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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
UStel, Inc.
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(Exact name of registrant as specified in its charter)
Minnesota 95-4362330
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
2775 South Rainbow Boulevard, #102, Las Vegas, Nevada 90212
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act: None
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. [ ]
If this Form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
Redeemable Warrants
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(Title of class)
Units, consisting of two shares of Common Stock, par value $0.01, of UStel, Inc.
and one Redeemable Warrant to purchase a share of Common Stock of UStel, Inc.
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(Title of class)
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USTEL, INC>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Incorporated by reference to the sections entitled "Description of the
Securities" in that portion of the Prospectus contained in Registrant's
Registration Statement on Form SB-2 filed with the Securities and Commission on
September 27, 1996, as amended on October 25, 1996, January 27, 1997 and
February 10, 1997 ("Registration No. 333-12981) (the "Registration Statement"),
at pages [51, 52, 53 and 54.] A copy of pages [51-54] of the Prospectus is
attached hereto as Exhibit __.
ITEM 2. EXHIBITS.
REGISTRATION
STATEMENT
EXHIBIT EXHIBIT
NUMBER NUMBER DESCRIPTION
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I.1 3.1 The Registrant's Articles of Incorporation.(1)
I.2 3.1-a Statement of Designations, Preferences and Rights of
Series A Convertible Preferred Stock.(2)
I.3 3.2 The Registrant's Bylaws.(1)
I.4 4.1 Form of Common Stock Certificate.(1)
I.5 4.1-a Form of Warrant Agreement between the Company and
American Transfer & Trust, Inc.(2)
I.6 4.2 Form of 12% Convertible Subordinated Debenture.(1)
I.7 4.3 Form of Representative's Warrant between the Registrant
and Barber & Bronson Incorporated.(2)
I.8 4.4 Form of Warrant Certificate.(2)
I.9 4.5 Form of Unit Certificate.(2)
I.10 Pages 51-54 of the Prospectus.
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(1) Incorporated by reference to the Registrant's registration
statement on Form SB-2 and Amendments No. 1 and No. 2 thereto
(Registration No. 33-75210-LA) declared effective June 21, 1994, and to
Exhibit 3.1(b) of Amendment No. 3 to registration statement on Form SB-2
(Registration No. 333-12981) filed December 10, 1997.
(2) Incorporated by reference to the Registration Statement.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
USTEL, INC.
Date: February 10, 1997 By: /s/ Robert L.B. Diener
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Robert L.B. Diener
Chairman and Chief Executive Officer
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thereof are at least as favorable to the Company as those that could be obtained
for unaffiliated third parties and are approved by a majority of disinterested
directors.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, par value $0.01 per share (the "Common Stock"), and 5,000,000
shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock").
COMMON STOCK
At December 31, 1996, there were 2,126,851 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each share
on all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, the holders of a majority of the stock entitled to
vote in any election of directors may elect all of the directors standing for
election. The Company intends to reincorporate in California, which provides for
cumulative voting. Subject to preferences that may be applicable to any then
outstanding Preferred Stock, the holders of Common Stock will be entitled to
receive such dividends, if any, as may be declared by the Board of Directors
from time to time out of legally available funds. Upon liquidation, dissolution
or winding up of the Company, the holders of Common Stock will be entitled to
share ratably in all assets of the Company that are legally available for
distribution, after payment of all debts and other liabilities and subject to
the prior rights of holders of any Preferred Stock then outstanding. The holders
of Common Stock have no preemptive, subscription, redemption or conversion
rights. The rights, preferences and privileges of holders of Common Stock will
be subject to the rights of the holders of shares of any series of Preferred
Stock that the Company may issue in the future.
PREFERRED STOCK
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock. The Board of Directors is authorized, subject to any limitations
prescribed by the laws of the State of Minnesota, but without further action by
the Company's stockholders, to provide for the issuance of Preferred Stock in
one or more series, to establish from time to time the number of shares to be
included in each such series, to fix the designations, powers, preferences and
rights of the shares of each such series and any qualifications, limitations or
restrictions thereof, and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then outstanding)
without any further vote or action by the stockholders.
The Board of Directors has designated 550,000 shares of Preferred Stock as
Series A Convertible Preferred Stock ("Series A Preferred") all of which were
outstanding as of December 31, 1996 and 95,000 shares of Series B Preferred, all
of which were converted into Common Stock in September 1996. Each share of
Series A Preferred entitles the holder to dividends at the same rate paid to
holders of Common Stock and as a result of an amendment to the terms of the
Series A Preferred made on January 24, 1997, is convertible at any time into
1.3636 shares of Common Stock, subject to adjustment for stock splits, stock
dividends and other similar events. Holders of Series A Preferred are entitled
to vote on all matters submitted or required to be submitted to stockholders on
an as if converted basis and, except as required by law, vote together with the
Common Stock and not as a separate class. Upon the liquidation, dissolution or
winding up of the Company (including for such purposes certain mergers or
consolidations and the sale of all of the assets of the Company) holders of each
outstanding share of Series A Preferred shall be entitled to receive, prior to
holders of Common Stock, an amount equal to approximately $5.45 per share.
The unissued Preferred Stock may be issued in one or more series, the terms
of which may be determined at the time of issuance by the Board of Directors,
without further action by the Company's stockholders, and may include voting
rights, preferences as to dividends and liquidation, conversion and redemption
rights and sinking fund provisions as determined by the Board of Directors.
Although the Company has no present plans to issue any new shares of Preferred
Stock, the issuance of Preferred Stock in the future could adversely affect the
rights of the holders of Common Stock and, therefore, reduce the value of the
Common Stock. In particular, specific rights granted to future holders of
Preferred Stock could be used to restrict the Company's
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ability to merge with or sell its assets to a third party, thereby preserving
control of the Company by present owners.
The Board of Directors may authorize and issue additional Preferred Stock
with voting or conversion rights that could adversely affect the voting power or
other rights of the holders of Common Stock. In addition, the issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company. The Company has no current plan to issue any
additional shares of Preferred Stock.
CONVERTIBLE SUBORDINATED DEBENTURES
The Company also has outstanding Convertible Subordinated Debentures (the
"Debentures") in the aggregate principal amount of $500,000, which bear interest
at the rate of 12% per annum, payable quarterly on the first day of January,
April, July and September, commencing April 1, 1994, with all principal and
accrued interest due and payable on or before December 31, 1998. The principal
amount of the Debentures is convertible on any payment date into shares of the
Company's Common Stock at a price of $7.00 per share. If the aggregate principal
amount of the Debentures were converted, an aggregate of 71,429 shares of Common
Stock would be issued.
UNITS
Each Unit offered by this Prospectus consists of two shares of Common Stock
and one Warrant, each Warrant to purchase one share of Common Stock for $4.00
per share. The Common Stock and Warrants will be separately transferable as of
the date of this Prospectus. As soon as is practical, the Transfer and Warrant
Agent (as defined) will cause to be delivered or mailed to the registered
holders of the Units the certificates representing the Common Stock and the
Warrants. Any transfer of a Unit will constitute a transfer of the holder's
beneficial interest in the related Common Stock and Warrants.
WARRANTS
The following is a brief summary of certain provisions of the Warrants, but
such summary does not purport to be complete and is qualified in all respects by
reference to the actual text of the Warrant Agreement between the Company and
American Securities Transfer & Trust, Inc. (the "Transfer and Warrant Agent"). A
copy of the Warrant Agreement will be filed as an exhibit to the Registration
Statement of which the Prospectus is a part. See "Additional Information."
Exercise Price and Terms. Each Warrant entitles the holder thereof to
purchase at any time over a five year period from the date of this Prospectus,
one share of Common Stock at a price of $4.00 per share, subject to adjustment
in accordance with the anti-dilution and other provisions referred to below. The
holder of any Warrant may exercise such Warrant by surrendering the certificate
representing the Warrant to the Transfer and Warrant Agent, with the
subscription form on the reverse side of such certificate properly completed and
executed, together with payment of the exercise price. The Warrants may be
exercised until , 2002 in whole or in part at the applicable
exercise price until expiration of the Warrants. No fractional shares will be
issued upon the exercise of the Warrants.
The exercise price of the Warrants bears no relation to any objective
criteria of value and should in no event be regarded as an indication of any
future market price of the securities offered hereby.
Adjustments. The exercise price and the number of shares of Common Stock
purchasable upon the exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, including stock dividends, stock splits,
combinations or reclassifications of the Common Stock and, excluding all
presently outstanding options, warrants, employee stock options, the
Representative's Warrants and the Warrants included in the Units, upon sale of
the Common Stock below the then fair market value. Additionally, an adjustment
would be made in the case of a reclassification or exchange of Common Stock,
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the surviving
corporation) or sale of all or substantially all of the assets of the Company in
order to enable warrantholders to acquire the kind and number of shares of stock
or other securities or property
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receivable in such event by a holder of the number of shares of Common Stock
that might otherwise have been purchased upon the exercise of the Warrant. No
adjustments will be made until the cumulative adjustments in the exercise price
per share amount to $0.05 or more. No adjustment to the number of shares and
exercise price of the shares subject to the Warrants will be made for dividends
(other than stock dividends), if any, paid on the Common Stock.
Redemption Provisions. The Warrants are subject to redemption at $0.01 per
Warrant on 30 days' written notice to the warrantholders if the closing bid
price of the Common Stock as reported on the Nasdaq SmallCap Market (or any
other market where the Common Stock is then traded) averages or exceeds $6.00
over a period of 20 consecutive trading days. In the event the Company exercises
the right to redeem the Warrants, such Warrant will be exercisable until the
close of business on the business day immediately preceding the date for
redemption fixed in such notice. If any Warrant called for redemption is not
exercised by such time, it will cease to be exercisable and the holder will be
entitled only to the redemption price.
Transfer, Exchange and Exercise. The Warrants are in registered form and
may be presented to the Transfer and Warrant Agent for transfer, exchange or
exercise at any time prior to their expiration date five years from the date of
this Prospectus, at which time the Warrants become wholly void and of no value.
If a market for the Warrants develops, the holder may sell the Warrants instead
of exercising them. There can be no assurance, however, that a market for the
Warrants will develop or continue.
Warrantholder Not a Shareholder. The Warrants do not confer upon holders
any voting, dividend or other rights as shareholders of the Company.
Modification of Warrant. The Company and the Transfer and Warrant Agent may
make such modifications to the Warrants that they deem necessary and desirable
that do not materially adversely affect the interests of the Warrantholders. No
other modifications may be made to the Warrants without the consent of the
majority of the Warrantholders. Modification of the number of securities
purchasable upon the exercise of any Warrant, the exercise price and the
expiration date with respect to any Warrant requires the consent of the holder
of such Warrant.
Certain Federal Income Tax Considerations. The basis of the Warrant and the
Common Stock purchased by the holder as part of a Unit or upon exercise of a
Warrant will be determined by allocating the cost of each Unit between the
Common Stock and the Warrant in accordance with the relative fair market values
of those elements at the time of acquisition.
No gain or loss will be recognized by a holder upon the exercise of a
Warrant. The sale of a Warrant by a holder or the redemption of a Warrant by a
holder will result in the recognition of gain or loss in an amount equal to the
difference between the amount realized by the holder and the Warrant's adjusted
basis in the hands of the holder. Provided that the holder is not a dealer in
the Warrants and that the Common Stock would have been a capital asset in the
hands of the holder had the Warrant been exercised, gain or loss from the sale
or redemption of a Warrant will be long-term or short-term capital gain or loss
to the holder. Loss on the expiration of a Warrant, equal to the Warrant's
adjusted basis in the hands of the holder, will be a long-term or short-term
capital loss, depending on whether the Warrant had been held for more than one
year.
THE ABOVE DISCUSSION DOES NOT ADDRESS ALL OF THE TAX CONSIDERATIONS THAT MAY BE
RELEVANT TO A PARTICULAR PURCHASER. ACCORDINGLY, ALL PROSPECTIVE PURCHASERS ARE
ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
UNITS, THE WARRANTS AND THE COMMON STOCK.
REGISTRATION RIGHTS
The Company has granted certain registration rights to the holder of the
Series A Preferred, Integrated Financial Consultants, Inc., a company
wholly-owned by Andrew J. Grey, a director of the Company, the investors in the
December 29, 1995 $160,000 private placement, Noam Schwartz, David Schwartz, the
RGB 1993 Family Trust (the "RGB Trust"), the TAD 1993 Family Trust (the "TAD
Trust"), the Trust, (the trustee of which is Royce Diener, a director of the
Company, which now owns the RGB Trust's
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and TAD Trust's shares along with the registration rights), and to the holders
of warrants issued in connection with the October, 1995 $1,500,000 line of
credit, the holder of the Representative's Warrants, Jeflor, Inc., Abe Sher and
Norcross Securities, Inc. for the shares issuable pursuant to the exercise of
their warrants or options, as the case may be, and to certain other parties. The
total number of shares as to which the Company has granted registration rights
is 2,443,000. The Company intends to register with the Commission under Form S-4
the 1,076,923 shares to be issued in the Merger. However, officers and directors
and principal stockholders of the Company who receive shares in the Merger will
be subject to the two-year lock up agreement with the Representative.
CONTROL SHARE ACQUISITION
The Minnesota Control Share Act ("CSAA") provides that, generally, that a
person who becomes the beneficial owner of 20% or more of the voting power of
the shares of an "issuing public corporation" may exercise only an aggregate of
20% of the voting power of the corporation's shares in the absence of special
stockholder approval. That approval can be obtained only by resolution adopted
by (i) the affirmative vote of the holders of a majority of the voting power of
all shares entitled to vote, including all shares held by the acquiring person,
and (ii) the affirmative vote of the holders of a majority of the voting power
of all shares entitled to vote, excluding all "interested shares" (i.e., shares
held by the acquiring person, any officer of the issuing public corporation or
any director who is also an employee of the corporation).
The CSAA applies to a share acquisition only if (i) the person acquiring
the shares is an "acquiring person," (ii) the acquisition constitutes a "control
share acquisition," and (iii) the shares acquired are shares of an "issuing
public corporation." An "acquiring person" includes not only a single natural
person or entity but also two or more persons or entities who act as a
partnership, limited partnership, syndicate, or other group pursuant to any
written or oral agreement, arrangement, relationship, understanding, or
otherwise to acquire, own or vote an issuing public corporation's shares. A
"control share acquisition" generally occurs upon an acquisition of beneficial
ownership of shares which, together with all other shares beneficially owned by
the acquiring person, would increase the acquiring person's range of voting
power from less than 20% to 20% or more. An "issuing public corporation" is a
corporation incorporated in Minnesota which has at least 50 stockholders of
record.
Under the CSAA the acquisition by the Trust of 612,750 shares on August 14,
1996 may constitute a control share acquisition. Accordingly that number of
shares acquired by the Trust which exceeds 20% of the voting power of the
Company may be subject to the voting disqualification imposed by the CSAA. Thus
only 404,101 shares of Common Stock owned by the Trust, or 19% of the voting
power would be entitled to full voting rights under the CSAA. The Company
intends to reincorporate in California by merging with a wholly-owned California
corporation. Only stockholders of record before the effective date of this
Offering are expected to be able to vote on the Merger or on the reincorporation
in California. Upon the reincorporation in California, the shares held by the
Trust will have full voting power. California does not have provisions similar
to those in the CSAA. The Trust has agreed to vote 404,101 shares of the Common
Stock (amounting to 19% of the outstanding Common Stock entitled to vote) in
favor of the reincorporation.
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