418,000 principal amount at maturity of its
13-1/4% Senior Discount Notes due February 1, 2004 (the "Old
Notes") for an aggregate of: (i) $13,755,240, in cash, calculated
on the basis of $180 for each $1,000 principal amount at maturity
of Old Notes; (ii) approximately $5,000,000 principal amount of the
Registrant's 10% Guaranteed Secured Notes due August 1, 2001 (the
"10% Notes"), calculated on the basis of $65.42961 for each $1,000
principal amount at maturity of Old Notes; (iii) approximately
$5,000,000 principal amount of the Registrant's 8% Guaranteed
Secured Notes due August 1, 2004 (the "8% Notes"), calculated on
the basis of $65.42961 for each $1,000 principal amount at maturity
of Old Notes; and (iv) 39,985 shares of the Registrant's newly-
created Series A-1 Convertible Preferred Stock, $1.00 par value
("Series A-1 Preferred Stock"), calculated on the basis of
0.5234368 shares for each $1,000 principal amount of Old Notes,
plus cash in lieu of fractional shares.
The notes submitted for exchange represent 100% of the
outstanding Old Notes. The cash applied by the Registrant at
Closing was obtained by the Registrant from working capital and
general corporate funds.
The Registrant's 10% Notes will accrue interest payable at the
rate of 10% per annum, semi-annually, through issuance of
additional 10% Notes. Upon consummation by the Registrant of
specified equity transactions (the "Equity Investment") aggregating
at least $20 million over any twelve-month period (including any
cash distributions on the Registrant's investment in NewCheck
Corporation), the 10% Notes will be subject to mandatory
prepayment. The Registrant's 8% Notes will accrue interest payable
at the rate of 8% per annum, semi-annually, through issuance of
additional 8% Notes. Upon consummation by the Registrant of
specified equity transactions aggregating at least $40 million on
a cumulative basis from Closing, the 8% Notes will be subject to
mandatory prepayment.
The 10% Notes and 8% Notes (the "Notes") will be subject to
prepayment at the election of the Registrant, in the case of the
10% Notes without premium and in the case of the 8% Notes at
premiums ranging up to eight percent of the principal prepaid. Upon
specified change-in-control events, the Notes will be subject to
mandatory prepayment at specified premiums. The Notes are
guaranteed by the Registrant's subsidiaries and are secured by the
assets of the Registrant and its subsidiaries. The Notes contain
covenants that, among other matters, restrict distributions on the
Registrant's common stock, $.01 par value, and limit the ability of
the Registrant and its subsidiaries to incur indebtedness for
borrowed money and create liens on their assets.
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The Registrant's Series A-1 Preferred Stock does not entitle
the holders to dividends or, except in limited circumstances,
voting rights. The Series A-1 Preferred Stock entitles the holders
to a liquidation preference per share of $100 and, subject to
specified exceptions, is subject to automatic conversion upon
consummation of the Equity Investment, into the same securities
offered in such transaction and at the same price, payable by
application of the liquidation preference of the Series A-1
Preferred Stock.
Item 7. Financial Statements and Exhibits.
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The exhibits filed as part of this Current Report on Form
8-K are listed in the attached Index to Exhibits.
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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 thereunto duly authorized.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Bruce F. Failing, Jr.
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Bruce F. Failing, Jr.
Vice Chairman and Chief
Executive Officer
Dated: July 6, 2000
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INDEX TO EXHIBITS
Exhibit Description
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2(a) Press Release issued July 6, 2000 by the
Registrant.
2(b) Form of Letter of Transmittal executed to the
Registrant by holders of 13-1/4% Senior Discount
Notes due February 1, 2004.
2(c) Form of the Registrant's 10% Guaranteed Secured
Note due August 1, 2001.
2(d) Form of the Registrant's 8% Guaranteed Secured Note
due August 1, 2004.
2(e) Guaranty Agreement dated July 6, 2000 entered into
by Electronic Retailing Systems International,
Inc., a Connecticut corporation ("ERS-
Connecticut").
2(f) Conditional Assignment and Security Agreement dated
July 6, 2000 among the Registrant, ERS-Connecticut,
and United States Trust Company of New York as
Collateral Agent.
2(g) Certificate of Designation of Series A-1
Convertible Preferred Stock of the Registrant.
