SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
Glasgal Communications, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a- 6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
<PAGE>
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
-2-
<PAGE>
GLASGAL COMMUNICATIONS, INC.
September 3, 1996
Dear Stockholders:
You are cordially invited to attend the 1996 Annual Meeting of
Stockholders of Glasgal Communications, Inc., which will be held at the Pearl
River Hilton Hotel, 500 Veterans Memorial Drive, Pearl River, New Jersey 10965,
on Thursday, October 3, 1996, at 10:00 A.M., local time.
Information about the Annual Meeting, including a listing and
discussion of the matters on which the Stockholders will act, may be found in
the enclosed Notice of Annual Meeting and Proxy Statement.
We hope that you will be able to attend the Annual Meeting.
However, whether or not you anticipate attending in person, I urge you to
complete, sign and return the enclosed proxy card promptly to ensure that your
shares will be represented at the Annual Meeting. If you do attend, you will, of
course, be entitled to vote in person, and if you vote in person such vote will
nullify your proxy.
Sincerely,
RALPH GLASGAL
Chairman of the Board and President
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE>
GLASGAL COMMUNICATIONS, INC.
151 VETERANS DRIVE
NORTHVALE, NEW JERSEY 07647
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------
To our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Glasgal Communications, Inc., a Delaware corporation (the "Company"), will be
held at the Pearl River Hilton Hotel, 500 Veterans Memorial Drive, Pearl River,
New Jersey 10965, on Thursday, October 3, 1996, at 10:00 A.M., local time for
the following purposes:
1. To elect seven (7) members to the Board of
Directors of the Company to serve until the next annual
meeting of stockholders and until their successors have been
duly elected and shall have qualified;
2. To ratify the appointment of Arthur Andersen LLP
as the Company's independent public accountants for the
fiscal year ending April 30, 1997; and
3. To consider and act upon such other business as
may properly come before the Annual Meeting or any
adjournments thereof.
Only stockholders of record at the close of business on August
22, 1996 will be entitled to notice of, and to vote at, the Annual Meeting.
PLEASE SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IN ORDER THAT YOUR SHARES MAY BE
VOTED FOR YOU. A RETURN ENVELOPE IS PROVIDED FOR YOUR CONVENIENCE.
By Order of the Board of Directors,
JAMES M. CACI
Chief Financial Officer, Secretary and Treasurer
Dated: Northvale, New Jersey
September 3, 1996
<PAGE>
GLASGAL COMMUNICATIONS, INC.
151 VETERANS DRIVE
NORTHVALE, NEW JERSEY 07647
--------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 3, 1996
--------------------------
This Proxy Statement is being furnished to the stockholders of
Glasgal Communications, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation by the Board of Directors of the Company of
proxies ("Proxies") for the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Pearl River Hilton Hotel, 500 Veterans Memorial
Drive, Pearl River, New Jersey 10965, on Thursday, October 3, 1996, at 10:00
A.M., local time. At the Annual Meeting, the stockholders will be asked to (1)
elect seven (7) directors; (2) ratify the appointment of Arthur Andersen LLP as
the Company's independent public accountants for the fiscal year ending April
30, 1997; and (3) consider and act upon such other business as may properly come
before the Annual Meeting. It is expected that the Notice of Annual Meeting,
Proxy Statement and form of Proxy will first be mailed to stockholders on or
about September 3, 1996.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on
Thursday, August 22, 1996 (the "Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting and any adjournments thereof. As of the close of
business on the Record Date, there were 16,441,179 outstanding shares of the
Company's Common Stock. Each outstanding share of Common Stock is entitled to
one vote. There was no other class of voting securities of the Company
outstanding on the Record Date. A majority of the outstanding shares of Common
Stock present in person or by proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies, which are
properly executed, duly returned and not revoked, will be voted in accordance
with the instructions contained therein. If no specification is indicated on the
Proxy, the shares of Common Stock represented thereby will be voted (i) for the
election as Directors of the persons who have been nominated by the Board of
Directors, (ii) for the ratification of the appointment of Arthur Andersen LLP
as the Company's independent public accountants for the fiscal year ending April
30, 1997, and (iii) for any other matter that may properly be brought before the
Annual Meeting in accordance with the judgment of the person or persons voting
the Proxy.
The execution of a Proxy will in no way affect a stockholder's
right to attend the Annual Meeting and vote in person. Any Proxy executed and
returned by a stockholder may be revoked at any time thereafter if written
notice of revocation is given to the Secretary of the Company prior to the vote
to be taken at the Annual Meeting, or by execution of a subsequent Proxy which
is presented at the Annual Meeting, or if the stockholder attends the Annual
Meeting and votes by ballot, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. Broker "non-votes" and the shares of Common Stock as
to which a stockholder abstains are included for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual
Meeting. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
<PAGE>
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Broker "non-votes" are not
counted for purposes of determining whether a proposal has been approved and,
therefore, do not have the effect of votes in opposition in such tabulations. An
abstention from voting on a matter or a Proxy instructing that a vote be
withheld has the same effect as a vote against a matter since it is one less
vote for approval.
The management of the Company knows of no matters which are to be
presented for consideration at the Annual Meeting other than those specifically
described in the Notice of Annual Meeting of Stockholders, but, if other matters
are properly presented, it is the intention of the persons designated as proxies
to vote on them in accordance with their judgment.
All expenses in connection with this solicitation will be borne by the
Company. In addition to the use of the mails, proxy solicitation may be made by
telephone, telegraph and personal interview by officers, directors and employees
of the Company. The Company will, upon request, reimburse brokerage houses and
persons holding shares in the names of their nominees for their reasonable
expenses in sending soliciting material to their principals.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Common Stock outstanding as of August 22, 1996, by (i) each person known by the
Company to be the beneficial owner of more than five percent (5%) of the
Company's Common Stock, (ii) each director and nominee for election as a
director, (iii) each of the executive officers named in the summary compensation
table, and (iv) by all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME AND ADDRESS OF BENEFICIALLY OWNED
BENEFICIAL OWNER(1) (2) PERCENTAGE OF CLASS
- -------------------------------------------- -------------------------- -----------------------
<S> <C> <C>
Ralph Glasgal(3) 4,895,875 29.8%
Direct Connect(4) 1,175,000 7.2%
International Inc.
700 Godwin Avenue
Midland Park, NJ 07432
Isaac Gaon(5) 619,778 3.6%
Robert F. Gadd(6) 398,366 2.4%
Ingemar Sjunnemark(7) 289,166 1.7%
William Currie (8) 100,000 *
Robert H. Friedman(9) 47,146 *
505 Park Avenue
New York, New York 10022
Joseph Salvani(10) 32,000 *
700 Godwin Avenue
Midland Park, New Jersey 07432
Maurice Kulik(11) 643,636 3.9%
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME AND ADDRESS OF BENEFICIALLY OWNED
BENEFICIAL OWNER(1) (2) PERCENTAGE OF CLASS
- -------------------------------------------- -------------------------- -----------------------
<S> <C> <C>
Thomas Berry(12) 24,000 *
David Milch 344,505 2.1%
All directors and officers as a group (10
persons)(13) 7,394,472 40.9%
</TABLE>
* Less than 1%
(1) Unless otherwise indicated, all addresses are c/o Glasgal
Communications, Inc., 151 Veterans Drive, Northvale, New Jersey 07647.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance
with Rule 13d-3 and includes options or other rights to subscribe which
are exercisable within sixty (60) days of August 22, 1996.
(3) Includes (i) 146,752 shares of Common Stock owned by Ralph Glasgal's
wife and (ii) 1,175,000 shares of Common Stock owned by Direct Connect
International Inc. ("DCI") which Ralph Glasgal has the right to vote
pursuant to a voting agreement with DCI.
(4) Based on information provided to the Company by DCI. Does not include
any shares of common stock to be purchased by DCI at the time of the
Additional DCI Investment (as hereinafter defined).
(5) Represents options exercisable within sixty (60) days from August 22,
1996 to purchase (i) 495,245 shares of Common Stock at an exercise
price of $.005 per share, (ii) 60,000 shares of Common Stock at an
exercise price of $1.25 per shares, and (iii) 64,533 shares of Common
Stock at an exercise price of $2.775 per share (includes options to
purchase 28,259 shares of Common Stock held by Ralph Glasgal).
(6) Represents options exercisable within sixty (60) days from August 22,
1996 to purchase (i) 297,166 shares of Common Stock at an exercise
price of $.005 per share, (ii) 40,000 shares of Common Stock at an
exercise price of $1.25 per share, and (iii) 61,200 shares of Common
Stock at an exercise price of $2.775 per share (includes options to
purchase 26,538 shares of Common Stock held by Ralph Glasgal).
(7) Represents options exercisable within sixty (60) days from August 22,
1996 to purchase (i) 262,166 shares of Common Stock at an exercise
price of $.005 per share, (ii) 10,000 shares of Common Stock at an
exercise price of $1.25 per share, and (iii) 17,000 shares of Common
Stock at an exercise price of $2.775 per share (includes options to
purchase 8,778 shares of Common Stock held by Ralph Glasgal).
(8) Represents options exercisable within sixty (60) days from August 22,
1996 to purchase 100,000 shares of Common Stock at an exercise price of
$1.25 per share. Mr. Currie's employment with the Company was
terminated on April 30, 1996.
(9) Represents options exercisable within sixty (60) days from August 22,
1996 to purchase (i) 15,146 shares of Common Stock at an exercise price
of $.005 per share, (ii) 24,000 shares of Common Stock at an exercise
price of $1.25 per share, and (iii) 8,000 shares of Common Stock at an
exercise price of $2.525 per share.
-3-
<PAGE>
(10) Represents options exercisable within sixty (60) days of August 22,
1996 to purchase (i) 24,000 shares of Common Stock at an exercise price
of $1.25 per share and (ii) 8,000 shares of Common Stock at an exercise
price of $2.525 per share. Mr. Salvani is also the Chairman of the
Board of DCI but has no power to direct DCI's voting or disposition of
its interest in the Company. Thus the shares of the Company's Common
Stock owned by DCI are not deemed to be attributable to Mr. Salvani.
(11) Represents (i) 440,000 shares of Common Stock to be issued in exchange
for outstanding Class B shares of Signatel held by Maurice Kulik and
(ii) options exercisable within sixty (60) days of August 22, 1996 to
purchase 203,636 shares at an exercise price of $1.75 per share. In
addition, Maurice Kulik holds proxies to vote 440,000 shares of Common
Stock held by another stockholder of the Company, Berthold Hoeniger,
which shares will be surrendered to the Company upon the exchange by
Mr. Kulik of the Class B shares of Signatel for shares of Common Stock
of the Company described above. Such proxies terminate on a share for
share basis as Maurice Kulik exchanges his Class B shares of Signatel
for shares of Common Stock of the Company. The holders of such Class B
shares are entitled to the equivalent of any dividend paid on shares of
Common Stock of the Company.
(12) Represents options exercisable within sixty days of August 22, 1996 to
purchase 24,000 shares of Common Stock at an exercise price of $2.775
per share.
(13) Includes (i) options exercisable within sixty (60) days of August 22,
1996 to purchase an aggregate of 1,736,092 shares of Common Stock held
by the directors and executive officers of the Company (includes
options to purchase 79,066 shares of Common Stock held by Ralph
Glasgal) and (ii) 1,175,000 shares of Common Stock owned by DCI which
Ralph Glasgal has the right to vote pursuant to a voting agreement with
DCI.
-4-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise specified, all Proxies received will be voted
in favor of the election of the persons named below as directors of the Company,
to serve until the next Annual Meeting of Stockholders of the Company and until
their successors shall be duly elected and qualified. Directors shall be elected
by a plurality of the votes cast, in person or by proxy, at the Annual Meeting.
The terms of the current directors expire at the Annual
Meeting and when their successors are duly elected and qualified. All nominees
are currently directors of the Company except for David Milch. Management has no
reason to believe that any of the nominees will be unable or unwilling to serve
as a director. Should any of the nominees not remain a candidate for election at
the date of the Annual Meeting, the Proxies will be voted in favor of those
nominees who remain candidates and may be voted for substitute nominees selected
by the Board of Directors.
The names of the nominees and certain biographical information
concerning each of them are set forth below:
NAME AGE CURRENT POSITION WITH THE COMPANY
Ralph Glasgal 63 Chairman of the Board and President
Isaac J. Gaon 47 Chief Executive Officer and Director
Robert H. Friedman 43 Director
Joseph M. Salvani 39 Director
Maurice Kulik 57 Director
Thomas Berry 71 Director
David M. Milch 41 Nominee for Director
Ralph Glasgal, Director, Chairman of the Board and President, with
degrees in Engineering Physics and Electrical Engineering, founded the Company
in 1975 as an integrator of data communications equipment and services. Prior to
1975 he held various engineering positions with RCA and Siemens and was
executive assistant to the President of Timeplex. Mr. Glasgal, among other
functions, currently oversees the evaluation of acquisitions and selection of
connectivity products sold and installed by the Company. He is the author of
numerous articles and three books on data communications.
Isaac J. Gaon, Chief Executive Officer and Director, joined the Company
in April 1992. He served as Chief Financial Officer from April 1992 until
October 1994. Prior to joining the Company, Mr. Gaon served as a consultant to
the Company, developing the strategic plan and financial model for the Company's
nationwide enterprise networking strategy. From September 1987 to December 1991,
Mr. Gaon, a chartered accountant, served as President and Chief Executive
Officer of Toronto-based NRG, Inc., (a subsidiary of Gestetner International) an
office equipment supplier, and in several key senior management roles within
Gestetner Canada and Gestetner USA.
Robert H. Friedman, Director since August 1994, has been a partner with
Olshan Grundman Frome & Rosenzweig LLP, a New York City law firm, since August
1992. Prior to that time and since September 1983
-5-
<PAGE>
he was associated with Cahill Gordon & Reindel, also a New York City law firm.
Mr. Friedman specializes in corporate and securities law matters.
Joseph M. Salvani, Director since August 1994, has been the President
of Salvani Investments, Inc., an investment and consulting firm since 1991. From
July 1989 through 1991, he was a founder, general partner and Hedge Fund Manager
of EGS Associates, L.P., a private investment limited partnership. He served as
a general partner of Steinhardt Partners from October 1986 until April 1989 and
as a general partner of Institutional Partners, L.P. from January 1987 to April
1989. He began his career in 1981 as an analyst with Goldman, Sachs & Co. Mr.
Salvani is a graduate of Rutgers College with Bachelor of Science degrees in
Accounting, Economics and Finance. He also holds a Masters Degree in Business
Administration from Columbia University. Mr. Salvani is Chairman of the Board of
Directors of Direct Connect International Inc. ("DCI"), an OTC Bulletin Board
company and a director of Medicis Pharmaceutical, Inc., a pharmaceutical
company.
Maurice Kulik, Director since October 1994, is also Chief Executive
Officer and President of Signatel which he founded in 1977. Prior to 1977 he
held various engineering, sales and marketing management positions with ATELCO,
ROR Associates, Beckman Instruments and SPERRY/UNIVAC. From 1985 to 1989, Mr.
Kulik also served as President, Chief Executive Officer and Director of Black
Box Canada Corporation, a joint venture corporation with Black Box Corporation
of Pittsburgh, PA. Mr. Kulik currently oversees Signatel's financial and
strategic planning as well as its marketing and sales management functions.
Thomas J. Berry, Director since July 1995, is currently retired. Mr.
Berry was an executive with the U.S. Postal Service from November 1986 to
December 1992 serving as executive assistant to the Postmaster General. Prior to
that time and until November 1986, Mr. Berry held various executive positions at
AT&T. Mr. Berry is a director of Computer Horizons Corp., a Nasdaq traded
company.
David M. Milch is President of Davco Consultants, Inc., which he
founded in 1989 for the purpose of identifying, advising and investing in
emerging growth technologies. Since 1983, Dr. Milch has been a principal and
executive officer of Bermil Industries, a closely held company engaged in the
manufacture, sale, financing and distribution of capital equipment and in real
estate development. Dr. Milch did his undergraduate studies at Amherst College
and Stanford University, from which he graduated with honors in Biology. He is
also a graduate of Harvard Medical School.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR"
THE ELECTION OF EACH OF THE NOMINEES.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended April 30, 1996 ("Fiscal 1996"),
the Company's Board of Directors formally met on three occasions. Each of the
directors attended (or participated by telephone) more than 75% of such meetings
of the Board of Directors and Committees on which he served during Fiscal 1996.
During Fiscal 1996, the Board of Directors also acted by unanimous written
consent in lieu of a meeting on twelve occasions. The Board of Directors has no
committees other than the Compensation Committee, which consisted of Messrs.
Friedman, Salvani and Berry during Fiscal 1996. The duties of the Compensation
Committee are described below under "Glasgal Communications, Inc., Report of the
Compensation Committee." The Compensation Committee met or took action on two
occasions during Fiscal 1996.
-6-
<PAGE>
The officers of the Company are elected annually by the Board of
Directors at its meeting following the Annual Meeting of Stockholders. There are
no family relationships between any directors and executive officers of the
Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
stockholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Each of the following persons failed to file on a timely basis one
report for a single transaction required by Section 16(a) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), during Fiscal 1996: James Caci, Robert Gadd,
Isaac Gaon and Maurice Kulik. Ingemar Sjunnemark failed to file on a timely
basis two reports covering two transactions required by Section 16(a) of the
Exchange Act during Fiscal 1996. Each of the transactions for the above named
individuals were subsequently reported to the Commission on a Form 4.
-7-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the years ended December
31, 1993 and 1994, and the fiscal years ended April 30, 1995 and 1996 with
respect to annual and long-term compensation for services in all capacities to
the Company of (i) the chief executive officer, and (ii) the other four most
highly compensated executive officers of the Company at April 30, 1996 who
received compensation of at least $100,000 during Fiscal 1996 (collectively, the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
STOCK LONG-TERM
OPTIONS INCENTIVE
NAME AND POSITION YEAR SALARY BONUS (SHARES) PAYMENTS
----------------- ---- ------ ----- -------- --------
<S> <C> <C> <C> <C> <C>
Ralph Glasgal(1) 1996 $250,000 $74,800 -- --
Chairman of the Board and President 1994* 26,700 -- -- --
1994 105,901 -- -- --
1993 319,992 -- -- --
Isaac J. Gaon 1996 $204,800 -- 108,821 --
Chief Executive Officer 1994* 192,300 -- 90,000 --
1994 200,000 -- -- --
1993 180,685 --
Robert F. Gadd 1996 $136,433 $22,500 103,985 --
Vice President-Federal and Enterprise 1994* 113,900 -- 60,000 --
Systems 1994 112,308 -- -- --
1993 112,654 -- --
William Currie(2) 1996 $142,308 $16,625 -- --
Vice President - Domestic Sales 1994* 126,200 -- 100,000 --
1994 116,269 -- -- --
1993 -- -- --
Ingemar Sjunnemark 1996 $115,600 $15,000 24,666 --
Vice President - Export Sales 1994* 109,307 -- 15,000 --
1994 108,608 -- -- --
1993 105,391 -- --
</TABLE>
(1) Beginning July, 1993, the Company and Ralph Glasgal, its Chairman and
President, orally agreed that future salary payments would be
suspended. During the period of salary suspension, Mr. Glasgal's duties
were significantly diminished as a result
-8-
<PAGE>
of the addition of Mr. Gaon as Chief Executive Officer in April 1992.
Mr. Glasgal contributed to the Company 442,478 shares of Common Stock
in consideration for the cancellation by the Company of the $476,000
owed as of April 30, 1995 by Mr. Glasgal to the Company. Mr. Glasgal is
currently receiving salary compensation of $250,000 per year. Mr.
Glasgal may also receive a bonus at the discretion of, and to be
determined by, the Board of Directors.
(2) Mr. Currie's employment with the Company was terminated on April 30,
1996.
* Represents the fiscal year ended April 30, 1995. The Company changed
its fiscal year end in May 1994 from December 31 to April 30.
STOCK OPTIONS TABLE
The following table sets forth certain information regarding stock
option grants made to each of the Named Officers during the fiscal year ended
April 30, 1996.
OPTIONS GRANTED IN FISCAL YEAR ENDED
APRIL 30, 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED RATES OF ANNUAL
----------------- RATES OF STOCK PRICE
APPRECIATION FOR OPTION (1)
----------------------------
SHARES OF
COMMON STOCK % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE
NAME GRANTED FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Ralph Glasgal -- -- -- -- -- --
Isaac J. Gaon 108,821 31.45 2.775 July 17, 2005 $189,913 $481,276
Ingemar Sjunnemark 24,666 7.13 2.775 July 17, 2005 43,047 109,089
Robert F. Gadd 103,985 30.05 2.775 July 17, 2005 181,473 459,888
William Currie -- -- -- -- -- --
</TABLE>
(1) The potential realizable portion of the foregoing table illustrates
value that might be realized upon exercise of options immediately prior
to the expiration of their term, assuming (for illustrative purposes
only) the specified compounded rates of appreciation on the Company's
Common Stock over the term of the option. These numbers do not take
into account provisions providing for termination of the option
following termination of employment, nontransferability or difference
in vesting periods.
-9-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
The following table sets forth information as to each of the Named
Officers concerning exercises of options during Fiscal 1996 and unexercised
stock options held as of April 30, 1996.
<TABLE>
<CAPTION>
Value Realized
(Market Price at Value of Unexercised
Shares Acquired Exercise less Number of Unexercised Options Held at In-The-Money Options at
on Exercise Exercise Price) April 30, 1996 April 30, 1996(1)
------------------ --------------- ------------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ralph Glasgal -- -- -- -- -- --
Isaac J. Gaon -- -- 525,245 168,821 $3,899,361 $889,179
William S. Currie -- -- 100,000 -- 625,000 --
Robert F. Gadd -- -- 317,166 143,985 2,352,259 741,329
Ingemar Sjunnemark 35,000 $105,000 267,166 34,666 1,997,060 179,047
</TABLE>
(1) Assuming a price of $7.50 per share of Common Stock, which was the
closing bid price per share as of April 30, 1996.
The value of personal benefits for executive officers of the Company
during Fiscal 1996 that might be attributable to management as executive fringe
benefits such as automobiles and club dues cannot be specifically or precisely
determined; however, it would not exceed 10% for any individual named above or,
with respect to the group, would not in the aggregate exceed 10% of the
compensation reported above.
The Company adopted the Glasgal Communications, Inc., Salary Reduction
Plan (the "401(k) Plan") effective January 1, 1983. The 401(k) Plan was assumed
by the Company following the merger with Sellectek Incorporated, a California
Corporation. The 401(k) Plan is a voluntary program covering employees who are
at least 21 years of age and who have worked full time for the Company for six
months. A participant in the 401(k) Plan may contribute from 2% to 15% of his or
her base salary or wages up to the maximum amount per year allowable (currently
$9,500) under the Internal Revenue Code of 1986, as amended, and the Company
makes matching contributions of 100% of the participant's contribution up to a
maximum of $600 per year per participant. A participant's and the Company's
contributions and the related investment earnings thereon are immediately vested
and not subject to forfeiture. Distribution of a participant's vested benefits
in the 401(k) Plan is made upon a termination of employment subject to the right
of the participant, if his or her account balance exceeds $3,500, to defer
receipt until attaining age 65. Certain in-service withdrawals, and loans up to
50% of a participant's account, are permitted under the 401(k) Plan, including
withdrawals to meet financial emergencies. At July 31, 1996, 37 of the Company's
employees were participating in the 401(k) Plan.
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DIRECTORS COMPENSATION
Each director who is not an employee of the Company receives an annual
grant of options to purchase 24,000 shares of Common Stock pursuant to the
Directors Plan at an exercise price equal to fair market value on the date of
grant and a fee of $1,000 per meeting attended.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Glasgal
pursuant to which he is employed full-time as the Company's President commencing
January 1, 1993 and until terminated in accordance with the agreement. The
agreement expires on December 31, 1996. The Company has entered into an
employment agreement with Mr. Gaon pursuant to which he is employed full-time as
the Company's Chief Executive Officer commencing January 1, 1993 and until
terminated in accordance with the agreement. The agreement expires on December
31, 1996. The Company has entered into an employment agreement with Mr. Gadd.
Mr. Gadd's employment agreement provides for Mr. Gadd to be employed full-time
as the Company's Vice President-Federal and Enterprise Systems. The employment
agreement expires on December 31, 1996. The agreements provide for aggregate
annual compensation of $635,000.
The Company has also entered into an employment agreement with Mr.
Kulik pursuant to which he is employed full-time as the Chief Executive Officer
and President of Signatel Ltd., the Company's Canadian subsidiary commencing
October 28, 1994 and until terminated in accordance with the agreement. Mr.
Kulik receives an annual base salary of $115,500; provided that the base salary
shall, at a minimum, be increased after each 12 months of employment by a
percentage equal to the percentage increase in the Consumer Price Index over
such 12-month period, with the increased amount to remain in effect for the next
12-month period.
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GLASGAL COMMUNICATIONS, INC.
REPORT OF THE COMPENSATION COMMITTEE
GENERAL
The Board of Directors created the Compensation Committee in 1994.
Since July 1995, the Compensation Committee has consisted of Robert Friedman,
Joseph Salvani and Thomas Berry, each of whom were non-employee Directors.
The Compensation Committee's duties include: making recommendations
(for Board approval) on compensation actions involving the Company's President
and Chief Executive Officer, including but not limited to salary actions,
incentive bonus determinations and terms of employment; approving incentive
bonus determinations and terms of employment for executive officers other than
the President and Chief Executive Officer and for other key employees and
agents; reviewing salary actions (approved by the Chief Executive Officer)
regarding executive officers other than the President and Chief Executive
Officer and regarding other key employees and agents; making recommendations on
compensation and benefit plans requiring Board and/or stockholder approval; and
such other duties as the Board of Directors may assign to it from time to time.
The Compensation Committee also currently administers the Company's 1990 Stock
Option Plan.
PHILOSOPHY OF EXECUTIVE COMPENSATION
In reaching its decisions regarding executive compensation, the
Compensation Committee was guided by the following philosophy.
o Total cash compensation levels (salary plus annual bonus)
should be set at levels consistent with competitive practice
at other open systems computer integration companies of
similar size.
o Performance objectives, used to determine incentive bonuses,
should be explained and confirmed in advance.
o Stock based incentives should be sufficient to promote
alignment of interests between executives and stockholders,
while ensuring that stockholders must benefit before
executives do.
o Employment security arrangements should provide competitive
benefits while encouraging executives to make decisions that
will maximize long-term stockholder value.
The Company has not established a policy with regard to Section 162(m)
of the Internal Revenue Code of 1986, as amended, since the Company has not and
does not currently anticipate paying compensation in excess of $1 million per
annum to any employee.
COMPENSATION PROGRAMS FOR EXECUTIVE OFFICERS
This section describes the compensation programs for executive officers
that were in effect in Fiscal 1996 and the programs approved by the Compensation
Committee for the 1997 fiscal year. It also details specific Compensation
Committee decisions involving Mr. Glasgal and Mr. Gaon.
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<PAGE>
BASE SALARY
Base salary levels are primarily a function of competitive practice at
other companies for positions of similar scope and responsibility. Other factors
that influence base salary levels include the incumbent's tenure with the
Company, individual performance, potential earnings from comparable outside
positions and the performance of the Company.
Mr. Glasgal's base salary during Fiscal 1996 was $250,000 and reflects
a competitive salary for his position for similarly sized companies. Mr. Gaon's
base salary for Fiscal 1996 was $200,000, which also reflects a competitive
salary for his position for similarly sized companies. The Company believes it
is in the low to mid range for president and chief executive officer salary.
INCENTIVE BONUS PROGRAM
The Compensation Committee considers cash performance bonuses to its
executives in accordance with the following terms: competitive practice at other
companies for positions of similar scope and responsibility; overall performance
of the Company; individual performance of the executive; and transactions
effected for the benefit of the Company which are outside the ordinary business
and directly accomplished through the efforts of the executive. During Fiscal
1996, the Compensation Committee considered the above factors and awarded the
Named Executives aggregate bonuses of $128,925, which included a bonus of
$74,800 for Mr. Glasgal.
STOCK OPTION PROGRAM
During Fiscal 1996, an aggregate of 237,472 shares were granted to
Named Executives under the Company's 1990 Stock Option Plan (the "1990 Option
Plan"), which included 108,821 shares granted to Mr. Gaon. Such grants under the
1990 Option Plan are made to provide incentives to executive officers to
contribute to corporate growth and profitability and are based on the
Compensation Committee's judgment of an employee's contribution to the success
of the Company's operations.
EMPLOYMENT AGREEMENTS
Effective January 1, 1993, the Company entered into employment
agreements with Ralph Glasgal and Isaac Gaon, each of which had a term of four
years. See "Executive Compensation - Employment Agreements." The objective of
these agreements are two-fold:
o To ensure the Company of consistency of leadership and the
retention of a qualified President and Chief Executive
Officer.
o To foster a spirit of employment security to Mr. Glasgal and
Mr. Gaon, thereby encouraging decisions that will benefit
long-term stockholders.
Compensation Committee: Robert Friedman; Joseph Salvani; Thomas Berry.
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<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company with the cumulative total return on the Nasdaq
Market Index and an index of peer companies in the open systems computer
integration business selected by the Company over the same period (assuming the
investment of $100 in the Company's Common Stock, the Nasdaq Market Index and
the peer group on December 10, 1992, and reinvestment of all dividends). On May
2, 1994, Glasgal Communications, Inc., a New Jersey corporation, merged with and
into Sellectek Incorporated, a California corporation. The surviving entity,
Sellectek Incorporated, changed its name to Glasgal Communications, Inc.
Stockholders' returns set forth in the graph below for periods prior to May 3,
1994 reflect that of Sellectek, which had no ongoing business operations.
Companies in the peer group are as follows:
AMERIDATA TECHNOLOGIES
DATAFLEX CORP.
MICROS-TO MAINFRAMES INC.
FISCAL YEAR ENDING
COMPANY 1992 1993 1994 1995 1996
GLASGAL COMMUNICATIONS 100.00 78.13 28.13 10.63 37.51
PEER GROUP 100.00 126.26 226.25 160.53 164.56
BROAD MARKET 100.00 113.21 127.07 138.75 193.68
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's existing bank indebtedness under its
revolving credit facility, Ralph Glasgal, the Chairman of the Board and
President of the Company, has guaranteed the Company's obligations thereunder.
As of April 30, 1996, the Company had an aggregate outstanding indebtedness
under the revolving credit facility of $1,239,000.
The Company has entered into a common stock purchase agreement (the
"DCI Agreement") with DCI, a principal stockholder of the Company, governing
certain equity investments which DCI has made, and in the future intends to
make, in the Company's Common Stock. Pursuant to the DCI Agreement, in January
1994 DCI converted $1.9 million of outstanding indebtedness of the Company owed
to DCI into equity of the Company (the "DCI Conversion"). In addition, the DCI
Agreement gives the Company the right to require DCI to purchase an additional
number of shares of Common Stock equal to 13.5% of the outstanding shares on the
date of the agreement (the "Additional Share") for an aggregate of $8.75
million, less certain warrant solicitation fees (the "Additional DCI
Investment"). The Company may require this purchase if, and then only to the
extent, that DCI receives proceeds from the exercise of certain existing DCI
warrants. DCI has the right to retain the first $500,000 of warrant proceeds;
however, such amount must be used by DCI to purchase shares of Common Stock if
the aggregate amount of warrant proceeds applied to the purchase of Common
Stock, after the earlier of the expiration or exercise of all warrants or 24
months after the effectiveness of the registration statement covering the DCI
common stock underlying the warrants, is less than $8.4 million. If the Company
does not require the Additional DCI Investment, DCI may still purchase, on the
same terms, up to one-half of the Additional Shares.
On July 17, 1995, Mr. Glasgal granted to five executive officers and
other key employees of the Company options to purchase an aggregate of 300,000
shares of Common Stock. The options granted by Mr. Glasgal vest 1/3 on July 17,
1996 (at an exercise price of $2.775 per share), 1/3 on July 17, 1997 (at an
exercise price of $3.50 per share) and 1/3 on July 17, 1998 (at an exercise
price of $4.50 per share). In connection with this grant the Company granted
options to purchase 281,000 shares of Common Stock under the 1990 Option Plan to
the same executive officers and on the same vesting schedule, at an exercise
price of $2.775 per share, which represented fair market value on the date of
grant.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending April 30,
1997. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of Arthur Andersen LLP be
submitted to stockholders for ratification due to the significance of their
appointment to the Company. Approval by a majority of shares of Common Stock
represented in person or by proxy is necessary for stockholder ratification of
the appointment of Arthur Andersen LLP. If stockholders do not ratify the
appointment of Arthur Andersen LLP, the Board of Directors will consider the
appointment of other certified public accountants. A representative of Arthur
Andersen LLP is expected to be present at the Annual Meeting. Such
representative will have an opportunity to make a statement if he desires to do
so and will be available to respond to appropriate questions from stockholders.
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<PAGE>
In June 1994, the Company determined to change accountants to Arthur
Andersen LLP. The Company's prior auditors, KPMG Peat Marwick resigned. On the
same date, the Company engaged Arthur Andersen LLP to audit its financial
statements. The decision to change accountants was made with the approval of the
Company's Board of Directors.
The Company believes, and has been advised by KPMG Peat Marwick that it
concurs in such belief, that, during the fiscal year ended December 31, 1993 and
subsequent thereto, the Company and KPMG Peat Marwick did not have any
disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of KPMG Peat Marwick, would have caused it to make
reference in connection with its report on the Company's financial statements to
the subject matter of the disagreement.
No report of KPMG Peat Marwick on the Company's financial statements
for either of the past two fiscal years contained an adverse opinion, a
disclaimer or opinion or a qualification or was modified as to uncertainty,
audit scope or accounting principles. During such fiscal periods, there were no
"reportable events" within the meaning of Item 304(a)(1) of Regulation S-K
promulgated under the Securities Act.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING APRIL 30, 1997.
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<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997
Annual Meeting must be received by the Company for inclusion in the 1997 Proxy
Statement no later than May 5, 1997.
ANNUAL REPORT
All stockholders of record as of Thursday, August 22, 1996,
have been sent, or are concurrently herewith being sent, a copy of the Company's
Annual Report on Form 10-K, as amended, for the fiscal year ended April 30,
1996. Such report contains certified consolidated statements of the Company and
its subsidiaries for the fiscal year ended April 30, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no
matters other than those set forth herein which will be presented for
consideration at the Annual Meeting. If any other matter or matters are properly
brought before the Annual Meeting or any adjournment thereof, the persons named
in the accompanying Proxy will have discretionary authority to vote, or
otherwise act, with respect to such matters in accordance with their judgment.
By Order of the Board of Directors,
-------------
JAMES M. CACI
Chief Financial Officer,
Secretary and Treasurer
September 3, 1996
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
GLASGAL COMMUNICATIONS, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 3, 1996
The undersigned, a stockholder of Glasgal Communications,
Inc., a Delaware corporation (the "Company"), does hereby appoint Ralph Glasgal
and Isaac Gaon and each of them, the true and lawful attorneys and proxies with
full power of substitution, for and in the name, place and stead of the
undersigned, to vote all of the shares of Common Stock of the Company which the
undersigned would be entitled to vote if personally present at the 1996 Annual
Meeting of Stockholders of the Company to be held at the Pearl River Hilton
Hotel, 500 Veterans Memorial Drive, Pearl River, New Jersey 10965, on Thursday,
October 3, 1996, at 10:00 A.M., local time, or at any adjournment or
adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
The election of the following directors: Ralph Glasgal, Isaac
J. Gaon, Robert H. Friedman, Joseph M. Salvani, Maurice Kulik,
Thomas Berry and David Milch to serve until the next annual
meeting of stockholders and until their successors have been
duly elected and qualified.
TO WITHHOLD AUTHORITY
TO VOTE FOR ANY NOMINEE(S),
FOR ___ WITHHELD ___ PRINT NAME(S) BELOW
-------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
______ FOR _____ AGAINST _____ ABSTAIN
3. DISCRETIONARY AUTHORITY.
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
DIRECTORS, TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS AND IN ACCORDANCE WITH THE DISCRETION OF THE
PROXIES OR PROXY WITH RESPECT TO ANY OTHER BUSINESS TRANSACTED AT THE ANNUAL
MEETING.
Dated _______________________, 1996
_____________________________ (L.S.)
_____________________________ (L.S.)
Signature(s)
NOTE: YOUR SIGNATURE SHOULD APPEAR THE SAME AS YOUR NAME APPEARS HEREON. IN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
INDICATE THE CAPACITY IN WHICH SIGNING. WHEN SIGNING AS JOINT TENANTS, ALL
PARTIES IN THE JOINT TENANCY MUST SIGN. WHEN A PROXY IS GIVEN BY A CORPORATION,
IT SHOULD BE SIGNED BY AN AUTHORIZED OFFICER AND THE CORPORATE SEAL AFFIXED. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
