SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
HERLEY INDUSTRIES, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
o Fee paid previously with preliminary materials
o Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule, and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
HERLEY INDUSTRIES, INC.
Dear Stockholder:
On November 7, 1996, Herley Industries, Inc. mailed to its stockholders
a Proxy Card and Proxy Statement for use at its Annual Meeting of Stockholders
to be held on December 17, 1996. Since such mailing, a second proposal has been
added for consideration at this meeting ratifying the issuance of warrants
previously issued to the Company's executive officers and directors. A revised
proxy card is enclosed with this letter. We request that you vote for all items
of business, and sign, date, and return the enclosed revised proxy card. If you
have already voted, you must re-vote using the enclosed revised proxy card. Any
prior proxy cards received by the Company will be destroyed. Please accept our
apologies for this inconvenience.
Sincerely yours,
HERLEY INDUSTRIES, INC.
Lee N. Blatt
Chairman of the Board
November 21, 1996
<PAGE>
HERLEY INDUSTRIES, INC.
-----------------------
AMENDED NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 17, 1996
-----------------------
To the Stockholders of
HERLEY INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Herley
Industries, Inc. will be held at the Comfort Inn, 500 Centerville Road,
Lancaster, Pennsylvania 17601 on Tuesday, December 17, 1996 at 10:00 a.m., or at
any adjournment thereof, for the following purposes:
1. To elect five directors.
2. To consider and act upon a proposal to ratify the issuance of
Warrants to the Company's executive officers and to certain
directors.
3. To consider and act upon such other business as may properly come
before this meeting or any adjournment thereof.
The above matters are set forth in the Proxy Statement attached to this
Notice to which your attention is directed.
Only stockholders of record on the books of the Company at the close of
business on October 30, 1996 will be entitled to vote at the Annual Meeting of
Stockholders or at any adjournment thereof. You are requested to sign, date and
return the enclosed Proxy at your earliest convenience in order that your shares
may be voted for you as specified.
By Order of the Board of Directors,
LEE N. BLATT
Chairman
Dated: November 21, 1996
Lancaster, Pennsylvania
<PAGE>
HERLEY INDUSTRIES, INC.
10 Industry Drive
Lancaster, Pennsylvania 17603
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AMENDED PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
Tuesday, December 17, 1996
The Annual Meeting of Stockholders of Herley Industries, Inc. (the
"Company") will be held on Tuesday, December 17, 1996 at The Comfort Inn, 500
Centerville Road, Lancaster, Pennsylvania 17601 at 10:00 a.m., for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. The
enclosed proxy is solicited by and on behalf of the Board of Directors of the
Company for use at the Annual Meeting of Stockholders. This amended proxy
statement and the enclosed amended proxy have been mailed on or about November
21, 1996 to all stockholders as of the record date.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the Company or in person at the Annual Meeting.
Voting Rights
Only stockholders of record on October 30, 1996 (the "Record Date") will
be entitled to vote at the Annual Meeting or any adjournment thereof. The
Company has outstanding one class of voting capital stock, namely 2,951,247
shares of Common Stock, $.10 par value. Stockholders are entitled to one vote
for each share registered in their names at the close of business on the Record
Date. The affirmative vote of a majority of the votes cast at the meeting on the
proposal is required for approval of each matter to be submitted to a vote of
the stockholders. For purposes of determining whether proposals requiring a
majority of the votes cast at the meeting have received a majority vote,
abstentions will not be included in the vote totals, and in instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy (so called "broker non-votes"), those votes
will not be included in the vote totals. Therefore, abstentions and broker
non-votes will have no effect on such vote, but will be counted in the
determination of a quorum.
To the knowledge of the Board of Directors, upon whose behalf this
solicitation is made, the only persons owning of record or beneficially more
than 5% of the Company's outstanding Common Stock as of the Record Date are Lee
N. Blatt, Chairman of the Board, residing in Vero Beach, Florida, who owns
669,864 (20.7%) shares , Myron Levy, President, residing in Lancaster,
Pennsylvania, who owns 273,311 shares (8.8%), and Gerald I. Klein, the Company's
Chief Technical Officer, residing in Lancaster, Pennsylvania, who owns 290,146
(9.4%) shares.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of
Directors consisting of not less than three nor more than twelve directors,
classified into three classes as nearly equal in number as possible, whose terms
of office expire in successive years. The Company's Board of Directors now
consists of six directors, including Gerald I. Klein who, while still employed
by the Company in an executive capacity, will not be seeking renomination to the
<PAGE>
Board at the 1996 Annual Meeting. The Company's Board of Directors nominated for
election at this meeting and the classes in which they will serve are as
follows:
Class I Class II Class III
(To Serve until the (To Serve until the (To Serve until the
Annual Meeting of Annual Meeting of Annual Meeting of
Stockholders in 1997) Stockholders in 1998) Stockholders in 1999)
--------------------- --------------------- ---------------------
David H. Lieberman (1) Myron Levy Lee N. Blatt
Adm. Thomas J. John A. Thonet (2)
Allshouse(1)(2)
(1) Member of Compensation Committee
(2) Member of Audit Committee
The directors are to be elected to hold office until the Annual Meeting
of Stockholders as set forth above or until their successors are chosen and
qualified. Shares represented by executed proxies in the form enclosed will be
voted, if authority to do so is not withheld, for the election as directors of
the aforesaid nominees (each of whom is now a director) unless any such nominee
shall be unavailable, in which case such shares will be voted for a substitute
nominee designated by the Board of Directors. The Board of Directors has no
reason to believe that any of the nominees will be unavailable or, if elected,
will decline to serve.
Directors who are not employees of the Company receive a fee of $7,500
for each annual meeting of the Board of Directors and $1,500 for each interim
Board of Directors or committee meeting attended. There were four meetings of
the Board of Directors during the fiscal year ended July 28, 1996, including the
annual meeting. Each Director attended or participated in at least 75% of such
meetings of the Board of Directors. During the fiscal year ended July 28, 1996,
there was one meeting each of the Audit and Compensation Committees. The Audit
Committee is involved in discussions with the Company's independent certified
public accountants with respect to the year end audited financial statements.
The Compensation Committee recommends executive compensation and the granting of
stock options and warrants to key employees. See "Compensation Committee Report
on Executive Compensation." The Company does not have a nominating committee.
Security Ownership
The following table sets forth the indicated information as of October
14, 1996 with respect to the beneficial ownership of the Company's securities by
(i) all persons known to the Company to be beneficial owners of more than 5% of
the Company's outstanding Common Stock, (ii) each director of the Company, and
(iii) by all officers and directors as a group:
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<PAGE>
Shares of Common Stock
Director Beneficially Owned
Name Age Since (1)(5)
- ---- --- -------- ----------------------
Lee N. Blatt (2)(4) 68 1965 669,864 (20.7%)
Myron Levy (4) 56 1992 273,311 ( 8.8%)
Gerald I. Klein (4) 68 1991 290,146 ( 9.4%)
Anello C. Garefino (4) 49 -- 33,051 ( 1.1%)
Allan Coon (4) 60 -- 20,000
Adm. Thomas J.
Allshouse 71 1983 19,600
David H. Lieberman 51 1985 16,600
John A. Thonet (3) 46 1991 16,270
Directors and officers
as a group (8 persons) 1,338,842 (37.4%)
- ------
(1) No officer or director owns more than one percent of the issued and
outstanding Common Stock of the Company unless otherwise indicated.
Ownership represents sole voting and investment power.
(2) Does not include an aggregate of 356,700 shares owned by family
members, including Hannah Thonet, Rebecca Thonet, Kathi Thonet, Randi
Rossignol and Allyson Gerber, of which Mr. Blatt disclaims beneficial
ownership.
(3) Does not include 105,000 shares, owned by Mr. Thonet's children, Hannah
and Rebecca Thonet, and 137,233 shares owned by his wife, Kathi Thonet.
Mr. Thonet disclaims beneficial ownership of these shares.
(4) Includes shares subject to options exercisable within the 60-day period
following October 30, 1996 at prices ranging from $3.38 to $9.25 per
share pursuant to the Company's Non-Qualified Stock Option Plans: Lee
N. Blatt - 183,333, Myron Levy - 94,167, Gerald I. Klein - 76,667,
Anello C. Garefino - 13,333, Allan Coon - 10,000.
(5) Includes shares subject to outstanding warrants exercisable within the
the 60-day period following October 30, 1996 at a price of $6.1875:
Lee N. Blatt - 100,000, Myron Levy - 50,000, Gerald I. Klein - 50,000,
Anello C. Garefino - 10,000, Allan Coon - 10,000; and the following
at a price of $7.125: Adm. Thomas J. Allshouse - 10,000, David H.
Lieberman - 10,000, John A. Thonet - 10,000.
Principal Occupations of Directors
The following is a brief account of the business experience for the past
five years of the Company's directors:
Mr. Lee N. Blatt has been Chairman of the Board of the Company since its
organization in 1965. Mr. Blatt holds a Bachelors Degree in Electrical
Engineering from Syracuse University and a Masters Degree in Business
Administration from City College of New York. Mr. Blatt is primarily involved in
the financial and administrative activities of the Company.
Mr. Myron Levy has been President of the Company since June 1993 and
served as Executive Vice President and Treasurer since May 1991, and prior
thereto as Vice President for Business Operations and Treasurer since October
1988. For more than ten years prior to joining the Company, Mr. Levy, a
certified public accountant, was employed in various executive capacities by
Instrument Systems Corporation, most recently holding the position of Vice
President.
Mr. Gerald I. Klein has been Chief Technical Officer of the Company since
March 1994, and has served as Chief Operating Officer and as Executive Vice
President since January 1988.
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<PAGE>
Admiral Thomas J. Allshouse has been a director of the Company since
September 1983. Prior to 1981, when he retired from the United States Navy,
Admiral Allshouse served for 34 years in various naval officer positions,
including acting as commanding officer of the United States Naval Ships Parts
Control Center. Admiral Allshouse holds a Bachelors Degree in Engineering from
the United States Naval Academy and a Masters Degree in Business Administration
from Harvard University.
Mr. David H. Lieberman has been a practicing attorney in the State of New
York for more than the past ten years and is a member of the firm of Blau,
Kramer, Wactlar & Lieberman, P.C., general counsel to the Company. For the
fiscal year ended July 28, 1996, approximately $64,000 in legal fees were paid
to this firm.
Mr. John A. Thonet has been President of Thonet Associates, an
environmental consulting firm specializing in land planning and zoning matters
for the past ten years. Mr. Thonet is the son-in-law of Mr. Lee N. Blatt.
MANAGEMENT
Officers of the Company
The executive officers of the Company are as follows:
Name Position Held with the Company
---- ------------------------------
Lee N. Blatt Chairman of the Board and Chief Executive
Officer
Myron Levy President
Gerald I. Klein Chief Technical Officer
Anello C. Garefino Vice President-Finance, Treasurer and Chief
Financial Officer
Allan Coon Vice President
David H. Lieberman Secretary
Mr. Anello C. Garefino (49 years of age) has been employed by the Company
in various executive capacities for more than the past five years. Mr. Garefino,
a certified public accountant, was appointed Vice President-Finance, Treasurer
and Chief Financial Officer in June 1993. From 1987 to January 1990, Mr.
Garefino was Corporate Controller of Exide Corporation.
Mr. Allan Coon (60 years of age) joined the Company in 1992 and has
served as a Vice President since December 1995. Prior to joining the Company,
Mr. Coon held various financial positions with Alpha Industries, Inc.
Executive Compensation
The following table sets forth the annual and long-term compensation with
respect to the Chairman/Chief Executive Officer and each of the other executive
officers of the Company, for services rendered for the fiscal years ended July
28, 1996, July 30, 1995 and July 31, 1994.
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<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------------------------------------- ---------------------------
Name and Other Annual Stock Long-Term
Principal Fiscal Compensation Option Incentive All Other
Position Year Salary(1) Bonus(2) (3) Awards(#) Plan Payouts Compensation
- --------------- ------ --------- --------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lee N. Blatt 1996 $ 483,028 $ 203,068 $ - 200,000(5) - $ 4,500 (4)
Chairman of 1995 503,842 - - 100,000 - 4,620
the Board 1994 454,705 - - 100,000 - 22,400
Myron Levy 1996 288,726 121,841 - 125,000(5) - 7,380 (4)
President 1995 295,331 27,500 - 50,000 - 6,636
1994 240,384 - - 40,000 - 5,041
Gerald I. Klein 1996 288,726 121,841 - 50,000(5) - 4,500 (4)
Chief Technical 1995 295,328 - - 50,000 - 4,620
Officer 1994 286,727 - - 60,000 - 4,980
- --------
</TABLE>
(1) Amounts set forth herein include cost of living adjustments under
employment contracts in fiscal 1996 and 1995 and are less than
contractual obligations in fiscal 1994 as a result of voluntary salary
reductions.
(2) Represents for Messrs. Blatt, Levy and Klein incentive compensation under
employment agreements. No incentive compensation was earned under the
employment agreements in fiscal 1995. Mr. Levy was awarded a bonus by the
Board of Directors for fiscal 1995. Messrs. Blatt, Levy and Klein each
waived their incentive compensation payment under the employment
agreements for fiscal 1994. See "Management - Employment Agreements."
(3) Other Annual Compensation does not include amounts of certain perquisites
and other non-cash benefits provided by the Company since such amounts do
not exceed the lesser of $50,000 or 10% of the total annual base salary
and bonus disclosed in this table for the respective officer.
(4) All Other Compensation includes: (a) $2,880 paid by the Company for term
life insurance on Mr. Levy, and (b) $4,500, $4,500 and $4,500 contributed
to the Company's 401(k) Plan as a pre-tax salary deferral for Messrs.
Blatt, Levy and Klein respectively.
(5) Includes the following warrants issued in December 1995 for the right to
purchase Common Stock of the Company at a price of $6.1875: Lee N. Blatt
- 100,000, Myron Levy - 50,000, Gerald I. Klein - 50,000; and options
issued in October 1996 at a price of $9.25: Lee N. Blatt - 100,000, Myron
Levy - 75,000.
Employment Agreements
In June 1984, Lee N. Blatt entered into an employment agreement with the
Company, which, as amended, terminates on December 31, 2002, subject to
extension each January 1 for six years from that date not to extend, in any
event, beyond December 31, 2006. Pursuant to the agreement, Mr. Blatt receives
compensation consisting of salary, an annual cost of living increment, and an
incentive bonus. The present base annual salary for Mr. Blatt is $475,000. Mr.
Blatt's incentive bonus is not less than 5% of the Company's consolidated pretax
earnings.
In October 1988, the Company entered into an employment agreement with
Myron Levy, which, as amended, terminates on December 31, 2002, subject to
extension each January 1 for six years from that date not to extend, in any
event, beyond December 31, 2006. The agreement, as amended, provides for a
present base salary of $275,000 per annum, plus cost-of-living increments. Mr.
Levy also is entitled to an incentive bonus in an amount equal to not less than
3% of the consolidated pretax earnings of the Company.
5
<PAGE>
In December 1991, the Company entered into an employment agreement with
Gerald I. Klein which, as amended, terminates on December 31, 2001. The
agreement provides for a present base salary at the annual rate of $275,000, an
annual cost of living increment and an incentive bonus equal to not less than 3%
of the consolidated pretax earnings of the Company.
The employment agreements with Messrs. Blatt, Levy and Klein make
provision for certain payments following death or disability. The employment
agreements also provide for certain rights in the event there is a change in
control of the Company, as defined therein.
Certain Transactions
In November 1995 and March 1996, the Company loaned $1,700,000 and
$300,000, respectively, to certain officers as authorized by the Board of
Directors, pursuant to the terms of non-negotiable promissory notes. The loans
are secured by 445,774 shares of common stock of the Company. The notes are due
November 1996 and March 1997, respectively, and may be renewed by the Company
for up to four additional one-year periods. Interest is payable at maturity at
the average rate of interest paid by the Company on borrowed funds during the
fiscal year. The pledge agreement also provides for the Company to have the
right of first refusal to purchase the pledged securities, based on a formula as
defined, in the event of the death or disability of the officer.
On March 6, 1996, the Board of Directors approved the purchase of an
industrial parcel of land from the Chairman of the Company for $940,000. A
deposit of $94,000 was paid on execution of the contract, and the balance of
$846,000 will be paid at settlement on or before April 30, 1998. The Company
intends to use this land for possible future expansion.
Stock Plans
1988 Non-Qualified Stock Option Plan
The Company's 1988 Non-Qualified Stock Option Plan covers 500,000 shares
of the Company's Common Stock. Under the terms of the plan, the purchase price
of the shares subject to each option granted will not be less than 85% of the
fair market value at the date of grant. The date of exercise may be determined
at the time of grant by the Board of Directors; however, if not specified, 20%
of the shares can be exercised each year beginning one year after the date of
grant so that such option may be exercised as to 100% of the shares covered
thereby five years after the date of grant.
In December 1995, this Plan was terminated except for outstanding options
thereunder. At July 28, 1996, options to purchase 23,100 shares of Common Stock
were outstanding.
1992 Non-Qualified Stock Option Plan
The 1992 Non-Qualified Stock Option Plan covers 1,000,000 shares of the
Company's Common Stock. Under the terms of the Plan, the purchase price of the
shares, subject to each option granted, is 100% of the fair market value at the
date of grant. The date of exercise is determined at the time of grant by the
Board of Directors; however, if not specified, 50% of the shares can be
exercised each year beginning one year after the date of grant. The options
expire ten years from the date of grant.
In December 1995, this Plan was terminated except for outstanding options
thereunder. At July 28, 1996, options to purchase 489,468 shares of Common Stock
were outstanding.
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<PAGE>
1996 Stock Option Plan
The 1996 Stock Option Plan covers 500,000 shares of the Company's Common
Stock. Options granted under the plan may be incentive stock options qualified
under Section 422 of the Internal Revenue Code of 1986 or non-qualified stock
options. Under the terms of the Plan, the exercise price of options granted
under the plan will be the fair market value at the date of grant. The nature
and terms of the options to be granted is determined at the time of grant by the
Board of Directors. If not specified, 100% of the shares can be exercised one
year after the date of grant. The options expire ten years from the date of
grant. No options were granted during the fiscal year ended July 28, 1996.
Warrant Agreements
In April 1993, common stock warrants were issued to certain officers and
directors for the right to acquire 430,000 shares of common stock of the Company
at the fair market value of $7.125 per share at date of issue. In December 1995,
warrants for 400,000 shares were canceled. The warrants expire April 30, 1998.
In December 1995, common stock warrants were issued to certain officers for the
right to acquire 220,000 shares of common stock of the Company at the fair
market value of $6.1875 per share at date of issue. The warrants expire December
13, 2005.
Employee Savings Plan
The Company maintains an Employee Savings Plan which qualifies as a
thrift plan under Section 401(k) of the Internal Revenue Code. This plan allows
employees to contribute between 2% and 15% of their salaries to the plan. The
Company, at its discretion can contribute 100% of the first 2% of the employees'
salary so contributed and 25% of the next 4% of salary. Additional Company
contributions can be made, depending on profits. The aggregate benefit payable
to an employee is dependent upon his rate of contribution, the earnings of the
fund, and the length of time such employee continues as a participant.
The Company accrued approximately $159,000 for the fiscal year ended July
28, 1996 and contributed approximately $151,000 and $199,000 to this plan for
the years ended July 30, 1995 and July 31, 1994, respectively. For the year
ended July 28, 1996, $4,500 each was contributed by the Company to this plan for
Messrs. Blatt, Levy, and Klein, and $19,674 was contributed for all officers and
directors as a group.
Warrants Issued in Last Fiscal Year (1)
The following table sets forth all warrants issued to the named executive
officers during the fiscal year ended July 28, 1996:
<TABLE>
<CAPTION>
Individual Warrants Issued (1)(2)
-------------------------------------------------- Potential Realizable Value
% of Total at Assumed Annual Rates of
Warrants Stock Price Appreciation
Warrants Issued to Exercise for Warrant Term (4)(5)
Issued Employees in Price Expiration ---------------------------
Name (#) Fiscal Year (3) ($/Sh) Date 0% 5% 10%
- ----------------- -------- --------------- ------- ---------- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Lee N. Blatt 100,000 45% $6.1875 12/13/05 $0 $389,100 $986,100
Myron Levy 50,000 23% 6.1875 12/13/05 0 195,600 493,100
Gerald I. Klein 50,000 23% 6.1875 12/13/05 0 195,600 493,100
</TABLE>
7
<PAGE>
(1) All warrants are issued under individual agreements. Dollar gains are
based on the assumed annual rates of appreciation of the exercise price
of each option for the term of the option.
(2) Warrants were issued in fiscal 1996 at 100% of the closing price of the
Company's Common Stock on date of issue and are fully vested.
(3) Total warrants issued to employees in 1996 were for 220,000 shares of
Common Stock.
(4) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's stock. Such amounts are based on
the assumption that the named persons hold the warrants for their full
ten year term. The actual value of the warrants will vary in accordance
with the market price of the Company's Common Stock. The column headed
"0%" is included to demonstrate that the warrants were issued at fair
market value and holders of the warrants will not recognize any gain
without an increase in the stock price, which increase benefits to all
stockholders commensurately. The Company did not use an alternative
formula to attempt to value the warrants at the date of issue, as
management is not aware of any formula which determines with reasonable
accuracy a present value of warrants of the type issued.
(5) The increase in market value of the Company's stock for all stockholders
as of the Record Date, assuming annual rates of stock appreciation from
July 28, 1996 (stock price at $8.50 per share) over the ten year period
used in this table, aggregates $15,776,200 at a rate of 5% and
$39,980,000 at a rate of 10%.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth stock options exercised during fiscal 1996
and all unexercised stock option grants and warrants issued to the named
executive officers as of July 28, 1996.
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised In-The-Money
Acquired on Value Options/SARs at Fiscal Year-End Options/SARs at Fiscal Year-End(2)
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lee N. Blatt 200,000 1,000,000 233,333 66,667 $563,900 $341,300
Myron Levy 70,000 350,000 106,667 33,333 265,800 170,700
Gerald I. Klein 100,000 500,000 126,667 33,333 298,200 170,700
</TABLE>
(1) Values are calculated by subtracting the exercise price from the fair
market value of the stock as of the exercise date.
(2) Based upon the closing price of the Company's Common Stock of $8.50 on
July 28, 1996.
Board of Directors Interlocks and Insider Participation
During fiscal 1996, the Company's Compensation Committee consisted of
Messrs. Thomas J. Allshouse and David H. Lieberman. Except for Mr. Lieberman
being Secretary and a member of a law firm acting as counsel to the Company,
none of these persons were officers or employees of the Company during fiscal
1996 nor had any relationship requiring disclosures in this Proxy Statement.
In accordance with rules promulgated by the Securities and Exchange
8
<PAGE>
Commission, the information included under the captions "Compensation Committee
Report on Executive Compensation" and "Performance Graph" will not be deemed to
be filed or to be proxy soliciting material or incorporated by reference in any
prior or future filings by the Company under the Securities Act of 1933 or the
Securities Exchange Act.
Compensation Committee Report on Executive Compensation
The primary function of the Compensation Committee is to oversee policies
relating to executive compensation including salary, incentive bonuses, fringe
benefits and stock option awards. Its objective is to attract and retain
qualified individuals by providing competitive compensation, while, at the same
time, linking such compensation to corporate objectives. The Committee believes
that providing a direct relationship between corporate results and executive
compensation will best serve shareholder interest. This link between executive
compensation and corporate performance is facilitated through incentive bonuses
based on earnings and also through stock option awards. Salary ranges for the
chief executive officer and other executive officers are based on the underlying
accountability of each executive's position, which is reviewed on a regular
basis, subject to the terms and conditions of employment agreements.
Relationship of Compensation to Performance for Officers and Chief Executive
Officer
The Compensation Committee annually establishes, subject to any
applicable employment agreements, the salaries which will be paid to the
Company's executive officers during the coming year. In setting salaries, the
Committee takes into account several factors, including competitive compensation
data, the extent to which an individual may participate in the stock option
plans maintained by the Company and its affiliates, and qualitative factors
bearing on an individual's experience, responsibilities, management and
leadership abilities and job performance.
The Compensation Committee: Thomas J. Allshouse
David H. Lieberman
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities (Reporting Persons") to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. (the "NASD"). These Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Forms 3, 4 and 5 they file
with the SEC and NASD.
Based solely upon the Company's review of the copies of the forms it has
received, the Company believes that all Reporting Persons complied on a timely
basis with all filing requirements applicable to them with respect to
transactions during fiscal year 1996.
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<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the cumulative total stockholder return to
the Company's stockholders during the five year period ended July 28, 1996 as
well as an overall stock market index (NASDAQ Stock Market-US) and the Company's
peer group index (S&P Aerospace/Defense):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG HERLEY INDUSTRIES, INC., THE NASDAQ STOCK MARKET-US INDEX AND
THE S & P AEROSPACE/DEFENSE INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD HERLEY NASDAQ S & P
(FISCAL YEAR COVERED) INDUSTRIES, INC. STOCK MARKET AEROSPACE/DEFENSE
- --------------------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
1991 100 100 100
1992 154 117 102
1993 137 143 130
1994 68 147 148
1995 93 206 221
1996 152 225 287
</TABLE>
* $100 Invested on July 31, 1991 in stock or index including
reinvestment of dividends. Fiscal year ending July 31.
10
<PAGE>
PROPOSAL TO RATIFY THE ISSUANCE OF WARRANTS
TO THE COMPANY'S EXECUTIVE OFFICERS AND TO CERTAIN DIRECTORS
Introduction
At the Annual Meeting there will be presented to stockholders a
proposal to ratify the prior issuance of common stock purchase warrants (the
"Warrants") to executive officers of the Company and certain directors.
Stockholder approval is required under the rules of the Nasdaq Stock Market.
The first Warrants for which the Company seeks ratification were
authorized by the Company's Board of Directors in April 1993 and provided for
the issuance of 10,000 Warrants to each of Thomas J. Allshouse, John Thonet and
David H. Lieberman, the Company's three outside directors. These Warrants, which
were issued subject to stockholder approval, each provides for an exercise price
of $7-1/8, which was the fair market value of the Company's Common Stock at the
date of grant. The Warrants expire on April 30, 1998 and have yet to be
exercised.
The second Warrants for which the Company seeks ratification were
authorized by the Company's Board of Directors on December 13, 1995 for issuance
to the Company's executive officers. At the recommendation of the Compensation
Committee, the Board authorized the issuance of 100,000 Warrants to Lee N.
Blatt, 50,000 Warrants to Myron Levy, 50,000 Warrants to Gerald Klein, 10,000
Warrants to Anello Garefino and 10,000 Warrants to Allan Coon. These Warrants,
which were issued subject to stockholder approval, each provides for an exercise
price of $6-3/16 which was the fair market value of the Company's Common Stock
on date of grant. The Warrants expire on December 13, 2005 and have yet to be
exercised. The Warrants issued to Messrs. Blatt, Levy and Klein were in lieu of
warrants previously issued to them in April 1993 to acquire an aggregate of
400,000 shares of the Company's Common Stock at $7-1/8 per share with an
expiration date of April 30, 1998. 200,000 of such warrants were previously
issued to Lee Blatt, 100,000 of such warrants were previously issued to Gerald
Klein and 80,000 were previously issued to Myron Levy. All of the previously
issued warrants were cancelled at the time of the December 1995 issuance.
The terms and conditions of the above-referenced Warrants are more
fully set forth in the Warrant Agreement annexed hereto as Exhibit A. In
summary, the Warrants are subject to dilution under certain circumstances such
as a recapitalization, consolidation or merger of the Company and the issuance
of shares of Common Stock at less than the purchase price for such Warrants,
excluding certain shares reserved for issuance upon exercise of outstanding
stock options or warrants. The Warrant Agreement also provides that neither the
Warrant nor the underlying shares of Common Stock will be offered or sold except
in a registration statement meeting the requirements of the Securities Act of
1933, as amended, ("the Act"), or unless an exemption from registration is
afforded under the Act.
The reason for the issuance of the Warrants to the above-named
individuals is similar to the rationale for issuing stock options. Management
believes that the Company's short-term and long-term success is dependent upon
the ability of the Company to attract, motivate and retain the management talent
required to achieve corporate objectives and thereby increase shareholder value.
Management believes that the Warrants, similar to stock options, provide an
incentive focusing the person's attention on managing the Company from a
perspective of an owner with an equity stake in the business. The Warrants were
awarded with an exercise price equal to the market value of Common Stock on the
date of grant. With respect to the Warrants issued to executive officers, the
number of shares subject to Warrants granted to each individual was dependent
upon the level of that officers responsibility, with the largest grants awarded
to the most senior officer, who, in the view of the Compensation Committee, has
the greatest potential impact on the Company's profitability and growth. In
11
<PAGE>
determining the issuance of Warrants to Messrs. Blatt, Klein and Levy, the
cancellation of a greater number of previously issued warrants was also a
determining factor in the number of new Warrants issued to them.
Federal Income Tax Consequences
Upon the exercise of a Warrant, an employee who is not a director or
officer of the Company will be treated as receiving compensation, taxable as
ordinary income, in an amount equal to the excess of the fair market value of
the underlying shares of the Company's Common Stock, at the time of exercise,
over the exercise price and is also subject to withholding on such compensation.
The date of recognition and determination of the ordinary compensation income
attributable to shares received upon exercise of a Warrant by an officer or
director of the Company, while he or she is subject to Section 16(b) of the
Securities Exchange Act of 1934, is generally delayed until six months after
such exercise, unless that person elects to be taxed as of the date of exercise.
The Company will receive an income tax deduction for the amount treated as
compensation income to the recipient at the time and in the amount that the
recipient recognizes such ordinary income.
Upon subsequent disposition of the shares subject to the Warrant, any
differences between the tax basis of the shares and the amount realized on the
disposition is generally treated as long-term or short-term capital gain or
loss, depending on the holding period of the shares of Common Stock.
The tax basis of the shares of Common Stock received by the recipient will be
the market value on the date the recipient is considered to have received
taxable compensation income, and the holding period of the shares will begin the
day after such date.
Required Vote
The affirmative vote of a majority of those votes cast on this proposal at the
annual meeting in person or by proxy is required for approval of the Warrants.
In the event the Warrants are not approved at this Annual Meeting, they will be
cancelled.
The Board of Directors recommends a vote FOR the approval of the ratification of
the previous issuance of the Warrants to its executive officers and certain
directors.
12
<PAGE>
MISCELLANEOUS INFORMATION
A representative of Arthur Andersen LLP, the Company's independent public
accountants for the fiscal year ended July 28, 1996, plans to be present at the
Annual Meeting with the opportunity to make a statement if he desires to do so,
and will be available to respond to appropriate questions.
As of the date of this Proxy Statement, the Board of Directors does not
know of any business other than specified above to come before the meeting, but,
if any other business does lawfully come before the meeting, it is the intention
of the persons named in the enclosed Proxy to vote in regard thereto, in
accordance with their judgment.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit proxies by telephone, telegraph or
personal interview. The Company may also request brokerage houses and other
custodians, and, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of stock held by record by such persons, and may make
reimbursement for payments made for their expense in forwarding soliciting
material to the beneficial owners of the stock held of record by such persons.
Stockholder proposals with respect to the Company's next Annual Meeting
of Stockholders must be received by the Company no later than October 1, 1997 to
be considered for inclusion in the Company's next Proxy Statement.
A copy of the Company's Annual Report for the fiscal year ended July 28,
1996 has been provided to all stockholders as of the Record Date. The Annual
Report is not to be considered as proxy soliciting material.
By Order of the Board of Directors,
LEE N. BLATT
Chairman of the Board
Dated: November 21, 1996
Lancaster, Pennsylvania
13
<PAGE>
EXHIBIT A
HERLEY INDUSTRIES, INC.
WARRANT AGREEMENT
These securities may not be publicly offered or sold unless at the time of such
offer or sale, the person making such offer of sale delivers a prospectus
meeting the requirements of the Securities Act of 1933 forming a part of a
registration statement, or post-effective amendment thereto, which is effective
under said act, or unless in the opinion of counsel to the Corporation, such
offer and sale is exempt from the provisions of Section 5 of said Act.
W A R R A N T
For the Purchase of Common Stock, Par Value $.10 per Share of
HERLEY INDUSTRIES, INC.
(Incorporated under the Laws of the State of Delaware)
VOID AFTER 5 P.M. ________________
No. ____
Warrant to Purchase
_______ Shares
THIS IS TO CERTIFY that, for value received,
____________________________ is entitled, subject to the terms and conditions
set forth, at or before 5 P.M., New York City Time, on ______________, but not
thereafter, to purchase the number of shares set forth above of Common Stock,
par value $.10 per shares (the "Common Stock"), of HERLEY INDUSTRIES, INC., a
Delaware corporation (the "Corporation"), from the Corporation at a purchase
price per share of $_______ if and to the extent this Warrant is exercised, in
whole or in part, during the period this Warrant remains in force, subject in
all cases to adjustment as provided in Section 3 hereof, and to receive a
certificate or certificates representing the shares of Common Stock so
purchased, upon presentation and surrender to the Corporation of this Warrant,
with the form of subscription attached hereto duly executed, and accompanied by
payment of the purchase price of each share purchased either in cash or by
certified or bank cashier's check payable to the order of the Corporation.
1. The Corporation covenants and agrees that all shares may be
delivered upon the exercise of this Warrant and will, upon delivery, be fully
paid and non-assessable, and, without limiting the generality of the foregoing,
the Corporation covenants and agrees that it will from time to time take all
such action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the then current Warrant
purchase price per share of the Common Stock issuable upon exercise of this
Warrant.
2. The rights represented by this Warrant are exercisable at the
option of the holder hereof in whole at any time, or in part from time to time,
within the period above specified at the prices specified in Section 1 hereof .
In case of the purchase of less than all the shares as to which this Warrant is
exercisable, the Corporation shall cancel this Warrant upon the surrender hereof
and shall execute and deliver a new
A-1
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Warrant of like tenor for the balance of the shares purchasable hereunder.
3. The price per share at which shares of Common Stock may be
purchased hereunder, and the number of such shares to be purchased upon exercise
hereof, are subject to change or adjustment as follows:
(A) In case the Corporation shall, while this Warrant
remains unexercised, in whole or in part, and in force, effect a
recapitalization of such character that the shares of Common
Stock purchasable hereunder shall be changed into or become
exchangeable for a larger or smaller number of shares, then,
after the date of record for effecting such recapitalization,
the number of shares of Common Stock which the holder hereof
shall be entitled to purchase hereunder 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, and the purchase price
hereunder per share of such recapitalized Common Stock shall, in
the case of an increase in the number of such shares, be
proportionately reduced, and in the case of a decrease in the
number of such shares, shall be proportionately increased. For
the purpose of this subsection (A), a stock dividend, stock
split-up or reverse split shall be considered as a
recapitalization and as an exchange for a larger or smaller
number of shares, as the case may be.
(B) In the case of any consolidation of the Corporation
with, or merger of the Corporation into, any other corporation,
or in case of any sale or conveyance of all or substantially all
of the assets of the Corporation in connection with a plan of
complete liquidation of the Corporation, then, as a condition of
such consolidation, merger or sale or conveyance, adequate
provision shall be made whereby the holder hereof shall
thereafter have the right to purchase and receive, upon the
basis and upon the terms and conditions specified in this
Warrant and in lieu of shares of Common Stock immediately
theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock or securities as
may be issued in connection with such consolidation, merger or
sale or conveyance with respect to or in exchange for the number
of outstanding shares of Common Stock immediately therefore
purchasable and receivable upon the exercise of the rights
represented hereby had such consolidation, merger or sale or
conveyance not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests
of the holder of this Warrant to the end that the provisions
hereof shall be applicable as nearly as may be in relation to
any shares of stock or securities thereafter deliver- able upon
the exercise hereof.
(C) In case the Corporation shall, while this Warrant
remains unexercised, in whole or in part, and in force, issue
(otherwise than by stock dividend or stock split-up or reverse
split) or sell shares of its Common Stock (hereinafter referred
to as "Additional Shares") for a consideration per share (before
deduction of expenses or commissions or underwriting discounts
or allowances in connection therewith) less than the purchase
price hereunder per share, then, after the date of such issuance
or sale, the purchase price hereunder per shall be reduced to a
price determined by dividing (1) an amount equal to (a) the
total number of shares of Common Stock outstanding immediately
prior to the time of such issuance or sale multiplied by such
purchase price hereunder per share, plus (b) the consideration
(before deduction of expenses or commissions or underwriting
discounts or allowances in connection therewith), if any,
received by the Corporation upon such issuance or sale, by (2)
the total number of shares of Common Stock outstanding after the
date of the issuance or sale of such Additional Shares, and the
number of shares of Common Stock which the holder
A-2
<PAGE>
hereof shall be entitled to purchase hereunder at each such
adjusted purchase price per share, at the time such adjusted
purchase price per shall be in effect, shall be the number of
whole shares of Common Stock obtained by multiplying such
purchase price hereunder per share before such adjustment, by
the number of shares of Common Stock purchasable upon the
exercise of this Warrant immediately before such adjustment, and
dividing the product so obtained by such adjusted purchase price
per share; provided, however, that no such adjustment of the
purchase price hereunder per share or the number of shares for
which this Warrant may be exercised shall be made upon the
issuance or sale by the Corporation of not more than 500,000
Additional Shares reserved for issuance upon exercise of
outstanding stock options or warrants.
(D) In case the Corporation shall, while this Warrant
remains unexercised in whole or in part, and in force, issue or
grant any rights to subscribe for or to purchase, or any option
(other than the employee stock options referred to in subsection
(C) above) for the purchase of (i) Common Stock or (ii) any
indebtedness or shares of stock convertible into or exchangeable
for Common Stock (indebtedness or shares of stock convertible
into or exchangeable for Common Stock being hereinafter referred
to as "Convertible Securities"), or issue or sell Convertible
Securities and the price per share for which Common Stock is
issuable upon the exercise of such rights or options or upon
conversion or exchange of such Convertible Securities at the
time such Convertible Securities first become convertible or
exchangeable (determined by dividing (1) in the case of an
issuance or grant of any such rights or options, the total
amount, if any, received or receivable by the Corporation as
consideration for the issuance or grant of such rights or
options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon exercise of such
rights or options, plus, in the case of such Convertible
Securities, in the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the
conversion or exchange of such Convertible Securities at the
time such Convertible Securities first become convertible or
exchangeable, or (2) in the case of an issuance or sale of
Convertible Securities other than where the same or issuable
upon the exercise of any such rights or options, the total
amount, if any, received or receivable by the Corporation as
consideration for the issuance or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the
conversion or exchange of such Convertible Securities at the
time such Convertible Securities first become convertible or
exchangeable, by, in either such case, (3) the total maximum
number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of
such Convertible Securities at the time such Convertible
Securities first become convertible or exchangeable) shall be
less than the two purchase prices hereunder per share, then the
total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon conversion or
exchange of the total maximum amount of such Convertible
Securities at the time such Convertible Securities first become
convertible or exchangeable, shall (as of the date of the
issuance or grant of such rights or options or, in the case of
the issuance or sale of Convertible Securities other than where
the same are issuable upon the exercise of rights or options, as
of the date of such issuance or sale) be deemed to be
outstanding and to have been issued for said price per share;
provided that (i) no further adjustment of the purchase price
shall be made upon the actual issuance of such Common Stock upon
the exercise of such rights or options or upon the conversion or
exchange of such Convertible Securities or upon the actual
issuance of Convertible Securities where the same are issuable
upon the exercise of such rights or options, and (ii) rights or
A-3
<PAGE>
options issued or granted pro rata to shareholders without
consideration and Convertible Securities issuable by way of
dividend or other distribution to shareholders shall be deemed
to have been issued or granted at the close of business on the
date fixed for the determination of shareholders entitled to
such rights, options or Convertible Securities and shall be
deemed to have been issued without consideration; and (iii) if,
in any case, the total maximum number of shares of Common Stock
issued upon exercise of such rights or options or upon
conversion or exchange of such Convertible Securities is not, in
fact, issued and the right to exercise such right or option or
to convert or exchange such Convertible Securities shall have
expired or terminated, then, and in any such event, the purchase
price, as adjusted, shall be appropriately readjusted at the
time of such expiration or termination. In such case, each
purchase price hereunder per share which is greater than the
price per share for which Common Stock is issuable upon
conversion or exchange of such rights or options or upon
conversion or exchange of such Convertible Securities at the
time such Convertible Securities first become convertible or
exchangeable, as determined above in this subsection (D), shall
thereupon be reduced to a price determined by dividing (1) an
amount equal to (a) the total number of shares of Common Stock
outstanding immediately prior to the time of the issuance or
grant of such rights or options or the issuance or sale of such
Convertible Securities multiplied by such purchase price
hereunder per share, plus (b) the total amount, if any, received
or receivable by the Corporation as consideration for such
issuance or grant or such issuance or sale, plus the additional
amounts referred to and more fully set forth in clauses (1) and
(2) of the parenthetical material above in this subsection (D),
whichever clause and whichever additional amounts may be
applicable, by (2) the total number of shares of Common Stock
outstanding after the date of such issuance or grant or such
issuance or sale, and the number of shares of Common Stock which
the holder hereof shall be entitled to purchase hereunder at
such adjusted purchase price per share, at the time such
adjusted purchase price per shall be in effect, shall be the
number of whole shares of Common Stock obtained by multiplying
such purchase price hereunder, per share, before such
adjustment, by the number of shares of Common Stock purchasable
upon the exercise of this Warrant immediately before such
adjustment and dividing the product so obtained by such adjusted
purchase price per share.
(E) For the purpose of subsections (C) and (D) above,
in case the Corporation shall issue or sell Additional Shares,
issue or grant any rights to subscribe for or to purchase, or
any options for the purchase of (i) Common Stock or (ii)
Convertible Securities, or issue or sell Convertible Securities
for a consideration part of which shall be other than cash, the
amount of the consideration received by the Corporation therefor
shall be deemed to be the cash proceeds, if any, received by the
Corporation plus the fair value of the consideration other than
cash as determined by the Board of Directors of the Corporation
in good faith, before deduction of commissions, underwriting
discounts or allowances or other expenses paid or incurred by
the Corporation for any underwriting of, or otherwise in
connection with, such issuance, grant or sale.
(F) Subject to the provisions of subsection (G) below,
in case the Corporation shall, while this Warrant remains
unexercised, in whole or in part, and in force, make any
distribution of its assets to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining
shareholders entitled to such distribution, the holder hereof
shall be entitled, upon exercise of this Warrant and purchase of
any or all of the shares of Common Stock subject hereto, to
receive the amount of such assets (or at the option of the
Corporation, a sum equal to the value thereof at the time of
such
A-4
<PAGE>
distribution to holders of Common Stock as such value is
determined by the Board of Directors of the Corporation in good
faith) which would have been payable to such holder had he been
the holder of record of such shares of Common Stock on the
record date for the determination of shareholders entitled to
such distribution.
(G) Except as otherwise provided in subsection (B)
above, in the case of any sales or conveyance of all or
substantially all of the assets of the Corporation in connection
with a plan of complete liquidation of the Corporation, in the
case of the dissolution, liquidation or winding up of the
Corporation, all rights under this Warrant shall terminate on a
date fixed by the Corporation, such date so fixed to be not
earlier than the date of the commencement of the proceedings for
such dissolution, liquidation or winding-up and not later than
thirty (30) days after such commencement date. Notice of such
termination of purchase rights shall be given to the registered
holder hereof, as the same shall appear on the books of the
Corporation, at least thirty (30) days prior to such termination
date.
(H) In case the Corporation shall, while this Warrant
remains unexercised in whole or in part, and in force, offer to
the holders of Common Stock any rights to subscribe for
additional shares of stock of the Corporation, then the
Corporation shall given written notice thereof to the registered
holder hereof not less than thirty (30) days prior to the date
on which the books of the Corporation are closed or a record
date fixed for the determination of shareholders entitled to
such subscription rights. Such notice shall specify the date as
to which the books shall be closed or the record date fixed with
respect to such offer or subscription, and the right of the
holder hereof to participate in such offer or subscription shall
terminate if this Warrant shall not be exercised on or before
the date of such closing of the books or such record date.
(I) Any adjustment pursuant to the foregoing provisions
shall be made on the basis of the number of shares of Common
Stock which the holder hereof would have been entitled to
acquire by exercise of this Warrant immediately prior to the
event giving rise to such adjustment and, as to the purchase
price hereunder per share, whether or not in effect immediately
prior to the time of such adjustment, on the basis of such
purchase price immediately prior to the event giving rise to
such adjustment. Whenever any such adjustment is required to be
made, the Corporation shall forthwith determine the new number
of shares of Common Stock which the holder shall be entitled to
purchase hereunder and/or such new purchase price per share, and
shall prepare, retain on file and transmit to the holder hereof
within ten (10) days after such preparation a statement
describing in reasonable detail the method used in calculating
such adjustment(s).
(J) For the purposes of this Section 3, the term
"Common Stock" shall include all shares of capital stock
authorized by the Corporation's Certificate of Incorporation, as
from time to time amended, which are not limited to a fixed sum
or percentage of par value in respect of the right of the
holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation.
(K) Whenever the price per share hereunder, initial or
adjusted, and the number of shares of Common Stock to be
purchased upon exercise hereof, initial or adjusted, shall be
changed or adjusted pursuant to the provisions of this Section
3, the Corporation shall forthwith cause written notice setting
forth the changed or adjusted price per share hereunder and
number of shares to be purchased upon exercise hereof to be
given to the holder of this Warrant.
A-5
<PAGE>
4. The holder hereof agrees that the Warrants and shares of
Common Stock will not be offered or sold (1) unless at the time of such offer or
sale, there is delivered a prospectus meeting the requirements of the Securities
Act of 1933, as amended, forming a part of an applicable post-effective
amendment to the Registration Statement, or forming a part of a new registration
statement with respect to such offer and sale, or (2) unless in the opinion of
counsel to the Corporation satisfactory to the holder hereof, such offer and
sale is exempt from the provisions of Section 5 of the Act. In connection with
the preparation of any post-effective amendment to the Registration Statement or
any new registration statement, the holder hereof agrees to furnish the
Corporation with information, in writing, concerning the terms of the proposed
offer.
5. The Corporation agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover the number of
shares issuable upon the exercise of this and all other Warrants of the same
class.
6. This Warrant shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Corporation, or to any
other rights whatsoever except the rights herein expressed, and no dividends
shall be payable or accrue in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until or unless, and
except to the extent that, this Warrant shall be exercised.
7. This Warrant is exchangeable upon the surrender hereof by the
holder hereof to the Corporation for new Warrants of like tenor representing in
the aggregate the right to purchase the number of shares purchasable hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the holder hereof at the time of such
surrender.
8. The Corporation will transmit to the holder of this Warrant
such information, documents and reports as are generally distributed to
shareholders of the Corporation concurrently with the distribution thereof to
such shareholders.
9. Notices to be given to the holder of this Warrant shall be
deemed to have been sufficiently given if delivered or mailed, addressed in the
name and at the address of such holder appearing in the records of the
Corporation, and if mailed, sent first class registered or certified mail,
postage prepaid. The address of the Corporation is 10 Industry Drive, Lancaster,
Pennsylvania 17603, and the Corporation shall give written notice of any change
of address to the holder hereof.
10. The exercise of this Warrant is subject to the approval of
its issuance by the shareholders of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to
be executed by the signature of its President and its seal affixed and attested
by its Secretary.
Dated:
HERLEY INDUSTRIES, INC.
By:
[Corporate Seal] --------------------
ATTEST:
-----------------------
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HERLEY INDUSTRIES, INC.
AMENDED BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING
December 17, 1996
The undersigned hereby appoints Lee N. Blatt and Myron Levy, or either of
them, attorneys and Proxies with full power of substitution in each of them, in
the name and stead of the undersigned to vote as Proxy all the stock of the
undersigned in HERLEY INDUSTRIES, INC., a Delaware corporation, at the Annual
Meeting of Stockholders scheduled to be held December 17, 1996 and any
adjournments thereof.
The Board of Directors recommends a vote FOR the following proposals:
1. Election of the following nominees, as set forth in the Proxy
Statement:
David H. Lieberman, Myron Levy, Adm. Thomas J. Allshouse, Lee N. Blatt
and John A. Thonet
/__/ FOR ALL NOMINEES /__/ WITHHELD FROM ALL NOMINEES
/__/ FOR ____________________ BUT WITHHELD FROM ______________________
2. Ratification of the issuance of Warrants, as set forth in the Proxy
Statement:
/__/ FOR /__/ AGAINST /__/ ABSTAIN
3. Upon such other business as may properly come before the meeting or
any adjournment thereof.
(Continued and to be signed on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY PROXIES, AND EACH OF THEM, AS
SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. SHAREHOLDERS MAY WITHHOLD THE VOTE FOR ONE OR MORE
NOMINEE(S) BY WRITING THE NOMINEE(S) NAME(S) IN THE BLANK SPACE PROVIDED ON THE
REVERSE HEREOF. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE
PROPOSALS SET FORTH ON THE REVERSE HEREOF.
Dated: _____________, 1996 _________________________________ [L.S.]
_________________________________ [L.S.]
(Note: Please sign exactly as your name appears
hereon. Executors, administrators, trustees, etc.
should so indicate when signing, giving full title
as such. If signer is a corporation, execute in full
corporate name by authorized officer. If shares are
held in the name of two or more persons, all should
sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
