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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COMTECH TELECOMMUNICATIONS CORP.
(Exact name of Registrant as specified in its charter)
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DELAWARE 11-2139466
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
105 BAYLIS ROAD
MELVILLE, NEW YORK 11747
(631) 777-8900
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
FRED KORNBERG
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
COMTECH TELECOMMUNICATIONS CORP.
105 BAYLIS ROAD
MELVILLE, NEW YORK 11747
TELEPHONE: (631) 777-8900
FAX: (631) 777-8877
(Address, including zip code, and telephone number,
including area code, of agent for service)
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Copies of communications to:
ROBERT A. CANTONE, ESQ.
PROSKAUER ROSE LLP
1585 BROADWAY
NEW YORK, NEW YORK 10036
TELEPHONE: (212) 969-3000
FAX: (212) 969-2900
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times after the effective date of this Registration Statement as the
selling stockholders shall determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest or interest investment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM AMOUNT OF
SECURITY TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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Common Stock, 2,100,000(1)(2) $ 19.23 (3) $40,383,000(3) $ 3,267(3)
par value
$.10 per share
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(1) Includes preferred stock purchase rights attached to each share of common
stock pursuant to the Rights Agreement, dated as of December 15, 1998,
between the Registrant and American Stock Transfer and Trust Company,
which, prior to the occurrence of certain events will not be evidenced
separately from the Common Stock.
(2) All of the shares of common stock offered hereby are being sold for the
account of selling stockholders.
(3) Estimated solely for purposes of calculating the registration fee,
pursuant to Rule 457(c) under the Securities Act of 1933, and based upon
the average of the reported high and low prices per share of the common
stock as reported by the Nasdaq National Market on July 24, 2003.
SUBJECT TO COMPLETION, DATED JULY 24, 2003
PROSPECTUS
2,100,000 SHARES
[LOGO OF COMTECH TELECOMMUNICATIONS CORP.]
COMMON STOCK
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This prospectus covers 2,100,000 shares of our common stock that may be
offered and sold from time to time by the selling stockholders. We will not
receive any proceeds from the sale of the shares of common stock. We will bear
the costs relating to the registration of the shares of common stock, which we
estimate will be approximately $65,000.
The selling stockholders may offer their shares through public or private
transactions on or off the Nasdaq National Market at prevailing market prices or
at privately negotiated prices. The selling stockholders may make sales directly
to purchasers or through brokers, agents, dealers or underwriters. The selling
stockholders will bear all commissions and other compensation paid to brokers in
connection with the sale of their shares.
Our common stock is traded on the Nasdaq National Market under the symbol
CMTL. On July 24, 2003, the closing sale price of our common stock was $19.04
per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is 2003
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TABLE OF CONTENTS
PAGE
THE COMPANY...................................................................1
THE OFFERING..................................................................2
RISK FACTORS..................................................................3
FORWARD-LOOKING STATEMENTS...................................................10
USE OF PROCEEDS..............................................................10
SELLING STOCKHOLDERS.........................................................11
PLAN OF DISTRIBUTION.........................................................12
LEGAL MATTERS................................................................13
EXPERTS......................................................................13
WHERE YOU CAN FIND MORE INFORMATION..........................................14
----------------------------------------------------
You should rely only on the information contained in this prospectus. We
have not, and the selling stockholders have not, authorized anyone to provide
you with information different from that contained in this prospectus. The
selling stockholders are not making an offer to sell or seeking offers to buy
these securities in any jurisdiction where the offer or sale is not permitted.
The information contained in this prospectus is complete and accurate as of the
date of this prospectus, but the information may have changed since that date.
Unless the context otherwise indicates, the terms "Comtech," "we" and "our
company" mean Comtech Telecommunications Corp. and Comtech's subsidiaries. All
share and per share information has been adjusted to reflect the 3-for-2 stock
split that occurred on July 14, 2003.
i
THE COMPANY
We design, develop, produce and market innovative products, systems and
services for advanced communications solutions addressing commercial and
government markets. We offer niche product lines where we believe we have
technological, engineering, systems design or other expertise that differentiate
our product offerings.
We conduct our business through three complementary business segments:
telecommunications transmission, mobile data communications services and RF
microwave amplifiers:
Our TELECOMMUNICATIONS TRANSMISSION segment, which is our largest business
segment, provides sophisticated products and systems for satellite,
over-the-horizon microwave and line-of-sight microwave telecommunication
systems. Our telecommunications transmission products are used in a wide variety
of commercial and defense applications including the transmission of voice,
video and data over the Internet (such as voice over Internet Protocol and
broadband video), long distance telephone, broadcast and cable television and
highly secure applications relating to military intelligence. We believe we are
a leading provider, based on market share and product performance, of
over-the-horizon microwave systems, satellite earth station modems and
integrated circuits incorporating Turbo Product Code forward error correction
technology.
Our MOBILE DATA COMMUNICATIONS SERVICES segment provides satellite-based
mobile tracking and messaging services and mobile satellite transceivers
primarily for defense applications, including logistics, support and battlefield
command and control. We are currently the sole provider of the U.S. Army
logistics command's Movement Tracking System and have recently begun providing
our mobile satellite transceivers for integration into a U.S. Army command and
control system. We are currently exploring commercial transportation market
applications for our satellite-based mobile system and transceivers.
Our RF MICROWAVE AMPLIFIER segment designs, manufactures and markets
solid-state high power, broadband RF microwave amplifier products. Our RF
microwave amplifier products are used in a wide variety of applications
including defense (such as communications, radar, jamming and identification
friend or foe systems), medical equipment (such as oncology treatment systems),
satellite communications (including air-to-satellite-to-ground communications)
and instrumentation (such as those used by manufacturers to test electronic
systems for electromagnetic compatibility). We believe we are one of the largest
independent suppliers of solid-state high power, broadband RF microwave
amplifiers.
----------------------------------------------------
Our principal executive offices are located at 105 Baylis Road, Melville,
New York 11747. The headquarters' telephone number is (631) 777-8900. Our
website can be accessed at www.comtechtel.com. The information contained in our
website does not constitute part of this prospectus. We are incorporated in the
state of Delaware.
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THE OFFERING
Common stock offered by the selling stockholders... 2,100,000 shares
Offering Price..................................... All or part of the
shares offered hereby
may be sold from time
to time by the selling
stockholders.
Risk Factors....................................... For a discussion of
certain risks you
should consider before
investing in the
shares, see "Risk
Factors" beginning on
page 3.
Nasdaq National Market symbol...................... CMTL
2
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE DECIDING TO
INVEST IN OUR COMMON STOCK. THESE RISKS COULD HAVE A MATERIAL AND ADVERSE IMPACT
ON OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION. IF THAT WERE TO
HAPPEN, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE
ALL OR PART OF YOUR INVESTMENT. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES
WE FACE. OUR BUSINESS OPERATIONS COULD ALSO BE IMPAIRED BY ADDITIONAL RISKS AND
UNCERTAINTIES THAT ARE NOT PRESENTLY KNOWN TO US, OR THAT WE CURRENTLY CONSIDER
IMMATERIAL.
RISKS RELATED TO OUR BUSINESS
DUE TO MANY FACTORS, INCLUDING THE AMOUNT OF BUSINESS REPRESENTED BY LARGE
CONTRACTS, OUR OPERATING RESULTS ARE DIFFICULT TO FORECAST AND MAY BE VOLATILE.
We have experienced, and will experience in the future, significant
fluctuations in sales and operating results from quarter to quarter. One reason
for this is that a significant portion of our business - primarily the
over-the-horizon microwave systems of our telecommunications transmission
business segment, a portion of our RF microwave amplifier business segment and
the majority of our mobile data communications services segment - is derived
from a limited number of relatively large customer contracts, the timing of
which cannot be predicted. While we generally recognize revenue on contracts
when the products are shipped, revenue is recognized on the
percentage-of-completion method when the performance of a contract will extend
beyond a 12 month period. Our net sales and operating results also may vary
significantly from period to period because of the following factors: product
mix sold; fluctuating market demand; price competition; new product
introductions by our competitors; fluctuations in foreign currency exchange
rates; unexpected changes in delivery of components or subsystems; political
instability; regulatory developments; and general economic conditions.
Accordingly, you should not rely on period-to-period comparisons as indications
of our future performance because these comparisons may not be meaningful.
OUR BUSINESS, RESULTS OF OPERATIONS, LIQUIDITY AND FINANCIAL POSITION DEPEND ON
OUR ABILITY TO MAINTAIN OUR LEVEL OF GOVERNMENT BUSINESS.
The recent slowdown in our commercial business, particularly in the
telecommunications and aviation sectors, has increased our dependence on
U.S. government business. Our sales to the U.S. government (including sales
to prime contractors to the U.S. government) accounted for approximately
44.9% of our total net sales for the nine months ended April 30, 2003 and
33.8%, 23.1% and 8.8% of our total net sales for the fiscal years ended
2002, 2001 and 2000, respectively. We expect such business to represent a
significant portion of our revenues for the foreseeable future. U.S.
government business exposes us to various risks, including:
o unexpected contract or project terminations or suspensions;
o unpredictable order placements, reductions or cancellations;
o reductions in government funds available for our projects due to
government policy changes, budget cuts and other spending priorities;
o penalties arising from post-award contract audits;
o cost audits in which the value of our contracts may be reduced;
o higher-than-expected final costs, particularly relating to software
and hardware development, for work performed under contracts where we
commit to specified deliveries for a fixed price; and
o unpredictable cash collections of unbilled receivables that may be
subject to acceptance of contract deliverables by the customer and
contract close-out procedures, including government approval of
final indirect rates.
All of our U.S. government contracts can be terminated by the U.S.
government for its convenience. Termination for convenience provisions provide
only for our recovery of costs incurred or committed, settlement expenses and
profit on work completed prior to termination. In addition to the right of the
U.S. government to terminate, U.S. government contracts are conditioned upon the
continuing approval by Congress of the necessary spending. Congress usually
appropriates funds for a given program on a fiscal-year basis even though
contract performance may take more than one year. Consequently, at the beginning
of a major program, the contract is usually not fully funded, and additional
monies are normally committed to the contract only if, as and when
appropriations are made by Congress for future fiscal years.
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The U.S. government may review our costs and performance on their
contracts, as well as our accounting and general business practices. Based on
the results of such audits, the U.S. government may adjust our contract-related
costs and fees, including certain financing costs, goodwill, portions of
research and development costs, and certain marketing expenses, which may not be
reimbursable under U.S. government contracts.
We obtain U.S. government contracts through a competitive bidding process.
We cannot assure you that we will continue to win competitively awarded
contracts or that awarded contracts will generate sufficient net sales to result
in profitability.
ALL OF OUR BUSINESSES ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE; WE MUST KEEP
PACE WITH CHANGES TO COMPETE SUCCESSFULLY.
We are engaged in businesses characterized by rapid technological change,
evolving industry standards, frequent new product announcements and
enhancements, and changing customer demands. The introduction of products and
services embodying new technologies and the emergence of new industry standards
could render our products and services obsolete or non-competitive. The
technology used in our products and services evolves rapidly, and our business
position depends, in large part, on the continuous refinement of our scientific
and engineering expertise and the development, either through internal research
and development or acquisitions, of new or enhanced products and technologies.
We may not have the economic or technological resources to be successful in such
efforts and we may not be able to identify and respond to technological
improvements made by our competitors in a timely or cost-effective fashion. A
significant technological breakthrough by others, including smaller competitors
or new firms, could have a material adverse impact on our business, results of
operations and financial condition.
OUR DEPENDENCE ON INTERNATIONAL SALES MAY ADVERSELY AFFECT US.
Sales for use by international customers (including sales to prime
contractors' international customers) represented approximately 38.3% of our
total net sales for the nine months ended April 30, 2003 and 41.2%, 46.2% and
71.4% of our total net sales for the fiscal years ended July 31, 2002, 2001 and
2000, respectively. Approximately 56.0% of our backlog at April 30, 2003
consisted of orders for use by foreign customers. We expect that international
sales will continue to be a substantial portion of our total sales.
These sales expose us to certain risks, including barriers to trade,
fluctuations in foreign currency exchange rates (which may make our products
less price competitive), political and economic instability, exposure to public
health epidemics (such as Severe Acute Respiratory Syndrome ("SARS")),
availability of suitable export financing, tariff regulations, and other U.S.
and foreign regulations that may apply to the export of our products and the
generally greater difficulties of doing business abroad. We attempt to reduce
the economic risk of doing business in foreign countries by seeking subcontracts
with large systems suppliers, contracts denominated in U.S. dollars, advance or
milestone payments and irrevocable letters of credit in our favor. However, we
may not be able to reduce the economic risk of doing business in foreign
countries, in all instances.
Foreign defense contracts generally contain provisions relating to
termination at the convenience of the government. In addition, certain of our
products and systems may require licenses from U.S. government agencies for
export from the United States, and some of our products may not be permitted to
be exported. We cannot be sure of our ability to gain any licenses that may be
required to export our products, and failure to receive required licenses could
materially reduce our ability to sell our products outside the United States.
A SLOWING ECONOMY AND CONTINUED REDUCTION IN TELECOMMUNICATIONS EQUIPMENT AND
SYSTEMS SPENDING MAY NEGATIVELY AFFECT OUR REVENUES AND PROFITABILITY.
Since the second half of fiscal 2001, our revenues from commercial
customers have been negatively affected by the increasingly uncertain economic
environment both in the overall market, and more specifically in the
telecommunications and aviations sectors. If the economy continues to slow, some
of our customers may further reduce their budgets for spending on
telecommunications equipment and systems. As a consequence, our current
customers and other prospective customers may postpone, reduce or even forego
the purchase of our products and systems, which could adversely affect our
revenues and profitability.
4
OUR MOBILE DATA COMMUNICATIONS SERVICES BUSINESS IS SUBJECT TO RISK.
Although fiscal 2003 sales and earnings will increase significantly over
prior years, our mobile data communications services business has a relatively
limited operating history compared to our other business segments. It is subject
to all of the risks inherent in the operation of a new business enterprise. In
addition to the other risk factors described in this section, the risk factors
applicable to our mobile data communications services business include the
following:
o Although the U.S. Army contract obligates us to provide satellite
services and hardware, including mobile satellite transceivers and
computers, over an eight year period as and when ordered by the U.S.
Army and at the prices and other terms set forth in the contract,
the U.S. Army is not obligated to purchase any terminals or services
under this contract and may terminate this contract. Sales under
the U.S. Army contract could be subject to unpredictable funding and
deployment decisions. Through April 30, 2003, we have received
orders aggregating $64.5 million under this contract.
o Certain components that we need have purchasing lead time of four
monthsor longer, and the U.S. Army contract requires us to provide
mobile terminals within 90 days after we receive an order.
o Our success in commercial markets will depend on, among other things,
our ability to access the best distribution channels, the development
or licensing of applications which create value for the customer and
our ability to attract and retain qualified personnel. Delays in
delivering terminals could also adversely affect our ability to obtain
and retain commercial customers.
o In general, as we seek to grow our mobile data communications
services business, we anticipate that we will need to maintain a
substantial inventory in order to provide terminals to our customers on
a timely basis. If forecasted orders are not received, we might be left
with large inventories of slow moving or unusable parts or terminals.
This could result in an adverse effect on our business, results of
operations and financial condition.
o We lease the satellite capacity necessary to operate our system from
third party satellite networks. We currently have a long-term lease
that expires on June 30, 2005 with a satellite network operator, Mobile
Satellite Ventures, for satellite coverage in North America, Central
America and the northern rim of South America. We have leases with
other vendors for satellite coverage in other parts of the world as
required by the U.S. Army contract. We cannot assure you that we will
be able to obtain sufficient satellite capacity or geographical
coverage from any vendor to operate our mobile data communications
services system on acceptable terms or on a timely basis.
o There are several existing competitors in the mobile data
communications services market that have established systems with
sizable customer bases and much greater financial resources than us.
The largest of these competitors is Qualcomm, Inc. Existing
competitors, including terrestrial service providers, are also
aggressively pricing their products and services and may continue to do
so in the future. Competitors continue to offer new value added
products and services, which we may be unable to match on a timely or
cost effective basis. Increased competition may impact margins
throughout the industry. We anticipate that new competitors will enter
the mobile data communications services market in the future. This
could impact our entry into the commercial market in a significant way.
o All satellite communications are subject to the risk that a satellite
or ground station failure or a natural disaster may interrupt service.
Interruptions in service could have a material adverse impact on our
business, results of operations and financial condition. At present,
one of our satellite providers, is operating without a full in-orbit
back-up capability in the event of a failure of one of its two
satellites in operation. Should we be obliged to restore service on
another system in the event of a satellite failure, our costs would
increase and could have an adverse effect on our business, results of
operation, liquidity and financial position.
5
OUR BACKLOG IS SUBJECT TO CUSTOMER CANCELLATION OR MODIFICATION.
We currently have a backlog of orders, mostly under contracts that the
customer may modify or terminate. We cannot assure you that our backlog will
result in net sales.
OUR DEPENDENCE ON COMPONENT AVAILABILITY, SUBCONTRACTOR AVAILABILITY AND
PERFORMANCE AND KEY SUPPLIERS MAY ADVERSELY AFFECT US.
We do not generally maintain a substantial inventory of components and
subsystems. We obtain certain components and subsystems from a single source or
a limited number of sources, but believe that most components and subsystems are
available from alternative suppliers and subcontractors. A significant
interruption in the delivery of such items, however, could have a material
adverse impact on our business, results of operations and financial condition.
OUR FIXED PRICE CONTRACTS SUBJECT US TO RISK.
Almost all of our products and services are sold under fixed price
contracts. This means that we bear the risk of unanticipated technological,
manufacturing, supply or other problems, price increases or increases in the
cost of performance.
ADVERSE REGULATORY CHANGES COULD IMPAIR OUR ABILITY TO SELL PRODUCTS.
Our products are incorporated into wireless communications systems that
must comply with various government regulations, including those of the Federal
Communications Commission. Regulatory changes, including changes in the
allocation and availability of frequency spectrum, and in the military standards
and specifications that define the current satellite networking environment,
could materially harm our business by (1) restricting development efforts by us
and our customers, (2) making our current products less attractive or obsolete,
or (3) increasing the opportunity for additional competition.
Changes in, or our failure to comply with, applicable regulations could
materially harm our business. In addition, the increasing demand for wireless
communications has exerted pressure on regulatory bodies world wide to adopt new
standards and reassign bandwidth for these products and services. The reduced
number of available frequencies for other products and services and the time
delays inherent in the government approval process of new products and services
have caused and may continue to cause our customers to cancel, postpone or
reschedule their installation of communications systems including their
satellite, over-the-horizon-microwave, or terrestrial line-of-sight-microwave
communication systems. This, in turn, could have a material adverse effect on
our sales of products to our customers.
WE FACE RISKS FROM THE UNCERTAINTY OF PREVAILING ECONOMIC AND POLITICAL
CONDITIONS.
Current global political and economic conditions are uncertain. As a
result, it is difficult to estimate the level of expansion, if any, for the
global or U.S. economies generally or the markets in which we participate.
Because our budgeting and forecasting process relies on estimates of growth in
the markets we serve, the current economic environment renders estimates of
future income and expenses even more difficult than usual to formulate. The
future direction of the domestic and global economies and political environment
could have a material adverse impact on our business, results of operations and
financial condition.
ACQUISITIONS AND STRATEGIC INVESTMENTS MAY DIVERT OUR RESOURCES AND MANAGEMENT
ATTENTION; RESULTS MAY FALL SHORT OF EXPECTATIONS.
We intend to continue pursuing selected acquisitions of and investments in
businesses, technologies and product lines as a key component of our growth
strategy. Any future acquisition or investment may result in the use of
significant amounts of cash, potentially dilutive issuances of equity
securities, incurrence of debt and amortization expenses or in process research
and development charges related to intangible assets. Acquisitions involve
numerous risks, including:
o difficulties in the integration and assimilation of the operations,
technologies, products and personnel of an acquired business;
6
o diversion of management's attention from our other business concerns;
and
o potential loss of key employees or customers of any acquired business.
THE LOSS OF KEY TECHNICAL OR MANAGEMENT PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.
Our success depends on the continued contributions of key management
personnel, including the key corporate and operating unit management at each of
our subsidiaries. Many of our key personnel, particularly the key engineers of
our subsidiaries, would be difficult to replace, and are not subject to
employment or noncompetition agreements. Our growth and future success will
depend in large part upon our ability to attract and retain highly qualified
engineering, sales and marketing personnel. Competition for such personnel from
other companies, academic institutions, government entities and other
organizations is intense. Although we believe that we have been successful to
date in recruiting and keeping key personnel, we may not be successful in
attracting and retaining the personnel we will need to continue to grow and
operate profitably. Also, the management skills that have been appropriate for
us in the past may not continue to be appropriate if we continue to grow and
diversify.
OUR MARKETS ARE HIGHLY COMPETITIVE.
The markets for our products are highly competitive. We cannot assure you
that we will be able to successfully compete or that our competitors will not
develop new technologies and products that are more commercially effective than
our own. We expect the Department of Defense's increased use of commercial
off-the-shelf products and components in military equipment will encourage new
competitors to enter the market. Also, although the implementation of advanced
telecommunications services is in its early stages in many developing countries,
we believe competition may intensify as businesses and foreign governments
realize the market potential of telecommunications services. Many of our
competitors have financial, technical, marketing, sales and distribution
resources greater than ours.
PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED; WE ARE SUBJECT TO THE RISK
OF THIRD PARTY CLAIMS OF INFRINGEMENT.
Our businesses rely in large part upon our proprietary scientific and
engineering "know-how" and production techniques. Historically, patents have not
been an important part of our protection of our intellectual property rights. We
rely primarily upon the laws of unfair competition, restrictions in licensing
agreements and confidentiality agreements to protect our intellectual property.
We limit access to, and distribution of, our proprietary information. These
efforts allow us to rely upon the knowledge and experience of our management and
technical personnel to market our existing products and to develop new products.
The departure of any of our key management and technical personnel, the breach
of their confidentiality and non-disclosure obligations to us or the failure to
achieve our intellectual property objectives may have a material adverse impact
on our business, results of operations and financial condition.
Our ability to compete successfully and achieve future revenue growth will
depend, in part, on our ability to protect our proprietary technology and
operate without infringing upon the rights of others. We may fail to do so. In
addition, the laws of certain countries in which our products are or may be sold
may not protect our products and intellectual property rights to the same extent
as the laws of the United States.
We believe that we own or have licensed all intellectual property rights
necessary for the operation of our businesses as currently contemplated. If the
technology we use is found to infringe on protected technology, we could be
required to change our business practices, license the protected technology,
and/or pay damages or other compensation to the infringed party. If we are
unable to license protected technology used in our business or if we were
required to change our business practices, we could be prohibited from making
and selling our products or providing certain telecommunications services.
OUR OPERATIONS ARE SUBJECT TO ENVIRONMENTAL REGULATION.
We are subject to a variety of local, state and federal governmental
regulations relating to the storage, discharge, handling, emission, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture our products, particularly in the fabrication of fiberglass antennas
by our Comtech Antenna Systems, Inc. subsidiary. We believe that we are
currently in compliance, in all material respects, with such regulations and
that we have obtained all necessary environmental permits to conduct our
business. Nevertheless, the failure to
7
comply with current or future regulations could result in the imposition of
substantial fines, suspension of production, alteration of our manufacturing
processes or cessation of operations that could have a material adverse impact
on our business, results of operations and financial condition.
RECENTLY ENACTED AND PROPOSED CHANGES IN SECURITIES LAWS AND REGULATIONS ARE
LIKELY TO INCREASE OUR COSTS.
The Sarbanes-Oxley Act of 2002 that became law in July 2002 requires
changes in some of our corporate governance, public disclosure and compliance
practices. The Act also requires the Securities and Exchange Commission to
promulgate new rules on a variety of subjects. In addition to final rules and
rule proposals already made, the Nasdaq National Market has proposed revisions
to its requirements for companies, such as us, that are listed on the Nasdaq
National Market. We expect these developments to increase our legal and
financial compliance costs. We expect these developments to make it more
difficult and more expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur
substantially higher costs to obtain coverage. These developments could make it
more difficult for us to attract and retain qualified members of our board of
directors, particularly to serve on our audit committee, and qualified executive
officers. We are presently evaluating and monitoring regulatory developments and
cannot estimate the timing or magnitude of additional costs we could incur as a
result.
TERRORIST ATTACKS AND THREATS, AND GOVERNMENT RESPONSES THERETO, AND THREATS OF
WAR ELSEWHERE MAY NEGATIVELY IMPACT ALL ASPECTS OF OUR OPERATIONS, REVENUES,
COSTS AND STOCK PRICE.
The terrorist attacks in the United States and against United States'
interests overseas, the U.S. government's response thereto, and threats of war
may negatively affect our business, financial condition and results of
operations. Any escalation in these events or similar or future events may
disrupt our operations or those of our customers and may affect the availability
of materials needed to manufacture our products or the means to transport those
materials to manufacturing facilities and finished products to customers. In
addition, these events have had and could continue to have an adverse impact on
the U.S. and world economy in general.
RISKS RELATED TO THIS OFFERING
OUR STOCK PRICE IS VOLATILE.
The stock market in general, and the stock prices of technology-based
companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of any specific public company. The
market price of our common stock has fluctuated significantly in the past and is
likely to fluctuate significantly in the future as well. Factors that may have a
significant impact on the market price of our stock include:
o future announcements concerning us or our competitors;
o receipt or non-receipt of substantial orders for products and
services;
o results of technological innovations;
o new commercial products;
o changes in recommendations of securities analysts;
o government regulations;
o proprietary rights or product or patent litigation;
o changes in economic conditions generally, particularly in the
telecommunications sector;
o changes in market conditions generally, particularly in the market for
small cap stocks; and
o limited public float.
Shortfalls in our sales or earnings in any given period relative to the
levels expected by securities analysts could immediately, significantly and
adversely affect the trading price of our common stock.
WE HAVE NEVER DECLARED OR PAID CASH DIVIDENDS.
We have never declared or paid a cash dividend and do not intend to
declare any cash dividends on our common stock in the foreseeable future.
8
PROVISIONS IN OUR CORPORATE DOCUMENTS, STOCKHOLDER RIGHTS PLAN, AND DELAWARE LAW
COULD DELAY OR PREVENT A CHANGE IN CONTROL OF COMTECH.
We have taken a number of actions that could have the effect of
discouraging, delaying or preventing a merger or acquisition involving Comtech
that our stockholders may consider favorable. For example, we have adopted a
stockholder rights plan that could cause substantial dilution to a stockholder,
and substantially increase the cost paid by a stockholder, who attempts to
acquire us on terms not approved by our board of directors. This could prevent
us from being acquired. In addition, our certificate of incorporation grants the
board of directors the authority to fix the rights, preferences and privileges
of and issue up to 2,000,000 shares of preferred stock without stockholder
action. Although we have no present intention to issue shares of preferred
stock, such an issuance of any class or series of our preferred stock could have
rights which would adversely affect the voting power of the common stock or
which could delay, defer, or prevent a change in control of Comtech. In
addition, we are subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, this statute provides
that except in certain limited circumstances a corporation shall not engage in
any "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, for purposes of Section 203 of the
Delaware General Corporation Law, an "interested stockholder" is a person who,
together with affiliates, owns, or within three years did own, 15% or more of
the corporation's voting stock. This provision could have the effect of delaying
or preventing a change in control of Comtech.
9
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" including statements
concerning the future of our industry, product development, business strategy,
continued acceptance of our products, market growth, and dependence on
significant customers. These statements can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," "continue," or other similar words. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus. The risk factors noted above and other factors
noted throughout this prospectus could cause our actual results to differ
significantly from those contained in any forward-looking statement. Except as
required by law, we undertake no obligation to update publicly any
forward-looking statements for any reason after the date of this prospectus to
conform these statements to actual results or to changes in our expectations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock by the selling stockholders.
10
SELLING STOCKHOLDERS
All of the 2,100,000 shares offered hereby were acquired by the selling
stockholders from us in a private placement completed on July 16, 2003. The
initial holders, or their pledgees, donees, distributes, transferees or other
successors-in-interest (including, for example, partners in a partnership
receiving a distribution of the shares), who are collectively referred to in
this prospectus as the selling stockholders, may from time to time offer and
sell any and all of the shares of common stock offered under this prospectus.
The following table sets forth, for each selling stockholder, the amount
of Comtech common stock owned, the number of shares of common stock offered
hereby and the number of shares of common stock to be held and the percentage of
outstanding common stock to be owned after completion of this offering (assuming
the sale of all shares offered under this prospectus). None of the selling
stockholders has had any position, office or other relationship material to
Comtech or any of its affiliates within the past three years.
NUMBER PERCENT
NUMBER OF OF
NUMBER OF OF SHARES SHARES OWNERSHIP
SHARES OFFERED OWNED AFTER AFTER
NAME OWNED HEREBY OFFERING OFFERING
---- ----- ------ -------- --------
Amaranth L.L.C 150,000 150,000 - -
Ardsley Offshore Fund, Ltd. 125,000 125,000 - -
Ardsley Partners
Institutional Fund, L.P. 60,000 60,000 - -
Ardsley Partners Fund II, L.P. 115,000 115,000 - -
BayStar Capital II, LP 150,000 150,000 - -
Colonial Fund LLC 75,000 75,000 - -
Core Technology Fund Inc. 16,100 3,800 12,300 *
Executive Technology LP 10,300 1,000 9,300 *
Gracie Capital, LP 150,000 150,000 - -
Mainfield Enterprises Inc. 300,000 300,000 - -
Matrix Technology Group N.V 8,250 2,100 6,150 *
PCM Partners International
Ltd. 29,300 8,400 20,900 *
PCM Partners L.P. II 379,100 104,100 275,000 2.0%
S.A.C. Capital Associates,
LLC 300,000 300,000 - -
SF Capital Partners Ltd. 375,000 375,000 - -
SG Partners L.P. 174,175 26,800 147,375 1.1%
Sci-Tech Investment
Partners L.P. 34,200 4,800 29,400 *
UT Technology Partners I,
L.P. 82,500 82,500 - -
Walt Disney Company
Retirement Plan 97,400 25,100 72,300 *
Yale University New Leaf 41,400 41,400 - -
- ---------
* Less than 1%.
11
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our shares of common stock and may sell
or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
12
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares of common stock purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares of common stock. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934 may apply to sales of our common stock and activities of the selling
stockholders.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Proskauer Rose LLP, New York, New York.
EXPERTS
The consolidated financial statements of Comtech Telecommunications Corp.
and subsidiaries as of July 31, 2002 and 2001, and for each of the years in the
three-year period ended July 31, 2002, are included in Comtech's Annual Report
on Form 10-K for the year ended July 31, 2002 in reliance upon the report of
KPMG LLP, independent accountants, incorporated herein by reference, and upon
the authority of said firm as experts in accounting and auditing.
13
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can inspect and
copy these reports, proxy statements and other information at the public
reference facilities of the Securities and Exchange Commission, in Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Securities and
Exchange Commission's regional offices at 233 Broadway, New York, New York 10279
and 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604. You can also
obtain copies of these materials from the public reference section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Please call the Securities and Exchange Commission
at 1-800-SEC-0330 for further information on the public reference rooms. The
Securities and Exchange Commission also maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Securities and Exchange Commission
(http://www.sec.gov).
We have filed a registration statement on Form S-3 and related exhibits
with the Securities and Exchange Commission under the Securities Act. The
registration statement contains additional information about us and our common
stock. You may inspect the registration statement and exhibits without charge at
the office of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and you may obtain copies from the Securities and
Exchange Commission at prescribed rates.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the Securities and Exchange Commission will
automatically update and supersede this information. We incorporate by reference
the following documents we filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"):
o our Annual Report on Form 10-K for the fiscal year ended July 31,
2002, filed on October 16, 2002, as amended on our Amendments to
Annual Report on Form 10-K/A for the fiscal year ended July 31, 2002,
filed on April 4, 2003 and July 25, 2003;
o our Quarterly Reports on Form 10-Q for periods ended October 31,
2002, filed on December 10, 2002, January 31, 2003, filed on March 12,
2003, and April 30, 2003, filed on June 5, 2003;
o our Definitive Proxy Statement dated November 1, 2002;
o our registration of our common stock pursuant to Section 12(g) of the
Exchange Act, on Form 8-A filed on November 25, 1974; and
o all documents filed by us with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
before the offering of the common stock offered hereby is completed.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Telephone: (631) 777-8900
Attention: Ms. Gail Segui
14
==============================================================================
[LOGO OF COMTECH TELECOMMUNICATIONS CORP.]
2,100,000
COMMON STOCK
------------
PROSPECTUS
------------
, 2003
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the sale
of the common stock being registered under the prospectus are as follows (all
amounts other than Securities and Exchange Commission, NASD, and Nasdaq National
Market fees are estimated).
Securities and Exchange Commission
registration fee ........................................ $ 3,267
NASD registration fee ..................................... 4,060
Nasdaq National Market additional listing fee ............. 21,000
Blue Sky fees and expenses ................................ 2,000
Transfer agent's fees and expenses ........................ 2,000
Printing and engraving costs .............................. 0
Accounting fees and expenses .............................. 15,000
Legal fees and expenses (other than Blue Sky
fees and expenses)......................................... 15,000
Miscellaneous ............................................. 2,673
----------
Total ............................................... $ 65,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted under Delaware law, our Certificate of Incorporation contains
a provision that eliminates the personal liability of the directors to us and
our stockholders for monetary damages for breaches of fiduciary duties as
directors, except that such provision does not apply to any breach that involves
o a breach of a director's duty of loyalty to our company,
o any acts or omission not in good faith or which involves intentional
misconduct or a knowing violation of law,
o a transaction from which the director derives an improper personal
benefit, or
o the payment of dividends or the approval of stock repurchases or
redemptions that are unlawful under the Delaware General Corporation
Law.
Our By-laws provide that we shall indemnify (a) any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of our company) by reason
of the fact that he is or was one or our directors, officers or employees, or is
or was serving at our request as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to our best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful, and (b) any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by us or in our name to procure a judgment in its favor by reason of the
fact that he is or was one or our directors, officers or employees, or is or was
serving at our request as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to our
best interests and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to us
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but
II - 1
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT INCORPORATED BY
NUMBER DESCRIPTION OF EXHIBIT REFERENCE TO EXHIBIT
- ------ ---------------------- --------------------
4(a) Common Stock Purchase Agreement dated as of
July 15, 2003, by and among the Registrant
and each of the purchasers named therein
4(b) Rights Agreement dated as of December Exhibit 4(1) to the
15, 1998 between the Registrant and Registrant's Form
American Stock Transfer and Trust 8-A/A dated
Company, as Rights Agent December 23, 1998
5 Legal Opinion of Proskauer Rose LLP
23(a) Consent of KPMG LLP
23(b) Consent of Proskauer Rose LLP
(contained in Exhibit 5 to this
registration statement)
24 Power of Attorney (contained in the
signature pages to this registration
statement)
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; provided, however, that notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration
statement is on Form S-3, Form S-8 of Form F-3, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Melville and State of New York, on the 25th day of
July, 2003.
COMTECH TELECOMMUNICATIONS CORP.
By /s/ Fred Kornberg
------------------------------
Fred Kornberg
Chairman of the Board,
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in their respective
capacities and on the respective dates set forth opposite their names. Each
person whose signature appears below hereby authorizes Fred Kornberg and Robert
G. Rouse, and each of them, with full power of substitution, to execute in the
name and on behalf of such person any amendment or any post-effective amendment
to this registration statement and to file the same, with exhibits thereto, and
other documents in connection therewith, making such changes in this
registration statement as the registrant deems appropriate, and appoints Fred
Kornberg and Robert G. Rouse, and each of them, with full power of substitution,
attorneys-in-fact to sign any amendment and any post-effective amendment to this
registration statement and to file the same, with exhibits thereto, and other
documents in connection therewith.
SIGNATURE CAPACITY DATE
- ---------------------- ----------------------------- --------------------
/s/ Fred Kornberg
- ---------------------- Chairman of the Board, July 25, 2003
Fred Kornberg Chief Executive
Officer and President
(Principal Executive
Officer)
/s/ Robert G. Rouse
- ---------------------- Senior Vice President July 25, 2003
Robert G. Rouse and Chief Financial
Officer
(Principal Financial
and Accounting Officer)
/s/ George Bugliarello
- ---------------------- Director July 25, 2003
George Bugliarello
/s/ Richard L. Goldberg
- ---------------------- Director July 25, 2003
Richard L. Goldberg
/s/ Edwin Kantor
- ---------------------- Director July 25, 2003
Edwin Kantor
/s/ Ira Kaplan
- ---------------------- Director July 25, 2003
Ira Kaplan
/s/ Gerard R. Nocita
- ---------------------- Director July 25, 2003
Gerard R. Nocita
II-4
EXHIBIT 4(a)
COMTECH TELECOMMUNICATIONS CORP.
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "AGREEMENT") is made and
entered into as of July 15, 2003, by and among Comtech Telecommunications,
Corp., a Delaware corporation (the "COMPANY"), and each of the purchasers listed
on EXHIBIT A attached hereto (collectively, the "PURCHASERS" and individually, a
"PURCHASER").
RECITALS
WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers
desire to purchase from the Company, shares of Common Stock, par value $0.10 per
share, of the Company (the "COMMON STOCK") on the terms and conditions set forth
in this Agreement; and
WHEREAS, the Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT").
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
(a) AUTHORIZATION. The Company's Board of Directors has authorized
the issuance, pursuant to the terms and conditions of this Agreement, of up to
2,100,000 shares of Common Stock (the "PURCHASED Shares").
(b) AGREEMENT TO PURCHASE AND SELL SECURITIES. Subject to the terms
and conditions of this Agreement, each Purchaser severally agrees to purchase,
and the Company agrees to sell and issue to each Purchaser, at the Closing (as
defined below), that number of Purchased Shares set forth opposite such
Purchaser's name on EXHIBIT A attached hereto. The purchase price of each
Purchased Share (the "PER SHARE PRICE") shall be $ 19.33.
(c) USE OF PROCEEDS. The Company intends to apply the net proceeds
from the sale of the Purchased Shares for the pre-payment of long-term debt and
for other corporate purposes.
(d) OBLIGATIONS SEVERAL NOT JOINT. The obligations of each Purchaser
under this Agreement are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser under this Agreement. Nothing
contained herein, and no action taken by any Purchaser pursuant hereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by this Agreement. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
2. CLOSING. The purchase and sale of the Purchased Shares shall take place
at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New York, at
10:00 a.m. E.T., on July 16, 2003, or at such other time and place as the
Company and Purchasers mutually agree upon (which time and place are referred to
in this Agreement as the "CLOSING"). At the Closing, the Company shall authorize
its transfer agent to issue to each Purchaser, against delivery of payment for
the Purchased Shares by wire transfer of immediate available funds in accordance
with the Company's instructions, one or more stock certificates (the
"CERTIFICATES") registered in the name of each Purchaser (or in such nominee
name(s) as designated by such Purchaser in the Stock Certificate Questionnaire
attached hereto as Appendix I), representing the number of shares set forth
opposite the appropriate Purchaser's name on EXHIBIT A hereto, and bearing the
legend set forth in Section 4(j) herein. Closing documents may be delivered by
facsimile with original signature pages sent by overnight courier. The date of
the Closing is referred to herein as the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that the statements in this
Section 3 are true and correct, except as set forth in the SEC Documents (as
defined below):
(a) ORGANIZATION GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all corporate power and authority required to
(i) carry on its business as presently conducted and (ii) enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and thereby. The
Company is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, "MATERIAL ADVERSE EFFECT" means a material adverse effect on,
or a material adverse change in, or a group of such effects on or changes in,
the business, operations, financial condition, results of operations, assets or
liabilities of the Company and its subsidiaries, taken as a whole.
(b) CAPITALIZATION. The capitalization of the Company, without
listing the Purchased Shares to be issued pursuant to this Agreement, and
without giving effect to a three-for-two stock split, effected by a stock
dividend payable on July 14, 2003, to holders of record as of June 30, 2003, is
as follows:
(i) The authorized capital stock of the Company consists of
30,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock.
(ii) As of June 30, 2003, the issued and outstanding capital
stock of the Company consisted of 7,718,523 shares of Common Stock. The shares
of issued and outstanding capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights.
(iii) As of June 30, 2003, the Company had (a) 425,450 shares
of Common Stock reserved for issuance upon exercise of outstanding options
granted under the Company's 1993 Incentive Stock Option Plan; (b) 870,520 shares
of Common Stock reserved for issuance upon exercise of outstanding options
granted under the Company's 2000 Stock Incentive Plan; and 34,992 shares of
Common Stock reserved for issuance upon exercise of outstanding warrants.
(iv) As of June 30, 2003, the Company had 534,960 shares of
Common Stock available for future grant under the Company's 2000 Stock Incentive
Plan.
(v) As of June 30, 2003, the Company had 232,632 shares of
Common Stock reserved for future purchase by employees of the Company under the
Company's 2001 Employee Stock Purchase Plan (the "ESPP").
With the exception of the foregoing in this Section 3(b), there are no
outstanding subscriptions, options, warrants, convertible or exchangeable
securities or other rights granted to or by the Company to purchase shares of
Common Stock or other securities of the Company and there are no commitments,
plans or arrangements to issue any shares of Common Stock or any security
convertible into or exchangeable for Common Stock.
(c) SUBSIDIARIES. Except as set forth in the Disclosure Letter
set forth on EXHIBIT C attached hereto delivered to the purchasers
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concurrently herewith and except for Comtech AHA Corporation, a Delaware
corporation, Comtech Antenna Systems, Inc., a Delaware corporation, Comtech
EF Data Corp., a Delaware corporation, Comtech Mobile Datacom Corp., a
Delaware corporation, Comtech PST Corp., a New York corporation, Comtech
Systems, Inc., a Delaware corporation, and Comtech Vipersat Networks, Inc.,
a Delaware corporation, the Company does not have any subsidiaries, nor does
the Company own any capital stock of, assets comprising the business of,
obligations of, or any other interest (including any equity or partnership
interest) in, any person or entity.
(d) DUE AUTHORIZATION. All corporate actions on the part of the
Company necessary for the authorization, execution, delivery of, and the
performance of all obligations of the Company under this Agreement and the
authorization, issuance, reservation for issuance and delivery of all of the
Purchased Shares being sold under this Agreement have been taken, no further
consent or authorization of the Company or the Board of Directors or its
stockholders is required (including with respect to NASD Marketplace Rule
4350(i)(1)(D)), and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except (i) as may be limited by (1) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors' rights generally and (2) the effect of
rules of law governing the availability of equitable remedies and (ii) as rights
to indemnity or contribution may be limited under federal or state securities
laws or by principles of public policy thereunder.
(e) VALID ISSUANCE OF STOCK.
(i) VALID ISSUANCE. The shares of Common Stock to be issued
pursuant to this Agreement will be, upon payment therefor by the Purchasers in
accordance with this Agreement, duly authorized, validly issued, fully paid and
non-assessable free from all taxes, liens, claims, encumbrances with respect to
the issuance of such shares and will not be subject to any pre-emptive rights or
similar rights.
(ii) COMPLIANCE WITH SECURITIES LAWS. Subject to the accuracy
of the representations made by the Purchasers in Section 4 hereof, the Purchased
Shares (assuming no change in applicable law and no unlawful distribution of
Purchased Shares by the Purchasers or other parties) will be issued to the
Purchasers in compliance with applicable exemptions from (1) the registration
and prospectus delivery requirements of the Securities Act and (2) the
registration and qualification requirements of all applicable securities laws of
the states of the United States.
(f) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, or notice to, any federal, state or local governmental authority or
self regulatory agency on the part of the Company is required in connection with
the issuance of the Purchased Shares to the Purchasers, or the consummation of
the other transactions contemplated by this Agreement, except (i) such filings
as have been made prior to the date hereof, (ii) the filing of a notification
form with The Nasdaq National Market ("NASDAQ") and (iii) such additional
post-Closing filings as may be required to comply with applicable state and
federal securities laws and the listing requirements of Nasdaq.
(g) NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby (including issuance of the Purchased Shares),
do not (i) contravene or conflict with the Certificate of Incorporation or
Bylaws of the Company, each as amended; (ii) constitute a violation of any
provision of any federal, state, local or foreign law, rule, regulation, order
or decree applicable to the Company; or (iii) constitute a default or require
any consent under, give rise to any right of termination, cancellation or
acceleration of, or to a loss of any material benefit to which the Company is
entitled under, or result in the creation or imposition of any lien, claim or
encumbrance on any assets of the Company under, any material contract to which
the Company is a party or any material permit, license or similar right relating
to the Company or by which the Company may be bound or affected.
(h) LITIGATION. Except as set forth in the Disclosure Letter,
there is no action, suit, proceeding, claim, arbitration or investigation
("ACTION") pending or, to the Company's knowledge, threatened in writing: (i)
against the Company, its activities, properties or assets, or any officer,
director or employee of the Company in connection with such officer's,
director's or employee's relationship with, or actions taken on behalf of, the
Company, that is reasonably likely to have a Material Adverse Effect on the
Company, or (ii) that seeks to prevent, enjoin, alter, challenge or delay the
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transactions contemplated by this Agreement (including issuance of the Purchased
Shares). The Company is not a party to or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. No Action by the Company is currently pending nor does the
Company intend to initiate any Action that is reasonably likely to have a
Material Adverse Effect on the Company.
(i) COMPLIANCE WITH LAW AND CHARTER DOCUMENTS. The Company is not
in violation or default of any provisions of its Certificate of Incorporation or
Bylaws, each as amended. The Company has complied and is currently in compliance
with all applicable statutes, laws, rules, regulations and orders of the United
States of America and all states thereof, foreign countries and other
governmental bodies and agencies having jurisdiction over the Company's business
or properties, except for any instance of non-compliance that has not had, and
would not reasonably be expected to have, a Material Adverse Effect.
(j) MATERIAL NON-PUBLIC INFORMATION. The Company has not provided
to the Purchasers any material non-public information other than information
related to the transactions contemplated by this Agreement, all of which
information related to the transactions contemplated hereby shall be disclosed
by the Company pursuant to Section 9(m) hereof.
(k) SEC DOCUMENTS.
(i) REPORTS. The Company has filed in a timely manner all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and
regulations promulgated thereunder. The Company has made available to the
Purchasers prior to the date hereof copies of its Annual Report on Form 10-K for
the fiscal year ended July 31, 2002 (the "FORM 10-K"), its quarterly report on
Form 10-Q for the fiscal quarter ended April 30, 2003 (the "FORM 10-Q"), its
Proxy Statement for its 2002 Annual Meeting of Stockholders (the "PROXY
STATEMENT"), and any Current Report on Form 8-K for events occurring since July
31, 2002 ("FORM 8-KS" filed by the Company with the SEC (the Form 10-K, the Form
10-Q, the Proxy Statement and the Form 8-Ks are collectively referred to herein
as the "SEC DOCUMENTS"). Each of the SEC Documents, as of the respective date
thereof, did not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. Each SEC
Document, as it may have been subsequently amended by filings made by the
Company with the SEC prior to the date hereof, complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Document.
(ii) FINANCIAL STATEMENTS. The financial statements of the
Company in the SEC Documents present fairly, in accordance with United States
generally accepted accounting principles ("GAAP"), consistently applied, the
financial position of the Company as of the dates indicated, and the results of
its operations and cash flows for the periods therein specified, subject, in the
case of unaudited financial statements for interim periods, to normal year-end
audit adjustments.
(l) ABSENCE OF CERTAIN CHANGES SINCE BALANCE SHEET DATE. Since
April 30, 2003, the business and operations of the Company have been conducted
in the ordinary course consistent with past practice, and, except as set forth
in the Disclosure Letter, there has not been:
(i) any declaration, setting aside or payment of any
dividend or other distribution of the assets of the Company with respect to any
shares of capital stock of the Company or any repurchase, redemption or other
acquisition by the Company or any subsidiary of the Company of any outstanding
shares of the Company's capital stock;
(ii) any damage, destruction or loss, whether or not covered
by insurance, except for such occurrences, individually and collectively, that
have not had, and would not reasonably be expected to have, a Material Adverse
Effect;
(iii) any waiver by the Company of a valuable right or of a
material debt owed to it, except for such waivers, individually and
collectively, that have not had, and would not reasonably be expected to have, a
Material Adverse Effect;
(iv) any material change or amendment to, or any waiver of any
material right under a material contract or arrangement by which the Company or
any of its assets or properties is bound or subject;
(v) any change by the Company in its accounting principles,
methods or practices or in the manner in which it keeps its accounting books and
records, except any such change required by a change in GAAP or by the SEC; or
(vi) any other event or condition of any character, except for
such events and conditions that have not resulted, and are not expected to
result, either individually or collectively, in a Material Adverse Effect.
(m) INTELLECTUAL PROPERTY. The Company owns or possesses adequate
rights to use all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, copyrights or other information
(collectively, "INTELLECTUAL PROPERTY"), which are necessary to conduct its
businesses as currently conducted, except where the failure to currently own or
possess would not reasonably be expected to result, either individually or in
the aggregate, in a Material Adverse Effect. The Company has not received any
written notice of, and has no actual knowledge of, any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a Material
Adverse Effect, and to the Company's knowledge, none of the material patent
rights owned or licensed by the Company are unenforceable or invalid.
(n) REGISTRATION RIGHTS. Except as provided in Section 5 herein,
and except as set forth in the Disclosure Letter, effective upon the Closing,
the Company is not currently subject to any agreement providing any person or
entity any rights (including piggyback registration rights) to have any
securities of the Company registered with the SEC or registered or qualified
with any other governmental authority.
(o) TITLE TO PROPERTY AND ASSETS. The properties and assets of the
Company are owned by the Company free and clear of all mortgages, deeds of
trust, liens, charges, encumbrances and security interests except for (i)
statutory liens for the payment of current taxes that are not yet delinquent,
and (ii) liens, encumbrances and security interests that arise in the ordinary
course of business and do not in any material respect affect the properties and
assets of the Company. With respect to the property and assets it leases, the
Company is in compliance with such leases in all material respects.
(p) TAXES. The Company has filed or has valid extensions of the
time to file all necessary federal, state, and foreign income and franchise tax
returns due prior to the date hereof and has paid or accrued all taxes shown as
due thereon, and the Company has no knowledge of any material tax deficiency
which has been or might be asserted or threatened against it.
(q) INSURANCE. The Company maintains insurance of the types and in
the amounts that the Company reasonably believes is prudent and adequate for its
business, all of which insurance is in full force and effect.
(r) LABOR RELATIONS. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(s) INTERNAL ACCOUNTING CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the
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recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) TRANSACTIONS WITH OFFICERS AND DIRECTORS. Except as set forth
in the SEC Documents, none of the officers or directors of the Company is a
party to any transaction with the Company or any Subsidiary that would be
required to be disclosed pursuant to Item 404(a), (b) or (c) of Regulation S-K
of the SEC.
(u) GENERAL SOLICITATION. Neither the Company nor any other person
or entity authorized by the Company to act on its behalf has engaged in a
general solicitation or general advertising (within the meaning of Regulation D
of the Securities Act) of investors with respect to offers or sales of the
Purchased Shares.
(v) REGISTRATION STATEMENT MATTERS. The Company meets the
eligibility requirements for use of a Form S-3 Registration Statement for the
resale of the Purchased Shares by the Purchasers. Assuming the completion and
timely delivery of the Registration Statement Questionnaire by each Purchaser to
the Company, the Company is not aware of any facts or circumstances that would
prohibit or delay the preparation and filing of a registration statement with
respect to the Purchased Shares.
(w) NO INTEGRATED OFFERING. Neither the Company, nor any Affiliate
(as hereafter defined) of the Company, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Purchased Shares to be integrated with prior offerings by
the Company for purposes of the Securities Act, any applicable state securities
laws or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any national securities exchange
or automated quotation system on which any of the securities of the Company are
listed or designated, nor will the Company take any action or steps that would
cause the offering of the Purchased Shares to be integrated with other
offerings.
(x) NASDAQ LISTING MATTERS. The Common Stock of the Company is
registered and listed on Nasdaq under the ticker symbol "CMTL." The Company has
not received any notice that it is not in compliance with the listing or
maintenance requirements of Nasdaq. The issuance and sale of the Purchased
Shares under this Agreement does not contravene the rules and regulations of
Nasdaq.
(y) DISCLOSURE. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated hereby,
furnished by or on behalf of the Company (including the Company's
representations and warranties set forth in this Agreement) were true and
correct in all material respects when made and did not, when made, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE
PURCHASERS. Each Purchaser hereby represents and warrants to the Company,
severally and not jointly, and agrees that:
(a) ORGANIZATION GOOD STANDING AND QUALIFICATION. The Purchaser
has all corporate, membership or partnership power and authority required to
enter into this Agreement and the other agreements, instruments and documents
contemplated hereby, and to consummate the transactions contemplated hereby and
thereby.
(b) AUTHORIZATION. The execution of this Agreement has been duly
authorized by all necessary corporate, membership or partnership action on the
part of the Purchaser. This Agreement constitutes the Purchaser's legal, valid
and binding obligation, enforceable in accordance with its terms, except (i) as
may be limited by (1) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally and (2) the effect of rules of law governing the
availability of equitable remedies and (ii) as rights to indemnity or
contribution may be limited under federal or state securities laws or by
principles of public policy thereunder.
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(c) LITIGATION. There is no Action pending to which such Purchaser
is a party that is reasonably likely to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement.
(d) PURCHASE FOR OWN ACCOUNT. The Purchased Shares are being
acquired for investment for the Purchaser's own account, not as a nominee or
agent, and not with a view to the public resale or distribution thereof within
the meaning of the Securities Act, without prejudice, however, to such
Purchaser's right at all times to sell or otherwise dispose of all or any part
of such Securities in compliance with applicable federal and state securities
laws and as otherwise contemplated by this Agreement. The Purchaser also
represents that it has not been formed for the specific purpose of acquiring the
Purchased Shares.
(e) INVESTMENT EXPERIENCE. The Purchaser understands that the
purchase of the Purchased Shares involves substantial risk. The Purchaser has
experience as an investor in securities of companies and acknowledges that it
can bear the economic risk of its investment in the Purchased Shares and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of this investment in the Purchased
Shares and protecting its own interests in connection with this investment.
(f) ACCREDITED PURCHASER STATUS. The Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act and a "qualified institutional buyer" within the meaning of Rule 144A
promulgated under the Securities Act ("Rule 144A").
(g) RELIANCE UPON PURCHASER'S REPRESENTATIONS. The Purchaser
understands that the issuance and sale of the Purchased Shares to it will not be
registered under the Securities Act on the ground that such issuance and sale
will be exempt from registration under the Securities Act pursuant to Section
4(2) thereof, and that the Company's reliance on such exemption is based on each
Purchaser's representations set forth herein.
(h) RECEIPT OF INFORMATION. The Purchaser has had an opportunity
to ask questions and receive answers from the Company regarding the terms and
conditions of the issuance and sale of the Purchased Shares and the business,
properties, prospects and financial condition of the Company and to obtain any
additional information requested and has received and considered all information
it deems relevant to make an informed decision to purchase the Purchased Shares.
Neither such inquiries nor any other investigation conducted by or on behalf of
such Purchaser or its representatives or counsel shall modify, amend or affect
such Purchaser's right to rely on the truth, accuracy and completeness of such
information and the Company's representations and warranties contained in this
Agreement.
(i) RESTRICTED SECURITIES. The Purchaser understands that the
Purchased Shares have not been registered under the Securities Act and will not
sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any of
the Purchased Shares unless (i) pursuant to an effective registration statement
under the Securities Act, (ii) such holder provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that a sale,
assignment or transfer of the Securities may be made without registration under
the Securities Act and the transferee agrees to be bound by the terms and
conditions of this Agreement, or (iii) such holder provides the Company with
evidence of compliance with Rule 144 promulgated under the Securities Act ("Rule
144"), including reasonable assurances (in the form of seller and broker
representation letters) that the Securities can be sold pursuant to Rule 144, or
(iv) pursuant to Rule 144(k) following the applicable holding period.
Notwithstanding anything to the contrary contained in this Agreement, including
but not limited to in Section 5(c)(i) below, the Purchaser may transfer (without
restriction and without the need for an opinion of counsel) the Purchased Shares
to its Affiliates provided that each such Affiliate is an "accredited investor"
under Regulation D, a "qualified institutional buyer" under Rule 144A, and such
Affiliate agrees to be bound by the terms and conditions of this Agreement.
(j) LEGENDS. The Purchaser agrees that the certificates for the
Purchased Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY STATE
SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY
THE HOLDER IN THE ABSENCE
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OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE LAWS AND RULES, OR,
UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, SUCH
TRANSFER MAY BE EFFECTED WITHOUT VIOLATION OF THE SECURITIES ACT
OF 1933 AND OTHER APPLICABLE STATE LAWS AND RULES."
In addition, the Purchaser agrees that the Company may place stop transfer
orders with its transfer agents with respect to such certificates in order to
implement the restrictions on transfer set forth in this Agreement. The
appropriate portion of the legend and the stop transfer orders will be removed
promptly upon delivery to the Company of such satisfactory evidence as
reasonably may be required by the Company that such legend or stop orders are
not required to ensure compliance with the Securities Act.
(k) QUESTIONNAIRES. The Purchaser has completed or caused to be
completed the Stock Certificate Questionnaire and the Registration Statement
Questionnaire, attached to this Agreement as Appendices I and II, for use in
preparation of the Registration Statement (as defined in Section 5(a)(ii)
below), and the answers to such Questionnaires are true and correct as of the
date of this Agreement.
(l) RESTRICTIONS ON SHORT SALES. The Purchaser represents and
warrants that, during the period beginning on the date on which C.E. Unterberg,
Towbin, a financial advisor to the Company, first contacted such Purchaser
regarding a transaction contemplated by this Agreement (and involving the
Company) and ending on the Closing Date, neither it nor any Affiliate (as
defined below) of such Purchaser has engaged in any "short sales" (as such term
is defined in Rule 3b-3 promulgated under the Exchange Act) of the Company's
Common Stock. The representations and warranties in this Section 4(l) shall not
apply to any Affiliate of the Purchaser to the extent that such Affiliate is
acting in the capacity of a broker-dealer executing unsolicited third party
transactions.
For the purposes of this Agreement, an "Affiliate" of any specified
Purchaser means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such specified
Purchaser. For the purposes of this definition, "control" means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
5. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT.
(a) FORM D FILING; REGISTRATION OF PURCHASED SHARES. The
Company hereby agrees that it shall:
(i) file in a timely manner a Form D relating to the sale of
the Purchased Shares under this Agreement, pursuant to Regulation D promulgated
under the Securities Act;
(ii) prepare and file with the SEC as soon as practicable and
in no event later than thirty (30) days following the Closing, a registration
statement on Form S-3 (the "REGISTRATION STATEMENT"), to enable the resale of
the Purchased Shares (collectively, the "REGISTRABLE SHARES", including any
shares of Common Stock issued as a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the Purchased Shares) by the
Purchasers from time to time on Nasdaq and use all commercially reasonable
efforts to cause such Registration Statement to be declared effective as
promptly as possible after filing, but in any event, within one hundred twenty
(120) days after the Closing Date and to remain continuously effective until the
earlier of (1) the second anniversary of the effective date of the Registration
Statement, (2) the date on which all Registrable Shares purchased by the
Purchasers pursuant to this Agreement have been sold thereunder or (3) the date
on which the Registrable Shares can be sold by non-affiliates of the Company
pursuant to Rule 144(k) promulgated under the Securities Act (the "REGISTRATION
PERIOD"). In the event that the Company does not meet the requirements for the
use of Form S-3, the Company shall use such other form as is available for such
a registration, and shall convert such other form to Form S-3, or file a
replacement registration statement on Form S-3, promptly after the first date on
which it meets such requirements;
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(iii) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective at all times until the end of the Registration
Period;
(iv) furnish to the Purchasers with respect to the Registrable
Shares registered under the Registration Statement such reasonable number of
copies of any prospectus in conformity with the requirements of the Securities
Act and such other documents as the Purchaser may reasonably request, in order
to facilitate the public sale or other disposition of all or any of the
Registrable Shares by the Purchasers;
(v) use its commercially reasonable efforts to file documents
required of the Company for normal blue sky clearance in states specified in
writing by the Purchasers; PROVIDED, HOWEVER, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(vi) take all such action as is required of it to cause the
Registrable Shares to be listed on Nasdaq on the Closing Date.;
(vii) promptly notify the Purchasers in writing when the
Registration Statement has been declared effective;
(viii) promptly notify the Purchasers in writing of the
existence of any fact or the happening of any event, during the Registration
Period (but not as to the substance of any such fact or event), that makes any
statement of a material fact made in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make the statements
therein not misleading (PROVIDED, HOWEVER, that no notice by the Company shall
be required pursuant to this subsection (viii) in the event that the Company
either contemporaneously files a prospectus supplement to update the Prospectus
or a Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into the Registration Statement, which, in either case, contains the
requisite information with respect to such material event that results in such
Registration Statement no longer containing any such untrue or misleading
statements);
(ix) furnish to each Purchaser upon written request, from the
date of this Agreement until the end of the Registration Period, one copy of its
periodic reports filed with the SEC pursuant to the Exchange Act and the rules
and regulations promulgated thereunder;
(x) bear all expenses in connection with the procedures
described in paragraphs (i) through (ix) of this Section 5(a) and the
registration of the Registrable Shares pursuant to the Registration Statement
other than fees and expenses, if any, of legal counsel or other advisers to the
Purchasers or underwriting discounts, brokerage fees and commissions incurred by
the Purchasers, if any.
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section 5(a) with respect to Registrable Shares
held by a Purchaser that such Purchaser shall timely furnish to the Company a
completed Registration Statement Questionnaire on or before the Closing Date and
such other written information regarding itself, the Registrable Shares to be
sold by such Purchaser, and the intended method of disposition of the
Registrable Shares as shall be required to effect the registration of the
Registrable Shares. The Purchasers shall update such information as and when
necessary by written notice to the Company.
(b) LIQUIDATED DAMAGES.
(i) DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT. In the
event that the Registration Statement is not declared effective by the date that
is ninety (90) days following the Closing Date or, in the event of a review of
the Registration Statement by the SEC, one hundred twenty (120) days following
the Closing Date, the Company shall pay to each Purchaser liquidated damages (in
addition to the rights and remedies available to each
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Purchaser under applicable law and this Agreement), in an amount equal to one
percent (1%) of the total purchase price of the Purchased Shares purchased by
such Purchaser pursuant to this Agreement payable in cash.
(ii) LAPSE IN EFFECTIVENESS OF REGISTRATION STATEMENT. In the
event that the Registration Statement is filed and declared effective but,
during the Registration Period, shall thereafter cease to be effective or
useable or the prospectus included in the Registration Statement (the
"PROSPECTUS", as amended or supplemented by any prospectus supplement and by all
other amendments thereto and all material incorporated by reference in such
Prospectus) ceases to be usable, in either case, in connection with resales of
Registrable Shares, without such lapse being cured within ten (10) business days
(the "CURE PERIOD") by a post-effective amendment to the Registration Statement,
a supplement to the Prospectus or a report filed with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such lapse,
then the Company shall pay to each Purchaser, liquidated damages (in addition to
the rights and remedies available to each Purchaser under applicable law and
this Agreement), for the period from and including the first day following the
expiration of the Cure Period until, but excluding, the earlier of (1) the date
on which such failure is cured and (2) the date on which the Registration Period
expires, at a rate equal to two percent (2%) per annum (pro rata on a 360 day
basis) of the total purchase price of the Purchased Shares purchased by such
Purchaser pursuant to this Agreement. Such liquidated damages shall be payable
monthly in cash.
(c) TRANSFER OF REGISTRABLE SHARES AFTER REGISTRATION; SUSPENSION.
(i) The Purchasers agree that they will not offer to sell or
make any sale, assignment, pledge, hypothecation or other transfer with respect
to the Registrable Shares that would constitute a sale within the meaning of the
Securities Act except pursuant to either (1) the Registration Statement, (2)
Rule 144 of the Securities Act or (3) any other exemption from registration
under the Securities Act, and that they will promptly notify the Company of any
changes in the information set forth in the Registration Statement after it is
prepared regarding the Purchaser or its plan of distribution to the extent
required by applicable law.
(ii) In addition to any suspension rights under paragraph
(iii) below, the Company, upon the happening of any pending corporate
development, public filing with the SEC or similar event, that, in the judgment
of Company's Board of Directors, renders it advisable to suspend use of the
prospectus, may, for no more than thirty (30) days in the aggregate, suspend use
of the prospectus, on written notice to each Purchaser (which notice will not
disclose the content of any material non-public information and will indicate
the date of the beginning and end of the intended period of suspension, if
known), in which case each Purchaser shall discontinue disposition of
Registrable Shares covered by the Registration Statement or prospectus until
copies of a supplemented or amended prospectus are distributed to the Purchasers
or until the Purchasers are advised in writing by the Company that sales of
Registrable Shares under the applicable prospectus may be resumed and have
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in any such prospectus. The suspension and
notice thereof described in this Section 5(c)(ii) shall be held in strictest
confidence and shall not be disclosed by the Purchasers. The Company may not
utilize the suspension described in this Section 5(c)(ii) more than two (2)
times in the aggregate.
(iii) Subject to paragraph (iv) below, in the event of:
(1) any request by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to a Registration Statement or related prospectus or for
additional information, (2) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(3) the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Shares for sale in any jurisdiction or the initiation of any
proceeding for such purpose, or (4) any event or circumstance which necessitates
the making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and that in the case of the prospectus, it will not contain any untrue statement
of a material fact or any omission to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, then the Company shall
deliver a certificate in writing to the Purchasers (the "SUSPENSION NOTICE") to
the effect of the foregoing (which notice will not
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disclose the content of any material non-public information and will indicate
the date of the beginning and end of the intended period of suspension, if
known), and, upon receipt of such Suspension Notice, the Purchasers will
discontinue disposition of Registrable Shares covered by to the Registration
Statement or prospectus (a "SUSPENSION") until the Purchasers' receipt of copies
of a supplemented or amended prospectus prepared and filed by the Company, or
until the Purchasers are advised in writing by the Company that the current
prospectus may be used, and have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such prospectus. In the event of any Suspension, the Company will use its
commercially reasonable efforts to cause the use of the prospectus so suspended
to be resumed as soon as possible after delivery of a Suspension Notice to the
Purchasers. The Suspension and Suspension Notice described in this Section
5(c)(iii) shall be held in strictest confidence and shall not be disclosed by
the Purchasers.
(iv) Provided that a Suspension is not then in effect, the
Purchasers may sell Registrable Shares under the Registration Statement,
provided that the selling Purchaser arranges for delivery of a current
prospectus to the transferee of such Registrable Shares to the extent such
delivery is required by applicable law.
(v) In the event of a sale of Registrable Shares by a
Purchaser, such Purchaser must also deliver to the Company's transfer agent,
with a copy to the Company, a certificate of subsequent sale reasonably
satisfactory to the Company, so that ownership of the Registrable Shares may be
properly transferred. The Company will cooperate to facilitate the timely
preparation and delivery of certificates (unless otherwise required by
applicable law) representing Registrable Shares sold.
(d) INDEMNIFICATION. For the purpose of this Section 5(d), the term
"Registration Statement" shall include any preliminary or final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 5(a).
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each of the Purchasers and each person, if any, who
controls any Purchaser within the meaning of the Securities Act, to the fullest
extent permitted by law, against any and all losses, claims, damages,
liabilities or expenses, joint or several, to which such Purchasers or such
controlling person may become subject, under the Securities Act, the Exchange
Act or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them, in light of the
circumstances under which they were made, not misleading, and will reimburse
each Purchaser and each such controlling person for any reasonable legal and
other expenses as such reasonable expenses are incurred by such Purchaser or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; PROVIDED, HOWEVER, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability, expense or action
arises out of or is based upon (1) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
the Prospectus or any amendment to or supplement of the Registration Statement
or Prospectus made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use in
the Registration Statement or the Prospectus, (2) the failure of such Purchaser
to comply with the covenants and agreements contained in this Agreement
respecting resale of the Purchased Shares, or (3) any untrue statement or
omission of a material fact required to make such statement not misleading in
any Prospectus that is corrected in any subsequent Prospectus that was delivered
to the Purchaser before the pertinent sale or sales by the Purchaser.
(ii) INDEMNIFICATION BY THE PURCHASER. Each Purchaser will
severally and not jointly indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses to which the
Company, its directors, its officers who signed the
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Registration Statement and any controlling persons may become subject, under the
Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Purchaser, which consent shall not be unreasonably withheld) insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement to the Registration Statement or
Prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Purchaser expressly for use therein, and the Purchaser will reimburse the
Company, each of its directors, each of its officers who signed the Registration
Statement, and any controlling persons for any reasonable legal and other
expense incurred by the Company, its directors, its officers who signed the
Registration Statement, and any controlling persons, in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; PROVIDED, however, that the Purchaser
shall not be liable for any such untrue or alleged untrue statement or omission
or alleged omission with respect to which the Purchaser has delivered to the
Company in writing a correction before the occurrence of the event from which
such loss was incurred. Notwithstanding the provisions of this Section 5(d), the
Purchaser shall not be liable for any indemnification obligation under this
Agreement in excess of the aggregate amount of net proceeds received by the
Purchaser from the sale of the Registrable Shares pursuant to the Registration
Statement.
(iii) INDEMNIFICATION PROCEDURE.
(1) Promptly after receipt by an indemnified party under
this Section 5(d) of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 5(d), promptly notify the indemnifying
party in writing of the claim; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise under the indemnity agreement
contained in this Section 5(d) or otherwise, to the extent it is not prejudiced
as a result of such failure.
(2) In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 5(d) for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless:
a) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party, representing all of the
indemnified parties who are parties to such action); or
b) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action against the indemnified party,
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in each of which cases the reasonable fees and expenses of counsel for the
indemnified party shall be at the expense of the indemnifying party.
(iv) CONTRIBUTION. If the indemnification provided for in this
Section 5(d) is required by its terms but is for any reason held to be
unavailable to, or is otherwise insufficient to hold harmless, an indemnified
party under this Section 5(d) with respect to any losses, claims, damages,
liabilities or expenses referred to in this Agreement, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
in this Agreement:
(1) in such proportion as is appropriate to reflect the
relative faults of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations, or
(2) if the allocation provided by clause (1) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative faults referred to in clause (1) above but the relative
benefits received by the Company and the Purchaser from the placement of Common
Stock.
The respective relative benefits received by the Company on the one hand
and each Purchaser on the other shall be deemed to be in the same proportion as
the amount to which the consideration paid by such Purchaser to the Company
pursuant to this Agreement for the Purchased Shares purchased by such Purchaser
that were sold pursuant to the Registration Statement bears to the difference
(the "DIFFERENCE") between the amount such Purchaser paid for the Purchased
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company and
each Purchaser shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact or the inaccurate or the alleged
inaccurate material fact relates to information supplied by the Company or by
such Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 5(d)(iii), any reasonable legal
or other fees or expenses incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 5(d)(iii) with respect to the notice of the threat or commencement of
any threat or action shall apply if a claim for contribution is to be made under
this Section 5(d)(iv); PROVIDED, HOWEVER, that no additional notice shall be
required with respect to any threat or action for which notice has been given
under Section 5(d)(iii) for purposes of indemnification. The Company and each
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 5(d)(iv) were determined solely by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
5(d)(iv), no Purchaser shall be required to contribute any amount in excess of
the amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant
to this Section 5(d)(iv) are several and not joint.
(e) RULE 144 INFORMATION. For two years after the date of this
Agreement, the Company shall file in a timely manner all reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder and shall take such further action to the
extent required to enable the Purchasers to sell the Purchased Shares pursuant
to Rule 144 under the Securities Act (as such rule may be amended from time to
time).
6. ADVISORY FEE. The Purchasers acknowledge that the Company intends to
pay to C.E. Unterberg, Towbin, a financial advisor, and one or more other firms,
as financial advisors, a fee in respect of the sale of the Purchased Shares.
Each of the parties to this Agreement hereby represents that, on the basis of
any actions and
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agreements by it, there are no other brokers or finders entitled to compensation
in connection with the sale of the Purchased Shares to the Purchasers. The
Company shall indemnify and hold harmless the Purchasers from and against all
fees, commissions or other payments owing by the Company to C.E. Unterberg,
Towbin or any other person or firm acting on behalf of the Company hereunder.
7. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of the Purchasers under Section 1(b) of this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each of the
representations and warranties of the Company contained in Section 3 shall be
true and correct in all material respects on and as of the date hereof and on
and as of the date of the Closing with the same effect as though such
representations and warranties had been made as of the Closing.
(b) PERFORMANCE. The Company shall have performed and complied in
all material respects with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchase and sale described herein;
PROVIDED, HOWEVER, that the Company may furnish to each Purchaser a facsimile
copy of the stock certificate representing the Purchased Shares, with the
original stock certificate held in trust by counsel for the Company until
delivery thereof on the next business day.
(c) COMPLIANCE CERTIFICATE. The Company will have delivered to the
Purchasers a certificate signed on its behalf by its Chief Executive Officer or
Chief Financial Officer certifying that the conditions specified in Sections
7(a) and 7(b) hereof have been fulfilled.
(d) AGREEMENT. The Company shall have executed and delivered to
the Purchasers this Agreement.
(e) SECURITIES EXEMPTIONS. The offer and sale of the Purchased
Shares to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
(f) NO SUSPENSION OF TRADING OR LISTING OF COMMON STOCK. The
Common Stock of the Company (i) shall be designated for quotation or listed on
Nasdaq and (ii) shall not have been suspended from trading on Nasdaq.
(g) GOOD STANDING CERTIFICATES. The Company shall have delivered
to the Purchasers a certificate of the Secretary of State of the State of
Delaware, dated as of a date within five days of the date of the Closing, with
respect to the good standing of the Company.
(h) SECRETARY'S CERTIFICATE. The Company shall have delivered to
the Purchasers a certificate of the Company executed by the Company's Secretary
attaching and certifying to the truth and correctness of (1) the Company's
Certificate of Incorporation, (2) the Company's Bylaws and (3) the resolutions
adopted by the Company's Board of Directors in connection with the transactions
contemplated by this Agreement.
(i) OPINION OF COMPANY COUNSEL. The Purchasers will have
received an opinion on behalf of the Company, dated as of the date of the
Closing, from Proskauer Rose LLP, counsel to the Company, in the form attached
as EXHIBIT B.
(j) NO STATUTE OR RULE CHALLENGING TRANSACTION. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.
-14-
(k) PURCHASED SHARES REQUIREMENTS. There shall not be more than
2,100,000 Purchased Shares nor fewer than 1,500,000 Purchased Shares.
(l) OTHER ACTIONS. The Company shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Purchasers in
connection with the transactions contemplated hereby.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Purchasers under this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Purchasers contained in Section 4 shall be true and correct in
all material respects on and as of the date hereof and on and as of the date of
the Closing with the same effect as though such representations and warranties
had been made as of the Closing.
(b) PERFORMANCE. The Purchasers shall have performed and complied
in all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing and shall have obtained all approvals, consents
and qualifications necessary to complete the purchase and sale described herein.
(c) AGREEMENT. The Purchasers shall have executed and delivered to
the Company this Agreement (and Appendix II hereto).
(d) SECURITIES EXEMPTIONS. The offer and sale of the Purchased
Shares to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
(e) PAYMENT OF PURCHASE PRICE. The Purchasers shall have delivered
to the Company by wire transfer of immediately available funds, full payment of
the purchase price for the purchased shares as specified in Section 1(b).
(f) OTHER ACTIONS. The Purchasers shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Company in
connection with the transactions contemplated hereby.
(g) NO STATUTE OR RULE CHALLENGING TRANSACTION. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.
9. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Purchasers. Any Purchaser may assign its rights under this
Agreement to any person to whom the Purchaser assigns or transfers any Purchased
Shares, provided that such transferee agrees in writing to be bound by the terms
and provisions of this Agreement, and such transfer is in compliance with the
terms and provisions of this Agreement and permitted by federal and state
securities laws.
(b) GOVERNING LAW. This Agreement will be governed by and
construed under the internal laws of the State of New York, without reference to
principles of conflict of laws or choice of laws. EACH PARTY HEREBY
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IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(c) SURVIVAL. The representations and warranties of the Company
and the Purchasers contained in Sections 3 and 4 of this Agreement shall survive
until the first (1st) anniversary of the Closing Date.
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(e) HEADINGS. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by reference.
(f) NOTICES. Any notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered (i)
personally by hand or by courier, (ii) mailed by United States first-class mail,
postage prepaid or (iii) sent by facsimile directed (A) if to the Purchaser, at
the Purchaser's address or facsimile number set forth on EXHIBIT A to this
Agreement, or at such address or facsimile number as the Purchaser may designate
by giving at least ten (10) days' advance written notice to the Company or (b)
if to the Company, to its address or facsimile number set forth below, or at
such other address or facsimile number as the Company may designate by giving at
least ten (10) days' advance written notice to the Purchaser. All such notices
and other communications shall be deemed given upon (i) receipt or refusal of
receipt, if delivered personally, (ii) three days after being placed in the
mail, if mailed, or (iii) confirmation of facsimile transfer, if faxed.
The address of the Company for the purpose of this Section 9(f) is as
follows:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
(631) 777-8900
(631) 777-8877/fax
Attention: Robert G. Rouse
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
(212) 969-2900/fax
Attention: Robert A. Cantone
(g) AMENDMENTS AND WAIVERS. This Agreement may be amended only
with the written consent of the Company and each Purchaser. The Company and any
Purchaser, for itself, may waive the performance of any provision of this
Agreement only in writing. Any amendment effected in accordance with this
Section 9(g) will be binding upon the Purchasers, the Company and their
respective successors and assigns.
(h) SEVERABILITY. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
-16-
(i) ENTIRE AGREEMENT. This Agreement, together with all exhibits
and schedules hereto and thereto constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the
subject matter hereof.
(j) FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of the Company or the Purchasers, the Company and the
Purchasers will execute and deliver such instruments, documents or other
writings, and take such other actions, as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
(k) MEANING OF INCLUDE AND INCLUDING. Whenever in this Agreement
the word "include" or "including" is used, it shall be deemed to mean "include,
without limitation" or "including, without limitation," as the case may be, and
the language following "include" or "including" shall not be deemed to set forth
an exhaustive list.
(l) FEES, COSTS AND EXPENSES. Except as otherwise provided for in
this Agreement, all fees, costs and expenses (including attorneys' fees and
expenses) incurred by any party hereto in connection with the preparation,
negotiation and execution of this Agreement and the exhibits and schedules
hereto and the consummation of the transactions contemplated hereby and thereby
(including the costs associated with any filings with, or compliance with any of
the requirements of, any governmental authorities), shall be the sole and
exclusive responsibility of such party. Notwithstanding the foregoing, in the
event of a Closing, the Company shall reimburse the Purchasers for their
reasonable out-of-pocket costs and expenses in an amount not to exceed
$10,000.00.
(m) 8-K FILING AND PUBLICITY. On the Closing Date, the Company
shall file a Current Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by this Agreement and attaching this Agreement and the
press release referred to below as exhibits to such filing (the "8-K FILING"
including all attachments). Neither the Company nor any Purchaser shall issue
any press releases or any other public statements with respect to the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that the Company
shall be entitled, without the prior approval of any Purchaser, to make any
press release or other public disclosure (including a press release (concerning
the offering of the Purchased Shares) pursuant to Rule 135(c) under the
Securities Act) with respect to such transactions (i) in substantial conformity
with the 8-K Filing and (ii) as is required by applicable law, regulations, and
Nasdaq rules; and, provided further, that no such release may identify a
Purchaser unless such Purchaser has consented thereto in writing, or as required
by law.
(n) STOCK SPLITS, DIVIDENDS AND OTHER SIMILAR EVENTS. The
provisions of this Agreement shall be appropriately adjusted to reflect any
stock split, stock dividend, reorganization or other similar event that may
occur with respect to the Company after the date hereof.
(o) REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each Purchaser
and the Company will be entitled to specific performance under this Agreement.
The parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date and year first above written.
COMTECH TELECOMMUNICATIONS CORP.
By:
--------------------------------
Name:
------------------------------
Title:
----------------------------
[PURCHASER SIGNATURE PAGES TO FOLLOW]
i
SIGNATURE PAGE TO
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JULY 15, 2003
BY AND AMONG
COMTECH TELECOMMUNICATIONS CORP.
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Comtech Telecommunications
Corp., the Common Stock Purchase Agreement (the "Agreement") to which this
Signature Page is attached effective as of the date of the Agreement, which
Agreement and Signature Page, together with all counterparts of such Agreement
and signature pages of the other Purchasers named in such Agreement, shall
constitute one and the same document in accordance with the terms of such
Agreement.
Number of Shares:
----------------
[PURCHASER]
Signature:
------------------------
Name:
-----------------------------
Title:
----------------------------
Address:
--------------------------
--------------------------
--------------------------
Tax ID Number:
--------------------
ii
EXHIBIT 5
CONSENT OF PROSKAUER ROSE LLP
July 25, 2003
Board of Directors of
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Gentlemen:
You have requested our opinion in connection with the filing by Comtech
Telecommunications Corp., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to 2,100,000 shares of common stock, par value $.10 per
share, of the Company (the "Shares").
We have participated in the preparation of the Registration Statement, and have
examined such records, documents and other instruments as we have deemed
relevant, and have discussed with representatives of the Company and such other
persons such questions of fact, as we have deemed proper and necessary as a
basis for rendering this opinion. We have also assumed without investigation the
authenticity of any document submitted to us as an original, the conformity to
originals of any document submitted to us as a copy, the authenticity of the
originals of such latter documents, the genuineness of all signatures and the
legal capacity of natural persons signing such documents.
Based on the foregoing, and in reliance thereon, we are of the opinion that the
Shares (to the extent issued and sold by the Company as described in the
Registration Statement) have been duly authorized and, when issued and delivered
as described in the Registration Statement, will be validly issued, fully paid
and non-assessable.
We express no opinion as to the laws of any jurisdiction other than the laws of
the State of New York, the General Corporation Law of the State of Delaware, and
the laws of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement. In so doing,
we do not admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ PROSKAUER ROSE LLP
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Proskauer Rose LLP
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Comtech Telecommunications Corp.:
We consent to the use of our report dated October 15, 2002 with respect to the
consolidated balance sheets of Comtech Telecommunications Corp. and subsidiaries
as of July 31, 2002 and 2001, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended July 31, 2002, incorporated herein by reference, and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
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KPMG LLP
Melville, New York
July 24, 2003