SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Commission File Number:
earliest event reported):
MARCH 23, 2000 1-10210
eGLOBE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3486421
(State or other jurisdiction of (IRS Employer Identification
incorporation) Number)
1250 24TH STREET, NW, SUITE 725
WASHINGTON, DC 20037
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(202) 822-8981
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 23, 2000 pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") entered into on December 16, 1999, a wholly owned subsidiary of
eGlobe merged with and into Trans Global Communications, Inc. ("Trans Global"),
with Trans Global continuing as the surviving corporation and becoming a wholly
owned subsidiary of eGlobe (the "Merger"). Trans Global provides its clients
with services that include international and domestic terminations, co-location
facilities, switch partitioning and pre-paid calling cards through a
facilities-based, direct connection and resale network. Trans Global has points
of presence in New York, Los Angeles, London and Cairo. Through its main
switching centers in New York and London, Trans Global can transport and
terminate voice, fax or data calls to any country with a hard wire or cell-based
communications system.
As provided in the Merger Agreement, all shares of Trans Global common
stock, no par value, issued and outstanding were converted into the right to
receive an aggregate of up to 40,000,000 shares of eGlobe common stock, par
value $.001 per share. The 40,000,000 shares of eGlobe common stock were
allocated among the Trans Global stockholders in proportion to the number of
shares each held immediately prior to the Merger. eGlobe stockholders approved
the issuance of shares of eGlobe common stock representing more than 20% of
eGlobe's voting stock in the Merger on March 23, 2000. Trans Global stockholders
approved the Merger on March 20, 2000.
Pursuant to the Merger Agreement, eGlobe has withheld and deposited into
escrow 2,000,000 shares of the 40,000,000 shares of eGlobe common stock issued
to Trans Global stockholders in the Merger. These escrowed shares will cover the
indemnification obligations of the Trans Global stockholders under the Merger
Agreement. Further, pursuant to the Merger Agreement, eGlobe has deposited an
additional 2,000,000 shares of its common stock into escrow to cover its
indemnification obligations under the Merger Agreement.
The Merger Agreement provides that, after the effective time, each Trans
Global stockholder will jointly and severally indemnify, defend and hold
harmless eGlobe and its officers, directors, employees, agents and
representatives from and against any and all demands, losses, claims, actions or
causes of action, assessments, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements ("Losses") to which we may be subjected related to or
arising out of any misrepresentation or breach of any representation or
warranty, or noncompliance with any conditions or other agreements, given or
made by Trans Global or a Trans Global stockholder pursuant to the Merger
Agreement. The Merger Agreement also contains a similar obligation of eGlobe to
indemnify Trans Global and the Trans Global stockholders. The Merger Agreement
also provides that, except in cases of fraud by Trans Global or its
stockholders, the Trans Global stockholders will not be liable to indemnify us
for Losses until the aggregate value of such Losses is greater than $100,000.
Any indemnification for Losses will come from and be limited to the 2,000,000
shares that have been deposited in escrow.
Promptly after the Merger closed, eGlobe appointed Arnold S. Gumowitz
(Trans Global's Chairman), Gary S. Gumowitz (Trans Global's President) and John
W. Hughes (Trans Global's General Counsel) to our board of directors. eGlobe has
also agreed to use its reasonable best efforts to appoint Arnold Gumowitz to
serve on the executive committee. In addition, Arnold Gumowitz became
Co-Chairman of eGlobe, Gary Gumowitz was appointed President of eGlobe
Development Corp., a wholly owned subsidiary of eGlobe, and John W. Hughes
became a Senior Vice President and General Counsel of eGlobe.
The Merger Agreement provides that eGlobe will use its reasonable best
efforts to cause Christopher J. Vizas, eGlobe's Chairman and CEO, and Arnold S.
Gumowitz, Trans Global's Chairman,
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to enter into long term employment and non-competition agreements with us. The
terms of the employment arrangement with Mr. Vizas will be determined by
negotiations with our board of directors. Mr. Gumowitz's employment agreement
will provide for a term of one year at a salary that is below market for
similarly situated companies. The parties expect to enter into such employment
agreements during April 2000.
The Merger is expected to qualify as a tax-free reorganization for tax
purposes.
The Merger was accounted for as a pooling of interests for financial
reporting and accounting purposes under generally accepted accounting
principles. eGlobe will restate, retroactively at the effective time of the
Merger, its consolidated financial statements to include the assets,
liabilities, stockholders' equity and results of operations of Trans Global,
subject to any adjustments required to conform with the accounting policies and
financial statement classifications of the two companies, as if the companies
had been combined at the first date covered by the combined financial
statements. In future financial statements, the results of operations of the
combined entity will include the results of both eGlobe and Trans Global for the
entire fiscal year in which the Merger occurs and all prior periods presented.
eGlobe and Trans Global received letters from eGlobe's and Trans Global's
independent accountants stating their views that (1) after reasonable
investigation, the independent accountants were not aware of any fact that could
preclude Trans Global or eGlobe, respectively, from accounting for the Merger as
a "pooling of interests" in accordance with generally accepted accounting
principles, Accounting Principles Board Opinion No. 16 and all rules,
regulations and policies of the SEC, and (2) the Merger is eligible to be
accounted for as a "pooling of interests" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and all rules,
regulations and policies of the SEC.
However, the letters indicate that the Merger could cease to qualify for
pooling of interest treatment if any of various specified events occurs prior to
the combined company releasing financial results covering at least 30 days of
combined operations of eGlobe and Trans Global. In connection with the Merger,
the executive officers, directors and affiliates of eGlobe or Trans Global have
agreed not to sell any shares of either eGlobe or Trans Global until the
combined company releases financial results covering at least 30 days of
combined operations of eGlobe and Trans Global.
If the Merger does not qualify for treatment as a pooling of interests, the
Merger would be accounted for under the purchase method of accounting. This
would mean that Trans Global's assets would be recognized at their fair value
and that any excess of the purchase price over such fair value, other than
amounts charged to in-process research and development costs, if any, would be
recognized as goodwill on eGlobe's balance sheet. The goodwill would be
amortized as an expense over its anticipated useful life.
The shares of eGlobe common stock issued in the Merger have not been
registered under the Securities Act and therefore will be "restricted
securities" which cannot be resold in the United States until they are
registered under the Securities Act or until an exemption from registration is
available. Under the Merger Agreement, we have agreed to prepare and file,
within 90 days following the effective time, a registration statement covering
the resale by the Trans Global stockholders of the eGlobe common stock issued to
them in the Merger (the "Resale Registration Statement"). We have agreed to use
our reasonable best efforts to keep the Resale Registration Statement
continuously effective until the earlier of (1) the date on which the Trans
Global stockholders have disposed of all shares of eGlobe common stock issued to
them in connection with the Merger or (2) the date the eGlobe common stock
issued to them is otherwise eligible for public resale under applicable
securities laws. Trans Global
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stockholders that will receive a majority of the shares of eGlobe common stock
issued in the Merger are senior officers and/or directors of eGlobe and
notwithstanding the registration will be subject to our internal policies
regarding sale of shares by officers and directors. We will pay all expenses
incurred in preparing and filing the Resale Registration Statement.
-------------------
The foregoing description of the Merger does not purport to be complete and
is qualified in its entirety by reference to the Merger Agreement and amendment,
filed as Exhibits 2.1 and 2.2 hereto, which are incorporated herein by
reference. An extensive description of the Merger is contained in our definitive
proxy statement dated February 11, 2000, which related among other things to
approval of the issuance of stock in the Merger. A copy of the press release,
dated March 23, 2000, issued by eGlobe, Inc. regarding receipt of stockholder
approval for the above-described transaction is attached as Exhibit 99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
It is not practicable to provide the required financial statements for
Trans Global at this time. The statements will be filed as soon as they are
prepared and not later than May 6, 2000.
(b) Pro Forma Financial Information.
It is not practicable to provide the required pro forma financial
statements for Trans Global at this time. The statements will be filed as soon
as they are prepared and not later than May 6, 2000.
(c) Exhibits.
2.1 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. filed December 30, 1999).
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated February 11,
2000, by and among eGlobe, Inc., eGlobe, Merger Sub No. 6, Inc., Trans
Global Communications, Inc., and The Stockholders of Trans Global
Communications, Inc.
99.1 Press Release, dated March 23, 2000, regarding receipt of stockholder
approval for the merger discussed above.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned, thereunto duly authorized.
eGlobe, Inc.
(Registrant)
Date: April 7, 2000 By /s/ Graeme Brown
------------------------------------
Graeme Brown
Deputy General Counsel and Secretary
Exhibit 2.2
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this "Amendment
No. 1") is entered into this 11th day of February, 2000, by and among eGLOBE,
INC., a Delaware corporation ("Acquiror"), eGLOBE MERGER SUB NO. 6, INC., a
Delaware corporation ("Acquiror Sub"), TRANS GLOBAL COMMUNICATIONS, INC., a New
York corporation (the "Company"), and Arnold S. Gumowitz, Gary S. Gumowitz, Joan
Matthews, John W. Hughes, Stephen Levy, Grayson Family Trust, Milton Gumowitz,
Michael Gumowitz, Jonathan Gumowitz, Jonathan Lynn, and Rich Patton, the
stockholders of the Company (collectively, the "Company Stockholders").
WHEREAS, Acquiror, Acquiror Sub, the Company and the Company Stockholders
entered into that certain Agreement and Plan of Merger, dated December 16, 1999
(the "Merger Agreement"), providing for the acquisition of the Company by
Acquiror pursuant to the merger of Acquiror Sub with and into the Company;
WHEREAS, Acquiror has received gross proceeds of $15,000,000 in connection
with the sale of shares of its Series P Convertible Preferred Stock and warrants
to purchase shares of its common stock (the "Series P Financing") pursuant to
that certain Securities Purchase Agreement, dated as of January 26, 2000,
between Acquiror and RGC International Investors, LDC; and
WHEREAS, as a result of the Series P Financing, Acquiror, Acquiror Sub, the
Company and the Company Stockholders desire to delete certain provisions of the
Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Acquiror, Acquiror Sub, the Company and the Company Stockholders
each hereby agrees as follows:
1. FINANCING COMMITMENT COVENANT. Section 7.19 of the Merger Agreement is
hereby deleted in its entirety and the following provision is hereby inserted in
the place thereof:
"SECTION 7.19 [Intentionally Omitted]."
2. FINANCING COMMITMENT CONDITION. Section 8.1(g) of the Merger Agreement
is hereby deleted in its entirety and the following provision is hereby inserted
in the place thereof:
"(g) [Intentionally Omitted]."
3. OTHER TERMS UNCHANGED. The Merger Agreement shall be deemed amended and
restated in its entirety pursuant to the terms of this Amendment No. 1. The
Merger Agreement, as so amended and restated by this Amendment No. 1, shall
remain and continue in full force and effect, shall constitute a legal, valid
and binding obligation of Acquiror, Acquiror Sub, the Company and the Company
Stockholders and is in all respects agreed to, ratified and confirmed hereby.
Any reference to
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the Merger Agreement after the date first set forth above shall be deemed to be
a reference to the Merger Agreement as amended and restated by this Amendment
No. 1.
4. HEADINGS. The headings contained in this Amendment No. 1 are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Amendment No. 1.
5. GOVERNING LAW. This Amendment No. 1 shall be governed by, and construed
in accordance with, the Laws of the State of Delaware, regardless of the Laws
that might otherwise govern under applicable principles of conflicts of law.
6. EXECUTION IN COUNTERPARTS. This Amendment No. 1 may be executed and
delivered in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed and delivered shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, Acquiror, Acquiror Sub, the Company and the Company
Stockholders have duly executed and delivered, or have caused to be duly
executed and delivered, this Amendment No. 1 as of the date first written above.
eGLOBE, INC.
By: /s/ eGlobe, Inc.
-------------------------------
Name:
-----------------------------
Title:
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TRANS GLOBAL COMMUNICATIONS, INC.
By: /s/ Trans Global
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Name:
-----------------------------
Title:
----------------------------
/s/ Arnold S. Gumowitz
----------------------------------
Name: Arnold S. Gumowitz
Address:
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2
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/s/ Gary S. Gumowitz
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Name: Gary S. Gumowitz
Address:
--------------------------
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/s/ Joan Matthews
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Name: Joan Matthews
Address:
--------------------------
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/s/ John W. Hughes
----------------------------------
Name: John W. Hughes
Address:
--------------------------
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/s/ Stephen Levy
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Name: Stephen Levy
Address:
--------------------------
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/s/ Grayson Family Trust
----------------------------------
Name: Grayson Family Trust
Address:
--------------------------
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/s/ Milton Gumowitz
----------------------------------
Name: Milton Gumowitz
Address:
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/s/ Michael Gumowitz
----------------------------------
Name: Michael Gumowitz
Address:
--------------------------
----------------------------------
3
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/s/ Jonathan Gumowitz
----------------------------------
Name: Jonathan Gumowitz
Address:
--------------------------
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/s/ Jonathan Lynn
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Name: Jonathan Lynn
Address:
--------------------------
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/s/ Rich Patton
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Name: Rich Patton
Address:
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4
Exhibit 99.1
eGLOBE STOCKHOLDERS APPROVE TRANS GLOBAL MERGER
WASHINGTON, March 23 /PRNewswire/ -- eGlobe, Inc. (Nasdaq: EGLO - news) today
announced that its shareholders have approved the merger with Trans Global
Communications, Inc. At the special meeting of stockholders held today,
shareholders overwhelmingly approved all of the following matters that were set
forth in the Company's proxy statement:
-- the merger of Trans Global Communications, Inc.;
-- an increase in the number of authorized shares of eGlobe common stock
from 100 million to 200 million;
-- an increase in the number of authorized shares under eGlobe's Employee
Stock Option and Appreciation Rights Plan from 3,250,000 to 7 million;
-- authorization for the preferred stock issued in the recent acquisition
of Coast International to become convertible into up to 3,220,000
shares of eGlobe common stock.
Christopher Vizas', Chairman and CEO of eGlobe, presentation at the meeting can
be found at eGlobe's web site, www.eGlobe.com.
ABOUT eGLOBE
eGlobe is a leading global enabler of enhanced Internet services for the world's
telephone companies and Internet Service Providers. eGlobe's services include:
Voice over IP, telephone-based portal and unified messaging services. Through
its World Direct network, eGlobe originates traffic in more than 90 territories
and countries and terminates anywhere in the world. eGlobe provides its services
principally to large national telecommunications companies, to ISP's and
portals, and to financial institutions. Certain statements in this news release
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties
and other factors that may cause the Company's actual results, performance or
achievements to be materially different from the results, performance or
achievements expressed or implied by the forward looking statement. Factors that
impact such forward-looking statements include, among others the ability of the
Company to attract additional business, the ability of the Company to
successfully integrate acquisitions and mergers, complete software development
and offer new products, changes in expectations regarding restructurings,
including tax liabilities and reductions in cost, possible changes in
collections of accounts receivable, risks of competition, price and margin
trends, changes in worldwide general economic conditions, changes in interest
rates, currency rates and worldwide competition.
SOURCE: eGlobe, Inc.
