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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 2, 2000
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Startec Global Communications Corporation
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(Exact name of registrant as specified in its charter)
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Delaware 0-23087 52-2099559
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(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
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10411 Motor City Drive
Bethesda, Maryland 20817
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(Address of principal executive offices) (Zip Code)
(301) 365-8959
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
Agreement and Plan of Reorganization
On November 2, 2000, Startec Global Communications Corporation, a
Delaware corporation ("Startec"), and its wholly-owned subsidiary, Stars
Acquisition Corp., a Delaware corporation ("Stars"), entered into an
Agreement and Plan of Reorganization (the "Merger Agreement") with Capsule
Communications, Inc., a Delaware corporation ("Capsule"), and two Capsule
shareholders beneficially owning in the aggregate approximately 74% of the
outstanding common stock of Capsule, Gold & Appel Transfer, S.A. ("G&A") and
Foundation for the International Non-Governmental Development of Space
("Foundation"). Pursuant to the Merger Agreement and subject to the
conditions set forth in the Merger Agreement (including approval of the
Merger Agreement by the stockholders of each of Startec and Capsule, receipt
of required regulatory approvals, effectiveness of a registration statement
registering the shares of Startec common stock to be issued in the Merger and
other customary closing conditions), Stars will merge with and into Capsule.
Capsule, the surviving corporation, will become a wholly-owned subsidiary of
Startec.
Under the terms of the Merger, subject to certain adjustments, Startec
will issue approximately 2.7 million shares of common stock to shareholders
of Capsule. At the effective time of the Merger, each outstanding share of
Capsule common stock will be exchanged for 0.1333 shares of Startec common
stock, subject to increase if the weighted average of the high and low trade
prices of Startec common stock, as reported on Nasdaq for the 15 trading days
before the closing of the Merger, is less than $5.25 per share. In such
event, the Conversion Ratio will be increased to the extent necessary to
cause the consideration to be paid for each 7.5 shares of Capsule common
stock to equal $5.25, as more fully described in the Merger Agreement. In no
event, however, will the Conversion Ratio increase above 0.1647. In addition,
outstanding options to purchase Capsule common stock will be assumed by
Startec, and the exercise price and number of shares subject to each option
will be appropriately adjusted to reflect the application of the above
Conversion Ratio.
G&A and Foundation have executed voting agreements in which they have
agreed to vote all of their Capsule shares in favor of the Merger. As a
result of these agreements, approval of the Merger by Capsule's stockholders
is assured. G&A and Foundation will receive five-year unsecured balloon
payment promissory notes with an aggregate value of $3 million in lieu of
receiving a portion of the shares of Startec common stock they would
otherwise receive in the Merger. Copies of the Merger Agreement and the
voting agreements are attached as Exhibits 2.1, 99.1, and 99.2, respectively,
and are incorporated herein by reference. A copy of the joint press release
relating to the Merger is attached as Exhibit 99.3 hereto.
Pending filing and clearance of the requisite proxy materials with the
Securities and Exchange Commission, neither company has set a date for a special
meeting of its stockholders to approve the Merger.
Rights Plan Amendment
The Company's Board of Directors (the "Board") approved an amendment to
the Shareholder Rights Agreement (the "Rights Plan") dated as of March 26,
1998 between the Company and Continental Stock Transfer & Trust Company. The
amendment gives the Board authority to exclude a person from the definition
of "Acquiring Person" (as such term is defined in the Rights Plan) prior to a
transaction (the "Transaction") that would otherwise cause such person to
become an Acquiring Person. By exercising this authority, the Board can
prevent the triggering of the dilutive provisions of the Rights Plan with
respect to such person. If the Board determines that the exercise of this
authority is advisable and in the best interests of the Company and its
stockholders, it can act by adopting a resolution, prior to the date of the
Transaction, which includes specific qualifications and restrictions on the
exclusion. Any such exclusion will be void if the qualifications and
restrictions are not observed. A copy of the amendment is attached as
Exhibit 99.4 hereto.
Pursuant to this authority the Board adopted a resolution excluding G&A
from the definition of "Acquiring Person," subject to certain qualifications
and limitations.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
It is impracticable to provide the required financial statements
at this time. The required financial statements will be filed as
soon as practicable, but not later than 60 days after the filing
date of this Form 8-K report.
(b) PRO FORMA FINANCIAL INFORMATION
It is impracticable to provide the required pro forma financial
information at this time. The required pro forma financial
information will be filed as soon as practicable, but not later
than 60 days after the filing date of this Form 8-K report.
(c) EXHIBITS.
2.2 Agreement and Plan of Reorganization dated November 2, 2000
by and among Startec Global Communications Corporation,
Stars Acquisition Corp., Capsule Communications, Inc., Gold
& Appel Transfer, S.A. and Foundation for the International
Non-Governmental Development of Space.
99.1 Voting Agreement dated November 2, 2000 by and between
Startec Global Communications Corporation, Stars Acquisition
Corp., Walt Anderson and Gold & Appel Transfer, S.A.
99.2 Voting Agreement dated November 2, 2000 by and between
Startec Global Communications Corporation, Stars Acquisition
Corp. Walt Anderson and Foundation for the International
Non-Governmental Development of Space.
99.3 Joint Press Release dated November 6, 2000.
99.4 Second Amendment dated November 8, 2000 to Shareholder
Rights Agreement dated as of March 26, 1998, between
Startec Global Communications Corporation and Continental
Stock Transfer & Trust Company
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 7, 2000 Startec Global Communications Corporation
/s/ Prabhav V. Maniyar
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By: Prabhav V. Maniyar
Title: Chief Financial Officer
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EXHIBIT INDEX
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2.2 Agreement and Plan of Reorganization dated November 2, 2000 by
and among Startec Global Communications Corporation, Stars
Acquisition Corp., Capsule Communications, Inc., Gold & Appel
Transfer, S.A. and Foundation for the International
Non-Governmental Development of Space.
99.1 Voting Agreement dated November 2, 2000 by and between Startec
Global Communications Corporation, Stars Acquisition Corp., Walt
Anderson and Gold & Appel Transfer, S.A.
99.2 Voting Agreement dated November 2, 2000 by and between Startec
Global Communications Corporation, Stars Acquisition Corp. Walt
Anderson and Foundation for the International Non-Governmental
Development of Space.
99.3 Joint Press Release dated November 6, 2000.
99.4 Second Amendment dated November 8, 2000 to Shareholder
Rights Agreement dated as of March 26, 1998, between
Startec Global Communications Corporation and Continental
Stock Transfer & Trust Company
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