AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY ___, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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eGLOBE, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 7389 13-3486421
<S> <C> <C>
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
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1250 24th Street, NW
Washington, DC 20037
(202) 822-8981
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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John Hughes
General Counsel
eGlobe, Inc.
1250 24th Street, NW
Washington, DC 20037
(202) 822-8981
(Name, address, including zip code, and telephone number, including area code,
of registrant's agent for service)
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Copies to:
Steven M. Kaufman, Esq.
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5600
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective and from time to time as determined by market conditions.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
-----------
If this Form is a post-effective amendment filed pursuant Rule 462(c) under the
Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share(1) ... 79,085,288 $4.0031 $316,587,898 $83,579.21
</TABLE>
* The registrant hereby files this Form S-3 to register additional shares of
common stock and pursuant to Rule 429 amends its registration statement on
Form S-1 (No. 333-78299). A total of 19,517,243 shares of common stock were
registered on such registration statement for which the registrant paid a
registration fee equal to $19,153.05.
(1) In addition to the shares set forth in this table, this Registration
Statement also covers an indeterminate number of shares of common stock
that may be issuable upon conversion of the Series P Preferred Stock and
the Series Q Preferred Stock and upon the exercise of related warrants to
purchase common stock as a result of stock splits, stock dividends and
similar transactions in accordance with Rule 416.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY _____, 2000
98,602,531 SHARES
eGLOBE, INC.
COMMON STOCK
This prospectus relates to the possible offer and sale from time to time
of up to 98,602,531 shares of our common stock by the selling stockholders
identified herein. The shares to be sold consist of currently outstanding
common stock and shares of common stock which may be issued by us upon
conversion or exercise of currently outstanding convertible securities and
warrants. We will not receive any proceeds from the sale of such shares, but we
will receive proceeds from the exercise of warrants to purchase common stock to
the extent that such common stock is included in the shares registered
hereunder.
Our common stock is quoted on the Nasdaq National Market under the symbol
"EGLO." On May 26, 2000, the last reported sale price of the common stock on
the Nasdaq National Market was 3.4375 per share.
Our principal executive offices are located at 1250 24th Street, NW,
Washington, DC 20037 and our telephone number at that address is (202)
822-8981.
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SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
YOU SHOULD CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD WITH THIS
PROSPECTUS.
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The selling stockholders may offer the shares in public or private
transactions, on or off the Nasdaq National Market, at prevailing market
prices, prices related to prevailing market prices, privately negotiated prices
or fixed prices, which may be changed. See "Plan of Distribution" beginning on
page 34 for a more detailed discussion of the intended methods of sale.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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The date of this prospectus is May , 2000.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
If it is against the law in any state to make an offer to sell the shares
(or to solicit an offer from someone to buy the shares), then this prospectus
does not apply to any person in that state, and no offer or solicitation is
made by this prospectus to any such person.
You should rely only on the information provided or incorporated by
reference in this prospectus or any supplement. Neither we nor any of the
selling stockholders have authorized anyone to provide you with different
information. You should not assume that the information in this prospectus or
any supplement is accurate as of any date other than the date on the front of
such documents.
TABLE OF CONTENTS
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PAGE
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Our Corporate Name ............................................ 3
Where You Can Find More Information ........................... 3
Cautionary Note Regarding Forward-Looking Statements .......... 4
Risk Factors .................................................. 5
About eGlobe .................................................. 11
Use of Proceeds ............................................... 12
Selling Stockholders .......................................... 13
Description of Capital Securities ............................. 21
Plan of Distribution .......................................... 34
Legal Matters ................................................. 36
Experts ....................................................... 36
</TABLE>
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OUR CORPORATE NAME
We are incorporated in the State of Delaware under the corporate name of
eGlobe, Inc. Formerly, we were known as Executive Telecard, Ltd. Our common
stock is quoted on the Nasdaq National Market under the symbol "EGLO."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (the "Exchange Act"). You may read and copy any
of the information we file with the SEC at the SEC's public reference rooms at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can also obtain copies
of filed documents by mail from the Public Reference Section of the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. You
may call the SEC at 1-800-SEC-0330 for further information on the operation of
the public reference rooms. We file information electronically with the SEC.
Our SEC filings also are available from the SEC's Internet site at
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically. Our common
stock is quoted on the Nasdaq National Market under the symbol "EGLO," and
reports, proxy statements and other information concerning eGlobe can also be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington,
D.C. 20006.
This prospectus is part of a registration statement we filed with the
SEC under the Securities Act of 1933 (the "Securities Act"). As permitted by
SEC rules, this prospectus omits certain information that is included in the
registration statement. For further information about us and our common stock,
you should refer to the registration statement and its exhibits. If we have
filed a contract, agreement or other document as an exhibit to the registration
statement, you may read the exhibit for a more complete understanding of the
document or matter involved. Each statement in this prospectus (including
statements incorporated by reference as discussed below) regarding a contract,
agreement or other document is qualified in its entirety by reference to the
actual document.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document we have filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus. This prospectus incorporates by reference the documents set forth
below that we have previously filed with the SEC under Section 13(a) or 15(d)
of the Exchange Act, and any future filings we make with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, until the offering of securities
covered by this prospectus is completed. These documents contain important
information about us and our financial condition. Information in this
prospectus may update or supersede information contained in prior SEC filings,
but information included in future SEC filings will update or supersede
information in this prospectus.
o Our Current Report on Form 8-K, filed with the SEC on February 15,
2000 to report the closing of a $15 million equity private placement.
o Our Current Report on Form 8-K/A, filed with the SEC on February 15,
2000 to file financial statements of Coast International, Inc.
o Our Current Report on Form 8-K, filed with the SEC on March 23, 2000
to report the closing of a $4 million equity private placement.
o Our Annual Report on Form 10-K for our fiscal year ended December 31,
1999, filed with the SEC on April 7, 2000. We obtained an extension
for the filing of our Annual Report, using Form 12b-25, which we filed
with the SEC on March 30, 2000.
o Our Current Report on Form 8-K, filed with the SEC on April 7, 2000 to
report the closing of the acquisition of Trans Global Communications,
Inc.
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o Our Current Report on Form 8-K/A, filed with the SEC on May 22, 2000
to file financial statements of Trans Global Communications, Inc.
o Our Current Report on Form 8-K, filed with the SEC on May 22, 2000 to
file restated combined financial statements which reflect the merger
with Trans Global Communications, Inc. using pooling of interests
accounting.
o Our Quarterly Report on Form 10-Q for our fiscal quarter ended March
31, 2000, filed with the SEC on May 22, 2000. We obtained an extension
for the filing of our Quarterly Report, using Form 12b-25, which we
filed with the SEC on May 15, 2000.
We will provide a copy of the information we incorporate by reference, at
no cost, to each person, including any beneficial owner of our common stock, to
whom this prospectus is delivered. To request a copy of any or all of this
information, you should contact us at the following address and telephone
number:
Investor Relations
eGlobe, Inc.
1250 24th Street, NW
Suite 725
Washington, DC 20037
(telephone: (202) 822-8981)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it, as
well as any prospectus supplement that accompanies it, include "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. We intend the forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements in these sections.
All statements regarding our expected financial position and operating results,
our business strategy and our financing plans are forward-looking statements.
These statements can sometimes be identified by our use of forward-looking words
such as "may," "will," "anticipate," "estimate," "expect," or "intend." We
cannot promise that our expectations in such forward-looking statements will
turn out to be correct. Our actual results could be materially different from
and worse than our expectations. Important factors that could cause our actual
results to be materially different from our expectations include those discussed
in this prospectus under the caption "Risk Factors."
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RISK FACTORS
We caution you that our performance is subject to risks and uncertainties.
There are a variety of important factors like those that follow that may cause
our future results to differ materially from those projected in any of our
forward-looking statements made in this prospectus or otherwise.
WE HAVE INCURRED SIGNIFICANT LOSSES AND WE MAY NOT BE ABLE TO BECOME PROFITABLE
IN THE FUTURE.
LOSSES. We incurred a net loss of $28.2 million for the three months ended
March 31, 2000 and a net loss of $55.1 million for the year ended December 31,
1999, of which $22.1 million and $29.1 million, respectively, is primarily due
to increased costs and expenses related to growth, acquisition costs and other
non-cash charges. We continue to incur operating losses and are likely to report
net losses for the next year, due in part to large non-cash charges for goodwill
and other intangibles amortization and amortization of the value of warrants
associated with financings.
ABILITY TO BECOME PROFITABLE. Our ability to achieve profitability and
positive cash flow depends upon many factors, including our ability to increase
revenue while maintaining or reducing costs. A variety of factors, both external
and internal, may keep us from succeeding in increasing or maintaining revenue
or achieving or sustaining economies of scale and positive cash flow in the
future, and our failure to do so could prevent or delay us from becoming
profitable. If we do not become profitable in the future, the value of our
shares could fall and we could have difficulty obtaining funds to continue our
operations.
WE COULD BE REQUIRED TO CUT BACK OUR OPERATIONS IF WE ARE UNABLE TO OBTAIN
NEEDED FUNDING.
We estimate we will need to raise up to $20.0 million to have sufficient
working capital to run our business, acquire assets and technology, repay
indebtedness primarily incurred in connection with acquisitions, upgrade our
facilities, develop new services, continue to fund certain anticipated operating
losses and meet the cash obligations through March 31, 2001. To the extent that
we spend more on acquisitions or service development, our need for additional
financing will increase. Should we be unsuccessful in our efforts to raise
additional capital, we will be required to curtail our expansion plans or we may
be required to cut back or stop operations. There can be no assurance that we
will raise additional capital or generate funds from operations sufficient to
meet our obligations and planned requirements.
WE HAVE BEEN, AND WILL CONTINUE TO BE, SUBJECT TO LARGE AND NON-CASH ACCOUNTING
CHARGES.
During the three months ended March 31, 2000 and twelve months ended
December 31, 1999, we recorded significant charges totaling $22.1 million and
$29.1 million, respectively. In some cases, we expect to incur such charges in
the future, including those charges related to acquisitions, depreciation and
amortization and allowances for doubtful accounts. Some of the charges, such as
charges related to settlement costs, early retirement of debt and deferred
compensation expense related to stock options, are likely to be incurred on a
one-time or sporadic basis.
WE MAY NOT EFFECTIVELY MANAGE TRANS GLOBAL AND WE MAY NOT SUCCESSFULLY
INTEGRATE THE BUSINESS OF TRANS GLOBAL INTO OUR ORGANIZATION.
Managing Trans Global as part of our organization is critical to the
potentially beneficial impact of our recently completed acquisition. Trans
Global's business could decrease or stagnate if we do not effectively manage
Trans Global as an integral part of our organization. We may have difficulty
integrating Trans Global, assimilating the new employees and implementing
reporting, monitoring and
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forecasting procedures. In addition, the continuing integration of Trans Global
may divert management attention from our existing businesses and may result in
additional administrative expense.
WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE ACQUIRED COMPANIES INTO OUR
OPERATIONS, WHICH COULD SLOW OUR GROWTH.
Since December 1998, we have completed nine acquisitions or joint ventures.
Completed acquisitions and joint ventures include:
o IDX, a voice over Internet protocol company, in December 1998;
o UCI, a calling card services company in Greece, in December 1998;
o Telekey, a card based provider of enhanced communications services, in
February 1999;
o the assets of Connectsoft, a developer of unified messaging software,
in June 1999;
o Swiftcall, the owner of a network operating center, in July 1999;
o iGlobe, a supplier of Internet protocol services, particularly voice
over Internet protocol in the Latin American market effective on
August 1, 1999 and closing on October 14, 1999;
o a joint venture to operate ORS, a transaction support services and
call center, with Outsourced Automated Services and Integrated
Solutions, in September 1999;
o Coast, a provider of enhanced long-distance interactive voice and
Internet services, in December 1999; and
o Trans Global, a provider of long distance telephone service, in March
2000.
As a result of these acquisitions and joint venture we added 163 employees
and 13 operating locations. This does not include call center representatives
leased under a services contract for ORS who are neither employees of eGlobe or
ORS. We may have difficulty integrating these companies, assimilating the new
employees and implementing reporting, monitoring and forecasting procedures. In
addition, the continuing integration of these companies may divert management
attention from our existing businesses and may result in additional
administrative expense. We acquired these companies subject to a variety of
existing obligations. Moreover, in our due diligence investigation of these
companies, we may not have discovered all matters of a material nature relating
to these companies and their businesses.
WE DEPEND ON THE COMPANIES WE ACQUIRE TO EXPAND OUR MARKETS, OPERATIONS,
NETWORKS AND SERVICES.
As part of our business strategy, we will continue to evaluate strategic
acquisitions of businesses and to pursue joint ventures principally relating to
our current operations. These transactions commonly involve certain risks,
including, among others, that:
o we may experience difficulty in assimilating acquired operations,
services, products and personnel, which may slow our revenue growth;
o we may not be able to successfully incorporate acquired technology and
rights into our service offerings and maintain uniform standards,
controls, procedures and policies; and
o we may not be able to locate or acquire appropriate companies at
attractive prices.
Expected benefits from future acquisitions may not be realized, revenues of
acquired companies may be lower than expected, and operating costs or customer
loss and business disruption may be greater than expected.
Additional acquisitions may require additional capital resources. We may
not have timely access to additional financing sources on acceptable terms. If
we do not, we may not be able to expand our markets, operations, facilities,
network and services through acquisitions as we intend.
WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO COMPETE EFFECTIVELY AGAINST
COMPANIES WITH GREATER RESOURCES THAN US, WHICH COULD RESULT IN LOWER REVENUES.
Our industry is intensely competitive and rapidly evolving. The
communications industry is dominated by companies much larger than us, with much
greater name recognition, larger customer bases and financial, personnel,
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marketing, engineering, technical and other resources substantially greater
than ours. To the extent that these companies offer services similar to and
priced competitively with our services, there likely would be a negative effect
on our pricing which would result in lower revenues. In addition, several other
companies have offered or have announced intentions to offer enhanced
communications services similar to certain of the enhanced services we plan to
offer. To the extent that such entities are successful in offering superior
services or introducing credible service offerings before we do, we likely
would be adversely affected and such effects could be material. We expect new
types of products and services not yet announced or available in the
marketplace to be developed and introduced which will compete with the services
we offer today and plan to offer.
RAPID TECHNOLOGICAL AND MARKET CHANGES CREATE SIGNIFICANT RISKS FOR US.
Communications technology is changing rapidly. These changes influence the
demand for our services. We need to be able to anticipate these changes and to
develop new and enhanced products and services quickly enough for the changing
market. We, like others in our industry, believe it will be necessary to offer a
suite of enhanced business communications services, and that those companies
which do not offer acceptable services in a timely manner will not be able to
compete successfully. We may not be able to keep up with rapid technological and
market changes and we may not be able to offer acceptable new services in a
timely manner to be able to compete successfully. In addition, others may
develop services or technologies that will render our services or technology
noncompetitive or obsolete.
IF WE FAIL TO CREATE AND MAINTAIN STRATEGIC RELATIONSHIPS WITH INTERNATIONAL
CARRIERS, OUR REVENUES WILL DECLINE.
Relations with international carriers enable us to offer additional
services that we cannot offer on our own and to offer our services to a larger
customer base than we could otherwise reach through our direct marketing
efforts. We believe international relationships and alliances are important and
that such relationships will be even more important as providers add new
services. Our success depends in part on our ability to maintain and develop
such relationships, the quality of these relationships and the ability of these
strategic partners to market services effectively. Our failure to maintain and
develop such relationships or our strategic partners' failure to market our
services successfully could lower our sales, delay product launches and hinder
our growth plans.
WE RELY ON IP VOICE TELEPHONY, THE REGULATION OF WHICH IS CHANGING AND
UNCERTAIN AND MAY NEGATIVELY AFFECT OUR BUSINESS.
Since IP telephony is a recent market development, the regulation of IP
telephony is still evolving. A number of countries currently prohibit IP
telephony. Other countries permit but regulate IP telephony. In the U.S., the
FCC has stated that some forms of IP telephony appear to be similar to
traditional telephone services, but the FCC has not decided whether, or how, to
regulate providers of IP telephony. In addition, several efforts have been made
to enact U.S. federal legislation that would either regulate or exempt from
regulation services provided over the Internet. State public utility commissions
also may retain intrastate jurisdiction and could initiate proceedings to
regulate the intrastate aspects of IP telephony.
If governments prohibit or regulate IP telephony we could be subject to a
variety of regulatory requirements or penalties, including without limitation,
orders to cease operations or to limit future operations, loss of licenses or of
license opportunities, fines, seizure of equipment and, in some jurisdictions,
criminal prosecution. The revenue and/or profit generated from IP telephony may
have become a significant portion of our overall revenue and/or profit at the
time IP telephony is regulated and/or curtailed. Any of the developments
described above could have a material adverse effect on our business, operating
results and financial condition.
SINCE EARLY 1999 WE HAVE SIGNIFICANTLY INCREASED OUR OUTSTANDING SHARES OF
CAPITAL STOCK AND YOU LIKELY WILL SUFFER FURTHER DILUTION.
Since December 1998, we issued 15 separate series of convertible preferred
stock, eight of which have not been eliminated and two of which remain
outstanding. We also granted warrants to providers of bridge loans, the former
IDX stockholders, investors in various financings and the lender in a $20
million debt placement. As a result, the number of shares of common
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stock on a fully-diluted basis has increased from 17.8 million shares as of
November 1, 1998 to 122.0 million shares as of May 15, 2000. These figures
exclude employee and director options and assume conversion of all preferred
stock and convertible debt, exercise of all options and warrants and
achievement of all earnout provisions related to acquisitions by companies
acquired as of May 15, 2000. This has resulted in a significant reduction in
the respective percentage interests of eGlobe and voting power held by our
stockholders other than those purchasing additional stock in the recent
financings. We expect to issue additional shares of capital stock in connection
with further financings, acquisitions and joint ventures.
THE CONVERSION OF OUTSTANDING PREFERRED STOCK MAY HAVE A SIGNIFICANT NEGATIVE
EFFECT ON THE PRICE OF OUR COMMON STOCK.
As of May 15, 2000, 15,000 shares of Series P Preferred Stock and 4,000
shares of Series Q Preferred Stock were issued and outstanding. If converted on
May 15, 2000, the Series P Preferred Stock and Series Q Preferred Stock would
have been convertible into approximately 4,396,909 shares of common stock, but
this number of shares could prove to be significantly greater in the event of a
decrease in the trading price of the common stock. Purchasers of common stock
could therefore experience substantial dilution of their investment upon
conversion of the shares of Series P Preferred Stock and Series Q Preferred
Stock. The shares of Series P Preferred Stock and Series Q Preferred Stock are
not registered and may be sold only if registered under the Securities Act or
sold in accordance with an applicable exemption from registration, such as Rule
144. The shares of common stock into which the shares of Series P Preferred
Stock and Series Q Preferred Stock may be converted are being registered
pursuant to this registration statement.
WE HAVE ONLY LIMITED PROTECTION OF PROPRIETARY RIGHTS AND TECHNOLOGY.
We rely primarily on a combination of intellectual property laws and
contractual provisions to protect our proprietary rights and technology.
However, these laws and contractual provisions provide only limited protection.
Unauthorized parties may copy our technology, reverse engineer our software or
otherwise obtain and use information we consider proprietary. In addition, the
laws of some foreign countries do not protect our proprietary rights to the same
extent as the laws of the U.S. Our means of protecting our proprietary rights
and technology may not be adequate. In addition, it is likely that our
competitors will independently develop similar technology and that we will not
have any rights under existing laws to prevent the introduction or use of such
technology.
WE ARE EXPOSED TO RISKS OF INFRINGEMENT CLAIMS.
Many patents, copyrights and trademarks have been issued in the
telecommunication service area. We believe that in the ordinary course of our
business third parties may claim that our current or future products or services
infringe the patent, copyright or trademark rights of such third parties. We
cannot ensure that actions or claims alleging patent, copyright or trademark
infringement will not be brought against us, or that, if such actions are
brought, we will ultimately prevail. Any such claims, regardless of their merit,
could be time consuming, result in costly litigation, cause delays in
introducing new or improved products or services, require us to enter into
royalty or licensing agreements, or cause us to stop using the challenged
technology, trade name or service mark at potentially significant expense to us.
If our key technology is found to infringe the intellectual property rights of
others, it could have a material adverse effect on our business, financial
condition and results of operations.
OUR OPERATING PLATFORMS AND SYSTEMS MAY FAIL OR BE CHANGED, EXPOSING OUR
BUSINESS TO DOWNTIME.
Our operations depend upon protecting and maintaining our operating
platforms and central processing center against damage, technical failures,
unauthorized intrusion, computer viruses, natural disasters, sabotage and
similar events. We cannot ensure that an event would not cause the failure of
one or more of our communications platforms or even our entire network. Such an
interruption could have a material adverse effect on our business, financial
condition and results of operations. In addition, customers or others may assert
claims of liability against us as a result of any such interruption.
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THE LOSS OF KEY PERSONNEL COULD WEAKEN OUR TECHNICAL AND OPERATIONAL EXPERTISE,
DELAY OUR INTRODUCTION OF NEW SERVICES OR ENTRY INTO NEW MARKETS AND LOWER THE
QUALITY OF OUR SERVICE.
Our success depends upon the continued efforts of our senior management
team and our technical, marketing and sales personnel. We believe our continued
success will depend to a significant extent upon the efforts and abilities of
Christopher J. Vizas, our Co-Chairman and Chief Executive Officer (who joined us
in December 1997), and other key executives. We also believe that to be
successful we must hire and retain highly qualified engineering personnel. In
particular, we rely on key employees to design and develop our proprietary
operating platforms and related software, systems and services. Competition in
the recruitment of highly qualified personnel in the telecommunications services
industry is intense. Hiring employees with the skills and attributes required to
carry out our strategy can be extremely competitive and time-consuming. We may
not be able to retain or successfully integrate existing personnel or identify
and hire additional qualified personnel. If we lose the services of key
personnel or are unable to attract additional qualified personnel, our business
could be materially and adversely affected. We do not have key-man life
insurance.
OUR BUSINESS IS EXPOSED TO REGULATORY, POLITICAL AND OTHER RISKS ASSOCIATED
WITH INTERNATIONAL BUSINESS.
We conduct a significant portion of our business outside the U. S. and
accordingly, derive a portion of our revenues and accrue expenses in foreign
currencies. Accordingly, our results of operations may be materially affected by
international events and fluctuations in foreign currencies. We do not currently
employ foreign currency controls or other financial hedging instruments. Our
international operations and business expansion plans are also subject to a
variety of government regulations, currency fluctuations, political
uncertainties and differences in business practices, staffing and managing
foreign operations, longer collection cycles in certain areas, potential changes
in tax laws, and greater difficulty in protecting intellectual property rights.
Governments may adopt regulations or take other actions, including raising
tariffs, that would have a direct or indirect adverse impact on our business
opportunities within such governments' countries. Furthermore, from time to
time, the political, cultural and economic climate in various national markets
and regions of the world may not be favorable to our operations and growth
strategy.
OUR BUSINESS IS SUBJECT TO REGULATORY RISKS THAT MAY RESULT IN INCREASED COSTS
OR AFFECT OUR ABILITY TO RUN OUR BUSINESS.
We are subject to regulation in many jurisdictions. Our business is subject
to risks that changes in regulation may increase our costs or otherwise affect
our ability to run the business.
U.S. FEDERAL REGULATION. Under current FCC policy, we are considered a
non-dominant common carrier and, as a result, are subject to lesser regulation
than common carriers classified as dominant. We must have an authorization from
the FCC to provide international services, and must file tariffs at the FCC
setting forth the terms and conditions under which we provide certain
international and domestic services. We believe that these and other regulatory
requirements impose a relatively minimal burden on us at the present time.
However, we cannot ensure that the current U.S. regulatory environment and the
present level of FCC regulation will continue, or that we will continue to be
classified as non-dominant.
OTHER GOVERNMENT REGULATION. In most countries where we operate, equipment
cannot be connected to the telephone network without appropriate approvals, and
therefore, we must obtain such approval to install and operate our operating
platforms or other equipment. In most jurisdictions where we conduct business we
rely on our local partner to obtain the requisite authority. Relying on local
partners causes us to depend entirely upon the cooperation of the telephone
utilities with which we have made arrangements for our authority to conduct
business, as well as some of our operational and administrative requirements.
Any telephone utility could cease to accommodate our requirements at any time.
Depending upon the location of the telephone utility, this action could have a
material adverse effect on our business and prospects. Such relationships may
not continue and governmental authorities may seek to regulate our services or
require us to obtain a license to conduct our business.
9
<PAGE>
OUR STOCK PRICE WILL FLUCTUATE, AND COULD DECLINE SIGNIFICANTLY AS A RESULT OF
VOLATILITY IN TELECOMMUNICATIONS STOCKS.
Market prices for securities of telecommunications services companies have
generally been volatile. Since our common stock has been publicly traded, the
market price of our common stock has fluctuated over a wide range and may
continue to do so in the future. The market price of our common stock could be
subject to significant fluctuations in response to various factors and events,
including, among other things:
o the depth and liquidity of the trading market for our common stock;
o quarterly variations in actual or anticipated operating results;
o growth rates;
o changes in estimates by analysts;
o market conditions in the industry;
o announcements by competitors;
o regulatory actions; and
o general economic conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations, which have particularly affected the market
prices of the stocks of high-technology companies and which may be unrelated to
the operating performance of particular companies. Furthermore, our operating
results and prospects from time to time may be below the expectations of public
market analysts and investors. Any such event could result in a decline in the
price of our common stock.
PROVISIONS IN OUR CHARTER AND BYLAWS AND IN DELAWARE LAW COULD DISCOURAGE
TAKEOVER ATTEMPTS WE OPPOSE EVEN IF OUR STOCKHOLDERS MIGHT BENEFIT FROM A
CHANGE IN CONTROL OF eGLOBE.
Our restated certificate of incorporation allows our Board of Directors to
issue up to ten million shares of preferred stock and to fix the rights,
privileges and preferences of those shares without any further vote or action by
the stockholders. The rights of the holders of the common stock will be subject
to, and may be adversely affected by, the rights of the holders of any shares of
preferred stock that we may issue in the future. Any issuances of preferred
stock in the future could have the effect of making it more difficult for a
third party to acquire a majority of our outstanding voting stock. In addition,
our restated certificate of incorporation divides our board of directors into
three classes serving staggered three year terms which may have the effect of
delaying or preventing changes in control or of our management. Our certificate
of incorporation also imposes an ownership limit of 30% (40% on a fully diluted
basis) on stockholders except where the stockholder makes a tender offer
resulting in the stockholder owning 85% or more of our outstanding common stock,
or receives prior approval of our board of directors. Further, as a Delaware
corporation, we are subject to section 203 of the Delaware General Corporation
Law. This section generally prohibits us from engaging in mergers and other
business combinations with stockholders that beneficially own 15% or more of our
voting stock, or with their affiliates, unless our directors or stockholders
approve the business combination in the prescribed manner. These provisions may
discourage any attempt to obtain control of us by merger, tender offer or proxy
contest or the removal of incumbent management.
10
<PAGE>
ABOUT eGLOBE
We are a voice-based application services provider offering enhanced
telecommunications and information services, including Internet protocol
transmission services, telephone portal and unified messaging services on an
outsourced basis. Through our World Direct network, we originate traffic in over
90 territories and countries and terminate traffic anywhere in the world and
through our IP network, we can originate and terminate IP-based
telecommunication services in over 30 countries and six continents. Our
customers are principally large national telecommunications companies, Internet
service providers and competitive telephone companies around the world. Our goal
is to become a leading network-based global outsource provider of services that
interface the telephone with the Internet.
In December 1997, we brought in new management and directors to handle
adverse results in our calling card business. Until 1998, our entire focus was
on supporting calling card services. Beginning in 1998, but primarily in 1999,
that focus changed.
o We restructured key portions of our operations and refocused our
business to include Internet protocol transmission technologies
through an acquisition at the end of 1998.
o In 1999, we developed the Internet protocol transmission portion of
our business, which is now a principal business for eGlobe.
o In early 1999, we acquired a specialty calling card service that
improved the overall margins on our calling card business.
o In mid-1999, we added global unified messaging (the ability to
retrieve voice mail and faxes over a telephone or computer) and
telephone portal (the ability to retrieve information from a portal
Internet site through a telephone) capabilities through another
acquisition.
o In June 1999, we changed our name to eGlobe, Inc. signaling that we
have a new product line and a new focus.
o We acquired another company effective August 1999 that brought us
Latin American Internet protocol transmission operations.
o We added some needed assets and operating abilities by acquiring
network operating centers and a call center in September 1999.
o We acquired a company in October 1999 that will strengthen our
telephone portal and unified messaging offerings, as well as adding to
our customer support capabilities and providing us with several large
e-commerce customers.
o In December 1999 we signed a definitive agreement to merge with Trans
Global Communications, Inc., a facilities-based, direct connection and
resale network international telecommunications services provider. The
merger, accounted for as a pooling of interests transaction, closed in
March 2000 following receipt of stockholder approval.
Following our recent acquisitions, we principally offer or will offer on a
going-forward basis the following:
o Network Services, including our Internet protocol voice and fax
capabilities, network transmission services and our toll-free
services;
o Enhanced Services, primarily consisting of IP-based enhanced services
such as:
o unified messaging,
o telephone portal,
o our combined IVR (Interactive Voice Response) and IDR
(Interactive Data Response) services, along with our traditional
calling card enhancement service;
o Voice over Internet clearinghouse and settlement services in
partnership with Trans Nexus and Cisco
o Customer Care, consisting of our state-of-the-art calling center which
provides 24 hours a day, seven days a week, customer service in 12
languages
11
<PAGE>
for both eGlobe services and other customers, including customer care
for a number of e-commerce companies; and
o Retail Services, primarily consisting of our domestic long-distance
and Internet service provider business acquired as a part of the Coast
International acquisition.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
USE OF PROCEEDS
The selling stockholders will receive all of the net proceeds from the sale
of their shares. We will not receive any proceeds from the sale of the shares,
but we will receive proceeds from the exercise of warrants to purchase common
stock to the extent that such common stock is included in the shares registered
hereunder. We intend to use such proceeds from the exercise of warrants for
general working capital purposes.
12
<PAGE>
SELLING STOCKHOLDERS
This prospectus relates to the possible offer and sale from time to time of
up to 98,602,531 shares of our common stock by various selling stockholders. Our
employees and directors who are selling stockholders will be permitted to offer
and sell shares in accordance with company policy only during specific
intervals. In addition, certain selling stockholders have agreed not to offer
and sell shares prior to November 27, 2000.
This prospectus relates to the possible offer and sale of 98,602,531 shares
of common stock, but:
60,475,620 shares are subject to contractual restrictions on sale and
9,843,523 shares are subject to company policy restrictions on sale.
Accordingly, 28,283,338 shares will be available for offer and sale without
restriction.
The selling stockholders include:
o Former stockholders of IDX, who received Series H Preferred Stock,
Series I Preferred Stock and warrants to purchase common stock from us
in our acquisition of IDX in December 1998 and an exchange in July
1999 (renegotiated in December 1999) and common stock and warrants to
purchase common stock upon conversion of certain promissory notes;
o EXTL Investors LLC and certain of its affiliates, which received
shares of Series C Preferred Stock in December 1999, Series E
Preferred Stock and warrants to purchase common stock in February
1999, warrants to purchase common stock in April and June 1999, and
shares of Series J Preferred Stock in November 1999 principally
arising from investments in and loans to us;
o Vintage Products Ltd., which received Series D Preferred Stock and
warrants to purchase common stock from us in January and June 1999
arising from investments in us;
o United Communications International LLC, the former stockholder of UCI
Tele Networks, Ltd., which received common stock and promissory notes
from us in our acquisition of UCI in December 1998;
o Seymour Gordon and certain of his affiliates, who received common
stock and warrants to purchase common stock in connection with certain
loans in June 1998, received common stock and warrants to purchase
common stock as repayment of a certain loan in March 1999, purchased
common stock from us in a private sale in August 1999 and received
common stock and warrants to purchase common stock upon conversion of
a certain loan in April 2000;
o Former stockholders of Telekey, who received Series F Preferred Stock
from us in our acquisition of Telekey in February 1999 and are
entitled to receive additional securities as an earn-out in December
2000;
o American United Global, Inc., the stockholder of Connectsoft, which
received Series K Preferred Stock from us in our acquisition of
certain assets and liabilities of Connectsoft in June 1999 and an
exchange in September 1999;
o Fleming Fogtmann, one of our former employees who received common
stock in connection with the settlement of certain claims in June
1999;
o Gerard Klauer Mattison & Co, which received warrants to purchase
common stock from us in connection with investment banking services
provided in January and February 1999 and as a retainer for services
to be provided between December 1999 and June 2000;
o Outsourced Automated Services, the former stockholder of ORS, or its
affiliate, which received common stock and warrants to purchase common
stock from us in our acquisition of control of ORS in September 1999;
o Highpoint Telecommunications, Inc., the former stockholder of iGlobe,
which received Series M Preferred Stock from us in our acquisition of
iGlobe in October 1999;
13
<PAGE>
o Certain investors who received Series N Preferred Stock and warrants
to purchase common stock from us in October, November, and December
1999 and January and February 2000 arising from investments in us;
o Former stockholders of Coast who received Series O Preferred Stock and
common stock from us in our acquisition of Coast in December 1999;
o Swiftcall Holdings (USA), Ltd., the former stockholder of Swiftcall,
which received common stock from us in our acquisition of Swiftcall in
July 1999;
o IDT Corporation which received warrants to purchase common stock from
us in connection with a certain loan in February 1998;
o Executive Lending LLC which received warrants to purchase common stock
from us in connection with a certain loan in December 1998;
o Strategic Growth which received options to purchase common stock from
us in connection with consulting services provided between November
1996 and May 1998;
o RGC International Investors, LDC, which received Series P Preferred
Stock and warrants to purchase common stock from us in January 2000
and Series Q Preferred Stock and warrants to purchase common stock
from us in March 2000 arising from investments in us;
o Former stockholders of Trans Global, who received common stock from us
in our acquisition of Trans Global in March 2000;
o Dr. Joginder Soni, who received warrants to purchase common stock from
us in connection with a certain loan in September 1998;
o Penny Vane, who received warrants to purchase common stock from us
pursuant to an agreement to provide marketing services in February
1999;
o Certain of our employees, who were granted options to purchase common
stock outside of our employee stock option plan in December 1999;
o David Skriloff, who purchased shares of common stock in connection
with his hire in January 2000;
o Brookshire, which received common stock from us in connection with
services provided in our acquisition of Connectsoft in June 1999;
o NDS, which received warrants to purchase common stock from us in
connection with loans entered into in June 1996, April 1997 and August
1997;
o eGlobe No. 1, LLC, our wholly owned subsidiary, which granted a
security interest in certain shares of common stock to a lender in
connection with its loan to such subsidiary;
o Wolfe Axelrod Weinberger, which received warrants to purchase common
stock from us in connection with investor relation services provided
beginning in May 2000;
o Latin Soccer, which received shares of common stock from us in a
strategic business development investment in May 2000; and
o Pacific Business Funding Corp., which provided debt financing to Trans
Global Communications, our wholly owned subsidiary, in May 2000.
We are registering the shares under the Securities Act in accordance with
registration rights we granted to the selling stockholders when we conducted
these transactions. Our registration of the shares does not necessarily mean
that any selling stockholder will sell all or any of his shares.
14
<PAGE>
The following table sets forth certain information with respect to the
selling stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING OWNED AFTER OFFERING
------------------------- --------------------
NAME OF OWNER NUMBER PERCENTAGE SHARES OFFERED NUMBER PERCENTAGE
- --------------------------------------------------- ------------ ------------ ---------------- -------- -----------
<S> <C> <C> <C> <C> <C>
SHARES AVAILABLE FOR OFFER AND SALE WITHOUT RESTRICTION
Former IDX Stockholders (1)
Chadwick Investment, Ltd ......................... (See Shares Subject to Contractual Restrictions on Sale)
Tenrich Holdings Limited ......................... (See Shares Subject to Company Policy Restrictions on Sale)
Jeffey Gee ....................................... (See Shares Subject to Company Policy Restrictions on Sale)
HILK International Inc. .......................... 120,174 + 151,546 0 +
Dr. Yi-Shang Shen ................................ 273,871 + 313,089 0 +
Dr. Michael Muntner .............................. 164,323 + 187,855 0 +
Trylon Partners, Inc. ............................ 291,871 + 331,089 0 +
Dr. Orville Greynolds ............................ 109,544 + 125,232 0 +
Teknos Comunicaciones, S.A. ...................... 109,544 + 125,232 0 +
Telecommunications Development Corporation II,
LDC ............................................. 450,094 568,173 0 +
Cheng Li-Yun Chang ............................... 147,987 + 167,971 0 +
Silicon Application (B.V.I.) Corp. ............... 89,358 + 101,347 0 +
Chih Hsian Chang ................................. 89,358 + 101,347 0 +
Ming Yang Chang .................................. 58,629 + 66,622 0 +
Kou Yuan Chen .................................... 58,629 + 66,622 0 +
Tien Fu Jane ..................................... 44,677 + 50,673 0 +
Chuang Su Chen ................................... 29,306 + 33,302 0 +
Hao Li Lin ....................................... 15,364 + 17,362 0 +
Flextech Holdings Limited ........................ 29,170 + 33,146 0 +
EXTL Investors LLC Affiliates (2)
EXTL Investors LLC ............................... (See Shares Subject to Contractual Restrictions on Sale)
Julie J. Jensen .................................. 100,000 + 100,000 0 +
Jeffrey J. Jensen ................................ 100,000 + 100,000 0 +
James J. Jensen .................................. 100,000 + 100,000 0 +
Jami J. Jensen ................................... 100,000 + 100,000 0 +
Janet J. Jensen .................................. 100,000 + 100,000 0 +
Vintage Products Limited (3) ...................... 112,500 + 112,500 0 +
United Communications International LLC (4) ....... 125,000 + 125,000 0 +
James Critedes ................................... 16,666 + 16,666 0 +
Christos Miguroutis .............................. 16,666 + 16,666 0 +
Adamos Cidamidis ................................. 16,668 + 16,668 0 +
Gordon Affiliates (5)
Seymour Gordon ................................... (See Shares Subject to Company Policy Restrictions on Sale)
Nancy Lewis ...................................... 82,334 + 82,334 0 +
Robert Gordon .................................... 82,333 + 82,333 0 +
Peter Gordon ..................................... 82,333 + 82,333 0 +
Former Telekey Stockholders (6)
Sanford H. Levings, Jr. .......................... (See Shares Subject to Company Policy Restrictions on Sale)
David J. McDaniel ................................ (See Shares Subject to Company Policy Restrictions on Sale)
Harold M. Solomon ................................ (See Shares Subject to Company Policy Restrictions on Sale)
American United Global, Inc. (7) .................. 1,923,077 2.0 1,923,077 0 +
Fleming Fogtmann (8) .............................. 54,473 + 54,473 0 +
Gerard Klauer Mattison & Co., Inc. (9) ............ 816,595 + 816,595 0 +
Oasis Affiliate (10)
Eastern Airlines, Inc. ........................... 2,004,909 2.1 2,004,909 0 +
Series N Preferred Stockholders (12)
David Skriloff ................................... (See Shares Subject to Company Policy Restrictions on Sale)
Steven Chrust .................................... 117,647 + 152,941 0 +
Noel and Pamela Kimmel ........................... 14,118 + 18,353 0 +
Doreen Davidson .................................. 23,529 + 30,588 0 +
Simon Strauss .................................... 11,717 + 15,232 0 +
Safetynet Limited ................................ 363,636 + 472,727 0 +
Brad Harries ..................................... 2,424 + 3,151 0 +
Empire CM ........................................ 147,248 + 191,422 0 +
Empire CP ........................................ 128,841 + 167,494 0 +
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
John Dyett ....................................... 9,203 + 11,964 0 +
Steve Prough ..................................... 7,114 + 9,248 0 +
Schow Family Trust ............................... 148,280 + 192,764 0 +
Former Coast Stockholders (13) ....................
Ronald Jensen .................................... (See Shares Subject to Contractual Restrictions on Sale)
Bijan Moaveni .................................... (See Shares Subject to Company Policy Restrictions on Sale)
Jose Valdez ...................................... 95,904 + 95,904 0 +
Swiftcall Holdings (USA), Ltd. (14) ............... 526,063 + 526,063 0 +
IDT Corporation (15) .............................. 500,000 + 500,000 0 +
Executive Lending LLC (16) ........................ 10,000 + 10,000 0 +
Strategic Growth (17) ............................. 318,000 + 318,000 0 +
RGC International Investors, LDC (18) ............. 10,000,000 9.5 10,000,000 0 +
Former Trans Global Stockholders (19) .............
Gary Gumowitz .................................... (See Shares Subject to Contractual Restrictions on Sale)
Arnold Gumowitz .................................. (See Shares Subject to Contractual Restrictions on Sale)
John Hughes ...................................... (See Shares Subject to Contractual Restrictions on Sale)
Jonathan Lynn .................................... (See Shares Subject to Company Policy Restrictions on Sale)
Milton Gumowitz .................................. (See Shares Subject to Company Policy Restrictions on Sale)
Rich Patton ...................................... (See Shares Subject to Company Policy Restrictions on Sale)
Joan Matthews .................................... 2,000,000 2.1 2,000,000 0 +
Stephen Levy ..................................... 2,000,000 2.1 2,000,000 0 +
Grayson Family Trust ............................. 2,000,000 2.1 2,000,000 0 +
Michael Gumowitz ................................. 500,000 + 500,000 0 +
Jonathan Gumowitz ................................ 500,000 + 500,000 0 +
Dr. Joginder Soni (20) ............................ 60,000 + 60,000 0 +
Penny Vane (21) ................................... 8,250 + 8,250 0 +
eGlobe Employees (22) .............................
Jeffey Gee ....................................... (See Shares Subject to Company Policy Restrictions on Sale)
Anne Haas ........................................ (See Shares Subject to Company Policy Restrictions on Sale)
Allen Mandel ..................................... (See Shares Subject to Company Policy Restrictions on Sale)
Ronald Fried ..................................... (See Shares Subject to Company Policy Restrictions on Sale)
John Hammer ...................................... (See Shares Subject to Company Policy Restrictions on Sale)
Christopher J. Vizas ............................. (See Shares Subject to Company Policy Restrictions on Sale)
David Skriloff (23) ............................... (See Shares Subject to Company Policy Restrictions on Sale)
Brookshire Securities (24) ........................ 2,500 + 2,500 0 +
Network Data Systems (25) ......................... 50,000 + 50,000 0 +
eGlobe No. 1, LLC (26) ............................ (See Shares Subject to Contractual Restrictions on Sale)
Wolfe Axelrod Weinberger Associates (27) .......... 25,000 + 100,000 0 +
Latin Soccer Stockholders (28)
Latinsoccer.net, Inc. ............................ (See Shares Subject to Contractual Restrictions on Sale)
LSN Investors LLC ................................ (See Shares Subject to Contractual Restrictions on Sale)
Pacific Business Funding Corp. .................... 72,625 + 72,625 0 +
Total Shares for Offer and Sale Without
Restriction ..................................... 27,513,018 28,283,388 0
SHARES SUBJECT TO CONTRACTUAL RESTRICTIONS ON SALE *
Chadwick Investment, Ltd (1) ..................... 2,335,107 2.4 2,774,350 0 +
EXTL Investors LLC (2) ........................... 15,371,043 15.2 15,371,043 0 +
Highpoint Telecommunications, Inc. (11) .......... 3,773,584 4.0 3,773,584 0 +
Ronald Jensen (13) ............................... 3,356,643 3.0 3,356,643 0 +
Gary Gumowitz - (19) ............................. 14,000,000 14.7 14,000,000 0 +
Arnold Gumowitz - (19) ........................... 11,200,000 11.8 11,200,000 0 +
John Hughes - (19) ............................... 4,000,000 4.2 4,000,000 0 +
eGlobe No. 1 LLC (26) ............................ 4,000,000 4.2 4,000,000 0 +
Latinsoccer.net, Inc. (28) ....................... 1,500,000 1.6 1,500,000 0 +
LSN Investors LLC (28) ........................... 500,000 + 500,000 0 +
Totals Shares Subject to Contractual Restrictions on
Sale ............................................ 60,036,377 60,475,620 0
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
SHARES SUBJECT TO COMPANY POLICY RESTRICTIONS ON SALE **
Tenrich Holdings Limited (1) ..................... 1,569,653 1.6 1,784,765 0 +
Jeffey J. Gee (1)(22) ............................ 603,981 + 682,417 0 +
Seymour Gordon (5) ............................... 1,023,527 1.0 1,023,527 0 +
Sanford H. Levings, Jr. (6) ...................... 266,666 + 266,666 0 +
David J. McDaniel (6) ............................ 266,667 + 266,667 0 +
Harold M. Solomon (6) ............................ 266,667 + 266,667 0 +
David Skriloff (12) (23) ......................... 50,061 + 54,278 0 +
Bijan Moaveni (13) ............................... 1,342,658 1.2 1,342,658 0 +
Jonathan Lynn (19) ............................... 2,000,000 2.1 2,000,000 0 +
Milton Gumowitz (19) ............................. 1,000,000 1.1 1,000,000 0 +
Rich Patton (19) ................................. 800,000 + 800,000 0 +
Anne Haas (22) ................................... 20,000 + 20,000 0 +
Allen Mandel (22) ................................ 25,000 + 25,000 0 +
Ronald Fried (22) ................................ 56,250 + 56,250 0 +
John Hammer (22) ................................. 15,000 + 15,000 0 +
Christopher J. Vizas (22) ........................ 239,628 + 239,628 0 +
Total Shares Subject to Company Restrictions on
Sale....................................... 9,545,758 9,843,523 0
</TABLE>
- ----------
* The following security holders, except for Highpoint Telecommunications,
have agreed not to directly or indirectly offer, sell, offer to sell,
contract to sell, or otherwise dispose of any shares of common stock,
including the shares listed above, beneficially owned by them for a period
of at least 180 days and up to 1 year beginning on May 26, 2000. The shares
owned by Highpoint Telecommunications are subject to our repurchase under
certain circumstances until October 31, 2000.
** The following security holders are insiders, including employees and
directors, who are privy to information about us which would be important
to an investor in deciding whether to buy, sell or hold our securities, but
has not been disclosed by us to the investment public, are subject, based
on company policy, to limitations on buying and selling our securities.
Accordingly, shares owned by such insiders may be sold in accordance with
such company policy only during specific intervals when all material
information has been disclosed to the investment public.
+ Less than one percent.
- - Also an insider subject to restrictions detailed above at **.
(1) Except for 56,000 shares owned and offered by Jeffey Gee, which are
discussed in footnote (22) below, the shares of common stock listed in the
table under the caption "Shares Beneficially Owned Prior to Offering"
represent (a) shares of common stock issued to the former IDX stockholders
in payment of the first convertible subordinated promissory note in March
1999, (b) shares of common stock issued to the former preferred
stockholders of IDX in payment of a convertible subordinated note in
August 1999, (c) shares of common stock issued to the former IDX
stockholders upon conversion of the Series H Preferred Stock in January
2000, (d) shares of common stock issued to the former IDX stockholders
upon conversion of 150,000 shares of Series I Preferred Stock in February
2000, (e) shares of common stock which are issuable upon conversion of
250,000 shares of Series I Preferred Stock within sixty days of May 15,
2000 and (f) shares of common stock which are issuable upon exercise of
warrants to purchase 43,174 shares of common stock within sixty days of
May 15, 2000. The shares of common stock listed in the table under the
caption "Shares Offered" include all the shares listed in the table under
the caption "Shares Owned Prior to the Offering" plus shares of common
stock which are issuable upon exercise of warrants to purchase 1,087,500
shares of common stock which are contingent upon IDX meeting certain
performance tests through December 2000. Such stockholders intend to
convert and exercise such securities prior to the offer and sale of the
shares listed in the table under the caption "Shares Offered." For more
information, see the discussion under the caption "Description of Capital
Securities--Series I Preferred Stock" and "--New IDX Warrants."
(2) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent (a)
shares of common stock issued in exchange for all the outstanding Series C
Preferred Stock in February 1999, (b) shares of common stock issued upon
conversion of the Series E Preferred Stock in January 2000, (c) shares of
common stock issued upon conversion of the Series J Preferred Stock in
January 2000, (d) 500,000 shares
17
<PAGE>
of common stock issued upon exercise of certain warrants granted in
connection with a $7 million loan and (e) shares of common stock issuable
upon exercise of warrants to purchase 6,000,000 shares of common stock
within sixty days of May 15, 2000. The stockholders intend to convert and
exercise such securities prior to the offer and sale of the shares listed
in the table under the caption "Shares Offered."
(3) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issuable upon exercise of warrants to purchase
112,500 shares of common stock within sixty days of May 15, 2000. The
stockholder intends to convert and exercise such securities prior to the
offer and sale of the shares listed in the table under the caption "Shares
Offered." For more information, see the discussion under the caption
"Description of Capital Securities--Series D Warrants."
(4) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent (a)
125,000 shares of common stock and (b) shares of common stock issuable
upon exercise of warrants to purchase 50,000 shares of common stock within
sixty days of May 15, 2000. The stockholder intends to exercise such
securities prior to the offer and sale of the shares listed in the table
under the caption "Shares Offered."
(5) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent (a)
shares issuable upon exercise of warrants to purchase 442,000 shares of
common stock within sixty days of May 15, 2000, (b) 668,270 shares of
common stock issued to Mr. Gordon in payment of certain loans to us and
(c) 160,257 shares of common stock issued to Mr. Gordon in a private sale.
The stockholders intend to exercise such securities prior to the offer and
sale of the shares listed in the table under the caption "Shares Offered."
(6) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent an
estimate of shares of common stock that may be issued to the former
Telekey stockholders in payment of an earn-out in December 2000.
(7) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued upon conversion of the Series K Preferred
Stock in January 2000.
(8) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to Fleming Fogtmann in settlement of certain
claims.
(9) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent (a)
shares of common stock issued to Gerard Klauer Mattison & Co. upon
exercise of warrants and (b) shares of common stock which are issuable to
Gerard Klauer Mattison & Co. upon exercise of warrants to purchase shares
of common stock which are exercisable within sixty days of May 15, 2000.
(10) The shares of common stock listed in the table under the caption "Shares
Beneficially Owned Prior to Offering" represent (a) 1,500,000 shares of
common stock and (b) 504,909 shares of common stock issuable upon exercise
of certain warrants granted in connection with our acquisition of control
of ORS. In addition, we granted warrants to purchase a currently
indeterminable number of shares of common stock which are contingent upon
ORS meeting certain performance tests. The holder intends to exercise such
securities prior to the offer and sale of the shares listed in the table
under the caption "Shares Offered."
(11) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued upon exchange of 1 share of Series M
Preferred Stock.
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(12) Except for the shares of common stock discussed in footnote (23) below,
the shares of common stock listed in the table under the caption "Shares
Beneficially Owned Prior to Offering" represent shares of common stock
issued to the investors upon the conversion of the Series N Preferred
Stock. The shares of common stock listed in the table under the caption
"Shares Offered" include all the shares listed in the table under the
caption "Shares Owned Prior to the Offering" plus shares of common stock
which are issuable upon exercise of warrants to purchase shares of common
stock which are exercisable beginning in October 2000. The stockholders
intend to exercise such securities prior to the offer and sale of the
shares listed in the table under the caption "Shares Offered."
(13) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent (a)
shares of common stock and (b) shares of common stock issued to the former
stockholders of Coast upon conversion of 16,100 shares of Series O
Preferred Stock issued to the former stockholders of Coast in connection
with our acquisition of Coast.
(14) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to Swiftcall Holdings (USA) in connection
with our acquisition of Swiftcall.
(15) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to IDT Corporation upon exercise of warrants
granted in connection with IDT's loan to us.
(16) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issuable to Executive Lending LLC upon exercise of
warrants within sixty days of May 15, 2000. The stockholder intends to
exercise such securities prior to the offer and sale of the shares listed
in the table under the caption "Shares Offered."
(17) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issuable to Strategic Growth upon exercise of
options within sixty days of May 15, 2000. The stockholder intends to
exercise such securities prior to the offer and sale of the shares listed
in the table under the caption "Shares Offered."
(18) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent a
good faith estimate of the number of shares of common stock issuable to
RGC International Investors upon conversion of Series P Preferred Stock
and Series Q Preferred Stock and exercise of warrants. The actual number
of shares of common stock issuable upon conversion of the Series P
Preferred Stock and Series Q Preferred Stock and exercise of the related
warrants is indeterminate, is subject to adjustment and could be
materially less or more than such estimated number depending on factors
which cannot be predicted by us at this time, including, among other
factors, the future market price of the common stock. The actual number of
shares of common stock offered in this prospectus, and included in the
registration statement of which this prospectus is a part, includes such
additional number of shares of common stock as may be issued or issuable
upon conversion of the Series P Preferred Stock and Series Q Preferred
Stock and exercise of the related warrants by reason of any stock split,
stock dividend or similar transaction involving the common stock, in
accordance with Rule 416 under the Securities Act. Under the terms of the
Series P Preferred Stock, Series Q Preferred Stock and the related
warrants, the shares of Series P Preferred Stock and Series Q Preferred
Stock are convertible and the warrants are exercisable by any holder only
to the extent that the number of shares of common stock issuable pursuant
to such securities, together with the number of shares of common stock
owned by such holder and its affiliates (but not including shares of
common stock underlying unconverted Series P Preferred Stock, Series Q
Preferred Stock or unexercised portions of the warrants) would not exceed
4.9% of the then outstanding common stock as determined in accordance with
Section 13(d) of the Exchange Act. Accordingly, the number of shares of
common
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stock set forth in the table for RGC International Investors exceeds the
number of shares of common stock that RGC International Investors could
own beneficially at any given time through their ownership of Series P
Preferred Stock, Series Q Preferred Stock and the warrants. In that
regard, the beneficial ownership of the common stock by RGC International
Investors set forth in the table is not determined in accordance with Rule
13d-3 under the Exchange Act.
(19) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to the former Trans Global stockholders upon
our acquisition of Trans Global.
(20) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to Dr. Soni upon exercise of warrants
granted in connection with Dr. Soni's loan to us.
(21) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issuable to Penny Vane upon exercise of warrants to
purchase 8,250 shares of common stock within sixty days of May 15, 2000.
The stockholder intends to exercise such securities prior to the offer and
sale of the shares listed in the table under the caption "Shares Offered."
(22) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered," including only
56,000 of the shares so listed for Jeffey Gee, represent shares of common
stock issued to certain of our employees upon exercise of options.
(23) 36,000 shares of common stock listed in the table under the captions
"Shares Beneficially Owned Prior to Offering" and "Shares Offered"
represent shares of common stock issued to our Chief Financial Officer in
connection with his hire.
(24) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to Brookshire for services provided in
connection with our acquisition of certain assets of Connectsoft.
(25) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to NDS upon exercise of warrants granted in
connection with NDS's loan to us.
(26) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock that have been pledged by eGlobe No. 1, LLC, our
wholly owned subsidiary, to its lender to secure the lender's loan to such
subsidiary.
(27) The shares of common stock listed in the table under the caption "Shares
Beneficially Owned Prior to Offering" represent shares of common stock
which are issuable upon exercise of warrants to purchase shares of common
stock which are exercisable within sixty days of May 15, 2000. The shares
of common stock listed in the table under the caption "Shares Offered"
include all the shares listed in the table under the caption "Shares Owned
Prior to the Offering" plus shares of common stock which are issuable upon
exercise of warrants to purchase shares of common stock which are not
exercisable within sixty days of May 15, 2000.
(28) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock issued to the Latin Soccer shareholders as part of
a strategic business development investment.
(29) The shares of common stock listed in the table under the captions "Shares
Beneficially Owned Prior to Offering" and "Shares Offered" represent
shares of common stock which are issuable upon exercise of options to
purchase shares of common stock which are exercisable within sixty days of
May 15, 2000.
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DESCRIPTION OF CAPITAL SECURITIES
The following summary description of our capital stock is not a complete
description and is subject to the provisions of our Restated Certificate of
Incorporation, as amended (the "Restated Charter"), and our Amended and
Restated Bylaws, as amended (the "Bylaws"), which are included as exhibits to
the Registration Statement of which this prospectus forms a part, and the
provisions of applicable law.
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
We have the authority to issue two hundred million (200,000,000) shares
of common stock of which Ninety-three Million Two Hundred Twenty-three Thousand
Six Hundred Eighty-five (93,223,685) shares are issued and outstanding as of
May 15, 2000. In addition, our Board of Directors has authority (without action
by the stockholders) to issue 10,000,000 shares of preferred stock, par value
$0.001 per share, in one or more classes or series and, within certain
limitations, to determine the voting rights (including the right to vote as a
series on particular matters), preferences as to dividends and in liquidation,
and conversion and other rights of each such series. Various series of
preferred stock have been authorized and issued, but many of those series have
converted into or been exchanged for common stock In many cases, where no
shares of a series of preferred stock are issued or outstanding, the series has
been eliminated and the shares returned to our general pool of authorized but
undesignated and unissued preferred stock. The status of our series of
preferred stock as of the date hereof is as follows:
o Series A Participation Preference Stock: eliminated in June 1999, no
shares authorized or outstanding;
o Series B Preferred Stock: eliminated in December 1999, no shares
authorized or outstanding;
o Series C Preferred Stock: eliminated in December 1999, no shares
authorized or outstanding;
o Series D Preferred Stock: eliminated in February 2000, no shares
authorized or outstanding;
o Series E Preferred Stock: 125 shares authorized and no shares issued
and outstanding;
o Series F Preferred Stock: 2,020,000 shares authorized and no shares
issued and outstanding;
o Series G Preferred Stock: eliminated in December 1999, no shares
authorized or outstanding;
o Series H Preferred Stock: eliminated in February 2000, no shares
authorized or outstanding;
o Series I Preferred Stock: 400,000 shares authorized and 250,000 shares
issued and outstanding;
o Series J Preferred Stock: 40 shares authorized and no shares issued
and outstanding;
o Series K Preferred Stock: eliminated in February 2000, no shares
authorized or outstanding;
o Series M Preferred Stock: one share authorized and no shares issued
and outstanding;
o Series N Preferred Stock: eliminated in February 2000, no shares
authorized or outstanding;
o the Series O Preferred Stock: 16,100 shares authorized and no shares
issued and outstanding;
o Series P Preferred Stock: 15,000 shares authorized, issued and
outstanding; and
o Series Q Preferred Stock: 10,000 shares authorized and 4,000 shares
issued and outstanding.
The rights of the holders of common stock discussed below are subject to
rights the Board of Directors has granted and may in the future grant to the
holders of preferred stock. Rights granted to holders of preferred stock may
adversely affect the rights of holders of common stock. Under certain
circumstances, the issuance of preferred stock may tend to discourage a merger,
tender offer or proxy contest, the
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assumption of control by a holder of a large block of our securities or the
removal of incumbent management.
COMMON STOCK
Voting Rights. Each holder of shares of common stock is entitled to
attend all special and annual meetings of our stockholders and, together with
the holders of all other classes of stock entitled to attend such meetings and
to vote (except any class or series of stock having special voting rights), to
cast one vote for each outstanding share of common stock upon any matter
(including, without limitation, the election of directors) acted upon by the
stockholders. The shares of common stock do not have cumulative voting rights
in the election of directors (which means each share gets one vote for each
director nominee, rather than an aggregate number of votes equal to the number
of nominees which can be cast for any one or more directors).
Holders of a majority of the common stock represented at a meeting may
approve most actions submitted to the stockholders. Certain matters require
different approvals: election of directors requires the approval of a plurality
of the votes cast, certain corporate actions such as mergers, sale of all or
substantially all of our assets and charter amendments require the approval of
holders of a majority of the total number of shares of common stock
outstanding.
Liquidation Rights. Upon our dissolution, liquidation, or winding up,
the holders of the common stock, and holders of any class or series of stock
entitled to participate in the distribution of assets in such event, will be
entitled to participate in the distribution of any assets remaining after we
have paid all of our debts and liabilities and after we have paid the holders
of classes of stock having preference over the common stock the full
preferential amounts to which they are entitled.
Dividends. Dividends may be paid on the common stock and on any class or
series of stock entitled to participate therewith as to dividends but only when
and as declared by the Board of Directors.
Miscellaneous. Holders of common stock have no preemptive (right to buy
a pro rata share of new stock issuances), subscription, redemption or
conversion rights. All outstanding shares of common stock, including the shares
offered in this prospectus, are or upon issuance will be fully paid and
nonassessable.
PREFERRED STOCK
UNDESIGNATED PREFERRED STOCK. The Restated Charter authorizes our Board
of Directors, from time to time and without further stockholder action, to
issue additional preferred stock in one or more series, and to fix the relative
rights and preferences of the shares, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. The
Board's authority is limited by the terms of the series of preferred stock
which are currently designated. At present, 7,538,734 shares of additional
preferred stock can be issued with terms fixed by the Board. Because of its
broad discretion with respect to the creation and issuance of preferred stock
without stockholder approval, the Board of Directors could adversely affect the
voting power of the holders of common stock and, by issuing shares of preferred
stock with certain voting, conversion and/or redemption rights, could
discourage any attempt to obtain control of us by merger, tender offer or proxy
contest or the removal of incumbent management.
SERIES A PREFERRED STOCK. On February 28, 1997, we adopted a rights plan
and entered into a stockholder rights agreement with American Stock Transfer &
Trust Company, as rights agent (the "Rights Agreement"). The Rights Agreement
provided for the issuance of rights for each share of our common stock
outstanding on February 28, 1997 and each share of our common stock that we
issued since then representing the right to purchase one one-hundredth of a
share of the Series A Preferred Stock. On May 14, 1999, we repealed the Rights
Agreement. The Series A Preferred Stock has been eliminated as of June 1999.
SERIES B PREFERRED STOCK. As part of the consideration paid to the
former stockholders of IDX, we initially issued 500,000 shares of Series B
Preferred Stock. We subsequently issued 500,000 shares of Series H Preferred
Stock in exchange for such shares of Series B Preferred Stock. The Series B
Preferred Stock has been eliminated as of December 1999.
SERIES C PREFERRED STOCK. We issued 75 shares of Series C Preferred
Stock to Mr. Jensen in a private offering pursuant to Regulation D of
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the Securities Act of 1933. We exchanged 3,000,000 shares of our common stock
for all of the outstanding Series C Preferred Stock in February 1999. The
Series C Preferred Stock has been eliminated as of December 1999.
SERIES D PREFERRED STOCK. We issued an aggregate of 50 shares of Series
D Preferred Stock to Vintage Products in January 1999 and May 1999 in a private
offering pursuant to Regulation S of the Securities Act of 1933. In December
1999 and January 2000, Vintage converted all shares of Series D Preferred Stock
into 3,625,000 shares of our common stock. The Series D Preferred Stock was
eliminated in February 2000.
SERIES E PREFERRED STOCK. We issued 50 shares of Series E Preferred
Stock to EXTL Investors LLC in February 1999 in a private offering pursuant to
Regulation D of the Securities Act of 1933. On February 1, 2000, the closing
sales price of our common stock was over the required threshold for the
requisite number of trading days and, accordingly, the outstanding Series E
Preferred Stock converted into 2,352,941 shares of common stock. We agreed not
to issue any additional shares of Series E Preferred Stock other than pursuant
to the initial investment document. We have agreed to eliminate this series of
preferred stock once it has been fully converted by the stockholders or
redeemed by us.
Voting Rights. The holders of the Series E Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law or
dividends payable on the Series E Preferred Stock are in arrears for six
quarters, at which time the Series E Preferred Stock would be entitled to vote
as a separate class (with any other preferred stock having similar voting
rights) to elect one director to our Board of Directors at the next
stockholders' meeting. The holders of the Series E Preferred Stock are entitled
to notice of all stockholder meetings in accordance with the Bylaws. The
affirmative vote of 66 2/3% of the holders of the Series E Preferred Stock is
required for the issuance of any class or series of stock of eGlobe ranking
senior to or on a parity with the Series E Preferred Stock as to dividends or
rights on liquidation, winding up and dissolution.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series E Preferred Stock are entitled on a parity basis with
any preferred stock ranking on a parity with the Series E Preferred Stock to a
liquidation preference over our common stock and any preferred stock ranking
junior to the Series E Preferred Stock, but after all preferential amounts due
holders of any class of stock having a preference over the Series E Preferred
Stock are paid in full, equal to $100,000 per share, plus any accrued and
unpaid dividends.
Dividends. The Series E Preferred Stock carries a annual dividend of 8%,
which is payable quarterly, beginning December 31, 2000, if declared by our
Board of Directors. If the Board of Directors does not declare dividends, they
accrue and remain payable. All dividends that would accrue through December 31,
2000 on each share of Series E Preferred Stock, whether or not then accrued,
will be payable in full upon conversion of such share of Series E Preferred
Stock. No dividends may be granted on our common stock or any preferred stock
ranking junior to the Series E Preferred Stock until all accrued but unpaid
dividends on the Series E Preferred Stock are paid in full. Dividends on the
Series E Preferred Stock are not payable until all accrued but unpaid dividends
on preferred stock ranking senior to the Series E Preferred Stock are paid in
full.
Conversion. The Series E Preferred Stock is convertible into shares of
our common stock at any time after issuance. The shares of Series E Preferred
Stock are also convertible (one time right of holder) into our common stock
upon a change of control (as defined in the certificate of designations of the
Series E Preferred Stock) if the market price of our common stock on the date
immediately preceding the change of control is less than the conversion price.
In lieu of issuing the shares of our common stock issuable upon conversion in
the event of a change of control, we may, at our option, pay an amount equal to
the number of shares of our common stock to be converted multiplied by the
market price. The shares of Series E Preferred Stock will automatically be
converted into shares of our common stock, on the earliest to occur of (x) the
first date as of which the last reported sales price of our common stock on
Nasdaq is $5.00 or more for any 20 consecutive trading days during any period
in which Series E Preferred Stock is outstanding, (y) the date that 80% or more
of the Series E Preferred Stock we have issued has
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been converted into our common stock, or (z) we complete a public offering of
equity securities at a price of at least $3.00 per share and with gross
proceeds to eGlobe of at least $20 million. The initial conversion price for
the Series E Preferred Stock is $2.125.
The Certificate of Designations of Series E Preferred Stock provides for
adjustments to the number of shares issuable upon conversion in the event of
certain dividends and distributions to holders of our common stock, certain
reclassifications of our common stock, stock splits, combinations and mergers
and similar transactions and certain changes of control. In addition, the
Certificate of Designations of the Series E Preferred Stock provides for
adjustment to the conversion price if we sell stock for less than the
conversion price.
SERIES F PREFERRED STOCK. We issued 1,010,000 shares of Series F
Preferred Stock in February 1999 as part of the consideration issued to the
former stockholders of Telekey. On January 3, 2000, the former stockholders of
Telekey converted such shares of Series F Preferred Stock into an aggregate of
1,209,584 shares of our common stock. We agreed to issue at least 505,000 and
up to an additional 1,010,000 shares of Series F Preferred Stock to the former
stockholders of Telekey if Telekey achieves certain revenue and EBITDA
objectives. We have agreed to eliminate this series of preferred stock once it
has been fully converted by the stockholders or redeemed by us.
Voting Rights. The holders of the Series F Preferred Stock are generally
entitled to vote with the holders of our common stock on all matters coming
before our stockholders. In any vote with respect to which the Series F
Preferred Stock vote with the holders of our common stock as a single class,
each share of Series F Preferred Stock has the number of votes equal to 25% of
the number of shares of our common stock into which such share of Series F
Preferred Stock is convertible on the date of the vote. With respect to any
matter for which class voting is required by Delaware corporation law, the
holders of the Series F Preferred Stock will vote as a class and each holder
will be entitled to one vote for each share held. The holders of Series F
Preferred Stock are entitled to notice of all stockholder meetings in
accordance with the Bylaws.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series F Preferred Stock are entitled to participate in
distributions of assets to holders of our common stock after payment of all
debts and liabilities and distributions of all preferential amounts to holders
of classes of stock having a preference over the Series F Preferred Stock.
Dividends. The Series F Preferred Stock is entitled to receive dividends
only when and as declared by the Board of Directors with respect to the Series
F Preferred Stock and only if the Board of Directors declares or pays any
dividends upon our common stock at the same time. In the event the Board of
Directors declares a dividend on the Series F Preferred Stock, the holders of
the shares of Series F Preferred Stock are entitled to receive as a dividend an
amount equal to the amount each such holder would have received if such
holder's shares of Series F Preferred Stock had been converted into our common
stock immediately prior to the date as of which the record holders entitled to
dividends are to be determined.
Conversion. The Series F Preferred Stock is convertible into an equal
number of shares of our common stock, subject to adjustment as described below,
at the holders' option at any time. The shares of Series F Preferred Stock will
automatically convert into shares of our common stock on the earlier to occur
of (a) the first date that the closing sales price of our common stock is equal
to or greater than $4.00 for 15 consecutive trading days or (b) July 1, 2000.
If the market price of our common stock is less than $4.00 on December 31, 2000
(in the case of the shares subject to performance tests (or on the date of a
change of control or default event, if earlier)), we must issue additional
shares of our common stock upon conversion of the Series F Preferred Stock
based on the ratio of $4.00 to the market price (subject to exceptions where
minimum performance tests are not met).
SERIES G PREFERRED STOCK. We initially issued 1 share of Series G
Preferred Stock in June 1999 as part of the consideration paid to American
United Global, Inc., the stockholder of Connectsoft. We subsequently issued 30
shares of Series K Preferred Stock in exchange for such share of Series G
Preferred Stock. The Series G Preferred Stock was eliminated in December 1999.
SERIES H PREFERRED STOCK. We issued 500,000 shares of Series H Preferred
Stock as part of an exchange in August 1999 with former
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stockholders of IDX. On January 31, 2000, the Series H Preferred Stock
automatically converted into 3,262,500 shares of common stock. The Series H
Preferred Stock was eliminated in February 2000.
SERIES I PREFERRED STOCK. We issued 400,000 shares of Series I Preferred
Stock as part of an exchange in August 1999 with former stockholders of IDX. On
February 14, 2000, 150,000 shares of Series I Preferred Stock were converted
into 166,304 shares of our common stock. We have agreed to eliminate this
series of preferred stock once it has been fully converted by the stockholders
or redeemed by us.
Voting Rights. The holders of the Series I Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series I Preferred Stock are entitled to participate in
distributions of assets to holders of common stock after payment of all our
debts and liabilities and distributions of all preferential amounts to holders
of classes of stock having a preference over the Series I Preferred Stock.
Dividends. The Series I Preferred Stock is entitled to receive dividends
only when declared by the Board of Directors with respect to the Series I
Preferred Stock and only if the Board of Directors declares dividends upon the
common stock at the same time. In the event the Board of Directors declares a
dividend on the Series I Preferred Stock, the holders of the shares of Series I
Preferred Stock are entitled to receive an amount equal to the amount each such
holder would have received if such holder's shares of Series I Preferred Stock
had been converted into common stock immediately prior to the date as of which
the record holders entitled to dividends are to be determined.
Conversion. Shares of Series I Preferred Stock which have not been
redeemed prior to July 17, 2000 are automatically convertible into common stock
based on a conversion price equal to $10 per share plus 8% of the value of the
Series I Preferred Stock per annum from December 2, 1998 through the date of
conversion divided by the greater of $2.00 or the average closing price of the
common stock over the 15 days immediately prior to conversion, provided that we
will not issue more than 3,900,000 shares of common stock upon conversion of
the Series I Preferred Stock (including the 166,304 shares issued upon
conversion of 150,000 shares of Series I Preferred Stock on February 14, 2000).
Redemption. We may redeem the remaining 250,000 shares of Series I
Preferred Stock through July 17, 2000, at a price of $10 per share plus an 8%
annual interest rate from December 2, 1998. The redemption may be made in cash,
shares of our common stock or a combination of the two.
SERIES J PREFERRED STOCK. We issued 40 shares of Series J Preferred
Stock to EXTL Investors in November 1999 upon conversion of $4 million of the
$20 million secured debt. On January 31, 2000, the closing sales price of our
common stock was over the required threshold for the requisite number of
trading days and, accordingly, the outstanding Series J Preferred Stock
converted into 2,564,102 shares of common stock. We have agreed to eliminate
this series of preferred stock once it has been fully converted by the
stockholders or redeemed by us.
Voting Rights. The holders of the Series J Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law or
dividends payable on the Series J Preferred Stock are in arrears for six
quarters, at which time the Series J Preferred Stock would be entitled to vote
as a separate class (with any other preferred stock having similar voting
rights) to elect one director to our Board of Directors at the next
stockholders' meeting. The holders of the Series J Preferred Stock are entitled
to notice of all stockholder meetings in accordance with the Bylaws. The
affirmative vote of 66 2/3% of the holders of the Series J Preferred Stock is
required for the issuance of any class or series of stock of eGlobe ranking
senior to or on a parity with the Series J Preferred Stock as to dividends or
rights on liquidation, winding up and dissolution.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series J Preferred Stock are entitled on a parity basis with
any preferred stock ranking on a parity with the Series J Preferred Stock to a
liquidation preference over our common stock and any preferred stock ranking
junior to the Series J Preferred Stock, but after all preferential amounts due
holders of any class of stock having a preference over the Series J Preferred
Stock
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are paid in full, equal to $100,000 per share, plus any accrued and unpaid
dividends.
Dividends. The Series J Preferred Stock carries a annual dividend of 5%,
which is payable quarterly, beginning December 31, 2000, if declared by our
Board of Directors. If the Board of Directors does not declare dividends, they
accrue and remain payable. All dividends that would accrue through December 31,
2000 on each share of Series J Preferred Stock, whether or not then accrued,
will be payable in full upon conversion of such share of Series J Preferred
Stock. No dividends may be granted on our common stock or any preferred stock
ranking junior to the Series J Preferred Stock until all accrued but unpaid
dividends on the Series J Preferred Stock are paid in full. Dividends on the
Series J Preferred Stock are not payable until all accrued but unpaid dividends
on preferred stock ranking senior to the Series J Preferred Stock are paid in
full.
Conversion. The shares of Series J Preferred Stock are convertible into
shares of our common stock at any time after issuance at a conversion price
equal to $1.56 per share. The shares of Series J Preferred Stock are also
convertible (one time right of holder) into our common stock upon a change of
control (as defined in the certificate of designations of the Series J
Preferred Stock) if the market price of our common stock on the date
immediately preceding the change of control is less than the conversion price.
In lieu of issuing the shares of our common stock issuable upon conversion in
the event of a change of control, we may, at our option, pay an amount equal to
the number of shares of our common stock to be converted multiplied by the
market price. The shares of Series J Preferred Stock will automatically be
converted into shares of our common stock, on the earliest to occur of (x) the
first date as of which the last reported sales price of our common stock on
Nasdaq is $5.00 or more for any 20 consecutive trading days during any period
in which Series J Preferred Stock is outstanding, (y) the date that 80% or more
of the Series J Preferred Stock we have issued has been converted into our
common stock, or (z) we complete a public offering of equity securities at a
price of at least $3.00 per share and with gross proceeds to eGlobe of at least
$20 million.
The Certificate of Designations of Series J Preferred Stock provides for
adjustments to the number of shares issuable upon conversion in the event of
certain dividends and distributions to holders of our common stock, certain
reclassifications of our common stock, stock splits, combinations and mergers
and similar transactions and certain changes of control. In addition, the
Certificate of Designations of the Series J Preferred Stock provides for
adjustment to the conversion price if we sell stock for less than the
conversion price.
SERIES K PREFERRED STOCK. We issued 30 shares of Series K Preferred
Stock to American United Global, Inc. in September 1999 in exchange for the
sole share of Series G Preferred Stock. On January 31, 2000, the closing sales
price of our common stock was over the required threshold for the requisite
number of trading days and accordingly, the outstanding Series K Preferred
Stock converted into 1,923,077 shares of common stock. The Series K Preferred
Stock was eliminated in February 2000.
SERIES M PREFERRED STOCK. We issued one (1) share of Series M Preferred
Stock in connection with our acquisition of iGlobe. Pursuant to an agreement
dated April 17, 2000, we issued the Series M holder 3,773,584 shares of common
stock in exchange for one (1) share of Series M Preferred Stock. We have agreed
to eliminate this series of preferred stock once it has been fully converted by
the stockholders or redeemed by us.
Voting Rights. The holder of the Series M Preferred Stock does not have
voting rights, unless otherwise provided by Delaware corporation law or
dividends payable on the Series M Preferred Stock are in arrears for six
quarters, at which time the Series M Preferred Stock would be entitled to vote
as a separate class (with any preferred stock having similar voting rights) to
elect one director to our Board of Directors at the next stockholders' meeting.
The holder of the Series M Preferred Stock is entitled to notice of all
stockholder meetings in accordance with the Bylaws. The affirmative vote of the
holder of the Series M Preferred Stock is required for the issuance of any
class or series of stock of eGlobe ranking senior to or on a parity with the
Series M Preferred Stock as to dividends or rights on liquidation, winding up
and dissolution.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series M Preferred Stock are entitled on a parity
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basis with any preferred stock ranking on a parity with the Series M Preferred
Stock to a liquidation preference over the common stock and any preferred stock
ranking junior to the Series M Preferred Stock, but after all preferential
amounts due holders of any class of stock having a preference over the Series M
Preferred Stock are paid in full, equal to $9 million divided by the number of
shares of Series M Preferred Stock then outstanding, plus any accrued and
unpaid dividends.
Dividends. The Series M Preferred Stock carries an annual dividend of
20% which is payable annually, at our option, in cash or in shares of our
common stock, beginning December 31, 2000, if declared by our Board of
Directors. If the Board of Directors does not declare dividends, they accrue
and remain payable. All dividends that would accrue on the share of Series M
Preferred Stock will be payable in full upon conversion of such share of Series
M Preferred Stock. No dividends may be granted on common stock or any preferred
stock ranking junior to the Series M Preferred Stock until all accrued but
unpaid dividends on the Series M Preferred Stock are paid in full. Dividends on
the Series M Preferred Stock are not payable until all accrued but unpaid
dividends on preferred stock ranking senior to the Series M Preferred Stock are
paid in full.
Conversion. The share of Series M Preferred Stock is convertible, at the
holder's option, into shares of our common stock from and after October 15,
2000 at a conversion price equal to $2.385. The share of Series M Preferred
Stock will automatically be converted into shares of our common stock, on the
earliest to occur of (1) the first date as of which the last reported sales
price of our common stock on Nasdaq is $5.00 or more for any 10 consecutive
trading days during any period in which Series M Preferred Stock is
outstanding, (2) the date that is seven years after the date of issuance, or
(3) we complete a public offering of equity securities at a price of at least
$4.00 per share and with gross proceeds to us of at least $20 million, but in
no event shall the Series M Preferred Stock convert prior to the first
anniversary of the date of issuance.The Certificate of Designations of Series M
Preferred Stock provides for adjustments to the number of shares issuable upon
conversion in the event of certain dividends and distributions to holders of
common stock, certain reclassifications of the common stock, stock splits,
combinations and mergers and similar transactions and certain changes of
control.
Repurchase. We may repurchase the Series M Preferred Stock for $9
million plus any accrued but unpaid dividends on the Series M Preferred Stock
at any time prior to Highpoint's exercise of its conversion rights.
SERIES N PREFERRED STOCK. We issued 3,195 shares of Series N Preferred
Stock between October 1999 and January 2000 in connection with a private
placement. Prior to February 1, 2000, holders of 1,685 shares of Series N
Preferred Stock opted to convert such shares into 607,888 shares of common
stock. On February 1, 2000, the remaining shares of Series N Preferred Stock
automatically converted into 366,060 shares of common stock because the closing
sales price of our common stock was over the required threshold for the
requisite number of days. The Series N Preferred Stock was eliminated in
February 2000.
SERIES O PREFERRED STOCK. We issued 16,100 shares of Series O Preferred
Stock in connection with our acquisition of Coast. On January 26, 2000, the
closing sales price of our common stock was over the required threshold for the
requisite number of trading days. Accordingly, on April 30, 2000, following
receipt of stockholder approval of our issuance of more than 20% of our common
stock upon conversion of the Series O Preferred Stock, the outstanding Series O
Preferred Stock automatically converted into 3,220,000 shares of common stock.
We have agreed to eliminate this series of preferred stock once it has been
fully converted by the stockholders or redeemed by us.
Voting Rights. The holders of the Series O Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law. The
holders of the Series O Preferred Stock are entitled to notice of all
stockholder meetings in accordance with the Bylaws. The affirmative vote of 66
2/3% of the holders of the Series O Preferred Stock is required for the
issuance of any class or series of stock of eGlobe ranking senior to or on a
parity with the Series O Preferred Stock as to dividends or rights on
liquidation, winding up and dissolution.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series O Preferred Stock are entitled on a parity
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basis with any preferred stock ranking on a parity with the Series O Preferred
Stock to a liquidation preference over the common stock and any preferred stock
ranking junior to the Series O Preferred Stock, but after all preferential
amounts due holders of any class of stock having a preference over the Series O
Preferred Stock are paid in full, equal to $1,000 divided by the number of
shares of Series O Preferred Stock then outstanding, plus any accrued and
unpaid dividends.
Dividends. The Series O Preferred Stock carries an annual dividend of
10% which is payable annually in shares of the common stock beginning December
31, 2000, if declared by our Board of Directors. If the Board of Directors does
not declare dividends, they accrue and remain payable. All dividends that would
accrue on each share of Series O Preferred Stock through November 30, 2001 will
be payable in full upon conversion of such share of Series O Preferred Stock.
No dividends may be granted on common stock or any preferred stock ranking
junior to the Series O Preferred Stock until all accrued but unpaid dividends
on the Series O Preferred Stock are paid in full. Dividends on the Series O
Preferred Stock are not payable until all accrued but unpaid dividends on
preferred stock ranking senior to the Series O Preferred Stock are paid in
full.
Conversion. The shares of Series O Preferred Stock are convertible, at
the holder's option, into shares of our common stock at any time after the
later of (A) one year after the date of issuance and (B) the date we have
received stockholder approval for such conversion and the applicable
Hart-Scott-Rodino waiting period has expired or terminated (the "Clearance
Date"), at a conversion price equal to $5.00. The shares of Series O Preferred
Stock will automatically be converted into shares of our common stock, on the
earliest to occur of (1) the fifth anniversary of the first issuance of Series
O Preferred Stock, (2) the first date as of which the last reported sales price
of our common stock on Nasdaq is $6.00 or more for any 15 consecutive trading
days during any period in which Series O Preferred Stock is outstanding, (3)
the date that 80% or more of the Series O Preferred Stock we have issued has
been converted into our common stock, or (4) we complete a public offering of
equity securities at a price per share of at least $5.00 and with gross
proceeds to us of at least $25 million. Notwithstanding the foregoing, the
Series O Preferred Stock will not be converted into eGlobe common stock prior
to eGlobe's receipt of stockholder approval for such conversion and the
expiration or termination of the applicable Hart-Scott-Rodino waiting period.
If the events listed in the preceding sentence occur prior to the Clearance
Date, the automatic conversion will occur on the Clearance Date.
The Certificate of Designations of Series O Preferred Stock provides for
adjustments to the number of shares issuable upon conversion in the event of
certain dividends and distributions to holders of common stock, certain
reclassifications of the common stock, stock splits, combinations and mergers
and similar transactions and certain changes of control.
SERIES P PREFERRED STOCK. We issued 15,000 shares of Series P Preferred
Stock in a private placement in January 2000.
Voting Rights. The holders of the Series P Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series P Preferred Stock are entitled on a parity basis with
any preferred stock ranking on a parity with the Series P Preferred Stock to a
liquidation preference over the common stock and any preferred stock ranking
junior to the Series P Preferred Stock, but after all preferential amounts due
holders of any class of stock having a preference over the Series P Preferred
Stock are paid in full, equal to the sum of $1,000 plus an annual interest rate
of 5% on the $1,000 for the period the Series P Preferred Stock is outstanding
plus any default payments specified in the certificate of designations divided
by the number of shares of Series P Preferred Stock then outstanding.
Dividends. The Series P Preferred Stock does not bear any dividends. No
dividends may be granted on common stock or any preferred stock ranking junior
to the Series P Preferred Stock while the Series P Preferred Stock remains
outstanding.
Conversion. The Series P Preferred Stock is convertible, at the holder's
option, into shares of common stock. The shares of Series P Preferred Stock
will automatically be converted into shares of common stock on January 26,
2003, subject to delay for specified events. The conversion price
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for the Series P Preferred Stock is equal to the lesser of the lowest five
consecutive day average closing price of our common stock on Nasdaq during the
22-day period prior to conversion, and $12.04.
We can force a conversion of the Series P Preferred Stock on any trading
day following a period in which the closing bid price of our common stock has
been greater than $24.08 for a period of at least 35 trading days after the
earlier of (1) the first anniversary of the date the common stock issuable upon
conversion of the Series P Preferred Stock and warrants is registered for
resale, and (2) the completion of a firm commitment underwritten public
offering with gross proceeds to us of at least $45 million.
The Series P Preferred Stock is convertible into a maximum of 5,151,871
shares of common stock. This maximum share amount is subject to increase if the
average closing bid prices of our common stock for the 20 trading days ending
on the later of June 30, 2000 and the 60th calendar day after the common stock
issuable upon conversion of the Series P Preferred Stock and warrants is
registered is less than $9.375, provided that under no circumstances will the
Series P Preferred Stock (together with the Series Q Preferred Stock and
related warrants) be convertible into more than 7,157,063 shares of our common
stock. In addition, no holder may convert the Series P Preferred Stock or
exercise the warrants it owns for any shares of common stock that would cause
it to own following such conversion or exercise in excess of 4.9% of the shares
of our common stock then outstanding.
Redemption. We may be required to redeem the Series P Preferred Stock in
the following circumstances:
o if we fail to perform specified obligations under the securities
purchase agreement or related agreements;
o if we or any of our subsidiaries make an assignment for the benefit of
creditors or become involved in bankruptcy, insolvency, reorganization
or liquidation proceedings;
o if we merge out of existence without the surviving company assuming
the obligations relating to the Series P Preferred Stock;
o if our common stock is no longer listed on the Nasdaq National Market,
the Nasdaq SmallCap Market, the NYSE or the AMEX;
o if the Series P Preferred Stock is no longer convertible into common
stock because it would result in an aggregate issuance of more than
5,151,871 shares of common stock, as such number may be adjusted, and
we have not waived such limit and, to the extent necessary, obtained
stockholder approval of a higher limit; or
o if the Series P Preferred Stock is no longer convertible into common
stock because it would result in an aggregate issuance (taken together
with the shares issued upon conversion of the Series Q Preferred Stock
and exercise of related warrants) of more than 7,157,063 shares of our
common stock and we have not obtained stockholder approval of a higher
limit.
If the Series P Preferred Stock is redeemed under any of the first four
circumstances described above, the redemption value will be equal to the greater
of (a) 120% multiplied by the sum of (1) the stated value ($1,000 per share),
(2) 5% per annum and (3) any penalties in arrears (as defined in the agreement)
or (b) the sum of (1) the stated value plus (2) 5% per annum, divided by the
then effective conversion rate (as defined above) multiplied by the highest
closing price for our common stock during the period from the date of the first
occurrence of the mandatory redemption event until one day prior to the
mandatory redemption date.
If the Series P Preferred Stock is redeemed under either of the latter
two circumstances described above, the redemption value will be equal to $1,000
per share multiplied by 5% per annum.
SERIES Q PREFERRED STOCK. We issued 4,000 shares of Series Q Preferred
Stock in a private placement in March 2000. Under the terms of the Series Q
securities purchase agreement, we may issue up to 6,000 additional shares of
Series Q Preferred Stock under the same terms.
Voting Rights. The holders of the Series Q Preferred Stock do not have
voting rights, unless otherwise provided by Delaware corporation law.
Liquidation Rights. Upon our dissolution, liquidation, or winding-up,
the holders of the Series Q Preferred Stock are entitled on a parity basis with
any preferred stock ranking on a parity with the Series Q Preferred Stock to a
liquidation preference over the common stock and any preferred stock ranking
junior to the Series Q Preferred Stock, but after all preferential amounts due
holders of any class of stock having a preference over the Series Q Preferred
Stock are paid in full, equal to the sum of $1,000 plus an annual interest rate
of 5% on the $1,000 for the period the Series Q Preferred Stock is outstanding
plus any default payments specified in the certificate of designations divided
by the number of shares of Series Q Preferred Stock then outstanding.
Dividends. The Series Q Preferred Stock does not bear any dividends. No
dividends may be granted on common stock or any preferred stock
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ranking junior to the Series Q Preferred Stock while the Series Q Preferred
Stock remains outstanding.
Conversion. The Series Q Preferred Stock is convertible, at the holder's
option, into shares of common stock. The shares of Series Q Preferred Stock
will automatically be converted into shares of common stock on March 15, 2003,
subject to delay for specified events. The conversion price for the Series Q
Preferred Stock is equal to the lesser of the lowest five consecutive day
average closing price of our common stock on Nasdaq during the 22-day period
prior to conversion, and $12.04.
We can force a conversion of the Series Q Preferred Stock on any trading
day following a period in which the closing bid price of our common stock has
been greater than $24.08 for a period of at least 35 trading days after the
earlier of (1) the first anniversary of the date the common stock issuable upon
conversion of the Series Q Preferred Stock and warrants is registered for
resale, and (2) the completion of a firm commitment underwritten public
offering with gross proceeds to us of at least $45 million.
The Series Q Preferred Stock is convertible into a maximum of 3,434,581
shares of common stock. This maximum share amount is subject to increase if the
average closing bid prices of our common stock for the 20 trading days ending
on the later of June 30, 2000 and the 60th calendar day after the common stock
issuable upon conversion of the Series Q Preferred Stock and warrants is
registered is less than $9.375, provided that under no circumstances will the
Series Q Preferred Stock (together with the Series P Preferred Stock and
related warrants) be convertible into more than 7,157,063 shares of our common
stock. In addition. no holder may convert the Series Q Preferred Stock or
exercise the Series Q Warrants it owns for any shares of common stock that
would cause it to own following such conversion or exercise in excess of 4.9%
of the shares of our common stock then outstanding.
Redemption. We may be required to redeem the Series Q Preferred Stock in
the following circumstances:
o if we fail to perform specified obligations under the securities
purchase agreement or related agreements;
o if we or any of our subsidiaries make an assignment for the benefit of
creditors or become involved in bankruptcy, insolvency, reorganization
or liquidation proceedings;
o if we merge out of existence without the surviving company assuming
the obligations relating to the Series P Preferred Stock;
o if our common stock is no longer listed on the Nasdaq National Market,
the Nasdaq SmallCap Market, the NYSE or the AMEX;
o if the Series Q Preferred Stock is no longer convertible into common
stock because it would result in an aggregate issuance of more than
3,434,581 shares of common stock, as such number may be adjusted, and
we have not waived such limit and, to the extent necessary, obtained
stockholder approval of a higher limit; or
o if the Series Q Preferred Stock is no longer convertible into common
stock because it would result in an aggregate issuance (taken together
with the shares issued upon conversion of the Series P Preferred Stock
and related warrants) of more than 7,157,063 shares of our common
stock (the maximum share amount with respect to the Series Q Preferred
Stock will increase to 9,365,463 shares of our common stock if we
receive written guidance from Nasdaq that the issuance of the Series Q
Preferred Stock and the Series Q Warrants will not be integrated with
the issuances of the Series P Preferred Stock and the warrants granted
in connection with the Series P Preferred Stock) and we have not
obtained stockholder approval of a higher limit.
If the Series Q Preferred Stock is redeemed under any of the first four
circumstances described above, the redemption value will be equal to the greater
of (a) 120% multiplied by the sum of (1) the stated value ($1,000 per share),
(2) 5% per annum and (3) any penalties in arrears (as defined in the agreement)
or (b) the sum of (1) the stated value plus (2) 5% per annum, divided by the
then effective conversion rate (as defined above) multiplied by the highest
closing price for our common stock during the period from the date of the first
occurrence of the mandatory redemption event until one day prior to the
mandatory redemption date.
If the Series Q Preferred Stock is redeemed under either of the latter
two circumstances described above, the redemption value will be equal to $1,000
per share multiplied by 5% per annum.
WARRANTS
NEW IDX WARRANTS. As part of the consideration paid to the former
stockholders of IDX in the December 1998 merger, we issued warrants to purchase
up to 2,500,000 shares of our common stock, subject to adjustment. In July 1999
we reacquired the original IDX warrants in exchange for new warrants to acquire
up to 1,250,000 shares of our common stock. In December 1999 we agreed to
reduce the common stock issuable upon exercise of the warrants to 1,087,500,
subject to adjustment as described below, in return for extension of the
earn-out period. The new IDX warrants are exercisable only to the
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extent that IDX (which is managed by former IDX executives for the earn-out
period) achieves certain revenue, EBITDA and traffic minutes goals over the
three months ending September 30, 2000 or December 31, 2000.
SERIES D WARRANTS. In connection with the closing of the Series D
Preferred Stock in January 1999, we issued warrants to purchase 112,500 shares
of our common stock, with an exercise price of $.01 per share to Vintage
(collectively, the "Series D Warrants"). The Series D Warrants are exercisable
for three years beginning March 13, 1999. The Series D Warrants provide for
adjustments to the exercise price and number of shares to be issued in the
event of certain dividends and distributions to holders of our common stock,
stock splits, combinations and mergers.
In addition, we agreed to issue additional warrants to purchase the
number of shares of our common stock equal to $250,000 (based on the market
price of our common stock on the last trading day prior to July 1, 2000) or pay
$250,000 in cash, if we do not achieve, in the fiscal quarter commencing July
1, 2000, an aggregate amount of gross revenues equal to or in excess of 200% of
the aggregate amount of gross revenues achieved by us in the fiscal quarter
ended December 31, 1998.
SERIES E WARRANTS. In connection with the issuance of the Series E
Preferred Stock in February 1999, we issued warrants to purchase 723,000 shares
of our common stock with an exercise price of $2.125 per share and 277,000
shares of our common stock with an exercise price of $.01 per share (the
"Series E Warrants"). The Series E Warrants are exercisable for three years
beginning April 17, 1999. The Series E Warrants provide for adjustments to the
exercise price and number of shares to be issued in the event of certain
dividends and distributions to holders of our common stock, stock splits,
combinations and mergers.
OASIS WARRANTS. In connection with our acquisition of control of ORS, we
contributed warrants to purchase additional shares of our common stock to the
eGlobe/Oasis Reservations LLC as follows:
o (i) shares equal to the difference between $3 million and the value of
our 1.5 million share contribution on the date that the shares of
common stock (including the shares underlying the warrants)
contributed to eGlobe/Oasis Reservations LLC are registered with the
SEC (if the value of the 1.5 million shares on that date is less than
$3 million); and (ii) shares equal to $100,000 of our common stock for
each 30-day period beyond 90 days following the date of contribution
that the shares of common stock (including the shares underlying the
warrants) contributed to eGlobe/Oasis Reservations LLC remain
unregistered;
o 204,909 shares of our common stock, are issuable based upon ORS
achieving certain revenue and EBITDA targets; and
o additional shares based upon (a) ORS achieving revenue and EBITDA
targets, and (b) the market price of our common stock at the date of
registration of the shares contributed. Under certain circumstances,
these shares may be equal to the greater of (A) 50% of the incremental
revenue for the Second Measurement Period (as defined in the
agreements) over $9,000,000 or (B) four times the incremental Adjusted
EBITDA (as defined in the agreements) for the Second Measurement
Period over $1,000,000 provided, however, that such number of shares
shall not exceed the greater of (x) 1,000,000 shares or (y) that
number of shares determined by dividing $8,000,000 by the Second
Measurement Date Market Value (as defined in the agreements); and
provided further, that if the basis for the issuance of such shares is
incremental revenue over $9,000,000 then EBITDA for the Second
Measurement Period must be at least $1,000,000 for revenue between
$9,000,000 and $12,000,000 or at least $1,500,000 million for revenue
above $12,000,000. Additionally eGlobe/Oasis Reservations LLC may
receive 500,000 shares of our common stock if the revenue for the
Second Measurement Period is equal to or greater than $37,000,000 and
the Adjusted EBITDA for the Second Measurement Period is equal to or
greater than $5,000,000. The measurement periods for determining the
number of shares issuable under this warrant have not yet expired.
Depending upon the number, if any, of
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shares issuable under this warrant, the purchase amount and goodwill
may increase.
On May 12, 2000, Oasis exercised its option under the eGlobe/Oasis
Reservations LLC operating agreement to exchange its interest in eGlobe/Oasis
Reservations LLC and receive the shares of common stock and warrants
contributed to eGlobe/Oasis Reservations LLC by us.
SERIES N WARRANTS. In connection with the private placement of the
Series N Preferred Stock, we issued (a) warrants to purchase 46,588 shares of
our common stock with an exercise price of $3.00 per share and 175,220 shares
of our common stock with an exercise price of $5.00 per share in October 1999,
(b) warrants to purchase 82,827 shares of our common stock with an exercise
price of $5.00 per share in November 1999, (c) warrants to purchase 46,618
shares of our common stock with an exercise price of $7.50 per share in January
2000 and (d) warrants to purchase 200,000 shares of our common stock with an
exercise price of $7.50 per share in February 2000 (collectively, the "Series N
Warrants"). The Series N Warrants will be exercisable for three years beginning
the date of issuance of the warrants.
SERIES P WARRANTS. In connection with the private placement of the
Series P Preferred Stock in January 2000, we issued warrants to purchase
375,000 shares of our common stock with a per share exercise price equal to
$12.04, subject to adjustment for issuances of shares of our common stock below
market price. The warrants are exercisable for 5 years beginning January 27,
2000.
SERIES Q WARRANTS. In connection with the private placement of the
Series Q Preferred Stock in March 2000, we issued warrants to purchase 100,000
shares of our common stock with a per share exercise price equal to $12.04,
subject to adjustment for issuances of shares of our common stock below market
price. The warrants are exercisable for 5 years beginning March 17, 2000. Under
the terms of the Series Q securities purchase agreement, we may issue
additional warrants to purchase an additional 150,000 shares of our common
stock according to the same terms.
OTHER WARRANTS. In connection with certain bridge loans and various
other transactions, as of May 15, 2000 we have issued warrants to purchase
5,680,880 shares of our common stock with exercise prices ranging from $.01 to
$7.50 per share. These warrants are exercisable for periods ending between July
6, 2000 and February 18, 2007.
OPTIONS
As of May 15, 2000 we have currently outstanding options granted to
employees and directors to purchase 6,349,687 shares of common stock, of which
2,026,481 are exercisable as of May 15, 2000.
CERTAIN CHARTER AND STATUTORY PROVISIONS
The Restated Charter provides that any action required or permitted to
be taken by our stockholders must be effected at a duly called annual or
special meeting of stockholders and may not be taken or effected by a written
consent of stockholders in lieu thereof.
We are subject to the provisions of Section 203 of the Delaware
Corporation Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless (1) prior to such
date, the board approved either the business combination or the transaction
that resulted in the stockholder becoming an interested stockholder, (2) upon
consummation of the transaction that resulted in such person becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding, for purposes of determining the number of shares
outstanding, shares owned by certain directors or certain employee stock
plans), or (3) on or after the date the stockholder became an interested
stockholder, the business combination is approved by the Board of Directors and
authorized by the affirmative vote (and not by written consent) of at least
two-thirds of the outstanding voting stock excluding that stock owned by the
interested stockholder. A "business combination" includes a merger, asset sale
or other transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who (other than the
corporation and any direct or indirect majority-owned subsidiary of the
corporation), together with affiliates and associates, owns (or, as an
affiliate or associate, within three years prior, did own) 15% or more of the
corporation's outstanding voting stock.
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In addition, our Restated Certificate prohibits the acquisition by any
person of more than 30% of the outstanding common stock or 40% of the common
stock outstanding on a fully diluted basis (as defined) except through a
"qualifying offer." If these limits are exceeded, in addition to our right to
pursue an injunction, the excess shares would not have voting rights and would
be subject to redemption on specified terms.
The term "qualifying offer" would mean any fully financed, all-cash
tender offer to purchase all of the outstanding shares of common stock, that is
subject to no condition other than (A) the tender to the offeror of at least
85% of the fully diluted shares of common stock and certain technical
conditions.
The term "fully diluted basis" would refer to the total number of shares
of common stock outstanding assuming (1) the conversion of all then outstanding
convertible securities (including preferred stock) where no price must be paid
for conversion or the price, if any, is less than the then market price of our
common stock, (2) the exercise of any options, warrants or similar rights to
acquire common stock or other securities of eGlobe where the exercise price is
less than the then market price of our common stock, and (3) the issuance of
all securities (and the conversion of any convertible securities or exercise of
options or warrants in accordance with clauses (1) and (2)) which are subject
to achievement of performance criteria under a contract, the terms of preferred
stock or warrants, or other valid and binding arrangement.
33
<PAGE>
PLAN OF DISTRIBUTION
The shares may be sold or distributed from time to time by the selling
stockholders named in this prospectus, by their donees, pledgees, transferees
or other successors in interest. The selling stockholders may sell their shares
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices, or at fixed prices, which may
be changed. Each selling stockholder reserves the right to accept or reject, in
whole or in part, any proposed purchase of shares, whether the purchase is to
be made directly or through agents.
The selling stockholders may offer their shares at various times in one
or more of the following transactions, which may include block transactions:
o in ordinary brokers' transactions and transactions in which the broker
solicits purchasers;
o in transactions involving cross or block trades or otherwise on the
Nasdaq National Market or such other market on which the common stock
may from time to time be trading (including transactions in which
brokers or dealers may attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate
the transaction);
o in transactions in which brokers, dealers or underwriters purchase the
shares as principal and resell the shares for their own accounts
pursuant to this prospectus;
o in transactions "at the market" to or through market makers in our
common stock or into an existing market for the common stock;
o in other ways not involving market makers or established trading
markets, including direct sales of the shares to purchasers or sales
of the shares effected through agents;
o through transactions in options, swaps or other derivatives which may
or may not be listed on an exchange;
o in privately negotiated transactions;
o in short sales or transactions to cover short sales; or
o in a combination of any of the foregoing transactions.
The sale price to the public may be:
o the market price prevailing at the time of sale;
o a price related to such prevailing market price;
o at negotiated prices; or
o such other price as the selling stockholders determine from time to
time.
The selling stockholders shall have the sole and absolute discretion not to
accept any purchase offer or make any sale of shares if they deem the purchase
price to be unsatisfactory at any particular time.
The selling stockholders also may sell their shares in accordance with Rule 144
under the Securities Act, rather than pursuant to this prospectus.
From time to time, one or more of the selling stockholders may pledge or
grant a security interest in some or all of the shares owned by them. If the
selling stockholders default in performance of the secured obligations, the
pledgees or secured parties may offer and sell the shares from time to time.
The selling stockholders also may transfer and donate shares in other
circumstances. The number of shares beneficially owned by selling stockholders
who transfer, donate, pledge or grant a security interest in their shares will
decrease as and when the selling stockholders take these actions. The plan of
distribution for the shares offered and sold under this prospectus will
otherwise remain unchanged, except that the transferees, donees or other
successors in interest will be selling stockholders for purposes of this
prospectus.
A selling stockholder may sell short our common stock. The selling
stockholder may deliver this prospectus in connection with such short sales and
use the shares offered by this prospectus to cover such short sales.
A selling stockholder or its pledgee, donee, transferee or other
successor in interest may enter into hedging transactions with broker-dealers.
The broker-dealers may engage in short sales of our common stock in the course
34
<PAGE>
of hedging the positions they assume with the selling stockholders, including
positions assumed in connection with distributions of the shares by such
broker-dealers. A selling stockholder or its pledgee, donee, transferee or
other successor in interest also may enter into option or other transactions
with broker-dealers that involve the delivery of the shares to the
broker-dealers, who may then resell or otherwise transfer such shares. In
addition, a selling stockholder may loan or pledge shares to a broker-dealer,
which may sell the loaned shares or, upon a default by the selling stockholder
of the secured obligation, may sell or otherwise transfer the pledged shares.
A selling stockholder or its pledgee, donee, transferee or other
successor in interest may also sell the shares directly to market makers acting
as principals and/or broker-dealers acting as agents for themselves or their
customers or use brokers, dealers, underwriters or agents to sell their shares.
The broker-dealers acting as agents may receive compensation in the form of
commissions, discounts or concessions. This compensation may be paid by the
selling stockholders or the purchasers of the shares for whom such persons may
act as agent, or to whom they may sell as principal, or both. The compensation
as to a particular person may be less than or in excess of customary
commissions. The selling stockholders and any agents or broker-dealers that
participate with the selling stockholders in the offer and sale of the shares
may be deemed to be "underwriters" within the meaning of the Securities Act.
Any commissions they receive and any profit they realize on the resale of the
shares by them may be deemed to be underwriting discounts and commissions under
the Securities Act. Neither we nor any selling stockholders can presently
estimate the amount of such compensation.
The selling stockholders, alternatively, may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling
stockholder has entered into any agreement with a prospective underwriter and
there is no assurance that any such agreement will be entered into. If a
selling stockholder enters into such an agreement or agreements, the relevant
details will be set forth in a supplement or revisions to this prospectus.
We have advised the selling stockholders that during such time as they
may be engaged in a distribution of the shares, they are required to comply
with Regulation M under the Exchange Act. With certain exceptions, Regulation M
prohibits any selling stockholder, any affiliated purchasers and any
broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase, any security which is the subject of the distribution until the
entire distribution is complete. Regulation M also prohibits any bids or
purchases made in order to stabilize the price of a security in connection with
the distribution of that security. The foregoing restrictions may affect the
marketability of the shares.
Under our registration rights agreements with the selling stockholders,
we are required to bear the expenses relating to this offering, excluding any
underwriting discounts or commissions, stock transfer taxes and fees of legal
counsel to the selling stockholders. We estimate these expenses will total
approximately $40,000.
We have agreed to indemnify the selling stockholders and any
underwriters, brokers, dealers or agents and their respective controlling
persons against certain liabilities, including certain liabilities under the
Securities Act.
It is possible that a significant number of shares could be sold at the
same time. Such sales, or the perception that such sales could occur, may
adversely affect prevailing market prices for our common stock.
This offering by any selling stockholder will terminate on the date
specified in the selling stockholder's registration rights agreement with
eGlobe or, if earlier, on the date on which the selling stockholder has sold
all of his shares.
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LEGAL MATTERS
Hogan & Hartson L.L.P., of Washington, D.C., will issue an opinion about
certain legal matters with respect to the common stock for eGlobe.
EXPERTS
The consolidated financial statements and schedule of eGlobe, Inc. and
subsidiaries, the supplemental consolidated financial statements and schedule
of eGlobe, Inc. and subsidiaries, the combined consolidated financial
statements of Telekey, Inc. and subsidiary and Travelers Teleservices, Inc.,
the combined financial statements of Connectsoft Corporation, the combined
financial statements of Highpoint International Telecom, Inc. and affiliates
and the financial statements of Coast International, Inc. incorporated by
reference in this Prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their reports incorporated herein by reference, and are incorporated herein in
reliance upon such reports given upon the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Trans Global Communications,
Inc. and subsidiaries as of December 31, 1999 and 1998, and for the three years
in the period ended December 31, 1999, incorporated by reference in this
Prospectus, have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The financial statements of Oasis Reservations Services, Inc.,
incorporated by reference in this Prospectus, have been so referred to in
reliance upon the report of Berkowitz, Dick, Pollack & Brant LLP independent
auditors, given upon the authority of said firm as experts in auditing and
accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with
the issuance and distribution of the securities being registered hereby, other
than underwriting discounts and commissions. All amounts are estimated.
<TABLE>
<S> <C>
Blue Sky Fees and Expenses .............. $ 0
Accounting Fees and Expenses ............ $15,000
Legal Fees and Expenses ................. $10,000
Printing and Engraving Expenses ......... $15,000
-------
Total................................ $40,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware corporation law, a corporation may
indemnify its directors, officers, employees and agents and its former
directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in non derivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The Delaware
Corporation Law provides, however, that such person must have acted in good
faith and in a manner such person reasonably believed to be in (or not) the
best interests of the corporation and, in the case of a criminal action, such
person must have had no reasonable cause to believe his or her conduct was
unlawful. In addition, the Delaware corporation law does not permit
indemnification in an action or suit by or in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and only
to the extent that, a court determines that such person fairly and reasonably
is entitled to indemnity for costs the court deems proper in light of liability
adjudication. Indemnity is mandatory to the extent a claim, issue or matter has
been successfully defended. Our Restated Charter contains provisions that
provide that no director of eGlobe shall be liable for breach of fiduciary duty
as a director except for (1) any breach of the director's duty of loyalty to
eGlobe or our stockholders; (2) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law; (iii)
liability under Section 174 of the Delaware Corporation Law; or (iv) any
transaction from which the director derived an improper personal benefit. Our
Restated Certificate of Incorporation and our Bylaws contains provisions that
further provide for the indemnification of directors and officers to the
fullest extent permitted by the Delaware Corporation Law.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- --------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated February 3, 1999, by and among Executive
TeleCard, Ltd., Telekey, Inc., eGlobe Merger Sub No. 2, Inc. and the stockholders of
Telekey, Inc. (Incorporated by reference to Exhibit 2.1 in Current Report on Form 8-K
of Executive TeleCard, Ltd., dated March 1, 1999).
2.2 Asset Purchase Agreement, dated July 10, 1998, by and among Executive TeleCard,
Ltd., American United Global, Inc., Connectsoft Communications Corporation,
Connectsoft Holding Corp., and C-Soft Acquisition Corp. (Incorporated by reference to
Exhibit 2.1 in Current Report on Form 8-K filed on July 2, 1999).
</TABLE>
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<TABLE>
<S> <C>
2.3 Amendment No. 1 to Asset Purchase Agreement, dated July 30, 1998, by and among
Executive TeleCard, Ltd., American United Global, Inc., Connectsoft Communications
Corporation, Connectsoft Holding Corp., and C-Soft Acquisition Corp. (Incorporated by
reference to Exhibit 2.2 in Current Report on Form 8-K filed on July 2, 1999).
2.4 Amendment No. 2 to Asset Purchase Agreement, dated August _, 1998, by and among
Executive TeleCard, Ltd., American United Global, Inc., Connectsoft Communications
Corporation, Connectsoft Holding Corp., and C-Soft Acquisition Corp. (Incorporated by
reference to Exhibit 2.3 in Current Report on Form 8-K filed on July 2, 1999).
2.5 Amendment No. 3 to Asset Purchase Agreement, dated June 17, 1999, by and among
Executive TeleCard, Ltd., American United Global, Inc., Connectsoft Communications
Corporation, Connectsoft Holding Corp., and C-Soft Acquisition Corp. (Incorporated by
reference to Exhibit 2.4 in Current Report on Form 8-K filed on July 2, 1999).
2.6 Assignment and Assumption Agreement, dated as of June 17, 1999, by and among Vogo
Networks, LLC, Connectsoft Communications Corporation, and Connectsoft Holding
Corp. (Incorporated by reference to Exhibit 2.5 in Current Report on Form 8-K filed on
July 2, 1999).
2.7 Exchange Agreement dated July 26, 1999, by and between the former stockholders of
IDX International, Inc. and eGlobe, Inc. (Incorporated by reference to Exhibit 2.1 in
Current Report on Form 8-K/A filed on August 31, 1999).
2.8 Exchange Agreement dated as of September 3, 1999 by and between eGlobe, Inc. and
American United Global, Inc. (Incorporated by reference to Exhibit 2.1 in Current
Report on Form 8-K filed on September 3, 1999).
2.9 Contribution Agreement by and among eGlobe, Inc., eGlobe/OASIS, Inc., OASIS
Reservation Services, Inc., Outsourced Automated Services and Integrated Solutions,
Inc. and eGlobe/Oasis Reservations LLC, dated as September 15, 1999. (Incorporated
by reference to Exhibit 2.1 in Current Report on Form 8-K filed on October 5, 1999).
2.10 Stock Purchase Agreement dated as of October 4, 1999 by and among eGlobe, Inc.,
iGlobe, Inc. and Highpoint Telecommunications, Inc. (Incorporated by reference to
Exhibit 2.1 in Current Report on Form 8-K filed on October 29, 1999).
2.11 Agreement and Plan of Merger dated as of November 29, 1999 by and among eGlobe,
Inc., eGlobe Merger Sub No. 5, Inc., Coast International, Inc. and the Stockholders of
Coast International, Inc. (Incorporated by reference to Exhibit 2.1 in Current Report on
Form 8-K of eGlobe, Inc., dated December 17, 1999).
2.12 Agreement and Plan of Merger dated as of December 16, 1999 by and among eGlobe,
Inc., eGlobe, Merger Sub No. 6, Inc., Trans Global Communications, Inc., and the
Stockholders of Trans Global Communications, Inc. (Incorporated by reference to
Exhibit 2.1 in Current Report on Form 8-K of eGlobe, Inc., dated December 30, 1999).
3.1 Restated Certificate of Incorporation as amended June 16, 1999 (Incorporated by
reference to Exhibit 3.1 in Quarterly Report on Form 10-Q of eGlobe, Inc., for the
period ended June 30, 1999).
3.2 Certificate of Amendment of Restated Certificate of Incorporation, dated July 8, 1999
(Incorporated by reference to Exhibit 3.2 in Annual Report on Form 10-K of eGlobe, Inc.
filed April 7, 2000).
3.3 Certificate of Amendment of Restated Certificate of Incorporation, dated March 23,
2000. (Incorporated by reference to Exhibit 3.3 in Annual Report on Form 10-K of eGlobe, Inc.
filed April 7, 2000)
3.4 Certificate of Elimination to Certificate of Designations, Rights and Preferences of
Series A Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to Exhibit 3.4 in
Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000)
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
3.5 Certificate of Elimination to Certificate of Designations, Rights and Preferences of
Series B Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to Exhibit 3.5 in
Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.6 Certificate of Elimination to Certificate of Designations, Rights and Preferences of 8%
Series C Cumulative Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to
Exhibit 3.6 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.7 Certificate of Elimination to Certificate of Designations, Rights and Preferences of 8%
Series D Cumulative Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to
Exhibit 3.7 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.8 Certificate of Designations, Rights and Preferences of 8% Series E Cumulative
Convertible Redeemable Preferred Stock of eGlobe, Inc. (filed as part of the Restated
Certificate of Incorporation at Exhibit 3.1).
3.9 Certificate of Designations, Rights and Preferences of Series F Convertible Preferred
Stock of eGlobe, Inc. (filed as part of the Restated Certificate of Incorporation at
Exhibit 3.1).
3.10 Certificate of Elimination to Certificate of Designations, Rights and Preferences of 6%
Series G Cumulative Convertible Redeemable Preferred Stock of eGlobe, Inc. (Incorporated by
reference to Exhibit 3.10 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.11 Certificate of Elimination to Certificate of Designations, Rights and Preferences of
Series H Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to
Exhibit 3.11 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.12 Certificate of Designations, Rights and Preferences of Series I Convertible Optional
Redeemable Preferred Stock of eGlobe, Inc. (Incorporated by reference to Exhibit 4.6
in Current Report on Form 8-K/A of eGlobe, Inc., dated August 31, 1999).
3.13 Certificate of Elimination to Certificate of Designations, Rights and Preferences of 5%
Series J Cumulative Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference
to Exhibit 3.13 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.14 Certificate of Elimination to Certificate of Designations, Rights and Preferences of 5%
Series K Cumulative Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference
to Exhibit 3.14 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.15 Certificate of Designations, Rights and Preferences of 20% Series M Cumulative
Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to Exhibit 4.1 in
Current Report on Form 8-K of eGlobe, Inc. filed October 29, 1999).
3.16 Certificate of Elimination to Certificate of Designations, Rights and Preferences of 8%
Series N Cumulative Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference
to Exhibit 3.16 in Annual Report on Form 10-K of eGlobe, Inc. filed April 7, 2000).
3.17 Certificate of Designations, Rights, Preferences and Restrictions of 10% Series O
Cumulative Convertible Preferred Stock of eGlobe, Inc. (Incorporated by reference to
Exhibit 2.1 in Current Report on Form 8-K of eGlobe, Inc., dated December 17, 1999).
3.18 Certificate of Designations, Rights, Preferences and Restrictions of Series P Convertible
Preferred Stock of eGlobe, Inc. (Incorporated by reference to Exhibit 4.1 in Current
Report on Form 8-K of eGlobe, Inc. filed February 15, 2000).
3.19 Certificate of Designations, Rights, Preferences and Restrictions of Series Q Convertible
Preferred Stock of eGlobe, Inc. (Incorporated by reference to Exhibit 4.1 in Current
Report on Form 8-K of eGlobe, Inc. filed March 23, 2000).
3.20 Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.4 in Annual
Report on Form 10-K of eGlobe, Inc. for the fiscal year ended March 31, 1998).
3.21 Amendment to Bylaws (Incorporated by reference to Exhibit 3.4 in Annual Report on
Form 10-K of eGlobe, Inc., for the period ended December 31, 1998).
4.1 Forms of Warrant to purchase shares of common stock of eGlobe, Inc. (Incorporated by
reference to Exhibit 4.8 in Annual Report on Form 10-K of eGlobe, Inc., for the period
ended December 31, 1998).
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
4.2 Compensation Agreement, dated September 2, 1998, between eGlobe, Inc., C-Soft
Acquisition Corp. and Brookshire Securities Corp., providing a warrant to purchase
2,500 shares of common stock of eGlobe, Inc. (Incorporated by reference to Exhibit 4.13
in Annual Report on Form 10-K of eGlobe, Inc., for the period ended December 31,
1998).
4.3 Agreement, dated June 18, 1998, by and between eGlobe, Inc. and Seymour Gordon
(Incorporated by reference to Exhibit 4.14 in Annual Report on Form 10-K of eGlobe,
Inc., for the period ended December 31, 1998).
4.4 Promissory Note in the original principal amount of $1,000,000 dated June 18, 1998,
between eGlobe, Inc. and Seymour Gordon (Incorporated by reference to Exhibit 4.15
in Annual Report on Form 10-K of eGlobe, Inc., for the period ended December 31,
1998).
4.5 Promissory Note of C-Soft Acquisition Corp., as maker, and eGlobe, Inc., as guarantor,
payable to Dr. J. Soni in the original principal amount of $250,000, dated September 1,
1998, providing a warrant to purchase 25,000 shares of common stock of eGlobe, Inc.
(Incorporated by reference to Exhibit 4.17 in Annual Report on Form 10-K of eGlobe,
Inc., for the period ended December 31, 1998).
4.6 Form of Warrant to purchase 5,000,000 shares of common stock of eGlobe, Inc. issued
to EXTL Investors LLC (Incorporated by reference to Exhibit 4.1 in Current Report on
Form 8-K of eGlobe filed July 19, 1999).
4.7 Form of Warrants to purchase up to 1,250,000 shares of common stock of eGlobe, Inc.
(Incorporated by reference to Exhibit 4.7 in Current Report on Form 8-K/A of eGlobe,
Inc., dated August 31, 1999).
4.8 Form of Warrants to purchase shares of common stock of eGlobe, Inc. dated as of
September 15,1999 (Incorporated by reference to Exhibit 4.1 in Current Report on
Form 8-K of eGlobe filed October 5, 1999).
4.9 Form of Warrants to purchase shares of common stock of eGlobe, Inc. dated as of
October 15, 1999. (Incorporated by reference to Exhibit 4.6 in Quarterly Report on
Form 10-Q of eGlobe, Inc., for the period ended September 30, 1999).
4.10 Form of Warrants to purchase 375,000 shares of common stock of eGlobe, Inc. dated as
of January 26, 2000 (Incorporated by reference to Exhibit 4.2 in Current Report on
Form 8-K of eGlobe, Inc. filed February 15, 2000).
4.11 Form of Warrants to purchase 100,000 shares of common stock of eGlobe, Inc. dated as
of March 15, 2000 (Incorporated by reference to Exhibit 4.2 in Current Report on Form
8-K of eGlobe, Inc. filed March 23, 2000).
4.12 Form of Warrants to purchase 60,000 shares of common stock of eGlobe, Inc. dated as
of August 25, 1999. (Incorporated by reference to Exhibit 4.12 in Annual Report on
Form 10-K of eGlobe, Inc. filed April 7, 2000).
**5.1 Opinion of Hogan & Hartson
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Berkowitz Dick Pollack & Brant LLP
24 Power of Attorney (On signature page).
- -------
** To be filed pursuant to amendment.
</TABLE>
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<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) 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
Securities Act of 1933;
(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, represent 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 end 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%
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
Securities Act of 1933, 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the General Corporation Law of the State of
Delaware, the Restated Certificate of Incorporation, as amended, or the Amended
and Restated Bylaws of registrant, indemnification agreements entered into
between registrant and its officers and directors, 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 a 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 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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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
eGLOBE, INC.
Dated: May 26, 2000
By: /s/ David Skriloff
-------------------------------
David Skriloff
Chief Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Christopher J. Vizas, II, David Skriloff and Anne E.
Haas, jointly and severally, each in his own capacity, his true and lawful
attorneys-in-fact, with full power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this registration statement (including post-effective amendments), and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, with full power and authority
to do so and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact, or his or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirement of the Securities Act of 1934, this registration
statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: May 26, 2000 By: /s/ Christopher J. Vizas
--------------------------------------
Christopher J. Vizas
Co-Chairman of the Board of Directors, and Chief
Executive Officer (Principal Executive Officer)
Dated: May 26, 2000 By: /s/ David Skriloff
--------------------------------------
David Skriloff
Chief Financial Officer
(Principal Financial Officer)
Dated: May 26, 2000 By: /s/ Bijan Moaveni
--------------------------------------
Bijan Moaveni
Chief Operating Officer
(Principal Operating Officer)
Dated: May 26, 2000 By: /s/ Anne E. Haas
--------------------------------------
Anne E. Haas
Vice President, Controller and Treasurer
(Principal Accounting Officer)
<PAGE>
Dated: May 26, 2000 By: /s/ Arnold S. Gumowitz
--------------------------------------
Arnold S. Gumowitz
Co-Chairman of the Board of Directors
Dated: May 26, 2000 By: /s/ David W. Warnes
--------------------------------------
David W. Warnes, Director
Dated: May 26, 2000 By: /s/ Richard A. Krinsley
--------------------------------------
Richard A. Krinsley, Director
Dated: May 26, 2000 By: /s/ Donald H. Sledge
--------------------------------------
Donald H. Sledge, Director
Dated: May 26, 2000 By: /s/ James O. Howard
--------------------------------------
James O. Howard, Director
Dated: May 26, 2000 By: /s/ Richard Chiang
--------------------------------------
Richard Chiang, Director
Dated: May 26, 2000 By: /s/ John H. Wall
--------------------------------------
John H. Wall, Director
Dated: May 26, 2000 By: /s/ Gary Gumowitz
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Gary Gumowitz, Director
Dated: May 26, 2000 By: /s/ John Hughes
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John Hughes, Director
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
eGlobe, Inc.
Washington, DC
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our reports dated March
24, 2000, except for Notes 10 and 18, which are as of April 6, 2000 relating to
the consolidated financial statements and schedule and supplemental
consolidated financial statements and schedule of eGlobe, Inc. and
subsidiaries, appearing in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 and in the Company's Current Report on Form 8-K
dated May 22, 2000, respectively.
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated March
26, 1999 relating to the combined consolidated financial statements of Telekey,
Inc. and subsidiary and Travelers Teleservices, Inc., appearing in the Current
Report on Form 8-K/A dated April 30, 1999.
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated July 21,
1999 relating to the combined financial statements of Connectsoft
Communications Corporation, appearing in the Current Report on Form 8-K/A dated
August 31, 1999.
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated December
16, 1999 relating to the combined financial statements of Highpoint
International Telecom, Inc. and affiliates, appearing in the Current Report on
Form 8-K/A dated December 28, 1999.
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated February
3, 2000 relating to the financial statements of Coast International, Inc.,
appearing in the Current Report on Form 8-K/A dated February 15, 2000.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
Denver, Colorado
May 25, 2000
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of eGlobe, Inc. for
the registration of 98,602,531 shares of its common stock and to the
incorporation by reference therein of our report dated February 25, 2000, with
respect to the consolidated financial statements of Trans Global
Communications, Inc. and subsidiaries, included in eGlobe Inc.'s Current Report
on Form 8-K/A filed with the Securities and Exchange Commission on May 22,
2000.
/s/ Ernst & Young LLP
New York, New York
May 25, 2000
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated November 4, 1999 relating to the
financial statements of Oasis Reservations Services, Inc., which appear in the
Current Report under Form 8-K/A. We also consent to the references to us under
the headings "Experts" in this Prospectus.
/s/ Berkowitz Dick Pollack & Brant LLP
Miami, Florida
May 25, 2000
