SUBSCRIPTION AGREEMENT
NOTE:THREE COMPLETED AND EXECUTED COPIES OF THIS SUBSCRIPTION
AGREEMENT MUST BE RETURNED, AND THE ENTIRE PURCHASE PRICE FOR THE
SECURITIES SUBSCRIBED FOR MUST BE PAID AS SET FORTH HEREIN, TO
SUBSCRIBE FOR THIS OFFERING.
Name of Investor: Xxxxxxxx Broadcast Group, Inc.
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Number of Shares of Common Stock,
$0.01 par value, at $3.00 per Share: 1,431,333 in the aggregate
Warrants to Purchase Shares of Common Stock,
at $3.00 per Share: 2,000,000 in the aggregate
Warrants to Purchase Shares of Common Stock,
at $3.00 per Share: 713,100 in the aggregate
Aggregate Purchase Price: $4,000,000
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Warrants to Purchase Shares of Common Stock,
from $3.00 to $6.00 per Share: 6,000,000 in the aggregate
Purchase Price: $300,000
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Total Purchase Price: $4,300,000
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SUBSCRIPTION AGREEMENT, dated as of November 23, 1998, (this
"Agreement") by and among Acrodyne Communications, Inc., a Delaware
corporation (the "Company"), and Xxxxxxxx Broadcast Group, Inc., a Maryland
corporation (the "Investor").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to sell to the Investor, and the
Investor desires to purchase from the Company, for an aggregate purchase
price of Four Million Dollars ($4,000,000), (i) 1,431,333 shares of the
Company's common stock, par value $0.01 per share (the "Common Stock" and,
together with the Warrants (as defined below), the "Securities"), (ii)
warrants to purchase up to 2,000,000 shares of the Company's common stock at
a purchase price of $3.00 per share (the "Investor Warrants"), which
warrants are subject to certain vesting requirements described therein, and
(iii) warrants to purchase up to 713,100 shares of the Company's common
stock at a purchase price of $3.00 per share (the "Anti-Dilution Warrants"),
which warrants are subject to certain limitations on exercise described
therein; and
WHEREAS, the Company desires to sell to the Investor, and the
Investor desires to purchase from the Company, for an aggregate purchase
price of Three Hundred Thousand Dollars ($300,000), warrants to purchase up
to 6,000,000 shares of the Company's common stock at a purchase price of
between $3.00 and $6.00 per share (the "Bonus Warrants" and, together with
the Investor Warrants and the Anti-Dilution Warrants, the "Warrants"), which
warrants are subject to certain limitations on exercise described therein;
and
WHEREAS, the Company is described in the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1997 and Quarterly
Reports on Form 10-QSB for the fiscal quarters ended June 30, 1998 and
September 30, 1998 (collectively the "Reports") on file with the Securities
and Exchange Commission (the "SEC");
NOW, THEREFORE, the parties hereto agree as follows:
1. Subscription and Payment. Subject to the terms and conditions
herein set forth, the Investor hereby subscribes for the Securities. The
Investor agrees to deliver to the Company at the Closing (as defined below)
the aggregate purchase price of Four Million Three Hundred Thousand Dollars
($4,300,000), payable in immediately available funds (the "Purchase Price"),
for the Securities subscribed for hereby.
2. Closing. The closing (the "Closing") of the purchase and sale of
the Securities (the "Offering") will occur at the offices of Xxxxxx, Xxxx &
Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 no earlier than
January 4, 1999, and within five (5) business days of the date on which the
last of the closing conditions specified in Sections 12, 13 and 14 of this
Agreement has been satisfied or waived (any such date, the "Closing Date");
provided, however, that if the Closing has not occurred on or before the
ninetieth day after the date hereof, then this Agreement will terminate
unless the parties agree otherwise in writing. At the Closing, the Company
will deliver to the Investor (a) one executed copy of this Agreement; (b) a
stock certificate representing the Investor's ownership of the Common Stock
subscribed for hereby; (c) one executed copy of the Investor Agreement (as
defined herein); (d) one executed copy of each
of the Investor Warrant, the Anti-Dilution Warrant and the Bonus Warrant;
and (e) such other Closing deliveries as are otherwise required by this
Agreement.
3. Representations and Warranties of Investor. The Investor hereby
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 has received and read the Reports and has evaluated
the risks of investing in the Company.
(d) 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.
(e) In making its decision to purchase the Securities herein
subscribed for, it has relied solely upon the Reports, the representations,
warranties, agreements, undertakings and acknowledgments of the Company in
this Agreement, and independent investigations made by the Investor.
(f) It understands that an investment in the Company involves
certain risks and it has taken full cognizance of and understands such
risks, including those set forth in the Reports.
(g) It understands that the Securities have not been
registered under the Act, and agrees that the Securities 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
Agreement.
(h) 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 Securities.
(i) The Securities herein subscribed for are 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, and the Investor
will not sell or otherwise dispose of any of the Securities, unless:
(i) it has advised the Company in writing that it intends
to dispose of such Securities in a manner to be described in such
advice, and counsel reasonably
acceptable to the Company and has 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
Securities is in effect under the Act and such Securities have been
registered or qualified under applicable securities laws of any
jurisdiction.
(j) The 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.
(k) The Investor acknowledges and agrees that the
certificates representing the Common Stock and certificates representing any
common stock purchased through the exercise of any Warrant will 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
[the date hereof] among the Company and certain stockholders of the
Company."
(l) The Investor also acknowledges that the Company may place
a stop transfer order against transfer of any of the Securities or any
common stock purchase through the exercise of any Warrant, if necessary in
the Company's reasonable judgment in order to assure compliance by the
Investor with the terms of this Agreement.
(m) 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 Securities subscribed for hereby.
(n) 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
the Securities.
4. Representations and Warranties of the Company. The Company
represents and warrants to the Investor that:
(a) The Company has duly filed with the SEC all reports
required by the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"). The
Company has furnished to the Investor true and correct copies of the
Reports. The Reports do not, as of the date on which they were 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.
(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. All such financial statements have been prepared
in accordance with generally accepted accounting principles on a basis
consistently applied.
(c) Except as disclosed in the Reports, the Company does not
have any subsidiaries. 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 and outstanding capital stock of the
Company is described on Schedule 4(d) attached hereto. Except as described
on Schedule 4(d), there are no outstanding options, offers, warrants,
conversion rights or other rights to subscribe for or to purchase from the
Company any of its capital stock. The Company has all requisite power and
authority to issue, sell and deliver the Common Stock and the Warrants 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 and the Warrants has been validly and sufficiently taken. The
outstanding shares of Common Stock are, and the shares of common stock
purchasable upon exercise of the Warrants in accordance with their
respective terms 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,
indebtedness, loan agreement or revolving credit agreement 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 Investors
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 and the common stock purchasable upon
exercise of the Warrants, upon such purchase, will conform to the
description thereof contained in the Reports. 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, other than those which have been waived.
Neither the Offering nor the sale of the Securities as contemplated in this
Agreement gives rise to any rights for or relating to the registration of
any shares of common stock.
(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, the Company
(i) 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 Reports 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 (ii) 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 Company's knowledge, no such action, suit or proceeding
has been threatened. For purposes of this Agreement, "Company's knowledge"
of any fact or matter shall mean the actual knowledge of Xxxxxx Xxxxxxx and
Xxxxxx Xxxxxxxxx after having undertaken inquiry that is reasonable under
the circumstances as to the existence or non-existence of such fact or
matter.
(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) Neither the Company nor any of its officers, employees or
other persons directly or indirectly affiliated with it has, either directly
or through an agent, sold or offered for sale or solicited offers to
subscribe for or buy, or approached potential investors for or otherwise
negotiated in respect of, the Securities, other than with the Investors, and
neither the Company nor any of its employees or other persons directly or
indirectly affiliated with it has, either directly or through an agent,
participated in the organization or management of any entity or has engaged
or proposes during any time after the Closing to engage in any other
activity, in a manner or under circumstances that would jeopardize the
status of the Offering as an exempted transaction under the Act or under the
laws of any state in which it is represented by the Company that the
Offering may be made.
(m) No person is entitled to receive any commission, fee or
compensation from the Company for services rendered as placement agent or
otherwise in connection with the offer or sale of the Common Stock pursuant
to the Offering, except for Southeast Research Partners, Inc., in accordance
with the letter agreement attached hereto as Schedule 4(m).
5. Covenants of Both Parties. The Company and the Investor agree as
follows:
(a) The parties hereto shall cooperate in preparing and
filing, as soon as practicable after the execution of this Agreement, all
necessary Pre-Merger Notification Reports under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act") with the United States Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Justice Department (the "Antitrust Division"). The parties shall also
cooperate in providing any additional information requested by the FTC or
Antitrust Division in connection with such Pre-Merger Notification Reports.
The Investor shall be responsible for paying the filing fee associated with
any such necessary Pre-Merger Notification Reports.
(b) The Company shall obtain all necessary state securities
law or "Blue Sky" permits and approvals necessary to carry out the
transactions contemplated by this Agreement and the Investor shall furnish
all information concerning the Company as may be reasonably requested in
connection with any such action.
(c) Each party hereto shall promptly notify the other of any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise
affecting either party which, if pending on the Closing Date, would have
been required to have been disclosed by this Agreement, or which relate to
the consummation of the transactions contemplated by this Agreement.
6. Covenants of the Company. The Company covenants with the
Investor that:
(a) As promptly as practicable after the execution of this
Agreement, the Company shall (i) call a meeting of its stockholders for the
purpose of voting on the transactions contemplated by this Agreement,
including the amendment of the Articles of Incorporation to increase the
amount of authorized common stock of the Company; and (ii) with the
consultation of the Investor, prepare and file with the SEC a proxy
statement and a form of proxy, in connection with the vote of the Company's
stockholders with respect to the transactions contemplated by this Agreement
(the "Proxy Statement"). Subject to the complete discharge of the fiduciary
duties of the board of directors of the Company to its stockholders, the
Company shall use its best efforts to solicit from stockholders of the
Company proxies in favor of the approval and adoption of the transactions
contemplated by this Agreement and to secure the vote or consent of
stockholders required by applicable law to approve and adopt the
transactions contemplated by this Agreement, including the amendment of the
Articles of Incorporation to increase the amount of authorized common stock
of the Company, unless otherwise required by the applicable fiduciary duties
of the directors of the Company, as determined by such directors in good
faith after consultation with independent legal counsel (which may include
the Company's regularly engaged legal counsel).
(b) The Company will, so long as the Investor is the holder
of Common Stock or unexercised Warrants, furnish to the Investor, as soon as
practicable after the end of each fiscal year, an annual report with respect
to such year (including financial statements audited by independent public
accountants) and, as soon as practicable after the end of each quarterly
period (other than the last quarterly period) of each fiscal year, a
statement (which need not be audited) of the results of operations of the
Company for such period, and, to the extent not otherwise furnished,
promptly upon the filing thereof, copies of all reports filed by the Company
with the SEC pursuant to the Exchange Act.
(c) So long as the Investor is the holder of Common Stock or
unexercised Warrants, the Company will permit any person designated by the
Investor in writing, at the sole expense of the Investor, to visit and
inspect any of the properties and books of account of the Company and to
discuss its affairs, finances and accounts with the principal officers of
the Company, all at such reasonable times and at such reasonable intervals
as the Investor may reasonably request.
(d) The Company will at all times keep in reserve the number
of shares of its common stock purchasable from time to time upon the
exercise of all the outstanding Warrants.
(e) So long as the Investor is the holder of Common Stock or
unexercised Warrants, the Company will use its best efforts to continue its
existence, pay all applicable taxes and comply with all applicable laws.
(f) The Company undertakes to notify the Investor as soon as
practicable of any material change in any representation, warranty or other
information relating to the Company set forth herein which occurs prior to
the Closing.
(g) 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.
(h) The Company acknowledges that the representations,
warranties, agreements, undertakings and acknowledgments are made by the
Company with the intent that they be relied upon by each Investor in
determining whether to invest in the Securities.
7. Covenants of the Investor.
(a) The Investor covenants with the Company that, until the
date of the first anniversary of this Agreement, Investor will not, without
the prior written approval of the Company, (i) offer for sale, sell,
transfer (including by way of gift), tender, pledge, encumber or otherwise
subject to a lien, assign or otherwise dispose of, enforce or permit the
execution of the provisions of any redemption agreement with the Company or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale transfer, tender, pledge,
encumbrance, or other disposition of, or exercise any discretionary powers
to distribute (collectively, "Transfer") any Securities or common stock
purchasable upon the exercise of any Warrant, except that the Investor may,
upon not less than ten (10) days notice to the Company, include the
Securities in any general pledge or security interest granted to a lender in
the assets of the Investor or (ii) other than as contemplated by the
Investment Agreement, grant any proxies or powers of attorney, deposit into
a voting trust or enter into a voting agreement with respect to any
Securities or common stock purchasable upon the exercise of any Warrant. The
foregoing restrictions shall apply equally to the 800,000 shares of Common
Stock being purchased by the Investor at the Closing, as contemplated in
Section 12(c).
(b) The Investor covenants with the Company that any
proprietary or non-public information made available to the Investor or its
representatives by the Company shall be kept as confidential and shall not
be disclosed or used for any purpose other than the evaluation of the
Investor's investment in the Company.
8. 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
Securities and the common stock purchasable upon the exercise of any Warrant
(collectively, the "Registrable Securities") have been sold in transactions
where the transferee is not subject to securities law resale restrictions
and (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 terms "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) Within ninety (90) days following the Closing Date, the
Company will prepare and file with the SEC a Registration Statement on Form
S-3 or other appropriate form promulgated by 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 will 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 to prevent dilution
resulting from stock splits, stock dividends or similar transactions. The
Registration Statement (and each amendment or supplement thereto) will be
provided to, and subject to the reasonable approval of, the Investors and
their counsel. The Company will 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 will include, but not be limited
to, 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 from the SEC, the Company will
cause such Registration Statement to become effective within five (5)
business days of such SEC notification. Once declared effective by the SEC,
the Company will cause such Registration Statement to remain effective
throughout the Registration Period.
(e) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Company
may 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 will 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, will 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.
9. 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 the 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 Investor, 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 9(c) with respect to the number of legal counsel, the Company shall
reimburse the Investor 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 9(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
the Investor is participating, the Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section
9(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 become
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 the
Investor expressly for use in connection with such Registration Statement,
and the 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 9(b) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided,
further, that the Investor shall be liable under this Section 9(b) for only
that amount of a Claim as does not exceed the net proceeds to the 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
Investor pursuant to this Agreement. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 9(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 9 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 9, 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 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 9, except to
the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 9 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 9 shall
survive the termination of this Agreement.
10. Contribution. If the indemnification provided for in Section 9
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 the
Investor on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of the 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 the 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 the Investor.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 10 exceed the amount that such Indemnifying
Party would have been obligated to pay by way of indemnification if the
indemnification provided for under Sections 9(a) or 9(b) hereof had been
available under the circumstances.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 10 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, neither the Investor or any underwriter shall be
required to contribute any amount in excess of the amount by which (i) in
the case of the Investor, the net proceeds received by the 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 the Investor or such 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.
11. Assignment of Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement will be
automatically assigned by the Investor to transferees or assignees of all or
any portion of such securities only if:
(a) 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,
(b) 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,
(c) 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,
(d) at or before the time the Company received the written
notice contemplated by clause (b) of this Section 11, the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions contained herein,
(e) such transfer will have been made in accordance with the
applicable requirements of the Agreement, and
(f) such transferee will be an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act.
12. Conditions to Both Parties Obligations. Both parties'
respective obligations under this Agreement are subject to the satisfaction
of the following conditions on or before or simultaneously with the Closing:
(a) Any waiting period applicable to the consummation of the
Offering contemplated under the HSR Act shall have expired or have been
terminated, and any other notice or approvals to or of any federal, state or
foreign governmental authority with respect to the Offering shall have been
either filed, in the case of notices, or received, in the case of approvals.
(b) The transactions contemplated by this Agreement shall
have been approved and adopted by the (i) the Board of Directors of the
Company; and (ii) holders of a majority of the outstanding shares of the
Company's common stock in accordance with the Company's Articles of
Incorporation and the General Corporation Law of the State of Delaware.
(c) The transactions contemplated by that Stock Purchase
Agreement of even date herewith, by and among Xxxxxxxx Broadcast Group,
Inc., Scorpion-Acrodyne Investors LLC, Newlight Associates (BVI) LP and
Newlight Associates LP shall have been consummated at a closing thereunder.
(d) The Financial Consulting Agreement dated October 24, 1997
by and between the Company and Scorpion Holdings, Inc. shall have been
terminated.
(e) The Company's 326,530 issued and outstanding shares of
Series A Convertible Redeemable Preferred Stock, par value $1.00 per share,
shall have been redeemed.
(f) The Company shall have executed and delivered to the
Investor a copy of the Employment Agreement of even date herewith, between
the Company and Xxxxxx Xxxxxxx in the form attached hereto as Exhibit F.
(g) No federal, state or foreign governmental authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which remains in effect, and which has the effect of making the
transactions contemplated hereby illegal or otherwise prohibiting
consummation of the transactions contemplated by this Agreement.
(h) If any of the conditions specified in this Section 12
have not been fulfilled in all material respects when and as required by
this Agreement to be fulfilled, either party may cancel this Agreement and
all its respective obligations under this Agreement by notifying the other
party 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).
13. 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 4 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) The Company shall have delivered to Investor a stock
certificate representing the Investor's ownership of the Common Stock
subscribed for hereby.
(b) The Company shall have executed and delivered to Investor
a copy of the Investment Agreement in the form attached hereto as Exhibit A.
(c) The Company shall have executed and delivered to Investor
the Investor Warrants in the form attached hereto as Exhibit B.
(d) The Company shall have executed and delivered to Investor
the Anti-Dilution Warrants in the form attached hereto as Exhibit C.
(e) The Company shall have executed and delivered to Investor
the Bonus Warrants in the form attached hereto as Exhibit D.
(f) Investor shall have received an opinion of counsel from
Xxxxxx, Xxxx & Xxxxxxxx LLP in the form attached hereto as Exhibit E.
(g) At the Closing, the Investor will have received a
certificate, dated the Closing Date 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 carefully 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.
(h) If any of the conditions specified in this Section 13
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).
14. 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 3 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) The Investor shall have executed and delivered to the
Company a copy of the Investment Agreement in the form attached hereto as
Exhibit A.
(b) At the Closing, the Company will have received a
certificate, dated the Closing Date and signed by an officer of the Investor
to the effect that the representations and warranties of the Investor in
this Agreement are true and correct in all material respects, as if made at
and as of the Closing Date, and the Investor 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.
(c) If any of the conditions specified in this Section 14
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 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).
15. Public Information. With a view to making available to the
Investor 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 the Investor so long as the Investor holds
Common Stock or unexercised Warrants, 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 Investor to sell such securities pursuant
to Rule 144 without registration.
16. Expenses. Except as otherwise provided in this Agreement, each
party hereto will bear its own legal and other expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
17. Notices.
(a) Any notice required to be given or delivered to the
Investor will be mailed first class, postage prepaid, return receipt
requested, to:
Xxxxxxxx Broadcast Group, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx
Attn: President
with a copy to:
Xxxxxx & Xxxxxxxx, P.A.
Suite 1100, 000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
(b) Any notice required to be given or delivered to the
Company will 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:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
18. Survival of Representations and Warranties. All representations
and warranties and agreements hereunder will survive execution of this
Agreement and delivery of the Securities.
19. Governing Law. This Agreement and the rights and obligations of
the parties will be governed by and construed in accordance with the laws of
the New York applicable to contracts made and to be performed wholly within
that State.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
XXXXXXXX BROADCAST GROUP, INC.
By:
-----------------------------------
Name:
Title:
Address:
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
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
EXHIBIT A
FORM OF
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "Agreement"), dated as of ____________,
1999, by and among Xxxxxxxx Broadcast Group, Inc., a Maryland corporation
(the "Investor"), A. Xxxxxx Xxxxxxx, an individual (the "Stockholder"), and
Acrodyne Communications, Inc., a Delaware corporation (the "Company").
Capitalized terms used and not otherwise defined in this Agreement shall
have the meanings assigned in the Subscription Agreement dated as of
November ___, 1998 by and between the Investor and the Company (such
agreement, as may be amended from time to time, the "Subscription
Agreement").
W I T N E S S E T H:
WHEREAS, concurrently herewith, (a) the parties hereto are
executing the Subscription Agreement, pursuant to which, among other things,
the Investor is agreeing to purchase from the Company, and the Company is
agreeing to sell to the Investor, (i) 1,431,333 shares of common stock of
the Company ("Common Stock"); and (ii) the Warrants which, in the aggregate
and subject to certain conditions, are exercisable for the purchase of up to
8,713,100 shares of Common Stock; and (b) the Investor is acquiring an
additional 800,000 shares of Common Stock from another party; and
WHEREAS, the Investor, Company and the Stockholder wish to make
provision for certain matters concerning the Company's governance as
provided in this Agreement; and
WHEREAS, as of the date hereof, each of the Investor and the
Stockholder is the record and beneficial owner of the number of shares of
Common Stock as set forth on Exhibit A hereto (such shares of Common Stock
together with any shares of Common Stock hereafter acquired by either the
Investor or the Stockholder in any capacity, whether upon exercise of stock
options or warrants, the grant of additional options, conversion of
convertible securities, purchase, exchange, dividend or otherwise, being
referred to herein as the "Shares"); and
WHEREAS, as a condition to the effectiveness of the Subscription
Agreement, the Investor, the Stockholder and the Company are required to
enter into, and have agreed to enter into, this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, agreements and covenants set forth
herein and in the Subscription Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the parties hereto, each intending to be legally bound, hereby
agrees as follows:
2
SECTION 1 DEFINITIONS
As used in this Agreement:
"Affiliate" means any Person controlled by, controlled or under
common control with any other Person.
"Beneficially own" or "Beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (the "Exchange Act"),
including pursuant to any agreement, arrangement or understanding, whether
or not in writing. Without duplicative counting of the same securities by
the same holder, securities beneficially owned by a Person shall include
securities beneficially owned by all other Persons with whom such Person
would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
"Business Day" shall mean a day on which banks are not required or
authorized to be closed in the city of New York, New York.
"Common Stock Equivalents" means, with respect to any holder, the
number of shares of Common Stock owned by such holder and the number of
shares of Common Stock into or for which any Convertible Securities owned by
such holder shall be convertible, exchangeable or exercisable as of the date
of determination thereof.
"Convertible Securities" means, at any time, any options, warrants,
convertible notes or other securities or rights exchangeable or exercisable,
with or without the payment of additional consideration, into or for Common
Stock, directly or indirectly.
"New Securities" shall mean any Common Stock or Convertible
Securities; provided, however, that New Securities shall not include:
(a) Common Stock issued pursuant to any Convertible
Securities outstanding on the date hereof;
(b) Common Stock issued pursuant to any Convertible
Securities issued after the date hereof, provided that the
preemptive rights established by Section 5 of this Agreement
applied with respect to the initial issuance by the Company of such
Convertible Securities;
(c) Common Stock issued pursuant to the Warrants; and
(d) Common Stock issued pursuant to any grant of options
under any stock option plan of the Company in effect on the date
hereof or adopted by the Board of Directors hereafter.
3
"Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
SECTION 2 BOARD COMPOSITION;
MANAGEMENT COMMITTEE; VOTING
(a) Board of Directors. The Stockholder and the Investor shall vote
their Shares in favor of the election of a board of directors of the Company
(the "Board of Directors") consisting of seven (7) directors comprised as
follows:
(i) Three (3) directors shall be nominated by the
Investor;
(ii) Two (2) directors shall be nominated by the
Stockholder; and
(iii) Two (2) directors (the "Independent Directors")
shall be nominated by mutual agreement of the Investor and the
Stockholder. The Independent Directors shall each be a person who
(A) is not an Affiliate of the Investor or the Stockholder and (B)
does not have an employment or consulting relationship with, and is
otherwise independent from, the Investor or the Stockholder and
their respective Affiliates.
(b) Removal of Directors. Either the Stockholder or the Investor
may vote their Shares in favor of the removal of an Independent Director.
Neither the Stockholder nor the Investor shall vote any Shares in favor of
the removal of a director nominated solely by the other party hereunder
unless the right of any such party to solely nominate such director shall no
longer exist; provided, however, that upon the request of any party to
remove a director previously designated for nomination solely by such party,
the Stockholder and the Investor shall vote all of their Shares in favor of
(i) the removal of such director and (ii) the election of any replacement
director as may be solely designated by such party; provided further, that
any director may be removed for cause in accordance with applicable law, the
provisions of this Agreement and the bylaws of the Company, provided that
the party (or in the case of an Independent Director, the parties) that
designated such director for nomination shall be entitled to designate a
successor to such director and the Stockholder and the Investor shall vote
all of their Shares in favor of the election of such replacement director.
(c) Management Committee. So long as this Agreement is in effect,
the Company, the Stockholder and the Investor agree that the day-to-day
operations of the Company shall be conducted by a management committee (the
"Management Committee") which shall consist of the following individuals:
(i) An individual nominated by the Investor, who shall be
the Chairman and which person shall initially be Xxxxxxxxx Xxxxxxx;
(ii) An individual nominated by the Stockholder, who shall
be the Chief Executive Officer and which person shall initially be
Xxxxxx Xxxxxxx; and
4
(iii) An individual nominated by the Investor with the
consent of the Stockholder, who shall be the Chief Operating
Officer.
The Investor and the Stockholder shall each cause the directors
nominated by them to vote in favor of and to maintain the composition of the
Management Committee as set forth above, and to vote on the removal of
members of the Management Committee as described in this paragraph. Neither
the directors nominated by the Stockholder nor the directors nominated by
the Investor shall vote in favor of the removal of a member of the
Management Committee nominated solely by the other party hereunder unless
the right of any such party to solely nominate such member of the Management
Committee shall no longer exist; provided, however, that upon the request of
any party to remove a member of the Management Committee previously
designated for nomination solely by such party, the directors nominated by
the Stockholder and the directors nominated by the Investor shall vote in
favor of (i) the removal of such member of the Management Committee and (ii)
the election of any replacement member of the Management Committee as may be
solely designated by such party; provided further, that any member of the
Management Committee may be removed for cause in accordance with applicable
law, the provisions of this Agreement and the bylaws of the Company,
provided that the party (or in the case of the Chief Operating Officer, the
parties) that designated such member for nomination shall be entitled to
designate a successor to such member and the directors nominated by the
Stockholder and the directors nominated by the Investor shall vote in favor
of the election of such replacement member. As used herein "cause" means (A)
gross negligence or willful misconduct which, if curable, is not cured
within thirty (30) days' notice from the Board of Directors; (B) incapacity
or disability which continues for more than one hundred and twenty (120)
consecutive days; or (C) the conviction of a crime or felony in connection
with the business or affairs of the Company.
(d) Voting By the Investor; Proxy.
(i) At any meeting of the stockholders of the Company or
in connection with any written consent of the stockholders of the
Company, the Investor shall vote (or cause to be voted) its Shares
(A) in favor of the Stockholder's two nominees to the Board of
Directors of the Company as contemplated by this Article III, (B)
otherwise in any manner necessary to maintain the composition and
membership of the Board of Directors of the Company as provided in
this Article III, (C) in favor of any actions required in
furtherance of this Agreement and the Subscription Agreement, and
(D) against any action or agreement that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone,
discourage, adversely affect, or prevent the consummation of the
transactions contemplated by this Agreement and the Subscription
Agreement (the "Transactions") or could reasonably be expected to
result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Investor or the Company
under the Subscription Agreement, this Agreement or the
contemplated economic benefits of any of the foregoing. The
Investor shall not vote its Shares in any manner that is
inconsistent with the terms of this Agreement or the Subscription
Agreement or enter into any agreement or understanding with any
Person prior to the
5
Termination Date to vote, commit, or agree to take any action or
give instructions in any manner inconsistent with this Agreement or
the Subscription Agreement.
(ii) Proxy of the Investor. The Investor hereby grants to,
and appoints the Stockholder, individually, the Investor's
irrevocable proxy and attorney-in-fact (with full power of
substitution) to vote the Shares as provided in this Article III.
The Investor intends this proxy to be irrevocable and coupled with
an interest and that this proxy shall survive and continue to apply
to any remaining Shares owned by the Investor notwithstanding
diminution from time to time in the number of Shares owned by the
Investor. The Investor will take such further action and execute
such other instruments as may be necessary to effectuate the intent
of this proxy including, without limitation, executing and
delivering to the Stockholder an instrument confirming that this
proxy continues to apply to the remaining Shares owned by the
Investor after any diminution from time to time in the number of
Shares owned by the Investor. However, the refusal or failure of
the Investor to execute or deliver such a confirmatory instrument
shall in no way affect the validity of this proxy with respect to
such remaining Shares. This proxy shall remain in effect until the
Termination Date, at which time it shall terminate automatically.
(e) Voting By the Stockholder; Proxy.
(i) At any meeting of the stockholders of the Company or
in connection with any written consent of the stockholders of the
Company, the Stockholder shall vote (or cause to be voted) his
Shares (A) in favor of the Investor's three nominees to the Board
of Directors of the Company as contemplated by this Article III,
(B) otherwise in any manner necessary to maintain the composition
and membership of the Board of Directors of the Company as provided
in this Article III, (C) in favor of the execution and delivery by
the Company of this Agreement, the Subscription Agreement and the
approval of the terms hereof and thereof and any actions required
in furtherance hereof and thereof; (D) against any action or
agreement that is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, discourage, adversely
affect, or prevent the Transactions or could reasonably be expected
to result in a breach of any covenant, representation or warranty
or any other obligation or agreement of the Stockholder or the
Company under the Subscription Agreement, this Agreement or the
contemplated economic benefits of any of the foregoing. The
Stockholder, in his capacity as such, shall not vote his Shares in
any manner that is inconsistent with the terms of the Subscription
Agreement or enter into any agreement or understanding with any
Person prior to the Termination Date to vote, commit, or agree to
take any action or give instructions in any manner inconsistent
with the Subscription Agreement. The Stockholder hereby
acknowledges that he has received and reviewed a copy of the
Subscription Agreement.
(ii) Proxy of the Stockholder. The Stockholder hereby
grants to, and appoints the Investor, by its President and its
Chief Financial Officer, each acting singly in their respective
capacities as officers of the Investor, the Stockholder's
irrevocable proxy and
6
attorney-in-fact (with full power of substitution) to vote the
Shares as provided in this Article III. The Stockholder intends
this proxy to be irrevocable and coupled with an interest and that
this proxy shall survive and continue to apply to any remaining
Shares owned by the Stockholder notwithstanding diminution from
time to time in the number of Shares owned by the Stockholder. The
Stockholder will take such further action and execute such other
instruments as may be necessary to effectuate the intent of this
proxy including, without limitation, executing and delivering to
the Investor an instrument confirming that this proxy continues to
apply to the remaining Shares owned by the Stockholder after any
diminution from time to time in the number of Shares owned by the
Stockholder. However, the refusal or failure of the Stockholder to
execute or deliver such a confirmatory instrument shall in no way
affect the validity of this proxy with respect to such remaining
Shares. This proxy shall remain in effect until the Termination
Date, at which time it shall terminate automatically.
SECTION 3 GOVERNANCE PROVISIONS
(a) Organizational Documents. The organizational documents and
bylaws of the Company shall contain the following provisions, or shall be
amended as necessary to incorporate the following provisions:
(i) No director may be removed from the Board of Directors
except for cause in accordance with applicable law or by a vote of
the directors constituting no fewer than a majority of the entire
Board of Directors, such majority to include both Independent
Directors (or, in the case of the removal of an Independent
Director, such majority to include at least one Independent
Director, at least one director nominated by the Stockholder, and
at least one director nominated by the Investor);
(ii) No member of the Management Committee may be removed
from the Management Committee except for cause in accordance with
applicable law or by a vote of the directors constituting no fewer
than a majority of the entire Board of Directors, such majority to
include both Independent Directors (or, in the case of the removal
of the Chief Operating Officer, such majority to include at least
one director nominated by the Stockholder, and at least one
director nominated by the Investor); and
(iii) All actions and matters requiring the approval of
the Company's stockholders shall be submitted to a vote of the
stockholders at a meeting duly convened and held for such purpose.
(b) Certain Transactions. The Investor and its Affiliates shall not
engage in any "business combination" (as that term is defined in Section
203(c)(3) of the General Corporation Law of the State of Delaware) with the
Company or initiate or participate in any Rule 13e-3 transaction in respect
of the Company (as defined in Rule 13e-3 promulgated under the Exchange Act)
unless as a condition to the proposed business combination or Rule 13e-3
transaction:
7
(i) A special committee of the Board of Directors
consisting of all directors other than those nominated by the
Investor shall have unanimously determined that the proposed
transaction is fair to and in the best interests of the
stockholders other than the Investor and its Affiliates and shall
have recommended the approval of the transaction to the entire
Board of Directors; and
(ii) The Board of Directors shall have obtained an opinion
from a nationally recognized investment banking firm that the
consideration offered in the transaction is fair, from a financial
point of view, to the stockholders of the Company other than the
Investor and its Affiliates; and
(iii) The stockholders of the Company holding a majority
of the outstanding Common Stock other than Common Stock owned by
the Investor shall have approved the proposed transaction at a
meeting duly convened for such purpose.
(c) Arm's Length Dealings. The Company shall not engage in any
commercial, financial, securities or other business transactions with the
Investor or its Affiliates except on terms that are no less favorable to the
Company than could be obtained from non-affiliated third parties in arm's
length transactions. The Audit Committee of the Board of Directors shall
have the responsibility to oversee the application of these provisions.
(d) Funding of Research and Development. One Million Dollars
($1,000,000) of the Purchase Price paid by the Investor to the Company under
the Subscription Agreement shall be set aside and used specifically to fund
a research and development program, the elements of which shall be agreed
upon by the Board of Directors.
SECTION 4 STANDSTILL
Unless approved by a majority of the Board of Directors, such
majority to include both Independent Directors, neither the Investor and its
Affiliates nor Stockholder and his Affiliates shall:
(a) In the case of the Investor and its Affiliates, beneficially
own more than 2,231,333 shares of Common Stock, except through the exercise
and purchase of additional Shares under the Warrants issued to the Investor
under the Subscription Agreement, provided, however, that this restriction
shall not apply during the time any person or entity unaffiliated with the
Investor has, without the prior consent of the Company, commenced and is
continuing a tender offer involving the Company's securities or made a
public announcement with respect to, and is pursuing, any form of
acquisition of the Company;
(b) Subject to the provisions of this Agreement, make or in any way
participate in any solicitation of proxies to vote, solicit any consent or
seek to advise or influence any person or entity with respect to the voting
of Common Stock or become a participant in any election contest with respect
to the Company;
8
(c) Form, join or encourage the formation of any "group" within the
meaning of Section 13(d)(3) of the 1934 Act with respect to any Common
Stock;
(d) Deposit any Common Stock into a voting trust or subject any
such Common Stock to any arrangement or agreement with respect to the voting
thereof;
(e) Initiate, propose or otherwise solicit the stockholders for the
approval of one or more stockholder proposals with respect to the Company as
described in Rule 14a-8 under the Exchange Act or induce or attempt to
induce any other person or entity to initiate any such shareholder proposal;
(f) Subject to the provisions of this Agreement, seek election or
seek to place a representative on the Board of Directors or seek the removal
of any member of the Board of Directors;
(g) Call or seek to have called any meeting of the shareholders of
the Company;
(h) Solicit, seek to effect, negotiate with or provide any
information to any other party with respect to, or make any statement or
proposal, whether written or oral, to the Board of Directors or otherwise
make any public announcement (except as required by law or the requirements
of any stock exchange) whatsoever with respect to, any form of acquisition
or business combination transaction involving the Company or any significant
portion of its assets including, without limitation, a merger, tender offer,
exchange offer or liquidation, or any restructuring, recapitalization or
similar transaction with respect to the Company except in compliance with
Section 3(b). hereof; or
(i) Encourage any third party to do any of the foregoing.
SECTION 5 RIGHT OF FIRST REFUSAL
(a) Right of First Refusal. If, at any time prior to the
Termination Date, the Stockholder receives a bona fide offer to purchase any
or all of his Shares (an "Offer") from a third party (an "Offeror") which
the Stockholder wishes to accept, the Stockholder shall cause the Offer to
be reduced to writing and shall notify the Investor in writing of his wish
to accept the Offer. The Stockholder's notice shall contain an irrevocable
offer to sell such Shares to the Investor (in the manner set forth below) at
a purchase price equal to the price contained in, and on the same terms and
conditions of, the Offer, and shall be accompanied by a true copy of the
Offer (which shall identify the Offeror). At any time within 30 days after
the date of the receipt by the Investor of the Stockholder's notice, the
Investor shall have the right and option to purchase, or arrange for a third
party to purchase, all of the Shares covered by the Offer either (i) at the
same price and on the same terms and conditions as the Offer or (ii) if the
Offer includes any consideration other than cash, then at the sole option of
the Investor, at the equivalent all cash price, determined in good faith by
the Investor, in accordance with this Section 5 (the "Right of First
Refusal"). If at the end of such 30 day period, the Investor has not
tendered the
9
purchase price in the manner set forth below, the Stockholder may, during
the succeeding 30 day period, sell not less than all of the Shares covered
by the Offer to the Offeror at a price and on terms no less favorable then
those contained in the Offer.
(b) Payment of Purchase Price. The purchase price for any Shares
being purchased and sold pursuant to the provisions of this Section 2 shall
be paid at the Closing (as hereinafter defined) of the purchase and sale of
such Shares.
(c) Closing. The closing (the "Closing") of the purchase and sale
of any Shares pursuant to this Agreement shall take place at such time, date
and place as may be agreed upon by the Stockholder and the Investor, or if
the parties shall be unable to agree, at the principal office of the Company
at 10:00 a.m. (New York time) on the fifth (5th) business day following the
date the Right of First Refusal is exercised. At the Closing, the
certificate(s) representing the Shares being purchased and sold pursuant to
Section this Agreement shall be delivered by or on behalf of the selling the
Stockholder, in proper form for transfer, accompanied by stock powers duly
executed in blank (and with all requisite stock transfer stamps and such
supporting instruments, if any, as then may be required to effect transfer
of registration) against delivery of immediately available funds to the
selling the Stockholder in the amount of the purchase price.
(d) Refusal to Deliver Certificates. If the Stockholder refuses to
deliver the certificates representing any of its Shares to be sold hereunder
in connection with the exercise of the Right of First Refusal, the Investor
shall not be obligated to proceed with the Closing and may, in addition to
all other remedies it may have, deposit the purchase price for such Shares
with any bank or trust company doing business within 50 miles of the
Investor's principal office, for the account of the Stockholder, to be held
by such bank or trust company until withdrawn by the Stockholder. Upon such
deposit by the Investor of such amount and upon notice to the Stockholder
who was required to sell, the Shares to be sold pursuant to this Agreement
shall at such time be deemed to have been sold, assigned, transferred and
conveyed to the Investor, the Stockholder shall have no further rights
thereto and the Company shall record such transfer in its stock transfer
book. In addition to the foregoing remedy and any other legal or equitable
remedies which it may have, the Investor may enforce its rights by actions
for specific performance, for judgment for specific acts or for vesting of
title (in each case to the extent permitted by law), and may refuse to
recognize the Stockholder who was required to sell his or her Shares as one
of its stockholders for any purpose, including without limitation for
purposes of dividend and voting rights.
(e) Application to Sales of Tradable Shares. In the event any
Shares owned by the Stockholders are or become registered under a
registration statement of the Company filed with the SEC or otherwise
publicly resalable under an available exemption by the SEC (and shares
referred to as "Tradable Shares") then, notwithstanding anything to the
contrary in this Agreement, the following provisions shall apply:
(i) No compliance with the Right of First Refusal shall be
required with respect to any transaction or series of transactions
in any calendar quarter in which the
10
Stockholder sells less than 10,000 Tradable Shares through the
facilities of a broker or market maker; and
(ii) With respect to any transaction(s) aggregating 10,000
or more Tradable Shares, the Right of First Refusal shall apply;
however, the Investor shall be required to exercise such right
within twenty four (24) hours of the Investor's receipt of the
Stockholder's notice under Section 5(a).
SECTION 6 PREEMPTIVE RIGHTS
(a) Preemptive Rights. The Investor shall have the right to
purchase, pro rata, a portion of any New Securities that the Company may,
from time to time hereafter, propose to sell and issue. The Investor's pro
rata share of New Securities, for the purposes of this right, is the ratio
of the number of Common Stock Equivalents held by the Investor at the time
the New Securities are offered (treating then-presently exercisable
Convertible Securities owned by the Investor as if fully converted) to the
total number of outstanding Common Stock Equivalents (including then
presently exercisable Convertible Securities).
(b) Notice. If the Company proposes to undertake an issuance of New
Securities, it shall give the Investor written notice of its intention,
describing the type of New Securities, the price and the general terms and
conditions upon which the Company proposes to issue the same. The Investor
shall have thirty (30) days from the giving of such notice to agree to
purchase its pro rata share of New Securities for the price and upon the
terms and conditions specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
The Company shall give the Investor written notice on the date following
such thirty (30) day period as to any New Securities with respect to which
the Investor has not exercised its right.
(c) Failure to Exercise. If the Investor fails to exercise its
right under this Section to purchase its pro rata share of the New
Securities within forty (40) days following the date of the first notice
contemplated in Section 6(b) above, the Company shall have until the
ninetieth (90th) day following such date to enter into a letter of intent or
definitive agreement, and a period of ninety (90) days thereafter to sell
any of the New Securities in respect of which such holder's rights were not
exercised, at a price and upon terms and conditions no more favorable to the
purchasers thereof than specified in the Company's notice to the Investor.
If the Company has not entered into a letter of intent or definitive
agreement within such first ninety (90) day period and sold such New
Securities within such second ninety (90) day period, the Company shall not
thereafter issue or sell any such New Securities, without again first
offering such securities in the manner provided in this Section.
SECTION 7 REPRESENTATIONS AND WARRANTIES
(a) The Stockholder hereby represents and warrants to the Investor
as follows:
11
(i) Organization; Authorization; Validity of Agreement.
The Stockholder has the legal capacity to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding obligation of
the Stockholder enforceable against the Stockholder in accordance
with its terms.
(ii) Consents and Approvals; No Violations. The execution
and delivery of this Agreement does not and the performance of this
Agreement by the Stockholder will not (A) result in a violation or
breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration)
or result in the creation of any Lien (as defined below) on any
property or assets of the Stockholder under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, lease,
permit, franchise, agreement or other instrument or obligation of
any kind to which the Stockholder is a party or by which the
Stockholder or any of its properties or assets is bound or affected
or (B) conflict with or violate any order, writ, injunction,
decree, judgment, statute, rule or regulation applicable to the
Stockholder or any of its properties or assets. Except as provided
in the Subscription Agreement, no consent, approval, order or
authorization of, or registration, declaration or filing with, or
notice to, any state, federal or foreign public body or authority
is required by or with respect to the Stockholder in connection
with the execution and delivery of this Agreement by the
Stockholder or the consummation by the Stockholder of the
transactions contemplated herein.
(iii) Ownership of Securities. The Stockholder is the
record and beneficial owner of the Securities set forth opposite
the Stockholder's name on Exhibit A attached hereto. On the date
hereof, such Securities constitute all of the Securities of the
Company owned of record and/or beneficially by the Stockholder. The
Stockholder has sole power of disposition with respect to all of
the Securities owned by him and sole voting power with respect to
the matters set forth herein and sole power to demand dissenter's
or appraisal rights, in each case with respect to all of the
Securities owned by it with no restrictions on such rights, subject
to applicable federal securities laws and the terms of this
Agreement. The Stockholder will have sole power of disposition and
voting power with respect to Securities, if any, which become
beneficially owned by the Stockholder and sole power to demand
dissenter's or appraisal rights, in each case with respect to all
such Securities, if any, which become beneficially owned by the
Stockholder with no restrictions on such rights, subject to
applicable federal securities laws and the terms of this Agreement.
(iv) No Encumbrances. The Shares and the certificates
representing such shares are now, and the Shares and the
certificates representing such Shares at all times during the term
hereof will be, held by the Stockholder, free and clear of all
claims, liens, charges, security interests, proxies, pledges,
charges, equities, options, voting restrictions, rights of first
refusal, voting trusts or agreements, understandings or
arrangements and
12
any other encumbrances of any kind or nature whatsoever
(collectively, "Liens"), except as otherwise provided in this
Agreement.
(b) The Investor hereby represents and warrants to the Company and
the Stockholder as follows:
(i) Organization; Authorization; Validity of Agreement.
The Investor is a corporation duly organized, validly existing and
in good standing under the laws of Maryland and has the corporate
power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement by the Investor and the consummation by the Investor of
the Transactions have been duly authorized by all necessary
corporate action on the part of the Investor and no other or
further corporate proceedings on the part of the Investor are
necessary to authorize this Agreement or any of the Transactions.
This Agreement has been duly executed and delivered by the Investor
and constitutes a valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms.
(ii) Consents and Approvals; No Violations. The execution
and delivery of this Agreement do not and the performance of this
Agreement by the Investor will not (A) conflict with, violate or
result in any breach of the certificate of incorporation or by-laws
of the Investor, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) or result in
the creation of any Lien on any property or assets of the Investor
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, lease, permit, franchise, agreement or other
instrument or obligation of any kind to which the Investor is a
party or by which the Investor or any of its properties or assets
is bound or affected or (C) conflict with or violate any order,
writ, injunction, decree, judgment, statute, rule or regulation
applicable to the Investor or any of its properties or assets.
Except as provided in the Subscription Agreement, no consent,
approval, order or authorization of, or registration, declaration
or filing with, or notice to, any state, federal or foreign public
body or authority is required by or with respect to the Investor in
connection with the execution and delivery of this Agreement by the
Investor or the consummation by the Investor of the Transactions.
(c) The Company hereby represents and warrants to the Investor and
the Stockholder as follows:
(i) Organization; Authorization; Validity of Agreement.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and has the corporate
power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate
action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize
this
13
Agreement or any of the Transactions. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms.
(ii) Consents and Approvals; No Violations. The execution
and delivery of this Agreement do not and the performance of this
Agreement by the Company will not (A) conflict with, violate or
result in any breach of the certificate of incorporation or by-laws
of the Company, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) or result in
the creation of any Lien on any property or assets of the Company
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, lease, permit, franchise, agreement or other
instrument or obligation of any kind to which the Company is a
party or by which the Company or any of its properties or assets is
bound or affected or (C) conflict with or violate any order, writ,
injunction, decree, judgment, statute, rule or regulation
applicable to the Company or any of its properties or assets.
Except as provided in the Subscription Agreement, no consent,
approval, order or authorization of, or registration, declaration
or filing with, or notice to, any state, federal or foreign public
body or authority is required by or with respect to the Company in
connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the Transactions.
SECTION 8 MISCELLANEOUS
(a) Term. The provisions of this Agreement shall remain in effect
for so long as the Investor and its Affiliates own beneficially and of
record Shares representing not less than twenty percent (20%) of the voting
power of all shares of the Company's capital stock (such time, the
"Termination Date"); provided, however, that the provisions of Section 4
shall continue in effect for a period ending no earlier than on the seventh
(7th) anniversary of the Closing Date.
(b) Further Assurances. From time to time, at any other party's
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the Transactions.
(c) Entire Agreement; Assignment. This Agreement, the Subscription
Agreement, the Exhibits and schedules thereto and the Warrants, constitute
the entire agreement among the parties with respect to the subject matter
hereof and supersedes all other prior and contemporaneous agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, provided that the Investor may assign, in its
sole discretion, its rights and obligations hereunder to any Affiliate of
the Investor, but no such assignment shall relieve the Investor of its
obligations hereunder. Subject
14
to the foregoing, this Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties and their respective successors and
assigns, and the provisions of this Agreement are not intended to confer any
rights or remedies hereunder upon any Person other than the parties hereto
and their respective successors and assigns.
(d) Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto and in respect of any matter
affecting the Company such modifications or amendment shall be subject to
the affirmative vote of directors constituting at least 80% of the Board of
Directors.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by hand delivery,
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
(i) if to the Company, to:
Acrodyne Communications, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Mr. A. Xxxxxx Xxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(ii) if to the Investor, to:
Xxxxxxxx Broadcast Group, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
15
with a copy to:
Xxxxxx & Xxxxxxxx, P.A.
Suite 1100, 000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
(iii) if to the Stockholder, to:
A. Xxxxxx Xxxxxxx
000 Xxxxxx Xxxxxx #0
Xxxxxx, Xxx Xxxxxx 00000
or to such other address as the person to whom notice is given may
have previously furnished to the others in writing in the manner set forth
above.
(f) Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to the principles of conflicts of laws thereof.
(g) Enforcement. Each party hereto agrees, recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore
each party agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same Agreement.
(i) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(j) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or portion of any provision in such jurisdiction,
and this Agreement will be reformed, construed and enforced in
16
such jurisdiction to the maximum extent permitted by law in accordance with
the intention of the parties.
(k). Expenses. Except as otherwise provided herein or in the
Subscription Agreement, each party shall each bear its or his respective
fees and expenses in connection with this Agreement and the transactions
contemplated hereunder.
[Signatures appear on next page]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
ACRODYNE COMMUNICATIONS, INC.
By:
-------------------------------
Name:
Title:
XXXXXXXX BROADCAST GROUP, INC.
By:
-------------------------------
Name:
Title:
A. XXXXXX XXXXXXX
-----------------
18
EXHIBIT B
WARRANT AGREEMENT
THE WARRANT REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH COUNSEL IS OF THE OPINION THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES
NOT INVOLVE A TRANSACTION REQUIRING THE REGISTRATION OF SUCH SECURITY UNDER
THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
Right to Purchase up to 2,000,000 Shares of Common Stock
of Acrodyne Communications, Inc.
ACRODYNE COMMUNICATIONS, INC.
Common Stock Purchase Warrant
ACRODYNE COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), having its principal executive offices at 000 Xxxxxxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000, hereby certifies that, for value
received, Xxxxxxxx Broadcast Group, Inc. or assigns (the "Holder" or
"Holders"), having its address at c/x Xxxxxxxx Broadcast Group, Inc., 0000
Xxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, is entitled, subject to the
terms set forth below, to purchase from the Company at any time or from time
to time before 5:00 P.M., New York time, on [the Seventh Anniversary of the
Closing Date of the Subscription Agreement], up to Two Million (2,000,000)
fully paid and nonassessable shares of common stock of the Company (the
"Shares") at the purchase price of Three Dollars ($3.00) per Share (the
"Purchase Price").
1. Exercise of Warrant.
(a) Purchasable Shares. The number of Shares which may be purchased
under this Warrant from time to time shall be in accordance with the
schedule set forth below:
Cumulative Total of Shares
Date purchasable under this Warrant
---- ------------------------------
From and after [the Closing Date] 666,666
From and after [the First Anniversary
of the Closing Date] 1,333,333
From and after [the Second Anniversary of
the Closing Date] 2,000,000
Notwithstanding the foregoing, upon a Change of Control (as defined
below), this Warrant shall be immediately exercisable in full. A "Change of
Control" means the acquisition by any person or entity or combination
thereof acting together, other than Xxxxxxxx Broadcast Group, Inc. and its
affiliates, of the power to elect a majority of the board of directors of
the Company.
(b) Exercise. Commencing on the date of this Warrant or from time
to time thereafter prior to the expiration hereof, this Warrant may be
exercised in whole or in part, subject to this Section 1, by the Holder
hereof by surrender of this Warrant, with the form of subscription attached
as Exhibit A hereto duly executed by such Holder, to the Company at its
principal office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount
obtained by multiplying the number of Shares for which this Warrant is being
exercised by the Purchase Price.
(c) Trustee for Warrant Holders. In the event that a bank or trust
company has been appointed as trustee for the holder of this Warrant
pursuant to Section 3, such bank or trust company will have all the powers
and duties of a warrant agent appointed pursuant to Section 10 and will
accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of this Warrant
pursuant to this Section 1.
2. Delivery of Stock Certificates on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in
any event within ten (10) days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by the Company of any applicable transfer taxes) may direct, a
certificate or certificates for the number of fully paid and nonassessable
Shares to which such Holder is entitled upon such exercise.
3. Adjustment for Reorganization, Consolidation or Merger.
(a) Reorganization, Consolidation or Merger. In case, at any time
or from time to time, the Company (i) effects a reorganization, (ii)
consolidates with or merges into any other person or (iii) transfers all or
substantially all of its properties or assets to any other person under any
plan or arrangement then, in each such case, the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, will receive, in
lieu of the Shares issuable on such exercise prior to such consummation or
such effective date, the stock and other securities and property (including
cash) to which such Holder would have been entitled upon such consummation
or in connection with such dissolution, as the case may be, if such Holder
had so exercised this Warrant immediately prior thereto, all subject to
further adjustment as provided in Section 4.
(b) Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, will at its expense deliver
or cause to be delivered the stock and other securities and property
(including
2
cash, where applicable) receivable by the Holder of this Warrant after the
effective date of such dissolution pursuant to this Section 3 to a bank or
trust company, as trustee for the Holder of this Warrant, and will promptly
notify each holder of the Warrants of the occurrence of any events specified
in this Section 3.
(c) Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to
in this Section 3, this Warrant will continue in full force and effect and
the terms hereof will be applicable to all securities and other property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and will be binding upon
the issuer of any such stock or other securities, including, in the case of
any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person has
expressly assumed the terms of this Warrant.
4. Adjustments for Stock Dividends and Stock Splits. In the event
that the Company (a) issues additional shares of Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivides its
outstanding shares of Common Stock or (c) combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each
such event, the Purchase Price will, simultaneously with the happening of
such event, be adjusted by multiplying the then prevailing Purchase Price by
a fraction, the numerator of which will be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of
which will be the number of shares of Common Stock outstanding immediately
after such event, and the product so obtained will hereafter be the Purchase
Price then in effect. The Purchase Price, as so adjusted, will be readjusted
in the same manner upon the happening of any successive event or events
described herein in this Section 4. The Holder of this Warrant will
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of Shares determined by multiplying the number of Shares
which would otherwise (but for the provisions of this Section 4) be issuable
on such exercise, by a fraction of which (i) the numerator is the Purchase
Price, which would otherwise (but for the provisions of this Section 4) be
in effect, and (ii) the denominator is the Purchase Price in effect on the
date of such exercise.
5. Notices of Record Date, Etc.
In the event of:
(a) the Company's taking a record of the holders of its Common
Stock (or other securities at the time receivable upon the exercise of the
Warrant) for the purpose of entitling such holders to receive any dividend
(other than a cash dividend payable out of earned surplus) or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities, or to receive any
other right; or
(b) any capital reorganization of the Company (other than a stock
split or reverse stock split), any reclassification of the capital stock of
the Company, any consolidation or merger of the Company with or into another
corporation (other than a merger for purposes of change of
3
domicile) or any conveyance of all or substantially all of the assets of the
Company to another corporation; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; then, and in each such case, the Company will
mail or cause to be mailed to the Holder or Holders at the time outstanding
a notice specifying, as the case may be, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or right and the
amount and character of such dividend, distribution or right or (ii) the
date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of
the Warrant) will be entitled to exchange their shares of Common Stock (or
such other securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice will be mailed at least
twenty (20) days prior to the date therein specified and this Warrant may be
fully exercised prior to said date during the term of the Warrant but no
later than five days prior to said date.
6. No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Shares
receivable on the exercise of the Warrant above the amount payable therefor
on such exercise and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Shares on the exercise of this Warrant from time to
time outstanding.
7. Reservation of Stock Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, all Shares from time to time
issuable on the exercise of the Warrant.
8. Exchange of Warrant. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the Holder thereof a new Warrant or Warrants
of like tenor, in the name of such Holder or as such Holder (on payment by
such Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of Shares for which
the Warrant or Warrants may still be exercised.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
4
10. Warrant Agent. The Company may, by written notice to each
holder of a Warrant, appoint an agent for the purpose of issuing the Shares
on the exercise of the Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 8, and replacing this Warrant pursuant to
Section 9, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, will be made at such office by
such agent.
11. Negotiability; Restrictions on Transfer; Warrant Holder Not
Deemed Stockholder. This Warrant is issued upon the following terms, to all
of which each Holder or owner hereof by the taking hereof consents and
agrees:
(d) No Holder of this Warrant will, as such, be entitled to vote or
to receive dividends or to be deemed the Holder of any class of security
that may at any time be issuable upon exercise of the Warrant for any
purpose whatsoever, nor will anything contained herein be construed to
confer upon such Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock
to no par value, consolidation, merger or conveyance or otherwise), or to
receive notice of meetings or to receive dividends or subscription rights,
until such Holder has exercised the Warrant and been issued Shares in
accordance with the provisions hereof; and
(e) Neither this Warrant nor any Shares purchased pursuant to this
Warrant have been registered under the Securities Act of 1933. Therefore,
the Company may require, as a condition of allowing the transfer or exchange
of this Warrant or such Shares, that the Holder or transferee of this
Warrant or such Shares, as the case may be, furnish to the Company an
opinion of counsel reasonably acceptable to the Company to the effect that
such transfer or exchange may be made without registration under the
Securities Act of 1933. The certificates evidencing the Common Stock issued
on the exercise of the Warrant will bear a legend to the effect that the
certificates have not been registered under the Securities Act of 1933.
12. Further Assurances. The Company undertakes generally to execute
all such agreements and other instruments and to do all such other acts as
are necessary or appropriate (including, but not limited to, authorizing and
issuing additional shares of stock of the Company) to give full effect to
the terms, conditions and provisions of this Warrant and make it binding on
the Company.
13. Notices. All notices and other communications between the
Company and the holder of this Warrant shall be mailed by first class mail,
postage prepaid, at such addresses listed above, or as may have been
subsequently furnished to the other party in writing.
14. Definitions. As used herein, the following terms, unless the
context otherwise requires, have the following respective meanings:
(a) The term "Company" includes Acrodyne Communications, Inc., and
any corporation which succeeds or assumes the obligations of the Company
thereunder.
5
(b) The term "Common Stock" includes (i) the Company's common
stock, $.01 par value per share, as authorized on the date hereof, (ii) any
other capital stock of any class or classes (however designated) of the
Company, authorized on or after such date, the holders of which shall have
the right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the payment
of dividends and distributions on any shares entitled to preference and
(iii) any other securities into which or for which any of the securities
described in (i) or (ii) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
15. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant will be construed and enforced in
accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and will not
limit or otherwise affect any of the terms hereof. This Warrant is being
executed as an instrument under seal. The invalidity or unenforceability of
any provision thereof will in no way affect the validity or enforceability
of any other provision.
16. Expiration. The right to exercise this Warrant will expire at
5:00 P.M., New York time, on [the Seventh Anniversary of the Closing Date].
6
Dated:
--------------------------
ACRODYNE COMMUNICATIONS, INC.
By:
----------------------------------------
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
(Corporate Seal)
7
FORM OF SUBSCRIPTION
(To be signed only on Exercise of Warrant)
TO ACRODYNE COMMUNICATIONS, INC.:
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
_____ shares of common stock of ACRODYNE COMMUNICATIONS, INC. and herewith
makes payment of $________ therefor, and requests that the certificates for
such Shares be issued in the name of, and delivered to ____________, whose
address is _____________________.
Dated:
(Signature must conform to name of holder
as specified on the face of the Warrant)
(Address)
EXHIBIT C
WARRANT AGREEMENT
THE WARRANT REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH COUNSEL IS OF THE OPINION THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES
NOT INVOLVE A TRANSACTION REQUIRING THE REGISTRATION OF SUCH SECURITY UNDER
THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT
MAY NOT BE ASSIGNED, TRANSFERRED, OR SOLD WITHOUT THE COMPANY'S WRITTEN
CONSENT.
Right to Purchase up to 713,100 Shares of Common Stock
of Acrodyne Communications, Inc.
ACRODYNE COMMUNICATIONS, INC.
Common Stock Purchase Warrant
ACRODYNE COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), having its principal executive offices at 000 Xxxxxxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000, hereby certifies that, for value
received, Xxxxxxxx Broadcast Group, Inc., or assigns (the "Holder" or
"Holders"), having its address at c/x Xxxxxxxx Broadcast Group, Inc., 0000
Xxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, is entitled, subject to the
terms set forth below, to purchase from the Company at any time or from time
to time before 5:00 P.M., New York time, [the Seventh Anniversary of the
Closing Date of the Subscription Agreement], up to Seven Hundred Thirteen
Thousand One Hundred (713,100) fully paid and nonassessable shares of common
stock of the Company (the "Shares" and each, a "Share") at an exercise price
of Three Dollars ($3.00) per Share (the "Purchase Price"). This Warrant is
issued in connection with that certain Subscription Agreement dated as of
November ___, 1998, (the "Subscription Agreement") by and between Company
and Holder. Capitalized terms used herein but not defined have the same
definition as used in the Subscription Agreement.
1
1. Exercise of Warrant.
(a) Exercise Rights. From time to time, until the
expiration of this Warrant, the Holder shall have the right to purchase a
number of Shares under this Warrant calculated from the formula set forth
below:
(1.) "Holder's Shares" = (1.)"Holder's Shares" + (3.)"Anti-Dilution Shares"
(2.) [ ____________] (2.)[_____________] + (4.)"Exercised Options & Warrants"
+ (3.)"Anti-Dilution Shares"
1. "Holder's Shares" are the number of shares of the Company's common
stock issued to Holder under the Subscription Agreement which the
Holder owns at the time of exercise of this Warrant. If Holder has
sold or purchased additional shares of the Company's common stock
since the Closing of the Subscription Agreement (including through
the exercise of any warrant other than this Warrant, but excluding
those 800,000 shares purchased under that certain Stock Purchase
Agreement dated as of ____________, by and among Xxxxxxxx Broadcast
Group, Inc., Scorpion-Acrodyne Investors LLC, Newlight Associates
(BVI) LP and Newlight Associates LP), then "Holder's Shares" shall
be computed on a first-in, first-out basis (FIFO).
2. This number will be equal to the number of shares of the Company's
common stock outstanding on the Closing Date. [Currently
5,331,670].
3. "Anti-Dilution Shares" are the number of Shares which the Holder
may purchase under this Warrant.
4. "Exercised Options & Warrants" are those options and warrants
listed on Exhibit B attached hereto (the "Options & Warrants")
which have been exercised or converted into Common Stock.
(b) Reduction of Outstanding Shares. In the event any Options
& Warrants are redeemed, canceled, forfeited or otherwise terminated in
accordance with the terms of the agreements governing such Options &
Warrants, then the number of Shares issuable under this Warrant and/or the
Purchase Price herein shall be adjusted proportionately as at the effective
date of such occurrence.
(c) Anti-Dilution Provision. In case of any reclassification,
stock split, capital reorganization, stock dividend or other event which
causes the Company to make provisions for the adjustment in the number of
shares of Common Stock issuable under the Options & Warrants and/or in the
exercise price of the Options & Warrants, then the number of Shares issuable
under this Warrant and/or the Purchase Price herein shall be adjusted
proportionately as at the effective date of such occurrence.
(d) Exercise of Warrant. The Company shall give the Holder
reasonable notice in writing of the proposed exercise of any Options &
Warrants (the "Notice"), which Notice shall state (i) the name of the party
proposing to exercise an Option & Warrant; (ii) the number of shares to be
issued under such Option & Warrant; (iii) the consideration to be paid by
such party for such shares; (iv) the number of exercisable Shares authorized
to be issued under this Warrant and (v) the consideration to be paid by the
Holder for such Shares. Within thirty (30) days of the Notice (the "Exercise
Period"), the Holder shall exercise its rights to purchase Shares under this
Warrant by surrender of this Warrant, with the form of subscription attached
as Exhibit A hereto duly executed by such Holder, to the Company at its
principal office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount
obtained by multiplying the number of Shares for which this Warrant is being
exercised by the Purchase Price then in effect. Any portion of exercisable
Shares under this Warrant, not exercised within the Exercise Period, shall
be deemed canceled.
2
(e) Trustee for Warrant Holders. In the event that a bank or
trust company has been appointed as trustee for the Holder of this Warrant
pursuant to Section 3, such bank or trust company will have all the powers
and duties of a Warrant agent appointed pursuant to Section 10 and will
accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of this Warrant
pursuant to this Section 1.
2. Delivery of Stock Certificates on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in
any event within ten (10) days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by the Company of any applicable transfer taxes) may direct, a
certificate or certificates for the number of fully paid and nonassessable
Shares to which such Holder is entitled upon such exercise.
3. Adjustment for Reorganization, Consolidation or Merger.
(a) Reorganization, Consolidation or Merger. In case, at any
time or from time to time, the Company (i) effects a reorganization, (ii)
consolidates with or merges into any other person or (iii) transfers all or
substantially all of its properties or assets to any other person under any
plan or arrangement then, in each such case, the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, will receive, in
lieu of the Shares issuable on such exercise prior to such consummation or
such effective date, the stock and other securities and property (including
cash) to which such Holder would have been entitled upon such consummation
or in connection with such dissolution, as the case may be, if such Holder
had so exercised this Warrant immediately prior thereto, all subject to
further adjustment as provided in Section 4.
(b) Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties
or assets, the Company, prior to such dissolution, will at its expense
deliver or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the Holder of this Warrant
after the effective date of such dissolution pursuant to this Section 3 to a
bank or trust company, as trustee for the Holder of this Warrant, and will
promptly notify each Holder of the Warrants of the occurrence of any events
specified in this Section 3.
(c) Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant will continue in full
force and effect and the terms hereof will be applicable to all securities
and other property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may
be, and will be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the
Company, whether or not such person has expressly assumed the terms of this
Warrant.
4. Adjustments for Stock Dividends and Stock Splits. In the event
that the Company (a) issues additional shares of Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivides its
outstanding shares of Common Stock or (c) combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each
such event, the Purchase Price will, simultaneously with the happening of
such event, be adjusted by multiplying the then prevailing Purchase Price by
a fraction, the numerator of which will be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of
which will be the number of shares of Common Stock outstanding immediately
after such event, and the product so obtained will hereafter be the Purchase
Price then in effect. The Purchase Price, as so adjusted, will be readjusted
in the same manner upon the happening of any successive event or events
described herein in this Section 4. The Holder of this Warrant will
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of Shares determined by multiplying the number of Shares
which would otherwise (but for the provisions of this Section 4) be issuable
on such exercise, by a fraction of which (i) the
3
numerator is the Purchase Price which would otherwise (but for the
provisions of this Section 4) be in effect, and (ii) the denominator is the
Purchase Price in effect on the date of such exercise.
5. Notices of Record Date, Etc.
In the event of:
(a) the Company's taking a record of the holders of its
Common Stock (or other securities at the time receivable upon the exercise
of the Warrant) for the purpose of entitling such holders to receive any
dividend (other than a cash dividend payable out of earned surplus) or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities, or to receive any
other right; or
(b) any capital reorganization of the Company (other than a
stock split or reverse stock split), any reclassification of the capital
stock of the Company, any consolidation or merger of the Company with or
into another corporation (other than a merger for purposes of change of
domicile) or any conveyance of all or substantially all of the assets of the
Company to another corporation; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; then, and in each such case, the Company will
mail or cause to be mailed to the Holder or Holders at the time outstanding
a notice specifying, as the case may be, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or right and the
amount and character of such dividend, distribution or right or (ii) the
date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of
the Warrant) will be entitled to exchange their shares of Common Stock (or
such other securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice will be mailed at least
twenty (20) days prior to the date therein specified and this Warrant may be
fully exercised prior to said date during the term of the Warrant but no
later than five (5) days prior to said date.
6. No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Shares
receivable on the exercise of this Warrant above the amount payable therefor
on such exercise and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Shares on the exercise of this Warrant from time to
time outstanding.
7. Reservation of Stock Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, all Shares from time to time
issuable on the exercise of the Warrant.
8. Exchange of Warrant. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the Holder thereof a new Warrant or Warrants
of like tenor, in the name of such Holder or as such Holder (on payment by
such Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of Shares for which
the Warrant or Warrants may still be exercised.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the
4
Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
10. Warrant Agent. The Company may, by written notice to each
Holder of a Warrant, appoint an agent for the purpose of issuing the Shares
on the exercise of the Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 8 and replacing this Warrant pursuant to Section
9, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, will be made at such office by such agent.
11. Restrictions on Transfer; Warrant Holder Not Deemed
Stockholder. This Warrant is issued upon the following terms, to all of
which each Holder or owner hereof by the taking hereof consents and agrees:
(a) No Holder of this Warrant will, as such, be entitled to
vote or to receive dividends or to be deemed the holder of any class of
security that may at any time be issuable upon exercise of the Warrant for
any purpose whatsoever, nor will anything contained herein be construed to
confer upon such Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock
to no par value, consolidation, merger or conveyance or otherwise), or to
receive notice of meetings or to receive dividends or subscription rights,
until such Holder has exercised the Warrant and been issued Shares in
accordance with the provisions hereof; and
(b) Neither transfer or assignment of this Warrant is
permitted without the Company's written consent. Neither this Warrant nor
any Shares purchased pursuant to this Warrant have been registered under the
Securities Act of 1933. Therefore, the Company may require, as a condition
of allowing the transfer or exchange of this Warrant or such Shares, that
the Holder or transferee of this Warrant or such Shares, as the case may be,
furnish to the Company an opinion of counsel reasonably acceptable to the
Company to the effect that such transfer or exchange may be made without
registration under the Securities Act of 1933. The certificates evidencing
the common stock issued on the exercise of the Warrant will bear a legend to
the effect that the certificates have not been registered under the
Securities Act of 1933.
12. Further Assurances. The Company undertakes generally to execute
all such agreements and other instruments and to do all such other acts as
are necessary or appropriate (including, but not limited to, authorizing and
issuing additional shares of common stock of the Company) to give full
effect to the terms, conditions and provisions of this Warrant and make it
binding on the Company.
13. Notices. All notices and other communications between the
Company and the Holder of this Warrant shall be mailed by first class mail,
postage prepaid, at such addresses listed above, or as may have been
subsequently furnished to the other party in writing.
14. Definitions. As used herein, the following terms, unless the
context otherwise requires, have the following respective meanings:
(a) The term "Company" includes Acrodyne Communications,
Inc., and any corporation which succeeds or assumes the obligations of the
Company thereunder.
(b) The term "Common Stock" includes (i) the Company's common
stock, $.01 par value per share, as authorized on the date hereof, (ii) any
other capital stock of any class or classes (however designated) of the
Company, authorized on or after such date, the holders of which shall have
the right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the payment
of dividends and distributions on any shares entitled to preference and
(iii) any other securities into which or for which any of the securities
described in (i) or (ii) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
5
15. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant will be construed and enforced in
accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and will not
limit or otherwise affect any of the terms hereof. This Warrant is being
executed as an instrument under seal. The invalidity or unenforceability of
any provision thereof will in no way affect the validity or enforceability
of any other provision.
16. Expiration. The right to exercise this Warrant will expire at
5:00 P.M., New York time, on [the Seventh Anniversary of the Closing Date].
6
Dated:
ACRODYNE COMMUNICATIONS, INC.
By: ..........................................
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
(Corporate Seal)
7
EXHIBIT A
FORM OF SUBSCRIPTION
(To be signed only on Exercise of Warrant)
TO ACRODYNE COMMUNICATIONS, INC.:
The undersigned, the Holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
_____ shares of common stock of ACRODYNE COMMUNICATIONS, INC. and herewith
makes payment of $________ therefor, and requests that the certificates for
such shares be issued in the name of, and delivered to ____________, whose
address is _____________________.
Dated:
(Signature must conform to name of Holder
as specified on the face of the Warrant)
(Address)
EXHIBIT D
WARRANT AGREEMENT
THE WARRANT REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS
RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH COUNSEL IS OF THE OPINION THAT SUCH SALE, ASSIGNMENT OR TRANSFER DOES
NOT INVOLVE A TRANSACTION REQUIRING THE REGISTRATION OF SUCH SECURITY UNDER
THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
Right to Purchase up to 6,000,000 Shares of Common Stock
of Acrodyne Communications, Inc.
ACRODYNE COMMUNICATIONS, INC.
Common Stock Purchase Warrant
ACRODYNE COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), having its principal executive offices at 000 Xxxxxxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000, hereby certifies that, for value
received, Xxxxxxxx Broadcast Group, Inc., or assigns (the "Holder" or
"Holders"), having its address at c/x Xxxxxxxx Broadcast Group, Inc., 0000
Xxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, is entitled, subject to the
terms set forth below, to purchase from the Company at any time or from time
to time before 5:00 P.M., New York time, on [the Seventh Anniversary of the
Closing Date of the Subscription Agreement], up to Six Million (6,000,000)
fully paid and nonassessable shares of common stock of the Company (the
"Shares," and each, a "Share") at the Purchase Price (as defined below).
1. Exercise of Warrant.
(a) The Holder of this Warrant may, from time to time,
purchase up to an aggregate of 6,000,000 Shares, subject to the Company's
realization of Incremental Sales (as defined herein) in any fiscal year of
the Company beginning after December 31, 1998 (each a "Fiscal Year"). For
each $20 of Incremental Sales in any Fiscal Year, the Holder shall be
entitled to purchase One (1) Share under this Warrant. "Incremental Sales"
for any Fiscal Year means the aggregate of (i) the Company's sales of
Existing Products in such Fiscal Year which are in excess of the Company's
sales as reflected in its audited annual statement of operations for Fiscal
Year 1998 plus (ii) the Company's total sales of New Products in such Fiscal
Year. "Existing Products" means VHF and UHF solid state translators and
transmitters up to 10,000 xxxxx and VHF and UHF tube products of tetrode
and/or diacrode design from 1,000 xxxxx to 300,000 xxxxx. "New Products"
means all products manufactured and sold by the Company after December 31,
1998, other than Existing Products.
1
By way of illustration only, if the Company's sales in Fiscal
Year 1998 as reflected in the Company's audited annual statement of
operations are $14,000,000, and the Company's sales of Existing and New
Products in Fiscal Year 2000 as reflected in the Company's audited annual
statement of operations are $15,500,000 and $3,000,000 respectively, then
the Incremental Sales for Fiscal Year 2000 will be $4,500,000 ($15,500,000
minus $14,000,000 = $1,500,000 plus $3,000,000 from sales of New Products),
and the Holder will be entitled to purchase up to 225,000 Shares under this
Warrant, with respect to Fiscal Year 2000.
(b) Purchase Price. The purchase price of each Share under
this Warrant will be determined based upon the Fiscal Year in which the
Incremental Sales were realized in accordance with the schedule set forth
below (the "Purchase Price"):
For Incremental Sales realized in: Price Per Share:
---------------------------------- ----------------
Fiscal Year 1999 $3.00
Fiscal Year 2000 $3.60
Fiscal Year 2001 $4.32
Fiscal Year 2002 $5.18
Fiscal Year 2003
and Thereafter $6.00
(c) Exercise. Subject to the foregoing, commencing on the
date of this Warrant or from time to time thereafter prior to the expiration
hereof, this Warrant may be exercised in whole or in part, by the Holder
hereof by surrender of this Warrant, with the form of subscription attached
as Exhibit A hereto, duly executed by such Holder, to the Company at its
principal office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount
obtained by multiplying the number of Shares for which this Warrant is being
exercised by their respective Purchase Prices as described above.
(d) Trustee for Warrant Holders. In the event that a bank or
trust company has been appointed as trustee for the Holder of this Warrant,
such bank or trust company will have all the powers and duties of a Warrant
Agent appointed pursuant to Section 10 and will accept, in its own name for
the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as
the case may be, on exercise of this Warrant pursuant to this Section 1.
2. Delivery of Stock Certificates on Exercise. As soon as
practicable after any exercise of this Warrant in full or in part, and in
any event within ten (10) days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by
2
the Company of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable Shares to which
such Holder is entitled upon such exercise.
3. Adjustment for Reorganization, Consolidation or Merger.
(a) Reorganization, Consolidation or Merger. In case, at any
time or from time to time, the Company (i) effects a reorganization, (ii)
consolidates with or merges into any other person or (iii) transfers all or
substantially all of its properties or assets to any other person under any
plan or arrangement, then, in each such case, the Holder of this Warrant, on
the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, will receive, in
lieu of the Shares issuable on such exercise prior to such consummation or
such effective date, the stock and other securities and property (including
cash) to which such Holder would have been entitled upon such consummation
or in connection with such dissolution, as the case may be, if such Holder
had so exercised this Warrant immediately prior thereto, all subject to
further adjustment as provided in Section 4.
(b) Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties
or assets, the Company, prior to such dissolution, will at its expense
deliver or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the Holder of this Warrant
after the effective date of such dissolution pursuant to this Section 3 to a
bank or trust company, as trustee for the Holder of this Warrant, and will
promptly notify each Holder of the Warrants of the occurrence of any events
specified in this Section 3.
(c) Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant will continue in full
force and effect and the terms hereof will be applicable to all securities
and other property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may
be, and will be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the
Company, whether or not such person has expressly assumed the terms of this
Warrant.
4. Adjustments for Stock Dividends and Stock Splits. In the event
that the Company (a) issues additional shares of Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivides its
outstanding shares of Common Stock or (c) combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each
such event, the Purchase Price will, simultaneously with the happening of
such event, be adjusted by multiplying the then prevailing Purchase Price by
a fraction, the numerator of which will be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of
which will be the number of shares of Common Stock outstanding immediately
after such event, and the product so obtained will hereafter be the Purchase
Price then in effect. The Purchase Price, as so adjusted, will be
3
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The Holder of this Warrant will
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of Shares determined by multiplying the number of Shares
which would otherwise (but for the provisions of this Section 4) be issuable
on such exercise, by a fraction of which (i) the numerator is the Purchase
Price which would otherwise (but for the provisions of this Section 4) be in
effect, and (ii) the denominator is the Purchase Price in effect on the date
of such exercise.
5. Notices of Record Date, Etc.
In the event of:
(a) the Company's taking a record of the holders of its Common
Stock (or other securities at the time receivable upon the exercise of the
Warrant) for the purpose of entitling such holders to receive any dividend
(other than a cash dividend payable out of earned surplus) or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities, or to receive any
other right; or
(b) any capital reorganization of the Company (other than a stock
split or reverse stock split), any reclassification of the capital stock of
the Company, any consolidation or merger of the Company with or into another
corporation (other than a merger for purposes of change of domicile) or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; then, and in each such case, the Company will
mail or cause to be mailed to the Holder or Holders at the time outstanding
a notice specifying, as the case may be, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or right and the
amount and character of such dividend, distribution or right or (ii) the
date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of
the Warrant) will be entitled to exchange their shares of Common Stock (or
such other securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice will be mailed at least
twenty (20) days prior to the date therein specified and this Warrant may be
fully exercised prior to said date during the term of the Warrant but no
later than five (5) days prior to said date.
6. No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Shares
receivable on the exercise of the Warrant above the amount payable therefor
on such
4
exercise and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Shares on the exercise of this Warrant from time to
time outstanding.
7. Reservation of Stock Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, all Shares from time to time
issuable on the exercise of the Warrant.
8. Exchange of Warrant. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the Holder thereof a new Warrant or Warrants
of like tenor, in the name of such Holder or as such Holder (on payment by
such Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of Shares for which
the Warrant or Warrants may still be exercised.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
10. Warrant Agent. The Company may, by written notice to each
Holder of a Warrant, appoint an agent for the purpose of issuing Shares on
the exercise of the Warrant pursuant to Section 1, exchanging this Warrant
pursuant to Section 8, and replacing this Warrant pursuant to Section 9, or
any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, will be made at such office by such agent.
11. Negotiability; Restrictions on Transfer; Warrant Holder Not
Deemed Stockholder. This Warrant is issued upon the following terms, to all
of which each Holder or owner hereof by the taking hereof consents and
agrees:
(a) No Holder of this Warrant will, as such, be entitled to vote or
to receive dividends or to be deemed the holder of any class of security
that may at any time be issuable upon exercise of the Warrant for any
purpose whatsoever, nor will anything contained herein be construed to
confer upon such Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock
to no par value, consolidation, merger or conveyance or otherwise), or to
receive notice of meetings or to receive dividends or subscription rights,
until such Holder has exercised the Warrant and been issued Shares in
accordance with the provisions hereof; and
(b) Neither this Warrant nor any Shares purchased pursuant to this
Warrant have been registered under the Securities Act of 1933. Therefore,
the Company may require, as a condition of allowing the transfer or exchange
of this Warrant or such Shares, that the Holder or transferee of this
Warrant or such Shares, as the case may be, furnish to the Company an
opinion of counsel
5
reasonably acceptable to the Company to the effect that such transfer or
exchange may be made without registration under the Securities Act of 1933.
The certificates evidencing the Shares issued on the exercise of the Warrant
will bear a legend to the effect that the certificates have not been
registered under the Securities Act of 1933.
12. Further Assurances. The Company undertakes generally to execute
all such agreements and other instruments and to do all such other acts as
are necessary or appropriate (including, but not limited to, authorizing and
issuing additional shares of stock of the Company) to give full effect to
the terms, conditions and provisions of this Warrant and make it binding on
the Company.
13. Notices. All notices and other communications between the
Company and the Holder of this Warrant shall be mailed by first class mail,
postage prepaid, at such addresses listed above, or as may have been
subsequently furnished to the other party in writing.
14. Definitions. As used herein, the following terms, unless the
context otherwise requires, have the following respective meanings:
(a) The term "Company" includes Acrodyne Communications,
Inc., and any corporation which succeeds or assumes the obligations
of the Company thereunder.
(b) The term "Common Stock" includes (i) the Company's
common stock, $.01 par value per share, as authorized on the date
hereof, (ii) any other capital stock of any class or classes
(however designated) of the Company, authorized on or after such
date, the holders of which shall have the right, without limitation
as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends
and distributions on any shares entitled to preference, and (iii)
any other securities into which or for which any of the securities
described in (i) or (ii) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
15. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant will be construed and enforced in
accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and will not
limit or otherwise affect any of the terms hereof. This Warrant is being
executed as an instrument under seal. The invalidity or unenforceability of
any provision thereof will in no way affect the validity or enforceability
of any other provision.
16. Expiration. The right to exercise this Warrant will expire at
5:00 P.M., New York time, on [the Seventh Anniversary of the Closing Date].
[Signature Page Follows]
6
ACRODYNE COMMUNICATIONS, INC.
By: ...................................
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
(Corporate Seal)
7
EXHIBIT A
FORM OF SUBSCRIPTION
(To be signed only on Exercise of Warrant)
TO ACRODYNE COMMUNICATIONS, INC.:
The undersigned, the Holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
_____ shares of common stock of ACRODYNE COMMUNICATIONS, INC. and herewith
makes payment of $________ therefor, and requests that the certificates for
such shares be issued in the name of, and delivered to ____________, whose
address is _____________________.
Dated:
(Signature must conform to name of Holder
as specified on the face of the Warrant)
(Address)
EXHIBIT F
FORM OF
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of [the Closing Date of the Stock
Subscription Agreement], between ACRODYNE COMMUNICATIONS, INC., a Delaware
corporation, and ACRODYNE INDUSTRIES, INC., a Delaware corporation, both
having a principal place of business at 000 Xxxxxxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxxxx 00000 (jointly referred to as the "Company"), and A. XXXXXX
XXXXXXX, an individual residing at 000 Xxxxxx Xxxxxx #0, Xxxxxx, Xxx Xxxxxx
00000 ("Xxxxxxx").
WHEREAS, the Company designs, manufactures and markets television
transmitters and translators and Xxxxxxx has been employed with the Company
since 1994 and has been instrumental in the Company's development; and
WHEREAS, the Company desires to continue to retain the services of
Xxxxxxx as the Company's President and Chief Executive Officer, and Xxxxxxx
desires to render such services, all upon the terms, and subject to the
conditions, set forth herein;
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the Company and Xxxxxxx, each intending to be
legally bound, agree as follows:
1. Employment Term. Subject to earlier termination as provided in
Section 5 hereof, the Company hereby employs Xxxxxxx for a term of three (3)
years commencing on the date hereof (the "Initial Term"). The term of this
Agreement shall automatically be renewed for successive two year terms (each
such renewal being a "Renewal Term" and, all such Renewal Terms together
with the Initial Term, the "Term").
2. Responsibilities and Duties. During the Term, Xxxxxxx shall be
employed as President and Chief Executive Officer of the Company with such
responsibilities and duties as such are customarily performed by a person in
a similar position in a business of a similar nature, and such other duties
as the Board of Directors of the Company (the "Board") may from time to time
determine, consistent with Xxxxxxx'x position and experience. Xxxxxxx shall
be a member of the Board and a member of the Company's Management Committee.
The place of Xxxxxxx'x employment shall be the Company's facilities in Blue
Xxxx, Pennsylvania.
3. Extent of Service. Xxxxxxx shall devote his full business time
to the business of the Company, and, except as may be permitted in advance
by the Board, shall not be engaged in any other business activity during the
Term. Subject to the provisions of Section 7 hereof, the foregoing shall not
be construed as preventing Xxxxxxx from making passive minority investments
in other businesses or enterprises.
4. Compensation.
(a) Salary. The Company shall pay Xxxxxxx an initial base
salary of $175,000 per year during the Term (the "Base Salary"). The Base
Salary shall be subject to normal withholdings and deductions and be payable
in installments in accordance with the payroll policies of the Company in
effect from time to time during the Term. The Base Salary shall be subject
to annual increases decided by the Board, at its sole discretion.
(b) Bonus. In addition to the Base Salary, for each fiscal
year of the Company or part thereof during the Term, Xxxxxxx shall receive a
bonus (the "Bonus") in an amount calculated in accordance with Annex A
hereto. The Bonus shall be paid within ninety (90) days of the end of each
fiscal year.
(c) Stock Option. The Company hereby grants Xxxxxxx an option
to purchase up to 175,000 shares of the Company's common stock pursuant to
the 1997 Stock Option Plan at an exercise price of $3.88 per share. The
stock option granted by this Section shall become exercisable in increments
of 58,333 shares on January 1, 1999, 58,333 shares on January 1, 2000 and
58,334 shares on January 1, 2001. The option granted hereunder shall be
subject to the terms and conditions of the 1997 Stock Option Plan as
amended, and the Stock Option Agreement executed simultaneously herewith.
(d) Benefits. The Company shall provide to Xxxxxxx during the
Term such comprehensive medical, dental, disability, and other insurance
protection, 401(k), pension, retirement, savings or other similar plans,
paid vacation and sick days and other benefits, if any, as are consistent
with the Company's general policy in effect from time to time for senior
executives of the Company.
(e) Reimbursement of Expenses. The Company shall reimburse
Xxxxxxx for all reasonable, ordinary and necessary business expenses
incurred by him in the performance of his duties hereunder and Xxxxxxx shall
account to the Company therefor in the manner normally prescribed by the
Company for reimbursement of Xxxxxxx'x expenses.
(f) Automobile Allowance. The Company shall pay Xxxxxxx an
automobile allowance of $900 per month, payable in arrears on the last day
of each month.
5. Termination.
(a) Death. If Xxxxxxx dies during the Term, this Agreement
shall automatically terminate and the Company shall have no further
obligation to Xxxxxxx or his estate, except that the Company shall pay to
Xxxxxxx'x estate that portion of Xxxxxxx'x Base Salary and Bonus accrued
through the date of his death.
(b) Disability. If during the Term, Xxxxxxx shall be
prevented from performing his duties hereunder by reason of disability for a
period of not less than 180 consecutive days, then the Company may terminate
this Agreement upon 10 days' prior written notice to Xxxxxxx. For purposes
of this Agreement, Xxxxxxx shall be deemed to have become disabled when the
Company, upon advice of a qualified physician, shall have determined through
examination of Xxxxxxx that he has become physically or mentally incapable
(excluding
2
infrequent and temporary absences due to ordinary illness) of performing his
duties under this Agreement. Xxxxxxx agrees that he will submit to such an
examination. In the event of a termination pursuant to this Section 5(b),
the Company shall pay to Xxxxxxx an amount equal to one year of Xxxxxxx'x
Base Salary and that portion of the Bonus accrued through the date of
termination.
(c) Termination by the Company with Cause. The Company may
terminate this Agreement with Cause (as hereinafter defined) without prior
written notice and without any liability hereunder to Xxxxxxx, other than to
pay to Xxxxxxx Xxxxxxx'x Base Salary accrued to the date of such
termination. Any payment due to Xxxxxxx shall be made in the same manner and
at the same time as if this Agreement had not been terminated. As used
herein "Cause" means (i) gross negligence or willful misconduct of Xxxxxxx
which, if curable, is not cured within thirty (30) days' notice from the
Board of Directors; (ii) Xxxxxxx'x conviction of a crime or felony in
connection with the business or affairs of the Company; or (iii) the
termination, abrogation or breach by Xxxxxxx of that certain Investment
Agreement by and between the Company, Xxxxxxx and Xxxxxxxx Broadcast Group,
Inc. (the "Investment Agreement") dated the date hereof.
(d) Termination by the Company without Cause. The Company may
terminate Xxxxxxx'x employment for other than Cause or disability upon
ninety (90) days' prior written notice. Upon termination of this Agreement
by the Company for other than Cause or disability, including the failure of
the Company to renew this Agreement at the end of the Initial Term or any
Renewal Term, the Company shall pay Xxxxxxx as a xxxxxxxxx benefit: (i) a
severance payment (the "Severance Payment") consisting of (A) if termination
occurs before the end of the Initial Term, an amount equal to two (2) times
the annual Base Salary then in effect; or (B) if termination occurs after or
at the conclusion of the Initial Term, an amount equal to the annual Base
Salary then in effect, such Severance Payment to be payable in installments
in the same manner as the Base Salary; and (ii) the continuation of all
health, insurance and other benefits in effect at the time of such
termination or, at the Company's election, the payment to Xxxxxxx of his
expenses of obtaining substantially similar insurance coverage and other
benefits for himself and his spouse, all for the period of three (3) years
from the date of such termination.
(e) Voluntary Termination by Xxxxxxx. Xxxxxxx may voluntarily
terminate his employment with the Company at any time, including the failure
of Xxxxxxx to accept the Company's renewal of this Agreement at the end of
the Initial Term or any Renewal Term, upon ninety (90) days' prior written
notice, in which case this Agreement shall automatically terminate and the
Company shall have no further obligation to Xxxxxxx other than to pay to
Xxxxxxx that portion of Xxxxxxx'x Base Salary and Bonus accrued through the
date on which Xxxxxxx'x resignation becomes effective.
(f) Termination by Xxxxxxx for Good Reason. Xxxxxxx may
terminate his employment with the Company upon ninety (90) days prior
written notice in the event that (i) the Company breaches in any material
respect its obligations under this Agreement, which breach, if curable, is
not cured within ninety (90) days of Xxxxxxx'x written notice to the Board;
or (ii) the scope of Xxxxxxx'x authority and duties as President and CEO is
materially diminished by the Board or the place of Xxxxxxx'x employment is
relocated more than twenty (20) miles from the
3
city of Blue Xxxx, Pennsylvania without his consent; or (iii) there occurs a
"Change of Control," which term shall mean: (x) the acquisition of any
person or entity, or combination thereof acting together, other than
Xxxxxxxx Broadcast Group, Inc. and its affiliates, of the power to elect a
majority of the Board of the Company or any successor thereto; (y) the sale
of all or any substantial portion of the assets or business of the Company;
or (z) the termination, abrogation or breach by any party other than Xxxxxxx
of the Investment Agreement. In the event of Xxxxxxx'x termination of this
employment under this Section 5(f), such termination shall be treated in all
respects as if it constituted a termination by the Company without Cause
pursuant to Section 5(d) and Xxxxxxx shall be entitled forthwith to the
severance benefits of Section 5(d).
(g) To the extent that any payment or benefit to Xxxxxxx
under this Agreement or any, the Stock Option Agreement with the Company
constitutes an "excess parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended, the Company shall make a gross-up payment
to Xxxxxxx in an amount necessary to enable him to pay the excise tax (and
any interest and penalties herein and any income and excise taxes thereon)
with respect to such excess parachute payment and such gross-up payment.
6. Confidential Information. Xxxxxxx acknowledges that in the
course of his employment by the Company, he may receive or has received
certain information, including without limitation, technological
information, customer and client lists, and other business, product and
financial information which is confidential or which constitutes a trade
secret relating to the Company or the business conducted by the Company (the
"Information"). Xxxxxxx agrees not to reveal the Information to anyone
outside the Company or its affiliates and not to use the Information for any
purpose other than the performance of his duties under the Agreement. Upon
termination of this Agreement, Xxxxxxx shall surrender to the Company all
papers, documents, writing and other property produced by him or coming into
his possession by or through his employment concerning any Information and
Xxxxxxx agrees that all such materials will at all time remain the property
of the Company. The foregoing obligations shall survive the termination of
Xxxxxxx'x employment by the Company for any reason for a period of (2)
years.
7. Restrictive Covenant. For as long as Xxxxxxx shall be employed
by the Company, and for a period of two (2) years from the date he ceases to
be employed by the Company if such cessation of employment is by reason of a
termination by the Company with Cause under Section 5(c) or a voluntary
termination by Xxxxxxx under Section 5(e), Xxxxxxx shall not, directly or
indirectly, engage within any market area served by the Company in a manner
(including, without limitation, as principal, agent, employee, consultant,
or investor (other than a passive investor with an interest of less than
5%), trustee or through the agency of any corporation, partnership,
association or agent or agency) in any business in competition with the
business conducted by the Company or its subsidiaries or affiliates (or its
successors and assigns), including, without limitation, any business
involving telecommunication transmittal equipment. During such period,
Xxxxxxx further agrees that he shall not, either directly or indirectly,
through any person, firm, association or corporation with which Xxxxxxx is
now or may hereafter become associated, cause or induce any present or
future employee of the Company (or its successors and assigns) or any of its
affiliates to leave the employ of the Company (or its successors and
assigns) or any such affiliate for any reason. If at the time of
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enforcement of any provision of this Agreement, a court shall hold that the
duration, scope or area restriction of any other provision hereof is
unreasonable under circumstances now or then existing, the parties hereto
agree that the maximum duration, scope or area reasonable under the
circumstances shall be substituted for the stated duration, scope or area.
8. Amendment to Stock Option Plans. In connection with and as a
condition to this Agreement, the Board shall have amended the Company's 1997
stock option plan, 1994 stock option plan and 1993 stock option plan by
adoption of the resolutions set forth in Annex B hereto.
9. Notices. All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be deemed
to have been delivered on (a) the date personally delivered, (b) five days
following the date mailed, postage prepaid, by certified mail, return
receipt requested, or (c) five days following the date telecopied and
confirmed by mail, if addressed to the respective parties as follows:
If to Xxxxxxx: Mr. A. Xxxxxx Xxxxxxx
000 Xxxxxx Xxxxxx #0
Xxxxxx, Xxx Xxxxxx 00000
If to the Company: Acrodyne Industries, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Chairman of the Board of Directors
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
10. Specific Performance. Xxxxxxx acknowledges that a remedy at law
for any breach or attempted breach of Section 6 or 7 of this Agreement will
be inadequate, and agrees that the Company shall be entitled to specific
performance and injunctive and other equitable relief in case of any such
breach or attempted breach, and Xxxxxxx specifically waives any defense that
the Company has or may have an adequate remedy at law.
11. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or otherwise unenforceable by a court
of competent jurisdiction for any reason whatsoever:
(a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held
to be invalid, illegal or unenforceable) shall not in any way be affected or
impaired thereby; and
(b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
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12. Assignment. This Agreement may not be assigned by either party
hereto, except that the Company may assign this Agreement without the
consent of Xxxxxxx in connection with the sale of all or substantially all
of the assets of the Company, provided that the Company and the assignee
shall thereafter remain jointly liable to Xxxxxxx for the performance of
this Agreement. Neither Xxxxxxx nor his estate shall have any right to
commute, encumber or dispose of any right to receive payments hereunder, it
being agreed that such payments and the right thereto are nonassignable and
nontransferable.
13. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, Xxxxxxx'x heirs and personal
representatives, and the successors and assigns of the Company.
14. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by
both the parties hereto. No waiver of any other provision hereof (whether or
not similar) shall be binding unless executed in writing by both the parties
hereto nor shall such waiver constitute a continuing waiver.
15. Captions. The section and paragraph headings in this Agreement
are for reference purposes only and shall not effect in any way the meaning
or interpretation of this Agreement.
16. Governing Law. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of New York.
17. Counterparts. This Agreement may be executed in multiple
original counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
18. Entire Agreement. This Agreement together with the Stock Option
Agreements and the Investment Agreement contain the entire agreement between
the parties with respect to the employment of Xxxxxxx by the Company and
supersedes any and all prior understandings, agreements or correspondence
between the parties.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
ACRODYNE COMMUNICATIONS, INC.
By:
ACRODYNE INDUSTRIES, INC.
By:
A. XXXXXX XXXXXXX
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ANNEX A
EMPLOYMENT AGREEMENT
between ACRODYNE and XXXXXXX
BONUS FORMULA
-------------
Section 4(b)
Xxxxxxx'x Bonus for each fiscal year of the Company shall be equal
to five percent (5%) of the Company's earnings before interest and taxes
excluding costs for research and development, as determined from the
Company's audited statement of operations; provided, however, that in no
event shall Xxxxxxx'x Bonus for any fiscal year exceed his Base Salary for
such year.
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ANNEX B
EMPLOYMENT AGREEMENT
between ACRODYNE and XXXXXXX
AMENDMENTS TO STOCK OPTION GRANTS
---------------------------------
Section 8
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