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 (Date of earliest event reported): September 28, 1999
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Grace Development, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 0-25582 84-1110469
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
1690 Chantilly Drive, Atlanta, Georgia 30324
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 633-3831
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Item 1. Changes in Control of Registrant.
A change in control of the Registrant occurred on September 28, 1999 (the
"Effective Time") pursuant to the terms and conditions of an Agreement and Plan
of Merger (the "Merger Agreement") dated as of August 20, 1999 between the
Registrant, New Millennium Multimedia, Inc., a Georgia corporation ("NM"), Grace
Newco, Inc., a Georgia corporation and wholly-owned subsidiary of the Registrant
("Merger Sub") and Signal Compression, Inc., a Nevada corporation ("Signal").
The Merger Agreement provided for the merger (the "Merger) of Merger Sub with
and into NM, with NM as the surviving corporation. As a result of the Merger, NM
became a wholly-owned subsidiary of the Registrant and the former shareholders
of NM received an aggregate of 66,223,329 or 89.70% of the outstanding shares of
the common stock, no par value, of the Registrant (the "Common Stock").
Effective as of the Effective Time, the Board of Directors of the Registrant
(the "Board"), which, prior to the Effective Time, was composed of Jacob
Barrocas as sole director, increased the size of the Board from one to six
members and the following persons were elected to the Board: Louis Friedman,
Richard S. Granville, III, Ronald McCallum, Dr. Lee Silverstein and Peter
Tierney (the "NM Designees"). Information with respect to the NM Designees,
including beneficial ownership of the Common Stock by such NM Designees, is
included in the Registrant's Information Statement pursuant to Section 14(f) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14f-1 thereunder, filed by the Registrant on August 27, 1999, as amended on
September 24, 1999 and October 7, 1999 (the "Information Statement"), which is
incorporated herein by this reference. All references to the terms of the Merger
Agreement are qualified in their entirety by reference to the Merger Agreement,
which is attached as Exhibit 2.1 hereto and incorporated herein by this
reference.
At a meeting of the Board held on September 30, 1999, the Board voted to
increase the size of the Board to seven persons and elected James Blanchard to
the Board. The Board also elected the following persons to the offices set forth
opposite their names:
Louis Friedman Chairman of the Board
Richard S. Granville, III Chief Executive Officer
Ronald McCallum Chief Financial Officer and Secretary
Sean T. Duffy Chief Sales and Marketing Officer
Pursuant to the Merger Agreement, certain shares of Common Stock held by
Signal, which prior to the Merger held approximately 66% of the Common Stock and
following the Merger holds approximately 6.77% of the Common Stock, were pledged
to NM (the "Pledge Agreement") to secure certain indemnification obligations of
the Issuer to NM and the former shareholders of NM (the "Indemnitees"). The
terms of the Pledge Agreement provide for the release of a number of pledged
shares equal to one percent (1%) of the outstanding Common Stock on the Initial
Release Date and on each subsequent Release Date (each as defined in the Pledge
Agreement); provided that (a) no default has occurred and is continuing under
the Pledge Agreement); (b) the pledged shares remaining as collateral are
sufficient to satisfy the aggregate of claims made as of the Initial Release
Date or the Release Date, as the case may be; or (c) the pledgees shall not have
determined that a release of pledged shares would have an adverse impact on the
market or trading activity for the Common Stock. Under the Pledge Agreement,
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the Initial Release Date occurs thirty (30) days following the effective date of
the Merger and Release Dates occur at quarterly intervals thereafter until the
termination of the Pledge Agreement. The Pledge Agreement terminates on the
later of (i) eighteen months following the effective time of the Merger and (ii)
the resolutions of all indemnification claims made by the Indemnitees under the
Merger Agreement. All references to the terms of the Pledge Agreement are
qualified in their entirety by reference to the Pledge Agreement, which is
attached as an exhibit to the Merger Agreement, filed as Exhibit 2.1 hereto and
incorporated herein by this reference.
Because the shares of Common Stock received by the former shareholders of
NM were not registered under the Securities Act of 1933, as amended (the "Act"),
such shares are "restricted securities" (as defined in Rule 144 promulgated
under the Act) and accordingly, may not be sold or transferred by the holders
thereof unless such shares are registered under the Act or are sold or
transferred pursuant to an exemption therefrom.
Item 2. Acquisition or Disposition of Assets.
On September 28, 1999, the Merger was consummated in accordance with the
terms and conditions of the Merger Agreement. Pursuant thereto, Merger Sub, a
wholly-owned subsidiary of Registrant, was merged with and into NM, with NM as
the surviving corporation. Following the Merger, NM became a wholly-owned
subsidiary of the Registrant. In consideration for the Merger, the former
shareholders of NM received 66.3013 shares of Common Stock for each share of NM
Common Stock (the "Merger Consideration"). As a result thereof, the former
shareholders of NM now beneficially own an aggregate of 66,223,329
(approximately 89.70%) of the outstanding Common Stock. The Merger Consideration
was determined in arms' length negotiations between the parties to the Merger
Agreement. Prior to the consummation of the Merger, there were no material
relationships between NM and its former officers, directors, affiliates,
associates or shareholders and the officers, directors, affiliates, associates
or shareholders of the Registrant. As described in Item 1 of this Report, upon
consummation of the Merger, the NM Designees were elected to the Board and
certain officers of NM were elected officers of the Registrant. The response to
Item 1 of this Report is incorporated herein by this reference.
The foregoing description of the Merger and the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, which is being
filed as an exhibit to this report. In addition, the Registrant's Information
Statement and Report on Form 8-K dated August 20, 1999, which reported the
announcement of the execution of the Merger Agreement, is incorporated herein
and made a part hereof by this reference.
As a result of the Merger, the Registrant is a holding company for NM. NM,
doing business as Avana (www.avana.net), is a communications company based in
Atlanta, Georgia. In addition to providing internet services to approximately
5,400 subscribers, Avana is developing a wireless voice, data and video network
to enable customers to bypass incumbent regional Bell operating companies for
telecommunications services. Avana has applied for competitive local exchange
carrier status in nine southeastern states and currently has service offerings
in Georgia, North Carolina, Tennessee and Alabama. Over the next several months,
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Avana, together with network facilities providers, will begin to deploy a
radio/microwave telephony network, which, when implemented, will provide
residential and commercial customers with local, long distance, high-speed
Internet access and cellular/paging services. Avana utilizes several network
facilities providers, including ICG Communications, for asynchronous transfer
mode ("ATM"), frame relay and primary relay interface ("PRI") service for
interconnection, and Qwest Communications for long-distance and
voice-over-internet- protocol ("VOIP") services. Avana also has an ongoing
relationship with Lucent Technologies for network solutions and implementation
services.
THIS REPORT INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL STATEMENTS, OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS REPORT, INCLUDING, WITHOUT
LIMITATION, THOSE REGARDING THE REGISTRANT'S FINANCIAL POSITION, BUSINESS,
MARKETING AND PRODUCT DEVELOPMENT PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE
OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE REGISTRANT BELIEVES
THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) - (b). Financial Statements and Pro Forma Financial Information. All
required financial statements and pro forma financial information will be filed
by amendment to this Report not later than 60 days from September 28, 1999.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as August 20, 1999.
20.1 Registrant's Information Statement pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder, filed by the Registrant on August 27,
1999, as amended on September 24, 1999 and October 7, 1999 (filed with the
Commission on August 27, 1999, September 24, 1999 and October 7, 1999, and
incorporated herein by reference).
99.1 Press Release issued September 24, 1999 relating to the completion of
the Merger.
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SIGNATURE
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.
GRACE DEVELOPMENT, INC.
By: /s/ RONALD MCCALLUM
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Ronald McCallum
Chief Financial Officer & Secretary
Dated as of October 13, 1999
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