UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 16, 2006 (August 11,
2006)
--------------------------------------------------------------------
Conversion Services International, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-30420 20-0101495
----------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
100 Eagle Rock Avenue, East Hanover, New Jersey 07936
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 560-9400
------------------------------------------------------------------
Not Applicable
---------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation to the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On August 11, 2006, Conversion Services International, Inc. (the "Company")
entered into a Stock Purchase Agreement with Matthew J. Szulik ("Szulik"),
pursuant to which it issued 20,000 shares of the Company's newly created Series
B Convertible Preferred Stock, $.001 par value (the "Series B Preferred"). Each
share of Series B Preferred has a stated value of $100.00. The Company received
proceeds of $2,000,000.
The Series B Preferred has a cumulative annual dividend equal to the Prime Rate
plus one percent (1%), which is payable monthly in cash or common stock, at the
election of the Company, and is convertible into shares of the Company's common
stock at any time at a price equal to the lower of (1) $0.85 or (2) the average
daily volume weighted market price for the five consecutive trading days
immediately prior to the date for which such price is determined, with a minimum
price of $0.50. In addition, the Series B Preferred has no voting rights, but
has liquidation preferences and certain other privileges.
Pursuant to the Stock Purchase Agreement, Szulik was also granted a warrant to
purchase 1,176,471 shares of the Company's common stock, and counsel to Szulik
was granted a warrant to purchase 100,000 shares of the Company's common stock
(the "Warrants"), both exercisable at a price of $0.94 per share (subject to
adjustment). The Warrants are exercisable for a period of five years.
Pursuant to a Registration Rights Agreement, the Company agreed to file a
registration statement covering the shares of common stock underlying the Series
B Preferred and the Warrants. Such registration rights are more fully set forth
in the Registration Rights Agreement attached to this Current Report on Form 8-K
as Exhibit 10.2.
The information set forth herein with respect to the Stock Purchase Agreement,
the Series B Preferred, the Warrants and the Registration Rights Agreement is
meant to be a summary only. The entire agreements are attached hereto as
Exhibits to this Current Report on Form 8-K.
Item 3.02 Unregistered Sales of Equity Securities.
See Item 1.01 of this Current Report on Form 8-K, which is incorporated herein
by this reference, for a description of the terms of a preferred stock
instrument and warrants which are convertible/exercisable into shares of the
Company's common stock.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit
Number Description
- -------- -------------------------------------
4.1 Certificate of Designations of the Series B Convertible Preferred
Stock filed with the Secretary of the State of Delaware, dated
August 11, 2006.
10.1 Stock Purchase Agreement by and between the Company and Matthew J.
Szulik, dated August 11, 2006.
10.2 Registration Rights Agreement by and between the Company, Matthew
J. Szulik and Feiner Family Trust, dated August 11, 2006.
10.3 Common Stock Purchase Warrant issued to Matthew J. Szulik, dated
August 11, 2006.
10.4 Common Stock Purchase Warrant issued to Feiner Family Trust, dated
August 11, 2006.
This Current Report on Form 8-K may contain, among other things, certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including, without limitation, statements with
respect to the Company's plans, objectives, expectations and intentions and
other statements identified by words such as "may", "could", "would", "should",
"believes", "expects", "anticipates", "estimates", "intends", "plans" or similar
expressions. These statements are based upon the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth in the
forward-looking statements. These forward-looking statements involve certain
risks and uncertainties that are subject to change based on various factors
(many of which are beyond the Company's control).
* * *
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
August 16, 2006 CONVERSION SERVICES INTERNATIONAL, INC.
By: /s/ Scott Newman
----------------------------------
Name: Scott Newman
Title: President, Chief Executive Officer and
Chairman