UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section l3 or l5(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) June 13, 1997
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VISUAL EDGE SYSTEMS INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20995 13-377-8895
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(State of other juris- Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
2424 North Federal Highway, Suite 100, Boca Raton, FL 33431
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(Address of principal executive offices) (Zip Code)
(561) 750-7559
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(Registrant's telephone number, including area code)
Item 5. Other Events.
On June 13, 1997, Visual Edge Systems Inc. (the "Company") arranged a three
year $7.5 million debt and convertible equity facility with a group of
investment funds advised by an affiliate of Hunt Sports Group, a sports and
entertainment management company controlled by the Lamar Hunt family of Dallas,
Texas. The Company issued and sold to Infinity Investors Limited, Infinity
Emerging Opportunities Limited, Sandera Partners, L.P. and Lion Capital
Partners, L.P. (collectively, the "Funds") the following securities pursuant to
the Bridge Securities Purchase Agreement, dated as of June 13, 1997 (the "Bridge
Agreement"), among the Company and the Funds: (i) 8.25% unsecured convertible
bridge notes in the aggregate principal amount of $7,500,000 with a maturity
date of three years from the date of issuance (the "Bridge Notes"), which Bridge
Notes are convertible into shares of Common Stock (the "Note Conversion
Shares") at any time and from time to time commencing January 1, 1998 at the
option of the holder thereof; (ii) 93,677 shares of Common Stock, par value $.01
per share (the "Grant Shares"); and (iii) five-year warrants (the "Warrants")
to purchase 100,000 shares of Common Stock (the "Warrant Shares") with an
exercise price equal to $10.675. Such Warrants are redeemable commencing
October 1, 1998, based on a 20-day minimum closing bid price, at a redemption
price equal to $.10 per share. The Funds payed an aggregate of $ 7,474,438 to
the Company for the Bridge Notes, Grant Shares and Warrants.
Pursuant to the Bridge Agreement, the Company will issue additional Grant
Shares (the "Additional Grant Shares") to the Funds in the event that the
closing bid price of the Common Stock for each trading day during any
consecutive 10 trading days from June 13, 1997 (the "Closing Date") through
December 31, 1997 does not equal at least $10.00 per share. In the event that
any Additional Grant Shares are issued, the exercise price of the Warrants will
be adjusted so that the value of the Warrants (using a Black -Scholes or similar
model) equals the value of the Warrants as of the Closing Date.
Interest payments on the Bridge Notes will, at the option of the Company,
be payable in cash or in shares of Common Stock. Effective January 1, 1998, the
aggregate outstanding principal amount of Bridge Notes exceeding $2,500,000 will
be automatically exchanged for an number of shares of Convertible Preferred
Stock with an aggregate liquidation preference equal to the principal amount of
Bridge Notes so exchanged and with terms substantially identical to the Notes,
which Preferred Stock is convertible into shares of Common Stock (the "Stock
Conversion Shares"). In addition, if the Company elects to redeem its
redeemable warrants issued on July 24, 1997 in connection with the Company's
initial public offering of Common Stock, the Company must redeem at least
$5,000,000 principal amount of the Bridge Notes with the net proceeds of such
redemption.
In connection with the sale of the Note Conversion Shares, Stock Conversion
Shares, Grant Shares, Warrant Shares and Additional Grant Shares (collectively,
the "Securities") to the Funds, the Company granted to the Funds registration
rights covering the Securities. As soon as
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practicable after July 24, 1997, the Company is obligated to file a registration
statement covering the sale of the Grant Shares. In addition, on or before
November 15, 1997, the Company is obligated to file a registration statement
covering the sale of the Note Conversion Shares, Stock Conversion Shares,
Warrant Shares and Additional Grant Shares.
The Company also agreed, pursuant to the Bridge Agreement, that the
proceeds from the issuance and sale of the Securities by the Company must be
used, in part, to repay the remaining outstanding balance due and owing on the
Company's $3,500,000 line of credit with Barnett Bank. Further, the Company
agreed to certain covenants, including limitations on the amount of capital
expenditures and minimum limits of net worth.
The Company will also begin to explore potential business opportunities
with Hunt Sports Group.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Bridge Securities Purchase Agreement, dated as of June 13, 1997, among
the Company and Infinity Investors Limited, Infinity Emerging Opportunities
Limited, Sandera Partners, L.P. and Lion Capital Partners, L.P. (collectively,
the "Funds")
99.2 Registration Rights Agreement, dated as of June 13, 1997, among the
Company and the Funds
99.3 Transfer Agent Agreement, dated as of June 13, 1997, among the
Company, the Funds and American Stock Transfer & Trust Company
99.4 Form of Common Stock Purchase Warrant
99.5 Form of Convertible Note
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISUAL EDGE SYSTEMS INC.
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(Registrant)
By:
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Earl T. Takefman
Chief Executive Officer
Date: June 23, 1997
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EXHIBIT INDEX
No.
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99.1 Bridge Securities Purchase Agreement, dated as of June 13, 1997, among
the Company and Infinity Investors Limited, Infinity Emerging
Opportunities Limited, Sandera Partners, L.P. and Lion Capital
Partners, L.P. (collectively, the "Funds")
99.2 Registration Rights Agreement, dated as of June 13, 1997, among the
Company and the Funds
99.3 Transfer Agent Agreement, dated as of June 13, 1997, among the
Company, the Funds and American Stock Transfer & Trust Company
99.4 Form of Common Stock Purchase Warrant
99.5 Form of Convertible Note