Exhibit 10.19
SUBSCRIPTION AGREEMENT
NOTE: THREE COMPLETED AND EXECUTED COPIES OF THIS
SUBSCRIPTION AGREEMENT MUST BE RETURNED, AND THE
ENTIRE PURCHASE PRICE FOR THE COMMON
STOCK SUBSCRIBED FOR MUST BE PAID AS SET FORTH HEREIN,
TO SUBSCRIBE FOR THIS OFFERING.
Number of Shares of Common Stock,
$0.01 par value, at $2.50 per Share: 800,000
Aggregate Purchase Price: $2,000,000
* * * * * * * * *
SUBSCRIPTION AGREEMENT, dated as of November 3, 1997, by and among
Acrodyne Communications, Inc., a Delaware corporation (the "Company"),
and each entity whose name appears on Schedule 1 hereto (each an "the
"Investor" and collectively the "Investor Group").
W I T N E S S E T H
WHEREAS, the Company desires to sell to the Investor Group, and the
Investor Group desires to purchase from the Company, an aggregate of
800,000 shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), at a purchase price of $2.50 per share;
and
WHEREAS, the Company is described in the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996 and its
Quarterly Reports on Form 10-QSB for the periods ended March 31,
1997 and June 30, 1997 (collectively the "Reports") as filed with the
Securities and Exchange Commission (the "Commission");
NOW, THEREFORE, the parties hereto agree as follows:
1. Subscription and Payment.
Subject to the terms and conditions herein set forth, each Investor
severally hereby subscribes for that number of shares of Common Stock
appearing opposite its name on Schedule 1 and shall deliver to the
Company at the Closing (as defined below) the aggregate purchase price
appearing in Schedule 1 payable in immediately available funds.
2. Closing.
The closing (the "Closing") of the purchase and sale of the Common
Stock (the "Offering") shall occur on November 6, 1997 or the
earliest date thereafter on which the closing conditions specified in
Sections 7 and 8 of this Agreement shall have been satisfied or
waived (any such date, the "Closing Date"); provided, however, that
if the Closing has not occurred by November 7, 1997, then this
Agreement shall terminate and the Closing shall not take place. At
the Closing, the Company will deliver to each Investor one executed
copy of this Agreement with a stock certificate representing the
Investor's ownership of the Common Stock subscribed for hereby and a
Warrant as described in Section 6(d).
3. Termination of Offering.
The Investor understands and agrees that it will not be entitled to
exercise the rights of a shareholder of the Company until an
appropriate certificate representing the Common Stock for which it
has subscribed has been issued to it on the day of the Closing. If
(a) the Company shall have reasonably determined that an event has
occurred or a condition exists which could materially and adversely
affect the business or proposed business of the Company and that
such possibility warrants termination of the Offering, (b) the
conditions to the Closing of the Offering are not satisfied or (c)
the Company elects to terminate the Offering, the Offering will be
terminated, and the Company will not issue the Common Stock and the
Company will not be entitled to payment of the purchase price for the
Common Stock.
4. Representations and Warranties by Investor.
Each Investor hereby severally represents and warrants to the Company
that:
(a) it is an "accredited investor" as that term is defined in
Rule 501(a) under the Securities Act of 1933, as amended (the
"Act");
(b) it has the requisite knowledge and experience in financial
and business matters to be capable of evaluating the merits and
risks of an investment in the Company;
(c) it understands that the Common Stock involves risk of loss of
such Investor's investment;
(d) its financial situation is such that such Investor is able to
bear the economic risks of its investment made hereby and at the
present time and in the foreseeable future could afford a
complete loss of such investment;
(e) it has received and carefully read the Reports and has
evaluated the risks of investing in the Company;
(f) it has been given the opportunity to ask questions of, and
receive answers from, the Company concerning the terms and
conditions of the Offering and to obtain additional information
necessary to verify the accuracy of the information contained in
the Reports or such other information as it desired in order to
evaluate its investment;
(g) in making its decision to purchase the Common Stock herein
subscribed for, it has relied solely upon the Reports, certain
other written materials provided by the Company including,
without limitation current backlog reports (such other
materials, collectively the "Materials"), and the
representations, warranties, agreements, undertakings and
acknowledgments of the Company in this Agreement and
independent investigations made by it;
(h) it understands that an investment in the Company involves
certain risks and it has taken full cognizance of and
understands such risks;
(i) it understands that the Common Stock has not been registered
under the Act and agrees that the Common Stock may not be sold,
offered for sale, transferred, pledged, hypothecated or
otherwise disposed of except in compliance with the Act and
subject to the terms of this Subscription Agreement;
(j) it understands that no federal or state agency has made any
finding or determination as to the fairness for investment in,
or any recommendation or endorsement of, the Common Stock;
(k) the Common Stock herein subscribed for is being acquired
by it in good faith solely for its own account, for
investment purposes and not with a view to subdivision,
distribution or resale. It will not sell or otherwise
dispose of any shares of the Common Stock, unless:
i) it shall have advised the Company in writing that it
intends to dispose of such shares of Common Stock in a manner
to be described in such advice, and counsel reasonably
acceptable to the Company shall have delivered to the Company
an opinion that registration is not required under the Act or
under any applicable securities laws of any jurisdiction; or
ii) a registration statement on an appropriate form under
the Act, or a post-effective amendment to such registration
statement, covering the proposed sale or other disposition of
such shares of Common Stock shall be in effect under the Act
and such shares of Common Stock or the proposed sale or other
disposition thereof shall have been registered or qualified
under applicable securities laws of any jurisdiction.
Each Investor undertakes to notify the Company as soon as practicable
of any material change in any representation, warranty or other
information relating to the Investor set forth herein which occurs
prior to the Closing in order to insure compliance of the Investor
with the terms of this Agreement.
Each Investor acknowledges and agrees that the certificates
representing the Common Stock shall bear the following legend (unless
not required under the Act):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 and may not be sold,
exchanged, hypothecated or transferred in any manner except in
compliance with that certain Subscription Agreement dated as of
November 3, 1997 between the Company and the Investors named therein."
Each Investor also acknowledges that the Company may place a stop
transfer order against transfer of the Common Stock, if necessary in
the Company's reasonable judgment in order to assure compliance by the
Investor with the terms of this Agreement.
If the Investor is a partnership, corporation, trust or other entity,
the Investor represents and warrants that (i) the individual executing
this Agreement has appropriate authority to act on behalf of the
Investor and (ii) the Investor was not specifically formed to acquire
the Common Stock subscribed for hereby. If the Investor is a
partnership, the Investor further represents that the funds to make
this investment were not derived from additional capital contributions
of the partners of such partnership made solely for the purpose of
enabling such partnership to purchase the Common Stock and that such
partnership was not formed solely for the purpose of enabling such
partnership to purchase the Common Stock.
The foregoing representations, warranties, agreements, undertakings
and acknowledgments are made by the Investor with the intent that they
be relied upon in determining its suitability as a purchaser of Common
Stock.
5. Representations and Warranties of the Company. The Company
represents and warrants to each Investor that:
(a) The Company has duly filed with the Commission all reports
required by the Securities Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx"). The Company has furnished to the Investor a true and
correct copy of the Reports. The Reports do not, as of the
date on which each was signed, contain any untrue statement of
a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Materials were prepared in good faith from the Company's
records maintained in the ordinary course of business, except
that the Company makes no representations or warranties with
respect to any projections or forecasts contained in the
Materials.
(b) The financial statements (including the related notes) of
the Company included in the Reports present fairly the
financial position of the Company as of the dates indicated and
its results of operations for the periods specified therein,
subject, in all cases, to the qualifications stated in the
Reports. All such financial statements have been prepared in
accordance with generally accepted accounting principles on a
basis consistently applied, subject, in all cases, to the
qualifications stated in the Reports.
(c) The Company has been duly organized and validly existing
as a corporation in good standing under the laws of its
jurisdiction of organization, with full power and authority
(corporate and other) to own its properties and conduct its
business as described in the Reports, and is duly qualified
to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the
business conducted by it or the location of the properties
owned or leased by it makes such licenses, certificates and
permits from governmental authorities necessary for the
conduct of its business as described in the Reports.
(d) The authorized capital stock of the Company consists of
(i) 1,000,000 shares of Preferred Stock, par value $1.00 per
share, of which 6,500 shares are issued and outstanding at
October 15, 1997, and (ii) 10,000,000 shares of Common Stock,
par value $.01 per share, of which 4,500,270 shares are
issued and outstanding at October 15, 1997. At October 15,
1997, there are outstanding stock options and warrants
exercisable for a total of 1,215,000 shares of Common Stock.
Schedule 2 hereto accurately sets forth the Company's issued
and outstanding capital stock and all securities convertible
into capital stock. The Company has all requisite power and
authority to issue, sell and deliver the Common Stock in
accordance with and upon the terms and conditions set forth
in this Agreement; and all corporate action required to be
taken by the Company for the due and proper authorization,
issuance, sale and delivery of the Common Stock has been
validly and sufficiently taken. The shares of Common Stock
are being subscribed for hereby will be, when issued, duly
authorized, validly issued, fully paid and nonassessable.
(e) Except as set forth in this Agreement, or as described
in the Reports, subsequent to the respective dates as of
which information is given in the Reports, the Company has
not incurred any material liability or obligation, direct or
contingent, or entered into any material transaction, whether
or not in the ordinary course of business, and there has not
been any material change on a consolidated basis in the
capital stock, or any material increase in the short-term
debt or long-term debt, or any material adverse change in the
condition (financial or other), business, key personnel,
properties or results of operations of the Company.
(f) The Company is not in violation of its Certificate of
Incorporation or Bylaws or in default in the performance of
any material obligation contained in any material agreement,
indenture or other instrument. The performance by the
Company of its obligations under this Agreement and the
consummation of the transactions herein contemplated will not
conflict with or result in a breach of the Certificate of
Incorporation or Bylaws of the Company, or any material
agreement, indenture or other instrument to which the Company
is a party or by which it is bound, or any law, rule,
administrative regulation or decree of any court or
governmental authority having jurisdiction over the Company
or its properties, or result in the creation or imposition of
any material lien, charge, claim or encumbrance upon any
property or asset of the Company. Except as required by the
Act and applicable state securities or blue sky laws, no
consent, approval, authorization or order of any court or
governmental authority is required in connection with the
consummation of the transactions contemplated by this
Agreement. The rights granted to the Investor hereunder do
not in any way conflict with and are not inconsistent with
any rights granted to the holders of the Company's securities
or debt instruments.
(g) The Common Stock subscribed for hereunder, when issued,
will conform to the description thereof contained in the
Reports. Except as described in the Reports or as set forth
in this Agreement, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of Common Stock
pursuant to the Company's Certificate of Incorporation or
Bylaws or any agreement or other instrument to which the
Company is a party.
(h) The Company has full right, power and authority to enter
into this Agreement and this Agreement has been duly
authorized, executed and delivered by the Company and
constitutes the legal, valid and binding agreement of the
Company enforceable against the Company in accordance with
its terms.
(i) Except as otherwise stated in the Reports, (A) the
Company has good and marketable title (in fee simple, in the
case of real property), free and clear of all liens and
encumbrances, to all of the material real and personal
property described in the Report as being owned by it, except
for any liens and encumbrances which are not material in the
aggregate and do not materially interfere with the conduct of
the business of the Company, and (B) has valid leases to the
material real property described in the Reports as under
lease to it with such exceptions as do not materially
interfere with the conduct of the business of the Company.
(j) Except as set forth in the Reports, there are no
actions, suits or proceedings pending before or by any court
or governmental agency or authority, or any arbitrator, which
seek to restrain or prohibit the consummation of the
transactions contemplated hereby or which might reasonably be
expected to result in any material adverse change in the
condition (financial or other), business or results of
operations of the Company and, to the best of the Company's
knowledge, no such action, suit or proceeding has been
threatened.
(k) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court degree to which it
may be subject and the Company has not failed to obtain any
license, permit, franchise or other governmental
authorization necessary to the ownership of its property or
to the conduct of its business, which violation or failure to
obtain is likely to have a material adverse effect on the
condition (financial or other), business or results of
operations of the Company.
(l) No person other than Scorpion Holdings, Inc.("Scorpion")
is entitled to receive any commission, fee or compensation
from the Company for services rendered as placement agent in
connection with the offer or sale of the Common Stock
pursuant to the Offering.
6. Covenants of the Company.
The Company covenants with the Investor that:
(a) The Company will apply the net proceeds from the sale of
the Common Stock to working capital and other general
corporate purposes.
(b) The Company undertakes to notify the Investor as soon as
practical of any material change in any representation,
warranty or other information relating to the Company set
forth herein which occurs prior to the Closing.
(c) Neither the Company nor any of its employees or other
persons directly or indirectly affiliated with it will engage
in any activity that would jeopardize the status of the
Offering as an exempt transaction under the Act or under the
laws of any state in which the Offering is made.
(d) At Closing, the Company shall issue to the Investors
identified in Schedule 1 warrants for the purchase of up to
300,000 shares of Common Stock, exercisable for five (5)
years after the Closing Date at a warrant exercise price of
$3.00 per share of Common Stock, in the form of the Warrant
Agreement attached hereto as Exhibit A (such warrants, the
"Investor Warrants").
(e) At Closing, in consideration for Scorpion Holdings Inc.'s
("Scorpion") introduction to the Investor Group the Company
shall sell to S-A Partners for $2,000 warrants for the
purchase of up to 200,000 shares of Common Stock, exercisable
for five (5) years after the Closing Date at a warrant
exercise price of $3.00 per share of Common Stock, in the form
of the Warrant Agreement attached hereto as Exhibit A (such
warrants, the "Scorpion Warrants" and, collectively with the
Investor Warrants, the "Warrants").
(f) At Closing, the Company shall enter into a financial
advisory agreement with Scorpion in the form of Exhibit B
attached hereto.
(g) For so long as the Investor Group owns beneficially
not less than 10% of the Common Stock of the Company issued
and outstanding on a fully diluted basis (assuming the
exercise or conversion of all securities exercisable or
convertible into Common Stock): (i) the Company's Board of
Directors shall consist of five (5) directors, (ii) the
Investor Group shall be entitled to nominate one (1) director
for election as a member of the Board of Directors of the
Company at the annual meeting of stockholders or any other
meeting at which directors are elected, and the Company shall
include such nominee in the slate of nominee directors
recommended for election by the incumbent directors and
management; and (iii) the Company shall include in such slate
of nominee directors at least two (2) nominees who are not
affiliated with the Company's management or with the Investor
Group and who shall be selected with the consent of the
Investor Group, whose consent shall not be unreasonably or
arbitrarily withheld. The Company shall be entitled to rely
on instructions received by Investors representing a majority
of the Common Stock held by the Investor Group.
7. Conditions of Investor Obligations.
The Investor's obligations under this Agreement are subject to the
accuracy of the representations and warranties of the Company made in
Section 5 hereof in all material respects, to the performance by the
Company of its other obligations under this Agreement to be performed
at or prior to the Closing and to the following further conditions:
(a) At the Closing, the Investor shall have received the
favorable opinion of counsel to the Company, dated the
Closing Date and in form and substance satisfactory to the
Investor, to the effect that:
i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of
its jurisdiction of organization, with full power and
authority to own its properties and conduct its business as
described in the Reports, and is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction in which the location of the properties
owned or leased by it, as known by such counsel, makes such
qualification materially necessary.
ii) The authorized capital stock of the Company consists of
1,000,000 shares of preferred stock, par value $1.00 per
share, and 10,000,000 shares of Common Stock, par value $.01
per share. The Company has all requisite power and authority
to issue, sell and deliver the Common Stock subscribed for
hereby in accordance with and upon the terms and conditions
set forth in this Agreement; and all corporate action
required to be taken by the Company for the due and proper
authorization, issuance, sale and delivery of such Common
Stock has been validly and sufficiently taken. Upon payment
by the Investor at the Closing of the purchase price for the
shares of Common Stock subscribed for hereby, such Common
Stock will be, upon issuance and delivery thereof duly
authorized, validly issued, fully paid and nonassessable.
There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer
of, any shares of Common Stock pursuant to the Company's
Certificate of Incorporation, By-laws or any agreement or
other instrument known to such counsel to which the Company
is a party except as described in the Reports.
iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not
result in a violation of, or constitute a default under, the
Certificate of Incorporation or Bylaws of the Company, or any
material agreement, indenture or other instrument known to
such counsel to which the Company is a party or by which it
may be bound, or to which any property of the Company is
subject, nor will the performance by the Company of its
obligations hereunder violate any law, rule, administrative
regulation or decree known to such counsel of any court, or
any governmental agency or authority having jurisdiction over
the Company or its properties, or, to the knowledge of such
counsel, result in the creation or imposition of any material
lien, charge, claim or encumbrance upon any property or asset
of the Company. No consent, approval, authorization or other
order of any court, governmental agency or authority is
required in connection with the consummation of the
transactions contemplated by this Agreement, except such as
have been obtained or as are contemplated hereunder.
iv) The Company has full legal right, power and authority to
enter into this Agreement. This Agreement has been validly
authorized, executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws relating
to or affecting creditors' rights generally and court
decisions with respect thereto (provided that no opinion need
be expressed with respect to the application of equitable
principles in any proceeding, whether at law or in equity).
In expressing such opinion, such counsel may state (i) that,
as to questions of fact not independently established by such
counsel, such counsel has relied on certificates of the
Company or its officers and of public officials, (ii) that
such opinion is limited to the General Corporation Law of the
State of Delaware, the laws of the United States and the laws
of the state in which such counsel maintains its principal
office, and (iii) that, when reference is made in such
opinion to "knowledge" or to what is "known" to such counsel,
such reference means the actual knowledge of only those
attorneys who have given substantive attention to the
representation of the Company and the preparation and
negotiation of this Agreement.
(b) At the Closing the Investor shall have received a
certificate, dated the date thereof and signed by the
Chairman of the Board and President of the Company to the
effect that:
i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects, as
if made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date; and
ii) The signer of said certificate has examined the Reports
and after giving effect to all amendments or supplements
thereto, on the Closing Date, such Reports does not include
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading.
If any of the conditions specified in this Section 7 have not been
fulfilled in all material respects when and as required by this
Agreement to be fulfilled, the Investor may cancel this Agreement and
all its obligations under this Agreement by notifying the Company of
such cancellation in writing or by telegram or by facsimile at any
time at or before the Closing and any such cancellation will be
without liability or obligation of any party to any other party
(except in the case of willful breach).
8. Conditions of Obligations of the Company.
The obligations of the Company under this Agreement are subject to
the accuracy of the representations and warranties of the Investor
made in Section 4 hereof in all material respects and to the
performance by the Investor of its other obligations under this
Agreement to be performed at or prior to the Closing.
If any of the conditions specified in this Section 8 have not been
fulfilled in all material respects when and as required by this
Agreement to be fulfilled, the Company may cancel this Agreement and
all its obligations under this Agreement by notifying the Investor of
such cancellation in writing or by telegram at any time at or before
the Closing and any such cancellation will be without liability or
obligation of any party to any other party (except in the case of
willful breach).
9. Special Covenants of Investor Group.
(a) Each Investor hereby severally agrees that, without the prior
written consent of the Company, it will not during the period ending
on the first (1st) anniversary of the Closing, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (ii) enter
into any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities,
in cash or otherwise.
(b) Each Investor and Scorpion agrees that, for a period of two
years and six (6) months from the date hereof, neither they nor any
of their affiliates will, without the prior written consent of the
Company or its Board of Directors: (i) in any manner, acquire,
attempt to acquire, offer to acquire, or agree to acquire, directly
or indirectly, by purchase or otherwise, greater than a 49.9%
interest in the voting securities (including direct or indirect
rights to acquire any voting securities) of the Company or any
subsidiary thereof, or of any successor to or person in control of
the Company, (ii) make or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used
in the proxy rules of the Securities and Exchange Commission) to
vote, or seek to advise or influence any person or entity with
respect to the voting of, any voting securities of the Company; (iii)
nominate for election or otherwise cause to be elected directors
constituting a majority of the entire Board of Directors of the
Company; (iv) make any public announcement with respect to a proposal
for, or offer of (with or without conditions) any extraordinary
transaction involving the Company or its securities or assets; (v)
form, join or in any way participate in a "group" (as defined in
Section 13(d)(3) of the Exchange Act) in connection with any of the
foregoing or (vi) take any action which might require the Company to
make a public announcement regarding the possibility of a business
combination or merger or other transaction. Investor and Scorpion
also agree during such period not to request the Company or any of
its representatives, directly or indirectly, to amend or waive any
provision of this paragraph (including this sentence). Investor and
Scorpion will promptly advise the Company of any inquiry or proposal
made to them with respect to any of the foregoing. For the purposes
of this Section 9(b), each Investor and Scorpion shall be deemed to
be affiliated and their ownership of Common Stock aggregated.
10. Registration Rights
(a) "Registration Period" means the period between the date
of this Agreement and the earlier of (i) the date on which
all of the shares of Common Stock and the Common Stock into
which the Warrants are exercisable (collectively the
"Registrable Securities") have been sold in transactions
where the transferee is not subject to securities law resale
restrictions (or is subject to securities law resale
restrictions solely because it is an "affiliate" of the
Company under the Securities Act and the Rules promulgated
thereunder), or (ii) the date on which the Registrable
Securities (in the opinion of Investor's counsel) may be
immediately sold without registration and free of
restrictions on transfer.
(b) "Registration Statement " means a registration statement
of the Company filed with the Securities and Exchange
Commission (the "SEC") under the Securities Act.
(c) The term "register", "registered", and "registration"
refer to a registration effected by preparing and filing a
Registration Statement in compliance with the Securities Act
and applicable rules and regulations thereunder and pursuant
to Rule 415 under the Securities Act, and the declaration or
ordering of effectiveness of such Registration Statement by
the SEC.
(d) The Company represents and warrants that it meets the
requirements for the use of Form S-3 and the Company shall
file all reports required to be filed by the Company with the
SEC in a timely manner so as to maintain such eligibility for
the use of Form S-3.
(e) Within ninety (90) days following the Closing Date, the
Company will prepare and file a Registration Statement on
Form S-3 with the SEC, registering all of the Registrable
Securities for resale. To the extent allowable under the
Securities Act and the Rules promulgated thereunder, the
Registration Statement shall include the Registrable
Securities and such indeterminate number of additional shares
of Common Stock as may become issuable pursuant to this
Agreement and/or upon exercise of the Warrants (i) to prevent
dilution resulting from stock splits, stock dividends or
similar transactions. The Registration Statement (and each
amendment or supplement thereto) shall be provided to, and
subject to the reasonable approval of , the Investors and
their counsel. The Company shall use its best efforts to
cause such Registration Statement to be declared effective by
the SEC as soon as practicable after filing. Such best
efforts shall include, but not be limited, promptly
responding to all comments received from the staff of the SEC.
Should the Company receive notification from the SEC that the
Registration Statement will receive no action or no review
form the SEC, the Company shall cause such Registration
Statement to become effective within five (5) business days of
such SEC notification. Once declared effective by the SEC, the
Company shall cause such Registration Statement to remain
effective throughout the Registration Period.
(f) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed
by the Company shall not contain any untrue statements of a
material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not
misleading. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all
times during the Registration Period and, during such period,
shall comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such
time as all of such Registrable Securities have been disposed
of in accordance with the intended methods of disposition by
the sellers thereof as set forth in the Registration Statement.
11. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable
Securities, the directors, if any, of such Investor, the
officers, if any, of such Investor, each person, if any, who
controls any Investor within the meaning of the Securities Act
or the Exchange Act, any underwriter (as defined in the
Securities Act) for the Investors, the directors, if any, of
such underwriter and the officers, if any, of such underwriter,
and each person, if any, who controls any such underwriter
within the meaning of the Securities Act or the Exchange Act
(each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several)
(collectively "Claims") to which any of them become subject
under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or
are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-
effective amendment thereof, or any prospectus included
therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective
date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein,
in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law or any rule or
regulation (the matters in the foregoing clauses ((i)through
(iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 11(c) with respect to the
number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement
contained in this Section 11(a): (A) shall not apply to a
Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished
in writing to the Company by any Indemnified Person or
underwriter forsuch Indemnified Person expressly for use in
connection with the preparation of the Registration Statement
or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant
to this Agreement hereof;
(B) with respect to any preliminary
prospectus shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to
the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in
the preliminary prospectus was corrected in the prospectus,
as then amended or supplemented, if a prospectus was timely
made available by the Company pursuant to this Agreement; and
(C) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or
on behalf of the Indemnified Persons and shall survive the
transfer of the Registrable Securities by the Investors to
this Agreement.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor, severally and
not jointly, agrees to indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 11(a),
the Company, each of its directors, each of its officers who
signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the Securities Act
or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls
such stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against
any Claim to which any of them may be come subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such
Claim arises out of or is based upon any Violation, in each
case to the extent (an onlyto the extent) that such Violation
occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor
expressly for use in connection with such Registration
Statement, and such Investor will promptly reimburse any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in
this Section 11(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided further,
however, that the Investor shall be liable under this Section
11(b) for only that amount of a Claim as does not exceed the
net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf
of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investors pursuant to this
Agreement. Notwithstanding anything to the contrary contain
herein, the indemnification agreement contained in this
Section 11(b) with respect to any preliminary prospectus
shall not inure to the benefit of any Indemnified Party if
the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 11 of notice of the
commencement of any action (including any governmental action)
such Indemnified Person or Indemnified Party shall, if a Claim
in respect thereof is to be made against any indemnifying
party under this Section 11, deliver to the indemnifying party
a written notice of the commencement thereof and this
indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with
any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually
satisfactory to the indemnifying parties; provided, however,
that an Indemnified Person or Indemnified Party shall have the
right to retain its own counsel, with the fees and expenses to
be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and
other party represented by such counsel in such proceeding.
The Company shall pay for only one separate legal counsel for
the Investors; such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable
Securities. The failure to deliver written notice to the
indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person
or Indemnified Party under this Section 11, except to the
extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required
by this Section 11 shall be made by periodic payments of the
amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is
incurred and is due and payable. The provisions of this
Section 11 shall survive the termination of this Agreement.
12. Contribution. If the indemnification provided for in Section
11 herein is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein (other than
by reason of the exceptions provided therein), then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities as
between the Company on the one hand and any Investor on the other, in
such proportion as is appropriate to reflect the relative fault of
the Company and of such Investor in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of any Investor
on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company or by such Investor.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 12 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections
11(a) or 11(b) hereof had been available under the circumstances.
The Company and the Investors agree that it would not be just and
equitable if contribution pursuant to this Section 12 were determined
by pro rata allocation (even if the Investors or the underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account o the equitable considerations
referred to in the immediately preceding paragraphs. The amount paid
or payable by an Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this section,
no Investor or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any Investor, the
net proceeds received by such Investor from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to
the public were offered to the public exceeds, in any such case, the
amount of any damages that such Investor or underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
13. Public Information. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities
Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to
the public without registration ("Rule 144"), the Company agrees to:
(a) File with the SEC in a timely manner and make and keep
available all reports and other documents required of the
Company under the Exchange Act so long as the Company remains
subject to such requirements and the filing and availability
of such reports and other documents is required for the
applicable provisions of Rule 144; and
(b) Furnish to each Investor so long as such Investor holds
Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the
reporting requirements of Rule 144 and the Exchange Act, (ii)
a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
14. Assignment of Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement
shall be automatically assigned by the Investors to transferees or
assignees of all or any portion of such securities or Warrants
exercisable into Registrable Securities only if (i) the Investor
agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished
with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration
rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by
the transferee or assignee is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the
Company received the written notice contemplated by clause (ii) of
this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein, (v)
such transfer shall have been made in accordance with the applicable
requirements of the Agreement, and (vi) such transferee shall be an
"accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
15. Expenses.
The reasonable legal and accounting fees and out-of-pocket expenses
of the Investor Group and Scorpion incurred in connection with this
Offering and the transactions contemplated herein, aggregating up to
a total of $20,000, shall be borne by the Company. Subject to the
preceding sentence, each party hereto shall bear its own legal and
other expenses incurred in connection with this Offering.
16. Notices.
(a) Any notice required to be given or delivered to the
Investor shall be mailed first class, postage prepaid, return
receipt requested, to such Investor's address shown on the
signature page hereof with a copy to:
Xxxxxx X. Xxxxxx, Esq.
00 Xxxxxxxx Xxxxxx
Xxx, XX 00000
(b) Any notice required to be given or delivered to the
Company shall be mailed first class, postage prepaid, return
receipt requested, to:
Acrodyne Communications, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: President
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
17. Survival of Representations and Warranties. All
representations and warranties and agreements hereunder shall
survive execution of this Agreement and delivery of the Common Stock.
18. Governing Law. This Agreement and the rights and obligations
of the parties shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to
be performed wholly within that State.
19. Entire Agreement. This Agreement (including all schedules
and exhibits thereto) constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are
no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement
supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
20. Amendment of Agreement. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or
in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this Section 15 shall
be binding upon the Investor and the Company.
21. Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the date first above written.
NEWLIGHT ASSOCIATES L.P.
Name of Subscriber
By: ____________________________
Name:
Title:
Address:
____________________________
____________________________
____________________________
Tax Identification Number:
____________________________
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
ACRODYNE COMMUNICATIONS, INC.
By: ______________________________
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
The terms of the foregoing, insofar
as they relate to Scorpion Holdings, Inc.,
are agreed to and accepted as of
the date first above written:
SCORPION HOLDINGS, INC.
By: ______________________________
Name:
Title:
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the date first above written.
NEWLIGHT ASSOCIATES (B.V.I.) L.P.
Name of Subscriber
By: ____________________________
Name:
Title:
Address:
____________________________
____________________________
____________________________
Tax Identification Number:
____________________________
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
ACRODYNE COMMUNICATIONS, INC.
By: ______________________________
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
The terms of the foregoing, insofar
as they relate to Scorpion Holdings, Inc.,
are agreed to and accepted as of
the date first above written:
SCORPION HOLDINGS, INC.
By: ______________________________
Name:
Title:
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the date first above written.
SCORPION-ACRODYNE INVESTORS LLC
Name of Subscriber
By: ____________________________
Name:
Title:
Address:
____________________________
___________________________
___________________________
Tax Identification Number:
___________________________
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
ACRODYNE COMMUNICATIONS, INC.
By: ______________________________
Name: A. Xxxxxx Xxxxxxx
Title: Chairman and President
The terms of the foregoing, insofar
as they relate to Scorpion Holdings, Inc.,
are agreed to and accepted as of
the date first above written:
SCORPION HOLDINGS, INC.
By: ______________________________
Name:
Title:
