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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 14, 2005
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RCG COMPANIES INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 1-8662 23-2265039
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
6836 MORRISON BLVD., STE. 200,
CHARLOTTE, NORTH CAROLINA 28211
(Address of principal executive offices) (Zip Code)
(704) 366-5054
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|X| 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.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
On April 14, 2005, RCG Companies Incorporated (the "Registrant") entered into
and closed a Securities Purchase Agreement with 12 institutional investors for a
private placement of Series C Convertible Preferred Stock totaling $31,110,165,
and associated warrants. Total proceeds after offering expenses will be
approximately $27,128,946.
The convertible preferred stock does not bear a stated annual dividend, subject
to approval by the Registrant's stockholders and The American Stock Exchange, is
convertible into shares of the Registrant's common stock at $0.55 per share, and
if not converted will be mandatorily redeemable one year from issuance.
Investors will also receive warrants to purchase an aggregate of 26,019,401
shares of the Registrant's common stock, at an initial exercise price of $0.55
per share, exercisable until the date that is 5 years after the issuance date.
The exercise of the warrants is also subject to approval of the Registrant's
stockholders. If fully exercised, the warrants would yield approximately
$14,000,000 of additional proceeds to the Registrant. The Registrant also agreed
with the investors to recommend a one for ten reverse stock split be approved by
its stockholders, and in the event such split is effected the conversion price
of the convertible preferred stock will be adjusted to the market value of the
stock if lower than the split adjusted conversion price. The Registrant has
agreed to file a registration statement with the Securities and Exchange
Commission in order to register the resale of the shares issuable upon
conversion of the convertible preferred stock and the shares issuable upon
exercise of the warrants. Stockholders representing 31.4% of the outstanding and
issued common stock of the Registrant have agreed to vote in favor of the
conversion of the Series C Convertible Stock and the exercisablity of the
warrants at a meeting of the Registrant's stockholders called to consider the
matter.
The Registrant also obtained the waiver and agreement, contingent upon the
closing of this placement, of holders of certain of the Registrant's outstanding
Warrants and the Registrant's Series A Preferred Stock. The Registrant and the
holders of the Registrant's Warrants and the Series A Preferred Stock issued
under the Securities Purchase Agreements each dated October 2003, September 13,
2004 and February 8, 2005 agreed, subject to approval of the Registrant's common
stockholders as may be required by the rules of The American Stock Exchange, to
permanently reset the exercise price of the Warrants and the Series A Preferred
Stock as follows: (1) the Warrants issued under the October, 2003 and February
8, 2005 Securities Purchase Agreements are permanently reset to $0.55, and are
not subject to further anti-dilution adjustments; (2) the Warrants issued under
the September 13, 2004 Securities Purchase Agreement are permanently reset to
$1.00, and are not subject to further anti-dilution adjustments; and (3) the
conversion price of the Series A Preferred Stock is permanently reset to $0.55,
except that it will be reset to the same conversion price of the Series C
Convertible Preferred Stock if the Series C conversion price is reset following
the one for ten reverse stock split, but is not otherwise subject to further
ant-dilution protection.
In conjunction with the placement, the Registrant redeemed all of its
outstanding convertible debentures issued in February 2005 for aggregate
consideration of $8,765,570. The Registrant also redeemed its $1,098,500 note
issued in January 2005. Remaining proceeds of the placement will be used to
finance the previously announced planned acquisition of 100% of the outstanding
stock of OneTravel, Inc. and for general working capital.
The transaction was approved by the Registrant's Board of Directors on April 6,
2005. The shares of convertible preferred stock and warrants will be issued
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended.
This summary description of the placement described by the agreements does not
purport to be complete and is qualified in its entirety by reference to the form
of the agreements and other documents that are filed as Exhibits hereto.
The press release issued by the Registrant on April 14, 2005 relating to the
placement is filed herewith as Exhibit 99.1
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
4.1 Certificate of Designations of Series C Convertible Preferred Stock
10.1 Securities Purchase Agreement dated April 14, 2005 among the
Registrant and the investors identified on the signature pages
thereto
10.2 Form of Warrant
10.3 Registration Rights Agreement dated April 14, 2005 among the
Registrant and the Investors signatory thereto
10.4 Agreement and Waiver of Holders of Series A Preferred Stock
99.1 Press Release issued April 14, 2005
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 hereunto duly authorized.
Dated: April 14, 2005
RCG COMPANIES INCORPORATED
By: /s/ Marc E. Bercoon
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Marc E. Bercoon,
Chief Financial Officer
Exhibit Index
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4.1 Certificate of Designations of Series C Convertible Preferred Stock
10.1 Securities Purchase Agreement dated April 14, 2005 among the
Registrant and the investors identified on the signature pages
thereto
10.2 Form of Warrant
10.3 Registration Rights Agreement dated April 14, 2005 among the
Registrant and the Investors signatory thereto
10.4 Agreement and Waiver of Holders of Series A Preferred Stock
99.1 Press Release issued April 14, 2005