<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1998
FILE NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
GLOBAL INTELLICOM, INC.
(Exact Name of Registrant as specified in its charter)
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<S> <C>
NEVADA 13-3797104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
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747 THIRD AVENUE,
NEW YORK, NEW YORK 10017
(212) 750-3772
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
--------------------------
N. NORMAN MULLER, CHIEF EXECUTIVE OFFICER
C/O 747 THIRD AVENUE,
NEW YORK, NEW YORK 10017
(212) 750-3772
(Name, address, zip code, and telephone number, including area code, of agent of
service)
--------------------------
COPIES TO:
ANDREW J. GOODMAN, ESQ.
SEYMOUR H. BUCHOLZ, ESQ.
Rosner Bresler Goodman & Unterman, LLP
521 Fifth Avenue
New York, New York 10175
(212) 661-2150
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING PRICE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 3,179,827(2) $1.52 $4,833,337 $1,425.83
Common Stock, $0.01 par value 2,580,333(3) 1.52 3,922,106 1,157.02
Common Stock, $0.01 par value 742,500(4) 1.52 1,128,600 332.94
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average price of the Common Stock on
The Nasdaq SmallCap Market on March 17, 1998.
(2) Represents shares of Common Stock issuable upon conversion of outstanding
shares of Series 6 and Series 7 Convertible Preferred Stock of the Company.
(3) Represents shares of Common Stock issuable upon exercise of various
outstanding warrants generally having exercise prices ranging from $1.99 to
$8.75 per share.
(4) Represents shares of Common Stock held by various persons.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH 19, 1998
GLOBAL INTELLICOM, INC.
COMMON STOCK
- 3,179,827 SHARES ISSUABLE UPON CONVERSION OF SERIES 6 AND SERIES 7
CONVERTIBLE PREFERRED STOCK
- 2,580,333 SHARES ISSUABLE UPON EXERCISE OF CERTAIN WARRANTS AT EXERCISE
PRICES RANGING GENERALLY FROM $1.99 TO $8.75 PER SHARE (SEE BELOW)
- 742,500 SHARES HELD BY VARIOUS STOCKHOLDERS
This offering consists of 3,179,827 shares of Common Stock ("Common Stock")
of Global Intellicom, Inc. (the "Company" or "Global") which may be issued upon
conversion of outstanding shares of the Company's Series 6 and Series 7
Convertible Preferred Stock held by persons not deemed "affiliates" of the
Company, as that term is defined under the Securities Act of 1933 (the
"Securities Act"). Such persons are identified under "Selling Stockholders." See
also "The Company-Recent Equity Financing."
This offering also consists of a total of 2,029,583 shares of Common Stock
which are issuable upon the exercise of certain outstanding warrants
(collectively, the "Warrants" and individually a "Warrant") to purchase shares
of Common Stock by persons not deemed "affiliates" of the Company, as that term
is defined under the Securities Act, and a total of 550,750 shares issuable upon
the exercise of Warrants held by present and former officers and directors of
the Company. The exercise prices for such Warrants generally range from $1.99 to
$8.75 per share, except for one Warrant for the purchase of 120,000 shares of
Common Stock which is exercisable at a discounted market price. See "Selling
Stockholders." If all such Warrants were exercised, the aggregate proceeds from
such exercise would be approximately $9,160,000 and, if realized, will be added
to the Company's working capital. See "Selling Stockholders."
In addition, this offering consists of the resale of 342,500 shares of
Common Stock issued to persons not deemed an "affiliate" of the Company, as that
term is defined under the Securities Act, and 400,000 shares issued to two
persons, one of whom is an officer and director and the other of whom is a
director of the Company, both of whom have indicated to the Company that they do
not have a present intention of selling such shares or any shares purchasable
under the Warrants held by them. See "Selling Stockholders".
The persons holding (i) shares of the Company's Series 6 and Series 7
Convertible Preferred Stock, (ii) the Warrants and (iii) the shares of Common
Stock referred to in the preceding paragraph are referred to collectively as
"Selling Stockholders" and individually as a "Selling Stockholder." The Company
will not receive any proceeds from the sale of shares by any Selling
Stockholder, other than proceeds from any exercise of Warrants.
The Company has been advised by the Selling Stockholders that there are no
underwriting arrangements with respect to the sale of the shares, and that such
shares will be sold from time to time in public sales in the over-the-counter
market at then prevailing prices or at prices related to the then current market
price or in private transactions at negotiated prices. The shares may be sold
through purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this Prospectus, or in ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. See "Selling
Stockholders" and "Plan of Distribution."
------------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
PAGE 7.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Company has agreed to pay all expenses of registration in connection
with this offering. Any brokerage commissions, underwriting discounts or similar
expenses incurred in connection with sales of the Shares will be borne by the
Selling Stockholders making such sales. The aggregate proceeds to the Selling
Stockholders from the sale of the Shares will be the purchase price of the
Shares sold, less the aggregate brokerage commissions and underwriting
discounts, if any, and any other expenses of issuance and distribution not borne
by the Company.
The Common Stock being offered hereby by the Selling Stockholders has not
been registered for sale under the securities laws of any state or jurisdiction
as of the date of this Prospectus. Brokers or dealers effecting transactions in
the Common Stock should confirm the registration thereof under the securities
law of the state in which such transactions occur, or the existence of any
exemption from registration.
The Common Stock is listed for trading on the Nasdaq SmallCap Market. On
March 17, 1998, the average sale price of the Common Stock on the Nasdaq
SmallCap Market was $1.52 per share.
The date of this Prospectus is , 1998.
<PAGE>
TABLE OF CONTENTS
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PAGE
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Available information...................................................................................... 2
Incorporation of Certain Documents by Reference............................................................ 2
The Company................................................................................................ 4
Risk Factors............................................................................................... 6
Use of Proceeds............................................................................................ 9
Selling Stockholders....................................................................................... 9
Plan of Distribution....................................................................................... 13
Litigation................................................................................................. 14
Legal Matters.............................................................................................. 14
Experts.................................................................................................... 14
</TABLE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by the Selling Stockholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The delivery
of this Prospectus at any time does not imply that the information contained
herein is correct as of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, the Company files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at 7 World Trade Center, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material may be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or from the Commission's web site at http://www.sec.gov.
The Common Stock is traded on the Nasdaq SmallCap Market, and reports and other
information concerning the Company may also be inspected and copied at The
Nasdaq Stock Market, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which can be obtained from the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by the
Company with the Commission (File No. 0-26684) under the Exchange Act:
(1) The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1996;
(2) The Company's Proxy Statement dated April 16, 1997;
2
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(3) The Company's Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997 and September 30, 1997;
(4) The Company's Report on Form 8-K dated February 27, 1998;
(5) The Company's Registration Statement on Form 8-A, filed August 29, 1995,
which incorporates a description of the Common Stock set forth in the
Company's Registration Statement on Form S-1, File No. 33-93098, effective
September 1, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13, 14 and 15(d) of the Exchange Act subsequent hereto, but prior to the
termination of this offering, shall be deemed to be incorporated herein by
reference and to be a part hereof from their respective dates of filing. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus, to the extent that a statement which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owners, to whom a copy of this Prospectus is delivered, upon the
written and oral request of any such person, a copy of any or all of the
documents referred to above which have been incorporated into this Prospectus by
reference (other than the exhibits to such documents). Requests for such copies
should be directed to Johan de Muinck Keizer, Vice President and General
Counsel, Global Intellicom, Inc., 747 Third Avenue, New York, New York 10017,
telephone (212) 750-3772.
3
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THE COMPANY
GENERAL
Global Intellicom, Inc. (together with its subsidiaries, "Global" or the
"Company") provides system integration and information technology services and
assembles and supplies build-to-suit computer equipment for a wide range of
customers, including corporate clients, governmental entities, institutions,
professional users and resellers.
The Company's subsidiaries and operations have been consolidated into two
distinct divisions, a Systems Integration Group, and a production division which
assembles and markets custom-built servers, workstations and personal computers.
The Systems Integration Group, which includes the Company's Vircom, Vircom TG,
Nevcor TG, Natcom and Natcom Automated Solutions units, acts as a value-added
reseller and provides a range of information technology consulting services,
including systems integration, internal and external linking of networks,
installation of new applications, assistance with non-compatible operating
systems and architectures, and design and support services for enterprise-wide
client server computer systems. The production division assembles, supplies and
supports state-of-the-art, custom-built network products, including servers,
workstations and personal computers, and markets them to large corporate and
institutional customers and to systems integrators and value-added resellers.
COMPANY HISTORY
Global was incorporated in September, 1994, and became a publicly-owned
company through a distribution of its shares under a registration statement
declared effective by the Securities and Exchange Commission on September 1,
1995. The Company's shares were listed for trading on the Nasdaq SmallCap Market
in May, 1996.
The Company has grown both through acquisitions and through internal
expansion. The aggregator operations of Nevcor were discontinued in late 1997,
but the Company's distribution of brand-name products as a value-added reseller
continues in the Systems Integration Group and, despite the discontinuance of
the aggregator business, Global's revenues have continued to increase.
Effective as of December 31, 1997, the Company has negotiated the
termination of various agreements under which it acquired its Natcom subsidiary
in 1995, and has accepted the resignation of Natcom's President, Frederick
Smith. The Company has been evaluating, and is proceeding with arrangements for,
the discontinuance of certain Natcom operations.
The consolidation of Global's operations into two divisions recognizes that
a narrower focus in products, services and markets is necessary to sustain
expansion in sales, and that such narrower focus is expected to prove more
profitable in the long term than pursuit of the wholesale distribution of
computer products at every market level.
SYSTEMS INTEGRATION GROUP
The Systems Integration Group functions as a value-added reseller, adding
computer hardware and software and other peripheral equipment to basic computer
system components furnished for the corporate, government, education, and
professional end-user. The Group can offer products from major brand-name
suppliers such as Compaq, IBM, Digital, Hewlett-Packard, NCR, Sun MicroSystems,
Microsoft and Novell, under distributor or reseller agreements between the
Company and such suppliers.
In addition, the Systems Integration Group offers systems integration
services for both local area and wide area networks. Services include analysis
of needs, system configuration, installation of fiber optic, wireless or
conventional network circuitry, network integration, software loading, testing
of system components, training of network personnel and system maintenance.
4
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By furnishing such a range of services, Global believes it can combine the
elements needed to offer a complete system or, in the Company's view, a "total
solution" to meet client needs. Global's management believes that selling
complete systems rather than separate components can generate repeat business
and more loyal customers, and is more likely to yield higher margins. Moreover,
the ability to provide diversified system integration is expected to position
the Company to meet additional information system needs of larger,
multi-divisional organizations.
On March 9, 1998, the Company formed CableCo, Inc. as a wholly-owned
subsidiary of Vircom, TG. CableCo will install fiber optic, conventional and
wireless circuitry for computer network projects serviced by the Systems
Integration Group.
The Systems Integration Group has also begun to develop, from its client
base and various professional contacts, a database of potential information
technology candidates for full and part-time placement. The Group intends to
offer its clients fee-based access to this database.
To date, the Systems Integration Group has developed a diversified customer
base which includes such large corporate and governmental users as ABC Capital
Cities, Lockheed Martin, Lucent Technologies, PNC Bank, Smith Barney,
Westinghouse, IKEA, Saturn, Shared Medical Systems, the Federal Aviation
Administration and the U.S. Coast Guard.
PRODUCTION DIVISION
Through its production division, Global In-Sync, the Company markets its own
state-of-the art, Pentium-Registered Trademark--class, customized servers,
workstations and personal computers, built to individual customer specifications
in the Company's facilities in Springfield, Virginia. Custom-built In-Sync
products are particularly suited for situations where standard models of
name-brand equipment are either not cost-effective, are not flexible enough to
fill a particular client need, or are not available in quantity on a stringent
delivery schedule.
In-Sync products and associated warranty and repair services are distributed
primarily through third-party value-added resellers and systems integrators who,
in turn, sell the products and various services to commercial enterprises and
governmental users. A major customer of the division is Lockheed Martin, sales
to which accounted for more than 20.8% of the Company's revenues in 1996 and
22.0% of revenues from continuing operations in 1997.
In-Sync is one of only two certified build-to-order suppliers of workstation
products for the General Services Administration.
COMPANY FACILITIES
The Company's facility for the assembly of its network products consists of
a 52,000 square foot plant in Springfield, Virginia, and is occupied under a
lease expiring in 2001. The Systems Integration Group's principal office and
warehouse is located in Exton, Pennsylvania, under a lease expiring in 2004, and
the Company also maintains office facilities in Florida, Indiana, New Jersey and
New York. The Company's executive offices are at 747 Third Avenue, New York, New
York 10017, and are occupied under a lease expiring in 2005.
EMPLOYEES
As of December 31, 1997, the Company had 203 full-time employees, including
75 persons employed in sales and marketing functions, 66 persons in production
and assembly, 8 persons involved in technical support roles, 10 persons involved
in purchasing and warehouse functions, and 44 persons involved in executive,
administrative, and finance functions. None of Global's employees are covered by
collective bargaining agreements. Global considers its relations with its
employees to be good.
5
<PAGE>
RECENT EQUITY FINANCING
As of February 20, 1998, the Company completed the sale of 2,200 shares of
Series 6 Convertible Preferred Stock and 1,425 shares of Series 7 Convertible
Preferred Stock to investors in private placement transactions, receiving
aggregate net proceeds of $3,255,500 from the financing. Such financing proceeds
have been used for the carrying of inventory and receivables and for reduction
of accounts payable, increasing the Company's working capital base in order to
sustain the Company's higher level of revenues.
As provided in the Certificates of Designation for the Series 6 and Series 7
Convertible Preferred Stock, such shares have a liquidation preference of $1,000
each, are non-voting, and carry a dividend of $50.00 per year, payable
semi-annually. At the election of the Company, dividends may be paid in shares
of Common Stock, priced at the five-day average closing bid price of common
shares prior to the dividend record date. Shares of Series 6 and Series 7
Preferred Stock are convertible into Common Stock at a conversion price equal to
75% of the five-day average closing bid price per share of Common Stock
immediately prior to conversion. The Company may call such shares for redemption
at a price equal to 133% of the liquidation preference of the shares. The shares
of Common Stock into which Series 6 and Series 7 Preferred shares are
convertible have been included in the registration statement of which this
Prospectus forms a part.
The Company has filed a Certificate of Designation authorizing the future
private sale of up to 1,500 shares of Series 8 Convertible Preferred Stock,
which, at a price of $1,000 per share, could generate gross proceeds of up to
$1,500,000 for the Company. To date, the Company has received subscriptions for
the purchase of 225 shares.
Series 8 Preferred shares are non-voting, have a liquidation preference of
$1,000 each, and will carry a 5% dividend payable in cash or in shares of Common
Stock at the election of the Company. Shares of Series 8 Preferred Stock are
convertible into Common Stock at a 25% discount to the five-day average closing
bid price per share of Common Stock. Series 8 shares are callable at the option
of the Company at a redemption price equal to 133% of their liquidation
preference. The Company will be obligated to amend the registration statement of
which this Prospectus forms a part to include therein in the shares of Common
Stock into which such Series shares are convertible.
COMPETITION
Competition in the distribution and integration of computer systems and
equipment remains intense. The Company's competitors in systems integration
services include national, regional and local distributors, resellers and
integrators, most of which are privately held, and, accordingly, information on
their size and business is not readily available, although the Company believes
there are a significant number of competitors having substantially greater
resources than Global. Competitors in the production of custom-built servers,
workstations and personal computers include Compaq, Comp USA, Dell, Gateway and
Hewlett-Packard.
Key competitive factors in the wholesale distribution industry include
product line selection and quality, availability, prompt delivery, pricing and
technical support. While a number of national and regional distributors and
integrators of computer equipment may have substantially greater financial
resources and larger staffs than the Company, the Company views its emphasis on
service and technical support, and its offering of total systems and total
solutions for customers, as a competitive strength.
RISK FACTORS
The Shares offered hereby involve significant risks. In addition to the
other information contained or incorporated by reference in this Prospectus, the
following factors should be considered carefully in evaluating the Company and
its business before purchasing the Common Stock offered by this Prospectus. The
following is not intended as, and should not be considered, an exclusive list of
relevant factors.
6
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OPERATING LOSSES. For the year ended December 31, 1996, the Company had a
net loss of $(1,085,388) after income tax benefits, equal to a loss of $(.33)
per share. For the nine months ended September 30, 1997, the Company's total net
loss was $(4,219,698) or $(.56) per share after income tax benefits, including a
loss of $(605,104) or $(.10) from continuing operations and a loss of
$(3,614,595) or $(.46) per share from discontinued operations. While the Company
has consolidated its subsidiaries and has been taking steps to reduce overhead
and other costs, there is no assurance that this will prove to be the case or
that the Company's operations will become profitable. At the time of the filing
of the registration statement of which this Prospectus forms a part, the Company
had not completed all work required in connection with the preparation and audit
of its year-end financial statements. Such financial statements will be included
in the Company's annual report on Form 10-K to be filed with the Commission.
DEPENDENCE ON RECEIVABLES AND FLOOR PLAN FINANCING. The Company has a
factoring facility with Century Business Credit Corporation ("Century"), under
which Century purchases, on an uncommitted basis, receivables from the Company.
Such receivables financing facility is important to the Company's liquidity and
enables the Company to better manage its cash flow. The Company also has had a
floor planning financing arrangement with Finova Capital Corporation ("Finova"),
which was used primarily for the discontinued aggregator business. The Company
views its relationship with Century as important and beneficial to the Company's
operations, and has been phasing out its relationship with Finova. While any
loss of the relationship with Century is not anticipated, there can be no
assurance that the Company will continue indefinitely to have access to the
Century financing facility, and any loss of such facility in the future would
have a materially adverse effect on the Company's business. In the event of any
such loss, the Company would be required to obtain replacement receivables
financing, but there can be no assurance that such replacement financing would
be available.
CUSTOMER CONCENTRATION. The Company's largest customer, Lockheed Martin,
accounted for 20.8% of the Company's revenues in 1996 and 22.0% of revenues from
continuing operations in 1997. The Company has no long-term commitments for
continuing orders from such customer, and there can be no assurance that the
Company will be able to maintain or increase the current level of sales derived
from this or any other customers or attract additional customers. The loss of
such customer could have a materially adverse affect on the Company's business,
financial condition and results of operation.
NEED FOR ADDITIONAL FINANCING. The Company has sold 2,200 shares of Series
6 Convertible Preferred Stock and 1,425 shares of Series 7 Convertible Preferred
Stock to investors in private placements, receiving net proceeds of $3,255,500
from the financing. The Company is seeking additional financing and, in
connection therewith, has authorized the sale of up to 1,500 shares of new
Series 8 Convertible Preferred Stock. To date, the Company has received
subscriptions for 225 shares at a price of $1,000 per share. Proceeds from the
sale of Series 8 Preferred shares, if obtained, will be added to the Company's
working capital base, which the Company intends to increase in order to support
the Company's higher level of revenues, particularly since the Company no longer
has access to the floor planning financing arrangements used in its discontinued
aggregator operations. The Company may need to obtain additional equity or debt
financing for similar purposes in the near or intermediate term, but there is no
assurance that such financing will be available on terms acceptable to the
Company, or on any terms. The Company's business and operations would be
materially and adversely affected if it is unable to obtain a level of financing
and working capital commensurate with the level of its revenues.
EFFECT OF ADDITIONAL SHARES TRADED. The Shares included in the registration
statement of which this Prospectus forms a part have not been previously
registered and available for public sale by the Selling Stockholders. Assuming,
at the date of this Prospectus, (i) that all shares of Series 6 and Series 7
Convertible Preferred Stock were to be converted into shares of Common Stock on
the basis of a market price equal to the March 17, 1998 average price of $1.52
per share, and (ii) that all Warrants were to be exercised, regardless of the
fact that the exercise prices of the Warrants are higher than such average price
(except in the case of one Warrant for the purchase of 120,000 shares
exercisable at a discounted market
7
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price), there would be a total of 14,005,005 shares of Common Stock outstanding,
the shares of Common Stock issuable upon such conversion of Series 6 and Series
7 Preferred Stock would represent 22.7%, the shares issuable upon such exercise
of Warrants would represent 18.4%, respectively, of the total shares of Common
Stock to be then outstanding after such conversion and such exercise, and such
shares would be available for public sale. Future sales of significant numbers
of shares of Common Stock in the public market could adversely affect the
prevailing market price of the Common Stock and also could impair the Company's
ability to raise capital through subsequent offerings of securities. Assuming
that all Warrants were exercised at their stated exercise prices, the Company
would realize aggregate proceeds of approximately $9,160,000 from such exercise.
COMPETITIVE NATURE OF BUSINESS. Competition in the integration, supply and
servicing of computer systems and equipment is intense. The Company's
competitors include national, regional and local integrators, distributors and
resellers. Most of these competitors are privately held, and, accordingly,
information on their size and business is not readily available, although the
Company believes there are a significant number of competitors having
substantially greater resources than Global. Key competitive factors include
quality, availability and prompt delivery of services and equipment, pricing and
technical support. While a number of national and regional distributors and
integrators of computer equipment may have substantially greater financial
resources and larger staffs than the Company, the Company views its emphasis on
service and technical support, and its offering of total systems and total
solutions for customers, as a competitive strength.
TECHNOLOGICAL CHANGE AND PRODUCT OBSOLESCENCE. The microcomputer industry
is characterized by rapid product improvement and technological change which
result in relatively short product life cycles and rapid product obsolescence.
Although such change and short product life cycles may result in an increased
desire on the part of certain customers to upgrade their computer installations,
thereby presenting new marketing opportunities, such rapid product changes also
introduce elements of uncertainty in the furnishing of services and products.
While the Company has stock rotation privileges and price protection rights in
its major vendor agreements, there is no assurance that the Company will always
be able to dispose of any inventory of older products at a profit. Also, there
can be no assurance that unforeseen new product developments will not affect the
Company adversely.
MANAGEMENT AND OTHER KEY PERSONNEL. The Company's future success depends on
the Company's ability to attract, retain and motivate key managerial,
information technology and marketing personnel. There is presently substantial
competition for the services of experienced and skilled managerial, information
technology and marketing personnel, and there can be no assurance that the
Company will be able to obtain the services of such personnel on a consistent
basis in the future. The inability to attract, retain and motivate key
managerial, information technology and marketing personnel in the future could
have a material adverse effect on the Company's business, financial position and
results of operations.
VOLATILITY OF SHARE PRICE. The trading price of Global Common Stock has
been in the past and may in the future be subject to wide fluctuations in
response to variations in operating results, announcements of technological
innovations or new products by the Company, its suppliers or competitors, and
other events or factors. In addition, the NASDAQ and other stock markets have
recently experienced large price and volume fluctuations, which often have been
unrelated to the operating performance of specific companies or market sectors,
such as the stock market's reactions to instabilities in certain Asian
economies. These broad market fluctuations may also adversely affect the market
price of the Common Stock.
LACK OF DIVIDENDS. The Company has not paid any cash dividends on the
Global Common Stock and it is not anticipated that it will do so in the
foreseeable future. Also, the existence of classes of outstanding preferred
stock means that holders of preferred shares will receive the dividends to which
they are entitled before any dividends may be paid to holders of Common Stock.
8
<PAGE>
PREFERRED STOCK PROVISIONS; ANTI-TAKEOVER MEASURES. The Board of Directors
has authority to issue up to 10,000,000 shares of preferred stock and to fix the
rights, preferences, privileges and limitations, including voting rights, of the
preferred stock without further vote or action by the Company's stockholders.
The rights of the holders of Global Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued. The Company presently has four outstanding classes of Preferred
Stock, two of which were issued in connection with the acquisition of
subsidiaries by the Company, and the holders of such preferred stock have rights
to receive dividends prior to the payment of any dividends to holders of Common
Stock. Preferred stock may continue to be issued in connection with future
acquisitions and for other corporate purposes, such as financing, and could also
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company or obtain a change in
control of the Board of Directors of the Company.
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY. Certain
statements contained or incorporated by reference in this Prospectus constitute
estimates of future performance or other forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such risks, uncertainties and other important factors include, among
other things, Global's success in implementing its respective business strategy,
including success in arranging financing where required; competition; general
economic and business conditions; and other factors referenced in this
Prospectus. These forward-looking statements speak only as of the date of this
Prospectus.
USE OF PROCEEDS
The shares of Common Stock being offered hereby are for the account of the
Selling Stockholders. Accordingly, the Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders. See "Selling
Stockholders."
If and when any of the Warrants listed in the table under "Selling
Stockholders" is exercised, the Company will receive, as payment for the
purchase of shares issuable thereunder, the exercise price set forth in the
applicable Warrant. If received, such payment will be added to the Company's
working capital. Since the Warrants generally have exercise prices substantially
above the current market price of the Common Stock (which averaged $1.52 per
share on the Nasdaq SmallCap Market on March 17, 1998), the Company does not
anticipate the present exercise of a substantial number of Warrants. If all of
the Warrants were to be exercised, the aggregate payments to the Company from
such exercise would be approximately $9,160,000.
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
Selling Stockholders. The number of shares that may actually be sold by the
Selling Stockholders will be determined by such Selling Stockholders, and may
depend upon a number of factors, including, among other things, the market price
of the Common Stock from time to time. The table below sets forth information as
of March 17, 1998, concerning the beneficial ownership of shares held by the
Selling Stockholders, including separately tabulated information concerning (i)
shares of Common Stock issuable upon conversion of Series 6 and Series 7
Convertible Preferred Stock; (ii) shares of Common Stock held by Company
directors, a Company employee and others; and (iii) Warrants held by directors
and employees of the Company and by other Selling Stockholders.
9
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
SHARES OF COMMON OFFERED SHARES OF COMMON
STOCK OWNED IN THE STOCK OWNED
BEFORE OFFERING OFFERING AFTER OFFERING(3)
----------------------- -------------- ---------------------
NAME OF STOCKHOLDER NUMBER(1) PERCENT(2) NUMBER NUMBER PERCENT
- ------------------------------------------------- ---------- ----------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
PREFERRED STOCK(4)
SERIES 6
Augustine Fund, L.P.............................. 175,439 1.3 175,439
Bronia GMbH...................................... 877,193 6.3 877,193
Thomson Kernaghan & Co., Ltd..................... 877,193 6.3 877,193
SERIES 7
Suaro, Ltd....................................... 175,439 1.3 175,439
Frederick Lenz................................... 87,719 0.6 87,719
Jimmy Dean Dowda................................. 43,860 0.4 43,860
Rida Holdings.................................... 175,439 1.3 175,439
James Skalko..................................... 43,860 0.3 43,860
Bruce Knox....................................... 43,860 0.3 43,860
Louise Nilsdotter................................ 131,579 0.9 131,579
Spratt Family Trust.............................. 87,719 0.6 87,719
Arnold Zousmer................................... 438,597 3.1 438,597
Colbennett LLC................................... 21,930 0.2 21,930
--------------
Total Shares................................. 3,179,827
ISSUED COMMON STOCK
MANAGEMENT AND EMPLOYEE STOCK
David A. Mortman (5)............................. 502,617 3.6 300,000(6)
Wayne M. Rogers (5).............................. 797,593 5.7 100,000(6)
Robert Grear (5)................................. 7,500 -- 7,500
OTHER STOCK
Liberty Capital Group............................ 285,000 2.0 285,000
Cyn Del & Co., Inc............................... 50,000 0.4 50,000
--------------
Total Issued Shares.......................... 742,500
</TABLE>
<TABLE>
<CAPTION>
SHARES OF COMMON
SHARES OF COMMON STOCK OFFERED SHARES OF COMMON
STOCK OWNED IN THE OFFERING STOCK OWNED
BEFORE OFFERING ----------------------- AFTER OFFERING(3)
------------------------ EXERCISE --------------------
NAME OF STOCKHOLDER NUMBER(1) PERCENT(2) NUMBER PRICE NUMBER PERCENT
- ----------------------------------------------------- ----------- ----------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
WARRANTS--MANAGEMENT (7)(9)
David Boim (7)....................................... 7,500 -- 7,500 $ 1.99
Anthony Cucchi (18).................................. 45,000 0.3 45,000 $ 2.02
Johan de Muinck Keizer (8)........................... 20,000 0.1 20,000 $ 2.02
Howard Maidenbaum (19)............................... 50,000 0.4 50,000 $ 2.02
David A. Mortman..................................... 246,250 1.8 246,250 (10)
N. Norman Muller (20)................................ 70,000 0.5 70,000 $ 2.02
Wayne M. Rogers...................................... 47,000 0.3 47,000 (11)
Anthony Russo........................................ 20,000 0.1 20,000 $ 2.02
Thomas Smith (21).................................... 45,000 0.3 45,000 $ 2.02
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON
SHARES OF COMMON STOCK OFFERED SHARES OF COMMON
STOCK OWNED IN THE OFFERING STOCK OWNED
BEFORE OFFERING ----------------------- AFTER OFFERING(3)
------------------------ EXERCISE --------------------
NAME OF STOCKHOLDER NUMBER(1) PERCENT(2) NUMBER PRICE NUMBER PERCENT
- ----------------------------------------------------- ----------- ----------- ---------- ----------- --------- ---------
OTHER WARRANTS
<S> <C> <C> <C> <C> <C> <C>
Avonwood Capital Corp................................ 35,000 0.2 35,000 $ 3.00
Cooke Capital, Inc................................... 100,000 0.7 100,000 (12)
Cyn Del & Co., Inc................................... 300,000 2.1 300,000 (13)
Destler Services, Inc................................ 200,000 1.4 200,000 (14)
First National Bank Of Long Island................... 1,250 -- 1,250 $ 2.03
Glenn Michael Financial, Inc......................... 50,000 0.4 50,000 $ 2.00
Liberty Capital Group................................ 700,000 5.0 700,000 (15)
MWW/ Strategic Communications, Inc................... 8,333 -- 8,333 $ 3.00
Carl Nurick.......................................... 20,000 0.1 20,000 $ 2.00
Pacific Consulting Group............................. 150,000 1.1 150,000 (16)
Willie Salet......................................... 35,000 0.2 35,000 $ 3.00
Perry Scherr......................................... 45,000 0.3 45,000 $ 4.00
Suncoast Capital Corp................................ 120,000 0.9 120,000 (17)
Wharton Associates................................... 40,000 0.3 40,000 $ 4.00
Infusion Capital Partners, LLP....................... 225,000 1.6 225,000 $ 2.00
----------
Total Shares Issuable Upon Exercise of
Warrants....................................... 2,580,333
</TABLE>
- ------------------------
(1) In the case of information under "Preferred Stock", represents shares
issuable upon conversion of Series 6 and Series 7 Preferred Stock into
Common Stock, and assumes each holder converts all shares of Preferred Stock
owned by such holder; in the case of information under "Issued Common
Stock", represents shares issued and currently issuable (shares issuable
upon the exercise of Warrants are separately listed below); in the case of
"Warrants--Management" and "Other Warrants", represents Warrants issued or
presently issuable.
(2) The percentages indicated assume that (i) all shares of Series 6 and Series
7 Convertible Preferred Stock were converted into shares of Common Stock
immediately prior to the date of this Prospectus (based on the average
market price of Common Stock on March 17, 1998), and that (ii) all Warrants
were exercised and the shares purchased thereunder were issued immediately
prior to the date of this Prospectus, resulting in a pro forma total of
14,005,005 shares of Common Stock outstanding, instead of 8,244,845 shares
outstanding (including the pending issuance of 692,500 shares) as of March
17, 1998.
(3) Because the Selling Stockholders may sell all, some or none of the shares
held, and because the offering contemplated by this Prospectus is not being
underwritten, no estimate can be given as to the number of shares that will
be held by the Selling Stockholder upon or prior to termination of this
offering. See "Plan of Distribution."
(4) Represents shares of Common Stock issuable upon conversion of outstanding
shares of Series 6 and Series 7 Convertible Preferred Stock held by the
Selling Shareholders indicated above. Share amounts are based on the average
price of Common Stock as of March 17, 1998.
(5) Mr. Mortman is President and Chief Operating Officer and a director, and
Mr. Rogers is a director; Mr. Grear is an employee.
(6) Represents shares of Common Stock issued to the named directors under
restricted stock agreements dated February 26, 1998, pursuant to which
ownership of such shares will vest in eight equal quarterly installments
over two years. Each such person has indicated to the Company in writing
that he has no present intention of selling any of such shares.
11
<PAGE>
(7) N. Norman Muller is Chairman, Chief Executive Officer and a director; David
A. Mortman is President, Chief Operating Officer and a director; Howard
Maidenbaum is Executive Vice President and a director; Messrs. Rogers and
Smith are directors; Mr. Cucchi resigned as Vice Chairman and as a director
effective as of January 23, 1998; Mr. Russo manages the Systems Integration
Group; Mr. Boim is the former President of Global InSync.
(8) Mr. Keizer is Vice President and General Counsel of the Company.
(9) Represents only shares issuable upon exercise of the Warrants.
(10) David A. Mortman holds 245,000 Warrants exercisable at $2.02, and 1,250
Warrants exercisable at $5.25. Mr. Mortman has indicated he has no present
intention of selling shares purchasable under such Warrants.
(11) Wayne M. Rogers holds 45,000 Warrants exercisable at $2.02, and 2,000
Warrants exercisable at $5.25. Mr. Rogers has indicated he has no present
intention of selling shares purchasable under such Warrants.
(12) Cooke Capital, Inc. holds 50,000 Warrants exercisable at $2.00 and 50,000
Warrants exercisable at $3.00.
(13) Cyn Del & Co., Inc. holds 150,000 Warrants exercisable at $2.75 and 150,000
Warrants exercisable at $4.00.
(14) Destler Services, Inc. holds 100,000 Warrants exercisable at $3.50 and
100,000 Warrants exercisable at $5.00.
(15) Liberty Capital Group holds 700,000 Warrants exercisable at various prices
ranging from $2.75 to $8.75.
(16) Pacific Consulting Group holds 50,000 Warrants exercisable at $3.00, 50,000
Warrants exercisable at $4.00 and 50,000 Warrants exercisable at $6.00
(17) Suncoast Capital Corp. holds 120,000 Warrants exercisable at a price equal
to the lesser of the closing price of Common Stock on June 26, 1996, or 75%
of the bid price of the Common Stock on the exercise date. See "Litigation."
(18) Anthony Cucchi also owns beneficially 27,593 shares of Common Stock, not
being included in this offering.
(19) In addition to the Warrants held by him, Howard Maidenbaum, his adult
children and a family corporation own beneficially 461,533 shares of Common
Stock, not being included in this offering.
(20) In addition to the Warrants held by him, N. Norman Muller's wife and a
corporation owned by his adult children own beneficially a total of 442,280
shares of Common Stock, not being included in this offering.
(21) In addition to the Warrants held by him, Thomas Smith and a corporation
controlled by him own beneficially a total of 265,000 shares of Common
Stock, not being included in this offering.
Additional information concerning the above listed Selling Stockholders may
be set forth from time to time in supplements to this Prospectus. See "Plan of
Distribution."
Pursuant to the terms of the Series 6 and Series 7 Convertible Preferred
Stock and the Warrants, the Company agreed to file the Registration Statement of
which this Prospectus forms a part for the purpose of registering the potential
resale of the shares obtainable by the holders of such Preferred stock and of
the Warrants.
In addition, the Company and the Selling Stockholders have agreed to
indemnify each other and certain affiliated parties from and against any losses
or claims arising out of, among other things, (1) untrue statement or alleged
untrue statement of a material fact or (2) any material omission, contained or
referred to in the Registration Statement. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the Company, pursuant to the
12
<PAGE>
foregoing provisions, the Company has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
All of the registration and filing fees, printing expenses, blue sky fees,
if any, and fees and disbursements of counsel for the Company will be paid by
the Company; provided, however, that any underwriting discounts and/or selling
commissions, and the fees and disbursements of counsel to the respective Selling
Stockholders, will be borne by the respective Selling Stockholders.
Except for the persons listed under "Management and Employee Stock" and
under "Warrants-- Management" in the preceding table (and the notes thereto),
the Company does not believe that any of the Selling Stockholders has, or within
the past three years has had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates.
PLAN OF DISTRIBUTION
Sales of the shares may be made from time to time by the Selling
Stockholders, or, subject to applicable law, by pledgees, donees, distributees,
transferees or other successors in interest. Such sales may be made on the
Nasdaq SmallCap Market, in another over-the-counter market, on a national
securities exchange (any of which may involve crosses and block transactions),
in privately negotiated transactions or otherwise or in a combination of such
transactions at prices and at terms then prevailing or at prices related to the
then current market price, or at privately negotiated prices. In addition, any
shares covered by this Prospectus which qualify for sale pursuant to Section
4(1) of the Securities Act and Rule 144 promulgated thereunder may be sold under
such provisions rather than pursuant to this Prospectus. Without limiting the
generality of the foregoing, the shares may be sold in one or more of the
following types of transactions: (a) a block trade in which the broker-dealer so
engaged will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholder may
arrange for other brokers or dealers to participate in the resales.
In connection with distribution of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered hereunder in the course of hedging the positions they
assume with the Selling Stockholders. The Selling Stockholders may also enter
into option or other transactions with broker-dealers which require the delivery
to the broker-dealer of the shares registered hereunder, which the broker-dealer
may resell pursuant to this Prospectus. The Selling Stockholders may also pledge
the shares registered hereunder to a broker or dealer and upon a default, the
broker or dealer may effect sales of the pledged shares pursuant to this
Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders in amounts
to be negotiated in connection with the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. Any dealer or brokerage participating in
any distribution of the shares may be required to deliver a copy of this
Prospectus, including any supplement to this Prospectus (the "Prospectus
Supplement"), to any person who purchases any of the shares from or through such
dealer or broker.
The Company has advised the Selling Stockholders that, during such time as
they may be engaged in a distribution of the shares included herein, they are
required to comply with Regulation M promulgated under the Exchange Act. In
general, Regulation M precludes any Selling Stockholders, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of
13
<PAGE>
the distribution until the entire distribution is complete. A "distribution" is
defined in the rules as an offering of securities that is distinguished from
ordinary trading activities and depends on the "magnitude of the offering and
the presence of special selling efforts and selling methods." Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security.
It is anticipated that the Selling Stockholders will offer the shares listed
in the table under "Selling Stockholders" from time to time, except that (i)
Messrs. Mortman and Rogers have indicated they do not intend to sell their
shares presently (see Notes 6, 10 and 11 to the table) and (ii) the holders of
the Warrants may or may not choose to exercise such Warrants in order to
purchase the shares listed next to their respective names in the table,
depending on the relationship between the prevailing market price of the Common
Stock from time to time and the exercise prices of the various Warrants (see the
information with regard to exercise prices in the table under "Selling
Stockholders"). Further, because it is possible that a significant number of
Shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the Company's
Common Stock. See "Risk Factors--Effect of Additional Shares Traded."
LITIGATION
On September 18, 1997, Suncoast Capital Corp., one of the Selling
Shareholders, commenced an action in the Supreme Court of the State of New York
against the Company and three officers and directors for alleged damages. The
Complaint alleges that the Company breached its obligations under a Warrant held
by Suncoast to register shares of Common Stock for public sale. Such shares are
included in the registration statement of which this Prospectus forms a part.
The action is entitled SUNCOAST CAPITAL CORP. V. GLOBAL INTELLICOM, INC., ET AL,
Supreme Court of the State of New York, New York County--Index No. 604797/97.
The Company believes the action to lack merit and the damage claim for
$1,000,000 to be contrived and insupportable, and has asserted, as an
affirmative defense, that the transaction with Suncoast Capital Corp. was void
under New York's usury law, and has made a counterclaim in the amount of
$29,666.57. The Company has been defending the action vigorously.
On or about October 30, 1996, Scott and Ellen Arch, the former owners of the
Company's Nevcor subsidiary, commenced an action against Nevcor, the Company and
two of the Company's directors as guarantors (the "Arch Complaint"). The Arch
Complaint stems from a dispute over the proper calculation of certain state,
local and federal income taxes incurred by the plaintiffs in 1994, which were
included in the Nevcor purchase price. According to the plaintiffs, they are due
an additional payment of $93,449. Nevcor and the Company believe that all sums
due to the plaintiffs have been paid and are defending the action vigorously.
On or about September 30, 1997, Grove Avenue Corporation, the entity which
in October of 1994 sold the assets from which the Nevcor and Vircom subsidiaries
were created to the Company (the "Acquisition"), filed an amended complaint
against the Company and its subsidiaries, seeking damages in excess of $50,000
and certain injunctive relief as a result of the Company's non-payment of
certain installment payments allegedly due as a result of the Acquisition. The
Company believes that the discontinuance of the Nevcor business will
significantly alter the schedule of payments due under the Acquisition agreement
and is actively attempting to resolve this dispute.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered hereby
will be passed upon for the Company by Rosner Bresler Goodman & Unterman, LLP,
521 Fifth Avenue, New York, New York 10175.
EXPERTS
The consolidated financial statements of Global Intellicom, Inc. and
subsidiaries included in the Company's annual report on Form 10-K for the year
ended December 31, 1996 have been audited by Miller, Ellin & Company,
independent auditors, as indicated in their report with respect thereto. Such
financial statements are incorporated herein by reference in reliance upon the
report of said firm given upon their authority as experts in accounting and
auditing.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the expenses to be
incurred by it in connection with the Common Stock being offered hereby:
<TABLE>
<S> <C>
SEC Registration Fee............................................ $2,428.01
Printing registration statement and other documents............. *6,000.00
Legal fees and expenses......................................... *15,000.00
Accounting fees and expenses.................................... *1,000.00
Miscellaneous expenses.......................................... *3,000.00
</TABLE>
- ------------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Eighth of the Restated Certificate of Incorporation of the Company
contains the following provision which provides for the indemnification of
directors and officers of the Company:
EIGHTH: No director or officer of the Corporation shall have personal
liability to the Corporation or its stockholders for damages for breach
of fiduciary duty as a director or officer, except that this provision
shall not eliminate the liability of a director or officer for (a) acts
or omissions which involve intentional misconduct, fraud or a knowing
violation of law, or (b) the payment of distributions in violation of
Nevada General Corporation Law Section 78. 300. No amendment to or repeal
of this Article EIGHTH shall apply to or have any effect on the liability
or alleged liability of any director or officer of the Corporation for or
with respect to any acts or omissions of such director or officer
occurring prior to such amendment or repeal.
In accordance with Section 78.751, Title 7 of the Nevada Revised Statutes,
Article Eighth of the Certificate of Incorporation of the Company eliminates the
personal liability of directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director with certain limited
exceptions set forth in Section 78.751, and Article Ninth of the Certificate of
Incorporation provides for indemnification of Company directors and officers
against any such liability. The Company may also obtain and maintain its own
insurance for the benefit of its directors and officers and the directors and
officers of its subsidiaries, insuring such persons against certain liabilities
including liabilities arising under the securities law.
Agreements between the Company and the purchasers of the Company's Series 6
and Series 7 Convertible Preferred Stock, and various Warrants and other
agreements, provide for reciprocal indemnification between the Company and its
controlling persons on the one hand, and the Selling Stockholders and their
respective controlling persons on the other hand, against certain liabilities in
connection with this offering, including liabilities under the Securities Act of
1933.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------- -------------------------------------------------------------------------------------------------
<C> <C> <S>
4.01 -- Certificate of Designation for Series 6 Convertible Preferred Stock
4.02 -- Certificate of Designation for Series 7 Convertible Preferred Stock
5.01 -- Form of Opinion of Rosner Bresler Goodman & Unterman, LLP (1)
10.01 -- Preliminary Form of Restricted Stock Agreements with David A. Mortman and Wayne M. Rogers (2)
23.01 -- Form of Consent of Miller & Ellin (1)
23.02 -- Consent of Rosner Bresler Goodman & Unterman, LLP (included in Exhibit 5.01 hereof)
24.01 -- Power of attorney (included in the signature page of Part II of this Registration Statement)
</TABLE>
- ------------------------
(1) Executed consents will be filed by amendment.
(2) Final form to be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purpose of determining any liability under the Securities Act,
each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, that is incorporated by
reference in the Registration Statement, shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the Company
pursuant of Item 15 of the Registration Statement, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the mater 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 Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on March 19, 1998.
GLOBAL INTELLICOM, INC.
BY: /S/ N. NORMAN MULLER
-----------------------------------------
N. Norman Muller
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints N. Norman Muller and David A. Mortman, and each
of them, will full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereof, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Director, Chairman and
/s/ NORMAN MULLER Chief Executive Officer
- ------------------------------ (Principal Executive March 19, 1998
N. Norman Muller Officer)
/s/ DAVID A. MORTMAN Director, President and
- ------------------------------ Chief Operating Officer March 19, 1998
David A. Mortman
/s/ HOWARD MAIDENBAUM Director and Executive Vice
- ------------------------------ President March 19, 1998
Howard Maidenbaum
/s/ WAYNE M. ROGERS Director
- ------------------------------ March 19, 1998
Wayne M. Rogers
/s/ THOMAS W. SMITH Director
- ------------------------------ March 19, 1998
Thomas W. Smith
/s/ ROBERT L. OLSON Vice President, Finance
- ------------------------------ (Principal Accounting March 19, 1998
Robert L. Olson Officer)
II-3
<PAGE>
EXHIBIT 4.01
CERTIFICATE OF DESIGNATION
OF
GLOBAL INTELLICOM, INC.
Certificate of Designations, Preferences
Rights and Limitations of
SERIES 6 CONVERTIBLE PREFERRED STOCK
under Section 78.1955 of Nevada Revised Statutes
_____________
David A. Mortman and Johan de Muinck Keizer HEREBY CERTIFY that they are,
respectively, the President and the Secretary of GLOBAL INTELLICOM, INC. (the
"Corporation"), a corporation organized and existing under the laws of the State
of Nevada, and that, pursuant to (i) authority conferred upon the Board of
Directors by the Corporation's Restated Certificate of Incorporation and (ii)
Section 78.1955 of Nevada Revised Statutes, the Board of Directors of the
Corporation duly adopted the following resolution providing for the issuance of
a series of convertible preferred stock, as follows:
RESOLVED, that, pursuant to authority expressly granted to and
vested in the Board of Directors by the provisions of the Restated
Certificate of Incorporation and Section 78.1955 of the Nevada Revised
Statutes, the Board of Directors hereby creates a series consisting of
2,200 shares of Series 6 Convertible Preferred Stock of the
Corporation, and hereby fixes the powers, designation, preferences and
rights of the shares of such Series, and the qualifications,
limitations, or restrictions thereof (in addition to those provisions
set forth in the Restated Certificate of Incorporation which may be
applicable to the Preferred Stock), as follows:
1. SERIES 6 CONVERTIBLE PREFERRED STOCK.
There is hereby created a separate and distinct series of convertible
preferred stock, consisting of 2,200 shares thereof, to be designated Series 6
Convertible Preferred Stock (the "Series 6 Preferred Stock"), having the
powers, preferences, privileges, and rights, and the qualifications, limitations
and restrictions thereon, as are set forth herein. All shares of Series 6
Preferred Stock shall have a stated value of $1,000.00 per share and shall be of
equal rank with each other. Shares of the Series 6 Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation shall be cancelled and shall
not be subject to reissuance by the Corporation for any purpose. Holders of
<PAGE>
the Series 6 Preferred Stock may convert the Series 6 Preferred Stock into
Common Stock of the Corporation, par value $0.01 ("Common Stock"), as more
particularly set forth below. At the election of the Corporation, dividends on
the Series 6 Preferred Stock may be payable in Common Stock, as more
particularly set forth below.
2. LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the business and affairs of the Corporation, and before the
holders of shares either of Common Stock or of any other stock of the
Corporation ranking junior to the Series 6 Preferred Stock shall be entitled to
any payment on account of such shares, the holders of Series 6 Preferred Stock
then outstanding shall be entitled to receive as a liquidation preference an
amount equal to One Thousand ($1,000.00) Dollars per share (the "Liquidation
Preference"), plus dividends to which such shareholders have become entitled and
which have not theretofore been paid. After the holders of Series 6 Preferred
Stock shall have received such Liquidation Preference payment (including all
accrued and unpaid dividends), they shall have no right or claim to any of the
remaining assets of the Corporation. The shares of Series 6 Preferred Stock
shall rank pari passu with shares of the Corporation's Series 3 Preferred Stock
and Series 5 Preferred Stock.
(b) If upon any liquidation, dissolution or winding up, the
Corporation shall have insufficient funds to permit payment to the holders of
Series 6 Preferred Stock then outstanding of the entire amount to which they are
entitled as a Liquidation Preference thereunder, then such funds as are
available for such purpose shall be distributed among such holders on the basis
of the number of shares of Series 6 Preferred Stock held by each such holder so
that, as nearly as may be practicable, the amount each such holder shall receive
shall represent the same proportion of such available funds as such holder's
total holding of shares of Series 6 Preferred Stock represents of the total
shares of Series 6 Preferred Stock at the time outstanding.
(c) The sale of all or substantially all of the assets of the
Corporation, or the merger or consolidation of the Corporation with another
entity, shall not be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section.
- 2 -
<PAGE>
3. DIVIDENDS.
The holders of Series 6 Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, dividends
payable either
(i) in cash, out of funds legally available for the payment of
dividends, at an annual rate equal to five (5%) percent of the
Liquidation Preference; or
(ii) at the election of the Corporation, in fully-paid and non-
assessable shares of Common Stock at an annual rate equal to five (5%) percent
of the Liquidation Preference, and such shares shall be valued, for the purposes
of any dividend payment, at the average of the closing bid price for the Common
Stock for the five days on which the Common Stock was traded immediately prior
to the record date for the payment of such dividend.
Dividends shall be payable semi-annually on the first day of July and on the
last day of December in each year commencing July 1, 1998, to stockholders of
record on the immediately preceding June 15th or December 15th or such other
record date fixed for the purpose by the Board of Directors. Dividends payable
on shares of Series 6 Preferred Stock for the initial dividend period and for
any period less than a full six-month period shall accrue from the date of
issuance of the shares of Series 6 Preferred Stock on which such dividends are
payable, and shall be computed and apportioned on the basis of a 180-day period
composed of six 30-day months. Dividends in arrears may be declared and paid at
any time, without reference to any regular dividend payment date, to
stockholders of record as of a date established by the Board of Directors.
Holders of Series 6 Preferred Stock shall not be entitled to any dividends,
however payable, in excess of the full dividends provided for herein, and no
interest or sum of money in lieu of interest shall be payable in respect of any
dividend payment which may be in arrears.
4. NO DIVIDENDS OR DISTRIBUTIONS TO JUNIOR SECURITIES.
Except as may be otherwise provided in this Certificate, so long as
any shares of Series 6 Preferred Stock are outstanding, no dividends shall be
declared or paid or set aside for payment, and no other distribution shall be
declared or made, upon any Common Stock of the Corporation or upon any other
shares of a class or series of stock which is junior in right and ranking to the
Series 6 Preferred Stock, unless all amounts then due to the holders of Series 6
Preferred Stock, including the dividends provided for herein, have been paid.
- 3 -
<PAGE>
5. VOTING.
Except as otherwise expressly provided herein or as provided by law,
the Series 6 Preferred Stock shall have no voting rights.
6. CONVERSION INTO COMMON STOCK.
The holders of Series 6 Preferred Stock shall have a conversion right
as follows (the "Conversion Right").
(a) Beginning on the 60th day after the date of original issuance of
a share of Series 6 Preferred Stock, each such share of Series 6 Preferred Stock
shall be convertible, at the option of the holder thereof, into shares of
Common Stock. The number of shares of Common Stock into which each share of
Series 6 Preferred Stock may be converted shall be the quotient obtained by
dividing the Liquidation Preference by an amount equal to 75% of the five-day
average closing bid price per share of Common Stock immediately prior to the
date of conversion by such holder.
(b) No fractional shares of Common Stock shall be issued upon
conversion of the Series 6 Preferred Stock and, in lieu of any fractional shares
to which the holder would otherwise be entitled, the number of shares of Common
Stock issuable upon conversion shall be rounded to the nearer whole number.
(c) A Conversion Right shall be exercised by a holder by delivering
to the Corporation during regular business hours or to such other place as may
be designated by the Corporation, the original certificate or certificates for
the shares to be converted, duly endorsed or assigned either in blank or to the
Corporation (if required by it), accompanied by written notice in substantially
the form annexed hereto as Exhibit A, stating that the holder elects to convert
such shares (or the amount thereof as to which the conversion right is to be
exercised, which amount shall be not less than that represented by shares
having an aggregate Liquidation Preference of $50,000) and stating the name or
names (with address and Social Security or Federal Taxpayer Identification
Number) in which the certificate or certificates for the shares of Common Stock
are to be issued. Conversion shall be deemed to have been effected on the date
when the aforesaid delivery is made and such date is referred to herein as the
"Conversion Date". As promptly as practicable thereafter, the Corporation shall
issue and deliver to or upon the written order of such holder, to the place
designated by such holder, a certificate or certificates for the number of
shares of Common Stock to which such
- 4 -
<PAGE>
holder is entitled. The person in whose name the certificate or certificates
for Common Stock are to be issued shall be deemed to have become a stockholder
of record on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event such person shall be deemed
to have become a stockholder of record on the next succeeding date on which the
transfer books are open. Upon conversion of only a portion of the number of
shares covered by a certificate representing shares of Series 6 Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series 6 Preferred Stock representing the unconverted
portion of the certificate so surrendered.
(d) The Corporation shall, at all times when Series 6 Preferred Stock
shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of Series 6
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series 6 Preferred Stock.
(e) All shares of Common Stock which may be issued in connection with
the conversion provisions set forth herein will, upon issuance by the
Corporation, be validly issued, fully paid and non-assessable. No adjustment
shall be made for dividends on any share of Series 6 Preferred Stock which is
being converted (unless such dividends have been declared and are unpaid as of
the Conversion Date) or on any share of Common Stock issued on exercise of a
holder's Conversion Right.
(f) In the event certificates for shares of Common Stock issuable
upon conversion of the Series 6 Preferred Stock are not delivered within seven
business days after receipt of a conversion notice from a holder, and if such
delay is within the control of the Corporation, the Corporation will pay a late
delivery penalty equal to 1% of the amount of the aggregate Liquidation
Preference of shares of Series 6 Preferred Stock being so converted, for each
additional business day beyond the first seven business days of such delay;
provided, however that no penalty shall accrue if (i) the Company has issued a
redemption notice in accordance with Section 8 hereof within the initial
seven-day delay period, or (ii) the delay in delivering certificates is caused
by an act of force majeure,
- 5 -
<PAGE>
or (iii) the delay is caused by an act or omission of the affected holder, such
as a failure to deliver original certificates for the Series 6 Preferred Stock.
7. ADJUSTMENTS.
The Conversion Price from time to time in effect shall be subject to
adjustment (to the nearest cent) from time to time as follows:
(a) In case of any merger (other than a merger in which the
Corporation is not the continuing or surviving entity), combination, or any
reclassification of the Common Stock of the Corporation, each share of the
Series 6 Preferred Stock shall thereafter be convertible into shares of stock or
other securities or property into which a holder of Common Stock immediately
prior to such merger, combination or reclassification would have been entitled
upon such merger, combination or reclassification. In any such case,
appropriate adjustment (as determined by the Board of Directors in good faith)
shall be made in the application of the provisions herein set forth with respect
to the rights and interests thereafter of the holders of Series 6 Preferred
Stock, such that the provisions set forth herein shall thereafter be applicable,
as nearly as reasonably may be, in relation to any share of stock or other
property thereafter issuable upon conversion.
(b) Whenever the Conversion Price shall be adjusted as provided in
this Section 7, the Corporation shall forthwith file, at the office of the
Corporation or of any transfer agent designated as transfer agent for the Series
6 Preferred Stock, a statement, certified by the President of the Corporation,
showing in detail the facts requiring such adjustment and the method of
calculating the Conversion Price that shall be in effect after such adjustment.
The Corporation shall also cause a copy of such statement to be sent by first
class mail, postage prepaid, to each holder of record of Series 6 Preferred
Stock at such holder's address as shown in the records of the Corporation.
8. REDEMPTION.
(a) Beginning 60 days after the date of original issuance of any
shares of Series 6 Preferred Stock, the Corporation, at its sole option,
expressed by resolution of its Board of Directors, may call for redemption and
may redeem shares of Series 6 Preferred Stock in whole, or from time to time in
part, upon notice as set forth below; provided, however, that no share of Series
6 Preferred Stock shall be redeemed prior to 60 days from the date of the
original issuance of such share. The
- 6 -
<PAGE>
redemption price per share of Series 6 Preferred Stock shall be equal to 133% of
the Liquidation Preference.
(b) Notice of any redemption of the Series 6 Preferred Stock shall be
given as set forth in Section 9 below, not less than five (5) nor more than
seven (7) days prior to the date fixed in such notice for such redemption (the
"Redemption Date") to each holder of record of shares of Series 6 Preferred
Stock to be redeemed, at such holder's address as the same shall appear on the
books of the Corporation. Such notice shall specify the time and place of
redemption, the redemption price, and, if less than all the shares owned by any
stockholder are to be redeemed, shall also specify the number of shares which
are to be redeemed.
(c) If any such notice of redemption shall have been duly given and
if, on or before the redemption date specified therein, all funds necessary for
such redemption shall have been set aside by the Corporation, separate and apart
from its other funds, in trust for the pro rata benefit of the holders of the
shares so called for redemption, so as to be and continue to be available
therefor, then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, all shares so
called for redemption shall no longer be deemed outstanding on and after such
redemption date, and the right to receive dividends thereon and all other rights
with respect to such shares shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof to receive the amount
payable on redemption, without interest; and provided further that the right to
convert shares of Series 6 Preferred Stock into Common Stock shall terminate,
effective as of the day prior to the date of the notice of redemption.
9. NOTICES.
Any notices required to be given to any holder of Series 6 Preferred
Stock shall be deemed properly given if deposited in the United States mail,
postage prepaid, or sent by facsimile or by overnight or express delivery
service, followed by duplicate notice via United States first class mail,
postage prepaid, and addressed to the holder of record at such holder's address
appearing at the books of the Corporation.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series 6 Convertible Preferred Stock to be duly executed by its
President and by its Secretary, respectively, this ___ day of December, 1997.
GLOBAL INTELLICOM, INC.
By:
--------------------------------
, Title
By:
--------------------------------
, Secretary
[Corporate Seal]
- 8 -
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION OF SERIES 6 PREFERRED STOCK
(To be Executed by the Registered Holder in order to Convert the Series 6
Preferred Stock)
The undersigned Holder hereby irrevocably elects to convert ____
shares of Series 6 Preferred Stock, represented by stock certificate No(s).
___________ (the "Preferred Stock Certificates") into shares of common stock
("Common Stock") of Global Intellicom, Inc. (the "Company") according to the
conditions of the Certificate of Designation of Series 6 Preferred Stock, as of
the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates. No fee will
be charged to the Holder for any conversion, except for transfer taxes, if any.
A copy of each of the Preferred Stock Certificates being converted is attached
hereto.
Date of Conversion: _________________________
Applicable Conversion Price: ___________________
Number of Shares of
Common Stock to be Issued: ___________________
Name of Holder: _____________________________
By: _____________________________________
(Signature)
Title: _____________________________________
Address: ___________________________________
Social Security or
Federal Taxpayer ID No:_______________________
IMPORTANT
No shares of Common Stock will be issued until the original Series 6 Preferred
Stock Certificate(s) to be converted and the Notice of Conversion are received
by the Company. The
<PAGE>
Holder shall fax, or otherwise deliver, a copy of this completed and fully
executed Notice of Conversion to the Company at the office of the Company or
such other location designated by the Company, and shall deliver, at the same
time, the original Series 6 Preferred Stock Certificate(s) representing the
Series 6 Preferred Stock being converted, duly endorsed for transfer. The
Company shall use its best efforts to cause its Transfer Agent to issue
shares of Common Stock and deliver them to the shareholder no later than five
(5) business days following receipt of a facsimile of this Notice of
Conversion AND receipt by the Company of the original Series 6 Preferred
Stock Certificate(s) to be converted, all in accordance with the terms of the
Certificate of Designation.
-2-
<PAGE>
EXHIBIT 4.02
CERTIFICATE OF DESIGNATION
OF
GLOBAL INTELLICOM, INC.
Certificate of Designations, Preferences
Rights and Limitations of
SERIES 7 CONVERTIBLE PREFERRED STOCK
under Section 78.1955 of Nevada Revised Statutes
_____________
David A. Mortman and Johan de Muinck Keizer HEREBY CERTIFY that they are,
respectively, the President and the Secretary of GLOBAL INTELLICOM, INC. (the
"Corporation"), a corporation organized and existing under the laws of the State
of Nevada, and that, pursuant to (i) authority conferred upon the Board of
Directors by the Corporation's Restated Certificate of Incorporation and (ii)
Section 78.1955 of Nevada Revised Statutes, the Board of Directors of the
Corporation duly adopted the following resolution providing for the issuance of
a series of convertible preferred stock, as follows:
RESOLVED, that, pursuant to authority expressly granted to and
vested in the Board of Directors by the provisions of the Restated
Certificate of Incorporation and Section 78.1955 of the Nevada Revised
Statutes, the Board of Directors hereby creates a series consisting of
2,500 shares of Series 7 Convertible Preferred Stock of the
Corporation, and hereby fixes the powers, designation, preferences and
rights of the shares of such Series, and the qualifications,
limitations, or restrictions thereof (in addition to those provisions
set forth in the Restated Certificate of Incorporation which may be
applicable to the Preferred Stock), as follows:
1. SERIES 7 CONVERTIBLE PREFERRED STOCK.
There is hereby created a separate and distinct series of convertible
preferred stock, consisting of 2,500 shares thereof, to be designated Series 7
Convertible Preferred Stock (the "Series 7 Preferred Stock"), having the powers,
preferences, privileges, and rights, and the qualifications, limitations and
restrictions thereon, as are set forth herein. All shares of Series 7 Preferred
Stock shall have a stated value of $1,000.00 per share and shall be of equal
rank with each other. Shares of the Series 7 Preferred Stock redeemed,
purchased or otherwise acquired by
<PAGE>
the Corporation shall be cancelled and shall not be subject to reissuance by the
Corporation for any purpose. Holders of the Series 7 Preferred Stock may
convert the Series 7 Preferred Stock into Common Stock of the Corporation, par
value $0.01 ("Common Stock"), as more particularly set forth below. At the
election of the Corporation, dividends on the Series 7 Preferred Stock may be
payable in Common Stock, as more particularly set forth below.
2. LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the business and affairs of the Corporation, and before the
holders of shares either of Common Stock or of any other stock of the
Corporation ranking junior to the Series 7 Preferred Stock shall be entitled to
any payment on account of such shares, the holders of Series 7 Preferred Stock
then outstanding shall be entitled to receive as a liquidation preference an
amount equal to One Thousand ($1,000.00) Dollars per share (the "Liquidation
Preference"), plus dividends to which such shareholders have become entitled and
which have not theretofore been paid. After the holders of Series 7 Preferred
Stock shall have received such Liquidation Preference payment (including all
accrued and unpaid dividends), they shall have no right or claim to any of the
remaining assets of the Corporation. The shares of Series 7 Preferred Stock
shall rank pari passu with shares of the Corporation's Series 3 Preferred Stock,
Series 5 Preferred Stock and Series 6 Preferred Stock.
(b) If upon any liquidation, dissolution or winding up, the
Corporation shall have insufficient funds to permit payment to the holders of
Series 7 Preferred Stock then outstanding of the entire amount to which they are
entitled as a Liquidation Preference thereunder, then such funds as are
available for such purpose shall be distributed among such holders on the basis
of the number of shares of Series 7 Preferred Stock held by each such holder so
that, as nearly as may be practicable, the amount each such holder shall receive
shall represent the same proportion of such available funds as such holder's
total holding of shares of Series 7 Preferred Stock represents of the total
shares of Series 7 Preferred Stock at the time outstanding.
(c) The sale of all or substantially all of the assets of the
Corporation, or the merger or consolidation of the Corporation with another
entity, shall not be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section.
-2-
<PAGE>
3. DIVIDENDS.
The holders of Series 7 Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, dividends
payable either
(i) in cash, out of funds legally available for the payment of
dividends, at an annual rate equal to five (5%) percent of the
Liquidation Preference; or
(ii) at the election of the Corporation, in fully-paid and non-
assessable shares of Common Stock at an annual rate equal to five (5%) percent
of the Liquidation Preference, and such shares shall be valued, for the purposes
of any dividend payment, at the average of the closing bid price for the Common
Stock for the five days on which the Common Stock was traded immediately prior
to the record date for the payment of such dividend.
Dividends shall be payable semi-annually on the first day of July and on the
last day of December in each year commencing July 1, 1998, to stockholders of
record on the immediately preceding June 15th or December 15th or such other
record date fixed for the purpose by the Board of Directors. Dividends payable
on shares of Series 7 Preferred Stock for the initial dividend period and for
any period less than a full six-month period shall accrue from the date of
issuance of the shares of Series 7 Preferred Stock on which such dividends are
payable, and shall be computed and apportioned on the basis of a 180-day period
composed of six 30-day months. Dividends in arrears may be declared and paid at
any time, without reference to any regular dividend payment date, to
stockholders of record as of a date established by the Board of Directors.
Holders of Series 7 Preferred Stock shall not be entitled to any dividends,
however payable, in excess of the full dividends provided for herein, and no
interest or sum of money in lieu of interest shall be payable in respect of any
dividend payment which may be in arrears.
4. NO DIVIDENDS OR DISTRIBUTIONS TO JUNIOR SECURITIES.
Except as may be otherwise provided in this Certificate, so long as
any shares of Series 7 Preferred Stock are outstanding, no dividends shall be
declared or paid or set aside for payment, and no other distribution shall be
declared or made, upon any Common Stock of the Corporation or upon any other
shares of a class or series of stock which is junior in right and ranking to the
Series 7 Preferred Stock, unless all amounts then due to the holders of Series 7
Preferred Stock, including the dividends provided for herein, have been paid.
-3-
<PAGE>
5. VOTING.
Except as otherwise expressly provided herein or as provided by law,
the Series 7 Preferred Stock shall have no voting rights.
6. CONVERSION INTO COMMON STOCK.
The holders of Series 7 Preferred Stock shall have a conversion right
as follows (the "Conversion Right").
(a) Beginning on the 60th day after the date of original issuance of
a share of Series 7 Preferred Stock, each such share of Series 7 Preferred Stock
shall be convertible, at the option of the holder thereof, into shares of
Common Stock. The number of shares of Common Stock into which each share of
Series 7 Preferred Stock may be converted shall be the quotient obtained by
dividing the Liquidation Preference by an amount equal to 75% of the five-day
average closing bid price per share of Common Stock immediately prior to the
date of conversion by such holder.
(b) No fractional shares of Common Stock shall be issued upon
conversion of the Series 7 Preferred Stock and, in lieu of any fractional shares
to which the holder would otherwise be entitled, the number of shares of Common
Stock issuable upon conversion shall be rounded to the nearer whole number.
(c) A Conversion Right shall be exercised by a holder by delivering
to the Corporation during regular business hours or to such other place as may
be designated by the Corporation, the original certificate or certificates for
the shares to be converted, duly endorsed or assigned either in blank or to the
Corporation (if required by it), accompanied by written notice in substantially
the form annexed hereto as Exhibit A, stating that the holder elects to convert
such shares (or the amount thereof as to which the conversion right is to be
exercised, which amount shall be not less than that represented by shares
having an aggregate Liquidation Preference of $50,000) and stating the name or
names (with address and Social Security or Federal Taxpayer Identification
Number) in which the certificate or certificates for the shares of Common Stock
are to be issued. Conversion shall be deemed to have been effected on the date
when the aforesaid delivery is made and such date is referred to herein as the
"Conversion Date". As promptly as practicable thereafter, the Corporation shall
issue and deliver to or upon the written order of such
-4-
<PAGE>
holder, to the place designated by such holder, a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled. The
person in whose name the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a stockholder of record on the applicable
Conversion Date unless the transfer books of the Corporation are closed on that
date, in which event such person shall be deemed to have become a stockholder of
record on the next succeeding date on which the transfer books are open. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series 7 Preferred Stock surrendered for conversion, the
Corporation shall issue and deliver to or upon the written order of the holder
of the certificate so surrendered for conversion, at the expense of the
Corporation, a new certificate covering the number of shares of Series 7
Preferred Stock representing the unconverted portion of the certificate so
surrendered.
(d) The Corporation shall, at all times when Series 7 Preferred Stock
shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of Series 7
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series 7 Preferred Stock.
(e) All shares of Common Stock which may be issued in connection with
the conversion provisions set forth herein will, upon issuance by the
Corporation, be validly issued, fully paid and non-assessable. No adjustment
shall be made for dividends on any share of Series 7 Preferred Stock which is
being converted (unless such dividends have been declared and are unpaid as of
the Conversion Date) or on any share of Common Stock issued on exercise of a
holder's Conversion Right.
(f) In the event certificates for shares of Common Stock issuable
upon conversion of the Series 7 Preferred Stock are not delivered within seven
business days after receipt of a conversion notice from a holder, and if such
delay is within the control of the Corporation, the Corporation will pay a late
delivery penalty equal to 1% of the amount of the aggregate Liquidation
Preference of shares of Series 7 Preferred Stock being so converted, for each
additional business day beyond the first seven business days of such delay;
provided, however that no penalty shall accrue if (i) the Company has issued a
redemption notice in
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accordance with Section 8 hereof within the initial seven-day delay period, or
(ii) the delay in delivering certificates is caused by an act of force majeure,
or (iii) the delay is caused by an act or omission of the affected holder, such
as a failure to deliver original certificates for the Series 7 Preferred Stock.
7. ADJUSTMENTS.
The Conversion Price from time to time in effect shall be subject to
adjustment (to the nearest cent) from time to time as follows:
(a) In case of any merger (other than a merger in which the
Corporation is not the continuing or surviving entity), combination, or any
reclassification of the Common Stock of the Corporation, each share of the
Series 7 Preferred Stock shall thereafter be convertible into shares of stock or
other securities or property into which a holder of Common Stock immediately
prior to such merger, combination or reclassification would have been entitled
upon such merger, combination or reclassification. In any such case,
appropriate adjustment (as determined by the Board of Directors in good faith)
shall be made in the application of the provisions herein set forth with respect
to the rights and interests thereafter of the holders of Series 7 Preferred
Stock, such that the provisions set forth herein shall thereafter be applicable,
as nearly as reasonably may be, in relation to any share of stock or other
property thereafter issuable upon conversion.
(b) Whenever the Conversion Price shall be adjusted as provided in
this Section 7, the Corporation shall forthwith file, at the office of the
Corporation or of any transfer agent designated as transfer agent for the Series
7 Preferred Stock, a statement, certified by the President of the Corporation,
showing in detail the facts requiring such adjustment and the method of
calculating the Conversion Price that shall be in effect after such adjustment.
The Corporation shall also cause a copy of such statement to be sent by first
class mail, postage prepaid, to each holder of record of Series 7 Preferred
Stock at such holder's address as shown in the records of the Corporation.
8. REDEMPTION.
(a) Beginning 60 days after the date of original issuance of any
shares of Series 7 Preferred Stock, the Corporation, at its sole option,
expressed by resolution of its Board of Directors, may call for redemption and
may redeem shares of Series 7 Preferred Stock in whole, or
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<PAGE>
from time to time in part, upon notice as set forth below; provided, however,
that no share of Series 7 Preferred Stock shall be redeemed prior to 60 days
from the date of the original issuance of such share. The redemption price per
share of Series 7 Preferred Stock shall be equal to 133% of the Liquidation
Preference.
(b) Notice of any redemption of the Series 7 Preferred Stock shall be
given as set forth in Section 9 below, not less than five (5) nor more than
seven (7) days prior to the date fixed in such notice for such redemption (the
"Redemption Date") to each holder of record of shares of Series 7 Preferred
Stock to be redeemed, at such holder's address as the same shall appear on the
books of the Corporation. Such notice shall specify the time and place of
redemption, the redemption price, and, if less than all the shares owned by any
stockholder are to be redeemed, shall also specify the number of shares which
are to be redeemed.
(c) If any such notice of redemption shall have been duly given and
if, on or before the redemption date specified therein, all funds necessary for
such redemption shall have been set aside by the Corporation, separate and apart
from its other funds, in trust for the pro rata benefit of the holders of the
shares so called for redemption, so as to be and continue to be available
therefor, then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, all shares so
called for redemption shall no longer be deemed outstanding on and after such
redemption date, and the right to receive dividends thereon and all other rights
with respect to such shares shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof to receive the amount
payable on redemption, without interest; and provided further that the right to
convert shares of Series 7 Preferred Stock into Common Stock shall terminate,
effective as of the day prior to the date of the notice of redemption.
9. NOTICES.
Any notices required to be given to any holder of Series 7 Preferred
Stock shall be deemed properly given if deposited in the United States mail,
postage prepaid, or sent by facsimile or by overnight or express delivery
service, followed by duplicate notice via United States first class mail,
postage prepaid, and addressed to the holder of record at such holder's address
appearing at the books of the Corporation.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series 7 Convertible Preferred Stock to be duly executed by its
President and by its Secretary, respectively, this day of January, 1998.
GLOBAL INTELLICOM, INC.
By:
-----------------------------
, Title
By:
-----------------------------
, Secretary
[Corporate Seal]
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EXHIBIT A
NOTICE OF CONVERSION OF SERIES 7 PREFERRED STOCK
(To be Executed by the Registered Holder in order to Convert the Series 7
Preferred Stock)
The undersigned Holder hereby irrevocably elects to convert ____
shares of Series 7 Preferred Stock, represented by stock certificate No(s).
___________ (the "Preferred Stock Certificates") into shares of common stock
("Common Stock") of Global Intellicom, Inc. (the "Company") according to the
conditions of the Certificate of Designation of Series 7 Preferred Stock, as of
the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates. No fee will
be charged to the Holder for any conversion, except for transfer taxes, if any.
A copy of each of the Preferred Stock Certificates being converted is attached
hereto.
Date of Conversion: _________________________
Applicable Conversion Price: ___________________
Number of Shares of
Common Stock to be Issued: ___________________
Name of Holder: _____________________________
By: _____________________________________
(Signature)
Title: _____________________________________
Address: ___________________________________
Social Security or
Federal Taxpayer ID No:_______________________
IMPORTANT
No shares of Common Stock will be issued until the original Series 7 Preferred
Stock Certificate(s) to be converted and the Notice of Conversion are received
by the Company. The Holder shall fax, or otherwise deliver, a copy of this
completed and fully executed Notice of Conversion to the
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Company at the office of the Company or such other location designated by the
Company, and shall deliver, at the same time, the original Series 7 Preferred
Stock Certificate(s) representing the Series 7 Preferred Stock being converted,
duly endorsed for transfer. The Company shall use its best efforts to cause its
Transfer Agent to issue shares of Common Stock and deliver them to the
shareholder no later than five (5) business days following receipt of a
facsimile of this Notice of Conversion AND receipt by the Company of the
original Series 7 Preferred Stock Certificate(s) to be converted, all in
accordance with the terms of the Certificate of Designation.
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EXHIBIT 5.01
March , 1998
Global Intellicom, Inc.
747 Third Avenue
New York, New York 10017
Re: Registration Statement on Form S-3 under the Securities Act of 1933
-------------------------------------------------------------------
Gentlemen:
In our capacity as counsel to Global Intellicom, Inc., a Nevada corporation
(the "Company"), we have been asked to render this opinion in connection with a
Registration Statement on Form S-3 (the "Registration Statement), being filed
contemporaneously herewith by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, covering an aggregate
of 6,502,660 shares (the "Shares") of Common Stock, $0.01 par value, which have
been included in the Registration Statement for the respective accounts of the
persons identified in the Registration Statement as Selling Stockholders.
The Shares include (i) 3,179,827 shares of Common Stock issuable upon
conversion (the "Conversion Shares") of the Company's Series 6 and Series 7
Convertible Preferred Stock, (ii) 2,580,333 shares of Common Stock (the "Warrant
Shares") issuable upon the exercise of certain warrants ("Warrants") listed
under "Selling Stockholders" in the Prospectus included in the Registration
Statement, and (iii) 742,500 shares of Common Stock ("Issued Shares") held by
persons listed under "Issued Common Stock" in "Selling Stockholders."
In that connection, we have examined the Certificate of Incorporation and
the By-Laws of the Company, both as amended to date, the Registration Statement,
corporate proceedings of the Company relating to the issuance of the Common
Stock and such other instruments and documents as we have deemed relevant under
the circumstances.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the
corporate records furnished to us by the Company include all corporate
proceedings taken by the Company to date in connection with the issuance of the
Conversion Shares, the Warrant Shares and the Issued Shares.
<PAGE>
We are members of the bar of the State of New York, and have made such
examination of the laws of the State of New York and the laws of the United
States of America as we have deemed relevant to this opinion. To the extent the
laws of any jurisdiction other than the State of New York or the United States
of America are applicable to any of the foregoing opinions, we have assumed the
laws of such jurisdiction are identical to the laws of the State of New York.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nevada.
2. The Conversion Shares, when duly issued in conversion of the Series 6
and Series 7 Convertible Preferred Stock, and the Warrant Shares, when
duly issued and paid for pursuant to the exercise of the Warrants,
will be, and the Issued Shares are, duly and validly authorized and
issued, fully paid and non-assessable.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
ROSNER BRESLER GOODMAN &
UNTERMAN, LLP
By:
-------------------------------
A Member of the Firm
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EXHIBIT 10.01
DAVID MORTMAN
70 DYER COURT
NORWOOD, NJ 07648
March 4, 1998
Global Intellicom
747 Third Avenue
New York, NY 10017
Gentlemen:
This will confirm that, in regard to the 300,000 shares of Global
Intellicom common stock to be granted to me, we have agreed that such shares
will vest over a period of two years in eight equal installments of 37,500
shares each.
I further confirm to you that I have no present intention of selling any of
these shares that may have vested to date.
Very truly yours,
David A. Mortman
<PAGE>
MR. WAYNE ROGERS
11828 LA GRANGE AVENUE
LOS ANGELES, CA 90052
March 4, 1998
Global Intellicom, Inc.
747 Third Avenue
New York, New York 10017
Gentlemen:
This will confirm that, in regard to the 100,000 shares of Global
Intellicom common stock to be granted to me, we have agreed that such shares
will vest over a period of two years in eight equal installments of 12,5000
shares each.
I further confirm to you that I have no present intention of selling any of
these shares that may have vested to date.
Very truly yours,
Wayne Rogers
<PAGE>
EXHIBIT 23.01
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 22, 1997, which appears on page
F-3 of the Annual Report on Form 10-K of Global Intellicom, Inc. and
Subsidiaries for the years ended December 31, 1996 and 1995 and for the period
from September 1, 1994 to December 31, 1994, as well as for the period January
1, 1994 to December 7, 1994 for Amcom Business Centers Corp. (the "Predecessor")
and to the reference to our firm under the caption "Experts" in the prospectus.
MILLER, ELLIN & COMPANY, LLP
New York, New York
March 6, 1998
