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)
|
February
7, 2006 (February 1,
2006)
|
Conversion
Services International,
Inc.
|
(Exact
name of registrant as specified in
its charter)
|
Delaware
|
|
0-30420
|
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20-1010495
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(State
or other
jurisdiction
|
|
(Commission
|
|
(IRS
Employer
|
of
incorporation)
|
|
File
Number)
|
|
Identification
No.)
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100
Eagle Rock Avenue, East Hanover,
|
|
|
New
Jersey
|
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07936
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(Address
of principal executive offices)
|
|
(Zip
Code)
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Registrant’s
telephone number, including
area code:
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(973)
560-9400
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Not
Applicable
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(Former
name or former address, if changed
since last report)
|
□
|
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
February
1, 2006, Conversion Services International, Inc. (the "Company") entered into
financing agreements with Laurus Master Fund, Ltd. ("Laurus"), pursuant to
which
it, among other things, (a) issued a secured non-convertible term note in the
principal amount of $1,000,000 to Laurus (the “Term Note”), (b) issued a secured
non-convertible revolving note in the principal amount of $10,000,000 to Laurus
(the “Revolving Note”, collectively with the Term Note, the “Notes”), and (c)
issued an option to purchase up to 3,080,000 shares of the Company's common
stock to Laurus (the “Option”). The proceeds from the issuance of the Notes were
used to refinance the Company’s outstanding obligations under an existing
facility with Laurus (originally entered into in August 2004 and subsequently
amended in July 2005) at a 5% premium. The Notes bear an annual interest rate
of
prime (as reported in the Wall Street Journal, which was 7.25% as of January
31,
2006) plus 1.0%, with a floor of 5.0%. Payments of principal and interest will
be made in equal monthly amounts until maturity of both notes on December 31,
2007, at which time the 5% premium will also be due.
In
connection
with the Notes, the Company and Laurus entered into an Overadvance Letter
Agreement, pursuant to which Laurus exercised its discretion granted to it
pursuant to the Security Agreement entered into in August 2004 to make a loan
to
the Company in excess of the “Formula Amount” (as defined therein). The Company
also entered into a Stock Pledge Agreement and Security Agreement securing
its
obligations to Laurus, both prior to and including the Notes, as well as a
Registration Rights Agreement pursuant to which the Company agreed to file
a
registration statement to register the shares of the Company’s common stock
underlying the Option, as well as the shares of the Company’s common stock and
the shares of the Company’s common stock underlying the warrants held by Laurus,
within 90 days. As of the date of this filing, Laurus owns approximately 809,525
shares of the Company’s common stock, and warrants to purchase 400,000 shares of
the Company’s common stock at $4.35 per share, 200,000 shares of the Company’s
common stock at $4.65 per share and 200,000 shares of the Company’s common stock
at $5.25 per share.
Item
9.01. Financial Statements and Exhibits.
Exhibits
4.1 |
Option
issued to Laurus Master Fund, Ltd. to purchase 3,080,000 shares of
the
Company's
common stock, dated February 1,
2006
|
10.1 |
Nonconvertible
Secured Revolving Note in the principal amount of
$10,000,000
|
10.2 |
Nonconvertible
Secured Term Note in the principal amount of
$1,000,000
|
10.3 |
Security
Agreement dated February 1, 2006
|
10.4 |
Stock
Pledge Agreement dated February 1,
2006
|
10.5 |
Overadvance
Letter dated February 1, 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).
*
*
*
SIGNATURES
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.
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February
7, 2006 |
CONVERSION
SERVICES INTERNATIONAL, INC. |
|
|
|
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By: |
/s/ Scott
Newman |
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Name:
Scott Newman |
|
Title:
President and Chief Executive
Officer |