SUBSCRIPTION AGREEMENT
NOTE: THREE COMPLETED AND EXECUTED COPIES OF THIS SUBSCRIPTION AGREEMENT MUST BE
RETURNED, AND THE ENTIRE PURCHASE PRICE FOR THE COMMON STOCK SUBSCRIBED FOR MUST
BE PAID AS SET FORTH HEREIN, TO SUBSCRIBE FOR THIS OFFERING.
Number of Shares of Common Stock,
$0.01 par value, at $2.50 per Share: 800,000
Aggregate Purchase Price: $2,000,000
* * * * * * * * *
SUBSCRIPTION AGREEMENT, dated as of November 3, 1997, by and among
Acrodyne Communications, Inc., a Delaware corporation (the "Company"), and each
entity whose name appears on Schedule 1 hereto (each an "Investor" and
collectively the "Investor Group").
W I T N E S S E T H
WHEREAS, the Company desires to sell to the Investor Group, and the
Investor Group desires to purchase from the Company, an aggregate of 800,000
shares of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), at a purchase price of $2.50 per share; and
WHEREAS, the Company is described in the Company's Annual Report on
Form 10- KSB for the fiscal year ended December 31, 1996 and its Quarterly
Reports on Form 10-QSB for the periods ended March 31, 1997 and June 30, 1997
(collectively the "Reports") as filed with the Securities and Exchange
Commission (the "Commission");
NOW, THEREFORE, the parties hereto agree as follows:
1. Subscription and Payment.
Subject to the terms and conditions herein set forth, each Investor
severally hereby subscribes for that number of shares of Common Stock appearing
opposite its name on Schedule 1 and shall deliver to the Company at the Closing
(as defined below) the aggregate purchase price appearing in Schedule 1 payable
in immediately available funds.
2. Closing.
The closing (the "Closing") of the purchase and sale of the Common
Stock (the "Offering") shall occur on November 6, 1997 or the earliest date
thereafter on which the closing conditions specified in Sections 7 and 8 of this
Agreement shall have been satisfied or waived (any such date, the "Closing
Date"); provided, however, that if the Closing has not occurred by November 7,
1997, then this Agreement shall terminate and the Closing shall not take place.
At the Closing, the Company will deliver to each Investor one executed copy of
this Agreement with a stock certificate representing the Investor's ownership of
the Common Stock subscribed for hereby and a Warrant as described in Section
6(d).
3. Termination of Offering.
The Investor understands and agrees that it will not be entitled to
exercise the rights of a shareholder of the Company until an appropriate
certificate representing the Common Stock for which it has subscribed has been
issued to it on the day of the Closing. If (a) the Company shall have reasonably
determined that an event has occurred or a condition exists which could
materially and adversely affect the business or proposed business of the Company
and that such possibility warrants termination of the Offering, (b) the
conditions to the Closing of the Offering are not satisfied or (c) the Company
elects to terminate the Offering, the Offering will be terminated, and the
Company will not issue the Common Stock and the Company will not be entitled to
payment of the purchase price for the Common Stock.
4. Representations and Warranties by Investor.
Each Investor hereby severally represents and warrants to the Company
that:
(a) it is an "accredited investor" as that term is defined in Rule
501(a) under the Securities Act of 1933, as amended (the "Act");
(b) it has the requisite knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of an
investment in the Company;
(c) it understands that the Common Stock involves risk of loss of such
Investor's investment;
(d) its financial situation is such that such Investor is able to bear
the economic risks of its investment made hereby and at the present time and in
the foreseeable future could afford a complete loss of such investment;
(e) it has received and carefully read the Reports and has evaluated
the risks of investing in the Company;
(f) it has been given the opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions of the Offering
and to obtain additional information necessary to verify the accuracy of the
information contained in the Reports or such other information as it desired in
order to evaluate its investment;
(g) in making its decision to purchase the Common Stock herein
subscribed for, it has relied solely upon the Reports, certain other written
materials provided by the Company including, without limitation current backlog
reports (such other materials, collectively the "Materials"), and the
representations, warranties, agreements, undertakings and acknowledgments of the
Company in this Agreement and independent investigations made by it;
(h) it understands that an investment in the Company involves certain
risks and it has taken full cognizance of and understands such risks;
(i) it understands that the Common Stock has not been registered under
the Act and agrees that the Common Stock may not be sold, offered for sale,
transferred, pledged, hypothecated or otherwise disposed of except in compliance
with the Act and subject to the terms of this Subscription Agreement;
(j) it understands that no federal or state agency has made any
finding or determination as to the fairness for investment in, or any
recommendation or endorsement of, the Common Stock;
(k) the Common Stock herein subscribed for is being acquired by it in
good faith solely for its own account, for investment purposes and not with a
view to subdivision, distribution or resale. It will not sell or otherwise
dispose of any shares of the Common Stock, unless:
i) it shall have advised the Company in
writing that it intends to dispose of such shares of
Common Stock in a manner to be described in such
advice, and counsel reasonably acceptable to the
Company shall have delivered to the Company an
opinion that registration is not required under the
Act or under any applicable securities laws of any
jurisdiction; or
ii) a registration statement on an
appropriate form under the Act, or a post-effective
amendment to such registration statement, covering
the proposed sale or other disposition of such shares
of Common Stock shall be in effect under the Act and
such shares of Common Stock or the proposed sale or
other disposition thereof shall have been registered
or qualified under applicable securities laws of
any jurisdiction.
Each Investor undertakes to notify the Company as soon as practicable
of any material change in any representation, warranty or other information
relating to the Investor set forth herein which occurs prior to the Closing in
order to insure compliance of the Investor with the terms of this Agreement.
Each Investor acknowledges and agrees that the certificates
representing the Common Stock shall bear the following legend (unless not
required under the Act):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 and may not be sold, exchanged,
hypothecated or transferred in any manner except in compliance with that certain
Subscription Agreement dated as of November 3, 1997 between the Company and the
Investors named therein."
Each Investor also acknowledges that the Company may place a stop
transfer order against transfer of the Common Stock, if necessary in the
Company's reasonable judgment in order to assure compliance by the Investor with
the terms of this Agreement.
If the Investor is a partnership, corporation, trust or other entity,
the Investor represents and warrants that (i) the individual executing this
Agreement has appropriate authority to act on behalf of the Investor and (ii)
the Investor was not specifically formed to acquire the Common Stock subscribed
for hereby. If the Investor is a partnership, the Investor further represents
that the funds to make this investment were not derived from additional capital
contributions of the partners of such partnership made solely for the purpose of
enabling such partnership to purchase the Common Stock and that such partnership
was not formed solely for the purpose of enabling such partnership to purchase
the Common Stock.
The foregoing representations, warranties, agreements, undertakings
and acknowledgments are made by the Investor with the intent that they be relied
upon in determining its suitability as a purchaser of Common Stock.
5. Representations and Warranties of the Company. The Company
represents and warrants to each Investor that:
(a) The Company has duly filed with the Commission all reports
required by the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"). The
Company has furnished to the Investor a true and correct copy of the Reports.
The Reports do not, as of the date on which each was signed, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Materials were prepared in good faith from the
Company's records maintained in the ordinary course of business, except that the
Company makes no representations or warranties with respect to any projections
or forecasts contained in the Materials.
(b) The financial statements (including the related notes) of the
Company included in the Reports present fairly the financial position of the
Company as of the dates indicated and its results of operations for the periods
specified therein, subject, in all cases, to the qualifications stated in the
Reports. All such financial statements have been prepared in accordance with
generally accepted accounting principles on a basis consistently applied,
subject, in all cases, to the qualifications stated in the Reports.
(c) The Company has been duly organized and validly existing as a
corporation in good standing under the laws of its jurisdiction of organization,
with full power and authority (corporate and other) to own its properties and
conduct its business as described in the Reports, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of the business conducted by it or the location of the
properties owned or leased by it makes such licenses, certificates and permits
from governmental authorities necessary for the conduct of its business as
described in the Reports.
(d) The authorized capital stock of the Company consists of (i)
1,000,000 shares of Preferred Stock, par value $1.00 per share, of which 6,500
shares are issued and outstanding at October 15, 1997, and (ii) 10,000,000
shares of Common Stock, par value $.01 per share, of which 4,500,270 shares are
issued and outstanding at October 15, 1997. At October 15, 1997, there are
outstanding stock options and warrants exercisable for a total of 1,215,000
shares of Common Stock. Schedule 2 hereto accurately sets forth the Company's
issued and outstanding capital stock and all securities convertible into capital
stock. The Company has all requisite power and authority to issue, sell and
deliver the Common Stock in accordance with and upon the terms and conditions
set forth in this Agreement; and all corporate action required to be taken by
the Company for the due and proper authorization, issuance, sale and delivery of
the Common Stock has been validly and sufficiently taken. The shares of Common
Stock are being subscribed for hereby will be, when issued, duly authorized,
validly issued, fully paid and nonassessable.
(e) Except as set forth in this Agreement, or as described in the
Reports, subsequent to the respective dates as of which information is given in
the Reports, the Company has not incurred any material liability or obligation,
direct or contingent, or entered into any material transaction, whether or not
in the ordinary course of business, and there has not been any material change
on a consolidated basis in the capital stock, or any material increase in the
short-term debt or long-term debt, or any material adverse change in the
condition (financial or other), business, key personnel, properties or results
of operations of the Company.
(f) The Company is not in violation of its Certificate of
Incorporation or Bylaws or in default in the performance of any material
obligation contained in any material agreement, indenture or other instrument.
The performance by the Company of its obligations under this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach of the Certificate of Incorporation or Bylaws of the Company,
or any material agreement, indenture or other instrument to which the Company is
a party or by which it is bound, or any law, rule, administrative regulation or
decree of any court or governmental authority having jurisdiction over the
Company or its properties, or result in the creation or imposition of any
material lien, charge, claim or encumbrance upon any property or asset of the
Company. Except as required by the Act and applicable state securities or blue
sky laws, no consent, approval, authorization or order of any court or
governmental authority is required in connection with the consummation of the
transactions contemplated by this Agreement. The rights granted to the Investor
hereunder do not in any way conflict with and are not inconsistent with any
rights granted to the holders of the Company's securities or debt instruments.
(g) The Common Stock subscribed for hereunder, when issued, will
conform to the description thereof contained in the Reports. Except as described
in the Reports or as set forth in this Agreement, there are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the Company's
Certificate of Incorporation or Bylaws or any agreement or other instrument to
which the Company is a party.
(h) The Company has full right, power and authority to enter into this
Agreement and this Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms.
(i) Except as otherwise stated in the Reports, (A) the Company has
good and marketable title (in fee simple, in the case of real property), free
and clear of all liens and encumbrances, to all of the material real and
personal property described in the Report as being owned by it, except for any
liens and encumbrances which are not material in the aggregate and do not
materially interfere with the conduct of the business of the Company, and (B)
has valid leases to the material real property described in the Reports as under
lease to it with such exceptions as do not materially interfere with the conduct
of the business of the Company.
(j) Except as set forth in the Reports, there are no actions, suits or
proceedings pending before or by any court or governmental agency or authority,
or any arbitrator, which seek to restrain or prohibit the consummation of the
transactions contemplated hereby or which might reasonably be expected to result
in any material adverse change in the condition (financial or other), business
or results of operations of the Company and, to the best of the Company's
knowledge, no such action, suit or proceeding has been threatened.
(k) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court degree to which it may be subject and
the Company has not failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of its property or to the
conduct of its business, which violation or failure to obtain is likely to have
a material adverse effect on the condition (financial or other), business or
results of operations of the Company.
(l) No person other than Scorpion Holdings, Inc.("Scorpion") is
entitled to receive any commission, fee or compensation from the Company for
services rendered as placement agent in connection with the offer or sale of the
Common Stock pursuant to the Offering.
6. Covenants of the Company.
The Company covenants with the Investor that:
(a) The Company will apply the net proceeds from the sale of the
Common Stock to working capital and other general corporate purposes.
(b) The Company undertakes to notify the Investor as soon as practical
of any material change in any representation, warranty or other information
relating to the Company set forth herein which occurs prior to the Closing.
(c) Neither the Company nor any of its employees or other persons
directly or indirectly affiliated with it will engage in any activity that would
jeopardize the status of the Offering as an exempt transaction under the Act or
under the laws of any state in which the Offering is made.
(d) At Closing, the Company shall issue to the Investors identified in
Schedule 1 warrants for the purchase of up to 300,000 shares of Common Stock,
exercisable for five (5) years after the Closing Date at a warrant exercise
price of $3.00 per share of Common Stock, in the form of the Warrant Agreement
attached hereto as Exhibit A (such warrants, the "Investor Warrants").
(e) At Closing, in consideration for Scorpion Holdings Inc.'s
("Scorpion") introduction to the Investor Group the Company shall sell to S-A
Partners for $2,000 warrants for the purchase of up to 200,000 shares of Common
Stock, exercisable for five (5) years after the Closing Date at a warrant
exercise price of $3.00 per share of Common Stock, in the form of the Warrant
Agreement attached hereto as Exhibit A (such warrants, the "Scorpion Warrants"
and, collectively with the Investor Warrants, the "Warrants").
(f) At Closing, the Company shall enter into a financial advisory
agreement with Scorpion in the form of Exhibit B attached hereto.
(g) For so long as the Investor Group owns beneficially not less than
10% of the Common Stock of the Company issued and outstanding on a fully diluted
basis (assuming the exercise or conversion of all securities exercisable or
convertible into Common Stock): (i) the Company's Board of Directors shall
consist of five (5) directors, (ii) the Investor Group shall be entitled to
nominate one (1) director for election as a member of the Board of Directors of
the Company at the annual meeting of stockholders or any other meeting at which
directors are elected, and the Company shall include such nominee in the slate
of nominee directors recommended for election by the incumbent directors and
management; and (iii) the Company shall include in such slate of nominee
directors at least two (2) nominees who are not affiliated with the Company's
management or with the Investor Group and who shall be selected with the consent
of the Investor Group, whose consent shall not be unreasonably or arbitrarily
withheld. The Company shall be entitled to rely on instructions received by
Investors representing a majority of the Common Stock held by the Investor
Group.
7. Conditions of Investor Obligations.
The Investor's obligations under this Agreement are subject to the
accuracy of the representations and warranties of the Company made in Section 5
hereof in all material respects, to the performance by the Company of its other
obligations under this Agreement to be performed at or prior to the Closing and
to the following further conditions:
(a) At the Closing, the Investor shall have received the favorable
opinion of counsel to the Company, dated the Closing Date and in form and
substance satisfactory to the Investor, to the effect that:
i) The Company has been duly organized and
is validly existing as a corporation in good standing
under the laws of its jurisdiction of organization,
with full power and authority to own its properties
and conduct its business as described in the Reports,
and is duly qualified to do business as a foreign
corporation and is in good standing in each
jurisdiction in which the location of the properties
owned or leased by it, as known by such counsel,
makes such qualification materially necessary.
ii) The authorized capital stock of the
Company consists of 1,000,000 shares of preferred
stock, par value $1.00 per share, and 10,000,000
shares of Common Stock, par value $.01 per share. The
Company has all requisite power and authority to
issue, sell and deliver the Common Stock subscribed
for hereby in accordance with and upon the terms and
conditions set forth in this Agreement; and all
corporate action required to be taken by the Company
for the due and proper authorization, issuance, sale
and delivery of such Common Stock has been validly
and sufficiently taken. Upon payment by the Investor
at the Closing of the purchase price for the shares
of Common Stock subscribed for hereby, such Common
Stock will be, upon issuance and delivery thereof
duly authorized, validly issued, fully paid and
nonassessable. There are no preemptive or other
rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any
shares of Common Stock
pursuant to the Company's Certificate of
Incorporation, By-laws or any agreement or other
instrument known to such counsel to which the Company
is a party except as described in the Reports.
iii) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby do not result in a violation of,
or constitute a default under, the Certificate of
Incorporation or Bylaws of the Company, or any
material agreement, indenture or other instrument
known to such counsel to which the Company is a party
or by which it may be bound, or to which any property
of the Company is subject, nor will the performance
by the Company of its obligations hereunder violate
any law, rule, administrative regulation or decree
known to such counsel of any court, or any
governmental agency or authority having jurisdiction
over the Company or its properties, or, to the
knowledge of such counsel, result in the creation or
imposition of any material lien, charge, claim or
encumbrance upon any property or asset of the
Company. No consent, approval, authorization or other
order of any court, governmental agency or authority
is required in connection with the consummation of
the transactions contemplated by this Agreement,
except such as have been obtained or as are
contemplated hereunder.
iv) The Company has full legal right, power
and authority to enter into this Agreement. This
Agreement has been validly authorized, executed and
delivered by the Company and constitutes a legal,
valid and binding agreement of the Company,
enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally
and court decisions with respect thereto (provided
that no opinion need be expressed with respect to the
application of equitable principles in any
proceeding, whether at law or in equity).
In expressing such opinion, such counsel may state (i) that,
as to questions of fact not independently established by such counsel, such
counsel has relied on certificates of the Company or its officers and of public
officials, (ii) that such opinion is limited to the General Corporation Law of
the State of Delaware, the laws of the United States and the laws of the state
in which such counsel maintains its principal office, and (iii) that, when
reference is made in such opinion to "knowledge" or to what is "known" to such
counsel, such reference means the actual knowledge of only those attorneys who
have given substantive attention to the representation of the Company and the
preparation and negotiation of this Agreement.
(b) At the Closing the Investor shall have received a certificate,
dated the date thereof and signed by the Chairman of the Board and President of
the Company to the effect that:
i) The representations and warranties of the
Company in this Agreement are true and correct in all
material respects, as if made at and as of the
Closing Date, and the Company has complied with all
the agreements and satisfied all the conditions on
its part to be performed or
satisfied at or prior to the Closing Date; and
ii) The signer of said certificate has
examined the Reports and after giving effect to all
amendments or supplements thereto, on the Closing
Date, such Reports does not include any untrue
statement of a material fact or omit to state any
material fact necessary to make the statements
therein not misleading.
If any of the conditions specified in this Section 7 have not been
fulfilled in all material respects when and as required by this Agreement to be
fulfilled, the Investor may cancel this Agreement and all its obligations under
this Agreement by notifying the Company of such cancellation in writing or by
telegram or by facsimile at any time at or before the Closing and any such
cancellation will be without liability or obligation of any party to any other
party (except in the case of willful breach).
8. Conditions of Obligations of the Company.
The obligations of the Company under this Agreement are subject to the
accuracy of the representations and warranties of the Investor made in Section 4
hereof in all material respects and to the performance by the Investor of its
other obligations under this Agreement to be performed at or prior to the
Closing.
If any of the conditions specified in this Section 8 have not been
fulfilled in all material respects when and as required by this Agreement to be
fulfilled, the Company may cancel this Agreement and all its obligations under
this Agreement by notifying the Investor of such cancellation in writing or by
telegram at any time at or before the Closing and any such cancellation will be
without liability or obligation of any party to any other party (except in the
case of willful breach).
9. Special Covenants of Investor Group.
(a) Each Investor hereby severally agrees that, without the prior
written consent of the Company, it will not during the period ending on the
first (1st) anniversary of the Closing, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise.
(b) Each Investor and Scorpion agrees that, for a period of two years
and six (6) months from the date hereof, neither they nor any of their
affiliates will, without the prior written consent of the Company or its Board
of Directors: (i) in any manner, acquire, attempt to acquire, offer to acquire,
or agree to acquire, directly or indirectly, by purchase or otherwise, greater
than a 49.9% interest in the voting securities (including direct or indirect
rights to acquire any voting securities) of the Company or any subsidiary
thereof, or of any successor to or person in control of the Company, (ii) make
or in any way participate in, directly or indirectly, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities and
Exchange Commission) to vote, or seek to advise or influence any person or
entity with respect to the voting of, any voting securities of the Company;
(iii) nominate for election or otherwise cause to be elected directors
constituting a majority of the entire Board of Directors of the Company; (iv)
make any public announcement with respect to a proposal for, or offer of (with
or without conditions) any extraordinary transaction involving the Company or
its securities or assets; (v) form, join or in any way participate in a "group"
(as defined in Section 13(d)(3) of the Exchange Act) in connection with any of
the foregoing or (vi) take any action which might require the Company to make a
public announcement regarding the possibility of a business combination or
merger or other transaction. Investor and Scorpion also agree during such period
not to request the Company or any of its representatives, directly or
indirectly, to amend or waive any provision of this paragraph (including this
sentence). Investor and Scorpion will promptly advise the Company of any inquiry
or proposal made to them with respect to any of the foregoing. For the purposes
of this Section 9(b), each Investor and Scorpion shall be deemed to be
affiliated and their ownership of Common Stock aggregated.
10. Registration Rights
(a) "Registration Period" means the period between the date of this
Agreement and the earlier of (i) the date on which all of the shares of Common
Stock and the Common Stock into which the Warrants are exercisable (collectively
the "Registrable Securities") have been sold in transactions where the
transferee is not subject to securities law resale restrictions (or is subject
to securities law resale restrictions solely because it is an "affiliate" of the
Company under the Securities Act and the Rules promulgated thereunder), or (ii)
the date on which the Registrable Securities (in the opinion of Investor's
counsel) may be immediately sold without registration and free of restrictions
on transfer.
(b) "Registration Statement " means a registration statement of the
Company filed with the Securities and Exchange Commission (the "SEC") under the
Securities Act.
(c) The term "register", "registered", and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and applicable rules and regulations
thereunder and pursuant to Rule 415 under the Securities Act, and the
declaration or ordering of effectiveness of such Registration Statement by the
SEC.
(d) The Company represents and warrants that it meets the requirements
for the use of Form S-3 and the Company shall file all reports required to be
filed by the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
(e) Within ninety (90) days following the Closing Date, the Company
will prepare and file a Registration Statement on Form S-3 with the SEC,
registering all of the Registrable Securities for resale. To the extent
allowable under the Securities Act and the Rules promulgated thereunder, the
Registration Statement shall include the Registrable Securities and such
indeterminate number of additional shares of Common Stock as may become issuable
pursuant to this Agreement and/or upon exercise of the Warrants (i) to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The Registration Statement (and each amendment or supplement thereto) shall be
provided to, and subject to the reasonable approval of , the Investors and their
counsel. The Company shall use its best efforts to cause such Registration
Statement to be declared effective by the SEC as soon as practicable after
filing. Such best efforts shall include, but not be limited, promptly responding
to all comments received from the staff of the SEC. Should the Company receive
notification from the SEC that the Registration Statement will receive no action
or no review form the SEC, the Company shall cause such Registration Statement
to become effective within five (5) business days of such SEC notification. Once
declared effective by the SEC, the Company shall cause such Registration
Statement to remain effective throughout the Registration Period.
(f) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Company
shall not contain any untrue statements of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period and, during such period, shall comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
of the Company covered by the Registration Statement until such time as all of
such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the sellers thereof as set forth in the
Registration Statement.
11. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act, any underwriter (as defined in the
Securities Act) for the Investors, the directors, if any, of such underwriter
and the officers, if any, of such underwriter, and each person, if any, who
controls any such underwriter within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively "Claims") to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or 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, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act or any state securities law or any rule or regulation (the
matters in the foregoing clauses ((i)through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 11(c) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 11(a):
(A) shall not apply to a Claim arising out
of or based upon a Violation which occurs in reliance upon and
in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such
Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus
was timely made available by the Company pursuant to this
Agreement hereof;
(B) with respect to any preliminary
prospectus shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, if a prospectus was timely made
available by the Company pursuant to this Agreement; and
(C) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by
or on behalf of the Indemnified Persons and shall survive the
transfer of the Registrable Securities by the Investors to
this Agreement.
(b) In connection with any Registration Statement in which an Investor
is participating, each such Investor, severally and not jointly, agrees to
indemnify and hold harmless, to the same extent and in the same manner set forth
in Section 11(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, any underwriter
and any other stockholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who controls such
stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act (collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may be come
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement, and such
Investor will promptly reimburse any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 11(b) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided further, however, that the Investor shall be
liable under this Section 11(b) for only that amount of a Claim as does not
exceed the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to this Agreement. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 11(b) with respect to any preliminary prospectus shall not inure to
the benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 11 of notice of the commencement of any action
(including any governmental action) such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 11, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 11,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 11 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable. The provisions of this Section 11 shall survive the
termination of this Agreement.
12. Contribution. If the indemnification provided for in Section 11
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Investor on the
other, in such proportion as is appropriate to reflect the relative fault of the
Company and of such Investor in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and of any Investor on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by such Investor.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 12 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Sections 11(a) or 11(b) hereof had been
available under the circumstances.
The Company and the Investors agree that it would not be just and
equitable if contribution pursuant to this Section 12 were determined by pro
rata allocation (even if the Investors or the underwriters 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 the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no Investor or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of any Investor, the net proceeds received by such
Investor from the sale of Registrable Securities or (ii) in the case of an
underwriter, the total price at which the Registrable Securities purchased by it
and distributed to the public were offered to the public exceeds, in any such
case, the amount of any damages that such Investor or underwriter 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 was not guilty of such fraudulent
misrepresentation.
13. Public Information. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) File with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Exchange Act
so long as the Company remains subject to such requirements and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) Furnish to each Investor so long as such Investor holds
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
14. Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities or Warrants exercisable into Registrable
Securities only if (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being transferred
or assigned, (iii) following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws, (iv) at or before the time
the Company received the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein, (v) such transfer shall have
been made in accordance with the applicable requirements of the Agreement, and
(vi) such transferee shall be an "accredited investor" as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act.
15. Expenses.
The reasonable legal and accounting fees and out-of-pocket expenses of
the Investor Group and Scorpion incurred in connection with this Offering and
the transactions contemplated herein, aggregating up to a total of $20,000,
shall be borne by the Company. Subject to the preceding sentence, each party
hereto shall bear its own legal and other expenses incurred in connection with
this Offering.
16. Notices.
(a) Any notice required to be given or delivered to the Investor shall
be mailed first class, postage prepaid, return receipt requested, to such
Investor's address shown on the signature page hereof with a copy to:
Xxxxxx X. Xxxxxx, Esq.
00 Xxxxxxxx Xxxxxx
Xxx, XX 00000
(b) Any notice required to be given or delivered to the Company shall
be mailed first class, postage prepaid, return receipt requested, to:
Acrodyne Communications, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: President
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
17. Survival of Representations and Warranties. All representations
and warranties and agreements hereunder shall survive execution of this
Agreement and delivery of the Common Stock.
18. Governing Law. This Agreement and the rights and obligations of
the parties shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed wholly
within that State.
19. Entire Agreement. This Agreement (including all schedules and
exhibits thereto) constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
20. Amendment of Agreement. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 15 shall be binding upon the Investor
and the Company.
21. Severability. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
NEWLIGHT ASSOCIATES L.P.
Name of Subscriber
By: ____________________________
Name:
Title:
Address:
============================
----------------------------
Tax Identification Number:
----------------------------
The terms of the foregoing including the subscription described therein are
agreed to and accepted as of the date first above written:
ACRODYNE COMMUNICATIONS, INC.
By: ______________________________
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
The terms of the foregoing, insofar as they relate to Scorpion Holdings, Inc.,
are agreed to and accepted as of the date first above written:
SCORPION HOLDINGS, INC.
By: ______________________________
Name:
Title:
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
NEWLIGHT ASSOCIATES (B.V.I.) L.P.
Name of Subscriber
By: ____________________________
Name:
Title:
Address:
============================
----------------------------
Tax Identification Number:
----------------------------
The terms of the foregoing including the subscription described therein are
agreed to and accepted as of the date first above written:
ACRODYNE COMMUNICATIONS, INC.
By: ______________________________
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
The terms of the foregoing, insofar as they relate to Scorpion Holdings, Inc.,
are agreed to and accepted as of the date first above written:
SCORPION HOLDINGS, INC.
By: ______________________________
Name:
Title:
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the date first above written.
SCORPION-ACRODYNE INVESTORS LLC
Name of Subscriber
By: ____________________________
Name:
Title:
Address:
----------------------------
===========================
Tax Identification Number:
---------------------------
The terms of the foregoing including the subscription described therein are
agreed to and accepted as of the date first above written:
ACRODYNE COMMUNICATIONS, INC.
By: ______________________________
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
The terms of the foregoing, insofar as they relate to Scorpion Holdings, Inc.,
are agreed to and accepted as of the date first above written:
SCORPION HOLDINGS, INC.
By: ______________________________
Name:
Title:
