p3
Page 10 of 81 Pages
Item 4. Purpose of Transaction.
The Agent's Warrants and Agent's Bridge Warrants were acquired by the
Reporting Persons as compensation for services rendered in connection
with the Private Placement and the Bridge Financing, respectively, solely
for investment purposes and not for the purpose of acquiring control of
the Company. The Open Market Shares, Notes, Private Placement Warrants,
Bridge Notes and Bridge Warrants were acquired to make a profitable
investment.
Pursuant to the Agency Agreement, Commonwealth has the right until April
29, 2001 to designate a nominee to the Company's Board of Directors.
Commonwealth has the right to immediately appoint a majority of the Board
if the Company fails to repay the Notes when due. In addition, the Agency
Agreement contains restrictions on the Company's ability, while the Notes
are outstanding, to amend its by-laws with shareholder approval and
approval of the holders of a majority of the Notes issued in the Private
Placement.
Other than as set forth above, the Reporting Persons have no present
plans or proposals which relate to, or could result in, any of the
matters referred to in paragraphs (a) through (j), inclusive, of Item 4
of Schedule 13D. The Reporting Persons may, at any time and from time to
time, review or reconsider their position and formulate plans or
proposals with respect thereto, but have no present intention of doing
so.
Item 5. Interest in Securities of the Issuer.
(a)(1) Commonwealth is the beneficial owner of an aggregate of 2,715,545 shares
of Common Stock, representing approximately 30.4% of the issued and
outstanding shares of Common Stock of the Company. Commonwealth's
holdings include the right to acquire (i) 2,021,270 shares issuable upon
exercise of Agent's Warrants, (ii) 300,000 shares issuable upon
conversion of Notes, (iii) 150,000 shares issuable upon exercise of
Private Placement Warrants, (iv) 225,000 shares issuable upon exercise of
Agent's Bridge Warrants, and (v) 19,275 shares issuable upon exercise of
Bridge Warrants. CAMC is the beneficial owner of Commonwealth's shares.
(a)(2) Mr. Falk is the beneficial owner of an aggregate of 3,693,527 shares of
Common Stock, representing approximately 37.3% of the issued and
outstanding shares of Common Stock of the Company. In addition to
Commonwealth's 2,715,545 shares, Mr. Falk's holdings represent the right
to acquire (i) 633,027 shares issuable upon exercise of Agent's Warrants,
(ii) 225,000 shares issuable upon conversion of Notes, (iii) 112,500
shares issuable upon exercise of Private Placement Warrants, and (iv)
7,500 shares issuable upon exercise of Bridge Warrants. In his capacity
as Chairman and controlling equity owner of CAMC, Mr. Falk shares voting
and dispositive power with respect to the securities beneficially owned
by Commonwealth and may be deemed to be the beneficial owner of such
securities.
(a)(3) Mr. Priddy is the beneficial owner of an aggregate of 1,000,000 shares of
Common Stock, representing approximately 10.1% of the issued and
outstanding shares of Common Stock of the Company. Mr. Priddy's holdings
include the right to acquire (i) 500,000 shares issuable upon conversion
of Notes, (ii) 250,000 shares issuable upon exercise of Private Placement
Warrants, and (iii) 150,000 shares issuable upon exercise of Bridge
Warrants.
Page 11 of 81 Pages
In his capacity as a director and equity owner of CAMC, Mr. Priddy shares
indirect voting and dispositive power with respect to Commonwealth's
2,715,545 shares and may be deemed to be the beneficial owner of such
securities, although Mr. Priddy disclaims beneficial interest in such
shares other than that portion which corresponds with his equity
ownership in CAMC.
(a)(4) Mr. Rosenbloom is the beneficial owner of an aggregate of 255,968 shares
of Common Stock, representing approximately 2.8% of the issued and
outstanding shares of Common Stock of the Company. Mr. Rosenbloom's
holdings represent the right to acquire (i) 180,968 shares issuable upon
exercise of Agent's Warrants, (ii) 50,000 shares issuable upon conversion
of Notes, and (iii) 25,000 shares issuable upon exercise of Private
Placement Warrants. In his capacity as a director and equity owner of
CAMC, Mr. Rosenbloom shares indirect voting and dispositive power with
respect to Commonwealth's 2,715,545 shares and may be deemed to be the
beneficial owner of such securities, although Mr. Rosenbloom disclaims
beneficial interest in such shares other than that portion which
corresponds with his equity ownership in CAMC.
(a)(5) Mr. Ascuitto is the beneficial owner of an aggregate of 20,000 shares of
Common Stock, representing approximately 0.2% of the issued and
outstanding shares of Common Stock of the Company. Mr. Ascuitto's
holdings represent the right to acquire shares issuable upon exercise of
Agent's Warrants. In his capacity as a director of CAMC, Mr. Ascuitto
shares voting and dispositive power with respect to Commonwealth's
2,715,545 shares and may be deemed to be the beneficial owner of such
securities, although Mr. Ascuitto disclaims beneficial interest in such
shares other than that portion which corresponds with his equity
ownership in CAMC.
The percentages set forth above are calculated using a base of 6,207,783
shares of Common Stock outstanding. An additional 8,038,500 shares would be
outstanding if the Notes issued in the Private Placement were converted in full,
an additional 4,019,250 shares would be outstanding if the Private Placement
Warrants were exercised in full, and an additional 2,250,000 shares would be
outstanding if the Bridge Warrants were exercised in full. Assuming conversion
of all the Notes, exercise of all the Private Placement Warrants and exercise of
all the Bridge Warrants, the percentage holdings of the Reporting Persons would
be as follows: Commonwealth and CAMC-- 13.3%; Mr. Falk--18.0%; Mr. Priddy--4.9%;
Mr. Rosenbloom--1.3%; Mr. Ascuitto--.10%.
(b) Number of shares as to which each such person has:
(1) sole power to vote or to direct the vote:
(i) Mr. Falk has the sole power to vote or to direct the vote of his
978,027 shares.
(ii) Mr. Priddy has the sole power to vote or to direct the vote of his
1,000,000 shares.
(iii) Mr. Rosenbloom has the sole power to vote or to direct the vote of
his 255,968 shares.
(iv) Mr. Ascuitto has the sole power to vote or to direct the vote of
his 20,000 shares.
(2) shared power to vote or to direct the vote:
Page 12 of 81 Pages
Commonwealth, CAMC, Michael Falk, Robert Priddy, Keith Rosenbloom and
Basil Ascuitto share the power to vote or to direct the vote of
Commonwealth's 2,715,545 shares.
(3) sole power to dispose or to direct the disposition of:
(i) Mr. Falk has the sole power to dispose or to direct the
disposition of his 978,027 shares.
(ii) Mr. Priddy has the sole power to dispose or to direct the
disposition of his 1,000,000 shares.
(iii) Mr. Rosenbloom has the sole power to dispose or to direct the
disposition of his 255,968 shares.
(iv) Mr. Ascuitto has the sole power to dispose or to direct the
disposition of his 20,000 shares.
(4) shared power to dispose of or to direct the disposition of:
Commonwealth, CAMC, Michael Falk, Robert Priddy, Keith Rosenbloom and
Basil Ascuitto share the power to dispose or to direct the disposition of
Commonwealth's 2,715,545 shares.
(c) Inapplicable
(d) Inapplicable
(e) Inapplicable
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Under the terms of the Subscription Agreement filed as Exhibit 4 hereto
between the Company and the purchasers of the Bridge Notes and Bridge
Warrants, the Company is required to prepare and file a registration
statement with the Securities and Exchange Commission with respect to the
shares issuable upon conversion of the Bridge Notes (which are not
currently convertible) and exercise of the Bridge Warrants. Pursuant to
the terms of the Agent's Bridge Warrant filed as Exhibit 5 hereto, the
Company has agreed to register the shares of Common Stock underlying the
Agent's Bridge Warrants with the SEC under certain circumstances.
Page 13 of 81 Pages
Item 7. Materials to be Filed as Exhibits.
(a) Filed with Form 13D on May 17, 1999:
(1) Agency Agreement dated as of April 14, 1999 between Commonwealth
and the Company
(2) Form of Note
(3) Form of Private Placement Warrant
(4) Subscription Agreement regarding purchase of the Company's Notes
and Private Placement Warrants
(5) Form of Agent's Warrant
(b) Filed herewith:
(1) Agency Agreement dated as of July 1, 1999 between Commonwealth and
the Company
(2) Form of Bridge Note
(3) Form of Bridge Warrant
(4) Subscription Agreement regarding purchase of the Company's Bridge
Notes and Bridge Warrants
(5) Form of Agent's Bridge Warrant
(6) Joint Statement on Schedule 13D, as required by Rule 13d-1(f)(1)
under the Exchange Act
Page 14 of 81 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: August 4, 1999 Commonwealth Associates L.P.
New York, New York
By: Commonwealth Associates Management
Corp., its general partner
By: /s/ Joseph Wynne
-----------------------------------
Joseph Wynne
Chief Financial Officer
Dated: August 4, 1999 /s/ Michael S. Falk
New York, New York -----------------------------------
Michael S. Falk
Dated: August 4, 1999 /s/ Robert Priddy
Marietta, Georgia -----------------------------------
Robert Priddy
Dated: August 4, 1999 /s/ Keith Rosenbloom
New York, New York -----------------------------------
Keith Rosenbloom
Dated: August 4, 1999 /s/ Basil Ascuitto
New York, New York -----------------------------------
Basil Ascuitto
Page 15 of 81 Pages
EXHIBIT INDEX
Exhibit No. Page
----------- ----
(1) Agency Agreement dated as of July 1, 1999 between Commonwealth
and the Company 16
(2) Form of Note 31
(3) Form of Private Placement Warrant 47
(4) Subscription Agreement regarding purchase of the Company's Notes
and Private Placement Warrants 56
(5) Form of Agent's Warrant 67
(6) Joint Statement on Schedule 13D, as required by Rule 13d-1(f)(1)
under the Exchange Act 80
TYPE: EX-99.1
SEQUENCE: 2
DESCRIPTION: AGENCY AGREEMENT
Page 16 of 81 Pages
FUTURELINK DISTRIBUTION CORP.
AGENCY AGREEMENT
Commonwealth Associates L.P.
830 Third Avenue
New York, New York 10022
July 1, 1999
Gentlemen:
FutureLink Distribution Corp., a Colorado corporation (the "Company"),
proposes to offer for sale to "accredited investors", in a private placement,
units ("Units"), each Unit consisting (i) $250,000 principal amount of 8% senior
subordinated convertible promissory notes (the "Notes") and (ii) two-year
warrants (the "Warrants") to purchase 37,500 shares of the Company's common
stock, $.0005 par value (the "Common Stock"). Such offering and sale are
referred to herein as the "Offering." A minimum of 20 Units for $5,000,000
("Minimum Offering") and a maximum of 40 Units for $10,000,000 ("Maximum
Offering") will be sold in the Offering at $250,000 per Unit. The Units will be
offered pursuant to those terms and conditions acceptable to you as reflected in
the Confidential Term Sheet dated July 1, 1999 (the "Term Sheet"). The Minimum
Offering will be made on a "best efforts - all-or-none" basis and the balance of
the Offering will be offered on a "best efforts" basis. The Units are being
offered pursuant to the Term Sheet and related documents in accordance with
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act")
and Rule 506 of Regulation D promulgated thereunder.
Commonwealth Associates is sometimes referred to herein as the "Placement
Agent." The Term Sheet (including the exhibits thereto), as it may be amended or
supplemented from time to time, and the form of proposed subscription agreement
between the Company and each subscriber (the "Subscription Agreement") and the
exhibits which are part of the Term Sheet and/or Subscription Agreement are
collectively referred to herein as the "Offering Documents."
The Company will prepare and deliver to the Placement Agent a reasonable
number of copies of the Offering Documents in form and substance satisfactory to
counsel to the Placement Agent.
Each prospective investor subscribing to purchase Units ("Subscriber")
will be required to deliver, among other things, a Subscription Agreement and a
confidential purchaser questionnaire ("Questionnaire") in the form to be
provided to offerees. Capitalized terms used herein, unless otherwise defined or
unless the context otherwise indicates, shall have the same meanings provided in
the Offering Documents.
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