As filed with the Securities and Exchange Commission on January __, 2000
Registration No. 333-72427
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
HERLEY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2413500
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10 Industry Drive Myron Levy, President
Lancaster, Pennsylvania 17603-4025 Herley Industries, Inc.
(717) 397-2777 10 Industry Drive
(Address, including zip code and telephone Lancaster, Pennsylvania 17603-4025
number, including area code, of registrant's (717) 397-2777
principal executive offices) (Name address and telephone number,
including area code, of agent for
service)
-------
Copy to:
David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820
Approximate date of commencement of proposed sale to 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 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 []
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Aggregate Amount of
Registered Registered Price Per Security (1) Offering Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock,
par value $.10
per share (2) 1,265,000 shs. $15.50 $19,607,500 $5,255
- -------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee, based
on the closing price of the common stock reported in the consolidated
reporting system on January 12, 2000.
(2) Represents 1,265,000 shares of common stock issuable upon the exercise of
common stock purchase warrants.
- -------------------------------------------------------------------------------------------------------
</FN>
</TABLE>
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>
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>
Preliminary Prospectus
SUBJECT TO COMPLETION
Dated January __, 2000
HERLEY INDUSTRIES, INC.
1,265,000 Shares of Common Stock
Herley is selling 1,265,000 shares of common stock. The shares are to be
issued upon the exercise of Herley's outstanding common stock purchase warrants.
Each warrant represents the right to purchase one share of common stock at an
exercise price of $15.60 per share until January 16, 2000.
Herley will bear the expenses in connection with the offering, including
filing fees and Herley's legal and accounting fees, estimated at $10,000.
Herley's common stock is traded on the Nasdaq National Market System under
the symbol HRLY. On January 11, 2000, the last reported sale price of the common
stock as reported by the Nasdaq National Market System was $151/16 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Prospectus dated January __, 2000
<PAGE>
TABLE OF CONTENTS
Page
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
Risks Associated with Expansion into New Markets . . . . . . . . . . . .-2-
Fluctuations in Quarterly Results; Future Operating Results Uncertain. .-2-
Technological Change . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
Dependence Upon Key Personnel. . . . . . . . . . . . . . . . . . . . . .-3-
International Sales; Currency Fluctuations . . . . . . . . . . . . . . .-3-
Dependence on Proprietary Technology; Risk of Third Party Claims
for Infringement. . . . . . . . . . . . . . . . . . . . . . . . . . . .-4-
Potential Anti-Takeover Provisions . . . . . . . . . . . . . . . . . . .-4-
Additional Issuances of Stock Without Stockholder Approval . . . . . . .-4-
HERLEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
New Product Development and Applications. . . . . . . . . . . . . . . .-11-
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-12-
PRICE RANGE OF COMMON STOCK AND WARRANTS . . . . . . . . . . . . . . . . . .-12-
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-13-
PERFORMANCE CHART. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-13-
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . .-14-
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-14-
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-14-
Description of Warrants . . . . . . . . . . . . . . . . . . . . . . . .-15-
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .-17-
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-17-
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-17-
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . .-17-
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . .-18-
You should rely only on the information contained in this document or to which
Herley has referred you. Herley has not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
<PAGE>
RISK FACTORS
In evaluating whether to buy the securities offered by this prospectus, you
should consider carefully the following factors.
Risks Associated with Expansion into New Markets
Herley can be expected to introduce new products and expand its product
offerings in its existing markets. Broad market acceptance of Herley's new
products is critical to its future success. Herley believes that factors
affecting the ability of its products to achieve broad market acceptance
include:
. product performance;
. price;
. adaptation to rapid technological change; and
. competitive product offerings.
There can be no assurance that Herley will be able to respond promptly and
effectively to the challenges of technological change and its competitors'
innovations, or that Herley will be able to achieve the necessary market
acceptance, or compete effectively, in its product markets.
Fluctuations in Quarterly Results; Future Operating Results Uncertain
Herley's quarterly operating results have in the past, and its results may
in the future, fluctuate significantly depending on factors such as:
. demand for its products;
. the size and timing of orders;
. the number, timing and significance of new product announcements by it
and its competitors;
. its ability to develop, introduce and market new and enhanced versions
on a timely basis;
. the level of product and price competition;
. changes in operating expenses;
. changes in average selling prices and product mix;
. product returns;
. changes in technology;
. and general economic factors.
As a result, because product revenues in any quarter may be substantially
dependent on orders booked and shipped in that quarter, revenues for any future
quarter may not be predictable with any significant degree of accuracy. If
revenue levels are below expectations, operating results are likely to be
adversely affected and may be below the expectations of public market analysts
and investors. In such event, the price of the Herley common stock would likely
decrease.
Technological Change
Flight instrumentation and microwave components industries are
characterized by technological change. Herley's future success will depend upon
its ability to continually enhance its current products and systems and develop
and introduce new products and systems that keep pace with the increasingly
sophisticated needs of its customers and the technological advancements of its
competitors. There can be no assurance that Herley will be successful in
<PAGE>
developing and marketing product enhancements, new products or totally new
systems that will adequately meet the requirements of the marketplace. As a
result, Herley has expended substantial resources for system and product
development and intends to continue to expend such resources in the future. The
development of new or enhanced systems or products results in expenditures and
costs that Herley may not recover if the system or product is unsuccessful.
Dependence Upon Key Personnel
The success of Herley depends upon the efforts of its executive officers
and other key personnel, including Lee N. Blatt, Chairman of the Board and Chief
Executive Officer and Myron Levy, President, and in the event of an acquisition,
its ability to attract and retain other highly qualified management and
technical personnel. Although Herley has existing employment agreements with
Messrs. Blatt and Levy the loss of the services of Mr. Blatt and Mr. Levy could
have an adverse effect on Herley's business and prospects. Herley does not
maintain key-man life insurance. There can be no assurance that Herley will be
successful in the event it needs to hire and retain additional key personnel.
International Sales; Currency Fluctuations
International sales represented approximately 29% of Herley's net revenues
for the 52 weeks ended August 1, 1999 and August 2, 1998. Herley believes that
continued profitability requires additional expansion of sales in foreign
markets. This expansion will continue to require significant management
attention and financial resources and could adversely affect Herley's operating
margins. In order to increase international sales in the future, Herley may be
required to establish additional foreign operations, hire additional personnel
and recruit additional international resellers. To the extent that Herley is
unable to expand international sales in a timely and cost-effective manner, its
business, operating results and financial condition could be materially
adversely affected. In addition, there can be no assurance that Herley will be
able to maintain or increase international market demand for its products.
Substantially, all of Herley's international sales are currently
denominated in U.S. dollars. Consequently, Herley does not currently engage in
any hedging activities. To date, exposure to currency fluctuations has not been
significant but there can be no guarantee that future fluctuations in the
currency exchange rates will not have a material adverse effect on Herley's
business, operating results and financial condition.
Additional risks inherent in Herley's international business activities
include:
. unexpected changes in regulatory requirements;
. tariffs and other trade barriers;
. costs of localizing products for foreign countries;
. lack of acceptance of localized products in foreign countries;
. longer accounts receivable payment cycles;
. difficulties in collecting payment;
. difficulties in managing international operations;
. potentially adverse tax consequences, including repatriation of
earnings;
. reduced protection for intellectual property;
. the burdens of complying with a wide variety of foreign laws; and
. the effects of high local wage scales and other expenses.
<PAGE>
There can be no assurance that such factors will not have a material
adverse effect on Herley's future international sales and, consequently, its
business, operating results and financial condition.
Dependence on Proprietary Technology; Risk of Third Party Claims for
Infringement
Herley does not have any patents, other than through its General Microwave
subsidiary which has 12 patents in the United States which cover various
products. Herley relies on a combination of patent, copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The laws of some foreign countries do not
protect proprietary rights as thoroughly as do the laws of the United States.
Policing unauthorized use of Herley's products is difficult, time-consuming and
costly. However, the actions taken by Herley to establish and protect its
proprietary rights may not be enough to prevent imitation of its products or to
prevent others from claiming violations of their proprietary rights by Herley.
Any such claims, whether with or without merit, could be time-consuming, result
in costly litigation and diversion of resources, cause product shipment delays
or require Herley to enter into royalty or licensing agreements. Any such
royalty or licensing agreements may not be available on terms acceptable to
Herley or at all. In the event of a successful claim of product infringement
against Herley and the failure or inability of Herley to license the infringed
or similar technology, Herley's business, operating results and financial
condition could be materially adversely affected.
Potential Anti-Takeover Provisions
Certain provisions of Delaware law and Herley's Certificate of
Incorporation and By-laws could make it more difficult for a third party to
acquire control of Herley, even if the change in control could be beneficial to
the interests of the stockholders. These provisions include
. Section 203 of the Delaware General Corporation Law, which prohibits
certain business combinations with interested stockholders;
. the classification of Herley's Board of Directors into three classes; and
. the requirement that stockholders owning at least 80% of the
outstanding shares of Herley common stock approve certain transactions,
including mergers and sales or transfers of all or substantially all of
Herley's assets.
These provisions could limit the price that certain investors might be
willing to pay in the future for shares of Herley common stock.
Additional Issuances of Stock Without Stockholder Approval
After this offering, Herley will have an aggregate of approximately
10,340,498 shares of common stock authorized but unissued and not reserved for
specific purposes. All of such shares may be issued without any action or
approval by Herley's stockholders. Any shares issued would further dilute the
percentage ownership of Herley held by the investors in this offering. Unissued
but reserved shares of Herley common stock include shares of common stock
reserved for issuance in connection with the exercise of
. Herley's publicly-traded warrants;
. the stock options issued under Herley's stock option plans; and
. currently outstanding warrants, including the warrants held by officers
and directors.
<PAGE>
The market price of Herley common stock could drop as a result of sales of a
large number of shares in the market, or the perception that such sales could
occur. These factors could also make it more difficult for Herley to raise funds
through future offerings of Herley common stock during the terms of these stock
options and warrants because of the potential dilution and because the holders
thereof might be expected to convert or exercise them if the market price of the
Herley common stock exceeds their conversion or exercise price.
HERLEY
General
Herley is engaged in the design, development, manufacture and sale of
flight instrumentation components and systems, and microwave products primarily
to the U.S. government, foreign governments, and aerospace companies. Flight
instrumentation products include:
. command and control systems;
. transponders;
. flight termination receivers;
. telemetry transmitters and receivers;
. pulse code modulator, PCM, encoders; and
. scoring systems.
Flight instrumentation products are used to:
. accurately track the flight of space launch vehicles, targets, and unmanned
airborne vehicles, or UAVs;
. communicate between ground systems and the airborne vehicle;
. if necessary, destroy the vehicle if it is veering from its planned
trajectory; and
. train troops and test weapons.
Herley's command and control systems are used on training and test ranges
domestically and in foreign countries. Herley has an installed base of
approximately 100 command and control systems around the world, which are either
fixed installations, transportable units or portable units.
Herley is also engaged in the design, development, manufacture and
marketing of:
. microwave devices and electronic systems;
. equipment; and
. components.
A substantial portion of the Company's microwave products are sold to
manufacturers and users of microwave systems and equipment for applications in
the defense electronics industry, including in connection with the radar and
defense electronic systems on tactical fighter aircraft; as well as being used
in Herley's flight instrumentation systems and products. Herley also sells these
components and equipment for use in the industrial sector as well as in
commercial telecommunications industries. Typical applications for Herley's
microwave products include:
<PAGE>
. electronic warfare and countermeasures;
. airborne and shipboard navigation and communications;
. radar systems;
. missile guidance systems;
. automatic test equipment; and
. satellite communications.
Herley has grown internally and through six strategic acquisitions. As a
result, Herley has evolved from a components manufacturer to a systems and
service provider and has leveraged its technical capabilities and expertise into
domestic commercial and foreign defense markets.
Since its inception in 1965, Herley has designed and manufactured microwave
devices for use in various tactical military programs. In June 1986, Herley
acquired a small engineering company, Mission Design, Inc., engaged in the
design and development of transponders. This acquisition enabled Herley to enter
the flight instrumentation business beginning with the design and manufacture of
range safety transponders. In September 1992, Herley acquired substantially all
of the assets of Micro-Dynamics, Inc. Micro-Dynamics of Woburn, Massachusetts, a
microwave subsystem designer and manufacturer. In June 1993, Herley acquired
Vega Precision Laboratories, Inc. of Vienna, Virginia, a manufacturer of flight
instrumentation products. In March 1994, Herley entered into an exclusive
license agreement for the manufacture, marketing and sale of the Multiple
Aircraft GPS Integrated Command & Control, or (MAGIC2), systems. In July 1995,
Herley acquired certain assets and the business of Stewart Warner Electronics
Corp. of Chicago, Illinois, a manufacturer of high frequency radio and IFF
interrogator systems. In August 1997, Herley acquired Metraplex Corporation of
Frederick, Maryland, which has enabled Herley to enter the airborne PCM and FM
telemetry and data acquisition systems market. In January 1999, Herley acquired
all of the issued and outstanding common stock of General Microwave Corporation
of Amityville, New York, expanding its offering of microwave components and
electronic systems, and its customer base in the industrial sector, as well as
in the commercial telecommunications industries.
Products
Command and Control Systems (C2)
For over thirty years, Herley has been manufacturing products in the radar
enhancement field. Herley's command and control systems have been used to fly
remotely a large variety of unmanned aerial vehicles, typically aircraft used as
target drones or Remotely Piloted Vehicles, or RPVs, and some surface targets.
Operations have been conducted by users on the open ocean, remote land masses,
and instrumented test and training ranges.
Herley's command and control systems are currently in service throughout
the world. Herley's pulse- positioned-coded, or PPC, concept enables the use of
standard radar technology to track and control unmanned vehicles. Using the
radar beacon mode, PPC pulse groups are transmitted and received for transfer of
command and telemetry data while employing the location precision and advantages
of radar techniques.
Command and control systems permit a ground operator to fly a target or a
UAV through a preplanned mission. That mission may be for reconnaissance, where
the vehicle is equipped with high definition TV sensors and the necessary data
links to send information back to its command and control systems ground
station. The UAV may also be used as a decoy, since the operator can direct the
flight operations that will make the small drone appear to be a larger combat
aircraft.
<PAGE>
With the 1994 licensing of the MAGIC2 system, Herley increased the
selection of command and control systems. The 6104 TTCS, or Target Tracking and
Control System, unit is a line-of-sight command and control system with an
installed base of equipment worldwide. Herley's engineers and marketers are now
able to offer the MAGIC2 system as a supplement to, or replacement for, this
installed base of equipment. The MAGIC2 system affords over-the-horizon command
and control using GPS guidance and control of multiple targets from a single
ground station. The ability to control multiple targets at increased distances
represents a significant product improvement. The increasing demand for enhanced
performance by the U.S. Navy as well as foreign navies in littoral warfare
scenarios can be satisfied by the use of the MAGIC2 system.
The new Model 6104 TTCS is a highly flexible, multiple processor design
with high resolution graphics, which can be field configured within minutes to
fly or control any selected vehicle for which it is equipped. The system is
designed to operate with a large variety of vehicles. A basic TTCS configuration
is normally supplied with a standard Herley command panel and the software
peculiar to one vehicle. Telemetry display software is embedded for the
specified vehicle, and a magnetic hard drive is supplied with a mission map
prepared in accordance with a customer supplied detailed map of the area. The
TTCS is used in support of missile, aircraft and other weapons systems
development and testing. Herley continues to provide this system to customers to
support their requirement.
The MAGIC2 system provides control of multiple targets from a single ground
control system, and utilizes GPS to provide accurate position information. The
MAGIC2 system meets a growing requirement to test against multiple threats with
the automated defense capabilities of ships like the AEGIS cruiser and the E-2C
aircraft.
Military surveillance operations typically use UAVs, RPVs, or drones to
avoid the cost and risk of manned surveillance vehicles in the event of an
accident or if the vehicle is shot down. These inexpensive drones are controlled
in flight by a Herley command and control system, which may be mounted in a
trailer that may be moved from place to place by helicopter or truck. Herley
also manufactures portable command and control systems that are mounted on
tripods that can be easily transported by an operational team. The portable
units permit ready deployment in rugged terrain and may also be used on ships
during open ocean exercises.
In recent years, teaming arrangements between prime military contractors
and Herley have increased. Large companies bidding on major programs seek to
align themselves with parts and systems manufacturers such as Herley for
economic reasons as well as for the technical expertise afforded by such
alliances. Teaming arrangements with Tracor Corporation and Northrop Grumman
Corporation have resulted in recent awards to Herley for command and control
systems in Australia and Singapore, and Herley is presently negotiating
additional teaming arrangements.
Telemetry Systems
Missile, UAV, or target testing on domestic and international test ranges
requires flight safety and performance data transmission to maximize flight
safety during the test operation. Surveillance and intelligence gathering UAVs
also require a data transmission downlink and a command and control systems
uplink to accomplish their mission. Herley has developed a telemetry system
capability that can be configured to meet individual customers' needs. Various
components of the system include data encoders, transmitters and flight
termination receivers. Each has a distinctive role and each is key to the
success of the mission.
<PAGE>
In 1972, Metraplex began developing data encoding and acquisition, and
signal conditioning equipment. Metraplex is now a leading manufacturer of PCM
and FM telemetry and data acquisition systems for severe environment
applications, whose products are used worldwide for testing space launch vehicle
instrumentation, aircraft flight testing, and amphibian, industrial and
automotive vehicle testing. The product portfolio ranges in size and complexity
from miniature encoders to completely programmable data acquisition systems.
Herley's acquisition of Metraplex in 1997 allows Herley to offer a complete
airborne data link system. With the digital capability of Metraplex in data
encoding and acquisition elements combined with the radio frequency capability
of Herley in providing its telemetry transmitters and flight termination
receivers, Herley offers a full line of narrow or wide band airborne telemetry
systems to meet a wide variety of industrial needs, both domestically and
internationally.
Transponders
Herley manufactures a variety of expendable transponders, including:
. range safety;
. identification friend or foe, or IFF;
. command and control; and
. scoring systems.
Transponders are small, expendable, electronic systems consisting of a
transmitter, sensitive receiver and internal signal processing equipment
comprised of active and passive components. These components include microwave
subassemblies such as amplifiers, oscillators and circulators. The transponder
receives signals from radars, changes and amplifies the frequency of the
signals, and sends back a reply on a different frequency and signal level. This
reply will be a strong, noise free signal upon which the tracking radar can
"lock," and one which is far superior to skin reflection tracking, particularly
under adverse weather conditions after the launch.
In range safety applications, transponders enable accurate tracking of
space launch and unmanned aerial vehicles, missiles, and target drones so that
position and direction are known throughout its flight. In the case of several
defense and commercial space launch vehicles (i.e., Delta, Atlas, Titan and
Pegasus), the Herley transponder is tracked by the ground launch team all the
way to space orbit, and in certain instances through several orbits, as a
reference location point in space to assure that the launch payload has been
properly placed in orbit.
IFF transponders, which are used in conjunction with the FAA Air Traffic
Control System, enable ground controllers to identify the unmanned targets,
drones and cruise missiles on which these units fly and to vector other manned
aircraft safely away from the flight path of the unmanned aerial vehicle.
<PAGE>
Command and control transponders provide the link through the telemetry
system for relaying ground signals to direct the vehicle's flight. The uplink
from the ground control station, a series of coded pulse groups, carries the
signals that command the flight control guidance system of the vehicle. The
downlink to the ground provides both tracking signals for range safety, as well
as acknowledgment and status of the uplink commands and their implementation in
the vehicle. The transponder is therefore the means to fly the vehicle.
Scoring systems are mounted on both airborne and sea targets. Scoring
systems enable test and evaluation engineers to determine the "miss-distance"
between a projectile and the target at which it has been launched.
Flight Termination Receiver
A flight termination receiver, or FTR, is installed as a safety device in:
. a test missile;
. a UAV target; or
. a space launch vehicle.
The FTR has a built-in decoder that enables it to receive a complex series
of audio tones which, when appropriate, will set off an explosive charge that
will destroy the vehicle. A Range Safety Officer, or RSO, using the range safety
transponder will track the vehicle in flight to determine if it is performing as
required. If the RSO detects a malfunction in the test or launch vehicle that
causes it to veer from a planned trajectory in a manner that may endanger
personnel or facilities, the RSO will transmit a coded signal to the onboard FTR
to explode the vehicle harmlessly.
HF Communications and IFF Interrogators
The Company also designs and manufactures high frequency radio and IFF
interrogators. This high frequency communications equipment is used by the U.S.
Navy and foreign navies that conduct joint military exercises with the U.S.
Navy. The IFF interrogators are used as part of shipboard equipment and are also
placed on coastlines, where they are employed as silent sentries. Herley has
been a significant supplier to the Republic of Korea for over twenty years and
has a large, established installed base of equipment. Herley has been, and
continues to be, a supplier to the Republic of Korea KDX destroyer program.
Microwave Devices
Herley manufactures solid state microwave devices at the following
locations:
. Farmingdale, New York;
. Woburn, Massachusetts; and
. Jerusalem, Israel.
These devices are manufactured for use in its transponders and existing
long-term military programs, both as part of new production and for spare parts
and repair services. These microwave devices are used in a variety of radar,
communications and missile applications, including airborne and shipboard
navigation and missile guidance systems.
<PAGE>
Herley designs and manufactures complex microwave integrated circuits, or
MICs. MICs consist of sophisticated assemblies that perform many functions,
primarily involving switching of microwave signals. MICs manufactured by Herley
are employed in many defense electronics military systems as well as missile
programs. Herley also manufactures magnetrons, which are the power source
utilized in the production of Herley's transponders.
Herley's three facilities that manufacture microwave devices each have an
area of specialization that tends to limit the competitive pricing pressures
generally found in the commercial business area. Herley seeks the more limited
production, higher unit cost microwave subsystem applications, where Herley's
engineering experience is of primary advantage to its customers.
In Woburn, Herley specializes in high power microwave devices, generally
narrow band, that are used in radar system transmitters and in long range
missiles. While there are many suppliers of low power microwave components,
there are relatively few companies with the expertise or facilities to design
and test high power devices. High power devices frequently use small amounts of
nuclear material to enhance breakdown of high energy pulses and Herley is one of
very few companies with an active nuclear license that permits the handling of
these trace amounts of nuclear materials.
Herley has more recently become the preeminent supplier of solid state
receiver protector devices, that are able to withstand high energy pulses
without the use of nuclear materials. These high power devices protect a radar
receiver from transient bursts of microwave energy and are employed in almost
every military and commercial radar system. For its engineering efforts in
designing solid state receiver protectors for the F-16, the United States Air
Force awarded the Company cash awards as part of the government's value
engineering program.
In Farmingdale, Herley produces lower power, broad band microwave
integrated assemblies for the electronic defense business area. These costly,
complex assemblies combine microwave functions such as amplification,
attenuation, switching of multiple signals, and phase and amplitude control.
Their applications include Rear Warning Receivers, or RWR's, Electronics
Countermeasure, or ECM, systems, and highly sensitive receiver systems.
In Farmingdale, Herley also produces components that are sold through its
General Microwave catalog, which for almost forty years has been the microwave
engineer's handbook for attenuating devices and IQ modulation and phase
shifters.
Herley sells its catalog products to engineering design facilities on a
worldwide basis, and is considered the industry leader in attenuators and phase
shifters.
Herley's Israel division supplies microwave sources, which generate signals
that are used in microwave oscillators. Herley's Israel operation sells
approximately equally to various foreign governments and to the U.S. defense
industry. Herley specializes in digitally tuned oscillators, or DTO's, a
critical component of many ECM systems.
<PAGE>
With its three facilities and their diverse specialties, Herley is able to
offer its customers a more broadly based solution in the form of complex,
integrated microwave assemblies. In the modular approach now common in the
design of radar and ECM systems, the entire system may comprise only a handful
of Shop Replaceable or Line Replaceable units. Herley's goal is to become a
supplier of this magnitude to its existing customer base, through the
combination of its microwave capabilities.
New Product Development and Applications
Herley believes that its growth depends, in part, on its ability to renew
and expand its technology, products, and design and manufacturing processes with
an emphasis on cost effectiveness. Herley's primary efforts are focused on
engineering design and product development activities rather than pure research.
A substantial portion of Herley's development activities have been funded by
Herley's customers. Certain of Herley's officers and engineers are involved at
various times and in varying degrees in these activities. Herley's policy is to
assign the required engineering and support people, on an ad hoc basis, to new
product development as needs require and budgets permit. The cost of these
development activities, including employees' time and prototype development, net
of amounts paid by customers, were approximately $1,685,000 in fiscal 1999,
$1,562,000 in fiscal 1998 and $1,828,000 in fiscal 1997.
Government Contracts
A substantial part of Herley's sales are made to U.S. government agencies,
prime contractors or subcontractors on military or aerospace programs.
Government contracts are awarded either on a competitive bid basis or on a
negotiated sole source procurement basis. Contracts awarded on a bid basis
involve several competitors bidding on the same program with the contract being
awarded based upon price and ability to perform. Negotiated sole source
procurement is utilized if the Company is deemed by the customer to have
developed proprietary equipment not available from other parties or where there
is a very stringent delivery schedule.
Substantially all of the Company's government contracts are fixed price
contracts, some of which require delivery over time periods in excess of one
year. With this type of contract, Herley agrees to deliver products at a fixed
price except for costs incurred because of change orders issued by the customer.
In accordance with Department of Defense procedures, all contracts
involving government programs may be terminated by the government, in whole or
in part, at the government's discretion. In the event of such a termination,
prime contractors on such contracts are required to terminate their subcontracts
on the program and the government or the prime contractor is obligated to pay
the costs incurred by Herley under the contract to the date of termination plus
a fee based on the work completed.
Business Acquisition
As of January 4, 1999, the Company completed the acquisition of all of the
issued and outstanding common stock of General Microwave Corporation, a New York
corporation, including outstanding stock options, for $18.00 per share and
966,675 three-year warrants to purchase one share of Herley's common stock, at
an aggregate purchase price of approximately $24,556,000. The purchase price
includes shares of common stock of General Microwave purchased in the open
market, acquisition of the remaining shares of common stock outstanding, an
estimate of the fair market value of the warrants based on the trading price of
similar warrants currently on the market, and transaction expenses. The warrants
are exercisable at $15.60 per share of common stock of Herley and expire in
January 2002.
<PAGE>
General Microwave designs, manufactures and markets microwave components and
subsystems, and related electronic test and measurement equipment. General
Microwave is headquartered in Farmingdale, New York, and operates two other
facilities, one in Billerica, Massachusetts, and one in Israel. The transaction
has been accounted for under the purchase method.
Marketing and Distribution
Herley's marketing approach is to determine customer requirements in the
developmental stages of a program. Marketing and engineering personnel work
directly with the customer's engineering group to develop product
specifications. Herley receives its awards based upon an evaluation of a number
of factors, including:
. technical ranking;
. price;
. overall capability; and
. past performance.
Follow-up contracts and options on the same program are normally negotiated with
customers rather than being subject to a competitive bidding process.
USE OF PROCEEDS
Herley will not receive any proceeds from this offering. Herley will
receive $15.60 per share upon exercise of the common stock purchase warrants.
PRICE RANGE OF COMMON STOCK AND WARRANTS
Herley's common stock is traded in the Nasdaq National Market under the
symbol HRLY and the warrants are traded in the Nasdaq National Market under the
symbol HRLYW. The following table sets forth the high and low sales price as
reported by the Nasdaq National Market for the Herley common stock and warrants
for the periods indicated and gives retroactive effect to the four-for-three
stock split of the common stock on September 30, 1997.
Common Stock
------------
<TABLE>
<CAPTION>
High Low
---- ---
Fiscal Year 1998
<S> <C> <C>
First Quarter $15.00 $10.13
Second Quarter 14.75 10.50
Third Quarter 14.69 10.88
Fourth Quarter 14.25 8.63
<PAGE>
Fiscal Year 1999
First Quarter $10.50 $7.63
Second Quarter 15.31 9.56
Third Quarter 15.13 11.13
Fourth Quarter 16.19 11.50
Fiscal Year 2000
First Quarter 15.00 12.94
Second Quarter
(through January 11, 2000) 15.38 11.06
Warrants
--------
High Low
---- ---
Fiscal Year 1998
First Quarter Not Traded Not Traded
Second Quarter $2.00 $1.31
Third Quarter 2.91 1.69
Fourth Quarter 2.31 .81
Fiscal Year 1999
First Quarter $1.06 $.41
Second Quarter 1.94 .50
Third Quarter 1.84 1.00
Fourth Quarter 2.00 .72
Fiscal Year 2000
First Quarter 1.13 .28
Second Quarter
(through January 11, 2000) .38 .03
</TABLE>
The closing price of the common stock on January 11, 2000 was $15 1/16 and
the closing price of the warrants was $1/32. As of January 11, 2000 there were
approximately 1,000 record holders of the common stock and approximately 80
recordholders of the warrants.
DIVIDEND POLICY
Herley has never paid any cash dividends on its Common Stock. There have
been no stock dividends declared or paid by Herley on its common stock during
the past two years except for a four-for-three stock split on September 30,
1997. Payment of future dividends, if any, will be dependent upon the earnings
and financial position of Herley and such factors as the Board of Directors
shall deem appropriate.
PERFORMANCE CHART
The following graph sets forth the cumulative total stockholder return to
Herley's stockholders during the five-year period ended August 1, 1999, as well
as an overall stock market index (NASDAQ Stock Market-US) and Herley's peer
group index (S&P Aerospace/Defense):
<PAGE>
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>
Cumulative Total Return
7/94 7/95 7/96 7/97 7/98 7/99
<S> <C> <C> <C> <C> <C> <C>
Herley Industries, Inc. 100.00 136.51 222.22 352.38 336.52 469.84
Nasdaq Stock Market (U.S.) 100.00 140.40 152.98 225.75 265.75 379.01
S&P Aerospace/Defense 100.00 148.90 193.21 273.78 208.03 217.78
- -----------------
<FN>
* $100.00 invested on July 31, 1994 in stock or index, including reinvestment of
dividends. Fiscal year ending July 31.
</FN>
</TABLE>
DESCRIPTION OF SECURITIES
Capital Stock
Herley's authorized capital stock consists of 20,000,000 shares of Herley
common stock, $.10 par value per share.
Common Stock
General. Herley has 20,000,000 authorized shares of Herley common stock,
4,561,690 of which were issued and outstanding on January 11, 2000. All shares
of Herley common stock currently outstanding are validly issued, fully paid and
non-assessable, and all shares which are the subject of this prospectus, when
issued and paid for upon the exercise of the warrants, will be validly issued,
fully paid and non-assessable.
Voting Rights. Each share of Herley common stock entitles the holder
thereof to one vote, either in person or by proxy, at meetings of the
stockholders. Herley's Board of Directors consists of three classes, each of
which serves for a term of three years. At each annual meeting of the
stockholders the directors in only one class will be elected. The holders are
not permitted to vote their shares cumulatively. Accordingly, the holders of
more than 50% of the outstanding shares of Herley common stock can elect all of
the directors of Herley standing for election at a stockholders' meeting.
Dividend Policy. All shares of Herley common stock are entitled to
participate ratably in dividends when and as declared by Herley's Board of
Directors out of the funds legally available therefor. Any such dividends may be
paid in cash, property or additional shares of Herley common stock. Herley has
not paid any cash dividends in the past two fiscal years or the current fiscal
year and does not anticipate that cash dividends will be declared in the
foreseeable future. While Herley declared a four-for-three stock split effected
as a stock dividend effective September 30, 1997, payment of future dividends is
subject to the discretion of Herley's Board of Directors and will depend upon,
among other things, future earnings, the operating and financial condition of
Herley, its capital requirements, general business conditions and other
pertinent facts. Therefore there can be no assurance that any dividends on the
Herley common stock will be paid in the future. See "Dividend Policy."
<PAGE>
Miscellaneous Rights and Provisions. Holders of Herley common stock have no
preemptive or other subscription rights, conversion rights, redemption or
sinking fund provisions. In the event of the liquidation or dissolution, whether
voluntary or involuntary, of Herley, each share of common stock is entitled to
share ratably in any assets available for distribution to holders of the equity
of Herley after satisfaction of all liabilities.
Shares Eligible for Future Sale. Herley has 4,561,690 shares of Herley
common stock outstanding, of which 3,951,297 are freely tradeable without
restriction or further registration under the Securities Act, except for any
shares purchased by an "affiliate" of Herley generally, an affiliate is a person
who has a control relationship with Herley which will be subject to the
limitations of Rule 144 adopted under the Securities Act. The remaining shares
are deemed to be "restricted securities," as that term is defined under Rule
144.
In connection with the merger of General Microwave with a wholly-owned
subsidiary of Herley, Herley has issued approximately 966,675 warrants ("Merger
Warrants") to purchase shares of Herley common stock. In addition, Herley has
outstanding 1,265,000 warrants ("Warrants") that will be exercisable for
1,265,000 newly issued shares of Herley common stock which are being registered
under this prospectus. Upon exercise of those warrants to purchase, all of these
shares of Herley common stock will also be freely tradeable without restriction
or future registration under the Securities Act.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person who owns restricted
securities for at least one year is entitled to sell, within any three-month
period, a number of such securities that does not exceed the greater of (1) 1%
of the total number of securities outstanding of the same class or (2) the
average weekly trading volume of the securities on all exchanges and/or reported
through the automated quotation system of a registered securities association
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Commission. Sales under Rule 144 are also subject to manner of
sale provisions, notice requirements and the availability of current public
information about the issue. In addition, an affiliate of the issuer is subject
to the volume limitations of Rule 144 when selling both restricted and
unrestricted securities. A person who has not been an affiliate of Herley for at
least the three months immediately preceding the sale and who has beneficially
owned the securities for at least two years, however, is entitled to sell such
securities under Rule 144 without regard to any of the limitations described
above. Of the 580,393 shares of Herley common stock that constitute restricted
securities, 347,171 shares have been held for more than one year.
No predictions can be made as to the effect, if any, that sales of shares
of Herley common stock under Rule 144 or otherwise or the availability of shares
for sale will have on the market, if any, prevailing from time to time. Sales of
a substantial number of shares of the Herley common stock pursuant to Rule 144
or otherwise may adversely affect the market price of the Herley common stock or
the warrants.
Description of Warrants
The following is a brief summary of certain provisions of the Warrants and
of the Merger Warrants issued in connection with the merger of General Microwave
and a wholly-owned subsidiary of Herley. This summary is not complete and is
qualified in all respects by reference to the warrant agreement A copy of the
warrant agreement has been filed as an exhibit to the registration statement.
The Warrants are a different class than the Merger Warrants. The Warrants are
currently listed and traded on the Nasdaq National Market System under the
symbol HRLYW and the Merger Warrants are currently listed and traded on the
<PAGE>
Nasdaq National Market System under the symbol HRLYZ. The terms of the Warrants
and the Merger Warrants are virtually identical except for the following: (i)
the Warrants expire January 16, 2000 and the Merger Warrants expire in January
2002; (ii) the Merger Warrants are redeemable, in whole or in part, at any time
after 21 months from their issuance at a price of $1.00 per share of common
stock by delivery of 30 days' written notice if the average last reported sales
price of the Herley common stock has not been less than $17.60 per share for the
fifteen consecutive trading days immediately prior to the notice date.
Exercise Price and Terms. Each Warrant entitles the registered holder
thereof to purchase one share of Herley common stock at an exercise price of
$15.60 per share subject to adjustment in accordance with the anti-dilution and
other provisions referred to below. Prior to January 16, 1999, the exercise
price was $14.40 per share. The holder of any Warrant may exercise such Warrant
by surrendering the certificate representing the Warrant to American Stock
Transfer & Trust Company, the warrant agent, with the subscription form on the
Warrant properly completed and executed, together with payment of the exercise
price. The Warrants may be exercised at any time in whole or in part at the
exercise price then in effect until expiration of the Warrants. The Warrants
expire January 16, 2000. No fractional shares will be issued upon the exercise
of the Warrants.
The exercise price of the Warrants bears no relationship to any objective
criteria of future value. Accordingly, such exercise price should in no event be
regarded as an indication of any future trading price.
Adjustments. The exercise price and the number of shares of Herley common
stock purchasable upon the exercise of the Warrants are subject to adjustment
upon the occurrence of certain events, including:
. stock dividends;
. stock splits;
. combinations or reclassifications of the Herley common stock; or
. sale by Herley of shares of its Herley common stock or other securities
convertible into Herley common stock, at a price below the market price of
the Herley common stock, as defined in the warrant agreement, except that
no adjustment is required for the issuance of shares upon the exercise or
conversion of outstanding options, warrants and convertible securities.
Additionally, an adjustment would be made in the case of:
. a reclassification or exchange of Herley common stock;
. consolidation or merger of Herley with or into another corporation; or
. sale of all or substantially all of the assets of Herley in order to enable
warrant holders to acquire the kind and number of shares of stock or other
securities or property receivable in such event by a holder of the number
of shares of Herley common stock that might otherwise have been purchased
upon the exercise of the warrant, except that no adjustment is required for
a consolidation or merger in which Herley is the continuing corporation.
Transfer, Exchange and Exercise. The Warrants are in registered form and
may be presented to American Stock Transfer for transfer, exchange or exercise
at any time on or prior to their expiration date, at which time the Warrants
become wholly void and of no value. If a market for the Warrants develops, the
holder may sell the Warrants instead of exercising them. There can be no
assurance, however, that a market for the Warrants will develop or continue.
Warrant Holder Not a Stockholder. The warrants do not confer upon holders
any voting, dividend or other rights as stockholders of Herley.
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock are traded on the Nasdaq Stock Market National
Market System under the symbol HRLY. The shares may be sold from time to time
directly by the selling securityholders. Alternatively, the selling
securityholders may from time to time offer such securities through
underwriters, dealers or agents. The distribution of securities by the selling
securityholders may be effected in one or more transactions that may take place
on the Nasdaq Stock Market National Market System, including ordinary broker's
transactions, privately-negotiated transactions or through sales to one or more
broker-dealers for resale of such shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the selling securityholders in
connection with such sales of securities.
At the time a particular offer of securities is made by or on behalf of the
selling securityholders, to the extent required, a prospectus will be
distributed which will set forth the number of shares being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for shares
purchased from the Selling Securityholders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers, and the proposed selling
price to the public.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon
for Herley by Blau, Kramer, Wactlar & Lieberman, P.C., Jericho, New York 11753.
David H. Lieberman, a member of the firm, is a director of Herley. Mr. Lieberman
owns 600 shares of common stock of Herley and options and warrants to purchase
17,333 shares of common stock.
EXPERTS
The financial statements included in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen, LLP, independent
public accountants, as set forth in their reports. In those reports, that firm
states that with respect to the Israel subsidiary its opinion is based on the
reports of other independent public accountants, Deloitte & Touche LLP. The
financial statements referred to above have been included herein in reliance
upon the authority of those forms as experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
Herley has filed with the Securities and Exchange Commission, Washington,
D.C., a registration statement under the Securities Act of 1933, with respect to
the common stock offered by this prospects. This prospectus does not contain all
the information set forth in the registration statement and its exhibits. For
further information about Herley and the common stock offered by this prospectus
reference is made to the registration statement and its exhibits. Statements in
this prospectus about the contents of any contract or other document are not
necessarily complete and in each instance Herley refers you to the copy of such
contract or other document filed as an exhibit to the registration statement for
a full statement of the provisions of that contract or document.
Herley is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with the Exchange Act, Herley
files reports, proxy statements and other information with the Commission. You
may read and obtain copies of any materials filed by Herley with the Commission
at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington,
<PAGE>
D.C. 20549 and at the Commission's Regional Offices at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7
World Trade Center, New York, New York 10048. You may obtain information on the
operation of the Public Reference Room by calling the Commission at 1-800-SEC-
0330. Copies of such material can also be obtained from the Securities and
Exchange Commission's Web site at the address http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Herley with the Commission
pursuant to the Exchange Act, are incorporated by reference in this prospectus
and shall be deemed to be a part of this prospectus:
(1) Herley's Annual Report on Form 10-K for the fiscal year ended August 1,
1999.
(2) Herley's Quarterly Report on Form 10-Q for the quarter ended October
31, 1999.
(3) The description of the class of securities to be offered which is
contained in a Registration Statement filed under Section 12 of the Securities
and Exchange Act of 1934 (registration statement No. 333- 39767), including any
amendment or report filed for the purpose of updating such description.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus and prior to the termination of
this offering shall be deemed to be incorporated by reference in this prospectus
and to be part of this prospectus from the date they are filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement in
this prospectus or in any subsequently filed document that also is or is deemed
to be incorporated by reference in this prospectus modifies or supersedes that
statement. Any statement which is modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
Herley will provide without charge to each person to whom a copy of this
prospectus is delivered, upon the written or oral request of that person, a copy
of any or all of the documents incorporated by reference; except that Herley
will not provide exhibits to the documents incorporated by reference unless the
exhibits are specifically incorporated by reference. Requests for copies should
be directed to the Secretary, Herley Industries, Inc., 10 Industry Drive,
Lancaster, PA 17603, (717) 397-2777.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
Filing Fee. . . . . . . . . . . . . . . . . . $ 900
Legal and Accounting Fees . . . . . . . . . . 5,000
Miscellaneous . . . . . . . . . . . . . . . . 4,100
-------
Total . . . . . . . . . . . . . . . . . . . . $10,000
=======
</TABLE>
Herley will pay all of these expenses.
Item 15. Indemnification of Directors and Officers
Under provisions of the By-Laws of Herley, each person who is or was a
director or officer of Herley may be indemnified by Herley to the full extent
permitted or authorized by the General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the merits
of defense of a suit or proceeding brought against him by reason of the fact
that he is a director or officer of Herley, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action.
If unsuccessful in defense of a third-party civil suit or if a criminal
suit is settled, such a person may be indemnified under such law against both
(1) expenses (including attorneys' fees) and (2) judgements, fines and amounts
paid in settlement if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of Herley, and with
respect to any criminal action, had no reasonable cause to believe his conduct
was unlawful.
If unsuccessful in defense of a suit brought by or in the right of Herley,
or if such suit is settled, such a person may be indemnified under such law only
against expenses (including attorneys' fees) incurred in the defense or
settlement of such suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of Herley except that
if such a person is adjudged to be liable in such suit for negligence or
misconduct in the performance of his duty to Herley, he cannot be made whole
even for expenses unless the court determines that he is fairly and reasonably
entitled to indemnity for such expenses.
Herley and its officers and directors of Herley are covered by officers and
directors liability insurance. The policy coverage is $3,000,000, which includes
reimbursement for costs and fees. There is a maximum deductible under the policy
of $200,000 for each claim. Herley has entered into Indemnification Agreements
with certain of its officers and directors. The Agreements provide for
reimbursement for all direct and indirect costs of any type or nature whatsoever
(including attorneys' fees and related disbursements) actually and reasonably
incurred in connection with either the investigation, defense or appeal of a
Proceeding, as defined, including amounts paid in settlement by or on behalf of
an Indemnitee.
<PAGE>
Item 16. Exhibits
4.1 Form of Warrant (incorporated by reference to Exhibit 4.1 to
registration statement No. 333- 39767)
4.2 Warrant Agreement (incorporated by reference to Exhibit 4.2 to
registration statement No. 333-39767)
5 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included in
Exhibit 5 hereof)
24 Powers of Attorney (included in the signature pages hereof)
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Act"), each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 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.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such 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.
(c) The undersigned Registrant hereby undertakes:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed
by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act
shall be deemed to be part of the registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus 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.
<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 Lancaster, Pennsylvania on the 13th day of January, 2000.
Herley Industries, Inc.
By: /s/ Lee N. Blatt
-----------------------------------
Lee N. Blatt
Chairman of the Board
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on January 13, 2000, by the
following persons in the capacities indicated. Each person whose signature
appears below also constitutes and appoints Lee N. Blatt and Myron Levy, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and all other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Signature Title
--------- -----
/s/ Lee N. Blatt Chairman of the Board
Lee N. Blatt (Chief Executive Officer)
/s/ Myron Levy President and Director
Myron Levy
/s/ Anello C. Garefino Vice President - Finance, Treasurer (Chief
Anello C. Garefino Financial Officer and Principal Accounting
Officer)
/s/ Thomas J. Allshouse Director
Thomas J. Allshouse
/s/ David H. Lieberman Secretary and Director
David H. Lieberman
/s/ John Thonet Director
John Thonet
/s/ Alvin M. Silver Director
Alvin M. Silver
/s/ Edward K. Walker, Jr. Director
Edward K. Walker, Jr.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
EXHIBITS
to
Form S-3
Registration Statement
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Herley Industries, Inc.
(Exact name of registrant as specified in its charter)
EXHIBIT 5
January 14, 2000
Securities and Exchange Commission
450 Fifth Avenue, N.W.
Washington, D.C. 20549
Re: Herley Industries, Inc.
Registration Statement on Form S-3
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Gentlemen:
Reference is made to the filing by Herley Industries, Inc. (the "Company")
of a Registration Statement on Form S-3 (the "Registration Statement"), as
amended, with the Securities and Exchange Commission pursuant to the provisions
of the Securities Act of 1933, as amended, covering the registration of
1,265,000 shares of Herley's common stock, par value $.001 per share (the
"Common Stock") issuable upon the exercise of 1,265,000 common stock purchase
warrants (the "Warrants").
As counsel for Herley, we have examined its corporate records, including
its Certificate of Incorporation, By-Laws, its corporate minutes, the form of
its Common Stock certificate and Warrant certificate and such other documents as
we have deemed necessary or relevant under the circumstances.
Based upon our examination, we are of the opinion that:
1. Herley is duly organized and validly existing under the laws of the
State of Delaware.
2. The shares of Common Stock reserved for issuance upon the exercise of
the Warrants when issued in accordance with the terms and conditions of such
Warrants, will be validly issued, fully paid and non-assessable.
We hereby consent to be named in the Registration Statement and in the
prospectus which constitutes a part thereof as counsel to Herley, and we hereby
consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
/s/ Blau, Kramer, Wactlar & Lieberman, P.C.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated September 17, 1999,
included in Herley Industries, Inc.'s Form 10-K for the fiscal year ended August
1, 1999, and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Lancaster, Pennsylvania
January 14, 2000
