As filed with the Securities and Exchange Commission on September 30, 1998
Registration No. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
INTERNATIONAL FIBERCOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARIZONA 8-0271282
- ------------------------------- ----------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3410 EAST UNIVERSITY, SUITE 180
PHOENIX, ARIZONA 85034
(602) 941-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
MR. JOSEPH P. KEALY
INTERNATIONAL FIBERCOM, INC.
3410 EAST UNIVERSITY, SUITE 180
PHOENIX, ARIZONA 85034
(602) 941-1900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE OF SERVICE)
---------------
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
CHRISTIAN J. HOFFMANN, III
STREICH LANG, P.A.
2 NORTH CENTRAL AVENUE
PHOENIX, ARIZONA 85004-2391
(602) 229-5200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO PUBLIC:
From time to time after the Registration Statement becomes effective as
determined by market conditions and the needs of the Selling Shareholders.
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/
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Security to be Registered Registered(1) offering Price Aggregate Offering Registration Fee
Per Unit (2) Price (2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 661,556 $7.406 $4,899,484 $1,485
=================================================================================================
</TABLE>
(1) In the event of a stock split stock dividend, or similar transaction
involving the Company's Common Stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act.
(2) Estimated for purposes of calculating the amount of registration fee only.
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, AS AMENDED (THE "SECURITIES ACT") OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
INTERNATIONAL FIBERCOM, INC.
661,556 SHARES OF COMMON STOCK, NO PAR VALUE
---------------
The securities offered hereby (the "Offered Securities") are 661,556
shares of common stock, no par value ("Common Stock"), of International
FiberCom, Inc., an Arizona corporation (the "Company"). Of the 661,556 shares of
Common Stock, (i) 248,840 shares were issued as dividends on the Company's 8%
Convertible Preferred Stock ("Series A Preferred"), Series B Convertible
Preferred Stock ("Series B Preferred") and Series C Convertible Preferred Stock
("Series C Preferred") (all of such shares shall be referred to as the "Dividend
Shares"), (ii) 15,123 were issued as interest on the Company's Series A
Convertible Subordinated Debentures ("Interest Shares"); (iii) 46,093 shares
were issued in partial payment for the Company's acquisition of Riley
Underground Communications, Inc. and General Communications Services, Inc.
("Acquisition Shares"); (iv) 300,000 additional shares issued under the Stock
Purchase Agreement in connection with the Company's December 1997 private
placement of Common Stock ("Private Placement Shares"); (v) 44,000 shares are
issuable upon exercisable of Common Stock Purchase Warrants issued in connection
with the Company's acquisition of Concepts in Communications, Inc. ("Warrant
Shares"), and; (vi)7,500 shares reserved for future issuance as dividends on the
Series C Preferred. See "Risk Factors" and "Plan of Distribution."
The Common Stock is listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") under the Symbol "IFCI" and on the
Philadelphia Stock Exchange ("PHLX") under the symbol "IFC." On September 28,
1998, the average of the closing bid and asked quotations per share of the
Common Stock, as provided by market makers in the Common Stock who report
through NASDAQ was $7.406 per share.
SEE "RISK FACTORS" ON PAGE FOR A DISCUSSION OF CERTAIN RISKS
RELATED TO AN INVESTMENT IN THE COMMON STOCK.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September _____, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C., and at the Commission's regional offices
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained at prescribed rates from the Public Reference section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549 upon payment of the prescribed fees. The Commission also maintains a Web
site that contains reports proxy and information statements and other materials
that are filed through the Commission's Electronic Data Gathering, Analysis, and
Retrieval system. This Web site can be accessed at http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement, and reference is made to the
Registration Statement and related exhibits for further information with respect
to the Company and the securities offered hereby. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission are incorporated by reference into this Prospectus: (i) the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997; (ii)
the Company's Quarterly Report on Form 10-QSB for the quarterly periods ended
March 31, 1998 and June 30, 1998, and; (iii) the description of the Common Stock
contained in the Company's Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 on Form
8-A dated August 9, 1994, as amended from time to time.
All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that is also deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including a beneficial owner, to whom a Prospectus is delivered upon written or
oral request of each person, a copy of any document incorporated herein by
reference, (not including exhibits to the document that have been incorporated
herein by reference unless such exhibits are specifically incorporated by
reference in the document which this Prospectus incorporates). Requests should
be directed to Secretary, International FiberCom, Inc., 3410 East University,
Suite 180, Phoenix, Arizona 85034; telephone (602) 941-1900.
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<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN AND
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. THE SHARES OFFERED HEREBY ARE
SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. EACH PROSPECTIVE INVESTOR SHOULD
CAREFULLY REVIEW THE ENTIRE PROSPECTUS, THE FINANCIAL STATEMENTS AND ALL
EXHIBITS AND DOCUMENTS REFERRED TO THEREIN. SEE "RISK FACTORS."
THE COMPANY
The Company offers diversified telecommunications services and products
to the telecommunications, cable television ("CATV") and other industries. The
Company provides a wide range of engineering, consulting and broadband network
systems design, installation of structured cable and fiber-optic networks,
complete telecommunication systems integration services, and sells and
distributes new and used telecommunications equipment to leading
telecommunications companies, Regional Bell Operating Companies ("RBOCS"),
telecommunications hardware resellers and other Fortune 500 companies.
The Company's strategy is to be a one-stop solution for the
telecommunications marketplace, offering a wide range of engineering, consulting
and maintenance services for fiber-optic and broadband networks and systems
integrated with local area network ("LAN") and wide area network ("WAN")
expertise and capabilities. A LAN is a group of personal computers linked
together in a building or campus to share programs, data, E-mail, peripherals
and other resources. A WAN is network that covers a large geographic area, such
as a state or country.
In 1997 the Company began to implement this strategy through strategic
acquisitions of businesses that complemented and enhanced its services or
products. At the beginning of 1997 the Company had one operating subsidiary,
Kleven Communications, Inc. ("Kleven"), a Phoenix-based company specializing in
the design, installation and maintenance of fiber-optic and other cable services
for the telecommunication and CATV industries. During 1997 the Company completed
three strategic acquisitions that resulted in a significant increase in its
revenues and net income. Effective January 1997 the Company acquired Concepts in
Communication, Inc. ("Concepts") for total consideration of $4.8 million,
consisting of $4.6 million in cash and shares of Common Stock valued at
$200,000. Concepts is a Nashville-based company specializing in systems
integration services including design, engineering, installation and maintenance
of structured cable systems, network hardware and software, workstation
peripherals and intercommunications systems, primarily within commercial,
industrial and government facilities. Effective October 1997 the Company
acquired the assets and business of Southern Communications Products, Inc.
("Southern") for total consideration of $21.4 million, consisting of $12 million
in cash, 2,231,661 shares of Common Stock valued at $6.2 million and a $3.2
million promissory note. Southern purchases, sells and deals in used
telecommunications equipment that is utilized in the digital access, switching
and transport systems of telecommunication service providers on a nationwide
basis. Also effective October 1997, the Company acquired Compass Communications,
Inc. ("Compass") for total consideration of approximately $2.0 million
consisting of 470,588 shares of Common Stock. Compass is an Atlanta-based
company specializing in video, voice and data network development using state of
the art, fiber-optic distribution platforms. Effective September 1, 1998, the
Company acquired United Tech, Inc. ("United Tech") for total consideration
consisting of 1,502,000 restricted shares of Common Stock. United Tech is a
Florida-based company specializing in the design, construction and installation
of the systems used in Central Offices of the RBOC's, independent telephone
companies and competitive local exchange carriers ("CLEC's"). Also, effective
September 1, 1998, the Company acquired Diversitec, Inc. ("Diversitec") for
total consisting of 1,752,000 restricted shares of Common Stock. Diversitec is a
Virginia-based company which purchases, sells and deals in used
telecommunications equipment. To date in 1998, the Company has operated in
Arizona, California, Tennessee, Florida, Georgia and Virginia.
The Company's clients and customers include, but are not limited to,
Cox Communications, BellSouth Telecommunications, AT&T Network Systems,
Ameritech, Lucent Technologies, US West, Time Warner, Motorola,
MediaOne, Australia's Optus Vision, and the City of Phoenix.
-3-
<PAGE>
The Company maintains its principal executive offices at 3410 East
University, Suite 180, Phoenix, Arizona 85034 and its telephone number is (602)
941-1900. Unless the context indicates otherwise, all references to the Company
or "IFC" refer to International FiberCom, Inc. and its subsidiaries.
-4-
<PAGE>
SUMMARY OF THE OFFERING
SECURITIES OFFERED 661,556 shares of Common Stock
CAPITAL STOCK OUTSTANDING
Common Stock 23,025,727 shares, no par value outstanding,
as of September 28, 1998 (1)
Series C Convertible
Preferred Stock 400 shares outstanding
COMMON STOCK MARKET SYMBOLS Nasdaq SmallCap - "IFCI" Philadelphia Stock
Exchange - "IFC"
ESTIMATED NET PROCEEDS The net proceeds of the sale of the Offered
Securities will be received directly by each
Selling Shareholder. No proceeds will be
received by the Company from the sale of the
Common Stock offered hereby. See "Use of
Proceeds."
RISK FACTORS This offering involves a high degree of risk.
See "Risk Factors and Investment
Considerations."
- ----------
(1) Does not include (i) up to 123,684 shares issuable upon conversion of the
remaining Series C Preferred; (ii) 480,000 shares issuable upon exercise of
currently outstanding Common Stock purchase warrants issued in connection
with the Company's private placement of Series B Preferred; (iii) 267,000
shares issuable upon exercise of Common Stock purchase warrants issued in
connection with the Company's private placement of Common Stock, 5.5%
Convertible Subordinated Debentures ("5.5% Debentures") and Series C
Preferred; and (iv) 1,350,000 shares issuable upon exercise of stock
options not covered by the registration statement of which this prospectus
is a part. All of such shares, except 835,000 shares issuable upon exercise
of stock options granted to officers and directors of the Company, are
included either in the Company's Registration Statement on Form SB-2 which
was declared effective on February 12, 1998 or on the Registration
Statement on Form S-8 which was filed on December 8, 1997.
-5-
<PAGE>
RISK FACTORS
INVESTMENT IN THE COMPANY INVOLVES A NUMBER OF RISKS. IN ADDITION TO THE
RISKS AND INVESTMENT CONSIDERATIONS DISCUSSED ELSEWHERE IN THIS MEMORANDUM, THE
FOLLOWING FACTORS SHOULD BE CAREFULLY CONSIDERED BY ANYONE PURCHASING THE
SECURITIES OFFERED HEREBY.
RISKS OF THE COMPANY
ACQUISITION STRATEGY. A key element of the Company's growth to date and
its strategy for the future is expansion through the acquisition of companies
that have complementary businesses, that can utilize or enhance the Company's
existing capabilities and resources or that expand its existing range of
services or products in the telecommunications or CATV industries. As a result,
the Company continually evaluates potential acquisition opportunities, some of
which may be material in size or scope. Acquisitions involve a number of special
risks, including the time associated with identifying and evaluating future
acquisitions, the diversion of management's attention to the integration of the
operations and personnel of the acquired companies, the incorporation of
acquired products or services into the Company's products and services, possible
adverse short-term effects on the Company's operating results, the realization
of acquired intangible assets and the loss of key employees of the acquired
companies. The Company may issue equity securities and other forms of
consideration in connection with future acquisitions, which could cause dilution
to investors purchasing Common Stock of the Company. The Company completed three
major acquisitions in 1997 and has completed the acquisition of United Tech and
Diversitec plus three smaller acquisitions to date in 1998. There can be no
assurance that the Company will be able to identify additional suitable
acquisition candidates, that it will be able to consummate or finance any such
acquisitions, or that it will be able to integrate any such acquisitions
successfully into its operations.
MANAGEMENT OF GROWTH. The Company is currently experiencing a period of
rapid growth resulting from recent acquisitions and the expansion of its
operations, both of which have placed significant demands on the Company's
resources. The Company's success in managing its growth will require it to
continue to improve its operational, financial and management information
systems, and to motivate and effectively manage its employees. Further, prior to
its 1997 acquisitions, the Company had no prior experience in the systems
integration, engineering or telecommunication equipment fields and is relying
primarily upon the former management of Concepts, Compass, Southern United Tech
and Diversitec to provide a base of knowledge in these fields until the
Company's management gains sufficient experience. No assurance can be given that
the Company will successfully assimilate its new acquisitions into its existing
business operations. Also, no assurance can be given that the Company will be
successful in expanding the businesses of its new acquisitions, that new
customers can be attracted as anticipated, or that there will be continued, if
any, demand for the services of its new acquisitions' technology, products or
expertise in new and competitive markets. If the Company's management is unable
to manage growth effectively, to maintain the quality of its products and
services, and to retain key personnel and its business, financial condition and
results of operations could be materially adversely affected.
DEPENDENCE ON THE TELECOMMUNICATIONS AND CATV INDUSTRIES. Demand for a
substantial portion of the Company's services, and therefore future increases in
its net sales and net income, depends primarily on capital spending by CATV
operators, telecommunications and other companies for constructing, rebuilding,
maintaining or upgrading their telecommunications systems. However, the Company
expects its future revenue increases to come primarily from upgrading,
retrofitting, rebuilding and maintaining existing cable systems with fiber-optic
and other cables, rather than from constructing completely new systems and from
the sale of telecommunications equipment. The amount of capital spending by CATV
operators and telecommunications companies and, therefore, the sales and
profitability of the Company, are affected by a variety of factors, including
general economic conditions, access by cable operators to financing, government
regulation of cable operators, demand for cable services and technological
developments in the broadband communications industry. There can be no
assurances that such capital spending will occur or occur at the level announced
by the various telecommunications and CATV companies. Such companies may depend
upon their ability to obtain rate increases or otherwise experience favorable
environments for their CATV and telecommunications rates in order to raise funds
for capital spending. Federal regulations rolling back rates for basic tier CATV
services may have a negative impact on the capital spending plans of the CATV
companies and thus have a material adverse affect on the Company's business.
-6-
<PAGE>
NEED FOR ADDITIONAL FINANCING. The expansion of the Company's business and
continued implementation of its acquisition strategy may require the Company to
seek additional financing that may include bank financing or the issuance of
debt or equity securities. No assurance can be given that the Company will be
able to obtain additional capital or, if available, that such capital will be
available at terms acceptable to the Company or that such additional financing,
if available, would not result in substantial dilution of the equity interest of
existing shareholders. The ability of the Company to obtain bank financing or to
raise additional debt or equity capital will depend upon its financial
condition, results of operations, covenants and limitations of any outstanding
debt obligations at that time, and general economic conditions.
FEDERAL REGULATION. CATV operators are subject to federal regulation. In
1992, Congress passed an act that repealed the 1984 deregulation of cable
television and subjected cable systems to rate regulation and other FCC-enforced
obligations. In 1996 Congress passed the 1996 Telecommunications Act which
repeals many of the major provisions of the 1992 Act. On rate regulation,
current FCC rules cable service rates will be repealed in three years, except
for the "basic tier" of cable programming. Price caps are repealed for "small"
cable companies (less than $25 million in annual revenues) immediately or for
any cable system once it faces "effective competition" from a local telephone
company providing "comparable" video programming services. It is difficult to
predict the impact, if any, this legislation might have on the
telecommunications industry in general and the Company's business in particular.
IMPACT OF STATE REGULATION. The Company's ability to pursue its business
activities is regulated, directly or indirectly, by various agencies and
departments of state governments. Commencement of services by the Company and
its clients frequently requires licenses from public utilities commissions.
There is no assurance that the Company as a whole or its customers, will be
successful in its or their efforts to obtain necessary licenses or regulatory
approvals. The inability of the Company or any of its customers to secure any
necessary licenses or approvals could have a material adverse effect on its
business. In addition to specific regulations, the Company is subject to all
federal, state and local rules and regulations imposed upon businesses
generally. The cost of compliance with regulations is an additional cost of
doing business for the Company.
TECHNOLOGICAL DEVELOPMENTS AND RISKS OF TECHNOLOGICAL OBSOLESCENCE. The
Company's services and products sold through its Compass, Southern, United Tech
and Diversitec subsidiaries are subject to significant technological change and
innovation. Technological developments are occurring rapidly in the
communications and systems integration industries and, while the effects of such
developments are uncertain, they may have a material adverse effect on the
demand for the Company's services. For example, in the CATV industry,
technologies are being developed that would bypass existing cable systems and
permit the transmission of signals directly into households. The Company's
success will generally depend on its ability to penetrate and retain markets for
its existing services and to retain its expertise in installing and repairing
telecommunications, CATV cable and integrated systems on a cost-effective and
timely basis. There can be no assurance that the Company will be able to remain
competitive or that its products and services will not be subject to
technological obsolescence.
COMPETITION. All aspects of the Company's business are highly competitive.
The Company competes with national, regional and local companies. Many of the
Company's competitors or potential competitors are substantially larger and have
greater resources than the Company. In addition, because of the convergence of
the CATV, telecommunications and computer industries and rapid technological
development, new competitors may seek to enter the market.
DEPENDENCE UPON MAJOR CUSTOMERS AND LARGE CONTRACTS. The CATV industry is
highly concentrated with most of U.S. domestic subscribers being served by
approximately 25 major multi-system operators ("MSO"). The Company has customers
which have accounted for more than 10% of the Company's revenues on a historical
basis. Any decision by these major customers to cease or reduce their use of the
Company's services may have a material adverse effect on its business. A number
of the Company's contracts with its customers are substantial in size. The
failure to timely or adequately replace a contract upon its completion or
termination with one or more new contracts or customers may materially adversely
affect the business and operations of the Company.
RISKS OF POSSIBLE COST ESCALATION UNDER FIXED PRICE CONTRACTS. A
substantial portion of the Company's revenues have been generated principally
under firm fixed-price contracts. Fixed-price contracts carry certain inherent
risks, including underestimating costs, problems with new technologies and
economic and other changes that may
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<PAGE>
occur over the contract period. The Company recognizes revenues using the
percentage-of-completion method whereby revenue is recognized based on actual
costs incurred in relation to total estimated costs to complete the contract.
This method may result in irregular and uneven quarterly results. Unforeseen
events and circumstances can alter the Company's estimate of the costs and
potential profit associated with a particular contract. To the extent that
original cost estimates are modified, estimated costs to complete increase,
delivery schedules are delayed, or progress under a contract is otherwise
impeded, cash flow, revenue recognition and profitability from a particular
contract may be adversely affected.
INSURANCE AND POTENTIAL EXCESS LIABILITY. The Company maintains liability
insurance to protect it against damages to persons or property which may result
from its work. If the Company were to incur liability in excess of its policy
coverage, its financial condition could be adversely affected.
ARIZONA ANTI-TAKEOVER STATUTE. The Arizona Corporate Takeover Act
("Takeover Act") was adopted in 1987. The policy of the Takeover Act is to
prevent unfriendly corporate takeover attempts by third parties. The Takeover
Act prohibits certain types of transactions, including "green mail," limits
voting rights of certain individuals acquiring shares in the market and
regulates certain business combinations respecting corporate transactions
proposed by insiders and as part of a takeover plan. The Company is subject to
the foregoing provisions. These provisions enhance the possibility that a
potential bidder for control of the Company will be required to act through
arm's-length negotiation with respect to a major transaction, such as a merger,
consolidation or purchase of substantially all of the assets of the Company.
Such provisions may also have the effect of discouraging tender offers or other
stock acquisitions, giving management of the Company power to reject certain
transactions which might be desired by the owners of the majority of the
Company's voting securities. These provisions could also be deemed to benefit
incumbent management to the extent that they deter such offers by persons who
would wish to make changes in management or exercise control over management.
The Board of Directors of the Company does not presently know any third party
that plans to make an offer to acquire the Company through a tender offer,
merger or purchase of all or substantially all of the assets of the Company.
DEPENDENCE UPON SUPPLIERS. The Company does not have written agreements
with its suppliers. It is possible that the Company may encounter shortages in
parts, components, or other elements vital to its operations in the future. In
addition, there is no guarantee that the Company would be able to locate other
satisfactory suppliers, or even if other suppliers could be located, that the
Company would be able to establish commercial relationships with any such
suppliers. If the Company is unable to establish commercial relationships with
other suppliers, it may be required to suspend or curtail some of its services.
Suspension or curtailment of services could have a material adverse effect on
the Company.
DEPENDENCE UPON KEY PERSONNEL. The Company is dependent on the services of
Joseph P. Kealy and Terry W. Beiriger, its principal executive officers. The
Company has entered into a five-year employment agreement with each of these
individuals, effective as of December 1995. When the Company acquired Concepts,
Compass; Southern, United Tech and Diversitec, it caused each of such
subsidiaries to enter into employment agreements with numerous "key" employees
and consulting agreements with certain executives of these companies. The
Company must compete with much larger companies with significantly greater
resources to attract and retain personnel. There can be no assurance that the
Company will be successful in this regard or, if successful, that the services
of such personnel can be secured on terms deemed favorable to the Company. The
loss of the services of any of the individuals mentioned above to the Company or
the inability of the Company to attract other qualified employees could
materially and adversely affect their respective businesses and operations.
ECONOMIC AND GENERAL RISKS OF THE BUSINESS. The success of the Company
will depend upon factors which may be beyond the control of the Company and
cannot clearly be predicted at this time. Such factors include general economic
conditions, both nationally and internationally, changes in tax laws,
fluctuating operating expenses including energy costs, changes in governmental
regulations, including regulations imposed under federal, state or local
environmental laws, labor laws, and trade laws and other trade barriers.
-8-
<PAGE>
RISKS RELATING TO OFFERING
POSSIBLE DEPRESSIVE EFFECT ON MARKET PRICE OF SECURITIES ELIGIBLE FOR
FUTURE SALE. The officers and directors of the Company own an aggregate of
2,284,599 shares of Common Stock, including exercisable stock options. All, but
835,000 of such securities are eligible for sale either under the Registration
Statement of which this prospectus is a part or under the Company's Registration
Statement on Form S-8 which was filed on December 9, 1998. Sales of substantial
amounts of Common Stock by shareholders of the Company, or even the potential
for such sales, could have a depressive effect on the market price of shares of
Common Stock and could impair the Company's ability to raise capital through the
sale of its equity securities.
POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the Company's
Common Stock increased significantly during 1997 and the first half of 1998. The
period was marked by generally favorable industry conditions, acquisitions of
new businesses and substantially improving operating results by the Company,
including revenue and net income from the recently acquired businesses. The
trading price of the Company's Common Stock in the future could be subject to
wide fluctuations in response to quarterly variations in operating results of
the Company or its competitors, actual or anticipated announcements of new
acquisitions by the Company or technical innovations or new products by its
competitors, changes in analysts' estimates of the Company's financial
performance, general industry conditions, general economic and financial
conditions in the United States and other events or factors. In addition, the
stock market has experienced extreme price and volume fluctuations which have
particularly affected the market prices for many technology and
telecommunications companies and which have been unrelated to the operating
performance of such companies. These broad market fluctuations and other factors
may adversely affect the market price of the Common Stock.
Because the Company services the telecommunications and CATV and the
market price of its Common Stock may be affected by the market prices of
securities of companies in the telecommunications and CATV industries and
interest rates in general, which have tended to be volatile or cyclical. The
stock market has experienced volatility in market prices of telecommunications
and CATV companies which often has been unrelated to the operating results of
such companies. Announcements of combinations, mergers and changes in capital
plans of the cable and other customers of the Company may have an effect on its
business and the market price of the Common Stock may be significantly affected
by announcements of developments in the telecommunications and CATV fields
generally or the Company's obtaining or failure to obtain certain contracts.
EXERCISE PRICE NOT NECESSARILY RELATED TO ESTABLISHED CRITERIA OF VALUE.
The exercise prices of the warrants issued in connection with the Company's
private placement of Series B and Series C Preferred were set through
negotiations conducted prior to the time of their sale, with reference to the
public trading price of the Common Stock. The price of the Common Stock in such
exercises may not necessarily bear any relationship to the Company's asset
value, net worth, earnings or any other established criteria of value at the
time of exercise.
POSSIBLE ISSUANCE OF OPTIONS MAY DILUTE INTEREST OF STOCKHOLDERS. The
Company has reserved 441,707 shares of Common Stock for issuance under its 1994
Incentive Stock Option and Restricted Stock Purchase Plans, 1,200,000 shares of
Common Stock for issuance under its 1997 Incentive Stock Option and Restricted
Stock Plans and 2,000,000 shares for issuance under its Employee Stock Purchase
Plan. As of December 31, 1997, all of the options available under these
Incentive Stock Option Plans have been granted and 104,036 shares had been
purchased under the Stock Purchase Plan. On April 2, 1998 the Board of Directors
approved an Amendment to 1997 Incentive Stock Option Plan to increase the number
of shares reserved for issuance under the plan from 1,200,000 to 3,200,000. Such
amendment was approved by the shareholders at the Company's 1998 Annual Meeting
of Shareholders held July 10, 1998. Concurrent with such approval, 100,000
options which had been previously granted to officers of the Company under the
1997 Incentive Stock Option Plan became effective. The Company has also issued
300,000 stock options to its directors who are not employees of the Company and
835,000 shares to various officers and directors outside of the Company's Stock
Option and Restricted Stock Plans. To the extent that stock options are granted
and exercised, dilution to the interests of the Company's stockholders may
occur. Moreover, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holders of the
outstanding options can be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain any needed capital on terms more
favorable to the Company than those provided in such outstanding options.
-9-
<PAGE>
WARRANTS MAY ADVERSELY AFFECT MARKET PRICE OF COMMON STOCK. In connection
with its 1997 private placement of Series B Preferred, the Company issued
700,000 common stock purchase warrants ("Series B Warrants"), 480,000 of which
remain outstanding as of September 16, 1998. The Series B Warrants are
exercisable to purchase one share of Common Stock at varying exercise prices
depending on the tranche of the Series B Preferred with which it was issued. All
warrants issued with the first tranche of Series B Preferred have been
exercised. The exercise price for the warrants issued with the second tranche is
$2.50 per share which are exercisable until April 2002 and the exercise price
for warrants issued with the third tranche is $3.00 per share which are
exercisable until May 2002.
For the lives of the Series B Warrants, the holders will have the
opportunity to profit from an increase in the price of the underlying
securities. The existence of such Warrants may adversely affect the market price
of the Common Stock and the terms on which the Company can obtain additional
financing. The holders of such Warrants can be expected to exercise them at a
time when the Company would, in all likelihood, be able to obtain additional
capital by an offering of its unissued Common Stock on terms more favorable to
the Company than those provided by such Warrants.
ISSUANCE OF SECURITIES SENIOR TO COMMON STOCK COULD DILUTE VOTING POWER
AND EQUITY AND COULD CREATE PREFERENCES OVER STOCKHOLDERS. The Company's
Articles of Incorporation authorize the issuance of up to 10,000,000 shares of
preferred stock ("Preferred Stock"). As of September 28, 1998, the Board of
Directors has designated 4,400 shares as Series A Preferred, all of which shares
have been converted and canceled, 4,400 shares as Series B Preferred, all of
which shares have been converted and canceled, and 1,000 shares as Series C
Preferred, of which 400 shares remain outstanding as of September 20, 1998.
Additional shares of Preferred Stock may be issued by the Board of Directors of
the Company from time to time in one or more series, for such consideration and
with such relative rights and preferences as the Board of Directors may
determine. Any shares of Preferred Stock that may be issued in the future could
be given voting and conversion rights that could dilute the voting power and
equity of holders of shares of Common Stock, and have preferences over shares of
Common Stock with respect to dividends and in liquidation.
LACK OF DIVIDENDS. Holders of Preferred Stock and Common Stock are
entitled to receive such dividends as may be declared by the board of directors
of the Company. To date, the Company has paid no cash dividends on its shares of
Common Stock and does not expect to pay cash dividends on either its Preferred
Stock or Common Stock in the near term. The Company intends to retain future
earnings, if any, to provide funds for operations of the business. Investors who
anticipate the need for dividends from investments should refrain from
purchasing the Common Stock offered hereby.
FUNDS LEGALLY AVAILABLE FOR PAYMENT OF DIVIDENDS ON PREFERRED STOCK. The
Company may not pay distributions or dividends if the Company is insolvent or
would be rendered insolvent by such a dividend or distribution. Under the
General Corporation Law of the State of Arizona, "insolvency" means the
inability of a corporation to pay its debts as they become due in the ordinary
course of its business. There can be no assurance that the Company will generate
any or sufficient earning to pay dividends on the Preferred Stock.
USE OF PROCEEDS
All of the proceeds of this offering will be received by the Selling
Shareholders, the Company will not receive any proceeds from the sale of the
Common Stock registered hereunder.
DETERMINATION OF OFFERING PRICE
This Prospectus may be used from time to time by the Selling Shareholders
who offer the Common Stock registered hereby for sale. The offering price of
such Common Stock will be determined by the Selling Shareholder and may be based
on market prices prevailing at the time of sale, at prices relating to such
prevailing market prices, or at negotiated prices.
-10-
<PAGE>
SELLING SHAREHOLDERS
The following table provides certain information with respect to the
Common Stock beneficially owned by the Selling Shareholders who are entitled to
use this Prospectus. The information in the table is as of the date of this
Prospectus. Except as described below, no Selling Shareholder has had a material
relationship with the Company within the past three years other than as a result
of the ownership of Common Stock. The Common Stock offered by this Prospectus
may be offered from time to time by the Selling Shareholders named below or
their nominees:
<TABLE>
<CAPTION>
SHARES AVAILABLE PERCENT OWNED AFTER
NAME AND ADDRESS OF SELLING SHARES FOR SALE UNDER COMPLETION OF THE
SHAREHOLDER OWNED(1) THIS PROSPECTUS OFFERING (1)
- --------------------------------- -------- ---------------- --------------------
<S> <C> <C>
RBB Bank Aktiengesellschaft 248,840 248,840
Attn: Mr. Herbert Strauss
Burgring 16
8010 Graz, Austria
Richard and Patricia Jennings 17,857 17,857
584 Tillman, Suite 1
Memphis, Tennessee 38112
Thomas M. Riley 28,236 (2) 28,236
31630 Railroad Canyon Rd. #16
Canyon Lake, California 92587
Starr Marie Riley 28,236 (3) 28,236
31630 Railroad Canyon Rd. #16
Canyon Lake, California 92587
Thompson Kernaghan & Co., Ltd. 266,666 266,666
365 Bay Street, 10th Floor
Toronto, Ontario, Canada MSH
2V2
Rana General Holding, Ltd. 33,334 33,334
c/o Rana Investment Company
P.O. Box 60148
Riyadh 11545
Saudi Arabia
Lawrence D. Troutman 44,000 (4) 44,000
10354 Mocke Nock Cv
Collierville, TN 38017
</TABLE>
(1) Because (i) a Selling Shareholder may offer all or some of the shares of
Common Stock which it holds pursuant to the offerings contemplated by this
Prospectus, (ii) the offerings of shares of Common Stock are not
necessarily being underwritten on a firm commitment basis, and (iii) a
Selling Shareholder could purchase additional shares of Common Stock from
time to time, no estimate can be given as to the amount of shares of
Common Stock that will be held by any Selling Shareholder upon termination
of such offerings. See "PLAN OF DISTRIBUTION."
(2) Includes 15,520 shares of Common Stock owned of record by Mr. Riley's wife
and minor children. Mr. Riley is the husband of Starr M. Riley. Mr. Riley
disclaims beneficial ownership of shares owned by Mrs. Riley.
-11-
<PAGE>
(3) Includes 15,520 shares of Common Stock owned of record by Mrs. Riley's
husband and minor children. Mrs. Riley is the wife of Thomas M. Riley.
Mrs. Riley disclaims beneficial ownership of shares owned by Mr. Riley.
(4) Includes warrants to purchase 44,000 shares of Common Stock which are
presently exercisable.
-12-
<PAGE>
PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Shareholders. As used herein, "Selling Shareholders" includes donees and
pledgees selling shares received from a named Selling Shareholder after the date
of this prospectus. All costs, expenses and fees in connection with the
registration of the Shares offered hereby will be borne by the Company, except
that Mr. Troutman will bear his pro rata share of such expenses based on the
number of his Shares registered compared with the total number of Shares
registered under this Prospectus. Brokerage commissions and similar selling
expenses, if any, attributable to the sale of Shares will be borne by the
Selling Shareholders. Sales of Shares may be effected by Selling Shareholders
from time to time in one or more types of transactions (which may include block
transactions) on the Nasdaq SmallCap market, in the over-the-counter market, in
negotiated transactions, through put or call options transactions relating to
the Shares, through the short sale of Shares, or a combination of such methods
of sale, at market prices prevailing at the time of sale, or at negotiated
prices. Such transactions may or may not involve brokers or dealers. The Selling
Shareholders have advised the Company that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the propped sale of
Shares by the Selling Shareholders.
The Selling Shareholders may effect such transactions by selling Shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of Shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers that act in connection
with the sale of Shares might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the Shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act.
Because Selling Shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Shareholders will be
subject to prospectus delivery requirements of the Securities Act. The Company
has informed the Selling Shareholders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to their sales in the
market.
Selling Shareholders also may resell all of a portion of the Shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.
Upon the Company being notified by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Shareholder and of
the participating broker-dealer(s), (ii) the number of Shares involved, (iii)
the price at which such Shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated b reference in this prospectus and (vi) other facts material
to the transaction. In addition, upon the Company being notified by a Selling
Shareholder that a donee or pledgee intends to sell more than 500 shares, a
supplement to this prospectus will be filed.
LEGAL MATTERS
The legality of the securities offered hereby has been passed upon for the
Company by Streich Lang, P.A., Phoenix, Arizona. One or more members of such law
firm own shares of Common Stock of the Company constituting less than 1.5% of
the total outstanding Common Stock of the Company.
-13-
<PAGE>
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1997 have been
audited by Semple & Cooper, independent auditors, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
MATERIAL CHANGES
No material changes have occurred in the Registrant's affairs since the
end of the last fiscal year for which certified financial statements were
included in the latest annual report to security holders and which has not been
described in a report on Form 10-QSB or Form 8-K filed under the Exchange Act.
-14-
<PAGE>
======================================= =====================================
NO DEALER, SALESMAN OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON INTERNATIONAL
AS HAVING BEEN AUTHORIZED BY THE FIBERCOM, INC.
COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES
TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION IN WHICH
SUCH AN OFFER WOULD BE UNLAWFUL.
NEITHER DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS.
661,556 SHARES
--------------- NO PAR VALUE
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION............. 2
INCORPORATION OF CERTAIN PROSPECTUS
DOCUMENTS BY REFERENCE.......... 2
PROSPECTUS SUMMARY................ 3
RISK FACTORS...................... 6
USE OF PROCEEDS................... 10
DETERMINATION OF OFFERING PRICE... 10
SELLING SHAREHOLDERS.............. 11
PLAN OF DISTRIBUTION.............. 13
LEGAL MATTERS..................... 13
EXPERTS........................... 14
MATERIAL CHANGES.................. 14 SEPTEMBER ___, 1998
======================================= =====================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses of the
Company in connection with the offering described in the Registration Statement.
Securities and Exchange Commission Registration Fee $ 1,485
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 7,500
Other Expenses 1,000
-------
Total Expenses $34,985
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ARTICLE XII of the Articles of Incorporation of the Registrant provides as
follows:
The Corporation shall indemnify any person against expenses, including
without limitation, attorney's fees, judgements, fines and amounts paid in
settlement, actually and reasonably incurred by reason of the fact that he or
she is or was a director, officer, employee or agent of the Corporation or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, in all circumstances in which, to the extent that, such
indemnification is specifically permitted and provided for by the laws of the
State of Arizona as then in effect.
ARTICLE XII of the Bylaws of the registrant provide as follows:
12.01 Indemnification. To the full extent permitted by Arizona law, the
Corporation shall indemnify and pay the expenses of any person who is or was
made, or threatened to be made, a party to an action or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that he
is or was a director, officer, employee, trustee or agent of or for the
Corporation or is or was serving at the request or with the prior approval of
the Corporation as a director, officer, employee, trustee or agent of another
corporation, trust or enterprise, against any liability asserted against him and
incurred by him in any capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against such liability
under the provisions of these Bylaws.
Section 10-202(B)(1) and Chapter 8, Article 5 (Section 10-850 et seq.) of the
General Corporation Law of Arizona, as amended, apply to registrant and provide
as follows:
Section 10-202(B). The articles of incorporation shall set forth:
1. If elected by the incorporators, a provision eliminating or limiting
the liability of a director to the corporation or its shareholders for
money damages for any action taken or any failure to take any action as
a director, except for any of the following:
(a) The amount of any financial benefit received by a
director to which the director is not entitled.
(b) An intentional infliction of harm on the corporation or
the shareholders.
(c) A violation of Section 10-833.
(d) An intentional violation of criminal law.
As indicated above, the Registrant has included in its Articles of
Incorporation a provision limiting director liability in accordance with the
statute.
II-1
<PAGE>
Chapter 8 -- Directors and Officers, Article 5 -- Indemnification.
Section 10-850. Definitions
1. "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the predecessor's
existence ceased on consummation of the transaction.
2. "Director" means an individual who is or was a director of a corporation or
an individual who, while a director of a corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. A director is considered to be
serving an employee benefit plan at the corporation's request if his duties to
the corporation also impose duties on or otherwise involve services by him to
the plan or to participants in or beneficiaries of the plan.
Director includes the estate or personal representative of a director.
3. "Expenses" includes attorney fees and all other costs and expenses reasonably
related to a proceeding.
4. "Liability" means the obligation to pay a judgment, settlement, penalty or
fine, including an excise tax assessed with respect to an employee benefit plan,
or reasonable expenses incurred with respect to a proceeding and includes
obligations and expenses than have not yet been paid by the indemnified person
but that have been or may be incurred.
5. "Official capacity" means, if used with respect to a director, the office of
director in a corporation and, if used with respect to an individual other than
a director, as contemplated in Section 10-856, the office in a corporation held
by the officer or the employment or agency relationship undertaken by the
employee or agent on behalf of the corporation. Official capacity does not
include service for any other foreign or domestic corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise.
6. "Outside director" means a director who, when serving as a director, was not
an officer, employee or holder of more than five per cent of the outstanding
shares of any class of stock of the corporation.
7. "Party" includes an individual who was, is or is threatened to be made a
named defendant or respondent in a proceeding.
8. "Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal.
Section 10-851. Authority to indemnify
A. Except as provided in subsection D of this section and in Section 10-854, a
corporation may indemnify an individual made a party to a proceeding because the
individual is or was a director against liability incurred in the proceeding if
all of the following conditions exist:
1. The individual's conduct was in good faith
2. The individual reasonably believed:
(a) In the case of conduct in an official capacity with the
corporation, that the conduct was in its best interests.
(b) In all other cases, that the conduct was at least not
opposed to its best interests.
3. In the case of any criminal proceedings, the individual had no
reasonable cause to believe the conduct was unlawful
B. A director's conduct with respect to an employee benefit plan for a purpose
reasonably believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirements of
subsection A, paragraph 2, subdivision (a) of this section.
II-2
<PAGE>
C. The termination of a proceeding by judgment, order, settlement or conviction
or on a plea of no contest or its equivalent is not of itself determinative that
the director did not meet the standard of conduct described in this section.
D. A corporation may not indemnify a director under this section either:
1. In connection with a proceeding by or in the right of corporation in
which the director was adjudged liable to the corporation.
2. In connection with any other proceeding charging improper personal
benefit to the director, whether or not involving action in the
director's official capacity, in which the director was adjudged liable
on the basis that personal benefit was improperly received by the
director.
E. Indemnification permitted under this section in connection with a proceeding
by or in right of the corporation is limited to reasonable expenses incurred
during the proceeding.
Section 10-852. Mandatory indemnification
A. Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was the prevailing party, on the merits or otherwise,
in the defense of any proceeding to which the director was a party because the
director is or was a director of the corporation against reasonable expenses
incurred by the director in connection with the proceeding.
B. Unless limited by its articles of incorporation, Section 10-851, subsection D
or subsection C of this section, a corporation shall indemnify an outside
director against liability. Unless limited by its articles of incorporation or
subsection C of this section, a corporation shall pay an outside director's
expenses in advance of a final disposition of the proceeding, if the director
furnishes the corporation with a written affirmation of the director's good
faith belief that the director met the standard of conduct described in Section
10-851, subsection A and the director furnishes the corporation with a written
undertaking executed personally, or on the director's behalf, to repay the
advance if it is ultimately determined that the director did not meet the
standard of conduct. The undertaking required by this subsection is an unlimited
general obligation of the director but need not be secured and shall be accepted
without reference to the director's financial ability to make repayment.
C. A corporation shall not provide the indemnification or advance payment of
expenses described in subsection B if this section if a court of competent
jurisdiction has determined before payment that the outside director failed to
meet the standards described in Section 10-851, subsection A, and a court of
competent jurisdiction does not otherwise authorize payment of indemnification
or expenses under subsection B of this section for more than sixty days after a
request is made unless ordered to do so by a court of competent jurisdiction.
Section 10-853. Advance for expenses
A. A corporation may pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding in advance of final disposition of the
proceeding if the following conditions exist:
1. The director furnishes the corporation with a written affirmation of
the director's good faith belief that the director met the standard of
conduct described in Section 10-851.
2. The director furnishes the corporation with a written undertaking
executed personally, or on the director's behalf, to repay the advance
if it is ultimately determined that the director did not meet the
standard of conduct.
3. A determination is made that the facts then known to those making
the determination would not preclude indemnification under this
article.
B. The undertaking required by subsection A, paragraph 2 of this section is an
unlimited general obligation of the director but need not be secured and shall
be accepted without reference to the director's financial ability to make
repayment.
II-3
<PAGE>
C. Determinations and authorizations of payments under this section shall be
made in the manner specified in Section 10-855.
D. This section does not apply to the advancement of expenses to or for the
benefit of an outside director. Advances to outside directors shall be made
pursuant to Section 10-852.
Section 10-854. Court ordered indemnification
Unless the corporation's articles of incorporation provide otherwise, a director
of the corporation who is a party to a proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving notice the
court considers necessary may order indemnification if it determines either:
1. The director is entitled to mandatory indemnification under Section
10-852, in which case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain court ordered
indemnification.
2. The director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the director met
the standard of conduct set forth in Section 10-851 or was adjudged
liable as described in Section 10-851, subsection D, but if the
director was adjudged liable under Section 10-851, subsection D,
indemnification is limited to reasonable expenses incurred.
Section 10-855. Determination and authorization of indemnification
A. A corporation may not indemnify a director under Section 10-851 unless
authorized in the specific case after determination has been made that
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in Section 10-851.
B. The determination shall be made either:
1. By the board of directors by a majority vote of the directors not at
the time parties to the proceeding.
2. By special legal counsel:
(a) Selected by majority vote of the disinterested directors.
(b) If there are no disinterested directors, selected by
majority vote of the board.
3. By the shareholders, but shares owned by or voted under the control
of directors who are at the time parties to the proceeding shall not be
voted on the determination.
C. Neither special legal counsel nor any shareholder has any liability
whatsoever for the determination made pursuant to this section. In voting
pursuant to subsection B of this section, directors shall discharge their duty
in accordance with Section 10-830.
D. Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection B,
paragraph 2 of this section to select counsel.
Section 10-856. Indemnification of officers, employees and agents
Unless a corporation's articles of incorporation provide otherwise:
1. An officer of the corporation who is not a director is entitled to
mandatory indemnification against liability under Section 10-852 and is
entitled to apply for court ordered indemnification against liability
under Section 10-854, in each case to the same extent as a director.
II-4
<PAGE>
2. The corporation may indemnify against liability and advance expenses
under this article to an officer, employee or agent of the corporation
who is not a director to the same extent as to a director.
3. A corporation may also indemnify against liability and advance
expenses to an officer, employee or agent to the extent, consistent
with public policy, that indemnification may be provided by its
articles of incorporation, bylaws, general or specific action of its
board of directors or contract, provided that if the officer, employee
or agent is also a director, indemnification against liability arising
from serving as a director is limited to the other provisions of
chapters 1 through 17 of this title.
Section 10-857. Insurance
A corporation may purchase and maintain insurance on behalf of an individual who
is or was a director, officer, employee or agent of the corporation or who,
while a director, officer, employee or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against liability asserted against or incurred by the individual in that
capacity or arising from the individual's status as a director, officer,
employee or agent, whether or not the corporation would have power to indemnify
the individual against the same liability under Section 10-851 or Section
10-852.
Section 10-858. Application of article
A. A provision that treats a corporation's indemnification of or advance for
expenses to directors and that is contained in its articles of incorporation,
its bylaws, a resolution of its shareholders or board of directors or a contract
or otherwise is valid only if and to the extent the provision is consistent with
this article. If the articles of incorporation limit indemnification or advances
for expenses, indemnification and advances for expenses are valid only to the
extent consistent with the articles.
B. This article does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with the director's appearance as
a witness in a proceeding at a time when the director has not been made a named
defendant or respondent to the proceeding.
The above discussion is qualified in its entirety by reference to the
Company's Articles of Incorporation and Bylaws. See Exhibits 3.1 through 3.7 to
this Registration Statement.
II-5
<PAGE>
Item 16. Exhibits
EXHIBIT
NUMBER DESCRIPTION REFERENCE
- ------ ----------- ---------
3.1 Restated Articles of Incorporation of Registrant dated
October 21, 1981 (1)
3.2 Amendment to Articles of Incorporation of Registrant dated
April 18, 1986 (1)
3.3 Amendment to Articles of Incorporation of Registrant dated
May 20, 1987 (1)
3.4 Amendment to Articles of Incorporation of Registrant dated
February 4, 1988 (1)
3.5 Amendment to Articles of Incorporation of Registrant dated
August 15, 1991 (1)
3.6 Amendment to Articles of Incorporation of Registrant dated
June 3, 1994 (1)
3.7 Amended, Revised, and Restated Bylaws of Registrant (1)
4.1 Form of Common Stock Certificate (1)
5.1 Opinion of Streich Lang, P.A. as to the legality of securities
being registered *
23.1 Consent of Semple & Cooper *
23.2 Consent of Streich Lang, P.A. (2)
27.1 Financial Data Schedule (3)
- -------------
* Filed herewith
(1) Filed with Registration Statement on Form SB-2, No. 33-79730, dated August
10, 1994
(2) Included in Exhibit 5.1
(3) Filed with report on Form 10-QSB for the quarter ended June 30, 1998.
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering. The undersigned Registrant hereby undertakes:
(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 the 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.
(e) Request for acceleration of effective date:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer 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 small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer 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.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
International FiberCom, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix and State of
Arizona on September 29, 1998.
INTERNATIONAL FIBERCOM, INC., an Arizona
corporation
/s/ Joseph P. Kealy
------------------------------------------
Joseph P. Kealy, Chairman of the Board and
President (Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature and Title Date
------------------- ----
/s/ Joseph P. Kealy September 29, 1998
- ----------------------------------------------------
Joseph P. Kealy, Chairman of the Board, President,
Principal Executive Officer and Director
/s/ V. Thompson Brown September 29, 1998
- ----------------------------------------------------
V. Thompson Brown, Director
/s/ John F. Kealy September 29, 1998
- ----------------------------------------------------
John F. Kealy, Director
/s/ Richard J. Seminoff September 29, 1998
- ----------------------------------------------------
Richard J. Seminoff, Director
/s/ Jerry A. Kleven September 29, 1998
- ----------------------------------------------------
Jerry A. Kleven , Director
S-1
[STREICH LANG LETTERHEAD]
September 30, 1998
Writer's Direct Line:
(602) 229-5336
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: International FiberCom, Inc.
Ladies and Gentlemen:
This firm is counsel for International FiberCom, Inc., an Arizona
corporation (the "Company"). As such, we are familiar with the Articles of
Incorporation and Bylaws of the Company. We have also acted as counsel for the
Company with respect to certain matters in connection with the preparation of
the Registration Statement on Form S-3 registering 661,556 shares of Common
Stock, no par value (the "Shares"), under the Securities Act of 1933. In
addition, we have examined such documents and undertaken such further inquiry as
we consider necessary for rendering the opinion hereinafter set forth below.
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the Sate of Arizona.
2. The Shares, when issued, will be duly and validly issued, fully paid
and nonassessable.
We acknowledge that we are referred to under the heading "Legal
Matters" of the Prospectus which is part of the Registration Statement and we
hereby consent to the use of our name in such Registration Statement. Members of
our firm, including the undersigned, own shares of Common Stock of the Company,
amounting to less than 1.5% of the outstanding Common Stock of the Company. We
further consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
/s/ Christian J. Hoffmann, III
Christian J. Hoffmann, III
For the Firm
EXHIBIT 5.1
[Semple & Cooper, LLP Letterhead]
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountants, we hereby consent to the inclusion
of our report dated March 13, 1998, on the consolidated financial statements of
International FiberCom, Inc. and Subsidiaries for the years ended December 31,
1997 and 1996, in the Company's Form S-3 Registration Statement, and to the
reference to us under the caption "Experts" contained in the Prospectus.
Certified Public Accountants Semple & Cooper, LLP
Phoenix, Arizona
September 15, 1998
