<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10 - KSB/A
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM: COMMISSION FILE NO. 0-25314
JULY 1, 1996 TO DECEMBER 31, 1996
AMERICAN COMMUNICATIONS SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1947746
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
131 National Business Parkway Annapolis Junction, MD 20701
(Address of principle executive office) (Zip Code)
Registrant's telephone number, including area code: (301) 617-4200
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Act:
Title of Class
--------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K [ ].
As of March 27, 1997, the aggregate market value of the voting stock
held by non-affiliates based upon the last reported sales price of a share of
common stock as reported on the NASDAQ National Market was approximately
$40,483,401.
As of March 17, 1997, 8,193,109 common shares were outstanding.
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<PAGE> 2
Part III of the Registrant's Form 10-KSB is hereby amended to read as follows:
ITEM 9. EXECUTIVE OFFICERS AND DIRECTORS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT.
The following table sets forth certain information regarding the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES HELD
- --------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Anthony J. Pompliano....... 58 Executive Chairman of the Board Directors
Jack E. Reich.............. 46 President and Chief Executive Officer -- Communications
Services
George M. Tronsrue, III.... 40 President and Chief Operating Officer -- Strategy and
Technology Development
Riley M. Murphy............ 41 Executive Vice President -- Legal and Regulatory Affairs,
General Counsel and Secretary
David L. Piazza(1)......... 42 Chief Financial Officer
George M. Middlemas(2)..... 51 Director
Edwin M. Banks(3).......... 34 Director
Christopher L.
Rafferty(2).............. 49 Director
Benjamin P. Giess.......... 34 Director
Olivier L.
Trouveroy(2)(3).......... 42 Director
Peter C. Bentz............. 32 Director
</TABLE>
- ---------------
(1) Mr. Piazza's employment began on March 24, 1997.
(2) Member of Compensation Committee
(3) Member of Audit Committee
Anthony J. Pompliano, Executive Chairman of the Board of Directors, has
more than 30 years of experience in the telecommunications industry. Mr.
Pompliano was elected a director of the Company in November 1993. He was
co-founder and President of Metropolitan Fiber Systems, the predecessor
organization to MFS Communications, a publicly-traded CLEC that was acquired by
WorldCom, Inc. in December 1996. Mr. Pompliano served as President, CEO and Vice
Chairman of MFS Communications from April 1988 until March 1991. He joined ACSI
in August 1993 after the expiration of his non-competition agreement with MFS
Communications. Before his association with MFS Communications and its
predecessor, he was Vice President -- Operations and Sales for MCI
Telecommunications International from 1981 to 1987, and prior thereto, was Vice
President -- National Operations for Western Union International, Inc. from 1960
to 1981.
Jack E. Reich, President and Chief Executive Officer -- Communications
Services, had 22 years of telecommunications industry and management experience
before joining ACSI in December 1996. For two and one-half years prior to
joining ACSI, Mr. Reich was employed by Ameritech, Inc. as President of its
Custom Business Service Organization, where Mr. Reich was responsible for full
business marketing to Ameritech's largest customers for telecommunications
services, advanced data services, electronic commerce and managed
services/outsource initiatives. Prior to that, he served as President of MCI's
Multinational Accounts organization and also served as MCI's Vice President of
Products Marketing. Mr. Reich has also held sales and marketing positions at
AT&T and ROLM Corp. Mr. Reich has a B.S. degree from St. Louis University and an
MBA from the University of Chicago.
George M. Tronsrue, III, President and Chief Operating Officer -- Strategy
and Technology Development, had 17 years of telecommunications industry and
management experience before joining ACSI in February 1994. Mr. Tronsrue served
the Company as Executive Vice President -- Strategic Planning and Business
Development from February 1994 until January 31, 1996. From 1993 until he joined
ACSI in February 1994, Mr. Tronsrue was the Regional Vice President for the
Central Region for Teleport Communications Group and the Vice President of
Emerging Markets, responsible for start-up and profit and loss management of
joint ventures with major cable television providers in eight major markets.
From 1987 until 1992, he was a member of the initial management team at MFS,
where he held senior positions in planning and market development, served as
Vice President of Sales and the Vice President/General Manager for the initial
start-up of MFS' New York operations, and served as the Executive Vice President
for MFS-Intelenet. Prior to joining MFS, he was a Director of Operations for MCI
Telecommunications International. Mr. Tronsrue has a B.S. degree in Applied
Sciences and Engineering from the United States Military Academy at West Point.
<PAGE> 3
Riley M. Murphy, Executive Vice President -- Legal and Regulatory Affairs
and Secretary, had twelve years of experience in the private practice of
telecommunications regulatory law for inter-exchange, cellular, paging and other
competitive telecommunication services prior to joining the Company. Since
February 1995, she has served as an officer and director of The Association for
Local Telecommunications Services. Ms. Murphy joined ACSI on a full-time basis
in April 1994 and was senior counsel to Locke Purnell Rain Harrell, a
Dallas-based law firm through December 1994. From 1987 to 1992, Ms. Murphy was a
partner of Wirpel and Murphy, a telecommunications law firm she co-founded, and
from 1992 to 1993 she was a sole practitioner. She holds a B.A. degree from the
University of Colorado and a J.D. from the Catholic University of America and is
admitted to practice law in the District of Columbia and Louisiana.
David L. Piazza, Chief Financial Officer, joined the Company as of March
24, 1997. For ten years prior to joining the Company, Mr. Piazza was employed by
MFS Communications in a variety of finance and senior management positions, most
recently as the Senior Vice President and Chief Financial Officer of MFS
Telecom, Inc., a subsidiary of MFS Communications. Prior to his employment with
MFS Communications, Mr. Piazza was employed by AT&T for four years in its
finance and support divisions. Mr. Piazza received his B.S. degree in
Accountancy from the University of Illinois and holds a CPA.
As part of the December 1996 management reorganization, Richard A. Kozak,
who had previously served as the Company's President and Chief Executive
Officer, was named President and Chief Executive Officer -- Corporate Services.
Mr. Kozak was also appointed as ACSI's Acting Chief Financial Officer, replacing
Harry D'Andrea who had resigned as ACSI's Chief Financial Officer in November
1996. Effective February 2, 1997, Mr. Kozak's employment was terminated, with
each of Mr. Kozak and the Company claiming the termination was the result of the
other party's breach of his employment agreement. The parties have settled
their dispute relating to the cause of Mr. Kozak's termination. See
"-- Employment Agreements."
The Board is comprised of seven members, four of whom were elected by the
holders of the Common Stock and three of whom were elected by the holders of the
Preferred Stock, which shares were automatically converted into Common Stock on
April 15, 1997, upon consummation of the Public Offering. Beginning at the
Annual Meeting, the Board will be elected by the holders of the Common Stock.
All directors of the Company hold office until the next annual meeting of
stockholders and until their successors are duly elected and qualified.
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and any persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission (SEC) reports of ownership and changes in ownership of the
Company's Common Stock and other equity securities of the Company. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that there was compliance for the period from June 30, 1996 to December 31, 1996
with all Section 16 filing requirements applicable to its officers, directors
and greater than ten-percent beneficial owners.
<PAGE> 4
ITEM 10. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS.
The following table provides a summary of compensation for the fiscal
period ended December 31, 1996 and for each of the three fiscal years ended June
30, 1996, 1995 and 1994, with respect to the Company's Chief Executive Officer,
and the other five most highly compensated officers of the Company during the
fiscal year ended June 30, 1996 whose annual salary and bonus during such fiscal
year exceeded $100,000 (collectively, the "Named Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
--------------------------------------- NUMBER OF
OTHER SECURITIES
NAME AND PRINCIPAL POSITION ANNUAL UNDERLYING ALL OTHER
ON DECEMBER 31, 1996 YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2) COMPENSATION
- ------------------------------ ----- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Pompliano.......... 1996* $124,167 $ 75,000(3) $ -- -- $ 2,574(4)
Executive Chairman of the 1996 239,583 175,000(3) -- -- 6,187(4)
Board of Directors 1995 219,500 175,000(3) -- 500,000 6,977(4)
1994 110,000 -- 25,000(5) 1,349,899 61,507(6)
Jack E. Reich(7).............. 1996* 20,883 -- -- 1,200,000
President and Chief
Executive Officer --
Communications Services
George M. Tronsrue............ 1996* 100,000 -- -- -- 2,400(4)
President and Chief 1996 191,128 54,116(8) -- 50,000 4,800(4)
Operating 1995 150,000 135,417(8) 68,800(9) 350,001(10) --
Officer -- Strategy and 1994 53,827 50,000 -- --
Technology Development....
Riley M. Murphy............... 1996* 91,250 -- -- -- --
Executive Vice 1996 162,499 81,500(11) 37,004(9) 50,000 3,536(4)
President -- 1995 150,000 81,500(12) -- 250,001(10) 9,783(4)
Legal and Regulatory 1994 37,500 -- 48,620(13) --
Affairs, General Counsel
and
Secretary
Robert H. Ottman(14).......... 1996* 90,667 -- -- -- --
Executive Vice President/ 1996 170,000 50,000(3) 100,000(9) -- --
Network Services and 1995 28,333 -- -- 250,000 --
Technical Support
Richard A. Kozak(15).......... 1996* 129,167 137,500(3) -- 83,334(16) 2,700(4)
President and Chief 1996 232,885 200,000(3) -- -- 5,400(4)
Executive 1995 184,378 175,000(3) -- 399,999(16) 3,750(4)
Officer -- Corporate 1994 87,500 -- 39,728(5) 899,932 --
Services
and Acting Chief Financial
Officer
</TABLE>
- ---------------
* Subsequent to June 30, 1996, the Company changed its fiscal year-end to
December 31. Information is for the six months ended December 31, 1996.
(1) Excludes perquisites and other personal benefits that in the aggregate do
not exceed 10% of the Named Officers' total annual salary and bonus.
(2) See information provided in "Option Grants in Fiscal Year Ended June 30,
1996 and Fiscal Period Ended December 31, 1996" and "December 31, 1996
Option Values."
(3) Represents cash bonuses received for attainment of certain performance
goals.
(4) Represents payments received for medical or disability insurance in excess
of that provided to other employees and/or car allowances and, for Ms.
Murphy, includes payments of $6,423 of premiums in connection with
professional liability insurance for the period prior to her employment
with the Company.
(5) Consists of amounts paid to Messrs. Pompliano and Kozak as consultants for
services rendered prior to their employment by the Company in August 1993
and November 1993, respectively.
(6) Consists of $20,000 received as compensation in connection with the
Company's November 1993 sale of 400,000 shares of Common Stock and $41,507
received as compensation in connection with the Company's June 1994
issuance of $4,300,720 principal amount of 15% convertible notes.
(7) Mr. Reich commenced employment with the Company in December 1996.
(8) Represents an installment of a $244,500 bonus, $54,116 of which was paid on
February 24, 1997.
<PAGE> 5
(9) Includes $65,000, $100,000 and $37,004 paid to Messrs. Tronsrue and Ottman
and Ms. Murphy, respectively, in connection with relocation and moving
expenses relating to the relocation of the Company's headquarters to
Annapolis Junction, Maryland.
(10) 150,000 of these options were originally granted in the fiscal year ended
June 30, 1994 at an exercise price of $2.50 per share and such exercise
price was subsequently reduced to $2.25 per share in connection with the
Company's October 1994 private placement.
(11) Represents an installment of a $244,500 cash bonus, $81,500 of which was
paid in January 1997.
(12) This payment represents the first installment of a $244,500 cash bonus.
(13) Consists of $43,620 received for performing legal services for the Company
as outside counsel and a $5,000 for location expenses.
(14) Mr. Ottman commenced employment with the Company in May 1995 and his
employment was terminated in February 1997.
(15) Mr. Kozak served as the Company's President and Chief Executive Officer
during fiscal year 1996. He became Acting Chief Financial Officer in
December 1996 upon the resignation of the Company's previous Chief
Financial Officer. In connection with the Company's December 1996
management reorganization, Mr. Kozak became President and Chief Executive
Officer -- Corporate Services. Effective February 2, 1997, Mr. Kozak's
employment with the Company was terminated.
(16) In connection with the settlement of the dispute relating to the
termination of Mr. Kozak's employment, all of the options granted in fiscal
period ended December 31, 1996 and options to purchase 83,333 shares
granted in fiscal year ended June 30, 1995 were canceled. See
"-- Employment Agreements."
<PAGE> 6
Option Grants in Fiscal Year Ended June 30, 1996 and Fiscal Period Ended
December 31, 1996
The following table contains information concerning the grant of stock
options to the Named Officers during the fiscal year ended June 30, 1996 and the
fiscal period ended December 31, 1996.
INDIVIDUAL GRANTS(1)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS MARKET PRICE
UNDERLYING GRANTED TO EXERCISE OR OF UNDERLYING
OPTIONS EMPLOYEES BASE PRICE SECURITIES ON EXPIRATION
NAME GRANTED IN PERIOD (PER/SHARE) DATE OF GRANT DATE
- ----------------------------------- ---------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Anthony J. Pompliano............... -- -- -- -- --
Jack E. Reich...................... 200,000 13.95% $ 9.375 $11.625 12/1/02
200,000 13.95 9.375 11.625 12/1/03
200,000 13.95 9.375 11.625 12/1/04
200,000 13.95 9.375 11.625 12/1/05
400,000 27.90 9.375 11.625 12/31/07
George M. Tronsrue, III............ 25,000(2) 2.20 3.40 3.875 2/22/03
25,000(3) 2.20 3.40 3.875 2/22/04
Riley M. Murphy.................... 25,000(2) 2.20 3.40 3.875 3/30/03
25,000(3) 2.20 3.40 3.875 3/30/04
Robert H. Ottman................... -- -- -- -- --
Richard A. Kozak................... 83,334 5.80 15.00 11.75 11/15/04(4)
</TABLE>
- ---------------
(1) Mr. Tronsrue and Ms. Murphy were granted options in fiscal year ended June
30, 1996, and Messrs. Reich and Kozak were granted options in the fiscal
period ended December 31, 1996.
(2) These options were granted on July 6, 1995, with an exercise price of $3.40.
Mr. Tronsrue's options will vest on February 23, 1998 and Ms. Murphy's
options will vest on March 31, 1998 provided, in each case, that he or she
does not voluntarily terminate his or her employment with the Company or is
not terminated for cause prior to the applicable vesting date.
(3) These options were granted on July 6, 1995, with an exercise price of $3.40.
Mr. Tronsrue's options will vest on February 23, 1999 and Ms. Murphy's
options will vest on March 31, 1999 provided, in each case, that he or she
does not voluntarily terminate his or her employment with the Company or is
not terminated for cause prior to the vesting date.
(4) These options were canceled in connection with the settlement of the dispute
relating to the termination of Mr. Kozak's employment. See "-- Employment
Agreements."
<PAGE> 7
December 31, 1996 Option Values
The following table sets forth the value of unexercised options held by the
Named Officers as of December 31, 1996. None of the Named Officers exercised
options during the fiscal year ended June 30, 1996 or the fiscal period ended
December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS AT DECEMBER 31,
OPTIONS AT DECEMBER 31, 1996 1996(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony J. Pompliano.................. 1,599,899 250,000 $15,455,253 $ 1,987,500
Jack E. Reich......................... -- 1,200,000 -- 1,650,000
George M. Tronsrue, III............... 250,000 150,000 2,125,000 1,217,500
Riley M. Murphy....................... 137,501 162,501 1,168,759 1,323,759
Robert H. Ottman...................... 100,000 150,000(2) 775,000 1,162,500
Richard A. Kozak...................... 1,133,265 250,000(3) 10,824,326 970,825
</TABLE>
- ---------------
(1) Represents the difference between the per share exercise price of the
unexercised options and $10.75, the last sale price on December 31, 1996, as
reported by the Nasdaq Stock Market.
(2) The vesting of options to purchase 75,000 of these shares was accelerated in
connection with the termination of Mr. Ottman's employment in February 1997.
(3) Of these, options to purchase 166,667 shares were canceled and the vesting
of options to purchase an additional 83,333 shares was accelerated in
connection with the settlement of the dispute relating to the termination of
Mr. Kozak's employment. See "-- Employment Agreements."
Employment Agreements
Anthony J. Pompliano. The Company is party to an employment agreement with
Anthony J. Pompliano, its Executive Chairman, which terminates on August 23,
1998. Under the terms of the agreement, as amended, Mr. Pompliano is entitled to
an annual base salary of $250,000 and a cash bonus of up to $200,000 for each of
the 1997 and 1998 fiscal years based upon the Company's achievement of certain
performance goals for the relevant fiscal year. Under this employment agreement,
Mr. Pompliano has been granted options to purchase an aggregate of 1,849,899
shares of the Company's Common Stock at exercise prices ranging from $.875 per
share to $2.80 per share. Mr. Pompliano has the right to obtain a 30-day loan
from the Company for the purpose of paying the aggregate exercise price of the
options granted to him.
Mr. Pompliano has the right, for 90 days after termination of his
employment (unless he is terminated by the Company "for cause" or he voluntarily
resigns), to sell to the Company up to $1.0 million in then market value of
shares of Common Stock issued or issuable pursuant to the options granted to Mr.
Pompliano under his employment agreement, at a price equal to the
publicly-traded price of the Common Stock, less the exercise price of the
options with respect to unexercised options; provided, however, this right
cannot be exercised unless at least 5,000,000 shares of Common Stock are owned
by non-affiliates of the Company at the time of his request and the market value
of the outstanding Common Stock is at least $300 million. Mr. Pompliano's
employment agreement also contains non-compete, non-solicitation and
confidentiality provisions.
Jack E. Reich. The Company is party to an employment agreement with Jack
E. Reich, its President and Chief Executive Officer -- Communications Services,
which terminates on December 31, 2000, extendable for one year by mutual
agreement. Under the terms of this agreement, Mr. Reich is entitled to a minimum
annual base salary of $250,000, a cash bonus of $100,000 in 1997 and annual
bonuses of between $150,000 and $350,000 based on the Company's achievement of
certain performance goals. Under this employment agreement, Mr. Reich was
granted an option to purchase 1,200,000 shares of Common Stock at an exercise
price $9.375 per share. These options vest in installments between December 1997
and December 2001, subject to Mr. Reich's continued employment. Mr. Reich's
employment agreement also contains a two year non-compete/non-solicit provision.
George M. Tronsrue, III. The Company is party to an employment agreement
with George M. Tronsrue, III, its President and Chief Operating
Officer -- Strategy and Technology Development, which terminates on February 23,
1999. The agreement, as amended, calls for an annual salary $200,000, a $400 per
month car allowance and a guaranteed bonus of $244,500 payable in annual
installments through February 1997. Under the terms of this employment
agreement, Mr. Tronsrue has been granted stock options to purchase an aggregate
of 400,000 shares of Common Stock at prices ranging from $2.25 per share to
$3.40. Furthermore, the Company has, upon Mr. Tronsrue's request, extended a
loan to Mr. Tronsrue in the aggregate amount of $195,000, bearing simple
interest at the rate of 8% per year and payable on the second anniversary of the
loan. Mr. Tronsrue's employment agreement also contains a two year
non-compete/non-solicit provision. See "Certain Relationships and Related
Transactions."
<PAGE> 8
Riley M. Murphy. The Company is party to an employment agreement with
Riley M. Murphy, its Executive Vice President for Legal and Regulatory Affairs,
which terminates on March 31, 1999. This agreement, as amended, calls for an
annual salary of $175,000 and a guaranteed bonus of $244,500, payable in annual
installments through January 1997. Under this employment agreement, Ms. Murphy
was granted options to purchase an aggregate of 300,002 shares of Common Stock
at prices ranging from $2.25 per share to $3.40 per share. Ms. Murphy's
employment agreement also contains a two year non-compete/non-solicit
provision.
Robert H. Ottman. The Company is party to an employment agreement with
Robert Ottman, pursuant to which Mr. Ottman's employment was terminated in
February 1997. In connection with Mr. Ottman's termination, the Company
accelerated the vesting of options to purchase 75,000 shares of Common Stock
having an exercise price of $3.00 per share and paid Mr. Ottman a lump sum of
approximately $44,000 as severance. Mr. Ottman's employment agreement contains a
two year non-compete/non-solicit provision.
Richard A. Kozak. The Company was party to an employment agreement with
Richard A. Kozak, which was terminated effective February 2, 1997. Each of the
parties initially claimed the termination was the result of a breach of the
employment agreement by the other party. In settlement of their dispute and
related litigation concerning Mr. Kozak's termination, the parties agreed, among
other things, that Mr. Kozak was to (i) receive $300,000 in cash, payable by the
Company in three equal installments on April 1, July 1 and October 1, 1997, (ii)
forfeit 166,667 of his unvested options, and (iii) execute a 180-day Lock-Up
Agreement with the underwriters of the Public Offering for all but 150,000 of
the shares underlying his vested options and 80,000 other shares he holds. The
Company also accelerated the vesting of Mr. Kozak's remaining 83,333 options
which had not vested at the time of his termination. Mr. Kozak also agreed to
certain non-compete, non-solicitation and confidentiality provisions expiring on
December 31, 1997. Under his employment agreement, Mr. Kozak had been granted
stock options to purchase an aggregate of 1,383,265 shares of the Company's
Common Stock at exercise prices ranging from $0.875 per share to $15.00 per
share, of which options to purchase 1,133,265 shares had vested as of his
termination. In January 1997, Mr. Kozak exercised options to purchase 100,000 of
these shares.
The shares of Common Stock underlying the stock options held by Messrs.
Pompliano and Tronsrue and Ms. Murphy which are discussed above are subject to
a registration rights agreement. Mr. Pompliano waived his right to demand an
underwritten registration of at least 300,000 shares of Common Stock until
120 days after April 15, 1997, the date the Company's underwritten public
offering of Common Stock was consummated (the "Public Offering"). The Company
has agreed to use its best efforts to have Mr. Reich's shares included in the
Registration Rights Agreement.
<PAGE> 9
ITEM 11. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of May 31, 1997, certain information
regarding the beneficial ownership of the Company's Common Stock outstanding
(assuming the exercise of options and warrants exercisable on or within 60 days
of such date by (i) each person who is known to the Company to own 5% or more of
the Common Stock, (ii) each director of the Company, (iii) the Chief Executive
Officer and each of the Named Officers and (iv) all executive officers and
directors of the Company as a group.
Unless otherwise indicated, the named persons exercise sole voting and
investment power over the shares that are shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE OF
NAME OF BENEFICIAL OWNER(1) OF SHARES(2) TOTAL(3)
------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Anthony J. Pompliano(3)...................................... 1,662,499 4.4%
Jack E. Reich................................................ -- --
George M. Tronsrue, III(4)................................... 300,000 *
Riley M. Murphy(5)........................................... 193,752 *
George M. Middlemas(6)....................................... 1,748,147 4.9
Christopher Rafferty(7)...................................... 8,000 *
Edwin M. Banks(7)............................................ -- --
Peter C. Bentz(7)............................................ -- --
Olivier L. Trouveroy(8)...................................... -- --
Benjamin P. Giess(8)......................................... -- --
Richard A. Kozak(9).......................................... 1,041,598 2.8
Robert H. Ottman(10)......................................... 175,000 *
The Huff Alternative Income Fund, L.P.(11)................... 14,286,960 39.6
ING Equity Partners, L.P. I(12).............................. 7,946,828 22.1
First Analysis Corporation(13)............................... 3,156,420 8.8
All executive officers and directors as a group (10
persons)................................................... 2,520,800 6.6
</TABLE>
- ---------------
* Less than one percent.
(1) The address of all officers and directors listed above is in the care of
the Company.
(2) The percentage of total outstanding for each stockholder is calculated by
dividing (i) the number of shares of Common Stock deemed to be beneficially
owned by such stockholder as of May 31, 1997 by (ii) the sum of (A) the
number of shares of Common Stock outstanding as of the Record Date plus (B)
the number of shares of Common Stock issuable upon the exercise of options
or warrants held by such stockholder which were exercisable on May 31,
1997 or will become exercisable within 60 days thereafter ("currently
exercisable"). Gives effect to conversion of 183,754 shares of Series A-1
Preferred Stock into 7,350,160 shares of Common Stock and conversion of
277,500 shares of Series B Preferred Stock into 9,910,704 shares of Common
Stock, all of which occurred automatically upon consummation of the Public
Offering.
(3) Includes currently exercisable options to purchase 1,662,399 shares.
(4) Includes currently exercisable options to purchase 300,000 shares.
(5) Includes currently exercisable options to purchase 193,752 shares.
(6) Includes currently exercisable options to purchase 20,000 shares. Also
includes 788,905 shares of Common Stock owned by Apex II and 278,973 shares
of Common Stock owned by Apex I. Mr. Middlemas is a general partner of Apex
Management Partnership which is the general partner of Apex I and Apex II.
Mr. Middlemas disclaims beneficial ownership of the shares owned by Apex I
and Apex II, except to the extent of his ownership in the general partner
of Apex I and in the general partner of Apex II.
(7) Messrs. Banks and Bentz are employees of W.R. Huff Asset Management Co.,
L.L.C., an affiliate of Huff. Mr. Rafferty is an employee of WRH Partners,
L.L.C., the general partner of Huff. Messrs. Rafferty, Bentz and Banks
disclaim beneficial ownership of all shares held by Huff.
(8) Mr. Trouveroy is a Managing Partner of ING and Mr. Giess is a Partner of
ING. Messrs. Trouveroy and Giess disclaim beneficial ownership of all
shares held by ING.
<PAGE> 10
(9) Includes currently exercisable options to purchase 1,041,598 shares. Mr.
Kozak's employment was terminated effective February 2, 1997. See "Certain
Transactions."
(10) Includes currently exercisable options to purchase 175,000 shares. Mr.
Ottman's employment with the Company was terminated in February 1997.
(11) Includes currently exercisable warrants to purchase 200,000 shares. The
address for Huff is 1776 On the Green, 67 Park Place, Morristown, NJ 07960.
(12) Includes currently exercisable warrants to purchase 100,000 shares. The
address for ING is 135 East 57th Street, 16th Floor, New York, NY 10022.
(13) Includes 1,034,465 shares of Common Stock owned by Apex II. Includes
103,800 and 175,173 shares of Common Stock owned by Apex I. Includes
359,214 and 732,213 shares of Common Stock owned by The Productivity Fund
II, L.P. ("Productivity"). Includes 714,293 shares of Common Stock owned by
Environmental Private Equity Fund II, L.P. ("EPEF"). First Analysis
Corporation ("FAC") is an ultimate general partner of Apex I, Apex II,
Productivity and EPEF and may be deemed to be the beneficial owner of the
shares owned by them. FAC disclaims beneficial ownership of these shares.
This information was obtained from a Schedule 13D filed with the Securities
and Exchange Commission on August 4, 1995, as amended from time to time.
The address for First Analysis Corporation is 233 South Wacker Drive, Suite
9600, Chicago, IL 60093.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In June 1995, the Company completed a private placement of its Series B
Preferred Stock, of which ING purchased an aggregate of 100,000 shares of
Preferred Stock, warrants to purchase 428,571 shares of Common Stock at an
exercise price of $0.01 per share and a warrant to purchase 100,000 shares of
Common Stock at an exercise price of $2.50 per share. Huff and certain of its
affiliates purchased an aggregate of 100,975 shares of the Preferred Stock,
warrants to purchase 432,749 shares of Common Stock at an exercise price of
$0.01 per share, a warrant to purchase 100,000 shares of Common Stock at an
exercise price of $1.79 per share and a warrant to purchase 100,000 shares at an
exercise price of $2.50 per share. Apex and certain of its affiliates purchased
an aggregate of 21,000 shares of the Preferred Stock and warrants to purchase an
aggregate of 90,000 shares of Common Stock at an exercise price of $0.01 per
share. The price per unit in the June 1995 private placement was $100. Pursuant
to the Series B Purchase Agreement, in November 1995, ING purchased 50,000
additional shares of the Series B Preferred Stock and exercised a warrant
entitling ING to purchase 214,286 shares of Common Stock at an exercise price of
$0.01 per share. In connection with these private placements, the Company
entered into the Registration Rights Agreement dated June 26, 1995, among the
holders of the Preferred Stock, certain holders of Common Stock and certain
holders of options or warrants convertible into Common Stock (the "Registration
Rights Agreement") wherein the parties were granted piggy-back registration
rights with respect to any registration statements (other than Registration
Statements filed on Forms S-4 or S-8) filed by the Company with the Commission
at any time prior to the sixth anniversary of the Registration Rights Agreement,
and certain demand registration rights following the occurrence of, among other
things, a Qualifying Offering.
The Company also entered into the Stockholders' Agreement, dated as of June
26, 1995, with the holders of the Preferred Stock, Anthony J. Pompliano and
Richard A. Kozak, the provisions of which terminated upon
<PAGE> 11
consummation of the Public Offering. The Stockholders' Agreement, among other
things, generally restricted the transfer of the Company's stock owned by the
parties to the agreement, with the exception of stock sold: (i) in a public
offering pursuant to an effective registration statement under the Securities
Act or (ii) in the public market pursuant to Rule 144 under the Securities Act.
The agreement further provided the stockholders with rights of first refusal in
the case of sales initiated by stockholders that are parties to the agreement
and certain "tag-along" rights which allow the stockholders to sell a
proportionate amount of their stock in the event a stockholder proposed to sell
such stock to an unrelated purchaser.
In response to voting rights issues raised by the NASDAQ Stock Market staff
concerning the Company's governance structure as set forth in a Governance
Agreement between the Company and certain of the holders of the Preferred Stock
dated November 8, 1995, the Company amended its Charter, which amendments were
approved by the stockholders of the Company on January 26, 1996, such that,
until the conversion of the Preferred Stock to Common Stock and except in
certain events (which did not occur prior to the conversion of the Preferred
Stock), the Board was required to be comprised of seven members, four of whom
were to be elected by the holders of the Company's Common Stock and three of
whom were to be elected by the holders of the Company's Preferred Stock. On
February 26, 1996, the Company and the other parties to the Governance Agreement
amended its terms to be consistent with the provisions of the Charter. The
amended Governance Agreement terminated upon conversion of the Preferred Stock.
The Company was party to an employment agreement with Richard A. Kozak,
which was terminated effective February 2, 1997. Each of the parties initially
claimed the termination was the result of a breach of the employment agreement
by the other party. In settlement of their dispute and related litigation
concerning Mr. Kozak's termination, the parties agreed, among other things, that
Mr. Kozak (i) receives $300,000 in cash, payable by the Company in three equal
installments on April 1, July 1 and October 1, 1997, (ii) forfeited 166,667 of
his unvested options, and (iii) execute a 180-day Lock-Up Agreement with the
Underwriters of the Public Offering for all but 150,000 of the shares underlying
his vested options and 80,000 other shares he holds. The Company agreed to
accelerate the vesting of Mr. Kozak's remaining 83,333 options which had not
vested at the time of his termination. Mr. Kozak also waived all rights under
the Registration Rights Agreement. Mr. Kozak also agreed to certain non-compete,
non-solicitation and confidentiality provisions expiring on December 31, 1997.
Under his employment agreement, Mr. Kozak had been granted stock options to
purchase an aggregate of 1,383,265 shares of the Company's Common Stock at
exercise prices ranging from $0.875 per share to $15.00 per share, of which
options to purchase 1,133,265 shares had vested as of his termination. In
January 1997, Mr. Kozak exercised options to purchase 100,000 of these shares.
In connection with, and as a condition precedent to the consummation of the
Public Offering, the Company sold 2,099,125, 1,364,432 and 136,443 shares of
Common Stock to Huff, ING and affiliates of First Analysis Corporation,
respectively. The per share price for the shares sold to these principal
stockholders was $4.70 (the same price paid to the Company by the Underwriters
for the 4,400,000 shares sold in the Public Offering) for aggregate proceeds to
the Company equal to $16,920,000. Additionally, these stockholders elected to
receive an aggregate of 1,603,241 shares of Common Stock in lieu of
approximately $7.6 million of accrued dividends payable upon conversion of the
Preferred Stock they held. See "Stock Ownership of Certain Beneficial Owners
and Management."
On April 28, 1997, the Company extended a loan in the principal amount of
$195,000 to George M. Tronsrue, III, the Company's President and Chief Operating
Officer -- Strategy and Technology Development. The loan bears interest at 8%
per annum and is due and payable no later than April 28, 1999. Mr. Tronsrue must
prepay all amounts outstanding if his employment terminates earlier than April
28, 1999, and he must use net proceeds from the sale of any of his shares of
Common Stock prior to April 28, 1999 to prepay any principal and interest then
outstanding.
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: June 18, 1997.
AMERICAN COMMUNICATIONS SERVICES, INC.
/s/ Anthony J. Pompliano
-------------------------------
By: Anthony J. Pompliano
Executive Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ ANTHONY J. POMPLIANO Chairman of the Board of Directors June 18, 1997
------------------ (Principal Executive Officer)
Anthony J. Pompliano
/s/ DAVID L. PIAZZA Chief Financial Officer June 18, 1997
------------------ (Principal Financial and Accounting
David L. Piazza Officer)
/s/ EDWIN M. BANKS Director June 18, 1997
------------------
Edwin M. Banks
/s/ PETER C. BENTZ Director June 18, 1997
------------------
Peter C. Bentz
/s/ BENJAMIN P. GIESS Director June 18, 1997
---------------------
Benjamin P. Giess
/s/ GEORGE M. MIDDLEMAS Director June 18, 1997
-----------------------
George M. Middlemas
/s/ CHRISTOPHER L. RAFFERTY Director June 18, 1997
---------------------------
Christopher L. Rafferty
/s/ OLIVIER L. TROUVEROY Director June 18, 1997
------------------------
Olivier L. Trouveroy
</TABLE>
