As filed with the Securities and Exchange Commission on August 13, 1997
Registration No. 333-____________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HIRSCH INTERNATIONAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 11-2230715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Wireless Boulevard
Hauppauge, New York 11788
(516) 436-7100
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
Henry Arnberg
President
Hirsch International Corp.
200 Wireless Boulevard
Hauppauge, New York 11788
(516) 436-7100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Irvin Brum, Esq.
Ruskin, Moscou, Evans & Faltischek, P.C.
170 Old Country Road
Mineola, New York 11501
(516) 663-6500
(516) 663-6641 (Facsimile)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, check the following box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Number of Shares Proposed Maximum Proposed Maximum
Class of Securities to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Shares (1) Price (1) Registration Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
$.01 par value 106,507 $23.75 $2,529,541.25 $766.57
==========================================================================================================
</TABLE>
(1) Estimated, pursuant to Rule 457(c), solely for purposes of calculating
the registration fee and based on the average of the high and low sales prices
of the Class A Common Stock of the Nasdaq National Market on August 11, 1997.
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
HIRSCH INTERNATIONAL CORP.
CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN PART I OF FORM S-3
<TABLE>
<CAPTION>
Item Location in Prospectus
<S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Pages of Prospectus.............................. Outside front cover page
2. Inside Front and Outside Back Cover Pages of
Prospectus................................................... Inside front and outside back cover pages
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges.................................... Prospectus Summary, Risk Factors
4. Use of Proceeds.............................................. Use of Proceeds
5. Determination of Offering Price.............................. Outside front cover page
6. Dilution..................................................... Not Applicable
7. Selling Security Holder...................................... Selling Stockholder
8. Plan of Distribution......................................... Plan of Distribution
9. Description of Securities to be Registered................. Not Applicable
10. Interests of Named Experts and Counsel....................... Experts; Legal Matters
11. Material Changes............................................. Not Applicable
12. Incorporation of Certain Information by Reference............ Documents Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities............. Not Applicable
</TABLE>
<PAGE>
PRELIMINARY PROSPECTUS DATED AUGUST 13, 1997, SUBJECT TO COMPLETION
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.
PROSPECTUS
HIRSCH INTERNATIONAL CORP.
106,507 Shares of Common Stock
This Prospectus relates to the offering for resale by the selling
stockholder ("Selling Stockholder") of 106,507 shares of Class A Common Stock
(the "Shares") of Hirsch International Corp., a Delaware corporation (the
"Company").
The Shares were acquired by the Selling Stockholder pursuant to a certain
Stock Purchase Agreement, dated December 20, 1996, by and between Jimmy L. Yates
("Yates") and the Company. The Company is registering the Shares, at its
expense, pursuant to a contractual obligation contained in a Registration Rights
Agreement dated December 20, 1996 between Yates and the Company.
The Shares may be sold from time to time, pursuant to this Prospectus by
the Selling Stockholder, on the NASDAQ National Market or otherwise than on the
NASDAQ National Market, at market prices then prevailing at the time of sale or
at negotiated prices, or by combination of the foregoing. The Company will not
receive any proceeds from the sale of the Shares sold by the Selling
Stockholder.
The Class A Common Stock is traded on the Nasdaq Stock Market's National
Market under the symbol "HRSH."
--------------------
The Class A Common Stock offered hereby involves a high degree of risk. See
"Risk Factors" beginning on Page 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is August __, 1997
<PAGE>
No dealer, sales representative or other person has been authorized to give
any information or to make any representation in connection with this offering
other than those contained in this Prospectus, and if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the shares of Common Stock offered hereby by
anyone in any jurisdiction in which such an offer or solicitation is not
authorized, or in which the persons making such an offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such an
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that the
information contained herein is correct as of any date subsequent to its date.
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the Securities
and Exchange Commission are hereby incorporated by reference in this
Registration Statement:
(1) The Company's Annual Report on Form 10-K for the year ended January 31,
1997;
(2) The Company's Quarterly Reports on Forms 10-Q and 10-Q/A for the
quarter ended April 30, 1997;
(3) The Company's Current Report on Form 8-K filed with the Commission on
May 30, 1997;
(4) The Company's Proxy Statement dated May 20, 1997;
(5) The description of the Company's Class A and Class B Common Stock
contained in the Company's Registration Statement on Form S-3 (Registration
Statement No. 333-26539), as filed with the Commission on June 6, 1997.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which removes from
registration all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
The Company undertakes to provide without charge to each person to whom a
Prospectus is delivered, upon oral or written request of such person, a copy of
any document that has been incorporated in this Prospectus by reference.
Requests for such documents should be directed to the Company at its offices
located at 200 Wireless Boulevard, Hauppauge, New York 11788 (Telephone Number
(516) 436-7100), Attention: Secretary.
<PAGE>
PROSPECTUS SUMMARY
THE COMPANY
Hirsch International Corp. ("Hirsch" or the "Company") is a leading single
source provider to the embroidery industry of electronic computer-controlled
embroidery machinery and related value-added products and services. The Company
offers a complete line of technologically advanced single-head and multi-head
embroidery machines, proprietary application software, a diverse line of
embroidery supplies, accessories and proprietary embroidery products, and a
range of equipment financing options. In addition, Hirsch provides a
comprehensive customer service program, user training and software support. The
Company believes its broad product offerings, together with its complementary
value-added products and services, place it in a strong competitive position
within its marketplace.
The Company's executive offices are located at 200 Wireless Boulevard,
Hauppauge, New York 11788, and its telephone number is (516) 436-7100.
THE OFFERING
Class A Common Stock Offered 106,507 shares of Class A Common
By The Selling Stockholder . . . . . Stock by the Selling Stockholder.
Common Stock Outstanding After
This Offering . . . . . . . . . . . . . .9,453,486 Shares (1)
Use of Proceeds . . . . . . . . . . . . .All of the proceeds from the sale
of the Shares offered hereby will be
received by the Selling Stockholder.
The Company will not receive any of
the proceeds of this Offering.
Class A NASDAQ National Market Symbol. . HRSH
(1) Includes 6,785,347 shares of Class A Common Stock and 2,668,139 shares
of Class B Common Stock. Except with respect to voting rights, shares of Class A
Common Stock and Class B Common Stock are substantially identical. See "Risk
Factors - Control by Principal Stockholders; Anti-Takeover Provisions."
<PAGE>
RISK FACTORS
Prospective purchasers of the Class A Common Stock offered hereby should
carefully consider the following risk factors in addition to the other
information contained in this Prospectus or incorporated herein by reference.
This Prospectus contains forward-looking statements which involve risks and
uncertainties. When used herein, the words "anticipate," "believe," "estimate,"
and "expect" and similar expressions as they relate to the Company or its
management are intended to identify such forward-looking statements. The
Company's actual results, performance or achievements could differ materially
from the results expected in, or implied by these forward-looking statements.
Factors that could cause or contribute to such differences include those
discussed in the following risk factors.
Dependence on Tajima
For the fiscal year ending January 31, 1997, approximately 80% of the
Company's revenues resulted from the sale or lease of embroidery equipment
supplied by Tajima and substantially all of the Company's sales were to users of
Tajima embroidery equipment. Three separate distributorship agreements
(collectively, the "Tajima Agreements") govern the Company's rights to
distribute Tajima embroidery equipment in the United States. Two of the
distributorship agreements with Tajima collectively provide the Company with the
exclusive rights to distribute Tajima's complete line of standard embroidery,
chenille embroidery and certain specialty embroidery machines in 39 states. The
main agreement (the "East Coast/Midwest Agreement"), which now covers 33 states,
first became effective on February 21, 1991, has a term of 20 years and contains
a renewal provision which permits successive five year renewals upon mutual
agreement of the parties. The East Coast/Midwest Agreement is terminable by
Tajima and/or the Company on not less than two years' prior notice. The second
agreement (the "Southwest Agreement") which covers six states, became effective
on February 21, 1997, and has a term of five years. Under the third
distributorship agreement, (the "West Coast Agreement") which covers nine
western states and Hawaii, the Company is the exclusive distributor of Tajima's
small machines, as well as chenille and tandem chenille/standard embroidery
machines with less than four heads or two stations, respectively. The West Coast
Agreement, which covers nine states and Hawaii, has a term of five years, became
effective on February 21, 1997, and contains a renewal provision which permits
successive five year renewals upon mutual agreement of the parties. Each of the
Tajima Agreements may be terminated if the Company fails to achieve certain
minimum purchase quotas. Furthermore, the East Coast/Midwest Agreement may be
terminated if Henry Arnberg and Paul Levine (or in certain circumstances, their
spouses and children) fail to own a sufficient number of shares of voting stock
to elect a majority of the Company's Board of Directors or in the event of the
death, physical or mental disability of a duration of six months or longer, or
incapacity of both Henry Arnberg and Paul Levine. The Southwest Agreement may be
terminated if the Company fails to remain the sole shareholder of its subsidiary
that is the party to the Southwest Agreement. The West Coast Agreement may be
terminated should any material change occur in the current Class B shareholders,
directors or officers of the Company or should there occur any change in control
of the Company. The termination of the Tajima Agreements would have a material
adverse effect on the Company's business, financial condition and results of
operations.
<PAGE>
Importing Tajima's equipment from Japan subjects the Company to risks of
engaging in business overseas, including international political and economic
conditions, tariffs, foreign regulation of trade with the United States, and
work stoppages. The interruption of supply or a significant increase in the cost
of Tajima equipment for any reason could have a material adverse effect on the
Company's business, financial condition and results of operation. In addition,
Tajima manufactures its embroidery machines in one location in Japan. The
Company could be adversely affected should this facility be seriously damaged as
a result of a natural disaster or otherwise. Further, the Company could be
adversely affected by adverse business or financial developments at Tajima.
Embroidery machines produced by Tajima are subject to technological
advances and new product introductions. Current competitors or new market
entrants could introduce products with features that render products sold by the
Company and products developed by Tajima less marketable. The Company relies on
Tajima's embroidery equipment to be high quality and state of the art. The
Company's future success will depend, to a great extent, on Tajima's ability to
adapt to technological change and address market needs. There can be no
assurance that Tajima will be able to keep pace with technological change in the
embroidery industry or the current demands of the marketplace.
Foreign Currency Risks
The Company pays for its Tajima embroidery machinery in Japanese Yen. Any
devaluation of the U.S. Dollar compared to the Japanese Yen increases the cost
to the Company of its embroidery machine inventory. The Company has generally
been able to recover these increased costs through price increases to its
customers or, in limited circumstances, price reductions from Tajima. However,
there can be no assurance that the Company will be able to recover such
increased costs in the future.
Assembly Facility
The Company has recently begun to assemble Tajima embroidery machines in
the United States through its subsidiary, Tajima USA, Inc. ("Tajima USA")
initially in configurations of up to six heads per machine. Tajima has agreed to
provide the Company with technical assistance and support, since the Company has
no prior experience in the assembly of embroidery machines. Commencing assembly
operations could require longer implementation times or greater start up and
other expenditures than anticipated. Additional problems could be encountered
and greater than projected expenses could be incurred in conducting assembly
operations. Furthermore, there can be no assurance that the Company will be able
to establish profitable assembly operations.
<PAGE>
Expansion
Since June 1996, the Company has acquired two companies (the "Recent
Acquisitions"). These acquisitions increased the area in which the Company is
the exclusive distributor of the complete line of Tajima embroidery equipment
from 26 states to 39 states. In addition, in January 1997 Tajima granted the
Company the exclusive rights to distribute small Tajima embroidery machines in
nine western states and Hawaii. There can be no assurance that the Company will
be able to successfully integrate the operations of the Recent Acquisitions with
the Company's operations without substantial costs, delays or problems or that
the Company will be able to profitably sell equipment or the Company's
value-added products in the new territories.
The past growth and planned expansion of the Company's business have
resulted in new and increased responsibilities for management and have placed
increased demands upon the Company's operating, financial and technical
resources. The Company's ability to successfully manage its expansion will
require continued enhancement of its management and operational, financial and
technical resources. The Company will also need to attract and retain qualified
personnel to support the expansion of its operations. The Company's failure to
successfully manage its expansion or attract and retain qualified personnel
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Embroidery Industry
The Company's growth has resulted in part from the increase in demand for
embroidered products and the growth of the embroidery industry. A decrease in
consumer preferences for embroidered products, a general economic downturn or
other events having an adverse effect on the embroidery industry would also have
an adverse effect on the Company.
<PAGE>
Leasing Operations
The Company's leasing subsidiary, HAPL Leasing, provides a range of
equipment financing options to customers wishing to finance equipment purchases.
HAPL Leasing retains selected leases for which it has not obtained a purchase
commitment from its funding sources. Although HAPL Leasing has funded
approximately 89% of its leases on a non-recourse basis, there can be no
assurance that it will continue to be able to sell its leases to third party
funding sources. Unfunded leases create the risk of nonpayment by lessees,
including the risk that foreclosure could be hampered by bankruptcy or other
legal proceedings, and the risk that foreclosed equipment cannot be re-leased or
sold due to market conditions or the physical condition of the equipment. The
operations of HAPL Leasing are interest rate sensitive. If interest rates rise,
there can be no assurances that profit margins can be maintained, and,
consequently, the operations of HAPL Leasing could be adversely affected.
HAPL Leasing's strategy is to enter into leases that qualify as sales-type
leases for which revenue is recognized immediately in an amount equal to the
present value of minimum lease payments. However, high interest rates, weakness
of the U.S. dollar, poor general economic conditions, market conditions, or
other factors could result in HAPL Leasing having to enter into operating leases
resulting in deferral of revenue recognition. Unlike sales-type leases, revenue
relating to operating leases is recognized over the term of the lease, resulting
in deferral of the recognition of revenue.
Inventory
The Company maintains inventory of approximately one month's sales of new
Tajima embroidery machines and its ordering cycle is approximately four to five
months prior to delivery to the Company. Since the Company generally delivers
new Tajima embroidery machines to its customers within one week of receiving
orders, it orders inventory based on experience and forecasted demand. Any
failure to manage its inventory effectively could have an adverse effect on the
Company's business, financial condition and results of operations.
Competition
The Company competes with distributors of embroidery machines produced by
manufacturers other than Tajima and with manufacturers who distribute their
embroidery machines directly. The Company believes that competition in the
embroidery equipment industry is based on technological capability, quality of
embroidery machines, price and service. The Company has been able to compete
effectively in part because of the relatively advanced technological
capabilities and excellent quality of Tajima embroidery machines. However, if
other manufacturers develop more technologically advanced embroidery machines or
the quality of Tajima embroidery machines declines, the Company would not be
able to compete as effectively which could have a material adverse effect on its
business, financial condition and results of operations.
The Company also faces competition in its sales of software, embroidery
supplies, accessories and proprietary products as well as in providing leasing
and customer training, support and services. The Company's failure to compete
effectively in these areas could have an adverse effect on its business,
financial condition and results of operations.
<PAGE>
Software
The software industry is characterized by the rapid development of new
programs with increased capabilities. Other producers of software for embroidery
machines could produce new software programs that would make the software
developed by the Company's Pulse subsidiary less marketable or obsolete. The
failure by Pulse to continue to develop and upgrade its software products could
have a material adverse effect on its business, financial condition and results
of operations.
Pulse's software products, like software programs generally, may contain
undetected errors when introduced or when new versions are released. To date,
Pulse has not experienced significant adverse financial or operational problems
due to post release software errors, although there can be no assurance that
this will not occur in the future, particularly as these software programs
continue to become more complex and sophisticated. Defective software could
result in loss of or delay in market acceptance of the Company's software
products, warranty liability or product recalls.
The Company has been granted patent and copyright protection for Pulse's
software products. The Company does not believe that the ownership of such
patents or copyrights is a significant factor in Pulse's business or that its
success is materially dependent upon the ownership, validity or enforceability
of such patents or copyrights. Existing intellectual property laws afford
limited protection of patents and copyrights, and unauthorized parties may
obtain and use information that the Company regards as proprietary. Although the
Company intends to enforce its intellectual property rights in Pulse's products,
there can be no assurance that it will be successful in doing so.
Dependence on Existing Management
The Company's continued success will depend to a significant extent upon
the abilities and continued efforts of Henry Arnberg, Chief Executive Officer,
President and Chairman of the Board of Directors of the Company; Paul Levine,
Executive Vice President, Chief Operating Officer, Secretary and a Director of
the Company; and Kenneth Shifrin, Vice President-Finance and Chief Financial
Officer of the Company. Pulse's continued success will depend to a significant
extent upon the abilities and continued efforts of Tas Tsonis, Vice President
and a Director of the Company and President of Pulse; and Brian Goldberg, Vice
President of the Company and Executive Vice President of Pulse. Tajima USA's
success will depend to a significant extent upon the ability and effort of Ron
Krasnitz, Vice President, Vice President--Manufacturing of Tajima USA and a
Director of the Company. Although the Company has entered into five year
employment agreements with Messrs. Arnberg, Levine, Shifrin, Tsonis, and
Krasnitz, the loss of their services or the services of other key management
personnel could have a material adverse effect upon the Company's business,
financial condition and results of operations.
<PAGE>
Control By Principal Stockholders; Anti-Takeover Provisions
Henry Arnberg and Paul Levine beneficially own 2,593,139 shares of the
2,668,139 currently outstanding shares of the Company's Class B Common Stock.
The Company's Certificate of Incorporation provides that as long as the number
of outstanding shares of Class B Common Stock equals or exceeds 400,000, the
holders thereof will be able to elect two-thirds of the Directors of the
Company. Accordingly, Messrs. Arnberg and Levine will be able to dispose of a
significant amount of their Class B Common Stock while retaining the ability to
elect two-thirds of the Company's Board of Directors. Because of such ownership
and their positions with the Company, Messrs. Arnberg and Levine will be able to
continue to control management policy and make decisions relating to the conduct
of the business of the Company, except as otherwise provided in the Delaware
General Corporation Law.
The stock ownership of Messrs. Arnberg and Levine would also make it
difficult for a third party to acquire and would discourage a third party from
attempting to acquire control of the Company. The Company's certificate of
incorporation, as well as Delaware law, contain certain provisions that could
have a similar effect. Certain of these provisions allow the Company's Board of
Directors to issue, without stockholder approval, preferred stock having rights
senior to those of the Common Stock. Further, as a Delaware corporation, the
Company is subject to Section 203 of the Delaware General Corporation Law, which
contains provisions that may have the effect of discouraging unsolicited
takeover bids from third parties.
Possible Volatility of Stock Price
The market price of the Class A Common Stock is subject to significant
fluctuation caused by variations in stock market conditions, changes in
financial estimates by securities analysts or failures by the Company to meet
such estimates, quarterly operating results, announcements by the Company or its
competitors, general conditions in the embroidery industry and other factors.
The stock market has experienced extreme price and volume fluctuations that
often are unrelated or disproportionate to the operating performance of publicly
traded companies. These broad fluctuations may have a material adverse effect on
the market price of the Class A Common Stock.
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby, all of which will be received by the Selling Stockholder.
The expenses of this Offering are estimated to be approximately $20,766, which
will be paid by the Company.
SELLING STOCKHOLDER
The following table sets forth certain information with respect to the
shares of the Company's Class Common Stock beneficially owned and being offered
hereby by the Selling Stockholder:
Shares Beneficially
Name Owned Prior to Offering Shares Being Offered
Jimmy L. Yates 106,507 (1) 106,507
(1) Does not include options to purchase 60,300 shares of Class A Common
Stock at an exercise price of $18.75. Includes 11,364 shares of the Company's
Class A Common Stock held in escrow pursuant to an Escrow Agreement, dated
December 20, 1996 among the Company, Yates and Ruskin, Moscou, Evans &
Faltischek, P.C., as escrow agent (the "Escrow Agent"). These shares will be
released to Yates after December 20, 1998. Ruskin Moscou Evans & Faltischek,
P.C. disclaims beneficial ownership with respect to these shares. Yates has
agreed not to sell or dispose of any Shares prior to September 5, 1997 pursuant
to a lock-up agreement entered into in connection with the Company's public
offering on June 6, 1997.
The Selling Stockholder acquired the Shares being offered hereby pursuant
to a certain Stock Purchase Agreement dated December 20, 1996, under which Yates
was issued 131,507 shares of Class A Common Stock. The Stock Purchase Agreement
provided that the Company would register the Shares pursuant to a certain
Registration Rights Agreement.
Pursuant to the terms of the Registration Rights Agreement, the Company
agreed to register the 131,507 shares of the Company's Class A Common Stock. On
June 6, 1997, 25,000 of those shares were registered and sold pursuant to a
Registration Statement filed with the Securities and Exchange Commission
(Registration No. 333-26539). Of the 106,507 shares offered hereby, 11,364
shares are being held, on Yates' behalf, by the Escrow Agent and will not be
released to Yates prior to December 20, 1998. The Company has agreed to pay all
of the registration expenses connected with this Registration Statement, except
that pursuant to the terms of the Registration Rights Agreement, Yates will pay
all fees associated with selling expenses. In addition, the Company has agreed
to indemnify Yates against certain liabilities in respect of this offering,
including liabilities under the Securities Act.
PLAN OF DISTRIBUTION
The Selling Stockholder may sell the Shares from time to time through
dealers or brokers in transactions on the Nasdaq National Market at prices then
prevailing, or directly to one or more purchasers in negotiated transactions at
negotiated prices, or in a combination thereof. The Selling Stockholder and any
dealers or brokers that participate in such distribution may be deemed
"underwriters" within the meaning of the Securities Act and any commissions or
discounts received by any such dealer or broker may be deemed "underwriting
compensation." The Selling Stockholder has been advised that he is subject to
the applicable provisions of the Exchange Act.
<PAGE>
LEGAL MATTERS
The validity and issuance of the Shares offered hereby will be passed upon
for the Company and the Selling Stockholder by Ruskin, Moscou, Evans &
Faltischek, P.C., Mineola, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended January 31, 1997
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, NW, Washington, D.C. 20549. The Company's Common
Stock is quoted on the Nasdaq Stock Market and reports, proxy statements and
other information concerning the Company may also be inspected and copied at the
offices of the Nasdaq Stock Market, Inc., 1735 K Street, NW, Washington, D.C.
20006. The Commission also maintains a web site that contains reports, proxy
information and statements and other information that may be obtained
electronically by using the Commission's Web Site on the internet at
http://www.sec.gov.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution
The following table sets forth the various expenses payable in connection
with the sale and distribution of the securities being registered, all of which
will be paid by the Company.
Total
SEC registration fee..............................................$ 766.57
Legal fees and expenses.............................................15,000.00
Accounting fees and expenses.........................................5,000.00
Total.....................................................$20,766.57
============
Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers
provided that this provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the Company's
By-Laws, any agreement, vote of shareholders or otherwise.
The Company's Amended and Restated Certificate of Incorporation eliminates
the personal liability of Directors and officers to the fullest extent permitted
by Section 102(b)(7) of the Delaware General Corporation Law.
The effect of the foregoing is to require the Company to indemnify its
directors and officers for any claim arising against such persons in their
official capacities if such person acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful.
The Company carries insurance providing indemnification, under certain
circumstances, to all of its directors and officers for claims against them by
reason of, among other things, any act or failure to act in their capacities as
directors or officers. No sums have been paid to any past or present director or
officer of the Company under this or any prior indemnification insurance policy.
<PAGE>
The Company has also entered into Indemnity Agreements with all of its
directors and executive officers. The Indemnity Agreements provide for
indemnification of the Company's directors and executive officers to the fullest
extent permitted by the provisions of the General Corporation Law of the State
of Delaware. The Indemnity Agreements also provide that the Company will pay any
costs which an indemnitee actually and reasonably incurs because of any claims
made against him by reason of the fact that he is or was a director or officer
of the Company, except that the Company is not obligated to make any payment
which the Company is prohibited by law from paying as indemnity, or where (a) a
final determination is rendered on a claim based upon the indemnitee's obtaining
a personal profit or advantage to which he was not legally entitled; (b) a final
determination is rendered on a claim for an accounting of profits made in
connection with a violation of Section 16(b) of the Securities Exchange Act of
1934, or similar state or common law provisions; (c) a claim where the
indemnitee was adjudged to be deliberately dishonest; or (d) a final
determination is rendered that indemnification is not lawful.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed 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.
Exhibits and Financial Statement Schedules
(a) Exhibits
*4.1 Specimen of Class A Common Stock Certificate
*4.2 Specimen of Class B Common Stock Certificate
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
**10.1 Registration Rights Agreement dated December 20, 1996 between the
Company and Yates.
***10.2 Stock Purchase Agreement dated December 20, 1996 between the
Company and Yates.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Ruskin, Moscou, Evans & Faltischek, P.C. (included in
Exhibit 5.1)
___________________
* Incorporated by reference from Registrant's Registration Statement on
Form S-1, Registration No. 33-72618.
** Incorporated by reference from Registrant's Form 10-K filed for the
fiscal year ended January 31, 1997.
*** Incorporated by reference from Registrant's Form 8-K filed with the
Commission on January 3, 1997.
<PAGE>
Undertakings
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (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.
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 issues.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and continued 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 this 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 therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
II-3
SIGNATURES
Pursuant to the requirements of the Act, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in Hauppauge, New York, on August 13, 1997.
HIRSCH INTERNATIONAL CORP.
By:_________________________________
Henry Arnberg, President
Dated: August 13, 1997
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby authorizes each of
Henry Arnberg and Paul Levine with full power of substitution to execute in the
name of such person and to file any amendment or post effective amendment to
this Registration Statement (or any Registration Statement filed pursuant to
Rule 462) making such changes in this Registration Statement as the Registrant
deems appropriate and appoints each of Henry Arnberg and Paul Levine with full
power of substitution, attorney-in-fact to sign and to file any amendment and
post-effective amendment to this Registration Statement.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Henry Arnberg
- ---------------------- Chief Executive Officer, August 13, 1997
Henry Arnberg President and Chairman of the Board
Principal Executive Officer)
/s/Paul Levine
- ---------------------- Chief Operating Officer, Executive August 13, 1997
Paul Levine Vice President and Secretary (Principal
Operating Officer)
/s/Kenneth Shifrin
- ---------------------- Chief Financial Officer and Vice August 13, 1997
Kenneth Shifrin President-Finance (Principal Financial
Officer)
/s/Tas Tsonis
- ---------------------- Vice President, President of Pulse August 13, 1997
Tas Tsonis Microsystems Ltd. and Director
/s/Ronald Krasnitz
- ---------------------- Vice President, Vice President - August 13, 1997
Ronald Krasnitz Manufacturing of Tajima USA, Inc. and
Director
/s/Marvin Broitman
- ---------------------- Director August 13, 1997
Marvin Broitman
/s/Herbert M. Gardner
- ----------------------- Director August 13, 1997
Herbert M. Gardner
/s/Douglas Schenendorf
- ----------------------- Director August 13, 1997
Douglas Schenendorf
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Deloitte & Touche LLP
Exhibit 5.1
Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
August 13, 1997
Hirsch International Corp.
200 Wireless Boulevard
Hauppauge, New York 11788
Re: Hirsch International Corp.
Gentlemen:
We have acted as counsel to Hirsch International Corp., a Delaware
corporation (the "Company"), in connection with its filing of this Registration
Statement (the "Registration Statement") on Form S-3 with respect to 106,507
shares of the Company's Class A Common Stock, $.01 par value of the Company,
which are to be sold by the Selling Stockholder. Unless otherwise defined
herein, all capitalized terms used herein and not expressly defined shall have
the meaning given to them in the Registration Statement.
As counsel to the Company, we have examined the Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws and other
corporate records of the Company and have made such other investigations as we
have deemed necessary in connection with the opinion hereinafter set forth.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us.
Based solely upon and subject to the foregoing, we are of the opinion that
the Company's Class A Common Shares are duly and validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
aforesaid Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the Prospectus constituting a part of said
Registration Statement.
Very truly yours,
RUSKIN, MOSCOU, EVANS
& FALTISCHEK, P.C.
Exhibit 23.1
Consent of Deloitte & Touche
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Hirsch International Corp. on Form S-3 of our report dated March 11, 1997,
appearing in the Annual Report on Form 10-K of Hirsch International Corp. for
the year ended January 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Jericho, New York
August 11, 1997
