-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OJ44Q4XLTkoijs15+TVZM+lbxnxAiI4sUWWiO9SNcVbPeZNI7zYg3rCC3CVJCc1v TWkguRSHYmcjnOuUt1lR/A== 0000002601-96-000014.txt : 19961104 0000002601-96-000014.hdr.sgml : 19961104 ACCESSION NUMBER: 0000002601-96-000014 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19961101 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROFLEX INC CENTRAL INDEX KEY: 0000002601 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 111974412 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-15339 FILM NUMBER: 96651789 BUSINESS ADDRESS: STREET 1: 35 S SERVICE RD CITY: PLAINVIEW STATE: NY ZIP: 11803 BUSINESS PHONE: 516-752-23 MAIL ADDRESS: STREET 1: 35 S SERVICE ROAD CITY: PLAINVIEW STATE: NY ZIP: 11803 FORMER COMPANY: FORMER CONFORMED NAME: ARX INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AEROFLEX LABORATORIES INC DATE OF NAME CHANGE: 19851119 S-3 1 As filed with the Securities and Exchange Commission November 1, 1996 Registration No. 333- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-3 REGISTRATION STATEMENT under THE SECURITIES ACT OF 1933 AEROFLEX INCORPORATED (Exact name of registrant as specified in its charter) Delaware 11-1974412 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 35 South Service Road Michael Gorin, President Plainview, New York 11803 Aeroflex Incorporated (516)694-6700 35 South Service Road (Address, including zip code and telephone Plainview, New York 11803 number, including area code, of registrant's (516) 694-6700 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 [ ]
CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------------------- Title of Each Class Proposed Maximum Proposed Maximum Amount of of Securities to be Amount to be Offering Price Aggregate Registration Registered Registered Per Share (1) Offering Price (1) Fee - -------------------------------------------------------------------------------------------- Common Stock, par 214,495 shs. $4.125 $884,792 $305 value $.10 per share reserved for issuance upon the exercise of Common Stock Purchase Warrants - -------------------------------------------------------------------------------------------- (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 October 25, 1996. (2) Pursuant to Rule 416, this Registration Statement also covers any additional shares of Common Stock which may become issuable by virtue of the anti-dilution provisions of such Warrants. - -------------------------------------------------------------------------------------------
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. AEROFLEX INCORPORATED Cross Reference Sheet Showing location in Prospectus of Information Required by Items on Form S-3 Item No. Prospectus Caption 1. Forepart of the Registration Outside Front Cover Statement and Outside Front Cover Page Page of Prospectus of Prospectus 2. Inside Front and Outside Back Cover Inside Front and Outside Pages of Prospectus Back Cover Pages of Prospectus 3. Summary Information, Risk Factors and Selected Financial Ratio of Earnings to Fixed Charges Data 4. Use of Proceeds Use of Proceeds 5. Determination of Offering Price Outside Front Cover Page; Selling Securityholders 6. Dilution * 7. Selling Security Holders Selling Securityholders 8. Plan of Distribution Outside Front Cover Page; Plan of Distribution 9. Description of Securities to be * Registered 10. Interests of Named Experts and Counsel Legal Opinion; Experts 11. Material Changes * 12. Incorporation of Certain Information Incorporation of by Reference Certain Documents By Reference 13. Disclosure of Commission Position on * Indemnification for Securities Act Liabilities *Omitted since answer to item is negative or inapplicable INFORMATION CONTAINED HEREIN IS SUBJECTED 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. SUBJECT TO COMPLETION Dated November 1, 1996 AEROFLEX INCORPORATED 214,495 Shares of Common Stock $.10 par value The 214,495 shares of Common Stock underlying Common Stock Purchase Warrants (the "Shares"), par value $.10 per share, of Aeroflex Incorporated (the "Company") being covered by this Prospectus are being offered for sale from time to time by or for the account of Value Investing Partners, Inc., certain transferees thereof, and any pledgees, transferees, donees or other successors in interest thereof (the "Selling Securityholders"). The Shares may be offered by the Selling Securityholders from time to time in transactions on the New York Stock Exchange, in privately negotiated transactions, or by a combination of such methods of sale, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Securityholders may effect such transactions by selling the Shares to or through broker-dealers and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Securityholders or the purchaser of the Shares for whom such broker-dealers may act as agent or to whom they sell as principal or both (which compensation to a particular broker-dealer might be in excess of customary commissions). See "Selling Securityholders" and "Plan of Distribution." None of the proceeds from the sale of the Shares by the Selling Securityholders will be received by the Company, except to the extent that the Common Stock Purchase Warrants are exercised. If all the Common Stock Purchase Warrants are exercised at current exercise prices, the net proceeds to the Company from this offering would be $984,137. The Company will bear the expenses in connection with the offering, including filing fees and the Company's legal and accounting fees, estimated at $7,500. The Company's Common Stock is traded on the New York Stock Exchange (NYSE Symbol: ARX). On October 25, 1996, the last reported sale price of the Company's Common Stock as reported by the New York Stock Exchange was $4.125 per share. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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 November __, 1996. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission"), Washington, D.C., a Registration Statement under the Securities Act of 1933, as amended (the "Act"), with respect to the Common Stock offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement and the exhibits relating thereto. For further information with respect to the Company and the shares of Common stock offered by this Prospectus, reference is made to such Registration Statement and the exhibits thereto. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement for a full statement of the provisions thereof; each such statement contained herein is qualified in its entirety by such reference. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained at the office of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, 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. Copies of such material can be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549, at prescribed rates, and from the Securities and Exchange Commission's Web site at the address http://www.sec.gov. In addition, the Company's Common Stock is listed on the New York Stock Exchange, and copies of the foregoing materials and other information concerning the Company can be inspected at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed by the Company with the Commission (File No. 1-8037) pursuant to the Exchange Act, are incorporated by reference in this Prospectus and shall be deemed to be a part hereof: (1) The Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996. (2) 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, 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 of Common Stock Purchase Warrants shall be deemed to be incorporated by reference in this Prospectus and to be part hereof from the date of filing of such documents. 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 contained herein or in any subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference (except for exhibits thereto unless specifically incorporated by reference therein). Requests for such copies should be directed to the Secretary, Aeroflex Incorporated, 35 South Service Road, Plainview, New York 11803, (516) 694-6700. THE COMPANY Aeroflex Incorporated, through its subsidiaries (collectively, unless the context requires otherwise, referred to as the "Company" or "Aeroflex") designs and manufactures advanced electronic systems and components, including microelectronic circuits and interconnect products, instrument products and motion control systems, for both the commercial and defense markets. It also designs and manufactures shock and vibration stabilizing systems used for commercial, industrial and defense applications. Aeroflex also provides defense consulting services involving systems analysis, design and engineering primarily to government contractors and the U.S. Armed Forces. Operations are grouped into two segments: electronics and isolator products. As of June 30, 1996, the Company has accounted for certain segments, namely commercial and custom envelopes (Huxley Envelope Corp.) and telecommunication systems services (T-CAS Corp.) as discontinued operations. The following description of the Company's business does not include these discontinued operations. Since 1961, the Company has been engaged in the design, development and production of stabilization tracking devices and systems. These are dynamically positioned pedestals on or in moving vehicles such as trucks, ships and aircraft, upon which tracking equipment, such as radar antenna, is mounted. The pedestal, through the continuous balancing action of gyroscopes and servo-mechanical stabilizers operating in all three dimensions, enables the mounted equipment to remain almost perfectly balanced and motionless. The equipment can then automatically track or focus on a target as accurately as if it were on solid ground despite the motion of the vehicle. The Company's stabilization and tracking devices are a part of major surveillance, reconnaissance and weapon firing control systems and play an important role in high altitude aircraft as well as in other aircraft, ships and ground vehicles which require precise, highly stable mounting for cameras, antennae and lasers. Since 1961, the Company has been engaged in the design, development, manufacture and sale of severe service shock and vibration isolation systems. These devices consist of helically-wound steel wire rope contained between rugged metal retainer bars, and are used to store and dissipate potentially destructive vibration and shock. The purchasers of helical isolators are manufacturers or users of equipment sensitive to shock and vibration who need to reduce shock/vibration to levels compatible with equipment fragility to extend the useful life of this equipment. Isolators are also used to prevent vibrations in equipment from causing disturbances to surrounding equipment, structures and configurations. They are manufactured in a variety of materials and with special anti-corrosion coatings according to each customer's specifications. In addition, a line of isolated systems evolved in response to the custom requirements of customers. Systems capability includes integrated avionics trays and bases, skids and pallets. Since 1974, the Company has been engaged in the design, manufacture and sale of state-of-the-art microelectronic assemblies for the electronics industry. In January 1994, the Company acquired substantially all of the net operating assets of the microelectronics division of Marconi Circuit Technology Corporation, which manufactures a wide variety of microelectronic assemblies. This acquisition increased the range of products offered and enhanced the Company's engineering capability. Since 1975, the Company has been engaged in the development and manufacture of electro-optical scanning devices used in infra-red night vision systems. These systems detect temperature differences in the infra-red radiation emanating from objects in target areas. In October 1983, the Company acquired Vibration Mountings and Controls, Inc., which manufactures a line of off-the-shelf noise, shock, vibration and structureborne noise control devices. These rubber and spring isolators, which are manufactured in a wide variety of sizes, load ratings and configurations, are used primarily in commercial applications to protect heavy rotating equipment, heating, ventilating and air conditioning equipment, and diesel engines. In December 1986, the Company acquired the operating assets of Korfund Dynamics Corporation , a manufacturer of an industrial line of heavy duty spring and rubber shock mounts. In November 1989, the Company acquired Comstron Corporation which is now an operating division of Aeroflex Laboratories Incorporated, a wholly-owned subsidiary of Aeroflex. Comstron is a leader in radio frequency and microwave technology used in the manufacture of fast switching frequency synthesizers and components. Building on technology acquired from Comstron, Aeroflex develops and manufactures complex communications and guidance systems and subsystems including HF, VHF and UHF receivers, communications jammer emulators, weather radar receivers, up/down converters, frequency agile radar local oscillators and low phase noise frequency sources. It has developed a phase shifter for the U.S. Air Force's mid-life upgrade F-16 Identification Friend or Foe (IFF) system and a tunable solid state local oscillator for the U.S. Navy MK-92 fire control radar. In January 1995, the Company acquired Lintek Inc. as a wholly owned subsidiary of Aeroflex. Aeroflex Lintek Corp. is a leader in high speed instrumentation radar systems and antenna measurement systems. These systems are used by the Department of Defense and by industry. Lintek Inc. was incorporated in 1988 for the purpose of developing and selling instrumentation radar systems, and currently has systems in place with many of the large aerospace companies and with major government laboratories. In March 1996, the Company acquired MIC Technology Corporation which designs, develops, manufactures and markets microelectronics products in the form of passive thin film circuits and interconnects. Its advanced circuit and interconnect technology is emerging as a key enabling technology for miniaturized, high frequency, high performance electronic products for rapidly growing markets like cellular telephones, personal communication service devices (PCS) and microwave data links. It continues to be an essential technology in satellite based communication hardware and leading edge military electronic products. The Company's executive offices are located at 35 South Service Road, Plainview, New York 11803, and its telephone number is (516) 694-6700. SELECTED FINANCIAL DATA The following selected financial data is qualified by reference to, and should be read in conjunction with, the consolidated financial statements, related notes thereto and other financial information incorporated by reference herein. The selected financial data for the five years ended June 30, 1996 have been derived from the Company's audited consolidated financial statements.
(In thousands except ratios and per share data) Year ended June 30, -------------------------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Earnings Statement Data (4) (5) Net Sales $ 74,367 $ 71,113 $65,602 $52,031 $48,109 Income from Continuing Operations (17,420)(1)(2) 6,587(4)(5) 5,850(6) 1,736 227 Income from Discontinued Operations -- 462 187 500 635 Extraordinary Item-Tax Benefit of Loss Carryovers (8) -- -- -- -- 143 Net Income (Loss) (17,420) 7,049 6,037(6) 2,236 1,005 Income (Loss) from Continuing Operations Per Common Share and Common Share Equivalent Primary $ (1.46)(1)(2) $ .53(4)(5) $ .55(6) $.20 $.03 Fully Diluted (3) .52(4)(5) .50(6) .19 .03 Net Income (Loss) Per Common Share and Common Share Equivalent Primary (1.46) .57 .57 .26 .12 Fully Diluted (3) .55 .51 .24 .12 Weighted Average Number of Common Shares and Common Share Equivalents Outstanding Primary 11,971 12,352 10,526 8,757 8,661 Fully Diluted (3) 14,249 12,401 10,920 8,661 June 30, -------------------------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Balance Sheet Data Working Capital $24,736 $31,533 $ 28,572 $14,982 $15,751 Total Assets 81,169 71,936 71,016 60,185 62,473 Long-Term Debt (including current portion) 34,577 13,787 18,408 21,871 28,098 Stockholders' Equity 30,472 46,344 39,571 27,208 25,025 Other Statistics (8) After Tax Profit Margin (Loss) (from continuing operations) (23.4)%(1)(2) 9.3%(4)(5) 8.9%(6) 3.3% 0.5% Return on Average Stockholders' Equity (from continuing operations) (45.4)%(1)(2) 15.3%(4)(5) 17.5%(6) 6.6% 0.9% Stockholders' Equity Per Share (9) $ 2.49 $3.95 $3.37 $3.14 $2.87 - ------------ (1) Includes $23,200,000 ($1.94 per share) for the year ended June 30, 1996, for the write-off of in process research and development acquired in connection with the purchase of MIC Technology Corporation in March 1996. (2) Includes a $437,000 net of tax, or $.04 per share gain on the sale of securities for the year ended June 30, 1996. (3) As a result of the loss, all options, warrants and convertible debentures are anti-dilutive. (4) Includes $2,000,000 ($.14 per share fully diluted and $.16 primary) of insurance proceeds received on the death of the former chairman. (5) Includes a $1,494,000 net of tax restructuring charge ($.10 per share fully diluted and $.12 primary) for the consolidation of the Company's Puerto Rican operations into its domestic facilities. (6) Includes income tax benefit of $1,716,000, or $.14 per share ($.16 per share primary), relating to the recognition of a portion of the Company's unrealized net operating loss carryforward in accordance with Statement of Financial Accounting Standards No. 109. (7) See Note 4 to the Consolidated Financial Statements for a discussion of discontinued operations. (8) In fiscal 1996, 1995, 1994, and 1993 the tax benefit from prior years' loss carryforwards was presented as a part of the provision for income taxes; in 1992 it was presented as an extraordinary item. (9) Calculated by dividing stockholders' equity, at the end of the year, by the number of shares outstanding at the end of the year.
USE OF PROCEEDS The Company will not receive any proceeds from this offering, except to the extent that the Common Stock Purchase Warrants are exercised. If all the Common Stock Purchase Warrants are exercised at current exercise prices, the net proceeds to the Company from this offering would be $984,137. If such proceeds are received, the Company intends to use such proceeds for general working capital. PRICE RANGE OF COMMON STOCK The Company's Common Stock is traded on the New York Stock Exchange under the symbol ARX. The following table sets forth the high and low sales prices of the Common Stock as reported by the National Quotation Bureau Incorporated for the calendar periods indicated. See "Dividend Policy". As of October 30, 1996, there were approximately 1,240 record holders of the Company's Common Stock.
Common Stock High Low ---- ---- 1994 First Quarter. . . . . . . . . . . . . . $ 5.00 $ 3.75 Second Quarter . . . . . . . . . . . . . 4.75 3.63 Third Quarter. . . . . . . . . . . . . . 4.13 3.63 Fourth Quarter . . . . . . . . . . . . . 4.00 3.50 1995 First Quarter. . . . . . . . . . . . . . $ 4.38 $ 3.50 Second Quarter . . . . . . . . . . . . . 4.88 3.63 Third Quarter . . . . . . . . . . . . . 5.63 4.25 Fourth Quarter . . . . . . . . . . . . . 5.00 3.88 1996 First Quarter. . . . . . . . . . . . . . $ 5.13 $ 3.50 Second Quarter . . . . . . . . . . . . . 6.63 4.38 Third Quarter. . . . . . . . . . . . . . 6.13 4.63
DIVIDEND POLICY The Company has never paid any cash dividends on its Common Stock. There have been no stock dividends declared or paid by the Company on its Common Stock during the past three years. Payment of future dividends, if any, will be dependent upon the earnings and financial position of the Company and such factors as the Board of Directors shall deem appropriate. In addition, the Company's Revolving Credit and Term Loan Agreement, as amended, prohibits, and its 7-1/2% Senior Subordinated Convertible Debenture Indenture Agreement limits, it from paying cash dividends. SELLING SECURITY HOLDERS The Shares being offered by this Prospectus are for the account of the following Selling Securityholders in the amounts set forth below:
Number of Securityholder Shares Offered -------------- -------------- Value Investing Partners, Inc. 65,975 Alan Dorsey 84,295 Kevin Cotter 7,650 Angus Carlill 18,450 Chris Lobo 12,625 Kevin Greene 21,450 Kevin Flynn 3,000 Rich Wilson 1,050
The Selling Securityholders currently own an aggregate of 214,495 Common Stock Purchase Warrants (the "Warrants") issued by the Company in October 1992 and June 1994. One hundred fourteen thousand four hundred ninety-five of these Warrants are exercisable for shares of Common Stock of the Company at a current exercise price of $2.70 per share and one hundred thousand of these Warrants are exercisable for shares of Common Stock of the Company at a current exercise price of $6.75 per share. PLAN OF DISTRIBUTION The Shares are traded on the New York Stock Exchange under the symbol ARX. 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 over-the-counter market, 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 OPINION Certain legal matters in connection with this offering will be passed upon for the Company by Blau, Kramer, Wactlar & Lieberman, P.C., Jericho, New York 11753. Harvey R. Blau, a member of the firm, is Chairman and Chief Executive Officer of the Company. Mr. Blau owns 31,311 shares of Common Stock of the Company and options to purchase 1,015,000 shares of Common Stock of the Company granted pursuant to certain of the Company's stock option plans. Mr. Blau's wife owns 62,246 shares of Common Stock of the Company. The Blau, Kramer, Wactlar & Lieberman, P.C. Profit Sharing Plan owns 3,614 shares of Common Stock of the Company. EXPERTS The consolidated financial statements and the related financial statement schedule as of and for the years ended June 30, 1996 and 1995 incorporated by reference in this Prospectus, to the extent and for the periods indicated in their report, have been audited by KPMG Peat Marwick LLP, independent auditors, and are included herein in reliance of said firm as experts in accounting and auditing in giving said report. The consolidated statement of operations, stockholders' equity and cash flows and the related financial statement schedule for the year ended June 30, 1994 incorporated in this prospectus by reference from the Company's Annual Report on Form 10-K for the year ended June 30, 1996 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. No dealer, salesperson, or other person has been authorized by the Company to give any information or to make any representations other than those contained in this Prospectus and, if given or made, such other information or representations must not be relied upon as having been so authorized by the Company. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities other than the securities to which it relates, or an offer to or solicitation of any person in any jurisdiction in which such offer or solicitation would be unlawful. Neither delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to the date hereof. TABLE OF CONTENTS Page ---- Available Information 2 Incorporation of Certain Documents by Reference 2 The Company 3 Selected Financial Data 5 Use of Proceeds 6 Price Range of Common Stock 6 Dividend Policy 7 Selling Security Holders 7 Plan of Distribution 7 Legal Opinion 8 Experts 8 AEROFLEX INCORPORATED 214,495 Common Shares PROSPECTUS November __, 1996 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution Securities and Exchange Commission Filing Fee. . . . . . . . . . . . . . . . . $ 305 Legal and Accounting Fees . . . . . . . . . . 6,000 Miscellaneous . . . . . . . . . . . . . . . . 1,195 ------ Total . . . . . . . . . . . . . . . . . . . $7,500 ======
The Company will pay all of these expenses. Item 15. Indemnification of Directors and Officers Under provisions of the By-Laws of the Company, each person who is or was a director or officer of the Company may be indemnified by the Company 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 the Company, 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 the Company, 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 the Company, 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 the Company 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 the Company, he cannot be made whole even for expenses unless the court determines that he is fairly and reasonably entitled to indemnity for such expenses. The Company and its officers and directors of the Company are covered by officers and directors liability insurance. The policy coverage is $20,000,000, which includes reimbursement for costs and fees. There is a maximum deductible under the policy of $500,000 for each claim. The Company 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. Item 16. Exhibits 4.1 Form of Warrant Certificate dated as of July 12, 1994 between the Company and each of the Selling Securityholders. 4.2 Form of Warrant Certificate dated as of October 27, 1992 between the Company and each of the Selling Securityholders. 5.1 Opinion of Blau, Kramer, Wactlar & Lieberman, P.C. 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of Deloitte & Touche, LLP 24.2 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included in Exhibit 5 hereof) 25 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. 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 Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Plainview, New York on the 30th day of October, 1996. Aeroflex Incorporated By: /s/ Harvey R. Blau Harvey R. Blau 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 October 30 , 1996 by the following persons in the capacities indicated. Each person whose signature appears below also constitutes and appoints Harvey R. Blau and Michael Gorin, 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/ Harvey R. Blau Chairman of the Board Harvey R. Blau (Chief Executive Officer) /s/ Michael Gorin President and Director Michael Gorin (Chief Financial Officer) _____________________________ Executive Vice President, Leonard Borow Secretary and Director (Chief Operating Officer) /s/ Robert Bradley, Sr. Director Robert Bradley, Sr. /s/ Milton Brenner Director Milton Brenner /s/ Ernest E. Courchene, Jr. Director Ernest E. Courchene, Jr. /s/ Jerome Fox Director Jerome Fox /s/ Donald S. Jones Director Donald S. Jones /s/ Eugene Novikoff Director Eugene Novikoff /s/ John S. Patton Director John S. Patton EX-4.1 2 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. VOID AFTER 5:00 P.M., NEW YORK TIME, ON JUNE 23, 2004 OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS DAY. WARRANT TO PURCHASE _______ Shares of Common Stock No. WARRANT TO PURCHASE COMMON STOCK OF ARX, INC. TRANSFER RESTRICTED -- SEE SECTION 6.02 This certifies that, for good and valuable consideration, Value Investing Partners, Inc., a Delaware corporation, having an address at 1853 Post Road East, Westport, Connecticut 06880, and its registered, permitted assigns (collectively, the "Warrantholder"), is entitled to purchase from ARX, Inc. a Delaware corporation (the "Company"), subject to the terms and conditions hereof, at any time before 5:00 P.M., New York time, on June 23, 2004, (or, if such day is not a Business Day, as defined herein, at or before 5:00 P.M., New York time on the next following Business Day), the number of fully paid and non-assessable shares of Common Stock, $.10 par value per share, of the Company (the "Common Stock") stated above at the Exercise Price (as defined herein). The Exercise Price and the number of shares purchasable hereunder are subject to adjustment as provided in Article III hereof. ARTICLE I Section 1.01: Definition of Terms. As used in this Warrant, the following capitalized terms shall have the following respective meanings: (a) Business Day: A day other than a Saturday, Sunday or other day on which banks in the State of New York are authorized by law to remain closed. (b) Common Stock: Common Stock, $.10 par value per share, of the Company. (c) Common Stock Equivalents: Securities that are convertible into or exercisable for shares of Common Stock. (d) Demand Registration: See Section 7.02. (e) Exchange Act: Securities Exchange Act of 1934, as amended. (f) Exercise Price: $6.75 per share. (g) Expiration Date: 5:00 P.M., New York time, on June 23, 2004. (h) Holder: A Holder of Registrable Securities. (i) NASD: National Association of Securities Dealers, Inc. (j) Person: An individual, partnership, joint corporation, trust, unincorporated organization or government or any department of agency thereof. (k) Piggyback Registration: See Section 7.01. (l) Prospectus: Any prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. (m) Public Offering: A public offering of any of the Company's equity or debt securities pursuant to a registration statement under the Securities Act. (n) Registration Expenses: Any and all expenses incident to the performance of or compliance with Article VII, including, without limitation, (i) all SEC, stock exchange and NASD registration and filing fees; (ii) all fees and expenses of complying with securities or blue sky laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities); (iii) all printing, mailing, messenger and delivery expenses; (iv) the fees and disbursements of counsel for the Company and of its independent certified public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance; and (v) any disbursements of underwriters customarily paid by issuers or sellers of securities including liability insurance if the Company so desires, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting fees, discounts and commissions and transfer taxes if any. (o) Registrable Securities: Any Warrant Shares and/or other securities that may be or are issued by the Company upon exercise of this Warrant (and other Warrants as defined below), including those which may thereafter be issued by the Company in respect of any such securities by means of any stock splits, stock dividends, recapitalization or the like, and as adjusted pursuant to Article III hereof; provided, however, that as to any particular security contained in Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement; or (ii) they shall have been sold pursuant to Rule 144 (or any successor provision) under the Securities Act; or (iii) they shall have been sold, assigned or otherwise transferred to any Person other than those Persons specified in Section 6.02(i) below ("6.02(i) Persons") and other than to any spouses, lineal descendants or adopted children of a 6.02(i) Person to whom such securities are transferred upon the death of any 6.02(i) Person by operation of law or by bequest. (p) Registration Statement: Any registration statement of the Company filed or to be filed with the SEC which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference by such registration statement. (q) SEC: The Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act. (r) Securities Act: Securities Act of 1933, as amended. (s) Warrants: This Warrant and all other warrants that have been or may be issued to Value Investing Partners, Inc., or its assignees or transferees, as additional compensation under a Placement Agency Agreement, dated June 6, 1994, in its or their place. (t) Warrantholder: The person(s) or entity(ies) to whom this Warrant is originally issued, or any successor in interest thereto, or any assignee or transferee thereof, in whose name this Warrant is registered upon the books to be maintained by the Company for that purpose. (u) Warrant Shares: Common Stock purchasable upon exercise of the Warrants. ARTICLE II Duration and Exercise of Warrant Section 2.01: Duration of Warrant. Subject to the terms contained herein, this Warrant may be exercised at any time before 5:00 P.M., New York time, on the Expiration Date (or, if such day is not a Business Day, at or before 5:00 P.M., New York time, on the next following Business Day). If this Warrant is not exercised at or before 5:00 P.M., New York time, on the Expiration Date, it shall become void, and all rights hereunder shall thereupon cease. Section 2.02: Exercise of Warrant. (a) (i) The Warrantholder may exercise this Warrant, in whole or in part, upon surrender of this Warrant with the Subscription Form hereon duly executed, to the Company at its corporate office at 35 South Service Road, Plainview, New York 11803, or to such other office as the Company has given due notice thereof to the Warrantholder, together with the full Exercise Price for each Warrant Share to be purchased by wire transfer, certified check or bank draft payable in United States Dollars to the order of the Company, or by delivering to the Company the number of shares of the Company's Common Stock having a value on the date of exercise equal to such Exercise Price. (ii) Notwithstanding this Section 2.02 or any other provision of this Warrant to the contrary, the Warrantholder may, upon any full or partial exercise of the Warrants, at its election, pay the Exercise Price applicable to such exercise by receiving from the Company upon such exercise the number of shares of Common Stock equal to the number of shares otherwise issuable upon such exercise, less the number of shares of Common Stock having a value on the date of exercise equal to such Exercise Price, to the extent permitted under Delaware law. (iii) For purposes of this Section 2.02(a), the value of shares of Common Stock on any date shall be equal to the average of the bid and asked prices of the Company's Common Stock on the New York Stock Exchange (or the closing prices on any national securities exchange or market system on which the Company's Common Stock is then primarily traded) for the thirty (30) trading days immediately preceding the date of exercise. (b) Upon receipt of this Warrant with the Subscription Form duly executed and accompanied by payment of the aggregate Exercise Price for the Warrant Shares for which this Warrant is then being exercised, the Company shall cause to be issued certificates for the total number of whole shares of Common Stock for which this Warrant is being exercised (adjusted to reflect the effect of the anti-dilution provisions contained in Article III hereof, if any, and as provided in Section 4.04 hereof) in such denominations in multiples as are requested by the Warrantholder, and the Company shall promptly deliver such certificates to the Warrantholder. If at the time this Warrant is exercised, a registration statement is not in effect to register under the Securities Act the Warrant Shares issuable upon exercise of this Warrant, the Company may require the Warrantholder to make such investment intent representations, and may place such legends on certificates representation the Warrant Shares, as may be reasonably required in the opinion of counsel to the Company to permit the Warrant Shares to be issued without such registration. (c) In case the Warrantholder shall exercise this Warrant with respect to less than all of the Warrant Shares that may be purchased under this Warrant, the Company will execute a warrant in the form and on the terms of this Warrant for the balance of such Warrant Shares and deliver such new warrant to the Warrantholder. (d) The Company covenants and agrees that it will pay when due and payable any and all stock transfer and similar taxes which may be payable in respect of the issue of this Warrant or in respect of the issue of any Warrant Shares. The Company shall not, however, be required to pay any tax imposed on income or gross receipts or any tax which may be payable in respect of any transfer involved in the issuance or delivery of this Warrant or at the time of surrender and, until the payment of such tax, shall not be required to issue such Warrant Shares. ARTICLE III Adjustment of Shares of Common Stock Purchasable and of Exercise Price The Exercise Price and the number and kind of Warrant Shares shall be subject to adjustment from time to time upon the happening of certain events as provided in this Article III. Section 3.01: Mechanical Adjustments. (a) If at any time prior to the full exercise of this Warrant, the Company shall (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock (other than cash dividends or distributions out of surplus or earnings); (ii) subdivide, reclassify or recapitalize its outstanding Common Stock into a greater number of shares; or (iii) combine, reclassify or recapitalize its outstanding Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date of such subdivision, combination, reclassification or recapitalization shall be proportionately adjusted so that the Warrantholder shall be entitled to receive the aggregate number and kind of shares which, if this Warrant had been exercised in full immediately prior to such time, he would have owned upon such exercise and been entitled to receive upon such dividend, subdivision, combination, reclassification or recapitalization. Such adjustment shall be made successively whenever any event listed in this paragraph 3.01(a) shall occur. (b) If the Company shall hereafter issue rights, options or warrants to all holders of its outstanding Common Stock, without charge to such holders, entitling them to subscribe for or purchase shares of Common Stock (or Common Stock Equivalents) at a price (or having a conversion price per share) less than the lower of the exercise price or the current market price of the Common Stock (as determined pursuant to paragraph (e) of this Section 3.01) on the record date described below, the Exercise Price shall be adjusted so that the Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the date of such sale or issuance (which date in the event of distribution to shareholders shall be deemed to be the record date set by the Company to determine shareholders entitled to participate in such distribution) by a fraction, the numerator of which shall be (i) the number of shares of Common Stock outstanding on the date of such sale or issuance, plus (ii) the number of additional shares of Common Stock which the aggregate consideration received by the Company upon such issuance or sale (plus the aggregate of any additional amount to be received by the Company upon the exercise of such rights or warrants) would purchase at such current market price per share of the Common Stock; and the denominator of which shall be (i) the number of shares of Common Stock outstanding on the date of such issuance or sale, plus (ii) the number of additional shares of Common Stock offered for subscription or purchase (or into which the Common Stock Equivalents so offered are convertible). Such adjustments shall be made successively whenever such warrants or rights are issued. To the extent that shares of Common Stock are not delivered (or Common Stock Equivalents are not delivered) after the expiration of such rights or warrants, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments been made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or Common Stock Equivalents) actually delivered. (c) In case the Company shall hereafter fix a record date for making a distribution to the holders of Common Stock of assets or evidences of its indebtedness (excluding cash dividends or distributions out of earnings and dividends or distributions referred to in paragraph (a) of this Section 3.01) or Common Stock subscription rights, options or warrants for Common Stock or Common Stock Equivalents (excluding those referred to in paragraph (b) of this Section 3.01), then in each such case the Exercise Price in effect after such record date shall be adjusted to the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in paragraph (e) of this Section 3.01), less the fair market value (as determined by the Company's Board of Directors) of said assets or evidences of indebtedness so distributed or of such Common Stock subscription rights, option and warrants or of such Common Stock Equivalents applicable to one share of Common Stock, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever the record date for such distribution is fixed and shall become effective immediately after such record date. (d) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to paragraphs (a), (b) or (c) of this Section 3.01, the Warrant Shares shall simultaneously be adjusted by multiplying the number of Warrant Shares initially issuable upon exercise of each Warrant by the Exercise Price in effect on the date thereof and dividing the product so obtained by the Exercise Price, as adjusted. (e) For the purpose of any computation under this Section 3.01, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily closing price for 30 consecutive Business Days commencing 45 Business Days before such date. The closing price for each day shall be the last sale price regular way or, in case no such reported sales take place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or if not listed or admitted to trading on such exchange, the representative closing bid price as reported by NASDAQ (or any stock quotation system on which the Company's Common Stock is then primarily traded), or if not so available, the fair market price as determined by the Board of Directors. (f) No adjustments in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents ($.05) in such price; provided, however, that any adjustments which by reason of this paragraph (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 3.01 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Notwithstanding anything in this Section 3.01 to the contrary, the Exercise Price shall not be reduced to less than the then existing par value of the Common Stock as a result of any adjustment made hereunder. (g) In the event that at any time, as a result of any adjustment made pursuant to paragraph (a) of this Section 3.01, the Warrantholder thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in paragraphs (a) to (f), inclusive, of this Section 3.01. Section 3.02: Notice of Adjustment. Whenever the number of Warrant Shares or the Exercise Price is adjusted as herein provided, the Company shall prepare and deliver to the Warrantholder a certificate signed by its President, any Vice President, Treasurer or Secretary, setting forth the adjusted number of shares purchasable upon the exercise of this Warrant and the Exercise Price of such shares after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which adjustment was made. Section 3.03: No Adjustment for Dividends. Except as provided in Section 3.01 of this Agreement, no adjustment in respect of any cash dividends shall be made during the term of this Warrant or upon the exercise of this Warrant. Section 3.04: Form of Warrant After Adjustments. The form of this Warrant need not be changed because of any adjustments in the Exercise Price or the number or kind of the Warrant Shares, and Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant, as initially issued. Section 3.05: Preservation of Purchase Rights in Certain Transactions. (a) In case of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, upon any such consolidation, merger, sale or conveyance and the surviving entity is a publicly traded company, the Company agrees that a condition of such transaction will be that the Company or such successor or purchasing corporation, as the case may be, shall assume the obligations of the Company hereunder in writing. In the case of any such consolidation, merger or sale or conveyance, the Warrantholder shall have the right until the expiration date upon payment of the Exercise Price in effect immediately prior to such action, to receive the kind and amount of shares and other securities and/or property which it would have owned or have been entitled to receive after the happening of such consolidation, merger, sale or conveyance had this Warrant been exercised immediately prior to such action, subject to adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article III. The provisions of this Section 3.05 shall similarly apply to successive consolidations, mergers, sales or conveyances. (b) In case of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, upon any such consolidation, merger, sale or conveyance and the surviving entity is a non-publicly traded company, the Company agrees that a condition of such transaction will be that the Company shall mail to the Warrantholder at the earliest applicable time (and, in any event not less than 20 days before any record date for determining the persons entitled to receive the consideration payable in such transaction) written notice of such record date. Such notice shall also set forth facts as shall indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Exercise Price of and the kind and amount of the shares of stock and other securities and property deliverable upon exercise of this Warrant. ARTICLE IV Other Provisions Relating to Rights of Warrantholders Section 4.01: No Rights as Shareholders: Notice to Warrantholders. Nothing contained in this Warrant shall be construed as conferring upon the Warrantholder or its transferees the right to vote or to receive dividends or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Company or of any other matter or any rights whatsoever as shareholders of the Company, except to the extent specifically provided for herein. Section 4.02: Lost, Stolen Mutilated or Destroyed Warrants. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as, and in substitution for, this Warrant. Section 4.03: Reservation of Shares. (a) The Company covenants and agrees that at all times it shall reserve and keep available for the exercise of this Warrant such number of authorized shares of Common Stock as are sufficient to permit the exercise in full of this Warrant. (b) Prior to the issuance of any shares of Common Stock upon exercise of this Warrant, the Company shall use its best efforts to secure the listing of such shares of Common Stock upon the securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed. (c) The Company covenants that all shares of Common Stock issued on exercise of this Warrant will be validly issued, fully paid, non-assessable and free of preemptive rights. Section 4.04: No Fractional Shares. Anything contained herein to the contrary notwithstanding, the Company shall not be required to issue any fraction of a share in connection with the exercise of this Warrant, and in any case where the Warrantholder would, except for the provisions of this Section 4.04, be entitled under the terms of this Warrant to receive a fraction of a share upon exercise of this Warrant and receipt of the Exercise Price, issue the larger number of whole shares purchasable upon exercise of this Warrant. The Company shall not be required to make any cash or other adjustment in respect of such fraction of a share to which the Warrantholder would otherwise be entitled. ARTICLE V Treatment of Warrantholder Prior to due presentment for registration or transfer of this Warrant, the Company may deem and treat the Warrantholder as the absolute owner of this Warrant (notwithstanding any notation of ownership or other writing hereon) for the purpose of any exercise hereof and for all other purposes of the Company shall not be affected by any notice to the contrary. ARTICLE VI Split-Up, Combination Exchange and Transfer of Warrants Section 6.01: Split-Up, Combination, Exchange and Transfer of Warrants. Subject to and limited by the provisions of Section 6.02 hereof, this Warrant may be split up, combined or exchanged for another Warrant or Warrants containing the same terms to purchase a like aggregate number of Warrant Shares. If the Warrantholder desires to split up, combine or exchange this Warrant, it shall make such request in writing delivered to the Company and shall surrender to the Company this Warrant and any other Warrants to be so split up, combined or exchanged. Upon any such surrender for a split-up, combination or exchange, the Company shall execute and deliver to the person entitled thereto a Warrant or Warrants, as the case may be, as so requested. The Company shall not be required to effect any split-up, combination or exchange which will result in the issuance of a Warrant entitling the Warrantholder to purchase upon exercise a fraction of a share of Common Stock or a fractional Warrant. The Company may require such Warrantholder to pay a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any split-up, combination or exchange of Warrants. Section 6.02: Restrictions on Transfer. This Warrant may not be sold, hypothecated exercised, assigned or transferred (a "Transfer"), except (i) to Value Investing Partners, Inc., any successor to the business of such company, or any officer, director, stockholder or employee of such company, or a member of such transferee's immediate family or a trust for the benefit of any such person, or (ii) to any underwriter in connection with a Public Offering of the Company's Common Stock, provided (as to (ii)) that this Warrant is exercised immediately upon such Transfer and the Common Stock issued upon such exercise is sold by such underwriter as part of such Public Offering and, as to (i) and (ii), only in accordance with and subject to the provisions of the Securities Act and the rules and regulations promulgated thereunder. If at the time of such a Transfer a Registration Statement is not in effect to register this Warrant under the Securities Act, the Company may require the Warrantholder to make such representations, and may place such legends on certificates representing this Warrant, as may be reasonably required in the opinion of counsel to the Company to permit such a Transfer without such registration. ARTICLE VII Registration Under the Securities Act of 1933 Section 7.01: Piggyback Registration. (a) Right to Include Registrable Securities. If at any time prior to the Expiration Date the Company proposes to register any class of debt or equity security or any Common Stock Equivalent under the Securities Act on any form for the registration of securities under such Act, whether or not for its own account (other than a registration form relating to (i) a registration of a stock option, stock purchase or compensation or incentive plan or of stock issued or issuable pursuant to any such plan, or a dividend investment plan; (ii) a registration of securities proposed to be issued in exchange for securities or assets of, or in connection with a merger or consolidation with, another corporation; or (iii) a registration of securities proposed to be issued in exchange for other securities of the Company) in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act (a "Piggyback Registration"), it will at such time give prompt written notice to all Holders of Registrable Securities of its intention to do so and of such Holders' rights under this Section 7.01. Such rights are referred to hereinafter as "Piggyback Registration Rights". Upon the written request of any such Holder made within 20 days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method of disposition thereof), the Company will include in the Registration Statement the Registrable Securities which the Company has been so requested to register by the Holders thereof provided that the Company need not include any such Registrable Securities in Registration Statements filed after the Expiration Date. (b) Withdrawal of Piggyback Registration by Company. If, any time after giving written notice of its intention to register any securities in a Piggyback Registration but prior to the effective date of the related Registration Statement filed in connection with such Piggyback Registration, the Company shall determine for any reason not to register such securities, the Company will give written notice of such determination to each Holder and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such Piggyback Registration. All best efforts obligations of the Company pursuant to Section 7.02 shall cease if the Company determines to terminate any registration where Registrable Securities are being registered pursuant to this Section 7.01. (c) Piggyback Registration of Underwritten Public Offerings. If a Piggyback Registration requested pursuant to this Section 7.01 involves an underwritten offering, then, (i) all Holders requesting to have their Registrable Securities included in the Company's registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to other selling shareholders; and (ii) any Holder requesting to have its Registrable Securities included in such registration may elect in writing, not later than three (3) Business Days prior to the effectiveness of the Registration Statement filed in connection with such registration, not to have its Registrable Securities so included in connection with such registration. (d) Payment of Registration Expenses for Piggyback Registration. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to a Piggyback Registration Right contained in this Section 7.01, except for the fees and disbursements of any counsel retained by the Holders of the Registrable Securities being so registered. (e) Priority in Piggyback Registration. If a Piggyback Registration involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number or kind of Registrable Securities requested to be included in such Piggyback Registration would have a material adverse effect on such offering, including a significant decrease in the price at which such securities can be sold, then the Registrable Securities to be offered for the accounts of Holders pursuant to a Piggyback Registration Right shall be eliminated entirely or reduced pro rata as to all requesting Holders on the basis of the relative number of Registrable Securities to be included in such offering to the amount recommended by such managing underwriter; provided, however, that no securities may be offered in such registration for the account of persons other than the Company by virtue of their also having "piggyback" registration rights, or otherwise, unless the Registrable Securities requested to be included in such registration are so included on a pro rata basis (by percentage of each class of securities) as to such other persons holding "piggyback" rights and the Holders requesting registration. (f) Expiration of Piggyback Registration Rights. The Piggyback Registration Rights shall survive the exercise of the Warrant or the transactions or events pursuant to which such Registrable Securities were issued, but all such rights will terminate in all events on the Expiration Date. The Holders, as a group, shall be limited to three Piggyback Registrations under this Section 7.01. Section 7.02: Demand Registration. (a) Request for Registration. Subject to the limitations set forth below in this Section 7.02, any Holder or Holders may after June 22, 1995 from time to time but prior to nine (9) months after the Expiration Date make written requests for the registration under the Securities Act of their Registrable Securities (a "Demand Registration") provided the number of Warrant Shares subject to the request is all Warrant Shares issuable under this Warrant and any other outstanding Warrants, as well as all warrant shares issuable under warrants granted to Value Investing Partners, Inc. as additional compensation under a Placement Agency Agreement, dated September 11, 1992. The Company shall use its best efforts to effect such Demand Registration. The Holders, as a group, shall be limited to one Demand Registration, and thereafter may not make any further written requests for registration under this Section 7.02. (b) Limitations on Demand Registration. The Company shall not be required to effect a Demand Registration sooner than (i) for a sixty (60) day period following the effective date of a registration statement pertaining to an underwritten Public Offering for the account of the Company; (ii) if the Company, in its reasonable judgment, determines that registration at the time requested by the Holders would materially adversely affect the Company, by, among other things, requiring disclosure of, any litigation or transactions at an inopportune time, in which case the obligation of the Company to register any Registrable Securities shall be delayed until the reason for such adverse affect has ceased to exist; or (iii) if the timing of the Demand Registration is such that a special audit of the Company would be required in connection with the preparation of financial statements for the registration. Section 7.03: Registration Procedures. If and whenever the Company is required to use its best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Article VII, the Company will, as expeditiously as practicable: (a) notify the selling Holders of Registrable Securities and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such advice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose; (iv) if at any time the representations and warranties of the Company contemplated by paragraph (h) below ceases to be true and correct; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (vi) of the happening of any event that makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement or Prospectus so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (b) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment; (c) if reasonably requested by the managing underwriters, immediately incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters believe (on advice of counsel) should be included therein as required by applicable law relating to such sale of Registrable Securities, including, without limitation, information with respect to the purchase price being paid for the Registrable Securities by such underwriters and with respect to any other terms of the underwritten (or "best-efforts" underwritten) offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (d) furnish to each selling Holder of Registrable Securities and each managing underwriter, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by all exhibits (including those incorporated by reference); (e) deliver to each selling Holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each preliminary Prospectus) and any amendment or supplement thereto as such Persons may reasonably request; the Company consents to the use of such Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto; (f) prior to any public offering of Registrable Securities, cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing, use its reasonable efforts to keep each such registration or qualification effective during the period such Registration Statement is required to be kept effective and any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject the Company to general service of process in any jurisdiction where it is not at the time so subject or would subject the principal stockholders of the Company to any restrictions on the resale or transfer of their shares of the Company's Common Stock; (g) cooperate with the selling Holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two Business Days prior to any sale of Registrable Securities to the underwriters; (h) upon the occurrence of any event contemplated by paragraph (a)(vi) above, prepare a supplement or post-effective amendment to the applicable Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement or a material fact or omit to state any material fact necessary to make the statements therein not misleading; (i) with respect to each issue or class of Registrable Securities, use its best efforts to cause all Registrable Securities covered by the Registration Statements to be listed on each securities exchange on which similar securities issued by the Company are listed, if so requested by the Holders of a majority of such Registrable Securities; (j) except as otherwise provided in this Agreement, the Company shall have sole control in connection with the preparation, filing, withdrawal, amendment or supplementing of each Registration Statement, the selection of underwriters, and the distribution of any preliminary prospectus included in the Registration Statement, and may include within the coverage thereof additional shares of Common Stock or other securities for its own account or for the account of one or more of its other security holders; (k) Holders of Registrable Securities shall have no registration rights hereunder in respect of any proposed transfer of such securities if, in the opinion of recognized securities counsel to the Company (A) registration under the Securities Act is not required for the transfer of the Registrable Securities in the manner provided by such Holder and that there are no further Securities Act resale restrictions on the Registrable Securities or (B) a post-effective amendment to an existing registration statement would be legally sufficient for such transfer. Section 7.04: Agreements by Selling Holders. (a) The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding the distribution of such securities and such other information as may otherwise be required by the Securities Act to be included in such Registration Statement, as the Company may from time to time reasonably request in writing. (b) Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7.03(a) or (b) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 7.03(h) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in such Prospectus, and, if so directed by the Company, such holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Each Holder of Registrable Securities agrees to notify the Company upon completion of its distribution of such Registrable Securities. (c) Each holder of Registrable Securities whose Registrable Securities are covered by a Registration Statement filed pursuant to Article VII hereof agrees, if requested by the managing underwriters in any underwritten offering, not to effect any public sale or distribution of any securities of the Company of the same class as the securities included in such Registration Statement, including a sale pursuant to rule 144 under the Securities Act (except as part of such underwritten registration), during any period during which the officers and directors of the Company and any other selling shareholders included in such Registration Statement are similarly restricted in the sale or distribution of any securities of the Company pursuant to such Registration Statement, to the extent timely notified in writing by the managing underwriters. Section 7.05: Indemnification. (a) Indemnification by Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by the law, each Holder, its officers, directors and agents and each Person who controls such Holder or agents (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses caused by any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are contained in any information furnished in writing to the Company by such Holder expressly for use therein; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or in based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if (i) such Holder failed to send or deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale of Registrable Securities and (ii) the Prospectus would have corrected such untrue statement or omission; and provided, further, that the Company shall not be liable in any such case to the extent that any such loss claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission in the Prospectus, if such untrue statement or untrue statement, omission or alleged omission is corrected in an amendment or supplement to the Prospectus and if, having previously been furnished by or on behalf of the Company with copies of the Prospectus as so amended or supplemented, such Holder thereafter fails to deliver or cause to be delivered such Prospectus as so amended or supplemented, prior to or concurrently with the sale of a Registrable Security to the person asserting such loss, claim, damage, liability or expense who purchased such Registrable Security from such Holder. The Company will also indemnify underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in the distribution their officers and directors and each person who controls such Persons (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities, if requested. (b) Indemnification by Holder of Registrable Securities. In connection with any registration, each Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any Registration Statement or Prospectus and agrees to indemnify, to the same extent as the indemnification provided by the Company in Section 7.05(a), the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses caused by any untrue statement of a material fact or any omission of a material fact required to be stated in any Registration Statement or Prospectus or preliminary prospectus or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in or based upon any information or affidavit so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or Prospectus. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in the distribution, to the same extent as provided above with respect to information so furnished in writing by such Persons specifically for inclusion in any prospectus or Registration Statement. (c) Conduct of Indemnification Procedure. Any party that proposes to assert the right to be indemnified hereunder will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section, notify each such indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served, No indemnification provided for hereunder shall be available to any party who shall fail to give notice as provided in this Section 7.05(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice but the omission so to notify such indemnifying party of any such action, suit or proceeding shall not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under this Section. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses, except as provided below and except for the reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of counsel by such indemnified party has been authorized in writing by the indemnifying parties, (ii) the indemnified party shall have reasonably concluded that there may be a conflict of interest between the indemnifying parties and the indemnified party in the conduct of the defense of such action (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the defense of such action within a reasonable time after notice of the commencement thereof, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying parties. An indemnifying party shall not be liable for any settlement of any action, suit, proceeding or claim effected without its written consent. ARTICLE VIII Other Matters Section 8.01: Expenses of Transfer. The Company will from time to time promptly pay, subject to the provisions of Section 6.01 and paragraph (d) of Section 2.02, all taxes and charges that may be imposed upon the Company in respect to the issuance or delivery of Warrant Shares upon the exercise of this Warrant by the Warrantholder. Section 8.02: Successors and Assigns. All the covenants and provisions of this Warrant by or for the benefit of the Company shall bind and inure to the benefit of its successors and assigns hereunder. Section 8.03: Amendments and Waivers. The provisions of this Warrant, including the provisions of this sentence, may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of holders of at least a majority of the outstanding Warrants. Holders shall be bound by any consent authorized by this Section whether or not certificates representing such Warrants have been marked to indicate such consent. Section 8.04: Counterparts. This Warrant may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 8.05: Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware. Section 8.06: Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. Section 8.07: Integration/Entire Agreement. This Warrant is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Warrant supersedes all prior agreements and understandings between the parties with respect to such subject matter. Section 8.08: Notices. Notice or demand pursuant to this Warrant to be given or made by the Warrantholder to or on the Company shall be sufficiently given or made if sent by first class mail, postage prepaid, to the Warrantholder or the Holder of Registrable Securities at its last known address as it shall appear on the books of the Company, and to the Company at 35 South Service Road, Plainview, New York 11803, or to such other address as may be duly given to such Holder. Section 8.09: Headings. The Article headings herein are for convenience only and are not part of this Warrant and shall not affect the interpretation thereof. IN WITNESS WHEREOF, this Warrant has been duly executed by the Comp any under its corporate seal as of the 23nd day of June, 1994. ARX, INC. By:________________________________ Name: Michael Gorin Title: President (Corporate Seal) ATTEST: - ------------------------------ _________________, Secretary ASSIGNMENT (To be executed only upon assignment of Warrant Certificate) For value received, _____________________________ hereby sells, assigns and transfers unto ______________________________ the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ______________________ attorney, to transfer said Warrant Certificate on the books of ARX, Inc. with respect to the number of Warrants set forth below, with full power of substitution in the premises: Name(s) of Assignee(s) Address No. of Warrants ----------- ------- --------------- And if said number of Warrants shall not be all the Warrants represented by the Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the Warrants represented by said Warrant Certificate. Dated: ______________ ___, 19__. ----------------------------------- Note: The above signature should correspond exactly with the name on the face of this Warrant Certificate. EXERCISE FORM (To be executed upon exercise of Warrant) ARX, Inc. The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, _________ shares of Common Stock, as provided for therein, at an aggregate exercise price of $_____, and tenders herewith payment of the purchase price in full in the form of a wire transfer, a certified or bank draft in the amount of $_______, and/or _____ shares of Common Stock of ARX, Inc. having a fair market value of $_____. Please issue a certificate or certificates for such Common Shares in the name of Name__________________________ (Please Print) -------------------------- Address -------------------------- -------------------------- Social Security No. Signature______________________ Note: The above signature should correspond exactly with the name on the first page of this Warrant Dated: _______________ ___, 19__. Certificate. And if said number of shares shall not be all the shares purchasable under the within Warrant Certificate, a new Warrant Certificate is to be issued in the name of the undersigned for the balance remaining of the number of whole shares purchasable thereunder. EX-4.2 3 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. VOID AFTER 5:00 P.M., NEW YORK TIME, ON OCTOBER 6, 2002 OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS DAY. WARRANT TO PURCHASE _______ Shares of Common Stock No. ___ WARRANT TO PURCHASE COMMON STOCK OF ARX, INC. TRANSFER RESTRICTED -- SEE SECTION 6.02 This certifies that, for good and valuable consideration, Value Investing Partners, Inc., 60 Broad Street, New York, New York 10004, and its registered, permitted assigns (collectively, the "Warrantholder"), is entitled to purchase from ARX, Inc. a corporation incorporated under the laws of the State of Delaware (the "Company"), subject to the terms and conditions hereof, at any time before 5:00 P.M., New York time, on October 6, 2002, (or, if such day is not a Business Day, as defined herein, at or before 5:00 P.M. , New York time on the next following Business Day), the number of fully paid and non-assessable shares of Common Stock (par value $.10) of the Company (the "Common Stock") stated above at the Exercise Price (as defined herein). The Exercise Price and the number of shares purchasable hereunder are subject to adjustment as provided in Article III hereof. ARTICLE I Section 1.01: Definition of Terms. As used in this Warrant, the following capitalized terms shall have the following respective meanings: (a) Business Day: A day other than a Saturday, Sunday or other day on which banks in the State of New York are authorized by law to remain closed. (b) Common Stock: Common Stock, $.10 par value per shares, of the Company. (c) Common Stock Equivalents: Securities that are convertible into or exercisable for shares of Common Stock. (d) Demand Registration: See Section 7.02. (e) Exchange Act: The Securities Exchange Act of 1934, as amended. (f) Exercise Price: $2.70 per warrant Share, as such price may be adjusted from time to time pursuant to Article III hereof. (g) Expiration Date: 5:00 P.M., New York time, on October 6, 1997. (h) Holder: A Holder of Registrable Securities. (i) NASD: National Association of Securities Dealers, Inc. (j) Person: An individual, partnership, joint venture, corporation, trust, unincorporated organization or government or any department or agency thereof. (k) Piggyback Registration: See Section 7.01. (1) Prospectus: Any prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. (m) Public Offering: A public offering of any of the Company's equity or debt securities pursuant to a registration statement under the Securities Act. (n) Registration Expenses: Any and all expenses incident to the performance of or compliance with Article VII, including, without limitation, (i) all SEC, stock exchange and NASD registration and filing fees; (ii) all fees and expenses of complying with securities or blue sky laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities); (iii) all printing, mailing, messenger and delivery expenses; (iv) the fees and disbursements of counsel for the Company and of its independent certified public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance; and (v) any disbursements of underwriters customarily paid by issuers or sellers of securities including liability insurance if the Company so desires, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting fees, discounts and commissions and transfer taxes if any. (o) Registrable Securities: This Warrant and Warrants in similar form issued to Value Investing Partners, Inc. and/or its designees or transferees as permitted under Section 6.02 and any Warrant Shares thereunder and/or other securities that may be or are issued by the Company upon exercise of such Warrants, including those which may thereafter be issued by the Company in respect of any such securities by means of any stock splits, stock dividends, recapitalizations or the like, and as adjusted pursuant to Article III hereof; provided, however, that as to any particular security contained in Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement; or (ii) they shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act; or (iii) they shall have been sold, assigned or otherwise transferred to any Person other than those Persons specified in Section 6.02(i) below ("6.02(i) Persons") and other than to any spouses, lineal descendants or adopted children of a 6.02(i) Person to whom such securities are transferred upon the death of any 6.02(i) Person by operation of law or by bequest. (p) Registration Statement: Any registration statement of the Company filed or to be filed with the SEC which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement including post-effective amendments, all exhibits and all material incorporated by reference by such registration statement. (q) SEC: The Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act. (r) Securities Act: The Securities Act Of 1933, as amended (s) Warrants: This Warrant, the warrants issued on the date hereof and all other warrants that may be issued in its or their place (together evidencing the right to purchase an aggregate of shares of the Company's Common Stock originally issued as set forth in the definition of Registrable Securities. (t) Warrantholder: The person(s) or entity(ies) to whom this warrant is originally issued, or any successor in interest thereto, or any assignee or transferee thereof, in whose name this Warrant is registered upon the books to be maintained by the Company for that purpose. (u) Warrant Shares: Common Stock purchasable upon exercise of the Warrants. ARTICLE II Duration and Exercise of Warrant Section 2.01: Duration of Warrant. Subject to the terms contained herein, this Warrant may be exercised at any time before 5:00 P.M., New York time, on the Expiration Date (or, if such day is not a Business Day, at or before 5:00 P.M., New York time, on the next following Business Day). If this Warrant is not exercised at or before 5: 00 P.M., New York time, on the Expiration Date, it shall become void, and all rights hereunder shall thereupon cease. Section 2.02: Exercise of Warrant. (a) The Warrantholder may exercise this Warrant, in whole or in part, upon surrender of this Warrant with the Subscription Form hereon duly executed, to the Company at its corporate office at 35 South Service Road, Plainview, New York 11803, together with the full Exercise Price for each Warrant Share to be purchased (i) by tendering in lawful money of the United States, or by certified check or bank draft payable in United States Dollars to the order of the Company; or (ii) by delivering to the Company the number of shares of the Company's Common Stock having a value on the date of exercise equal to such Exercise Price; or (iii) by delivering to the Company its 7% convertible Senior Subordinated Debentures due in the principal amount equal to such Exercise Price and upon compliance with and subject to the conditions set forth herein. Notwithstanding this Section 2.02 or any other provision of this Warrant to the contrary, the Warrantholder may, upon any full or partial exercise of the Warrants, at its election, pay the Exercise Price applicable to such exercise by receiving from the Company upon such exercise the number of shares of Common Stock equal to the number of shares otherwise issuable upon such exercise, less the number of shares of Common Stock having a value on the date of exercise equal to such Exercise Price. For purposes of this Section 2.02, the value of shares of Common Stock on any date shall be equal to the closing price of the Company's Common Stock on the New York Stock Exchange (or on such national securities exchange on which the Company's Common Stock is then primarily traded) on the immediately preceding trading day. (b) Upon receipt of this Warrant with the Subscription Form duly executed and accompanied by payment of the aggregate Exercise Price for the Warrant Shares for which this warrant is then being exercised, the Company will cause to be issued certificates for the total number of whole shares of Common Stock for which this Warrant is being exercised (adjusted to reflect the effect of the anti-dilution provisions contained in Article III hereof, if any, and as provided in Section 4.04 hereof) in such denominations as are required for delivery to the Warrantholder, and the Company shall thereupon deliver such certificates to the Warrantholder. If at the time this Warrant is exercised, a registration statement is not in effect to register under the Securities Act the Warrant Shares issuable upon exercise of this Warrant, the Company may require the Warrantholder to make such investment intent representations, and may place such legends on certificates representation the Warrant Shares, as may be reasonably required in the opinion of counsel to the Company to permit the Warrant Shares to be issued without such registration. (c) In case the Warrantholder shall exercise this Warrant with respect to less than all of the Warrant Shares that may be purchased under this Warrant, the Company will execute a new warrant in the form of this Warrant for the balance of such Warrant Shares and deliver such new warrant to the Warrantholder. (d) The Company covenants and agrees that it will pay when due and payable any and all stock transfer and similar taxes which may be payable in respect of the issue of this Warrant or in respect of the issue of any Warrant Shares. The Company shall not, however, be required to pay any tax imposed on income or gross receipts or any tax which may be payable in respect of any transfer involved in the issuance or delivery of this Warrant or at the time of surrender and, until the payment of such tax, shall not be required to issue such Warrant Shares. ARTICLE III Adjustment of Shares of Common Stock Purchasable and of Exercise Price The Exercise Price and the number and kind of Warrant Shares shall be subject to adjustment from time to time upon the happening of certain events as provided in this Article III. Section 3.01: Mechanical Adjustments. (a) If at any time prior to the full exercise of this Warrant, the Company shall (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock (other than cash dividends or distributions out of surplus or earnings); (ii) subdivide, reclassify or recapitalize its outstanding Common Stock into a greater number of shares; or (iii) combine, reclassify or recapitalize its outstanding Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date of such subdivision, combination, reclassification or recapitalization shall be proportionately adjusted so that the Warrantholder shall be entitled to receive the aggregate number and kind of shares which, if this warrant had been exercised in full immediately prior to such time, he would have owned upon such exercise and been entitled to receive upon such dividend, subdivision, combination, reclassification or recapitalization. Such adjustment shall be made successively whenever any event listed in this paragraph 3.01(a) shall occur. (b) If the Company shall hereafter issue rights, options or warrants to all holders of its outstanding Common Stock, without charge to such holders, entitling them to subscribe for or purchase shares of Common Stock (or Common Stock Equivalents) at a price (or having a conversion price per share) less than the current market price of the Common Stock (as determined pursuant to paragraph (e) of this Section 3.01) on the record date described below, the Exercise Price shall be adjusted so that the Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the date of such sale or issuance (which date in the event of distribution to shareholders shall be deemed to be the record date set by the Company to determine shareholders entitled to participate in such distribution) by a fraction, the numerator of which shall be (i) the number of shares of Common Stock outstanding on the date of such sale or issuance, plus (ii) the number of additional shares of Common Stock which the aggregate consideration received by the Company upon such issuance or sale (plus the aggregate of any additional amount to be received by the Company upon the exercise of such rights or warrants) would purchase at such current market price per share of the Common Stock; and the denominator of which shall be (i) the number of shares of Common Stock outstanding on the date of such issuance or sale, plus (ii) the number of additional shares of Common Stock offered for subscription or purchase (or into which the Common Stock Equivalents so offered are convertible). Such adjustments shall be made successively whenever such warrants or rights are issued. To the extent that shares of Common Stock are not delivered (or Common Stock Equivalents are not delivered) after the expiration of such rights or warrants, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments been made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or Common Stock Equivalents) actually delivered. (c) In case the Company shall hereafter fix a record date for making a distribution to the holders of Common Stock of assets or evidences of its indebtedness (excluding cash dividends or distributions out of earnings and dividends or distributions referred to in paragraph (a) of this Section 3.01) or Common Stock subscription rights, options or warrants for Common Stock or Common Stock Equivalents (excluding those referred to in paragraph (b) of this Section 3.01), then in each such case the Exercise Price in effect after such record date shall be adjusted to the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in paragraph (e) of this Section 3.01), less the fair market value (as determined by the Company's Board of Directors) of said assets or evidences of indebtedness so distributed or of such Common Stock subscription rights, option and warrants or of such Common Stock Equivalents applicable to one share of Common Stock, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever the record date for such distribution is fixed and shall become effective immediately after such record date. (d) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to paragraphs (a), (b) or (c) of this Section 3.01, the Warrant Shares shall simultaneously be adjusted by multiplying the number of Warrant Shares initially issuable upon exercise of each Warrant by the Exercise Price in effect on the date thereof and dividing the product so obtained by the Exercise Price, as adjusted. (e) For the purpose of any computation under this Section 3.01, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily closing price for 30 consecutive Business Days commencing 45 Business Days before such date. The closing price for each day shall be the last sale price regular way or, in case no such reported sales take place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or if not listed or admitted to trading on such exchange, the representative closing bid price as reported by NASDAQ, or other similar organization if NASDAQ is no longer reporting such information, or if not so available, the fair market price as determined by the Board of Directors. (f) No adjustments in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least three cents ($.03) in such price; provided, however, that any adjustments which by reason of this paragraph (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 3.01 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Notwithstanding anything in this Section 3.01 to the contrary, the Exercise Price shall not be reduced to less than the then existing par value of the Common Stock as a result of any adjustment made hereunder. (g) In the event that at any time, as a result of any adjustment made pursuant to paragraph (a) of this Section 3.01, the Warrantholder thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of any warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in paragraphs (a) to (g), inclusive, of this Section 3.01. Section 3.02: Notice of Adjustment. Whenever the number of Warrant Shares or the Exercise Price is adjusted as herein provided, the Company shall prepare and deliver to the Warrantholder a certificate signed by its President, any Vice President, Treasurer or Secretary, setting forth the adjusted number of shares purchasable upon the exercise of this Warrant and the Exercise Price of such shares after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which adjustment was made. Section 3.03: No Adjustment for Dividends. Except as provided in Section 3.01 of this Agreement, no adjustment in respect of any cash dividends shall be made during the term of this Warrant or upon the exercise of this Warrant. Section 3.04: Form of Warrant After Adjustments. The form of this Warrant need not be changed because of any adjustments in the Exercise Price or the number or kind of the Warrant Shares, and Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant, as initially issued. Section 3.05: Preservation of Purchase Rights in Certain Transactions. (a) In case of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, upon any such consolidation, merger, sale or conveyance and the surviving entity is a publicly traded company, the Company agrees that a condition of such transaction will be that the Company or such successor or purchasing corporation, as the case may be, shall execute with the Warrantholder an agreement granting the Warrantholder the right until the Expiration Date, upon payment of the Exercise Price in effect immediately prior to such action, to receive upon exercise of this Warrant the kind. and amount of shares and other securities and property which he would have owned or have been entitled to receive after the happening of such consolidation, merger, sale or conveyance had this Warrant been exercised immediately prior to such action. Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article Ill. The provisions of this Section 3.05 shall similarly apply to successive consolidations, mergers, sales or conveyances. (b) In case of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, upon any such consolidation, merger, sale or conveyance and the surviving entity is a non-publicly traded company, the Company agrees that a condition of such transaction will be that the Company shall mail to the Warrantholders at the earliest applicable time (and, in any event not less than 20 days before any record date or other date set for definitive action) written notice of the record date for such transaction to take place. Such notice shall also set forth facts as shall indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Exercise Price of and the kind and amount of the shares of stock and other securities and property deliverable upon exercise of this Warrant. ARTICLE IV Other Provisions Relating to Rights of Warrantholders Section 4.01: No Rights as Shareholders: Notice to Warrantholders. Nothing contained in this Warrant shall be construed as conferring upon the Warrantholder or his or its transferees the right to vote or to receive dividends or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Company or of any other matter or any rights whatsoever as shareholders of the Company. Section 4.02: Lost, Stolen, Mutiliated or Destroyed Warrants.. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as, and in substitution for, this Warrant. Section 4.03: Reservation of Shares. (a) The Company covenants and agrees that at all times it shall reserve and keep available for the exercise of this Warrant such number of authorized shares of Common Stock as are sufficient to permit the exercise in full of this Warrant. (b) Prior to the issuance of any shares of Common Stock upon exercise of this Warrant, the Company shall use its best efforts to secure the listing of such shares of Common Stock upon the securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed. (c) The Company covenants that all shares of Common Stock issued on exercise of this Warrant will be validly issued, fully paid, non-assessable and free of preemptive rights. Section 4.04: No Fractional Shares. Anything contained herein to the contrary notwithstanding, the Company shall not be required to issue any fraction of a share in connection with the exercise of this warrant, and in any case where the Warrantholder would, except for the provisions of this Section 4.04, be entitled under the terms of this Warrant to receive a fraction of a share upon exercise of this Warrant and receipt of the Exercise Price, issue the larger number of whole shares purchasable upon exercise of this Warrant. The Company shall not be required to make any cash or other adjustment in respect of such fraction of a share to which the Warrantholder would otherwise be entitled. ARTICLE V Treatment of Warrantholder Prior to due presentment for registration or transfer of this Warrant, the Company may deem and treat the Warrantholder as the absolute owner of this Warrant (notwithstanding any notation of ownership or other writing hereon) for the purpose of any exercise hereof and for all other purposes of the Company shall not be affected by any notice to the contrary. ARTICLE VI Split-Up, Combination Exchange and Transfer of Warrants Section 6.01: Split-up, Combination, Exchange and Transfer of Warrants. Subject to and limited by the provisions of Section 6.02 hereof, this Warrant may be split up, combined or exchanged for another Warrant or Warrants containing the same terms to purchase a like aggregate number of Warrant Shares. If the Warrantholder desires to split up, combine or exchange this Warrant, he or it shall make such request in writing delivered to the Company and shall surrender to the Company this Warrant and any other Warrants to be so split up, combined or exchanged. Upon any such surrender for a split-up, combination or exchange, the Company shall execute and deliver to the person entitled thereto a Warrant or Warrants, as the case may be, as so requested. The Company shall not be required to effect any split-up, combination or exchange which will result in the issuance of a warrant entitling the warrantholder to purchase upon exercise a fraction of a share of Common Stock or a fractional Warrant. The Company may require such Warrantholder to pay a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any split-up, combination or exchange of Warrants. Section 6.02: Restrictions on Transfer. This Warrant may not be sold, hypothecated exercised, assigned or transferred (a "Transfer'*), except (i) to Value Investing Partners, Inc., any successor to the business of such company, or any officer or employee of such company, or (ii) to any underwriter in connection with a Public Offering of the Company's Common Stock, provided (as to (ii)) that this Warrant is exercised immediately upon such Transfer and the Common Stock issued upon such exercise is sold by such underwriter as part of such Public Offering and, as to (i) and (ii), only in accordance with and subject to the provisions of the Securities Act and the rules and regulations promulgated thereunder. if at the time of such a Transfer a Registration Statement is not in effect to register this Warrant under the Securities Act, the Company may. require the Warrantholder to make such representations, and may place such legends on certif icates representing this Warrant, as may be reasonably required in the opinion of counsel to the Company to permit such a Transfer without such registration. ARTICLE VII Registration Under the Securities Act of 1.933 Section 7.01: Piggyback Registration. (a) Right to Include Registrable Securities. If at any time prior to the Expiration Date the Company proposes to register any class of debt or equity security or any Common Stock Equivalent under the Securities Act on any form for the registration of securities under such Act, whether or not for its own account (other than a registration form relating to (i) a registration of a stock option, stock purchase or compensation or incentive plan or of stock issued or issuable pursuant to any such plan, or a dividend investment plan; (ii) a registration of securities proposed to be issued in exchange for securities or assets of, or in connection with a merger or consolidation with, another corporation; or (iii) a registration of securities proposed to be issued in exchange for other securities of the Company) in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act (a "Piggyback Registration"), it will at such time give prompt written notice to all Holders of Registrable Securities of its intention to do so and of such Holders' rights under this Section 7.01. Such rights are referred to hereinafter as "Piggyback Registration Rights". Upon the written request of any such Holder made within 20 days after the giving of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method of disposition thereof), the Company will include in the Registration Statement the Registrable Securities which the Company has been so requested to register by the Holders thereof provided that the Company need not include any such Registrable Securities in Registration Statements filed after the Expiration Date. (b) Withdrawal of Piggyback Registration by Company. If, any time after giving written notice 'of its intention to register any securities in a Piggyback Registration but prior to the effective date of the related Registration Statement filed in connection with such Piggyback Registration, the Company shall determine for any reason not to register such securities, the Company will give written notice of such determination to each Holder and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such Piggyback Registration. All best efforts obligations of the Company pursuant to Section 7.02 shall cease if the Company determines to terminate any registration where Registrable Securities are being registered pursuant to this Section 7.01. (c) Piggyback Registration of Underwritten Public Offering. If a Piggyback Registration requested pursuant to this Section 7.01 involves an underwritten offering, then, (i) all Holders requesting to have their Registrable Securities included in the Company's registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to other selling shareholders; and (ii) any Holder requesting to have his or its Registrable Securities included in such registration may elect in writing, not later than 3 Business Days prior to the effectiveness of the Registration Statement filed in connection with such registration, not to have his or its Registrable Securities so included in connection with such registration. (d) Payment of Registration Expenses for Piggyback Registration. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to a Piggyback Registration Right contained in this Section 7.01, except for the fees and disbursements of any counsel retained by the Holders of the Registrable Securities being so registered. (e) Priority in Piggyback Registration. if a Piggyback Registration involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number or kind of Registrable Securities requested to be included in such Piggyback Registration would have a material adverse effect on such offering, including a significant decrease in the price at which such securities can be sold, then the Registrable Securities to be offered for the accounts of Holders pursuant to a Piggyback Registration Right shall be eliminated entirely or reduced pro rata as to all requesting Holders on the basis of the relative number of Registrable Securities to be included in such offering to the amount recommended by such managing underwriter; provided, however, that no securities may be offered in such registration for the account of persons other than the Company by virtue of their also having "piggyback" registration rights, or otherwise, unless the Registrable Securities requested to be included in such registration are so included on a pro rata basis (by percentage of each class of securities) as to such other persons holding "piggyback" rights and the Holders requesting registration. (f) Expiration of Piggyback Registration Rights. The Piggyback Registration Rights shall survive the -exercise o the Warrant or the transactions or events pursuant to which such Registrable Securities were issued, but all such rights will terminate in all events on the Expiration Date. Section 7.02: Demand Registration. (a) Request for Registration. Subject to the limitations set forth below in this Section 7.02, any Holder or Holders who hold in the aggregate 25% or more of the then outstanding Registrable Securities may after October 6, 1993 from time to time but prior to nine (9) months after the Expiration Date make written requests for the registration under the Securities Act of all or part of their Registrable Securities (a "Demand Registration") and the Company shall use its best efforts to effect such Demand Registration. The Holders, as a group, shall be limited to one Demand Registration and thereafter may not make any further written requests for registration. (b) Limitations on Demand Registration. The Company shall not be required to effect a Demand Registration sooner than (i) for a 120 day period following the effective date of a registration statement pertaining to an underwritten Public Offering for the account of the Company; (ii) if the Company, in its reasonable judgment, determines that registration at the time requested by the Holders would materially adversely affect the Company, by, among other things, requiring disclosure of, any litigation or transactions at an inopportune time, in which case the obligation of the Company to register any Registrable Securities shall be delayed until the reason for such adverse affect has ceased to exist; or (iii) if the timing of the Demand Registration is such that a special audit of the Company would be required in connection with the preparation of financial statements for the registration. Section 7.03 Registration Procedures. If and whenever the Company is required to use its best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Article VII, the Company will, as expeditiously as practicable: (a) notify the selling Holders of Registrable Securities and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such- advice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose; (iv) if at any time the representations and warranties of the Company contemplated by paragraph (n) below ceases to be true and correct; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (vi) of the happening of any event that makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement or Prospectus so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (b) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment; (c) if reasonably requested by the managing underwriters, immediately incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters believe (on advice of counsel) should be included therein as required by applicable law relating to such sale of Registrable Securities, including, without limitation, information with respect to the purchase price being paid for the Registrable Securities by such underwriters and with respect to any other terms of the underwritten (or "best-efforts" underwritten) offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (d) furnish to each selling Holder of Registrable Securities and each managing underwriter, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (e) deliver to each selling Holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each preliminary Prospectus) and any amendment or supplement thereto as such Persons may reasonably request; the Company consents to the use of such Prospectus of any amendment or supplement thereto by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto; (f) prior to any public offering of Registrable securities, cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing, keep each such registration or qualification effective during the period such Registration Statement is required to be kept effective and to any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; Provided that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject the Company to general service of process in any jurisdiction where it is not at the time so subject; (g) cooperate with the selling Holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two Business Days prior to any sale of Registrable Securities to the underwriters; (h) use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities. (i) upon the occurrence of any event contemplated by paragraph (c)(vi) above, prepare a supplement or post-effective amendment to the applicable Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement or a material fact or omit to state any material fact necessary to make the statements therein not misleading; (j) with respect to each issue or class of Registrable Securities, use its best efforts to cause all Registrable Securities covered by the Registration Statements to be listed on each securities exchange, if any, on which similar securities issued by the Company are then listed if requested by the Holders of a majority of such issue or class of Registrable Securities; (k) except as otherwise provided in this Agreement, the Company shall have sole control in connection with the Preparation, filing, withdrawal, amendment or supplementing of each Registration Statement, the selection of underwriters, and the distribution of any preliminary prospectus included in the Registration Statement, and may include within the coverage thereof additional shares of Common Stock or other securities for its own account or for the account of one or more of its other security holders; (1) Holders of Registrable Securities shall have no registration rights hereunder in respect of any proposed transfer of such securities if, in the opinion of recognized securities counsel to the Company (A) registration under the Securities Act is not required for the transfer of the Registrable Securities in the manner provided by such Holder and that there are no further Securities Act resale restrictions on the Registrable Securities or (B) a post-effective amendment to an existing registration statement would be legally sufficient for such transfer. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding the distribution of such securities and such other information as may otherwise be required by the Securities Act to be included in such Registration Statement, as the Company may from time to time reasonably request in writing. Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in paragraphs (a) or (b) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by paragraph (i) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in such Prospectus, and, if so directed by the Company, such holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Section 7.04: Indemnification. (a) Indemnification by Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by the law, each Holder, its officers, directors and agents and each Person who controls such Holder or agents (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses caused by any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are contained in any information furnished in writing to the Company by such Holder expressly for use therein; vi however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or in based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if (i) such Holder failed to send or deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale of Registrable Securities and (ii) the Prospectus would have corrected such untrue statement or omission; and provided, further, that the Company shall not be liable in any such case to the extent that any such loss claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission in the Prospectus, if such untrue statement or untrue statement, omission or alleged omission is corrected in an amendment or supplement to the Prospectus and if, having previously been furnished by or on behalf of the Company with copies of the Prospectus as so amended or supplemented, such Holder thereafter fails to deliver or cause to be delivered such Prospectus as so amended or supplemented, prior to or concurrently with the sale of a Registrable Security to the person asserting such loss, claim, damage, liability or expense who purchased such Registrable Security from such Holder. The Company will also indemnify underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in the distribution their officers and directors and each person who controls such Persons (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities, if requested. (b) Indemnification by Holder of Registrable Securities. In connection with any registration, each Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any Registration Statement or Prospectus and agrees to indemnify, to the same extent as the indemnification provided by the Company in Section 7.04(a), the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses caused by any untrue statement of a material fact or any omission of a material fact required to be stated in any Registration Statement or Prospectus or preliminary prospectus or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in or based upon any information or affidavit so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or Prospectus. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers, and similar securities industry professionals participating in the distribution, to the same extent as provided above with respect to information so furnished in writing by such Persons specifically for inclusion in any. prospectus or Registration Statement. (c) Conduct of Indemnification Procedure. Any party that proposes to assert the right to be indemnified hereunder will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section, notify each such indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served, No indemnification provided for hereunder shall be available to any party who shall fail to give notice as provided in this Section 7.04(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice but the omission so to notify such indemnifying party of any such action, suit or proceeding shall not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under this Section. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses, except as provided below and except for the reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of counsel by such indemnified party has been authorized in writing by the indemnifying parties, (ii) the indemnified party shall have reasonably concluded that there may be a conflict of interest between the indemnifying parties and the indemnified party in the conduct of the defense of such action' (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the defense of such action within a reasonable time after notice of the commencement thereof, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying parties. An indemnifying party shall not be liable for any settlement of any action, suit, proceeding or claim effected without its written consent. Section 7.05: Restrictions on Public Sale by Holder of Registrable Securities. Each holder of Registrable Securities whose Registrable Securities are covered by a Registration Statement filed pursuant to Article VII hereof agrees, if requested by the managing underwriters in any underwritten offering, not to effect any public sale or distribution of any securities of the Company of the same class as the securities included in such Registration Statement, including a sale pursuant to rule 144 under the Securities Act (except as part of such underwritten registration) , during the ten-day period prior to, and during the period the officers and directors of the Company are similarly restricted in the sale or distribution of any securities of the Company pursuant to such Registration Statement, to the extent timely notified in writing by the managing underwriters. The foregoing provisions shall not apply to any Holder if such Holder is prevented by applicable statute or regulation from entering any such agreement. However, any such Holder shall undertake, in its request to participate in any such underwritten offering, not to effect any public sale or distribution of the applicable Registrable Securities unless it has provided 45 days prior written notice of such sale or distribution to the underwriter or underwriters. ARTICLE VIII Other Matters Section 8.01: Expenses of Transfer. The Company will from time to time promptly pay, subject to the provisions of Section 6.01 and paragraph (d) of Section 2.02, all taxes and charges that may be imposed upon the Company in respect to the issuance or delivery of Warrant Shares upon the exercise of this Warrant by the Warrantholder. Section 8.02: Successors and Assigns. All the covenants and provisions of this Warrant by or for the benefit of the Company shall bind and inure to the benefit of its successors and assigns hereunder. Section 8.03: No Inconsistent Agreements. The Company will not on or after the date of this Warrant enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Warrant or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement with respect to its securities granting any registration rights to any Person, except for the holders of the shares issued upon the acquisition of Comstron Corporation. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under said agreement Section 8.04: Amendments and Waivers. The provisions of this Warrant, including the provisions of this sentence, may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of holders of at least a majority of the outstanding Registrable Securities. Holders shall be bound by any consent authorized by this Section whether or not certificates representing such Registrable Securities have been marked to indicate such consent. Section 8.05: Counterparts. This Warrant may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which so executed shall be deemed to be an original and all of , which taken together shall constitute one and the same agreement. Section 8.06: Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York. Section 8.07: Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. Section 8.08: Integration/Entire Agreement. Warrant is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the warrants sold pursuant to the Warrant. This Warrant supersedes all prior agreements and understandings between the parties with respect to such subject matter. Section 8.09: Attorney's Fees. In any action or proceeding brought to enforce any provisions of this Warrant to purchase, or where any provisions hereof or thereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees and disbursements in addition to its costs and expenses and any other available remedy. Section 8.10: Computations of Consent. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (other than the Warrantholder or subsequent Holders if they are deemed to be such affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. Section 8.11: Notices. Notice or demand pursuant to this Warrant to be given or made by the Warrantholder to or on the Company shall be sufficiently given or made if sent by first class mail, postage prepaid, to the Warrantholder or the Holder of Registrable Securities at his or its last known address as it shall appear on the books of the Company. Section 8.12: Headings. The Article headings herein are for convenience only and are not part of this Warrant and shall not affect the interpretation thereof. IN WITNESS WHEREOF, this Warrant has been duly executed by the Company under its corporate seal as of the lst day of December, 1992. ARX, INC. By:_________________________ Michael Gorin, President (Corporate Seal) ATTEST: __________________________ Richard G. Satin, Secretary ASSIGNMENT (To be executed only upon assignment of Warrant Certificate) For value received, hereby sells, assigns and transfers unto the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint attorney, to transfer said Warrant Certificate on the books of the within-named Company with respect to the number of Warrants set forth below, with full power of substitution in the premises: Name(s) of Assignee(s) Address No. of Warrants ------------- -------- ----------------- And if said number of Warrants shall not be all the Warrants represented by the Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the Warrants represented by said Warrant Certificate. Dated: ----------------------------------- Note: The above signature should correspond exactly with the name on the face of this Warrant Certificate. SUBSCRIPTION FORM (To be executed upon exercise of Warrant) ARX, Inc. The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, shares of Common Stock, as provided for therein, and tenders herewith payment of the purchase price in full in the form of cash or a certified or official bank check in the amount of $ Please issue a certificate or certificates for such common Shares in the name of, and pay any cash for any fractional share to: Name___________________________________ (Please Print Name, Address and Social Security No.) Signature______________________________ Note: The above signature should correspond exactly with the name on the first page of this Warrant Certificate or with the name of the assignee appearing in the assignment form below. And if said number of shares shall not be all the shares purchasable under the within Warrant Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder less any fraction of a share paid in cash. EX-5 4 October 30, 1996 Securities and Exchange Commission 450 Fifth Avenue Washington, D.C. 20549 Re: Aeroflex Incorporated Registration Statement on Form S-3 Gentlemen: Reference is made to the filing by Aeroflex Incorporated (the "Company") of a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933, as amended, covering the registration of 214,495 shares of Common Stock of the Company, par value $.10 per share (the "Common Stock") obtainable upon the exercise of Common Stock Purchase Warrants (the "Warrants"). As counsel for the Company, we have examined its corporate records, including its Certificate of Incorporation, By-Laws, its corporate minutes, the form of its Common Stock certificate and Warrants 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. The Company is duly organized and validly existing under the laws of the State of Delaware. 2. The shares of Common Stock subject to the Registration Statement have been duly authorized and, when issued in accordance with the terms of the Warrants and the related Warrant Certificates, as more fully described in the Registration Statement, 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 the Company, 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. EX-23.1 5 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS Board of Directors Aeroflex Incorporated and Subsidiaries: We consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated August 12, 1996, relating to the consolidated balance sheets of Aeroflex Incorporated and Subsidiaries as of June 30, 1996 and 1995 and the related consolidated statements of operations, stockholders' equity and cash flows and related schedule for the years then ended which report appears in the June 30, 1996 annual report on Form 10-K of Aeroflex Incorporated, and to the reference to our firm under the caption "Experts" in this Registration Statement. KPMG Peat Marwick LLP Jericho, New York October 30, 1996 EX-23.2 6 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT Aeroflex Incorporated and Subsidiaries We consent to the incorporation by reference in this Registration Statement of Aeroflex Incorporated on Form S-3 of our report dated August 12, 1994 on the consolidated statements of operations, stockholders' equity and cash flows and financial statement schedule for the year ended June 30, 1994, appearing in the Annual Report on Form 10-K of Aeroflex Incorporated for the year ended June 30, 1996 and to the reference to us under the heading "Experts" in such Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Jericho, New York October 30, 1996 -----END PRIVACY-ENHANCED MESSAGE-----