SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): December 30, 1998
AIM GROUP, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 33-82468 13-3773537
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
Jones Mills Industrial Park
Highway 270, P.O. Box 208
Jones Mills, AR 72105
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (501) 844-2600
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 December 30, 1998, AIM Group, Inc. (the "Company") consummated the
sale of a total of 150,000 shares of Series A Convertible Preferred Stock (the
"Series A Preferred Stock") at a price of $2.50 per share in a private
offering effected pursuant to Rule 506 of Regulation D under the Securities
Act of 1933 (the "1933 Act"). The terms of the Series A Preferred Stock are as
set forth in the Certificate of Designation, Preferences and Rights (the
"Certificate of Designation") filed by the Company with the Delaware Secretary
of State on December 30, 1998. A copy of the Certificate of Designation is
filed as an exhibit hereto and is incorporated herein by reference. The
following summary of certain of the terms of the Series A Preferred Stock is
qualified in its entirety by the full terms as set forth in the Certificate of
Designation.
1. CONVERSION. Each share of Series A Preferred Stock is
convertible into one share of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), subject to possible anti-dilutive adjustment as
set forth in the Certificate of Designation. The Series A Preferred Stock is
subject to the mandatory conversion provision discussed below.
2. REDEMPTION. The Company plans to conduct a private offering
of Common Stock during the first half of 1999. In the event the Company
consummates the sale of at least $2,100,000 of Common Stock in connection with
that offering on or before June 30, 1999, the Company will, within 30 days
after the consummation of such sale, offer to redeem the Series A Preferred
Stock on the following terms. The redemption price for each 100 shares of
Series A Preferred Stock will consist of (i) the payment of $250.00 (or $2.50
per share) and (ii) the issuance of a number of shares of Common Stock equal
to the greater of (a) 50 shares of Common Stock or (b) the number of shares of
Common Stock having a market value, based on the average closing sale prices
of the shares of Common Stock on the Vancouver Stock Exchange for the prior 10
consecutive trading days, equal to $125.00 The holders of the Series A
Preferred Stock will have the right to reject any such redemption offer.
3. MANDATORY CONVERSION. If the Company makes the
above-referenced redemption offer and such offer is rejected by a holder of
the Series A Preferred Stock, the Company will thereafter have the right to
require such holder to convert such holder's shares of Series A Preferred
Stock into Common Stock at the conversion price at the event the closing sale
prices of the Common Stock on the Vancouver Stock Exchange for a period of any
10 consecutive trading days are equal to or in excess of $6.00 per share.
4. VOTING RIGHTS. The holders of the Series A Preferred Stock
will be entitled to vote on an as-converted basis with the holders of the
Common Stock on all matters to be voted upon the stockholders of the Company,
and will also be entitled to vote separately as a class if necessary and to
the extent provided by law.
5. DIVIDENDS. The holders of the Series A Preferred Stock will
be entitled to receive cash dividends only when and if declared by the
Company's Board of Directors. Unless declared by the Board of Directors, no
dividends will accrue or accumulate with respect to the Series A Preferred
Stock.
6. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Company, the holders of the Series A
Preferred Stock will be entitled to receive, in preference to the holders of
Common Stock, and amount equal to $2.50 per share, plus declared but unpaid
dividends, if any. A merger or sale of all or substantially all of the assets
of the Company will be deemed to be a liquidation or winding up of the Company
for purposes of such liquidation.
The Series A Preferred Stock and any Common Stock issueable upon the
conversion thereof will constitute "restricted securities" under the 1933 Act
and, therefore, will not be transferable by the holders thereof in the absence
of registration or the availability of an exemption from registration under
such Act. The holders of the shares of Common Stock issued upon the conversion
of the Series A Preferred Stock will have unlimited piggyback registration
rights subject to a pro-rata cutback in full at the underwriter's discretion.
All costs and expenses associated with such registration rights, except any
commissions, will be paid by the Company.
Of the $375,000 total proceeds of the private offering of Series A
Preferred Stock, in connection with which no brokerage commissions were paid,
the Company plans to use approximately $200,000 to invest in another
corporation engaged in the Internet technology business. The Company has not
yet entered into any agreement in connection with such proposed investment.
The Company also plans to use approximately $80,000 of the proceeds of the
offering to repay certain short-term indebtedness and to use the balance of
the proceeds to pay certain accounts payable and for other working capital
purposes. As stated above, the Company plans to conduct a private offering of
Common Stock during the first half of 1999 and presently expects to use the
proceeds of such offering, together with additional shares of the Company's
capital stock, to effect one or more acquisitions of other companies engaged
in the Internet service provider business. Such plans are in their formative
stage, no understandings or agreements have been reached in connection with
any such possible acquisitions and no assurance can be given that the Company
will be able to successfully enter the Internet business.
Item 7c. EXHIBITS.
The following exhibit is filed herewith:
EXHIBIT NO. DOCUMENT
4 Certificate of Designation, Preferences and
Rights of Preferred Stock of AIM Group, Inc.
Relating to the Series A Convertible Preferred
Stock.
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.
AIM GROUP, INC.
(Registrant)
Date: December 31, 1998 /s/PAUL R. ARENA
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Paul R. Arena
Chairman of the Board, CEO
and President
EXHIBIT 4
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF PREFERRED STOCK
OF
AIM GROUP, INC.
AIM GROUP, INC., (the "Corporation") a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 151(g) thereof,
HEREBY CERTIFIES:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of Corporation, the Board of Directors by
unanimous consent has adopted the following resolutions creating a series of
150,000 shares of preferred stock, par value $1.00 per share, designated as
Series A Convertible Preferred Stock;
RESOLVED, that pursuant to the authority granted to the Board of
Directors by ARTICLE FOURTH, paragraph one of the Certificate of Incorporation
of the Corporation, there is hereby created and the Corporation be and hereby
is, authorized to issue 150,000 shares of a series of preferred stock
designated "Series A Convertible Preferred Stock" and shall have, in addition
to the terms set forth in the Certificate of Incorporation, the following
terms, conditions, designation, preferences and privileges, relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions:
(1) DESIGNATION, PAR VALUE AND NUMBER. A total of 150,000 shares of
authorized preferred stock of the Corporation are hereby constituted as a
series of preferred stock, par value $1.00 per share, designated as the
"Series A Convertible Preferred Stock" (hereinafter called "Series A Preferred
Stock"). In accordance with the terms hereof, each share of Series A Preferred
Stock shall have the same relative rights as, and be identical in all respects
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with, each other share of Series A Preferred Stock.
(2) DIVIDENDS. The holders of shares of Series A Preferred Stock shall
be entitled to receive cash dividends only when and if declared by the
Corporation's Board of Directors out of funds legally available for such
purpose. Holders of the Series A Preferred Stock shall be entitled to receive
dividends prior to and in preference to the holders of Common Stock and PARI
PASSU with any other series of preferred stock issued by the Corporation.
Unless declared by the Board of Directors, no dividends shall accrue or
accumulate with respect to the Series A Preferred Stock.
(3) LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution
or winding up of the Corporation, the holders of the Series A Preferred Stock
shall be entitled to receive, in preference to the holders of Common Stock and
PARI PASSU with any other series of preferred stock issued by the Corporation,
an amount equal to $2.50 per share, plus declared but unpaid dividends, if any
(the "Liquidation Preference"). A merger or sale of all or substantially all
of the assets of the Corporation shall be deemed to be a liquidation or
winding up of the Corporation for purposes of the Liquidation Preference.
After payment in full of the Liquidation Preference, the Series A Preferred
Stock shall not participate with the holders of the Common Stock or any other
series of subordinated or participating preferred stock hereafter issued by
the Corporation in the distribution of any remaining assets of the Corporation
upon any liquidation, dissolution or winding of the Corporation.
(4) CONVERSION RIGHTS. (a) The Series A Preferred Stock shall at any
time prior to the payment or declaration of a Liquidation Preference be
convertible at the option of the holder into such number of shares of Common
Stock of the Company as is obtained by multiplying the number of shares of
Series A Preferred Stock to be converted by $2.50 per share and dividing the
result by the initial conversion price of $2.50 per share (the "Initial
Conversion Price"). Subject to the anti-dilution adjustments described in the
following sentence, each share of Series A Preferred Stock is initially
convertible into one share of Common Stock. The Initial Conversion Price of
the Series A Preferred Stock will be subject to adjustment to reflect stock
dividends, stock splits and reverse stock splits (the "Adjusted Conversion
Price"). The Initial Conversion Price and the Adjusted Conversion Price are
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referred to collectively herein as the "Conversion Price." The Series A
Preferred Stock will be subject to the mandatory conversion provision set
forth in paragraph 6 below.
(b) If the Corporation shall issue or sell additional Common Stock
or equivalents other than up to (i) 183,525 shares of Common Stock underlying
the outstanding stock options previously issued to employees, consultants,
directors or advisors in accordance with resolutions, arrangements, contracts
or plans adopted by the Corporation's Board of Directors; (ii) 89,000 shares
of Common Stock underlying the remaining options under the Corporation's 1997
Incentive Stock Option Plan; and (iii) 500,000 shares underlying the
Corporation's $1,050,000 principal amount of outstanding Series A Convertible
Notes at a purchase price less than the Conversion Price, then such Conversion
Price shall be adjusted downward to equal (on a weighted-average basis) such
issuances of additional shares at prices less than the applicable Conversion
Price.
(c) Each conversion of shares of Series A Preferred Stock shall be
effected by the surrender to the Corporation of the certificate or
certificates representing the shares to be converted, duly endorsed or
assigned in blank, with signatures guaranteed if reasonably requested by the
Corporation, at the principal office of the Corporation (or such other office
or agency of the Company as the Corporation may designate in writing to the
holder or holders of the Series A Preferred Stock) at any time during its
usual business hours, and by the giving of written notice by the holder of
such Series A Preferred Stock stating that such holder desires to convert all
or a stated number of the shares of Series A Preferred Stock represented by
such certificate or certificates into Common Stock, which notice will also
state the name or names (with addresses) and denominations in which the
certificate or certificates for the Common Stock are to be be issued and will
include instructions for delivery thereof.
(d) Promptly after such surrender and the receipt of such written
notice and statement, the Corporation shall issue and deliver in accordance
with such instructions the certificate or certificates for the Common Stock
issuable upon such conversion. In addition, the Corporation shall deliver to
the converting holder a certificate representing any portion of the shares of
Series A Preferred Stock which had been represented by the certificate or
certificates delivered to the Corporation in connection with such conversion
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but which were not converted. Such conversion, to the extent permitted by law,
shall be deemed to have been effected as of the close of business on the date
on which such certificate or certificates have been surrendered and such
notice has been received, and at such time the rights of the holder of such
Series A Preferred Stock (or specified portion thereof), as such holder will
cease and the person or persons in whose name or names the certificate or
certificates for shares of Common Stock are to be issued upon such conversion
will be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby.
(e) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock or its treasury
shares of Common Stock, solely for the purpose of issuance upon the conversion
of the Series A Preferred Stock as provided in this paragraph(4), such number
of shares of Common Stock as are then issuable upon the conversion of all then
outstanding shares of Series A Preferred Stock into shares of Common Stock
hereunder. Notwithstanding the foregoing, if, at any time, there shall be an
insufficient number authorized or treasury shares of Common Stock available
for issuance upon conversion of Series A Preferred Stock, the Company shall
take all action necessary to propose and recommend to the stockholders of the
Corporation that its Certificate of Incorporation be amended to authorize
additional shares of Common Stock in an amount sufficient to provide adequate
reserves of shares for issuance upon conversion, including the diligent
solicitation of votes and proxies to vote in favor of such an amendment. All
shares of Common Stock which are issuable upon conversion hereunder will, when
issued, be duly and validly issued, fully paid and nonassessable.
(f) The issuance of certificates for shares of Common Stock upon
conversion of shares of Series A Preferred Stock shall be made without charge
to any original holder of any shares of Series A Preferred Stock for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such conversion and the related issuance of Common Stock;
provided that the Corporation will not be required to pay any such taxes or
costs which may be payable in respect of any such conversion by any other
person or in respect of any transfer involved in the issuance and delivery of
any certificate in a name other than that of the registered holder of the
shares converted. The Corporation shall not close its books against the
transfer of any shares of Series A Preferred Stock or Common Stock in a manner
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which would interfere with the conversion of Series A Preferred Stock.
(5) REDEMPTION PROVISIONS. (a) In the event the Corporation consummates
the sale of at least $2,100,000 of Common Stock in connection with a private
offering of Common Stock on or before June 30, 1999, the Corporation shall,
within 30 days after the consummation of the sale of such Common Stock, offer
to redeem the Series A Preferred Stock on the following terms: The redemption
price for each 100 shares of Series A Preferred Stock shall consist of (i) the
payment of $250.00; and (ii) the issuance of a number of shares of Common
Stock equal to the greater of (a) 50 shares of Common Stock or (b) the number
of shares of Common Stock having a market value, based on the average closing
sale prices of the Common Stock on the Vancouver Stock Exchange for the prior
10 consecutive trading days, equal to $125.00. The holders of the Series A
Preferred Stock shall have the right to reject any such redemption offer.
(b) In the event the Corporation shall offer to redeem any shares
of Series A Preferred Stock, notice of such offer shall be given by first
class mail, postage prepaid, mailed not less than 30 or more than 60 days
prior to the redemption date, to each holder of record of the shares to be
redeemed, at such holder's address as the same appears on the stock register
of the Corporation. Each such notice shall state: the redemption date; the
number of shares of Series A Preferred Stock to be redeemed; and the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price. Upon acceptance by the holder of the offer of redemption
and surrender in accordance with such notice of the certificates for any
shares redeemed, the shares shall be redeemed by the Corporation at the
redemption price aforesaid.
(c) The Corporation shall not be required to establish any sinking
or retirement fund with respect to the shares of Series A Preferred Stock.
(d) All shares of Series A Preferred Stock redeemed by the
Corporation shall be retired and cancelled and shall be restored to the status
of authorized but unissued shares of preferred stock, without designation as
to series, and may thereafter be issued subject to the terms of the
Certificate of Incorporation.
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(6) MANDATORY CONVERSION. If the Corporation's offer to redeem the
Series A Preferred Stock pursuant to paragraph (5) above is rejected by a
holder thereof, the Corporation shall thereafter have the right to require
such holder to convert such holder's shares of Series A Preferred Stock at the
Conversion Price in the event the closing sale prices of the Common Stock on
the Vancouver Stock Exchange for a period of any 10 consecutive trading days
are equal to or in excess of $6.00 per share.
(7) VOTING RIGHTS. The holders of the Series A Preferred Stock shall be
entitled to vote on an as-converted basis with the holders of the Common Stock
on all matters to be voted upon by the stockholders of the Corporation, and
shall also be entitled to vote separately as a class if necessary and to the
extent provided by law.
(8) REGISTRATION OF TRANSFER. The Corporation shall keep at its
principal office a register for the registration of the Series A Preferred
Stock. Upon the surrender of any certificate representing Series A Preferred
Stock at such place, the Corporation, at the request of the record holder of
such certificate, shall execute and deliver a new certificate or certificates
in exchange therefor representing in the aggregate the number of shares of
Series A Preferred Stock represented by the surrendered certificate. Each such
new certificate shall be registered in such name and shall represent such
number of shares of Series A Preferred Stock as is requested by the holder of
the surrendered certificate and shall be substantially identical in form as to
the surrendered certificate. The issuance of new certificates shall be made
without charge to the holders of surrendered certificates for any issuance tax
in respect thereof or other cost incurred by the Corporation in connection
with such issuance, unless such issuance is made in connection with a transfer
of Series A Preferred Stock, in which case the transferring holder shall pay
all taxes arising from such transfer.
(9) REPLACEMENT. Upon receipt of an affidavit of the registered holder,
or such other evidence reasonably satisfactory to the Corporation, of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred Stock, and in the case of any such
loss, theft or destruction, upon receipt of indemnity reasonable satisfactory
to the Corporation, or in the case of any such mutilation, upon surrender of
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such certificate, the Corporation shall, at its expense execute and deliver in
lieu of such certificate a new certificate of like kind representing the
number of shares of Series A Preferred Stock represented by such lost, stolen,
destroyed or mutilated certificate.
IN WITNESS WHEREOF, AIM Group, Inc. has caused this certificate to be
duly executed this 30th day of December 1998.
AIM GROUP, INC.
/s/PAUL R. ARENA
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Paul R. Arena
Chairman of the Board, Chief
Executive Officer and President
Attest: /s/LEIGH S. ZOLOTO
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Leigh S. Zoloto
Secretary
