SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLASGAL COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
94-291423
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(I.R.S. employer identification no.)
20C Commerce Way, Totowa, NJ 07512
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(Address of principal executive offices) (Zip Code)
1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN,
1996 STOCK OPTION CONVERSION PLAN
& 1996 SENIOR EXECUTIVE OFFICER STOCK OPTION PLAN
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(Full title of the plans)
Isaac J. Gaon
Chief Executive Officer
Glasgal Communications, Inc.
20C Commerce Way
Totowa, New Jersey 07512
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(Name and address of agent for service)
(201) 890-4800
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(Telephone number, including area code, of agent for service)
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share price fee
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<S> <C> <C> <C> <C>
Common Stock, $.001
par value per share,
issuable upon exercise
of options granted or to
be granted under the 1996
Employee and Consultant
Stock Option Plan 2,000,000(1)(2) $4.58(2) $9,156,250 $2,774.62
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Common Stock, $.001 par
value per share, issuable
upon exercise of options
granted under the 1996 Stock
Option Conversion Plan 470,442(1)(3) $1.48(3) $ 696,254 $ 210.99
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Common Stock, $.001 par
value per share, issuable
upon exercise of options
granted or to be granted
under the 1996 Senior
Executive Officer Stock
Option Plan 560,000(1)(4) $4.10(4) $2,297,812 $ 696.30
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Total 3,030,442 $4.01 $12,150,316 $3,681.91
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</TABLE>
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended (the "Act"), this Registration Statement also registers such
number of additional shares of Common Stock that may be offered or
issued pursuant to the Registrant's 1996 Employee and Consultant Stock
Option Plan (the "Employee Plan"), 1996 Stock Option Conversion Plan
(the "Conversion Plan"), and the 1996 Senior Executive Officer Stock
Option Plan (the "Executive Plan"), to prevent dilution resulting from
stock splits, stock dividends or similar transactions.
(2) Represents an aggregate of 1,500,000 shares of Common Stock with
respect to which options have been granted under the Employee Plan at a
weighted average exercise price of $4.00 per share. Pursuant to Rule
457(h) under the Securities Act, the offering price for the additional
500,000 shares of Common Stock which may be issued under the Employee
Plan is estimated solely for the purpose of determining the
registration fee and is based on $6.3125, the per share average of high
and low sale prices of the Common Stock as reported by the Nasdaq
SmallCap Market ("Nasdaq") for trading on September 17, 1997.
(3) Represents an aggregate of 470,442 shares of Common Stock with respect
to which options have been granted under the Conversion Plan at a
weighted average exercise price of $1.48 per share.
(4) Represents an aggregate of 535,000 shares of Common Stock with respect
to which options have been granted under the Executive Plan at a
weighted average exercise price of $4.00 per share. Pursuant to Rule
457(h) under the Securities Act, the offering price for the additional
25,000 shares of Common Stock which may be issued under the
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Executive Plan is estimated solely for the purpose of determining the
registration fee and is based on $6.3125, the per share average of high
and low sale prices of the Common Stock as reported by Nasdaq for
trading on September 17, 1997.
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PROSPECTUS
525,000 SHARES
GLASGAL COMMUNICATIONS, INC.
Common Stock ($.001 par value)
This Prospectus relates to the reoffer and resale by certain selling
shareholders (the "Selling Shareholders") of shares (the "Shares") of the Common
Stock, $.001 par value (the "Common Stock"), of Glasgal Communications, Inc.
(the "Company") that may be issued by the Company to the Selling Shareholders
upon the exercise of outstanding stock options granted pursuant to the 1996
Senior Executive Officer Stock Option Plan (the "Executive Plan"). The offer and
sale of the Shares to the Selling Shareholders were previously registered under
the Securities Act of 1933, as amended (the "Securities Act"). With respect to
the Shares that may be issued to any of the Selling Shareholders or additional
persons who may be deemed affiliates under the Executive Plan, this Prospectus
also relates to certain Shares underlying options which have not as of this date
been granted. If and when such options are granted, the Company will distribute
a Prospectus Supplement as required by the Act. The Shares are being reoffered
and resold for the account of the Selling Shareholders and the Company will not
receive any of the proceeds from the resale of the Shares.
The Selling Shareholders have advised the Company that the resale of
their Shares may be effected from time to time in one or more transactions in
the over the counter, in negotiated transactions or otherwise at market prices
prevailing at the time of the sale or at prices otherwise negotiated. See "Plan
of Distribution." The Company will bear all expenses in connection with the
preparation of this Prospectus.
The Common Stock of the Company is traded on the Nasdaq Small- Cap
Market ("Nasdaq") under the symbol "GLAS." On September 17, 1997, the closing
price for the Common Stock, as reported by Nasdaq was $6.50.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
CERTAIN MATTERS DISCUSSED IN THIS REGISTRATION STATEMENT ARE
FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED.
The date of this Prospectus is September 19, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwest Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, reports,
proxy statements and other information concerning the Company (symbol: GLAS) can
be inspected and copied at the offices of the Nasdaq Stock Market, 1735 K
Street, N.W., Washington, D.C. 20006, on which the Common Stock of the Company
is listed. Such material may also be accessed electronically by means of the
Commission's home page on the internet at http//www.sec.gov.
The Company has also filed with the Commission a Registration Statement
on Form S-8 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Shares
offered hereby. This Prospectus does not contain all of 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.
TABLE OF CONTENTS
AVAILABLE INFORMATION..........................................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................4
RISK FACTORS...................................................................5
GENERAL INFORMATION............................................................9
USE OF PROCEEDS................................................................9
SELLING SHAREHOLDERS..........................................................10
PLAN OF DISTRIBUTION..........................................................10
LEGAL MATTERS.................................................................10
EXPERTS .....................................................................11
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended April 30,
1997 and the Company's Quarterly Report on Form 10-Q for the quarter ended July
31, 1997 are incorporated by reference in this Prospectus and shall be deemed to
be a part hereof. All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of this offering, are deemed to be incorporated by reference in this Prospectus
and shall be deemed to be a part hereof from the date of filing of such
documents.
The Company's Application for Registration of its Common Stock under
Section 12(b) of the Exchange Act filed on May 2, 1996 is incorporated by
reference in this Prospectus and shall be deemed to be a part hereof.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents. Written requests for such copies should
be directed to 20C Commerce Way, Totowa, New Jersey 07004, Attention: James M.
Caci. Oral requests should be directed to such officer (telephone number (201)
890-4800).
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No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Selling Shareholder. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to any person in any state or other jurisdiction in which such offer or
solicitation is unlawful. The delivery of this Prospectus at any time does not
imply that information contained herein is correct as of any time subsequent to
its date.
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RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. EACH
PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
INHERENT IN, AND AFFECTING THE BUSINESS OF, THE COMPANY BEFORE MAKING AN
INVESTMENT DECISION.
WORKING CAPITAL DEFICIENCIES; HISTORY OF LOSSES. The Company has a
history of limited working capital and has had working capital deficiencies of
$585,000, $7,664,000 and $2,957,000 for the fiscal years ended April 30, 1995,
1996 and 1997, respectively and a working capital deficiency of $248,000 as of
July 31, 1997. In addition, while the Company had net income of $25,000 for the
three months ended July 31, 1997, the Company has incurred net losses of
$2,393,000, $13,418,000 and $4,960,000 for the fiscal years ended April 30,
1995, 1996, and 1997.
There can be no assurance that the Company will generate sufficient
revenues to meet expenses or to operate profitably in the future. If the Company
is unable to generate sufficient cash flow from its operations it would have to
seek additional borrowings, effect debt or equity offerings or otherwise raise
capital. There can be no assurance that any such financing will be available to
the Company, or if available, that the terms will be acceptable to the Company.
In addition, the ability to raise other capital might be restricted by financial
covenants contained in currently existing borrowing agreements.
POSSIBLE NEED FOR ADDITIONAL FINANCING. As of July 31, 1997 the Company
had cash and cash equivalents of $759,000. The Company anticipates, based on
currently proposed plans and assumptions relating to its operations that its
existing capital resources will be sufficient to satisfy its anticipated cash
requirements for at least 12 months. In the event that the Company's plans
change, its assumptions change or prove to be inaccurate, the Company will be
required to seek additional financing to finance its working capital
requirements. There can be no assurance that any additional financing, if
required, will be available to the Company on acceptable terms, if at all. The
Company does not currently have availability under its line of credit. Any
inability by the Company to obtain additional financing, if required, will have
a material adverse effect on the operations of the Company.
SUBSTANTIAL INDEBTEDNESS. As of July 31, 1997, the Company had
outstanding on a consolidated basis approximately $14,779,000 of indebtedness.
The level of the Company's indebtedness could have important consequences to its
future prospects, including the following: (i) limiting the ability of the
Company to obtain any necessary financing in the future for working capital,
capital expenditures, debt service requirements or other purposes; (ii)
requiring that a substantial portion of the Company's cash flow from operations,
if any, be dedicated to the payment of principal
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of and interest on its indebtedness and other obligations; (iii) limiting its
flexibility in planning for, or reacting to changes in, its business; (iv) the
Company will be more highly leveraged than some of its competitors, which may
place it at a competitive disadvantage; and (v) increasing its vulnerability in
the event of a downturn in its business.
DEPENDENCE ON KEY PERSONNEL. The Company's future success depends in
large part on the continued service of its key personnel. In particular, the
loss of the services of Isaac Gaon, Chief Executive Officer, Robert Gadd, Vice
President, or Christopher Carey, President and Chief Executive Officer of
Datatec Industries Inc. ("Datatec"), could have a material adverse effect on the
operations of the Company. The Company has employment agreements with Messrs.
Gaon, Gadd and Carey which each expire on October 31, 1999. Each of these
employment agreements may be terminated by the Company for cause or by the
employee for good reason. The Company's future success and growth also depends
on its ability to continue to attract, motivate and retain highly qualified
employees, including those with the technical expertise necessary to operate the
business of the Company. There can be no assurance that the Company will be able
to attract, motivate and retain such persons.
COMPETITION. The Company competes with other companies involved in the
design, installation, integration, deployment and servicing of local and wide
area networks. These competitors include local and national systems integrators
some of which are substantially larger and have significantly greater resources
than the Company. These markets are highly competitive and there can be no
assurance that the Company will be able to compete successfully in the future.
CONTROL BY PRINCIPAL STOCKHOLDERS. Ralph Glasgal, the Chairman of the
Board and President of the Company, through his beneficial ownership and through
a voting agreement with Direct Connect International Inc. ("DCI") has the power
to vote approximately 20.7% of the Common Stock. DCI has pledged approximately
300,000 of the shares of Common Stock it owns in the Company as collateral for
various obligations. If the pledgee were to become the owner of such shares, Mr.
Glasgal would no longer have the power to vote such shares. In addition, Mr.
Carey, President and Chief Executive Officer of Datatec has the power to vote
approximately 17% of the Common Stock.
EXTENDED LEAD TIMES FOR REALIZATION OF REVENUE. Due to the nature and
size of orders that the Company is now pursuing there is a longer lead time
between the initiation of prospective business and the consummation of a
transaction, if any. Consequently, significantly more resources are required to
manage this process. As such, there is likely to be substantial fluctuations in
sales volume on a month-to-month and quarter-to-quarter basis. The
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pursuit of this type of business increases the Company's risk of failure,
especially given its present level of working capital. As a result, if the
Company experiences lower than expected sales volume for an extended period of
time, there will be a material adverse effect on the Company.
VOLATILITY OF THE COMPANY'S COMMON STOCK PRICES. The market price of
the Company's Common Stock has experienced significant volatility, with per
share closing bid prices ranging from a low of $2.75 to a high of $11.63 over
the period from May 1, 1996 to July 31, 1997. Announcements of technological
innovations for new commercial products of the Company or its competitors,
developments concerning propriety rights or governmental regulation or general
conditions in the market for the Company's services may have a significant
effect on the Company's business and on the market price of the Company's
securities. Sales of a substantial number of shares by existing security holders
could also have an adverse effect on the market price of the Company's
securities.
SHARES ELIGIBLE FOR FUTURE SALE. The sale, or availability for sale, of
substantial amounts of Common Stock in the public market pursuant to Rule 144 or
otherwise could adversely affect the market price of the Common Stock and could
impair the Company's ability to raise additional capital through the sale of its
equity securities.
The shares of Common Stock issuable upon exercise of the warrants or
conversion of the Notes or the Common Stock registered in the Registration
Statement of which this Prospectus is part will be freely tradeable without
restriction under the Securities Act upon resale by the Selling Stockholders.
The Selling Stockholders are not restricted as to the price or prices at which
they may sell their Shares. Sales of such Shares may have an adverse effect on
the market price of the Common Stock. Moreover, the Selling Stockholders are not
restricted as to the number of Shares that may be sold at any time, and it is
possible that a significant number of Shares could be sold at the same time
which may also have an adverse effect on the market price of the Company's
Common Stock.
NO CASH DIVIDENDS. The Company has not paid cash dividends on its
Common Stock since its inception, other than certain distributions made to
stockholders in amounts sufficient to reimburse the Company's stockholders for
income tax liabilities arising from the Company's former status as an "S"
corporation. The Company currently intends to retain earnings, if any, for use
in the business and does not anticipate paying any dividends to its stockholders
in the foreseeable future.
RIGHTS OF COMMON STOCK SUBORDINATE TO PREFERRED STOCK. The Certificate
of Incorporation of the Company authorizes the issuance of a maximum of
4,000,000 shares of preferred stock, par value $.001 per share. There are no
shares of preferred shares currently
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issued and outstanding, however, if shares of preferred stock are issued in the
future, the terms of a series of preferred stock may be set by the Company's
Board of Directors without approval by the holders of the Common Stock of the
Company. Such terms could include, among others, preferences as to dividends and
distributions on liquidation as well as separate class voting rights. The rights
of the holders of the Company's 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 in the future.
CERTAIN ANTI-TAKEOVER CHARTER PROVISIONS. The future issuance of
preferred stock by the Company could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. The Company does not
have any present plans to issue any shares of preferred stock.
ACQUISITIONS. It is currently anticipated that a portion of the
Company's future growth will result from acquisitions of other similar or
complementary businesses. In October 1994, the Company consummated the
acquisition of Signatel, Ltd. ("Signatel"). On April 24, 1996, the Company
acquired 80% of the issued and outstanding capital stock of Computer-Aided
Software Integration, Inc. ("CASI"), a provider of software tools and services
to systems integrators and independent software vendors. On July 31, 1996, the
Company acquired 100% of the issued and outstanding capital stock of HH
Communications, Inc. ("HH"), which resells computer networking equipment and
provides value-added services in connection with such equipment. On October 31,
1996, the Company acquired approximately 98.5% of the issued and outstanding
capital stock of Datatec, a network integrator. The Company acquired the
remaining 1.5% of the outstanding capital stock of Datatec pursuant to a Stock
Purchase Agreement dated August 27, 1997. The Company has no other current plan
or agreement to acquire any other business. There can be no assurance that any
other transaction will be consummated or that they will result in increased
levels of profit for the Company. In addition, there can be no assurance that
the Company will be able to integrate or manage successfully other acquired
businesses.
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GENERAL INFORMATION
As used in this Prospectus, the term "Company" refers collectively to
Glasgal Communications, Inc., a Delaware corporation and its subsidiaries (i)
Signatel, a wholly owned subsidiary of the Company, (ii) CASI, a subsidiary of
which the Company owns 80% of the issued and outstanding shares, (iii) HH, a
wholly owned subsidiary of the Company, and (iv) Datatec, a wholly owned
subsidiary of the Company.
The Company is in the business of providing software enabled
configuration, integration and implementation networking services to Fortune
2,000 customers in the United States and Canada. The Company provides networking
services to end users and hardware/software manufacturers alike through its
twenty (20) branch offices and four (4) configuration centers in North America.
The Company's objective is to become one of the leading open systems integrators
providing complete enterprise networking solutions to national and international
organizations.
Over the past four years the Company has been reducing its dependence
on hardware distribution as a result of the continuous margin erosion and the
high working capital needs of this business. In June 1997, management of the
Company with the consent of the Board, agreed to discontinue its business as a
distributer of data communications equipment in order to concentrate the
Company's efforts on integration, configuration and deployment services.
The Company's executive offices are located at 20C Commerce Way,
Totowa, New Jersey 07512. The telephone number of the Company is (201) 890-4800.
The Shares offered hereby were or will be purchased by the Selling
Shareholders upon exercise of options granted to them and will be sold for the
account of the Selling Shareholders.
USE OF PROCEEDS
The Company will receive the exercise price of the options when
exercised by the holders thereof. Such proceeds will be used for working capital
purposes by the Company. The Company will not receive any of the proceeds from
the reoffer and resale of the Shares by the Selling Shareholders.
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SELLING SHAREHOLDERS
This Prospectus relates to the reoffer and resale of Shares issued or
that may be issued to the Selling Shareholders under the Company's Executive
Plan.
The following table sets forth (i) the number of shares of Common Stock
owned by each Selling Shareholder at September 15, 1997, (ii) the number of
Shares to be offered for resale by each Selling Shareholder and (iii) the number
and percentage of shares of Common Stock to be held by each Selling Shareholder
after completion of the offering.
<TABLE>
<CAPTION>
Number of shares of
Common Stock/
Number of Percentage of Class to
Number of shares of Shares to be be Owned After
Common Stock Owned at Offered for Completion of the
Name September 15, 1997 Resale Offering
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<S> <C> <C> <C>
Isaac J. Gaon(1)........................... 714,003(2) 350,000(3) 364,000/1.5%
James M. Caci(4) ........................ 112,000(5) 175,000(6) 0/*
</TABLE>
* Less than 1%.
(1) Mr. Gaon is Chief Executive Officer and a Director of the Company.
(2) Mr. Gaon owns 3,000 shares of Common Stock and has options to purchase
an additional 711,003 additional shares of Common Stock which are
exercisable within 60 days of September 15, 1997.
(3) Represents shares of Common Stock issuable to Mr. Gaon upon the
exercise of options to purchase 350,000 shares of Common Stock at a per
share exercise price of $4.00. Such options become exercisable with
respect to 233,333 shares on November 30, 1997 and with respect to
116,667 shares on October 31, 1998.
(4) Mr. Caci is a Vice-President, Chief Financial Officer and Secretary of
the Company.
(5) Mr. Caci owns options to purchase 112,000 shares of Common Stock which
are exercisable within 60 days of September 15, 1997.
(6) Represents shares of Common Stock issuable to Mr. Caci upon the
exercise of options to purchase 175,000 shares of Common Stock at a per
share exercise price of $4.00. Such options become exercisable with
respect to 116,667 shares on November 30, 1997 and with respect to
58,333 shares on October 31, 1998.
PLAN OF DISTRIBUTION
It is anticipated that all of the Shares will be offered by the Selling
Shareholders from time to time in the open market, either directly or through
brokers or agents, or in privately negotiated transactions. The Selling
Shareholders have advised the Company that they are not parties to any
agreement, arrangement or understanding as to such sales.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the
Shares offered hereby have been passed upon for the Company by
Messrs. Olshan Grundman Frome & Rosenzweig LLP, New York, New York
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10022. Certain members of such firm hold Common Stock of the Company.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement, to the extent and for
the periods indicated in their report, have been audited by Arthur Andersen LLP,
independent public accountants and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission three
Registration Statements on Form S-8 under the Securities Act with respect to the
Shares offered hereby. For further information with respect to the Company and
the securities offered hereby, reference is made to the Registration Statements.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statements, each such statement being qualified in all respects by
such reference.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Glasgal Communications, Inc.
(the "Company") with the Securities and Exchange Commission are incorporated
herein by reference:
1. The Company's Annual Report on Form 10-K for the
fiscal year ended April 30, 1997.
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended July 31, 1997.
3. The description of the Company's Common Stock, $.001
par value (the "Common Stock"), in the Company's Registration Statement on Form
8-A filed May 2, 1996.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, after
the effective date of this registration statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereunder
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Certain members of Olshan Grundman Frome & Rosenzweig LLP hold
shares and options to purchase shares of Common Stock of the Company.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 6 of the Company's By-laws authorize indemnification of
directors and officers as follows:
The corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of Delaware, as that Section may be amended and
supplemented from time to time, indemnify any director, officer or trustee which
it shall have power to indemnify under the Section against any expenses,
liabilities or other matters referred to in or covered by that Section. The
indemnification provided for in this Article (i) shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any by-law,
agreement or vote on stockholders or disinterested directors or otherwise, both
as to action in their official capacities and as to action in another capacity
while holding such office, (ii) shall continue as to a person who has ceased to
be a director, officer or trustee and (iii) shall inure to the benefit of the
heirs, executors and administrators of such a person. The corporation's
obligation to provide indemnification under this Article shall be offset to the
extent of any other source of indemnification or any otherwise applicable
insurance coverage under a policy maintained by the corporation or any other
person.
Expenses incurred by a director of the Corporation in defending a civil
or criminal action, suit or proceeding by reason of the fact that he is or was a
director of the Corporation (or was serving at the Corporation's request as a
director or officer of another corporation) shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized by relevant sections of the General Corporation Law of
Delaware.
To assure indemnification under this Article of all such persons who
are determined by the corporation or otherwise to be or to have been
"fiduciaries" of any employee benefit plan of the corporation which may exist
from time to time, such Section 145 shall, for the purposes of this Article, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including, without limitation, any plan of the
corporation which is governed by the Act of Congress entitled "Employee
Retirement Income Security Act of 1974," as amended from time to time; the
corporation shall be deemed to have requested a person to serve an employee
benefit plan where the performance by such person of his duties to the
corporation also imposes duties on, or otherwise involves services by, such
person to the plan or participants or beneficiaries of the plan; excise taxes
assessed on a person with respect to an employee benefit plan pursuant to such
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Act of Congress shall be deemed "fines"; and action taken or omitted by a person
with respect to an employee benefit plan in the performance of such person's
duties for a purpose reasonably believed by such person to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the corporation.
Section 145 of the Delaware General Corporation Law provides as
follows:
"(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than action by or in the right
of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create
a presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless
and only to
II-3
<PAGE>
the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall
deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion or (3) by the
stockholders.
(e) Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation
as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
II-4
<PAGE>
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participant and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for
II-5
<PAGE>
advancement of expenses or indemnification brought under this section
or under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Court of Chancery may summarily determine
a corporation's obligation to advance expenses (including attorneys'
fees)."
The Company maintains a directors and officers insurance and company
reimbursement policy. The policy insures directors and officers against
unindemnified loss arising from certain wrongful acts in their capacities and
reimburses the Company for such loss for which the Company has lawfully
indemnified the directors and officers. The policy contains various exclusions,
none of which relate to the offering hereunder.
The Company has entered into indemnity agreements with each officer and
director of the Company. The contracts provide for indemnification of such
persons against expenses, liabilities and losses.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
II-6
<PAGE>
ITEM 8. EXHIBITS
EXHIBIT INDEX
EXHIBIT
4.1 1996 Employee and Consultant Stock Option Plan,
incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended April
30, 1996.
4.2 1996 Stock Option Conversion Plan, incorporated by
reference to the Company's Annual Report on Form 10-K
for the fiscal year ended April 30, 1997.
4.3 1996 Senior Executive Officer Stock Option Plan,
incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended April
30, 1997.
*5.1 Opinion of Olshan Grundman Frome & Rosenzweig LLP.
* 23.1 Consent of Arthur Andersen LLP
* 23.2 Consent of Olshan Grundman Frome & Rosenzweig LLP
(included in Exhibit 5.1).
* 24 Power of Attorney (included on the signature page of
this Registration Statement).
- --------------------
* Filed herewith
II-7
<PAGE>
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:
a. To file, during any period in which offers
or sales are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement;
(iii) 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;
provided, however, that paragraphs (i) and (ii) above
do not apply if the information required to be
included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement;
b. That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
c. 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.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of
II-8
<PAGE>
1934) that is incorporated by reference in the registration statement 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against each such liabilities (other than the payment by the
registrant of expenses incurred or paid by a trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-9
<PAGE>
SIGNATURES
Pursuant to 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 for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Totowa, State of New Jersey, on this 19th day of
September, 1997.
GLASGAL COMMUNICATIONS, INC.
(Registrant)
By: /S/ ISAAC J. GAON
----------------------
Isaac J. Gaon
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ralph Glasgal and Isaac J. Gaon, and each
of them, 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 thereto, and other 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 and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or his substitute may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ RALPH GLASGAL
- ------------------------- Chairman of the Board and
Ralph Glasgal President September 19, 1997
/S/ ISAAC J. GAON
- ------------------------- Chief Executive Officer
Isaac J. Gaon and Director (principal September 19, 1997
executive officer)
Director September __, 1997
- -------------------------
Joseph M. Salvani
/S/ ROBERT H. FRIEDMAN Director September 19, 1997
- ------------------------
Robert H. Friedman
- ------------------------- Director September __, 1997
Maurice Kulik
/S/ THOMAS BERRY Director September 19, 1997
- ------------------------
Thomas Berry
/S/ DAVID MILCH Director September 19, 1997
- ------------------------
David Milch
- ------------------------- Director September __, 1997
Christopher Carey
/S/ JAMES M. CACI
- ------------------------- Chief Financial Officer
James M. Caci (principal financial and September 19, 1997
accounting officer)
II-10
September 19, 1997
EXHIBIT 5.1
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Glasgal Communications, Inc.-
REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-8
dated the date hereof (the "Registration Statement"), filed with the Securities
and Exchange Commission by Glasgal Communications, Inc., a Delaware corporation
(the "Company"). The Registration Statement relates to an aggregate of 3,030,442
(the "Shares") of common stock, par value $.001 per share (the "Common Stock").
The Shares will be issued and sold by the Company in accordance with (i) the
Company's 1996 Employee and Consultant Stock Option Plan (the "Employee Plan"),
(ii) the Company's 1996 Stock Option Conversion Plan (the "Conversion Plan"),
and (iii) the Company's 1996 Senior Executive Officer Stock Option Plan (the
"Executive Plan").
We advise you that we have examined originals or copies
certified or otherwise identified to our satisfaction of the Certificate of
Incorporation and By-laws of the Company, minutes of meetings of the Board of
Directors and shareholders of the Company, each of the Employee Plan, the
Conversion Plan and the Executive Plan and such other documents, instruments and
certificates of officers and representatives of the Company and public
officials, and we have made such examination of the law, as we have deemed
appropriate as the basis for the opinion hereinafter expressed. In making such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as
<PAGE>
Securities and Exchange Commission
September 19, 1997
Page -2-
originals, and the conformity to original documents of documents submitted to us
as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the
Shares, when issued and paid for in accordance with the terms and conditions set
forth in each of the Employee Plan, the Conversion Plan and the Executive Plan,
will be duly and validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement.
We advise you that Robert H. Friedman, a member of this firm,
is a director and stockholder of the Company. Other members of this firm are
also stockholders of the Company.
Very truly yours,
/S/ OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
------------------------------------------
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
ARTHUR ANDERSEN LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Glasgal Communications, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated August 9, 1997
included in Glasgal Communications, Inc. Form 10-K for the year ended April 30,
1997 and to all references to our Firm included in this registration statement.
/S/ ARTHUR ANDERSEN LLP
-----------------------
Arthur Andersen LLP
Roseland, New Jersey
September 17, 1997
