<PAGE>
As filed with the Securities and Exchange Commission on March 11, 1998
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ANCOR COMMUNICATIONS, INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 41-1569659
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
6130 Blue Circle Drive
Minnetonka, Minnesota 55343
(612) 932-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Copy to:
Kenneth E. Hendrickson Amy E. Ayotte
Ancor Communications, Incorporated Dorsey & Whitney LLP
6130 Blue Circle Drive 220 South Sixth Street
Minnetonka, Minnesota 55343 Minneapolis, MN 55402
(612) 932-4000 (612) 340-6323
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
---------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
=============================================================================================
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------
Proposed Proposed
Title of Each Amount Maximum Maximum Amount of
Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered(1) Per Share* Offering Price* Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
($.01 par value) 2,816,144 $7.69 $21,656,147.36 $6,389.00
=============================================================================================
</TABLE>
* Estimated solely for purposes of computing the registration fee and based upon
the average of the high and low sales prices for such Common Stock on March 9,
1998, as reported on the Nasdaq SmallCap Market.
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable as a result of decreases in the
conversion price of the Company"s Series C Preferred Stock and any future
antidilution adjustments in accordance with the terms of the Series C Preferred
Stock, the underlying shares of Common Stock of which are included for
registration.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 11, 1998
PROSPECTUS
ANCOR COMMUNICATIONS, INCORPORATED
----------
2,816,144 SHARES OF
COMMON STOCK
($.01 PAR VALUE)
----------
This Prospectus relates to the offer and sale by certain persons listed
under "Selling Shareholders" (collectively, the "Selling Shareholders") of (i)
up to an aggregate of 2,816,144 shares (collectively, the "Shares") of common
stock, par value $.01 per share (the "Common Stock"), of Ancor Communications,
Incorporated, a Minnesota corporation ("Ancor" or the "Company") and (ii) in
accordance with Rule 416 under the Securities Act of 1933, as amended (the
Securities Act"), such presently indeterminate number of additional Shares as
may be issuable upon conversion of the Company's Series C Preferred Stock (the
"Series C Preferred Stock") as a result of stock splits, stock dividends and
antidilution provisions (including decreases in the conversion price of the
Series C Preferred Stock). See "Selling Shareholders" and "Plan of
Distribution." The Company will not receive any proceeds from the sale of the
Shares. The Company has agreed to pay the expenses of registration of the
Shares, including legal and accounting fees.
The Selling Shareholders currently hold 1,100 shares of Series C
Preferred Stock. Each share of the Series C Preferred Stock has a stated value
of $10,000 and converts into Common Stock, subject to certain restrictions, at a
variable conversion rate equal to the lower of (i) the Maximum Conversion Price
(as defined below) or (ii) the average of the three lowest closing bid prices of
the Common Stock during the applicable Pricing Period (as defined below). The
Maximum Conversion Price is equal to the lower of (i) $9.00 per share and (iii)
a price which is set at a defined premium over the average closing bid price of
the Common Stock for the 30 trading days following February 19, 1998. The
applicable Pricing Period is a number of consecutive trading days immediately
preceding the date of conversion of the Series C Preferred Stock initially equal
to twelve and increased by one additional consecutive trading day for each full
calendar month which has elapsed since February 19, 1998.
Any or all of the Shares may be offered from time to time in
transactions on the Nasdaq SmallCap Market or the Pacific Stock Exchange in
brokerage transactions at prevailing market prices or in transactions at
negotiated prices. See "Plan of Distribution."
The Shares offered hereby have not been registered under the blue sky
or securities laws of any jurisdiction, and any broker or dealer should assure
the existence of an exemption from registration or effectuate such registration
in connection with the offer and sale of the Shares.
The Common Stock is traded on the Nasdaq SmallCap Market and the
Pacific Stock Exchange. On March 9, 1998, the last sale price of the Common
Stock as reported on the Nasdaq SmallCap Market was $7.375 per share.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES+
+EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE +
+SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
THE ACQUISITION AND OWNERSHIP OF THE COMMON STOCK INVOLVE A HIGH
DEGREE OF RISK. THE COMMON STOCK SHOULD BE PURCHASED ONLY BY INVESTORS
WHO ARE ABLE TO AFFORD THE RISK OF LOSS OF THEIR
ENTIRE INVESTMENT. (SEE "RISK FACTORS".)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING THE ENTRY OF STABILIZING BIDS OR PENALTY BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND PASSIVE MARKET MAKING.
No 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 contained herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities offered hereby in any jurisdiction in which
it is not lawful or to any person to whom it is not lawful to make any such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof.
The date of this Prospectus is __________, 1998.
2
<PAGE>
TABLE OF CONTENTS
PAGE
----
Available Information ............................. 5
Incorporation of Certain Documents by Reference.... 5
Risk Factors....................................... 6
Ancor Communications, Incorporated................. 14
Selling Shareholders............................... 15
Plan of Distribution............................... 18
Experts .......................................... 19
Legal Matters...................................... 19
3
<PAGE>
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"). This Prospectus does
not contain all the information set forth in the Registration Statement and
exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made. Reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. A copy of
the Registration Statement is also available on the Commission"s EDGAR site on
the World Wide Web at: http:\\www.sec.gov. In addition, the Common Stock of the
Company is listed on the Nasdaq SmallCap Market and the Pacific Stock Exchange,
and reports, proxy statements and other information concerning the Company can
also be inspected at such exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company, which have been filed with the
Commission, are hereby incorporated by reference in this Prospectus:
(a) the Annual Report on Form 10-K for the year ended December 31,
1997;
(b) the description of the Common Stock contained in the
Registration Statement on Form 8-A dated March 11, 1994, and any amendment
or report filed for the purpose of updating such description filed
subsequent to the date of this Prospectus and prior to the termination of
the offering described herein.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Shares shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the respective
dates of filing of such documents. Any statement contained herein or in a
document all or part of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such 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.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than certain exhibits to such documents). Requests for such copies should be
directed to Steven E. Snyder, Chief Financial Officer, Ancor Communications,
Incorporated, 6130 Blue Circle Drive, Minnetonka, Minnesota 55343, telephone
number (612) 932-4000.
4
<PAGE>
RISK FACTORS
Prospective investors in the shares offered hereby should carefully
consider the following risk factors, in addition to the other information
appearing in or incorporated by reference in this Prospectus.
DEPENDENCE ON FIBRE CHANNEL PRODUCTS; COMPETING TECHNOLOGIES; UNCERTAINTY OF
MARKET ACCEPTANCE OF FIBRE CHANNEL TECHNOLOGY
The Company's current products are all designed to comply with the Fibre
Channel standard for data communications network technology and to compete in
the high performance local area network (LAN) market and as a switching device
in high performance storage area network (SAN) markets. The Company's success
will thus depend on the market acceptance of Fibre Channel as a technology for
addressing data communications and data storage needs.
In the LAN market Fibre Channel competes with a number of other network
technologies, including both established technologies, such as Fiber Distributed
Data Interface ("FDDI"), Ethernet, Fast Ethernet and Token Ring, and newer
technologies that have not yet achieved wide market penetration, such as Gigabit
Ethernet and Asynchronous Transfer Mode ("ATM"). The Company believes that users
generally do not replace existing network technologies until system demands
significantly strain their capacity, relying instead on interim solutions such
as greater segmentation of networks using additional networks and routers. In
addition, many users who install new network technology continue to choose the
older, established technologies rather than newer technologies such as Fibre
Channel. Furthermore, users who are replacing existing data communications
networks may choose other new data communications technologies rather than Fibre
Channel; in particular, many believe that ATM or Gigabit Ethernet products,
which are available from a number of companies, are the most significant new
technologies competitive with Fibre Channel. In order to gain market acceptance,
the Company's products must be priced to provide a cost-effective alternative to
competing technologies. Market acceptance of Fibre Channel technology may also
be affected by the fact that Fibre Channel is not suitable for wide area network
("WAN") applications due to distance limitations specified in the American
National Standard Institute ("ANSI") standards. There can be no assurance that
Fibre Channel technology will gain widespread acceptance or that it will be able
to compete successfully with existing or future technologies. The failure of
Fibre Channel to gain widespread market acceptance or of the Fibre Channel
market to expand would have a material adverse effect on the Company's business,
financial condition and results of operations.
In the SAN market, adoption of Fibre Channel requires computer systems
manufacturers to convert from the Small Computer System Interface (SCSI)
interconnect protocol currently being used by many manufacturers. While many
computer systems manufacturers have announced their intentions to convert to
Fibre Channel as the interconnect protocol for their products, there can be no
assurance that this conversion will happen, or that other computer systems
manufacturers will adopt the Fibre Channel protocol, on a timely basis or at
all. Furthermore, there can be no assurance that these or other companies will
incorporate switching devices, such as those sold by the Company, into their
products on a timely basis or at all.
RAPID TECHNOLOGICAL CHANGE AND RISK OF TECHNOLOGICAL OBSOLESCENCE
The data network communications and storage markets are characterized by
rapid technological change, including changes in customer requirements, frequent
new product introductions and enhancements, and evolving industry standards. The
Company's success will depend in part on its ability to keep pace with
technological developments and emerging industry standards and to respond
5
<PAGE>
to customer requirements by enhancing its current products and developing and
introducing new products. Failure to anticipate or respond rapidly to advances
in technology and to adapt the Company's products appropriately could render the
Company's products obsolete and have a material adverse effect on the success of
the Company's products and thus on the Company's business, financial condition
and results of operations.
PRODUCT DEVELOPMENT RISKS
The Company's success will depend in part on its ability to develop and
introduce product enhancements and new products. The success of any product
enhancement or new product depends on many factors, including the amount of
resources devoted to its development, product competition and marketing
campaigns. There can be no assurance that the Company will succeed in
developing, introducing and marketing any product enhancements or new products
in a timely fashion, if at all, or that such enhancements or new products will,
if introduced, gain market acceptance. Failure to develop or introduce
enhancements or new products, or significant delays in doing so, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Products as complex as the Company's frequently contain undetected hardware
or software errors ('bugs") when first introduced or as new versions are
released. Despite testing and quality control efforts by the Company and current
and potential customers, the Company anticipates that such errors may be found
from time to time in new or enhanced products after commercial introduction. In
addition, errors may occur when the Company's products are integrated with
products of other companies which are designed to interoperate with the
Company's products. The occurrence of such errors could, and the inability to
correct errors would, result in the delay or loss of market acceptance of the
Company's products, possible warranty expense, diversion of engineering and
other resources from product development efforts and the loss of credibility in
the market, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY; RISK OF
PRODUCT RETURNS
The Company has incurred net losses in each of the past three years and, at
December 31, 1997, had an accumulated shareholders' deficit of approximately
$27.1 million. The Company has continued to incur operating losses since
December 31, 1997. Net losses for the years ended December 31, 1995, 1996 and
1997 were approximately $3.3 million, $5.3 million and $9.8 million,
respectively. Future operating results will depend on many factors, including
the growth of the Fibre Channel market, demand for the Company's products, the
level of product and price competition, and the Company's ability to develop and
market new products, general economic conditions and other factors. There can be
no assurance that the Company will achieve or sustain profitability in the
future.
In addition, in recognition of the difficulty in obtaining market
penetration of the Company's new technology and the necessity to make
concessions to customers during the initial introduction of a new technology
product, the Company has allowed customers to return products to the Company
which do not meet the customer's needs. During the year ended December 31, 1997,
the actual products returned by customers had an original sales value of
$750,000 and a cost of $312,000. As of December 31, 1997, the Company has a net
sales return allowance of $695,000 ($1,050,000 gross sales less the estimated
value of the product to be returned) as an estimate of future anticipated
returns of product. There can be no assurance that this reserve will be
adequate, or that significant returns will not occur in the future.
6
<PAGE>
LACK OF OEM SELLING EXPERIENCE
For the Company to be successful in selling into the storage area network
market it will need to sell directly to original equipment manufacturers (OEMs).
The Company has historically sold its products either directly to end users or
through resellers but not to OEMs and, therefore, does not have experience
selling its products through this channel. There can be no assurance that the
Company will be successful selling its products to OEMs.
RISKS ASSOCIATED WITH MANAGING GROWTH
The anticipated growth of the Company's operations will place significant
strain on the Company's management, sales and marketing, manufacturing,
operating and financial systems and resources. If such growth occurs, the
Company may encounter difficulties, including problems involving lower than
projected production rates, lower quality control and assurance, decreased
product reliability, increased manufacturing costs, difficulties in maintaining
internal accounting controls, malfunctioning of existing and new equipment,
insufficient or untimely component supplies and shortages of personnel. There
can be no assurance that the Company will be able successfully to plan for or
manage increased production and marketing of its products. The failure to do so
could have a material adverse effect on the Company's business, financial
condition and results of operations.
COMPETITION IN FIBRE CHANNEL MARKET
The Company's Fibre Channel products encounter competition from other Fibre
Channel products in addition to competition from other network technology
products. For example, Brocade Communications Systems, Inc., Arcxel, and McData
have developed Fibre Channel switches. Other companies may also be developing
switches. In addition, a number of companies, including Emulex Corp, Q Logic
Corp., Jaycor Corp. Gadzooks Corp., G2 Corp. and Interphase Corp. are developing
Fibre Channel products other than switches, such as adapters or hubs, and the
Company anticipates that these and other companies will introduce commercial
Fibre Channel products in the near future. In the event that Fibre Channel
technology gains wider market acceptance, it is likely that an increasing number
of competitors will begin developing and marketing Fibre Channel products. Some
of the companies that produce or may produce Fibre Channel products competitive
with the Company's products have substantially greater financial, technological
and marketing resources than the Company. There can be no assurance that the
Company will be able to compete effectively against current or future
competitors, or that such competitors will not succeed in adapting more rapidly
and effectively to changes in technology or in the market or in developing or
marketing products that will be more widely accepted. A failure to compete
effectively would prevent the Company from generating sufficient sales to allow
the Company to attain profitable operations.
DEPENDENCE ON SUBCONTRACTORS
The Company subcontracts a majority of its production activities, including
the manufacture, assembly and testing of the Company's proprietary Fibre Channel
switch and adapter designs. Utilization of subcontractors results in dependence
on the timely delivery of high quality products from these manufacturers and may
leave the Company with less flexibility and control over the manufacturing
process than if it conducted all of these operations internally. There can be no
assurance that the timely delivery of quality products will not be interrupted;
any such interruption would have a material adverse effect on the Company's
ability to deliver its products until acceptable arrangements could be made with
a qualified alternative subcontractor. There can be no assurance that the
Company would be able to reach an arrangement with such a subcontractor at
acceptable prices and adequate quality levels on a timely basis. If the Company
were unable to do so, such an interruption
7
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would have a material adverse effect on the Company's business, financial
condition and results of operations. Purchases from a major subcontractor were
approximately $6,480,000, $5,086,000 and $870,000 in 1997, 1996 and 1995,
respectively.
DEPENDENCE ON SUPPLIERS AND AVAILABILITY OF COMPONENTS
Certain of the components used in Ancor's products are available only from
a single supplier or from a limited number of suppliers, and others may from
time to time be in short supply or temporarily be available from only a single
supplier. The unavailability of adequate quantities of components, a reduction
or interruption in component supply, a disruption of existing supplier
relationships, an inability to develop alternative sources or a significant
increase in the price of components could each have a material adverse effect on
the Company's ability to produce and market its products.
DEPENDENCE ON CUSTOMER
A significant portion of the Company's revenues (88% in fiscal 1997 and 41%
in fiscal 1996) were generated by a single customer, Hucom, Inc. Product
purchased from the Company by Hucom is remarketed to end users. A significant
portion of Hucom's sales of Ancor's products in fiscal 1996 and fiscal 1997 have
been to one end user. In future periods, Hucom's sales of Ancor's products to
this end user are expected to be significantly less than in fiscal 1997. The
Company's business would be materially, adversely impacted if other end users
are not found to replace this level of business or if Hucom ceased doing
business with the Company unless and until additional resellers are established.
The Company's revenues in the future may also be generated by a single customer
or a small number of significant customers.
NEED TO ATTRACT AND RETAIN KEY PERSONNEL
The success of the Company is dependent on its ability to attract and
retain personnel needed for its business. The Company's personnel needs include
highly trained personnel for such areas as management, sales and engineering. In
particular, the Company's success will depend in part on the continued service
of certain key personnel, including Mr. Ken Hendrickson, who was named its Chief
Executive Officer in August 1997, Mr. Calvin G. Nelson, its President, and Mr.
Steven E. Snyder, its Chief Financial Officer. As the Company increases its
production and sales levels, it will need to attract and retain additional
qualified skilled and unskilled workers for its operations. In recent years
there has been great demand for qualified skilled and unskilled employees in the
Minneapolis area, where the Company's main operations are located. There can be
no assurance that the Company will be successful in attracting and retaining the
personnel needed for its business. Any failure to do so would adversely affect
the Company's business, financial condition and results of operations.
DEPENDENCE ON INTELLECTUAL PROPERTY
The Company's success will depend in part on its ability to protect its
proprietary rights and to operate without infringing on the proprietary rights
of third parties. The Company currently holds one U.S. patent covering certain
aspects of one of its Fibre Channel switches. The Company may apply for
additional patents in the future. There can be no assurance that any of the
Company's future patent applications will result in issued patents, that the
scope of any current or future patents issued to the Company will prevent
competitors from introducing competitive products or that any current or future
patents issued to the Company would be enforceable if challenged. In addition,
other parties may hold or receive patents that contain claims covering other
technology included in the Company's current or future products that could
hinder or prevent the sale of the Company's products or require the Company to
obtain licenses to such technology, which might not be available on acceptable
terms or at all.
8
<PAGE>
In addition to patents, the Company intends to rely upon unpatented trade
secrets and know-how and on the expertise of its employees. Although the Company
believes that it has in the past taken, and intends in the future to take,
appropriate steps to protect its unpatented proprietary rights, including
requiring that its employees and third parties granted access to the Company's
proprietary technology enter into confidentiality agreements with the Company,
there can be no assurance that these measures will be sufficient to protect the
Company's rights against third parties. Likewise, there can be no assurance that
others will not independently develop or otherwise acquire unpatented
technologies or products similar or superior to those of the Company.
The Company has registered three trademarks with the United States Patent
and Trademark Office (the "PTO") and has filed for registration of four
additional marks in which it claims trademark rights, one of which has been
allowed. United States trademark rights are acquired by use rather than by
registration, and there can be no assurance that others do not have conflicting
or superior rights to the Company's unregistered trademarks. There can thus be
no assurance that any of the trademarks covered by the Company's applications
for registration will be found registrable, that registrations will issue, or
that the Company can support the cost of defense of its trademarks.
The high technology area frequently features disputes over intellectual
property. The Company may in the future be required to defend its intellectual
property rights against infringement, duplication and discovery by third parties
or to defend itself against third-party claims of infringement. Likewise,
disputes may arise in the future with respect to ownership of technology
developed by employees who were previously employed by other companies. Any such
litigation or disputes could result in substantial costs to, and a diversion of
effort by, the Company. An adverse determination could subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from or pay royalties to third parties or require the Company to develop
appropriate alternative technology. There can be no assurance that any such
licenses would be available on acceptable terms or at all, or that the Company
could develop alternate technology at an acceptable price or at all. Any of
these events could have a material adverse effect on the Company's business,
financial condition and results of operations.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's operating results may vary significantly from quarter to
quarter due to such factors as changes in customer buying patterns, the timing
of the announcement and introduction of new products by the Company or its
competitors, the tactics of the Company's competitors, technological
developments affecting the data communication network market, and the overall
strength of the economy. All of these factors, along with the uncertainties
associated with the introduction of any new product or product enhancement, in
gauging ultimate customer demand, and in predicting general trends in the market
for the Company's products, may limit management's ability to plan for
production and to forecast quarterly results of operations accurately.
Fluctuations in such quarterly operating results or the Company's failure to
meet analysts' projections or public expectations as to results may adversely
affect the market price of the Common Stock. The Company's operating results for
any particular quarter are not necessarily indicative of results that the
Company may achieve for any subsequent quarter or full fiscal year.
STOCK PRICE VOLATILITY
The stock markets recently have experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many high
technology companies and which have often been unrelated to the operating
performance of such companies. The trading prices of the Company's Common Stock
have in the past been, and could in the future be, subject to wide fluctuations
9
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in response to a variety of events or factors, many of which are beyond the
Company's control. These could include, without limitation (i) quarterly
variations in the Company's operating results, (ii) the liquidity of the market
for the Common Stock, (iii) announcements of business developments by the
Company or its competitors, (iv) public perception regarding Fibre Channel's
market status, (v) developments or disputes concerning proprietary rights, (vi)
technological innovations or newly introduced products, and (vii) general
conditions in the data communications network industry and the economy.
POTENTIAL REDEMPTION OF PREFERRED STOCK
Pursuant to the requirements for continued listing on the Nasdaq SmallCap
Market, in the absence of shareholder approval, the Company may be subject to
the requirement that it not issue, in the aggregate, more than twenty percent of
the outstanding shares of Common Stock as of February 19, 1998 upon conversion
of the Series C Preferred Stock. The actual number of shares of Common Stock to
be issued upon conversion of the Series C Preferred Stock will depend on the
average closing price of the Common Stock prior to conversion. The Company is
obligated to redeem any shares of Series C Preferred Stock which may not be
converted as a result of such regulatory limitation. The cash demands to fund
such a redemption may adversely affect the Company's ability to make future
capital expenditures and fund the development and launch of new products.
Furthermore, there can be no assurance that the Company will have cash available
to fund such a redemption.
The Company is also obligated to redeem the Series C Preferred Stock, at
the option of the holders, at a price equal to the greater of (i) 125% of the
Total Value (as defined in the Certificate of Designation for the Series C
Preferred Stock) or (ii) the product of (A) the Conversion Rate (as defined
therein) and (B) the closing sale price of the Common Stock in the event of
announcement of a Major Transaction (as defined in the Certificate of
Designation) or occurrence of a Triggering Event (as defined therein).
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company anticipates that cash on hand, interest expected to be earned
thereon and anticipated revenues from operations will be sufficient to finance
the Company's operations at least through December 1998, although there can be
no assurance that additional capital will not be required sooner. In order to
meet its needs beyond such time, the Company may be required to raise additional
capital. There can be no assurance that sufficient capital will be available if
and when required on terms acceptable to the Company, if at all. Any additional
equity financings may be dilutive to purchasers in this offering, and any debt
financing may involve restrictive covenants. Failure to secure additional
financing if and when needed could adversely affect the Company and its
operations, including requiring the Company to delay, scale back, or eliminate
market expansion activities and research and development on existing or new
products, or forcing the Company to cease operations entirely.
POTENTIAL DILUTION; SHARES ELIGIBLE FOR FUTURE SALES; POSSIBLE EFFECT ON
ADDITIONAL EQUITY FINANCING
A substantial number of shares of Common Stock are or will be issuable by
the Company upon the conversion of the Series C Preferred Stock and upon
conversion of Series B Preferred Stock previously issued by the Company and upon
the exercise of certain warrants issued to the placement agent of the Series C
Preferred Stock (the "Agent Warrants") which could result in dilution to a
shareholder's percentage ownership interest in the Company and could adversely
affect the market price of the Common Stock. Under the applicable conversion
formulas of the Series C Preferred Stock and the Series B Preferred Stock, the
number of shares of Common Stock issuable upon conversion is inversely
proportional to the market price of the Common Stock at the time of conversion
(i.e., the number of shares increases as the market price of the Common Stock
decreases); and except with respect
10
<PAGE>
to certain redemption rights of the Company for the Preferred Stock and the
limitation under NASD rules, subject to shareholder approval which is being
requested by the Company, there is no cap on the number of shares of Common
Stock which may be issued. In addition, the number of shares issuable upon the
conversion of the Series C Preferred Stock and the Series B Preferred Stock and
the exercise of the Agent Warrants is subject to adjustment upon the occurrence
of certain dilutive events. For a complete description of the rights of holders
of Series C Preferred Stock and Agent Warrants, see the Company's Current Report
on Form 8-K filed on February 23, 1998, including the exhibits thereto.
On March 1, 1998, there were issued and outstanding a total of 11,918,226
shares of Common Stock. If all of the convertible preferred stock which the
Company has issued were converted into shares of Common Stock on the date hereof
and if all warrants outstanding were exercised, there would be outstanding
________ shares of Common Stock. Of these, the Company currently has registered
for resale __________ shares of Common Stock. The Company has registered a total
of 2,816,144 Shares hereunder, which includes shares in excess of the number of
Shares currently issuable upon conversion of the Series C Preferred Stock and
exercise of the Agent Warrants, if all such conversions and exercises occurred
on the date hereof, in an effort to ensure that a sufficient number of Shares
are registered in the event the price of the Company's Common Stock decreases.
All of the Shares registered hereby, if and when issued, will be eligible for
sale in the open market without restriction. Additional shares of Common Stock,
including shares issuable upon conversion of Series B Preferred Stock and
exercise of options and warrants, will also become eligible for sale in the
public market from time to time. The sale or availability for sale of a
significant number of shares of Common Stock in the public market could
adversely affect the market price of the Common Stock. In addition, certain
holders of outstanding securities of the Company have rights to approve and/or
participate in certain types of future equity financing by the Company. The
availability to the Company of additional equity financing, and the terms of any
such financing, may be adversely affected by the foregoing.
LITIGATION
The Company, along with Stephen O'Hara, Lee B. Lewis and Dale Showers, has
been named as a defendant in a securities action captioned Richard Radman and
Sol Rosenthal v. Ancor Communications, Inc., et al. filed in the United States
District Court for the District of Minnesota on July 24, 1997. The lawsuit, a
putative class action, alleges that the Company violated sections 10(b) and
20(a) of the Securities Exchange Act of 1934 when it allegedly made misleading
public disclosures relating to the Company's contract with Sequent Computer
Systems, Inc. and the Company's quarterly revenues. This action is in the
preliminary stage and the parties have not begun discovery. The Company believes
that the lawsuit is without merit and intends to defend it vigorously. However,
there is no assurance that any judgment, order or decree against the Company
arising out of this action will not have a material adverse effect on the
Company or its business.
The Company is also a defendant in a lawsuit currently pending in United
States District Court for the District of New Hampshire arising out of a
commission dispute. The lawsuit was commenced on December 29, 1997, by Westrade
International, Inc. ("Westrade"). The Company and Westrade were parties to an
agreement in which Westrade assisted the Company in signing up distributors for
the Company's products in exchange for a commission on sales made to those
distributors payable when payment was received by the Company. Westrade alleges
that it is owed commissions for sales made for which the Company has not
received payment. The complaint alleges five counts including breach of contract
and misrepresentation. The Company denies the allegations in the Complaint and
will vigorously defend the action.
11
<PAGE>
INVENTORY OBSOLESCENCE
The market in which the Company operates is characterized by rapid
technological change, including changes in customer requirements, frequent new
product introductions and enhancements, and evolving industry standards. Such
changes could render the Company's inventory obsolete, thereby having a material
adverse effect on the Company's business, financial conditions and results of
operations.
ANTI-TAKEOVER PROVISIONS
Under the Company's Amended and Restated Articles of Incorporation, the
Board of Directors may issue up to five million shares of preferred stock, $0.01
par value, on such terms, and with such rights, preferences and designations, as
the Board of Directors may determine, without further shareholder action. The
Board of Directors exercised this power to create and issue a series of 1,100
shares of Series A Convertible Preferred Stock in March 1996, to create and
issue a series of 900 shares of Series B Convertible Preferred Stock in March
1997 and to create and issue a series of 1,100 shares of Series C Convertible
Preferred Stock in February 1998. The rights of the holders of the Common Stock
will be subject to, and may be adversely affected by, the rights of any holders
of any preferred stock so issued. Furthermore, under the Company's Amended and
Restated Articles of Incorporation, the Company's Board of Directors is
classified and directors serve for staggered three-year terms. In addition to
these provisions in its Amended and Restated Articles of Incorporation, the
Company is subject to certain provisions of the Minnesota Business Corporation
Act that limit the voting rights of shares acquired in certain acquisitions and
restrict certain business combinations. The existence or issuance of "blank
check" preferred stock, the existence of a staggered board and the effect of
other anti-takeover provisions in the Company's charter documents or Minnesota
law, individually or in the aggregate, may render more difficult or discourage
any attempt to obtain control of the Company by means of a tender offer, merger,
proxy contest or otherwise, which could deprive the Company's shareholders of
opportunities to sell their shares of Common Stock at prices higher than
prevailing market prices.
NO DIVIDENDS
The Company has never paid or declared a dividend on its capital stock and
does not anticipate doing so for the foreseeable future.
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<PAGE>
ANCOR COMMUNICATIONS, INCORPORATED
Ancor Communications, Incorporated, incorporated in 1986, is recognized as
a leading developer of Fibre Channel network products. Fibre Channel is a high
bandwidth, low latency advance in data communications technology developed under
the auspices of the ANSI. Ancor develops, manufactures, and markets Fibre
Channel switches, interface adapters and application specific integrated
circuits ("ASICs") and router products.
In 1992, Ancor delivered its first prototype Fibre Channel switches and
interface adapters. Commercial Fibre Channel switch and interface deliveries
began in 1993. Since that product introduction, joint development and marketing
alliances and significant customer relationships have been achieved with major
industry players such as IBM, Hewlett-Packard, AT&T and Sun Microsystems.
Ancor's Fibre Channel products are used by organizations worldwide for enhanced
network performance, scalability and connectivity. Fibre Channel enables the
transfer of data at speeds ranging from 266 Mbps to 1 Gigabit per second.
Since its inception, Ancor's core technology has been built around the
utilization of fiber optic cable for data transmission. Originally, through its
Anderson Cornelius division, Ancor provided fiber optic manufacturing data
collection systems to Ford Motor Company. In 1989, Ancor began selling its fiber
optic defense communication products to the U.S. Navy. Its current Fibre Channel
product category was initiated in 1988 when Ancor participated as an original
member of the founding task group of the ANSI committee dedicated to the
creation of the Fibre Channel standard. Today Ancor -- an active member of the
ANSI Fibre Channel committee and the Fibre Channel Association -- focuses
entirely on the development of Fibre Channel solutions.
Today, Ancor offers one of the industry's most complete lines of Fibre
Channel solutions for high performance network environments. Ancor's product
line includes: quarter and full gigabit speed switches, stackable in modules of
8 or 16 ports and scaleable to support a Fibre Channel network of more than
3,000 nodes; Fibre Channel adapters and drivers for EISA, MCA, PCI, SBus and VME
bus types, offering connectivity to popular work stations and servers; and
router products offering seamless connectivity between Fibre Channel networks
and legacy LAN's. Customers for Ancor Fibre Channel products run high band
width, mission critical applications that require optimal network performance
and quality of service in data storage, client/server and network backbone
market segments. Specific applications include data mining and backup, CAD/CAM,
scientific visualization, storage clusters, server interconnect and data backup.
Ancor Fibre Channel products include gigabit speed network performance,
scalability, interoperability and an ANSI standard that specifies a road map to
increase network performance of two and four gigabits per second transfer rates.
Ancor's principal executive offices are located at 6130 Blue Circle Drive,
Minnetonka, Minnesota 55343, (telephone number (612) 932-4000). For further
information concerning Ancor, see the documents incorporated by reference herein
as described under "Incorporation of Certain Documents by Reference."
13
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth the names of the Selling Shareholders, the
number of shares of Common Stock owned beneficially by each of the Selling
Shareholders as of March 1, 1998, and the number of shares which may be offered
for sale pursuant to this Prospectus. Except under certain limited
circumstances, no holder of the Series C Preferred Stock or Agent Warrants is
entitled to convert or exercise such securities to the extent that the Shares to
be received by such holder upon such conversion or exercise would cause such
holder to beneficially own more than 5.00% of the Common Stock of the Company.
Therefore, the number of shares set forth herein and which a Selling Shareholder
may sell pursuant to the Prospectus may exceed the number of shares of Common
Stock such Selling Shareholder would otherwise beneficially own as determined
pursuant to Section 13(d) of the Exchange Act. Moreover, pursuant to the
regulations of the Nasdaq Stock Market, Inc., the Company may be subject to a
limitation that, in the absence of shareholder approval, the aggregate number of
shares of Common Stock issuable to the Selling Shareholders at a discount from
market price upon conversion of the Series C Preferred Stock and exercise of the
Agent Warrants may not exceed 20% of the outstanding shares of Common Stock on
February 19, 1998 (i.e. 2,383,725 shares). Unless shareholder approval is
obtained to issue Common Stock to the Selling Shareholders in excess of the
maximum amount set forth above, none of the Selling Shareholders will be
entitled to acquire more than its proportionate share of such maximum amount.
Any Series C Preferred Stock which may not be converted and any Agent Warrants
which may not be exercised because of such limitation must be redeemed by the
Company. Because the Selling Shareholders may offer all, some or none of their
Common Stock, no definitive estimate as to the number of shares that will be
held by the Selling Shareholders after such offering can be provided and the
following table has been prepared on the assumption that all shares of Common
Stock covered by this Prospectus will be sold.
The Company has agreed to initially register 2,816,144 shares for resale by
the Selling Shareholders holding the Series C Preferred Stock and Agent
Warrants, as well as certain other warrants. The number of Shares shown in the
following table as being offered by the Selling Shareholders which hold Series C
Preferred Stock and Agent Warrants does not include such presently indeterminate
number of Shares as may be issuable upon conversion of the Series C Preferred
Stock and Agent Warrants pursuant to the provisions thereof regarding
determination of the applicable conversion price and certain antidilution
provisions but which Shares are, in accordance with Rule 416 under the
Securities Act, included in the Registration Statement of which this Prospectus
forms a part.
Unless otherwise indicated, the persons and entities named in the table
have sole voting and sole investment power with respect to all Shares
beneficially owned. subject to community property laws where applicable. Except
as noted, Shares beneficially owned are deemed to include Shares which may be
acquired within 60 days of March 1, 1998.
14
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
NUMBER OF COMMON
SERIES C SHARES STOCK
PREFERRED STOCK BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED PRIOR TO BEING AGENT OWNED AFTER
NAME THE OFFERING(1) OFFERING(2)(3) OFFERED(4) WARRANTS(5) OFFERING (6)
- ---- --------------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
The Tail Wind Fund Ltd......... 250 -- 602,273 --
CCG Capital L.L.C (7).......... 4 5,375 9,636 0
Nelson Partners (7)............ 145 489,186 349,318 294,347
Olympus Securities, Ltd. (7)... 271 656,439 652,864 292,289
CC Investments, L.D.C.......... 425 -- 1,023,864 --
CCG Investment Fund Ltd. (7)... 5 6,719 12,045 0
Eric S. Swartz................. 32,529 0
Kendrick Family
Partnership, LP............ 32,529 0
P. Bradford Hathorn............ 7,500 0
Charles M. Whiteman............ 2,500 0
Carlton M. Johnson, Jr......... 1,500 0
Davis C. Holden................ 1,000 0
Swartz Investments, LLC........ 2,833 0
Charles B. Krusen.............. 5,253 0
Frank G. Mauro................. 1,500 0
H. Nelson Logan................ 1,000 0
Kelley E. Smith................ 500 0
Sandra M. Mallory.............. 1,000 0
Robert L. Hopkins.............. 500 0
Dwight B. Bronnum.............. 500 0
John G. Kinnard and Company,
Incorporated............... 75,500 0
Total...................... 1,100 2,650,000 166,144 536,686
</TABLE>
- --------------------
(1) The Company's Series C Preferred Stock was issued pursuant to subscription
agreements dated February 19, 1998. Each share of Series C Preferred Stock
has a stated value of $10,000 and converts into Common Stock, subject to
certain restrictions, at a variable conversion rate equal to the lower of
(i) the Maximum Conversion Price (as defined below) or (ii) the average of
the three lowest closing bid prices of the Common Stock during the
applicable Pricing Period (as defined below). The Maximum Conversion Price
is equal to the lower of (i) $9.00 per share and (ii) a price which is set
at a defined premium over the average closing bid price of the Common Stock
for the 30 trading days following February 19, 1998. The applicable Pricing
Period is a number of consecutive trading days immediately preceding the
date of conversion of the Series C Preferred Stock initially equal to
twelve and increased by one additional consecutive trading day for each
full calendar month which has elapsed since February 19, 1998.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities and includes any securities
which the person has the right to acquire within 60 days of March 1, 1998
through the conversion or exercise of any security or other right.
(3) Includes the number of shares of Common stock issuable upon conversion of
the Series C Preferred Stock calculated using an assumed conversion price
of $7.4583 (representing the average of the three lowest closing bid prices
for the Common Stock during the twelve consecutive trading days ending the
trading day immediately preceding March 1, 1998), with respect to the
stated value of the Series C Preferred Stock plus an accretion of 8% per
year, based upon certain conversion provisions of the Series C Preferred
Stock (which conversion price could fluctuate from time to time based on
changes in the market price of the Common Stock). Also includes shares of
Common Stock issuable upon the conversion of shares of the Company's Series
B Preferred Stock held by certain of the Selling Shareholders. This
Prospectus also covers the resale of such presently indeterminate number of
additional Shares as may be issuable upon conversion of the Series C
Preferred Stock and future antidilution adjustments in accordance with the
terms of the Series C
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<PAGE>
Preferred Stock. Pursuant to the terms the Series C Preferred Stock, no
holder thereof can covert or exercise any portion of such Series C
Preferred Stock if, subject to certain conditions, such conversion would
increase such holder's beneficial ownership of the Common Stock (other than
shares owned through ownership of the Series C Preferred Stock) to in
excess of 5.0%.
(4) The number of shares of Common Stock registered pursuant to the
Registration Statement on behalf of the Selling Shareholders holding Series
C Preferred Stock and the number of Shares offered hereby by such holders
have been determined by agreement between the Company and such Selling
Shareholders. Because the number of shares that will ultimately be issued
upon conversion of the Series C Preferred Stock is dependent, subject to
certain limitations, upon the average of certain closing bid prices of the
Common Stock prior to conversion, as described in footnote (1) above, and
certain antidilution adjustments, such number of shares (and therefore the
number of Shares offered hereby) cannot be determined at this time. The
number of Shares being offered by the Selling Shareholders holding Series C
Preferred Stock, in accordance with Rule 416 under the Securities Act, also
includes such presently indeterminate number of additional Shares as may be
issuable upon conversion of the Series C Preferred Stock, based upon
fluctuations in the conversion price of the Series C Preferred Stock and
future antidilution adjustments in accordance with the terms of the Series
C Preferred Stock.
(5) Consists of warrants to purchase 90,644 shares of Common Stock by the
designees of Dunwoody Brokerage Services, Inc. in connection with such
company's role as placement agent for the private placement of the
Company's Series C Preferred Stock in March 1998 and warrants to purchase
75,500 shares of Common Stock by John G. Kinnard and Company, Incorporated
in connection with such company's role as placement agent for private
placements of the Company's Common Stock in April 1995 and October 1995.
(6) Gives effect to the conversion of all shares of Series C Preferred Stock
and the exercise of all warrants by all Selling Shareholders.
(7) Citadel Limited Partnership is the managing general partner of Nelson
Partners and the trading manager of each of Olympus Securities, Ltd., CCG
Capital L.L.C. and CCG Investment Fund Ltd. (collectively, the "Citadel
Entities") and consequently has voting control and investment discretion
over securities held by the Citadel Entities. The ownership for each of the
Citadel Entities does not include the ownership information for the other
Citadel Entities. Citadel Limited Partnership and each of the Citadel
Entities disclaims beneficial ownership of the Shares held by the other
Citadel Entities.
16
<PAGE>
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Shareholders for their
own accounts. The Company will not receive any proceeds from the sale of the
Shares pursuant to this Prospectus. The Company has agreed to pay the expenses
of registration of the Shares, including legal and accounting fees.
The Shares offered hereby may be sold by the Selling Shareholders or by
pledgees, donees, transferees or other successors in interest that receive such
shares as a gift, partnership distribution or other non-sale related transfer.
The Shares may be sold from time to time in transactions in the over-the-counter
market, in negotiated transactions, or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices. The
Selling Shareholders may effect such transaction by selling the Shares to or
through broker-dealers, including block trades in which brokers or dealers will
attempt to sell the Shares as agent but may position and resell the block as
principal transaction, or is one or more underwritten offerings on a firm
commitment or best efforts basis. Sales of Selling Shareholders' Shares may also
be made pursuant to Rule 144 under the Securities Act, where applicable.
To the extent required under the Securities Act, the aggregate amount of
Selling Shareholders' Shares being offered and the terms of the offering, the
names of any such agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from a Selling
Shareholder and/or purchasers of Selling Shareholders' Shares, for whom they may
act (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
From time to time, one or more of the Selling Shareholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be Selling Shareholders hereunder. In addition, a Selling Shareholder may, from
time to time, sell short the Common Stock of the Company, and in such instances,
this Prospectus may be delivered in connection with such short sales and the
Shares offered hereby may be used to cover such short sales.
From time to time, one or more of the Selling Shareholders may
transfer, pledge, donate or assign such Selling Shareholders' Shares to lenders
or others and each of such persons will be deemed to be a "Selling Shareholder"
for purposes of this Prospectus. The number of Selling Shareholders' Shares
beneficially owned by those Selling Shareholders who so transfer, pledge, donate
or assign Selling Shareholders' Shares will decrease as and when they take such
actions. The plan of distribution for Selling Shareholders' shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be Selling Shareholders hereunder.
A Selling Shareholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Share in the course of hedging the positions they assume with such Selling
Shareholder, including, without limitation, in connection with distributions of
the Common Share by such broker-dealers. A Selling Shareholder may also enter
into option or other transactions with broker-dealers that involve the delivery
of the Common Stock to the broker-dealers, who may then resell or otherwise
transfer such Common Stock. A Selling Shareholder
17
<PAGE>
may also loan or pledge the Common Stock to a broker-dealer and the
broker-dealer may sell the Common Stock so loaned or upon a default may sell or
otherwise transfer the pledged Common Stock.
Shares to be sold hereunder may be issued upon conversion of the Series C
Preferred Stock in accordance with its terms, or in other transactions with the
Company involving the Series C Preferred Stock, including, without limitation,
issuance of Shares in exchange for shares of Series C Preferred Stock and
issuance of Shares pursuant to modification of the terms of the Series C
Preferred Stock, or in settlement of claims with respect to rights of holders of
Series C Preferred Stock.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Shareholders and any broker-dealer or agents that participate
with the Selling Shareholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
EXPERTS
The audited financial statements of the Company for the years ended
December 31, 1997, December 31, 1996 and December 31, 1995. Incorporated herein
and in the registration statement by reference to the Company's Annual Report on
Form 10-K have been audited by McGladrey & Pullen, LLP, independent auditors, to
the extent set forth in their report included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon for the
Company by Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota
55402.
18
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee...................................... $6,389
Accounting Fees and Expenses.............................. 3,000
Legal Fees and Expenses................................... 5,000
Total............................................ $8,638
All fees and expenses other than the SEC registration fee are estimated.
The expenses listed above will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article eight of the Company's Second Amended and Restated Articles of
Incorporation provides that a director shall not be liable to the Company or its
stockholders for monetary damages for a breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Sections 302A.559 or 80A.23 of the Minnesota Statutes, (iv) for any transaction
from which the director derived an improper personal benefit, or (v) for any act
or omission occurring prior to the date when such Article eight became
effective.
The Restated Bylaws of the Company provide that the officers and directors
of the Company and certain others shall be indemnified to substantially the same
extent permitted by Minnesota law.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify any person who was or is made or is threatened to be
made a party to any proceeding, by reason of the former or present official
capacity (as defined) of such person, against judgments, penalties, fines,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding if
certain statutory standards are met. "Proceeding" means a threatened, pending or
complete civil, criminal, administrative, arbitration or investigative
proceeding, including one by or in the right of the corporation. Section
302A.521 contains detailed terms regarding such right of indemnification and
reference is made thereto for a complete statement of such indemnification
rights.
The Company maintains a standard policy of officers' and directors'
insurance.
ITEM 16. LIST OF EXHIBITS
4 Series C Preferred Stock Form Warrant issued to Dunwoody Brokerage
Services, Inc.
5 Opinion of Dorsey & Whitney LLP
23.1 Form of Consent of McGladrey & Pullen, LLP
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5 to this
Registration Statement)
24 Power of Attorney
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1)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 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective 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 in the information set forth in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
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 section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for purposes 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
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 section 15(d) of the
Securities Exchange Act of 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
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the 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-2
<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-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on March 11, 1998.
ANCOR COMMUNICATIONS, INCORPORATED
By /s/Kenneth E. Hendrickson
-----------------------------
Kenneth E. Hendrickson
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on March 11, 1998.
SIGNATURE TITLE
/s/ Kenneth E. Hendrickson
- ------------------------------- Chief Executive Officer and Director
Kenneth E. Hendrickson (principal executive officer)
/s/ Steve E. Snyder
- ------------------------------- Chief Financial Officer
Steve E. Snyder (principal financial officer)
*
- ------------------------------- Director
Amyl Ahola
*
- ------------------------------- Director
Gerald M. Bestler
*
- ------------------------------- Director
Thomas F. Hunt, Jr.
*
- ------------------------------- Director
Paul F. Lidsky
- ------------------------------- Director
John F. Carlson
* By /s/ Kenneth E. Hendrickson
--------------------------
Kenneth E. Hendrickson
<PAGE>
Exhibit 4
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
90,644 shares
WARRANT TO PURCHASE COMMON STOCK
OF
ANCOR COMMUNICATIONS, INCORPORATED
THIS CERTIFIES that DUNWOODY BROKERAGE SERVICES, INC. or any subsequent
holder ("Holder") hereof, has the right to purchase from ANCOR COMMUNICATIONS,
INCORPORATED, a Minnesota corporation (the "Company"), not more than 90,644
fully paid and nonassessable shares of the Company's Common Stock, $.01 par
value ("Common Stock"), at a price equal to the Exercise Price (as defined in
Section 3 below), subject to adjustment as provided herein, at any time on or
before 5:00 p.m., Atlanta, Georgia time, on February 19, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. DATE OF ISSUANCE.
This Warrant shall be deemed to be issued on February 19, 1998 ("Date of
Issuance").
2. EXERCISE.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant,
1
<PAGE>
with the Exercise Form attached hereto as Exhibit A ("Exercise Form") duly
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Ancor Communications, Incorporated, 6130 Blue Circle Drive,
Minnetonka, MN 55343, Attention: Chief Financial Officer, Telephone No. (612)
932-4000, Facsimile No. (612) 932-4037, or at such other office or agency as the
Company may designate in writing, by overnight mail, with an advance copy of the
Exercise Form by facsimile (such surrender and payment of the Exercise Price
hereinafter called the "Exercise ").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant, Exercise Form and
full Exercise Price are received by the Company within five (5) business days
thereafter. The original Warrant, Exercise Form and full Exercise Price must be
received within five (5) business days of the Date of Exercise, or the exercise
may, at the Company's option, be considered void. Alternatively, the Date of
Exercise shall be defined as the date the original Exercise Form, original
Warrant and Exercise Price are received by the Company, if Holder has not sent
advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
Exercise and, as soon as practical after the Date of Exercise, the Holder hereof
shall be entitled to receive Common Stock certificates representing the number
of shares purchased upon such Exercise, and if this Warrant is not exercised in
full, the Holder shall be entitled to receive a new Warrant or Warrants
(containing terms identical to this Warrant) representing any unexercised
portion of this Warrant in addition to such Common Stock.
(d) Holder of Record. The Holder of this Warrant shall, for all purposes,
be deemed to have become the Holder of record of the shares of Common Stock to
be issued upon exercise hereof as of the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The "Exercise Price" shall equal $7.281.
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) Cash Exercise: cash, certified check, cashiers check or wire transfer;
or
2
<PAGE>
(ii) Cashless Exercise: surrender of this Warrant at the principal office
of the Company together with notice of cashless election, in which event the
Company shall issue Holder a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(ii), the "Market Price" shall be defined as the average closing
price of the Common Stock for the five (5) trading days prior to the Date of
Exercise of this Warrant (the "Average Closing Price"), as reported by Nasdaq or
if the Common Stock is not traded on Nasdaq, the Average Closing Price on the
primary market for the Common Stock. If the Common Stock is/was not traded
during the five (5) trading days prior to the Date of Exercise, then the closing
price for the last publicly traded day shall be deemed to be the closing price
for any and all (if applicable) days during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued to the extent permitted by applicable law.
Moreover, it is intended, understood and acknowledged that the holding period
for the Common Stock issuable upon exercise of this Warrant in a cashless
exercise transaction shall be deemed to have commenced on the date this Warrant
was issued to the extent permitted by applicable law.
4. TRANSFER AND REGISTRATION.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
3
<PAGE>
(b) Registrable Securities. The Common Stock issuable upon the exercise of
this Warrant is subject to the Registration Rights Agreement dated on or about
February 19, 1998 by and between the Company and Dunwoody Brokerage Services,
Inc. and, accordingly, has the benefit of the registration rights pursuant to
that agreement.
5. ANTI-DILUTION ADJUSTMENTS.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon Exercise of this
Warrant after the record date for the determination of Holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is Exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been Exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute to Holders
of Common Stock cash, evidences of indebtedness or other securities or assets
(other than cash dividends or distributions payable out of earned surplus or net
profits for the current or preceding year) then, in any such case, the Holder of
this Warrant shall be entitled to receive, upon exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
Holder would have been entitled to receive with respect to each such share of
Common Stock as a result of the happening of such event had this Warrant been
Exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, the Exercise Price may be reduced to an Exercise Price determined
by
4
<PAGE>
subtracting from the Exercise Price on the Determination the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board in its discretion).
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be assumed by the
acquiring entity or any affiliate thereof and thereafter this Warrant shall be
exerciseable into such class and type of securities or other assets as the
Holder would have received had the Holder exercised this Warrant immediately
prior to such Corporate Change; provided, however, that Company may not affect
any Corporate Change unless it first shall have given twenty (20) days notice to
the Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise
Price" shall mean the Exercise Price per share specified in the first paragraph
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5 and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsections. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the
effect of increasing the total consideration payable upon Exercise of this
Warrant in respect of all the Common Stock as to which this Warrant may be
exercised. Notwithstanding anything to the contrary contained herein, the
Exercise Price shall not be reduced to an amount below the par value of the
Common Stock.
(f) Adjustments: Additional Shares, Securities or Assets. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5, the
Holder of this Warrant shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
5
<PAGE>
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but upon Exercise of this Warrant,
the Holder hereof may purchase only a whole number of shares of Common Stock.
If, upon Exercise of this Warrant, the Holder hereof would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefore as herein above provided) as shall be sufficient for Exercise of this
Warrant. The Company covenants and agrees that upon Exercise of this Warrant,
all shares of Common Stock issuable upon such Exercise shall be duly and validly
issued, fully paid, nonassessable and not subject to preemptive rights, rights
of first refusal or similar rights of any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) Registration or Exemption Required. This Warrant and the Common Stock
issuable upon Exercise hereof have not been registered under the Securities Act
of 1933, as amended, and may not be sold, transferred, pledged, hypothecated or
otherwise disposed of in the absence of registration or the availability of an
exemption from registration under said Act. All shares of Common Stock issued
upon Exercise of this Warrant shall bear an appropriate legend to such effect,
if applicable.
(b) Assignment. The Holder may sell, transfer, assign, pledge or otherwise
dispose of this Warrant, in whole or in part, provided such sale, transfer,
assignment, pledge or other disposition does not violate any federal or state
securities laws. Holder shall deliver a written notice to Company, substantially
in the form of the Assignment attached hereto as Exhibit B, indicating the
person or persons to whom the Warrant shall be assigned and the respective
number of warrants to be assigned to each assignee together with the original
Warrant. The Company shall effect the assignment within ten days of its receipt
of such documents, and shall deliver to the assignee(s) designated by Holder a
Warrant or Warrants of like tenor and terms to purchase the appropriate number
of shares.
6
<PAGE>
(c) Investment Intent. The Warrant and Common Stock issuable upon
conversion are intended to be held for investment purposes and not with an
intent to distribution, as defined in the Act.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and the Holder of this Warrant any legal or equitable right,
remedy or claim under this Warrant and this Warrant shall be for the sole and
exclusive benefit of the Company and the Holder of this Warrant.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Minnesota, without giving
effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by the
Holder of this Warrant to or of the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, or overnight
courier postage prepaid, and addressed, until another address is designated in
writing by the Company, to Ancor Communications, Incorporated, 6130 Blue Circle
Drive, Minnetonka, MN 55343, Attention: Chief Financial Officer, Telephone No.
(612) 932-4059, Facsimile No. (612) 932-4000. Notices or demands pursuant to
this Warrant to be given or made by the Company to or of the Holder of this
Warrant shall be sufficiently given or made if sent by certified or registered
mail or overnight courier, return receipt requested, postage prepaid, and
addressed, Attn: Holder, address: c/o Dunwoody Brokerages Services, Inc., 8309
Dunwoody Place, Atlanta, Georgia 30350, until another address is designated in
writing by Holder.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
19th day of February, 1998.
ANCOR COMMUNICATIONS,
INCORPORATED
By: _______________________________________
Print Name: ________________________________
Title: _____________________________________
8
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: ___________________.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of ANCOR COMMUNICATIONS,
INCORPORATED, a Minnesota corporation, evidenced by the attached Warrant, and
herewith makes payment of the Exercise Price with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of such Common Stock, except in accordance with the provisions of Section 8
of the Warrant, and consents that the following legend may be affixed to the
stock certificates for the Common Stock hereby subscribed for, if such legend is
applicable:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any
provincial or state securities law, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of until either (i) a
registration statement under the Securities Act and applicable
provincial or state securities laws shall have become effective with
regard thereto, or (ii) an exemption from registration under the
Securities Act or applicable provincial or state securities laws is
available in connection with such offer, sale or transfer."
The undersigned requests that stock certificates for such shares be issued,
and a warrant representing any unexercised portion hereof be issued, pursuant to
the Warrant in the name of the Registered Holder and delivered to the
undersigned at the address set forth below:
Dated:
------------------------------------------------------------------------
Signature of Registered Holder
------------------------------------------------------------------------
Name of Registered Holder (Print)
------------------------------------------------------------------------
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
9
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of ANCOR COMMUNICATIONS,
INCORPORATED evidenced by the attached Warrant and does hereby irrevocably
constitute and appoint _______________________ attorney to transfer the said
Warrant on the books of the Company, with full power of substitution in the
premises.
Dated: ______________________________
Signature
Fill in for new Registration of Warrant:
- -----------------------------------
Name
- -----------------------------------
Address
- -----------------------------------
Please print name and address of assignee
(including zip code number)
- -----------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
- ------------------------------------------------------------------------
<PAGE>
Exhibit 5
[Dorsey & Whitney LLP Letterhead]
Ancor Communications, Inc.
6130 Blue Circle Drive
Minnetonka, Minnesota 55343
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Ancor Communications, Inc., a Minnesota
corporation (the "Company"), in connection with a Registration Statement on Form
S-3 (the "Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the sale of
2,816,144 shares (the "Shares") of common stock of the Company, par value $.01
per share, which will be sold from time to time by the persons named in the
Registration Statement (the "Selling Shareholders"), on the Nasdaq SmallCap
Market, the Pacific Stock Exchange or otherwise, directly or through
underwriters, brokers or dealers.
We have examined such documents and have reviewed such questions of law as
we have considered necessary and appropriate for the purposes of our opinions
set forth below. In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than the Company, that such
parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company and of public officials.
Based on the foregoing, we are of the opinion that the Shares to be sold by
the Selling Shareholders pursuant to the Registration Statement, upon conversion
of the Company's Series C Preferred Stock and exercise of the warrants to
purchase Common Stock issued by the Company on February 19, 1998 will be duly
authorized by all requisite corporate action, validly issued, fully paid and
nonassessable.
Our opinions expressed above are limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.
Dated: March 11, 1997
Very truly yours,
/s/ DORSEY & WHITNEY LLP
AEA
<PAGE>
Exhibit 23.1
FORM OF INDEPENDENT AUDITOR'S CONSENT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated February 19, 1998, relating to the
financial statements of Ancor Communications, Incorporated, appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 and to
the reference to our Firm under the caption "Experts" in the Prospectus.
/s/ McGLADREY & PULLEN, LLP
St. Paul, Minnesota
_____________, 1998
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Kenneth E. Hendrickson and Steven
E. Snyder, his true and lawful attorneys-in-fact and agents, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to execute a Registration Statement on Form S-3 to be
filed under the Securities Act of 1933, as amended, for the registration of the
resale of 2,816,144 shares of Common Stock of Ancor Communications, Incorporated
to be issued in connection with the conversion of shares of Series C Preferred
Stock and the exercise of certain outstanding warrants, and any and all
post-effective amendments thereto, 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 full power
and authority to do and perform to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: __________, 1998
/s/Kenneth E. Hendrickson /s/ Gerald M. Bestler
- ------------------------------- ------------------------------
Kenneth E. Hendrickson Gerald M. Bestler
/s/ Amyl Ahola /s/ Thomas F. Hunt, Jr.
- ------------------------------- ------------------------------
Amyl Ahola Thomas F. Hunt, Jr.
/s/ Paul F. Lidsky
- ------------------------------- ------------------------------
John F. Carlson Paul F. Lidsky
