SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DATATEC SYSTEMS, 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.)
23 Madison Road, Fairfield, New Jersey 07004
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(Address of Principal Executive Offices) (Zip Code)
2000 STOCK OPTION PLAN
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(Full Title of the Plan)
Isaac J. Gaon
Chief Executive Officer
Datatec Systems, Inc.
23 Madison Road
Fairfield, New Jersey 07004
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(Name and Address of Agent For Service)
(973) 808-4000
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(Telephone Number, Including Area Code, of Agent For Service)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C>
Common Stock, $.001 par 3,000,000 Shares(1)(2) $3.61(2) $10,830,000 $2,859.12
value per share, issuable
upon exercise of options
granted or to be granted
under the 2000 Stock
Option Plan
</TABLE>
(1) Represents shares of Common Stock issuable by the Registrant pursuant
to the 2000 Stock Option Plan. Pursuant to Rule 416 promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), this
Registration Statement also registers such number of additional shares
of Common Stock that may be offered or issued pursuant to the 2000
Stock Option Plan to prevent dilution resulting from stock splits,
stock dividends or similar transactions.
(2) Includes an aggregate of 1,035,000 shares with respect to which options
were granted under the 2000 Stock Option Plan at an average exercise
price of $3.81 per share. An additional approximately 1,965,000 shares
of Common Stock may be offered under the 2000 Stock Option Plan.
Pursuant to Rule 457(g) and (h), the offering price for the shares
which may be issued under the 2000 Stock Option Plan is estimated
solely for the purpose of determining the registration fee and is based
on the closing price of the Company's Common Stock of $3.50 as reported
by the Nasdaq Stock Market on November 17, 2000.
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<PAGE>
EXPLANATORY NOTES
Datatec Systems, Inc. (the "Company") has prepared this Registration
Statement in accordance with the requirements of Form S-8 under the Securities
Act, to register shares of our common stock, $.001 par value per share, issuable
pursuant to the 2000 Stock Option Plan (the "2000 Plan"). The 2000 Plan is
intended to replace all of the Company's existing stock option plans, which
include (i) the 1990 Employee Stock Option Plan, (ii) the 1995 Directors Option
Plan, (iii) the 1996 Employee and Consultant Stock Option Plan, and (iv) the
1996 Senior Executive Plan.
This Form S-8 includes a Reoffer Prospectus prepared in accordance with
Part I of Form S-3 under the Securities Act. The Reoffer Prospectus may be
utilized for reofferings and resales of shares of Common Stock acquired pursuant
to the 2000 Plan. Some of these shares were previously registered.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The Company will provide documents containing the information specified
in Part I of Form S-8 to employees as specified by Rule 428(b)(1) under the
Securities Act. Pursuant to the instructions to Form S-8, the Company is not
required to file these documents either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424 under the
Securities Act.
<PAGE>
PROSPECTUS
2,529,880 SHARES
DATATEC SYSTEMS, INC.
Common Stock ($.001 par value)
This prospectus relates to the reoffer and resale by certain selling
stockholders of shares of our common stock that may be issued by us to the
selling stockholders upon the exercise of stock options granted under our 2000
Stock Option Plan. We previously registered the offer and sale of the shares to
the selling stockholders. This Prospectus also relates to certain underlying
options that have not as of this date been granted. If and when such options are
granted to persons required to use the prospectus to reoffer and resell the
shares underlying such options, we will distribute a prospectus supplement. The
shares are being reoffered and resold for the account of the selling
stockholders and we will not receive any of the proceeds from the resale of the
shares.
The selling stockholders have advised us that the resale of their
shares may be effected from time to time in one or more transactions on the
Nasdaq Stock Market, in negotiated transactions or otherwise, at market prices
prevailing at the time of the sale or at prices otherwise negotiated. See "Plan
of Distribution." We will bear all expenses in connection with the preparation
of this prospectus.
Our common stock is listed on the Nasdaq Stock Market. On November 17,
2000, the closing price for the Common Stock, as reported by the Nasdaq Stock
Market, was $3.50.
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This investment involves risk. See "Risk Factors" beginning at page 6.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. THEY
HAVE NOT MADE, NOR WILL THEY MAKE, ANY DETERMINATION AS TO WHETHER ANYONE SHOULD
BUY THESE SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November 21, 2000.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document we file at the SEC's public reference room
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain further information on the operation of the public reference room by
calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public over the Internet at the SEC's web site at http://www.sec.gov. You may
also request copies of such documents, upon payment of a duplicating fee, by
writing to the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
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<PAGE>
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION.........................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................5
RISK FACTORS................................................................6
THE COMPANY................................................................13
USE OF PROCEEDS............................................................13
SELLING STOCKHOLDERS.......................................................14
PLAN OF DISTRIBUTION.......................................................15
LEGAL MATTERS..............................................................17
EXPERTS ..................................................................18
ADDITIONAL INFORMATION.....................................................18
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Datatec Systems, Inc. has filed with the SEC, a registration statement
on Form S-3 under the Securities Act, covering the securities offered by this
prospectus. This prospectus does not contain all of the information that you can
find in our registration statement and the exhibits to the registration
statement.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(a) Our Annual Report on Form 10-K, for the year ended April 30,
2000;
(b) Our Quarterly Report on Form 10-Q for the quarter ended July
31, 2000;
(c) The description of our common stock contained in our
registration statement on Form 8-A filed May 2, 1996,
including any amendments or reports filed for the purpose of
updating such descriptions.
You may request a copy of these filings, at no cost, by writing or
telephoning us at Datatec Systems, Inc., 23 Madison Road Fairfield, New Jersey
07004, Attention: Chief Financial Officer, telephone (973) 808- 4000.
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<PAGE>
RISK FACTORS
The purchase of our common stock involves a high degree of risk. You
should carefully consider the following risk factors and the other information
in this prospectus before deciding to invest in such common stock.
We Have Incurred Operating Losses in Our Business
We have incurred net losses of approximately $924,000 for the three
months ended July 31, 2000, $1,633,000 for the fiscal year ended April 30, 2000
and $506,000 for the fiscal year ended April 30, 1999. We may not generate
sufficient revenues to meet our expenses or to operate profitably in the future.
Our Liquidity is Limited
As of July 31, 2000 we had cash and cash equivalents of $7,627,000. In
addition, although our working capital was approximately $15.4 million at July
31, 2000, $16.1 million at April 30, 2000, and $2.3 million at April 30, 1999,
we have a history of limited working capital. We anticipate, based on currently
proposed plans and assumptions relating to our operations, that our existing
capital resources will be sufficient to satisfy our anticipated cash
requirements for at least 12 months. In the event that our plans change or our
assumptions change or prove to be inaccurate, we will be required to seek
additional financing to finance our working capital requirements. There can be
no assurance that any additional financing, if required, will be available to us
on acceptable terms, if at all. On November 15, 2000, we secured a $21 million
financing arrangement with IBM Credit Corporation, replacing our existing credit
facility. The new financing arrangement provides for an increase of $5 million
in borrowing capacity at more favorable interest rates. As of November 16, 2000,
we had availability of approximately $8.6 million under the new facility.
We Have Risks Resulting From Significant Amounts of Debt
As of July 31, 2000, we had outstanding debt of approximately $15.0
million. Our level of debt and the limitations imposed on us by our existing or
future debt agreements could have important consequences on our business and
future prospects, including the following:
o We may not be able to obtain necessary financing in the future
for working capital, capital
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expenditures, debt service requirements or other purposes.
o Our less leveraged competitors could have a competitive
advantage because they have greater flexibility to utilize
their cash flow to improve their operations.
o We could be more vulnerable in the event of a downturn in our
business that would leave us less able to take advantage of
significant business opportunities and to react to changes in
market or industry conditions.
Our Operating Results May Fluctuate
Our quarterly operating results have varied in the past, and may vary
significantly in the future, depending on factors that include the following:
o market acceptance of new or enhanced versions of our services;
o changes in our customer mix and changes in the level of our
operating expenses;
o the gain or loss of significant customers; and
o personnel changes and economic conditions in general and in
the information technology industry in particular.
Any unfavorable change in these or other factors could have a material adverse
effect on our operating results for a particular quarter. Changes in such
factors also makes the prediction of revenue and results of operations on a
quarterly basis difficult, and performance forecasts derived from such
predictions unreliable.
We have also experienced large fluctuations in sales from
quarter-to-quarter due to substantial sales to customers in the retailing
industry. Typically, these customers delay improvements and enhancements during
the fourth quarter of the calendar year to avoid costly interruptions during the
holiday sales season. In addition, a substantial portion of our operating
expenses are related to personnel, facilities, inventory, equipment and
marketing programs. The level of spending for such expenses cannot be adjusted
quickly and is therefore fixed in the short term. The level of these expenses is
based, in significant part, on our expectations of future revenue on a quarterly
basis. If actual
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<PAGE>
revenue levels on a quarterly basis are below management's expectations, results
of operations are likely to be adversely affected because only a small amount of
our expenses varies with our revenue in the short term.
We have also begun to receive revenues through the operation of our
subsidiary, eDeploy.com. As this subsidiary is in its development stages, the
level of its revenues will remain uncertain for the foreseeable future.
We Face Certain Risks Associated with Large Projects
Due to the nature and size of implementation projects that we are now
pursuing, there is a longer lead time between the initiation of prospective
business and the consummation of a transaction, if any. As such, there are
likely to be substantial fluctuations in sales volume from month-to-month and
quarter-to-quarter. The fluctuations in our operating results increases our
risk of failure, especially given our present level of working capital. As a
result, if we experience lower than expected sales volume for an extended period
of time, it may have a material adverse effect on our business, financial
condition and results of operations.
Our Business Is Very Competitive and Increased Competition Could
Have a Significant Impact On Our Earnings
We compete with a number of other companies involved in the design,
configuration, installation, integration, deployment and servicing of computer
networking technologies. The market for such services is highly fragmented,
intensely competitive and rapidly changing. Some of our competitors have
significantly greater resources and better brand-name recognition than us. In
addition, there are relatively low barriers to entry in these markets and new
competition may arise either from expansion by established companies or from new
emerging companies. Increased competition may result in pressure for price
reductions and related reductions in gross margins and market share. In addition
to direct competition, we face indirect competition from our existing and
potential future customers, many of which internally design, integrate and
deploy their own technologies for their particular needs, and therefore may be
reluctant to use services offered by independent providers such as us. We may
not be able to successfully compete against current and future competitors.
The following are the competitive factors that we believe will be
significant on our ability to compete successfully:
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o To achieve our goal of larger market share, we must continue
to enhance our existing services, introduce new service
offerings, recruit and train additional deployment and
engineering staff, and recruit and train sales and marketing
professionals.
o We believe that our ability to increase profit margins depends
upon a number of factors both within and beyond our control,
including performance, price, quality and breadth of services.
o We believe that our ability to successfully educate
prospective customers as to the advantages of our services is
vital to the recruitment of companies who internally design,
integrate and deploy their own technologies for their
particular needs.
We Depend on Strategic Alliances and Indirect Customers
A major part of our growth strategy is to market our services in part
through indirect customers and strategic alliances with systems manufacturers,
systems integrators, independent software developers/distributors, and
telecommunications carriers, that utilize our services to provide joint
solutions to customers. For example, we have entered into a non-exclusive
agreement with Cisco Systems, Inc., pursuant to which we have agreed to provide
implementation services to customers of Cisco. Cisco may terminate its agreement
with us at any time, with or without cause. Termination of the Cisco agreement,
or any similar agreement, may have a material adverse effect on our business,
financial condition and results of operations. Because we utilize and will
continue to utilize indirect customers and strategic alliances as a significant
distribution channel, we are subject to the risk that our indirect customers or
strategic partners will discontinue or decrease their use of our services for
reasons unrelated to the quality or price of, or demand for, our services. We
are also subject to the risk that the demand for products and services sold by
our indirect customers or strategic partners will decline, which could have a
material adverse effect on our business, financial condition and results of
operations.
We Depend on Certain Significant Customers
During each of the past two fiscal years and through the first quarter
of this past fiscal year, sales of our services to a limited number of customers
have accounted for a substantial percentage of our total net sales. Our 15
largest customers accounted for approximately 70% of our net sales for the
quarter
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<PAGE>
ended July 31, 2000, approximately 57% of our total net sales for the year ended
April 30, 1999 and approximately 73% of our total net sales for the year ended
April 30, 2000. This concentration of customers can cause our net sales and
earnings to fluctuate from quarter-to-quarter, based on the requirements of our
customers and the timing of delivery of services. Although we believe we have
good relationships with our largest customers and have in the past received a
substantial portion of our revenues from repeat business with established
customers, none of our major customers have any obligation to purchase
additional services. Therefore, we cannot assure you that any of our major
customers will continue to purchase new services in amounts similar to previous
years. Although the particular customers are likely to change from period to
period, we believe that large orders from a limited number of customers will
continue to account for a substantial portion of our revenues in any fiscal
period. In any period, the unexpected loss of or decline in net sales from a
major customer, or the failure to generate significant revenues from other
customers, could have a material adverse effect on our business, financial
condition and results of operations.
Backlog is an Unreliable Measure of Future Sales
From time to time, we disclose an amount of backlog for our services,
which typically consists of purchase orders, written agreements and other oral
agreements with customers for which a customer has scheduled the provision of
services within the next 12 months. Orders included in backlog may be canceled
or rescheduled by customers without penalty. A variety of conditions, both
specific to the individual customer and generally affecting the customer's
industry, may cause customers to cancel, reduce or delay orders that were
previously made or anticipated. We cannot assure the timely replacement of
canceled, delayed or reduced orders. Significant or numerous cancellations,
reductions or delays in orders by a customer or group of customers could
materially adversely affect our business, financial condition and results of
operations. Backlog should not be relied upon as indicative of our revenues for
any future period.
We Face Risks of Expansion
Recently, we have expanded our operations through several acquisitions,
which has placed significant demands on our administrative, operational and
financial personnel and systems. Additional expansion may further strain our
management, financial and other resources. Our systems, procedures, controls and
existing space may not be adequate to support expansion of our operations. Our
future operating results will substantially depend
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<PAGE>
on the ability of our officers and key employees to manage changing business
conditions and to implement and improve our operational and financial control
and our reporting systems. If we are unable to respond to and manage changing
business conditions, the quality of our services, our ability to retain key
personnel and the results of our operations could be materially adversely
affected.
We are Dependent on Certain Key Personnel
Our success depends in large part upon the abilities of our senior
management, including, Isaac Gaon, our Chairman of the Board and Chief Executive
Officer, and Robert Gadd, the Chief Technology Officer of eDeploy.com. The loss
of the services of any of these members of senior management could have a
material adverse effect on our business. We have an employment agreement with
Mr. Gaon which expires on April 30, 2003. The employment agreement may be
terminated by us for cause or by the employee for good reason. Our future
success and growth also depends on our ability to continue to attract, motivate
and retain highly qualified employees, including those with the technical,
managerial, sales and marketing expertise necessary to operate our business.
Competition for personnel in the configuration, integration and deployment
services industry is intense, and we cannot assure you that we will be
successful in attracting and retaining such personnel. Departures and additions
of key personnel may be disruptive to our business and could have a material
adverse effect on our business, financial condition and results of operations.
We Depend Upon Unionized Labor
A substantial portion of our deployment force is employed under
contracts with the International Brotherhood of Electrical Workers and the
International Brotherhood of Electrical Workers Local 1430 (collectively, the
"IBEW"). Our union employees are responsible for the deployment of our services.
Any work stoppages or other labor disturbances could have a material adverse
effect on our business, financial condition and results of operations.
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<PAGE>
Our Products and Services Have Limited Proprietary Protection
Most of our intellectual property consists of proprietary or
confidential information that is not subject to patent protection. Existing
trade secret laws offer only limited protection. The steps that we have taken to
protect these proprietary rights may not be adequate to deter misappropriation.
Although we do not believe that we are infringing the intellectual
property rights of others, there can be no assurance that such claims will not
be asserted. Any such litigation could be costly and divert management's
attention, either of which could have a material adverse effect on our business,
financial condition and results of operations. Adverse determinations in such
litigation could result in the loss of our proprietary rights, subject us to
significant liabilities, require us to seek licenses from third parties or
prevent us from selling our services, any one of which would have a material
adverse effect on our business, financial conditions and results of operations.
Our Common Stock Prices Are Volatile
The market price of our common stock is very volatile, with per share
closing bids ranging from a low of approximately $2.875 to a high of
approximately $9.125 over the period from May 1, 1999 to November 17, 2000.
Announcements by us or by our competitors of technological or other innovations
for new commercial products or services developments concerning propriety rights
or governmental regulations, changes in financial estimates by securities
analysts, or general conditions in the economy or the market for our services,
some of which may be unrelated to our performance and beyond our control, may
have a significant effect on our business and on the market price of our
securities. Sales of a substantial number of shares by existing security holders
could also have an adverse effect on the market price of our securities. The
stocks of many technology companies have experienced extreme price and volume
fluctuations unrelated to the operating performance of those companies.
Our Ability to Issue Preferred Stock Could Hurt Holders of Common Stock
Our Certificate of Incorporation authorizes the issuance of a maximum
of 4,000,000 shares of preferred stock. While there are currently no shares of
preferred stock issued and outstanding, if shares of preferred stock are issued
in the future, the terms of a series of preferred stock may be set by our board
of directors without approval by our stockholders. Such terms could include,
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among others, preferences as to dividends, distributions on liquidation and
enhanced voting rights. The rights of the holders of our 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. The ability of our board of
directors to issue preferred stock could have the effect of delaying, deferring
or preventing a change of control or the removal of existing management. As a
result, it could prevent our stockholders from being paid a premium over the
market value for their shares of common stock.
THE COMPANY
We are in the business of providing rapid and accurate technology
deployment services and licensing software tools, designed to accelerate the
delivery of complex Information Technology (IT) solutions for Technology
Providers and Enterprises. We market our services primarily to large Original
Equipment Manufacturers, systems integrators, independent software vendors,
telecommunications carriers and service providers as well as to a select number
of Fortune 2000 customers in the United States and Canada. Our deployment
services include the following: (i) the process of "customizing" internetworking
devices such as routers and switches, and computing devices such as servers and
workstations to meet the specific needs of the user, (ii) the process of
integrating these hardware devices as well as integrating operational and
application software on a network to ensure they are compatible with the
topology of the network and all legacy systems, and (iii) the physical process
of installing technology on networks. We license our software tools through our
subsidiary, eDeploy.com, Inc., and have established a new subsidiary, Global
Integration Services, for our proposed entry into Europe.
We are incorporated in Delaware and our stock is traded on the Nasdaq
National Market System under the symbol "DATC". Our executive offices are
located at 23 Madison Road, Fairfield, New Jersey 07004. Our telephone number is
(973) 808-4000.
USE OF PROCEEDS
The shares of common stock offered hereby are being registered for the
account of the selling stockholders identified in this prospectus. See "Selling
Stockholders." All net proceeds from the sale of the common stock will go to the
stockholders who offer and sell their shares. We will not receive any part of
the proceeds from such sales of common stock. We will, however, receive
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proceeds from the exercise of the options at the time of their exercise. Such
proceeds will be contributed to working capital and will be used for general
corporate purposes.
SELLING STOCKHOLDERS
This Prospectus relates to the offer and sale by the Selling
Stockholders of up to 2,529,880 Shares issued under the Plan to the Selling
Stockholders. This Prospectus also relates to such indeterminate number of
additional shares of Common stock that may be acquired by the Selling
Stockholders as a result of the antidilution provisions of the Plan.
Information regarding the identity of additional Selling Stockholders
and certain other information relating to such Selling Stockholders will be
provided by supplement to this Prospectus.
The following table sets forth (i) the number of shares of Common Stock
owned by each Selling Stockholder at November 21 2000, (ii) the number of Shares
to be offered for resale by each Selling Stockholder and (iii) the number and
percentage of shares of Common Stock to be held by each Selling Stockholder
after completion of the offering.
<TABLE>
<CAPTION>
Number of Maximum
Shares of Number of
Common Stock Shares to
Beneficially be Shares
Owned Prior Offered Beneficially
to for Owned After
Name and Address Offering(1) Resale Offering(2)
---------------- ----------- ------ -----------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Isaac Gaon(3) 1,648,924(4) 1,873,880 8,378 *
Thomas Berry(5) 80,000(6) 120,000 0 0%
Robert H. Friedman(7) 90,146(8) 120,000 10,146 *
Frank Brosens(9) 420,873(10) 48,000 412,873 1.2%
David Milch(11) 749,505(12) 320,000 469,505 1.4%
William J. Adams, Jr.(13) 8,000(14) 24,000 0 0%
Kevin S. Moore (15) 15,000(16) 24,000 7,000 *
</TABLE>
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* Less than one percent.
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(1) The calculation of shares of common stock beneficially owned was
determined in accordance with Rule 13d-3 of the Exchange Act.
(2) Assumes that all common stock offered by the selling stockholders is
sold.
(3) Mr. Gaon has been Chairman of the Board since December 1997 and a
Director since 1992.
(4) Mr. Gaon owns 8,378 shares of Common Stock and has options to purchase
1,640,546 additional shares of Common Stock which are exercisable
within 60 days of November 21, 2000.
(5) Mr. Berry has been a Director of the Company since July 1995.
(6) Mr. Berry owns options to purchase 80,000 shares of Common Stock which
are exercisable within 60 days of November 21, 2000.
(7) Mr. Friedman has been a Director of the Company since August 1994.
(8) Mr. Friedman owns 10,146 shares of Common Stock and has options to
purchase 80,000 additional shares of Common Stock which are exercisable
within 60 days of November 21, 2000.
(9) Mr. Brosens has been a Director of the Company since November 1998.
(10) Mr. Brosens owns 62,873 shares of Common Stock, has warrants to
purchase 350,000 additional shares of Common Stock which are
exercisable within 60 days of November 21, 2000, and has options to
purchase 8,000 additional shares of Common Stock which are exercisable
within 60 days of November 21, 2000.
(11) Mr. Milch has been a Director of the Company since October 1996.
(12) Mr. Milch owns 469,505 shares of Common Stock and has options to
purchase 72,000 additional shares of Common Stock which are exercisable
within 60 days of November 21, 2000.
(13) Mr. Adams has been a Director of the Company since April 2000.
(14) Mr. Adams owns options to purchase 8,000 shares of Common Stock which
are exercisable within 60 days of November 21, 2000.
(15) Mr. Moore has been a Director of the Company since June 2000.
(16) Mr. Moore owns 7,000 shares of Common Stock and has options to purchase
8,000 additional shares of Common Stock which are exercisable within 60
days of November 21, 2000.
Our registration of the shares included in this prospectus does not
necessarily mean that the selling stockholders will opt to sell any of the
shares offered hereby. The shares covered by this prospectus may be sold from
time to time by the selling stockholders so long as this prospectus remains in
effect; provided, however, that the selling stockholders are first required to
contact us to confirm that this prospectus is in effect.
PLAN OF DISTRIBUTION
This offering is self-underwritten; neither we nor the selling
stockholders have employed an underwriter for the sale of common stock by the
selling stockholders. We will bear all expenses in connection
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with the preparation of this Prospectus. The selling stockholders will bear all
expenses associated with the sale of the common stock.
The selling stockholders may offer their shares of common stock
directly or through pledgees, donees, transferees or other successors in
interest in one or more of the following transactions:
o On any stock exchange on which the shares of common stock may
be listed at the time of sale
o In negotiated transactions
o In the over-the-counter market
o In a combination of any of the above transactions
The selling stockholders may offer their shares of common stock at any
of the following prices:
o Fixed prices which may be changed
o Market prices prevailing at the time of sale
o Prices related to such prevailing market prices
o At negotiated prices
The selling stockholders may effect such transactions by selling shares
to or through broker-dealers, and all such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from the
selling stockholders and/or the purchasers of shares of common stock for whom
such broker-dealers may act as agents or to whom they sell as principals, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
Any broker-dealer acquiring common stock from the selling stockholders
may sell the shares either directly, in its normal market-making activities,
through or to other brokers on a principal or agency basis or to its customers.
Any such sales may be at prices then prevailing on the Nasdaq Stock Market or at
prices related to such prevailing market prices or at negotiated prices to its
customers or a combination of such methods. The selling stockholders and any
broker-dealers that act in connection with the sale of the common stock
hereunder might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act; any commissions received by them and any profit on
the resale of shares as principal might be deemed to be underwriting discounts
and commissions under the Securities Act. Any such commissions, as well as other
expenses incurred by the selling stockholders and applicable transfer taxes, are
payable by the selling stockholders.
The selling stockholders reserve the right to accept, and together with
any agent of the selling stockholder, to reject in whole or in part any proposed
purchase of the shares of common stock. The selling
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<PAGE>
stockholders will pay any sales commissions or other seller's compensation
applicable to such transactions.
We have not registered or qualified offers and sales of shares of the
common stock under the laws of any country, other than the United States. To
comply with certain states' securities laws, if applicable, the selling
stockholders will offer and sell their shares of common stock in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the selling stockholders may not offer or sell
shares of common stock unless we have registered or qualified such shares for
sale in such states or we have complied with an available exemption from
registration or qualification.
The selling stockholders have represented to us that any purchase or
sale of shares of common stock by them will comply with Regulation M promulgated
under the Exchange Act. In general, Rule 102 under Regulation M prohibits any
person connected with a distribution of our common stock (a "Distribution") from
directly or indirectly bidding for, or purchasing for any account in which he or
she has a beneficial interest, any of our common stock or any right to purchase
our common stock, for a period of one business day before and after completion
of his or her participation in the distribution (we refer to that time period as
the "Distribution Period").
During the Distribution Period, Rule 104 under Regulation M prohibits
the selling stockholders and any other persons engaged in the Distribution from
engaging in any stabilizing bid or purchasing our common stock except for the
purpose of preventing or retarding a decline in the open market price of our
common stock. No such person may effect any stabilizing transaction to
facilitate any offering at the market. Inasmuch as the selling stockholders will
be reoffering and reselling our common stock at the market, Rule 104 prohibits
them from effecting any stabilizing transaction in contravention of Rule 104
with respect to our common stock.
There can be no assurance that the selling stockholders will sell any
or all of the shares offered by them hereunder or otherwise.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
us by Olshan Grundman Frome Rosenzweig & Wolosky LLP, New York, New York. Mr.
Robert Friedman, a partner of Olshan Grundman Frome Rosenzweig & Wolosky LLP, a
director of the Company, holds shares of Common Stock and has been granted
options to purchase additional shares of Common Stock. Certain other members of
such firm hold shares of Common Stock.
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<PAGE>
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
ADDITIONAL INFORMATION
We have filed with the SEC a Registration Statement 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 Statement. 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 Statement,
each such statement being qualified in all respects by such reference
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference
The following documents filed by Datatec Systems, 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, 2000.
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 2000.
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 (the
"Exchange Act"), 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.
Any statement contained in a document incorporated or deemed
to be incorporated by reference into this Prospectus will be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or any other subsequently filed document
which also is, or is deemed to be, incorporated by reference into this
Prospectus modifies or supersedes that statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Item 4. Description of Securities
Not applicable.
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<PAGE>
Item 5. Interest of Named Experts and Counsel
Robert Friedman, a partner of Olshan Grundman Frome Rosenzweig &
Wolosky LLP, is a director of the Company, holds shares of Common Stock and has
been granted options to purchase additional shares of Common Stock. Certain
other members of such firm hold shares of Common Stock.
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
II-2
<PAGE>
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
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
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<PAGE>
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 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
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<PAGE>
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.
(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
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<PAGE>
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 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.
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<PAGE>
Item 8. Exhibits
Exhibit Index
Exhibit
4.1 Specimen Common Stock Certificate, incorporated by reference
to the Company's registration statement on Form S-8 filed with
the Commission on March 27, 1998.
*5.1 Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP.
10.1 2000 Stock Option Plan, incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 2000.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP
(included in Exhibit 5.1).
*24.1 Power of Attorney (included on the signature page of this
Registration Statement).
--------------------
* Filed herewith
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<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, as
amended (the "Securities Act");
(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
Exchange Act that are incorporated by reference in
the Registration Statement;
b. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable,
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<PAGE>
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) 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 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.
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<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 Fairfield, State of New Jersey, on this 21st day of
November, 2000.
DATATEC SYSTEMS, 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 Isaac J. Gaon 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 attorney-in-fact and agents 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Isaac J. Gaon Chairman of the Board, November 21, 2000
----------------------------------- Chief Executive Officer,
Isaac J. Gaon and Chief Financial
Officer (principal
executive and financial
officer)
/s/ Thomas Berry Director November 21, 2000
-----------------------------------
Thomas Berry
/s/ Robert H. Friedman Director November 21, 2000
-----------------------------------
Robert H. Friedman
/s/ Frank Brosens Director November 21, 2000
-----------------------------------
Frank Brosens
/s/ David Milch Director November 21, 2000
-----------------------------------
David Milch
/s/ William J. Adams, Jr. Director November 21, 2000
-----------------------------------
William J. Adams, Jr.
/s/ Kevin S. Moore Director November 21, 2000
-----------------------------------
Kevin S. Moore
</TABLE>
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