As filed with the Securities and Exchange Commission on January 28, 1997
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Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PICK Communications Corp.
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
75-2107261
(I.R.S. Employer Identification No.)
Wayne Interchange Plaza II, 155 Route 46 West, Wayne, NJ 07470
(Address of Principal Executive Offices) (Zip Code)
1996 Stock Option Plan
Compensation Agreement dated December 3, 1996
(Full Title of the Plans)
Elliot H. Lutzker, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, N.Y. 10158-0125
(Name and Address of Agent For Service)
(212) 687-3860
(Telephone Number, Including Area Code, of Agent For Service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of Each Class Proposed Maximum Proposed
of Securities to be Amount to be Offering Maximum Amount of
Registered Registered Price Aggregate Registration
Per Share Offering Price Fee
Stock Options 5,000,000(1) -- -- (5)
Shares of Common 3,500,000(2)(6) $ .88(7) $3,080,000 $ 933.33
Stock, par value 400,000(3) $ .25(7) $ 100,000 $ 30.30
$.002 per share
Shares of Common 1,500,000(4)(6) $ .19(8) $ 285,000 $ 86.36
Stock, par value
$.002 per share
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,049.99
</TABLE>
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(1) Represents options authorized to be granted pursuant to the 1996 Stock
Option Plan (the "Plan") of PICK Communications Corp. (the "Registrant,"
"Corporation" or "Company").
(2) Shares of the Company's common stock, $.002 par value (the "Common
Stock") issuable upon exercise of options previously granted pursuant
to the Plan.
(3) Represents shares of Common Stock issued to the Registrant's Chief
Executive Officer, Mr. Diego Leiva, at a purchase price of $.25 per
share, or an aggregate of $100,000, in lieu of payment of $100,000 of
salary accrued to Mr. Leiva pursuant to a Compensation Agreement dated
December 3, 1996 between the Registrant and Mr. Leiva (the "Compensation
Shares").
(4) Shares issuable upon exercise of stock options available for grant under
the Plan.
(5) No registration fee is required pursuant to Rule 457(h)(2).
(6) Includes an indeterminable number of shares of Common Stock which may
become issuable pursuant to the anti-dilution provisions of the Plan, as
the case may be.
(7) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(h)(1) based upon the average exercise price.
(8) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) based upon the average of the last bid and asked
prices for the shares of the Company's Common Stock on the National
Association of Securities Dealers, Inc.'s Electronic Bulletin
Board (OTCBB)on January 24, 1997.
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PROSPECTUS
PICK Communications Corp.
5,400,000 Shares
Shares of Common Stock, $.002 par value
This Prospectus has been prepared by PICK Communications Corp., a
Nevada corporation (the "Registrant," "Corporation" or "Company"), for use upon
resale of shares of the Registrant's common stock, $.002 par value (the "Common
Stock"), by certain "affiliates" (as defined in Rule 405 promulgated under the
Securities Act of 1933, as amended (the "Act")) of the Registrant (the "Selling
Stockholders") who have acquired or may acquire such shares of Common Stock (a)
upon exercise of 5,000,000 stock options granted or to be granted under (a) the
Registrant's 1996 Stock Option Plan (the "Plan") or (b) pursuant to a
compensation agreement with the Registrant for 400,000 shares of Common Stock
outside the Plan in connection with services rendered to the Registrant. The
maximum number of shares of Common Stock which may be offered or sold hereunder
is subject to adjustment in the event of stock splits or dividends,
recapitalization and other similar changes affecting the Common Stock. It is
anticipated that the Selling Stockholders will offer shares of Common Stock for
resale at prevailing prices in the over-the-counter market on the date of sale.
The Registrant's Common Stock has been traded in the over-the-counter market and
reported on the National Association of Securities Dealers, Inc.'s Electronic
Bulletin Board (OTCBB), under the symbol "PRMF," since August 17, 1995. The
Registrant will receive none of the proceeds from the sale of the shares of
Common Stock offered hereby. All selling and other expenses incurred by
individual Selling Stockholders will be borne by such stockholders. See "Plan of
Distribution."
See "Risk Factors" beginning on Page 4 for certain risks of an
investment in the shares of Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 28, 1997.
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No person is authorized to give any information or to make any
representation other than those contained in this Prospectus in connection with
any offer to sell of the securities to which this Prospectus relates and, if
given or made, such information or representations must not be relied upon as
having been authorized. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, imply that there has been no
change in the facts herein set forth since the date hereof. This Prospectus does
not constitute an offer to sell to or a solicitation of any offer to buy from
any person in any state in which any such offer of solicitation would be
unlawful.
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PICK Communications Corp. was incorporated in April 1984 under the laws of
Utah as S.T.V., Inc. ("STV"). In February 1986, STV changed its name to Adolphus
Companies, Inc. ("Adolphus"). In May 1988, Adolphus changed its name to Prime
International Products, Inc. ("Prime"). Prime ceased operations in late 1990.
In July 1995, Prime changed its state of organization from Utah to
Nevada. On September 12, 1995, Prime executed a Stock Purchase Agreement to
exchange 16,500,000 shares of Prime's common stock for all of the outstanding
shares of common stock and warrants of Public Info/Comm Kiosk, Inc. ("Pick"),
which made Pick a subsidiary of Prime. Pick was incorporated under the laws of
the State of New Jersey in August 1992. Prime changed its name to PICK
Communications Corp. in December 1995.
The Registrant's principal executive offices are located at Wayne
Interchange Plaza II, 155 Route 46 West, Wayne, New Jersey 07470, and its
telephone number is (201) 812-7425.
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AVAILABLE INFORMATION
The Registrant has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-8 including all amendments
thereto (the "Registration Statement") under the Act via the Electronic Data
Gathering Analysis and Retrieval system ("EDGAR") and may be found on the
Commission's web site at http://www.sec.gov. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Registrant, reference is
made to the Registration Statement, including the exhibits filed therewith.
Also, the Registrant is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance, therewith, files reports and other information with the Commission.
Reports, proxy statements and other information filed by the Registrant can be
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inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Regional Offices of the Commission at Seven World Trade Center, New
York, New York 10138 and at 500 West Madison Street, Chicago, Illinois 60611.
Copies of all or any part of this Registration Statement (including the exhibits
thereto) also may be obtained from the Public Reference Section of the
Commission at the Commission's principal office in Washington, D.C., at the
Commission's prescribed rates. Electronic filings made via EDGAR are publicly
available through the Commission's web site referenced above.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant hereby incorporates by reference the following documents:
1. The Registrant's Registration Statement on Form 10 (File
No.0-27604), including the description of the
Registrant's Common Stock, filed pursuant to Section
12(g) of the Exchange Act, including any amendment or
report filed for the purpose of updating such
information.
2. The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996.
3. The Registrant's Proxy Statement dated December 17,
1996.
All documents subsequently filed by the Registrant after the date of
this Prospectus pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing such documents. Any statement contained in a
previously filed document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement herein modifies or supersedes such statement; and any statement
contained herein shall be deemed to be modified or superseded to the extent that
a statement in any document subsequently filed, which is incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Registrant will provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person, a copy of any or all of the information
that has been incorporated by reference in this Prospectus (not including
exhibits to such information, unless such exhibits are specifically incorporated
by reference into the information which this Prospectus incorporates). Requests
for copies of such information should be directed to the
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Registrant at Wayne Interchange Plaza II, 155 Route 46 West, Wayne, New Jersey
07470.
RISK FACTORS
The Company's business can be broken into three segments: (i) debit calling
cards, (ii) international long distance service which entails the Company
purchasing long distance time from major network based carriers, such as AT&T,
and selling this time to other carriers and resellers via switch to switch
connections and (iii) prepaid cellular telephones incorporating prepaid debit
technology. Unless otherwise indicated, the following Risk Factors apply to all
three facets of the Company's business. Prospective investors should consider
carefully the following Risk Factors, along with the other documentation
incorporated by reference herein, in evaluating an investment in the Company.
Limited Operating History and Revenues; Significant and Continuing Losses
The Company was organized in April, 1984 and had no operations when it
acquired control of PICK in what is described as a reverse merger. PICK has a
limited operating history upon which an evaluation of the Company's future
performance and prospects can be made. The Company's prospects must be
considered in light of the risks, expenses, delays, problems and difficulties
frequently encountered in the establishment of a new business in the prepaid
phone card industry, which is an emerging and evolving industry characterized by
intense competition. Despite having achieved steadily increasing levels of
revenues since inception, the Company's expenses have exceeded revenues,
resulting in losses of $158,106, $1,250,580 and $1,068,371 for the years ended
December 31, 1993, 1994 and 1995 on a consolidated basis, respectively. Inasmuch
as the Company will continue to have a high level of operating expenses and will
be required to make significant up-front expenditures in connection with its
proposed expansion (including, but not limited to, salaries of executive,
creative, marketing and other personnel), the Company anticipates that losses
will continue until such time, if ever, as the Company is able to generate
sufficient revenues to finance its operations and the costs of continuing
expansion. There can be no assurance that the Company will be able to generate
significant revenues or achieve profitable operations.
Competition
The Company faces intense competition in the marketing and sale of its
prepaid telephone calling card products and services. The Company's telephone
debit cards and long distance services compete for consumer recognition with
other prepaid phone cards, credit calling cards and long distance telephone
services which have achieved significant international, national and regional
consumer
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loyalty. Many of these products and services are marketed by companies which are
well-established, have reputations for success in the development and sale of
products and services and have significantly greater financial, marketing,
distribution, personnel and other resources than the Company, thereby permitting
such companies to implement extensive advertising and promotional campaigns,
both general and in response to efforts by additional competitors to enter into
new markets and introduce new products and services. Certain of these
competitors, including AT&T, MCI, Sprint and the "Baby Bells," such as Bell
Atlantic and Bell South, dominate the telecommunications industry and have the
financial resources to enable them to withstand substantial price competition,
which is expected to increase significantly. These and other large telephone
companies, as well as retailers, such as Southland Corp., and companies engaged
in the marketing of collectibles, have also entered or have announced their
intention to enter into the telephone Debit Card segment of the industry. In
addition, because the prepaid phone card segment of the industry has no
substantial barriers to entry, competition from smaller competitors in the
Company's target markets is also expected to continue to increase significantly.
The telecommunications industry is characterized by frequent
introduction of new products and services, and is subject to changing consumer
preferences and industry trends, which may adversely affect the Company's
ability to plan for future design, development and marketing of its products and
services. The markets for telecommunications products and services are also
characterized by rapidly changing technology and evolving industry standards,
often resulting in product obsolescence or short product life cycles. The
proliferation of new telecommunications technologies, including personal
communication services, cellular telephone products and services and telephone
debit cards employing alternative technologies, may reduce demand for telephone
debit cards generally.
The Company is not presently aware of any competitor offering the same
prepaid cellular telephone technology. Larger, more established entities with
greater financial and personnel resources than those of the Company may enter
into direct competition with the Company although the Company has a patent
pending for such product. However, the Company reasonably expects it has a one
or two year lead and will be able to capture a significant market share. Despite
the foregoing, there can be no assurance that the Company will be able to
capture such market share or compete effectively.
The Company believes that it competes on the basis of price and service.
The Company's success will depend on the Company's ability to anticipate and
respond to rapid changes in consumer preferences and the introduction of new
products. There can be no assurance that the Company will be able to compete
successfully in its markets.
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Uncertainty of Market Acceptance
Achieving market acceptance for the Company's products and services
requires substantial marketing efforts and the expenditure of significant funds
to create both awareness and demand by large corporations, advertisers and
marketers, retailers and consumers. The Company's success depends, in large
part, on its ability to attract large corporations to advertise and promote
their products and services using the Company's prepaid phone cards as well as
the level of acceptance and usage by consumers. Because demand by large
corporations, advertisers and marketers, retailers and consumers may be
interrelated, any lack or lessening of demand by any one of these consuming
entities could adversely affect overall market acceptance of the Company's
products and services. There can be no assurance that substantial markets will
develop for prepaid phone cards and cellular phones or that the Company will be
able to meet its current marketing objectives or succeed in positioning itself
as a key player in the telecommunications industry.
Risks Associated with Marketing Strategy and Rapid Expansion
Although the Company intends to pursue a strategy of growth and will
seek to expand its distribution capabilities to achieve greater penetration in
new and emerging telecommunications markets, the Company has achieved only
modest growth, to date, and has limited experience in effectng rapid expansion
or managing operations targeting diverse market segments. Implementation of the
Company's proposed expansion will depend on, among other things, the Company's
ability to establish additional distribution arrangements targeting several
market segments, including collectors, promotional, retail and corporate
markets; hire and retain skilled management, financial, marketing, creative and
other personnel; and successfully manage growth (including monitoring
operations, controlling costs and maintaining effective quality, inventory and
service controls). The Company's prospects will be affected significantly by its
ability to continue to develop successfully and maintain strategic marketing
relationships with key distributors. The Company will substantially depend on
the efforts of such third parties and also upon such licensors' and
distributors' marketing efforts and the popularity and sales of their products.
The Company's marketing strategy and plans are subject to change as a
result of a number of factors, including progress or delays in the Company's
marketing efforts, changes in market conditions (including the emergence of
significant supplementary markets), the nature of possible distribution
arrangements which may become available to it in the future and competitive
factors. The Company may also seek to expand its operations through the possible
acquisition of companies in businesses which the Company believes are
complementary with its business. However, there can be no assurance that the
Company will be able to implement successfully its business strategy or
otherwise expand its operations, or that the Company will ultimately effect any
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acquisition or integrate successfully into its operations any
acquired business.
Need for Additional Financing
In the event that the Company's plans change, its assumptions change or
prove to be inaccurate, or its cash flow proves to be insufficient to fund the
Company's operations (due to unanticipated expenses, delays, problems,
difficulties or otherwise), the Company will be required to seek additional
financing sooner than anticipated or curtail its expansion activities. The
Company may determine, depending upon the opportunities available to it, to seek
additional debt or equity financing to fund the cost of continuing expansion. To
the extent that the Company finances an acquisition with a combination of cash
and equity securities, any such issuance of equity securities would result in
dilution to the interests of the Company's stockholders. Additionally, to the
extent that the Company incurs indebtedness or issues debt securities in
connection with any acquisition, the Company will be subject to risks associated
with incurring substantial indebtedness, including the risks that interest rates
may fluctuate and cash flow may be insufficient to pay principal and interest on
any such indebtedness. The Company has no current arrangements with respect to,
or sources of, additional financing, and it is not anticipated that existing
stockholders will provide any portion of the Company's future financing
requirements. There can be no assurance that additional financing, particularly
the significant amounts of financing which would be required if the Company is
unable to enter into additional strategic marketing or other distribution
arrangements, will be available to the Company on commercially reasonable terms,
if at all.
Dependence on Third-Party Long Distance Carriers; Possible Service
Interruptions and Equipment Failures
The Company is currently dependent on a limited number of domestic and
international long distance carriers to provide access to long distance
telephone service on a cost effective basis. The Company has entered into
interconnect agreements or arrangements with long distance carriers, pursuant to
which the Company leases phone lines and transmission facilities necessary to
transmit consumer calls. Although the Company believes that it currently has
sufficient access to transmission facilities and long distance networks on
favorable terms and believes that its relationships with its carriers are
satisfactory, any increase in the rates charged by carriers would materially
adversely affect the Company's operating margins. Failure to obtain continuing
access to such facilities and networks would also have a material adverse effect
on the Company, including possibly requiring the Company to significantly
curtail or cease its operations. In addition, the Company's operations require
that its switching facility and its carriers' long distance networks operate on
a continuous basis. It is not atypical for telephone carriers and switching
facilities to experience service interruptions and equipment failures which
could
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last for a significant period of time. It is possible that the Company's
switching facility and its carriers' long-distance networks may, from time to
time, experience service interruptions or equipment failures. Service
interruptions and equipment failures resulting in material delays would
adversely affect consumer confidence as well as the Company's business
operations and reputation.
Government Regulations
Long distance telecommunication services are subject to regulation by
the FCC and by state regulatory authorities. Among other things, these
regulatory authorities impose regulations governing the rates, terms and
conditions for interstate and intrastate telecommunication services. The federal
law governing regulation of interstate telecommunications are the Communications
Acts of 1934 and 1996 (the "Communications Acts"), which applies to all "common
carriers," including AT&T, MCI and Sprint, as well as entities, such as the
Company, which resell the transmission services provided through the facilities
of other common carriers. In general, under the Communications Acts, common
carriers are required to charge reasonable rates and are prohibited from
engaging in unreasonable practices in the provision of their services. Common
carriers are also prohibited from engaging in unreasonable discrimination in
their rates, charges and practices.
The Communications Acts require each common carrier to file tariffs with
the FCC. A tariff is a list of services offered, the terms under which the
services are offered, and the rates, or range of rates, charged for services.
Upon filing a tariff, the service provider is required to provide the services
at the rates and under the terms and conditions specified in the tariff. Failure
to file a tariff could result in fines and penalties. The Company believes it
has filed all required tariffs with the FCC.
In addition to federal regulation, resellers of long distance services
may be subject to regulation by the various state regulatory authorities. The
scope of such regulation varies from state to state, with certain states
requiring the filing and regulatory approval of various certifications and state
tariffs. As the Company expands the geographic scope of its long distance
operations, it intends to obtain operating authority as may be required to
provide long distance service.
The Company believes that it is in substantial compliance with all
material laws, rules and regulations governing its operations and has obtained
or is in the process of obtaining all licenses, tariffs and approvals necessary
for the conduct of its business. In the future, legislation enacted by Congress,
court decisions relating to the telecommunications industry, or regulatory
actions taken by the FCC or the states in which the Company operates could
adversely impact the Company's business. Changes in existing laws and
regulations, particularly currently proposed relaxation of existing regulations
resulting in significantly increased price
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competition, may have a significant impact on the Company's activities and on
the Company's operating results. Adoption of new statutes and regulations and
the Company's expansion into new geographic markets could require the Company to
alter its methods of operations, at costs which could be substantial, or
otherwise limit the types of services offered by the Company. There can be no
assurance that the Company will be able to comply with additional applicable
laws, regulations and licensing requirements.
Difficulty of Trading and Obtaining Quotations for Common Stock
The Company's Common Stock is currently trading in the over-the-counter
market so-called "pink sheets," and is quoted on the National Association of
Securities Dealers, Inc.'s Electronic Bulletin Board (OTCBB) under the symbol
"PRMF." As a result of trading in the over-the-counter market, an investor would
likely find it more difficult to dispose of, or to obtain quotations as to, the
price of the Common Stock.
Possible Inability to Recognize Deferred Revenue
The sale of long distance telephone service through prepaid phone cards
may be subject to "escheat" laws in various states. These laws generally provide
that payments or deposits received in advance or in anticipation of the
provision of utility (including telephone) services that remain unclaimed for a
specific period of time after the termination of such services are deemed
"abandoned property" and must be remitted to the state. Although the Company is
not aware of any case in which such laws have been applied to the sale of
prepaid phone cards, and does not believe that such laws are applicable, in the
event that such laws are deemed applicable, the Company may be unable to
recognize the portion of its deferred revenue remaining upon the expiration of
phone cards with unused calling time. In such event, the Company may be required
to deliver such amounts to certain states in accordance with these laws, which
could have a material adverse effect on the Company.
Penny Stock Regulation
The trading of the Company's Common Stock is currently subject to Rule
15g-9 promulgated under the Exchange Act for non-NASDAQ and non-exchange listed
securities. Under such rule, brokers-dealers who recommend such securities to
persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive the
purchaser's written agreement to a transaction prior to sale. Securities are
exempt from this rule if the market price is at least $5.00 per share.
The Commission has adopted regulations that generally define a "penny
stock" to be an equity security that has a market price of less than $5.00 per
share or an exercise price of less than $5.00 per share subject to certain
exceptions. Such exceptions include
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equity securities listed on NASDAQ and equity securities issued by an issuer
that has (i) net tangible assets of at least $2,000,000, if such issuer has been
in continuous operation for more than three years, or (ii) net tangible assets
of at least $5,000,000, if such issuer has been in continuous operation for less
than three years, or (iii) average revenue of at least $6,000,000 for the
preceding three years. Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, of a risk
disclosure schedule explaining the penny stock market and the risks associated
therewith.
The Company's Common Stock is currently penny stock as defined in the
Exchange Act and as such, the market liquidity for the Common Stock is limited
to the ability of broker-dealers to sell Common Stock in compliance with the
above-mentioned disclosure requirements.
SELLING STOCKHOLDERS
The shares of Common Stock to which this Prospectus relates are being
registered for reoffers and resales by Selling Stockholders of the Company who
have acquired or may acquire such shares pursuant to the exercise of Options or
pursuant to agreements with the Company outside of the Plan in connection with
services rendered to the Company. The Selling Stockholders named below may
resell all, a portion or one of such shares of Common Stock from time to time.
Participants under the Plan who are deemed to be "affiliates" of the
Company who may acquire Common Stock under the Plan or other employee benefit
plan may be added to the Selling Stockholders listed below from time to time by
use of a prospectus supplement filed pursuant to Rule 424(b) under the
Securities Act of 1933, as amended (the "Act"). An "affiliate" is defined in
Rule 405 under the Act as a "person that directly, or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with," the Company.
The table below sets forth with respect to each Selling Stockholder,
based upon information available to the Company as of January 20, 1997, the
number of shares of Common Stock beneficially owned before and after the sale of
the shares of Common Stock offered hereby; the number of shares of Common Stock
to be sold; and the percent of the outstanding shares of Common Stock owned
before and after the sale of the shares of Common Stock offered hereby. Each
Selling Stockholder's relationship to the Company is set forth in a footnote to
the table.
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<TABLE>
<S> <C> <C> <C> <C> <C>
Name Amount and Shares to be Shares Percent of Percent of
Nature of Sold(3) Beneficially Class (2)(3) Class (2)(3)
Beneficial Owned After Before After
Ownership(1) Offering Offering Offering
Diego Leiva 12,466,500(4) 900,000 11,566,500 29.2% 27.4%
(5)
Robert R. 665,000(6) 500,000 165,000 1.6% Less than 1%
Sams
Ricardo 826,000(6)(7) 500,000 326,000 1.9% Less than 1%
Maranon
Greg Manning 4,612,289(6) 500,000 4,112,289 10.8% 9.8%
(8)
Raymond M. 1,011,500(9) 500,000 961,500 2.4% 2.3%
Brennan (10)
Karen M. 871,250(10) 500,000 371,250 2.0% Less than 1%
Quinn
Karl R. 870,000(10) 500,000 370,000 2.0% Less than 1%
Petersson (11)
</TABLE>
(1) Unless otherwise noted, all shares are beneficially owned and the sole
voting and investment power is held by the person indicated.
(2) Based on 42,162,516 shares outstanding as of January 20, 1997. Each
beneficial owner's percentage ownership is determined by assuming that
options or warrants that are held by such person and which are
convertible or exercisable within sixty (60) days of such date pursuant
to Rule 13d-3 under the Exchange Act have been converted or exercised.
(3) Does not constitute a commitment to sell any or all of the stated number
of shares of Common Stock. The number of shares of Common Stock offered
hereby shall be determined from time to time by each Selling Stockholder
at his/her discretion.
(4) Includes (i) 4,290,000 shares beneficially owned by Mr. Leiva's wife,
(ii) 792,000 shares beneficially owned by a trust for Mr. Leiva's son for
which Mr. Leiva serves as trustee, (iii) 792,000 shares beneficially
owned by a trust for Mr. Leiva's daughter for which Mr. Leiva serves as
trustee and (iv) 400,000 shares being registered in this registration
statement which Mr. Leiva and the Company agreed to exchange for $100,000
in accrued and unpaid compensation due Mr. Leiva for 1994 and 1995, at a
price per share of $.25, pursuant to a Compensation Agreement dated as of
December 3, 1996.
(5) Includes incentive stock options to purchase up to 103,896 shares of the
Company's Common Stock at $.9625 and non-incentive stock options to
purchase up to 396,104 shares of the Company's Common Stock at $.875 per
share pursuant to the Plan being registered in this registration
statement.
.
(6) Includes non-qualified stock options to purchase up to 500,000 shares of
the Company's Common Stock at a price of $.875 per share pursuant to the
Plan being registered in this registration statement.
(7) Includes 37,250 shares of the Company's Common Stock beneficially owned
by Mr. Maranon's daughter.
(8) These shares are held by Greg Manning Auctions, Inc. a company of which
Greg Manning is a shareholder.
(9) Includes 250,000 shares beneficially owned by Mr. Brennan's wife.
(10) Includes incentive stock options to purchase up to 114,285 shares and
non-qualified stock options to purchase up to 385,715 shares pursuant to
the Plan being registered in this registration statement, all at a price
of $.875 per share.
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(11) Includes 40,000 shares of the Company's Common Stock beneficially owned
by Mr. Petersson's wife and 10,000 shares of the Common Stock owned by
each of Mr. Petersson's three children, or an aggregate of 30,000 shares
of Common Stock.
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PLAN OF DISTRIBUTION
The Options and/or shares of Common Stock (together, the "Securities")
are being sold by the Selling Stockholders for their own accounts. The
Securities may be sold or transferred for value by the Selling Stockholders, or
by pledgees, donees, transferees or other successors in interest to the Selling
Stockholders, in one or more transactions in the over-the-counter
market(reported on the National Association of Securities Dealers, Inc.
Electronic Bulletin Board (OTCBB) under the symbol "PRMF,") in negotiated
transactions or in a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at prices otherwise negotiated. The Selling Stockholders may effect
such transactions by selling the Securities to or through brokers-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Securities for whom such broker-dealers may act as agent
(which compensation may be less than or in excess of customary commissions). The
Selling Stockholders and any broker-dealers that participate in the distribution
of the Securities may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Act, and any commissions received by them and any profit on
the resale of the Securities sold by them may be deemed to be underwriting
discounts and commissions under the Act. All selling and other expenses incurred
by individual Selling Stockholders will be borne by such Selling Stockholders.
There can be no assurance that any of the Selling Stockholders will
sell any or all of the Shares of Common Stock offered by them hereunder.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon for the Company by Snow Becker Krauss P.C., 605 Third Avenue, New York, New
York 10158. Snow Becker Krauss P.C. holds 50,000 shares of the Company's Common
Stock, all of which was issued to it in exchange for legal fees and
disbursements.
EXPERTS
The consolidated financial statements of the Company for the year ended
December 31, 1995, incorporated by reference in this Prospectus have been
included in reliance upon the report of Durland & Company, CPAs, P.A.,
independent auditors, incorporated by reference herein, given upon the authority
of said firm as experts in accounting and auditing.
13
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COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
14
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Registrant pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by
reference in this registration statement.
(a) The Registrant's Registration Statement on Form 10 (File
No.0-27604), including the description of the Registrant's Common
Stock, filed pursuant to Section 12(g) of the Exchange Act, including
any amendment or report filed for the purpose of updating such
information.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996.
(c) The Registrant's Proxy Statement dated December 17, 1996.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
Item 4.Description of Securities.
Not applicable.
Item 5.Interests of Named Experts and Counsel.
Snow Becker Krauss P.C., counsel to the Registrant, owns 50,000 shares of
the Company's Common Stock.
Item 6. Indemnification of Directors and Officers.
Under Section 78.751 of Nevada General Corporation Law, directors and
officers may be indemnified against expenses,
II-1
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including attorney's fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred in connection with any actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation--a "derivative action"), if
they acted in good faith and in a manner which they reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A similar standard of care is applicable in the case of
derivative actions, except that the indemnification only extends to expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement of any action or
suit, if he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation, except in respect
of any claim, issue or matter as to which such person have been adjudged to be
liable to the corporation, unless and only to the extent a court of competent
jurisdiction deems proper.
Article VI of the Company's By-Laws state the following regarding
indemnification of its Directors and Officers:
"On the terms, to the extent, and subject to the conditions prescribed
by statute and by such rules and regulations, not inconsistent with
statute, as the Board of Directors may in its discretion impose in
general or particular cases or classes of cases, (a) the Corporation
shall indemnify any person made, or threatened to be made, a party to
an action or proceeding, civil or criminal, including an action by or
in the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise which any director or officer of the
Corporation served in any capacity at the request of the Corporation,
by reason of the fact that he, his testator or intestate, was a
director or officer of the Corporation, or served such other
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts
paid in settlement and reasonable expenses, including attorneys' fees,
actually and necessarily incurred as a result of such action or
proceeding, expenses incurred by such person in defending such action
or proceeding.
"On the terms, to the extent, and subject to the conditions prescribed
by statute and by such rules and regulations, not inconsistent with
statute, as the Board of Directors may in its discretion impose in
general or particular cases or classes of cases (a) the Corporation
shall indemnify any person made a party to an action by or in the right
of the Corporation to procure a judgment in its favor, by reason of the
fact that he, his testator
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<PAGE>
or intestate, is or was a director or officer of the Corporation,
against the reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him in connection with the defense of such
action, or in connection with an appeal therein, and (b) the
Corporation may pay, in advance of final disposition of any such
action, expenses incurred by such person in defending such action or
proceeding."
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8.Exhibits.
Page in
Sequentially
Numbered
Registration
Exhibit No. Description of Exhibit Statement
4.1 1996 Employee Stock Option Plan. 31
4.2 Compensation Agreement dated as of
December 3, 1996 between the Company
and Diego Leiva. 42
5.1 Opinion of Snow Becker Krauss P.C. 46
23.1 Consent of Snow Becker Krauss P.C.
(included in Exhibit 5.1 hereto). 46
23.2 Consent of Durland & Company, CPAs, P.A. 50
24.1 Powers of Attorney (included on the
signature page of this Registration
Statement). 26
- --------------
Item 9. Required Undertakings.
The undersigned Registrant hereby undertakes:
(a)(l) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Act;
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<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
(2) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to any arrangement, provision or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or
II-4
<PAGE>
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
Wayne, State of New Jersey, on January 27, 1997.
PICK Communications Corp.
By: /s/ Diego Leiva By: /s/ Karl R. Petersson
Diego Leiva Karl R. Petersson
Chairman of the Board, Vice President and
Chief Executive Officer Chief Financial Officer
and President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Diego Leiva and Karl R. Petersson, and each of them, his true and
lawful attorneys-in-fact and agents, with power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying all that said attorneys-in-fact and agents or his
substitute or substitutes, or any of them, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Act, this registration statement
has been signed by the following persons in the capacities indicated on January
27, 1997.
Signature Title
/s/ Diego Leiva Chairman of the Board,
Diego Leiva Chief Executive Officer,
President and Director
/s/Karl R. Petersson Vice President and Chief
Karl R. Petersson Financial Officer
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<PAGE>
/s/Karen M. Quinn Vice President of
Karen M. Quinn Corporate Communications
and Operations
/s/ Raymond M. Brennan Vice President, Secretary
Raymond M. Brennan and Director
/s/ Robert R. Sams Director
Robert R. Sams
/s/ Ricardo Maranon Director
Ricardo Maranon
/s/ Greg Manning Director
Greg Manning
II-7
<PAGE>
EXHIBIT 4.1
II-8
<PAGE>
PICK COMMUNICATIONS CORP.
1996 STOCK OPTION PLAN
1. Purposes.
The PICK Communications Corp. 1996 Stock Option Plan (the
"Plan") is intended to provide the employees, directors, independent contractors
and consultants of PICK Communications Corp., a Nevada corporation (the
"Company"), with an added incentive to commence employment with the Company,
continue their services to the Company and to induce them to exert their maximum
efforts toward the Company's success. By thus encouraging employees, directors,
independent contractors and consultants and promoting their continued
association with the Company, the Plan may be expected to benefit the Company
and its stockholders. The Plan allows the Company to grant Incentive Stock
Options ("ISOs") (as defined in Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code"), Non-Qualified Stock Options ("NQSOs") not
intended to qualify under Section 422(b) of the Code and Stock Appreciation
Rights ("SARs") (collectively the "Options").
2. Shares Subject to the Plan.
The total number of shares of the Company's common stock,
$.001 par value per share (the "Common Stock"), that may be subject to Options
granted under the Plan shall be 5,000,000 in the aggregate, subject to
adjustment as provided in Paragraph 8 of the Plan; however, the grant of an ISO
to an employee together with a tandem SAR or any NQSO to an employee together
with a tandem SAR shall only require one share of Common Stock available subject
to the Plan to satisfy such joint Option. The Company shall at all times while
the Plan is in force reserve such number of shares of Common Stock as will be
sufficient to satisfy the requirement of outstanding Options granted under the
Plan. In the event any Option granted under the Plan shall expire or terminate
for any reason without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part, the unpurchased shares subject
thereto shall again be available for granting of Options under the Plan.
3. Eligibility.
ISO's or ISO's in tandem with SAR's (provided the SAR meets
the requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a) through
(e) inclusive) may be granted from time to time under the Plan to one or more
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. An Officer is an
employee for the above purposes. However, a director of the Company who is not
otherwise an employee is not deemed an employee for such purposes. Options,
other than ISO's, may be granted from time to time under the Plan to one or more
employees of the Company, Officers, members of the Board of Directors,
independent contractors, consultants and other individuals who are not employees
of, but are involved in the continuing development and success of the Company
and/or of a subsidiary of the
1
<PAGE>
Company, including persons who have previously been granted Options under the
Plan.
4. Administration of the Plan.
The Plan shall be administered by the Board of Directors of
the Company as such Board of Directors may be composed from time to time and/or
by a Stock Option Committee (the "Committee") which shall be comprised of at
least two disinterested persons (the term "disinterested" having the meaning
ascribed to it by Rule 16b-3 of the Securities Exchange Act of 1934 (the "1934
Act) appointed by such Board of Directors of the Company. As and to the extent
authorized by the Board of Directors of the Company, the Committee may exercise
the power and authority vested in the Board of Directors under the Plan. Within
the limits of the express provisions of the Plan, the Board of Directors or
Committee shall have the authority, in its discretion, to determine the
individuals to whom, and the time or times at which, Options shall be granted,
the character of such Options (whether ISO, NQSO, and/or SARs in tandem with
NQSOs, and/or SARs in tandem with ISOs) and the number of shares of Common Stock
to be subject to each Option, the manner and form in which the optionee can
tender payment upon the exercise of his Option, and to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of Option agreements that may be entered into
in connection with Options (which need not be identical), subject to the
limitation that agreements granting ISOs must be consistent with the
requirements for the ISOs being qualified as "incentive stock options" as
provided in Section 422 of the Code, and to make all other determinations and
take all other actions necessary or advisable for the administration of the
Plan. In making such determinations, the Board of Directors and/or the Committee
may take into account the nature of the services rendered by such individuals,
their present and potential contributions to the Company's success, and such
other factors as the Board of Directors and/or the Committee, in its discretion,
shall deem relevant. The Board of Directors' and/or the Committee's
determinations on the matters referred to in this Paragraph shall be conclusive.
5. Terms of Options.
Within the limits of the express provisions of the Plan, the Board
of Directors or the Committee may grant either ISOs or NQSOs and/or SARs in
tandem with NQSOs or SARs in tandem with ISOs. An ISO or an NQSO enables the
optionee to purchase from the Company, at any time during a specified exercise
period, a specified number of shares of Common Stock at a specified price (the
"Option Price"). The optionee, if granted an SAR in tandem with an NQSO or ISO,
may receive from the Company, in lieu of exercising his option to purchase
shares pursuant to his NQSO or ISO, at one of the certain specified times during
the exercise period of the NQSO or ISO as set by the Board of Directors or the
Committee, the excess of the fair market value upon such exercise (as determined
in accordance with subparagraph (b) of this Paragraph 5) of one share of Common
Stock over the Option Price
2
<PAGE>
per share specified upon grant of the NQSO or ISO/SAR multiplied by the number
of shares of Common Stock covered by the SAR so exercised. The character and
terms of each Option granted under the Plan shall be determined by the Board of
Directors and/or the Committee consistent with the provisions of the Plan,
including the following:
(a) An Option granted under the Plan must be granted within 10
years from the date the Plan is adopted, or the date the Plan is approved by the
stockholders of the Company, whichever is earlier.
(b) The Option Price of the shares of Common Stock subject to each
ISO and each SAR issued in tandem with an ISO shall not be less than the fair
market value of such shares of Common Stock at the time such ISO is granted.
Such fair market value shall be determined by the Board of Directors and, if the
shares of Common Stock are listed on a national securities exchange or traded on
the over-the-counter market, the fair market value shall be the closing price on
such exchange, or the mean of the closing bid and asked prices of the shares of
Common Stock on the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System (NASDAQ), the
National Association of Securities Dealers OTC Bulletin Board or the National
Quotation Bureau, Inc., as the case may be, on the day on which the Option is
granted or, if there is no closing price or bid or asked price on that day, the
closing price or mean of the closing bid and asked prices on the most recent day
preceding the day on which the Option is granted for which such prices are
available. If an ISO or SAR in tandem with an ISO is granted to any individual
who, immediately before the ISO is to be granted, owns (directly or through
attribution) more than 10% of the total combined voting power of all classes of
capital stock of the Company or a subsidiary or parent of the Company, the
Option Price of the shares of Common Stock subject to such ISO shall not be less
than 110% of the fair market value per share of the shares of Common Stock at
the time such ISO is granted.
(c) The Option Price of the shares of Common Stock subject to an
NQSO or an SAR in tandem with a NQSO granted pursuant to the Plan shall be
determined by the Board of Directors or the Committee, in its sole discretion.
(d) In no event shall any Option granted under the Plan have an
expiration date later than 10 years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in Paragraph 6 hereof. If an ISO or an SAR in tandem with an ISO is
granted to any individual who, immediately before the ISO is granted, owns
(directly or through attribution) more that 10% of the total combined voting
power of all classes of capital stock of the Company or of a subsidiary or
parent of the Company, such ISO shall by its terms expire and shall not be
exercisable after the expiration of five (5) years from the date of its grant.
(e) With respect to the grant of SAR's to Officers and
Directors of the Company, an SAR may be exercised at any time after
3
<PAGE>
six months of the date of the grant thereof during the exercise period of the
ISO or NQSO with which it is granted in tandem and prior to the exercise of such
ISO or NQSO, but only within the specified 10 business day period referred to in
subsection (e)(3) of Rule 16b-3 of the 1934 Act (generally, the 10 business days
immediately following the publication of the Company's quarterly financial
information) if the Company's Common Stock is registered pursuant to Section
12(g) of the 1934 Act. Notwithstanding the foregoing, the Board of Directors
and/or the Committee shall in their discretion determine from time to time the
terms and conditions of SAR's to be granted, which terms may vary from the
afore-described conditions, and which terms shall be set forth in a written
stock option agreement evidencing the SAR granted in tandem with the ISO or
NQSO. The exercise of an SAR granted in tandem with an ISO or NQSO shall be
deemed to cancel such number of shares subject to the unexercised Option as were
subject to the exercised SAR. The Board of Directors or the Committee also has
the discretion to alter the terms of the SARs if necessary to comply with
Federal or state securities law. Amounts to be paid by the Company in connection
with an SAR may, in the Board of Director's or the Committee's discretion, be
made in cash, Common Stock or a combination thereof.
(f) Unless otherwise provided in any Option agreement under the
Plan, an Option granted under the Plan shall become exercisable, in whole at any
time or in part from time to time, but in no case may an Option (i) be exercised
as to less than one hundred (100) shares of Common Stock at any one time, or the
remaining shares of Common Stock covered by the Option if less than one hundred
(100), and (ii) become fully exercisable more than five years from the date of
its grant nor shall less than 20% of the Option become exercisable in any of the
first five years of the Option. The Board of Directors or the Committee, in its
sole discretion, may at such time or times as it deems appropriate, if ever,
accelerate all or part of the vesting provisions with respect to one or more
outstanding options. The acceleration of one option shall not infer that any
option is or to be accelerated.
(g) An Option granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its principal office (to the
attention of the Secretary) of written notice of the number of full shares of
Common Stock with respect to which the Option is being exercised, accompanied by
payment in full, which payment at the option of the optionee shall be in the
form of (i) cash or certified or bank check payable to the order of the Company,
of the Option Price of such shares of Common Stock, or, (ii) if permitted by the
Committee or the Board of Directors, as determined by the Committee or the Board
of Directors in its sole discretion at the time of the grant of the Option with
respect to an ISO and at or prior to the time of exercise with respect to an
NQSO, by the delivery of shares of Common Stock having a fair market value equal
to the Option Price or the delivery of an interest-bearing promissory note
having an original principal balance equal to the Option Price and an interest
rate not below the rate which would result in imputed interest under the Code
(provided, in order to qualify as an ISO,
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<PAGE>
more than one year shall have passed since the date of grant and one year from
the date of exercise), or (iii) at the option of the Committee or the Board of
Directors, determined by the Committee or the Board of Directors in its sole
discretion at the time of the grant of the Option with respect to an ISO and at
or prior to the time of exercise with respect to an NQSO, by a combination of
cash, promissory note and/or such shares of Common Stock (subject to the
restriction above) held by the employee that have a fair market value together
with such cash and principal amount of any promissory note that shall equal the
Option Price, and, in the case of an NQSO, at the discretion of the Committee or
Board of Directors by having the Company withhold from the shares of Common
Stock to be issued upon exercise of the Option that number of shares having a
fair market value equal to the exercise price and/or the tax withholding amount
due, or otherwise provide for withholding as set forth in Paragraph 9(c) hereof,
or in the event an employee is granted an ISO or NQSO in tandem with an SAR and
desires to exercise such SAR, such written notice shall so state such intention.
The Option Price may also be paid in full by a broker-dealer to whom the
optionee has submitted an exercise notice consisting of a fully endorsed Option,
or through any other medium of payment as the Board of Directors and/or the
Committee, in its discretion, shall authorize.
(h) The holder of an Option shall have none of the rights of a
stockholder with respect to the shares of Common Stock covered by such holder's
Option until such shares of Common Stock shall be issued to such holder upon the
exercise of the Option.
(i) All Options granted under the Plan shall not be transferable
otherwise than by will or the laws of descent and distribution, and any ISO or
SAR in tandem with an ISO granted under the Plan may be exercised during the
lifetime of the holder thereof only by the holder. No Option granted under the
Plan shall be subject to execution, attachment or other process.
(j) The aggregate fair market value, determined as of the time any
ISO or SAR in tandem with an ISO is granted and in the manner provided for by
Subparagraph (b) of this Paragraph 5, of the shares of Common Stock with respect
to which ISOs granted under the Plan are exercisable for the first time during
any calendar year and under incentive stock options qualifying as such in
accordance with Section 422 of the Code granted under any other incentive stock
option plan maintained by the Company or its parent or subsidiary corporations,
shall not exceed $100,000. Any grant of Options in excess of such amount shall
be deemed a grant of an NQSO.
(k) Notwithstanding anything contained herein to the contrary, an
SAR which was granted in tandem with an ISO shall (i) expire no later than the
expiration of the underlying ISO; (ii) be for no more than 100% of the spread at
the time the SAR is exercised; (iii) shall only be transferable when the
underlying ISO is transferable; (iv) only be exercised when the underlying ISO
is eligible to be exercised; and (v) only be exercisable when there is a
positive spread.
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<PAGE>
6. Death or Termination of Employment.
(a) Subject to the provisions of subparagraph (d) of this Paragraph
6 and except as otherwise determined by the Board of Directors or the Committee
in its sole discretion, if the employment of a holder of an ISO under the Plan
shall be terminated for any reason other than cause or the death or the
disability of the holder, such holder's ISO shall expire within three (3) months
after such termination. Except as otherwise determined by the Board of Directors
or the Committee, in its sole discretion, if the employment of a holder of an
ISO, NQSO, and/or SAR in tandem with an NQSO shall terminate for cause, then any
unexercised ISO, NQSO, and/or SAR in tandem with an NQSO granted to the holder
shall expire as at the time of termination. If the employment of a holder of an
Option (exclusive of his ISOs) shall be terminated for any reason other than
cause or the death or the disability of the holder, such holder's Options, other
than his ISOs, may be exercised during the earlier of (i) the respective terms
thereof, or (ii) the subsequent death or disability of the respective holder,
subject to the provisions of subparagraphs (b) and (d) of this Paragraph 6,
unless the Board of Directors or the Committee shall in its sole discretion set
forth to the contrary in the holder's Option Agreement.
(b) If the holder of an Option granted under the Plan dies (i)
while employed by the Company or a subsidiary or parent corporation or (ii)
within three (3) months after the termination of such holder's employment, such
Options may, subject to the provisions of subparagraph (d) of this Paragraph 6,
be exercised by a legatee or legatees of such Option under such individual's
last will or by such individual's personal representatives or distributees at
any time within such time as determined by the Board of Directors or the
Committee in its sole discretion, but in no event less than six months after the
individual's death, to the extent such Options were exercisable as of the date
of death or date of termination of employment, whichever date is earlier.
(c) If the holder of an Option under the Plan becomes disabled
within the definition of section 22(e)(3) of the Code while employed by the
Company or a subsidiary or parent corporation, such Option may, subject to the
provisions of subparagraph (d) of this Paragraph 6, be exercised at any time
within six months after such holder's termination of employment due to the
disability.
(d) Except as otherwise determined by the Board of Directors or the
Committee in its sole discretion, an Option may not be exercised pursuant to
this Paragraph 6 except to the extent that the holder was entitled to exercise
the Option at the time of termination of employment or death, and in any event
may not be exercised after the original expiration date of the Option.
7. Leave of Absence.
For the purposes of the Plan, an individual who is on military or sick leave
or other bona fide leave of absence (such as temporary
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employment by the Government) shall be considered as remaining in the employ of
the Company or of a subsidiary or parent corporation for ninety (90) days or
such longer period as such individual's right to reemployment is guaranteed
either by statute or by contract.
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
hereafter changed by reason of recapitalization, reclassification, stock
split-up, combination or exchange of shares of Common Stock or the like, or by
the issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Board of Directors, as determined by the Board
of Directors and/or the Committee, in the aggregate number of shares of Common
Stock available under the Plan, in the number of shares of Common Stock issuable
upon exercise of outstanding Options, and the Option Price per share. In the
event of any consolidation or merger of the Company with or into another
company, or the conveyance of all or substantially all of the assets of the
Company to another company, each then outstanding Option shall upon exercise
thereafter entitle the holder thereof to such number of shares of Common Stock
or other securities or property to which a holder of shares of Common Stock of
the Company would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Board of Directors of the Company (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of the
Company or its successor entity. In the event of the proposed dissolution or
liquidation of the Company, all outstanding Options under the Plan will
automatically terminate, unless otherwise provided by the Board of Directors of
the Company or any authorized committee thereof.
(b) Any Option granted under the Plan, unless waived by the Board
of Directors or the Committee, may, at the discretion of the Board of Directors
of the Company and said other corporation, be exchanged for options to purchase
shares of capital stock of another corporation which the Company, and/or a
subsidiary thereof is merged into, consolidated with, or all or a substantial
portion of the property or stock of which is acquired by said other corporation
or separated or reorganized into. The terms, provisions and benefits to the
optionee of such substitute option(s) shall in all respects be identical to the
terms, provisions and benefits of optionee under his Option(s) prior to said
substitution. To the extent the above may be inconsistent with Sections
424(a)(1) and (2) of the Code, the above shall be deemed interpreted so as to
comply therewith.
(c) Any adjustment in the number of shares of Common Stock shall
apply proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock.
9. Further Conditions of Exercise.
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(a) Unless the shares of Common Stock issuable upon the exercise of
an Option have been registered with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, prior to the exercise of the
Option, an optionee must represent in writing to the Company that such shares of
Common Stock are being acquired for investment purposes only and not with a view
towards the further resale or distribution thereof, and must supply to the
Company such other documentation as may be required by the Company, unless in
the opinion of counsel to the Company such representation, agreement or
documentation is not necessary to comply with said Act.
(b) The Company shall not be obligated to deliver any shares of
Common Stock until they have been listed on each securities exchange on which
the shares of Common Stock may then be listed or until there has been
qualification under or compliance with such state or federal laws, rules or
regulations as the Company may deem applicable.
(c) The Board of Directors or Committee may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of any taxes that the Company is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with the exercise of any Option, including, but not
limited to, (i) the withholding of payment of all or any portion of such Option
and/or SAR until the holder reimburses the Company for the amount the Company is
required to withhold with respect to such taxes, or (ii) the canceling of any
number of shares of Common Stock issuable upon exercise of such Option and/or
SAR and/or SDR in an amount sufficient to reimburse the Company for the amount
it is required to so withhold, (iii) the selling of any property contingently
credited by the Company for the purpose of exercising such Option, in order to
withhold or reimburse the Company for the amount it is required to so withhold,
or (iv) withholding the amount due from such employee's wages if the employee is
employed by the Company or any subsidiary thereof.
10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan)
shall terminate ten (10) years from the earliest of the date of its adoption by
the Board of Directors, or the date the Plan is approved by the stockholders of
the Company, or such date of termination, as hereinafter provided, and no Option
shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company entitled to vote thereon.
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(c) The Board of Directors of the Company may at any time, prior to
ten (10) years from the earlier of the date of the adoption of the Plan by such
Board of Directors or the date the Plan is approved by the stockholders,
terminate the Plan or from time to time make such modifications or amendments of
the Plan as it may deem advisable; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the Company entitled to
vote thereon, increase (except as provided by Paragraph 8) the maximum number of
shares of Common Stock as to which Options or shares may be granted under the
Plan, materially change the standards of eligibility under the Plan or amend any
provision hereof which requires stockholder approval in order to preserve the
status of the Plan as a plan qualifying under Rule 16b-3 of the 1934 Act if the
Plan would otherwise qualify thereunder. Any amendment to the Plan which, in the
opinion of counsel to the Company, will be deemed to result in the adoption of a
new Plan, will not be effective until approved by the affirmative vote of the
holders of a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon.
(d) No termination, modification or amendment of the Plan may
adversely affect the rights under any outstanding Option without the consent of
the individual to whom such Option shall have been previously granted.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of
Directors of the Company. The Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Company entitled to vote thereon within one year before or
after adoption of the Plan by the Board of Directors.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement executed
pursuant hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted hereunder any right to remain in the employ of the Company
or of a subsidiary or parent of the Company or in any way limit the right of the
Company, or of any parent or subsidiary thereof, to terminate the employment of
any employee.
13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option
plan, incentive plan or any other compensation plan in effect for the Company,
nor shall the Plan preclude the Company from establishing any other form of
stock option plan, incentive plan or any other compensation plan.
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EXHIBIT 4.2
11
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COMPENSATION AGREEMENT
COMPENSATION AGREEMENT, dated as of December 3, 1996, by and between Diego
Leiva, having an address at 155 Route 46 West, Wayne, New Jersey 07470 (the
"Executive"), and PICK Communications Corp., a Nevada corporation having an
address at 155 Route 46 West, Wayne, New Jersey 07470 (the "Company").
RECITALS:
WHEREAS, the Executive has served as the Chairman, Chief Executive Officer and
President of the Company and its predecessor from August, 1982 through the date
hereof;
WHEREAS, the Company owes the Executive in excess of $100,000 in accrued and
unpaid salary for the calendar years 1994 and 1995;
WHEREAS, on December 3, 1996, the Board of Directors of the Company authorized
the Company's issuance to the Executive of 400,000 shares (the "Shares") of the
Company's Common Stock, par value $.002 per share (the "Common Stock") at a
purchase price of $.25 per Share, or an aggregate of $100,000, in lieu of
payment to the Executive of $100,000 of salary accrued to the Executive; and
WHEREAS, the Executive has agreed to accept the Shares as payment in full of
$100,000 of said accrued and unpaid salary;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
conditions contained herein, the parties do hereby agree as follows:
1. The Company shall issue to the Executive 400,000 Shares upon execution and
delivery of this Agreement, at a purchase price of $.25 per Share, the closing
asked price per share of the Common Stock on the date on which the Board of
Directors of the Company authorized the issuance thereof, or an aggregate of
$100,000, which purchase price shall be paid as provided herein.
2. The Executive agrees that upon issuance to him, the 400,000 Shares shall
constitute full payment to the Executive of the sum of $100,000 of his accrued
and unpaid salary for services rendered to the Company and its subsidiaries or
affiliates during the 1994 and 1995 calendar years.
3. The Executive and the Company acknowledge and agree that the Company
intends to file a registration statement with the Securities and Exchange
Commission (the "SEC") on Form S-8 covering the options to purchase Common Stock
and the shares of Common Stock issuable under the terms of the Company's 1996
Stock Option Plan (the "Registration Statement"). The Company hereby agrees that
the Registration Statement, if filed with the SEC, will include registration of
the Shares issuable to the Executive pursuant to
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the terms of this Agreement. The Executive acknowledges and agrees that the
filing of the Registration Statement is within the sole discretion of the
Company and its Board of Directors. The Executive further acknowledges and
agrees that until the Registration Statement is filed with and declared
effective by the SEC, the Shares shall be and remain restricted stock under the
terms of the Securities Act of 1933, as amended.
4. The Company hereby represents and warrants to the Executive that the
execution and delivery of this Agreement has been duly authorized by all
necessary corporate action.
5. This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada, without giving effect to the principles thereof
applicable to the conflict of laws.
6. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof, and may not be modified or amended except
by a written agreement signed by the parties hereto.
7. Neither party may assign its rights under this Agreement without the prior
written consent of the other party, which may be withheld in such other party's
sole discretion.
8. This Agreement shall inure to the benefit of and be binding upon, the
parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE COMPANY:
PICK COMMUNICATIONS CORP. THE EXECUTIVE:
By: /s/Raymond M. Brennan /s/ Diego Leiva
Name: Raymond M. Brennan
Title: Vice President and Secretary
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Exhibit 5.1
3
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SNOW BECKER KRAUSS P.C.
ATTORNEYS AT LAW
605 THIRD AVENUE
NEW YORK, N.Y. 10158-0125
-----
(212) 687-3860
January 20, 1997
PICK Communications Corp.
Wayne Interchange Plaza II
155 Route 46 West
Wayne, New Jersey 07470
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
We have acted as counsel to PICK Communications Corp., a
Nevada corporation (the "Company"), in connection with the Company's
registration statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended. The Registration Statement includes (i) 5,000,000 stock
options authorized to be granted pursuant to the Company's 1996 Stock Option
Plan (the "Plan"); (ii) 3,500,000 shares of the Company's common stock, $.002
par value (the "Common Stock"), issuable upon the exercise of stock options
already granted to Company employees under the Plan; (iii)1,500,000 shares of
Common Stock issuable upon the exercise of stock options authorized and
available for future grant under the Plan and (iv) 400,000 shares of Common
Stock issued to the Company's Chief Executive Officer, Mr. Diego Leiva, pursuant
to a Compensation Agreement dated December 3, 1996, at a purchase price of $.25
per share, in lieu of $100,000 of accrued and unpaid salary owed Mr. Leiva (the
"Compensation Shares"). This results in an aggregate of 5,000,000 stock options
and 5,400,000 shares of Common Stock being registered in the Registration
Statement.
As counsel to the Company, we have examined the Company's
Certificate of Incorporation, By-laws, records of corporate proceedings, and
such other documents as we have deemed necessary or appropriate as a basis for
the opinions set forth below. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the accuracy and completeness of all documents submitted to us as
copies and the authenticity of the originals of such latter documents. As to any
facts material to such opinions which we did not independently establish or
verify, we have relied upon
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PICK Communications Corp.
January 20, 1997
Page 2
statements or representations of officers and other representatives
of the Company, public officials or others.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly organized, is validly existing,
and in good standing under the laws of the State of Nevada.
2. The stock options issuable under the Plan have been duly
authorized by the Board of Directors of the Company, and in
the case of the shares of Common Stock issuable upon exercise
of the stock options pursuant to the Plan, they have been duly
authorized and reserved for issuance, and when duly issued and
paid for as contemplated by the Registration Statement, the
shares of Common Shares will be legally issued, fully paid and
non-assessable securities.
3. The Compensation Shares have been duly authorized by the
Board of Directors of the Company and have been duly
authorized and reserved for issuance, and when duly issued and
paid for as contemplated by the Registration Statement, the
Common Shares will be legally issued, fully paid and
non-assessable securities.
We hereby consent to the reference of our name in the
Prospectus under the caption "Legal Opinion" and to inclusion of this opinion as
Exhibit 5.1 to the Registration Statement and all amendments thereto.
Very truly yours,
/s/ Snow Becker Krauss P.C.
SNOW BECKER KRAUSS P.C.
<PAGE>
Exhibit 23.2
<PAGE>
DURLAND & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL ASSOCIATION
340 ROYAL PALM WAY, SUITE 201
PALM BEACH, FL 33480
(561) 822-9995 Fax 822-9942
PICK Communications Corp.
Wayne Interchange Plaza II
155 Route 46 West
Wayne, New Jersey 07470
Gentlemen:
We hereby consent to the use of our report dated February 16, 1996 on the
financial statements of the Company and of the reference to our firm under the
caption "Experts" in the prospectus included in the Registration Statement on
Form S-8 being submitted to the U.S. Securities and Exchange Commission by the
Company.
/s/Durland & Company, CPAs, P.A.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
January 20, 1997
