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):
June 27, 2002
BOUNDLESS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-17977 13-3469637
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State of Commission IRS Employer
Incorporation File Number I.D. Number
100 Marcus Blvd., Hauppauge, New York 11788
Address of principal executive offices
Registrant's telephone number: (631) 342-7400
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 5: Other Events
As of June 27, 2002, we entered into agreements with our secured lenders
(the "Prior Lenders") to terminate our revolving credit facility (which we have
been calling our Chase Credit Line) and to release their liens on our personal
property. At the same time, we entered into another secured revolving credit
facility (the "CIT Credit Line") with The CIT Group/Business Credit, Inc.
("CIT") pursuant to which CIT was granted a lien on all of our personal property
and was pledged substantially all of the outstanding capital stock of our
subsidiaries. As used herein, "we" or "us" refers to Boundless Corporation and
its subsidiaries collectively, or each such entity individually, as may be
appropriate in accordance with the transaction documents filed as exhibits to
this report.
In return for the termination of the Chase Credit Line, we issued term
notes (the "Term Notes") to the Prior Lenders in the aggregate principal amount
of $2,950,000, of which $2,570,000 is secured by a second mortgage on our
Hauppauge, New York, facility and $380,000 is required to be paid on the earlier
of the 90th day after the date of the Term Notes or upon the completion of the
sale (the "Boca Asset Sale") of certain machinery, equipment and assets relating
to printed circuit board assembly located in our Boca Raton, Florida, facility.
We have undertaken to complete the Boca Asset Sale by such 90th day. Only
payments for interest, at the rate of 5% per annum, are required to be made on
the Term Notes until the earlier of April 1, 2003 or the date on which we
receive equity capital investments of at least $2,000,000. Thereafter, we are
required to pay off the Term Notes by making 51 consecutive monthly payments of
principal and interest based on a 60-month amortization schedule, except that
the 51st payment will include the balance due on the Term Notes.
In return for termination of the Chase Credit Line, we also paid the Prior
Lenders a total of $250,000 and agreed to issue 750,000 shares of our common
stock and shares of our newly-created convertible preferred stock (the
"Preferred Stock") with a stated value of $1,250,000. We have agreed to register
under the Securities Act of 1933 such common stock and the shares into which the
Preferred Stock may be converted. The Prior Lenders have certain anti-dilution
protection for their shares of common stock. The Preferred Stock may be
converted after the first anniversary of their issuance into shares of our
common stock at $3.00 per share and, unless sooner converted into our common
stock, must be redeemed by us on June 30, 2012 for their stated value.
In general, the CIT Credit Line permits us to borrow up to (a) 85% of our
eligible accounts receivable, plus (b) the lesser of (i) 10% of our eligible
inventory, (ii) 85% of our appraised inventory liquidation value or (iii)
$2,000,000, less (c) $880,000 (which amount will be reduced to $500,000 after
the Boca Asset Sale is completed). Under the CIT Credit Line, the annual
interest rate is 1-1/2% above the prime rate announced by JPMorgan Chase Bank
and we are required to pay interest on a minimum of $2,000,000 even though our
actual borrowings may be less than $2,000,000. We are responsible for certain
fees for unused credit and early termination of the facility. The maximum
availability under the CIT Credit Line is $8,500,000 and the term of the
facility is three years, subject to annual renewals thereafter.
As part of the restructuring of our debt, we have reached agreement with
our unsecured creditors representing approximately $10,234,965 of debt which
requires us to make cash
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payments totaling approximately $2,881,203 and to issue shares of Preferred
Stock with a stated value of approximately $3,115,218. The cash payments are
scheduled as follows: during calendar year 2002 - $1,438,748; 2003 - $584,996;
2004 - $643,681; 2005 - $142,520; and 2006 - $71,258. If all of such Preferred
Stock, including the Preferred Stock which we are required to issue to the Prior
Lenders, are converted, we would be required to issue approximately 1,455,073
shares of our common stock, subject to adjustment. We are continuing to
negotiate with other unsecured creditors to restructure our obligations to them.
Item 7. Exhibits
(c) Exhibits
Exhibit Nos.
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10.1 Letter Agreement, dated June 27, 2002, from JPMorgan Chase Bank,
Silicon Valley Bank and National Bank of Canada to Boundless
Corporation and its subsidiaries.
10.2 Form of Term Notes, dated June 27, 2002, made by Boundless
Corporation and its subsidiaries to JPMorgan Chase Bank, Silicon
Valley Bank or National Bank of Canada in the aggregate
principal amount of $2,950,000.
10.3 Mortgage dated June 27, 2002, between Boundless Technologies,
Inc. and JPMorgan Chase Bank, Silicon Valley Bank, and National
Bank of Canada
10.4 Letter Agreement, dated June 27, 2002, from JPMorgan Chase Bank,
Silicon Valley Bank and National Bank of Canada to Boundless
Corporation and its subsidiaries.
10.5 Financing Agreement, dated June 27, 2002, by and among The CIT
Group/Business Credit, Inc., Boundless Technologies, Inc. and
Boundless Manufacturing Services, Inc.
10.6 Guarantor Security Agreement, dated June 27, 2002, by Boundless
Corporation and Boundless Acquisition Corp. in favor of The CIT
Group/Business Credit, Inc.
10.7 Guaranty dated June 27, 2002, by and between Boundless
Technologies, Inc. and The CIT Group/Business Credit, Inc.
10.8 Guaranty dated June 27, 2002, by and between Boundless
Corporation, Boundless Acquisition Corp. and The CIT
Group/Business Credit, Inc. Guaranty dated June 27, 2002, by and
between Boundless Manufacturing Services, Inc. and
10.9 The CIT Group/Business Credit, Inc.
10.10 Pledge and Security Agreement dated June 27, 2002, by and
between Boundless Corporation and The CIT Group/Business Credit,
Inc.
10.11 Pledge and Security Agreement dated June 27, 2002, by and
between Boundless Acquisition Corp. and The CIT Group/Business
Credit, Inc.
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Exhibit Nos.
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10.12 Collateral Assignment and Security Agreement by and between
Boundless Technologies, Inc., Boundless Manufacturing Services,
Inc. and The CIT Group/Business Credit, Inc.
The Company hereby agrees to provide to the Commission upon request any omitted
schedules or exhibits to the documents listed in this Item 7.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 9, 2002
BOUNDLESS CORPORATION
By: /s/ Joseph Gardner
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Name: Joseph Gardner
Title: Chief Financial Officer
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