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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 15, 1998
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RADYNE CORP.
(Exact name of registrant as specified in its charter)
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NEW YORK 0-11685-NY 11-2569467
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
5225 SOUTH 37TH STREET, PHOENIX, ARIZONA 85040
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(Address of principal executive offices) (ZipCode)
Registrant's telephone number, including area code 602-437-9620
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(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 28, 1998, Radyne Corporation ("Radyne" or the "Company")
signed a definitive agreement (the "Agreement") to acquire ComStream
Holdings, Inc. ("ComStream") from Spar Aerospace Limited ("Spar"). On October
15, 1998 (the "Closing Date"), Radyne acquired Comstream (the "Acquisition"),
with Comstream becoming a wholly-owned subsidiary of Radyne.
On the Closing Date, Radyne purchased all of the outstanding shares
of common stock of ComStream for an aggregate purchase price of $17,000,000,
of which $10 million was paid in cash at the closing and $7 million will be
payable up to nine months thereafter pursuant to a note (the "Note") which is
convertible into Radyne common stock, par value $.02 per share (the "Common
Stock"), under certain circumstances. In the event that the Note is converted
into Common Stock, the parties will enter a Registration Rights Agreement
which will provide Spar with piggy-back and demand registration rights with
respect to the shares of Common Stock issuable upon such conversion.
The Acquisition will be accounted for under the purchase method of
accounting and will result in a one-time charge for the value assigned to
purchased in process research and development, and in addition, Radyne
expects to incur a one-time restructuring charge. The Company has reassessed
the amounts it originally forecast in light of recent SEC accounting guidance,
and has retained an independent valuation consulting firm to assist in the
allocation of the valuation with respect to these items.
Radyne intends to finance the Acquisition, the restructuring costs
and its ongoing working capital needs through (i) a rights offering pursuant
to which it will offer Common Stock to its existing shareholders and (ii) the
extension and enhancement of an existing bank line of credit. Stetsys Pte
Ltd. ("Stetsys Pte") and its affiliate, Stetsys US, Inc. ("Stetsys US"), both
of which are members of the Singapore Technologies ("ST") group of companies,
are Radyne's controlling shareholders. Both Stetsys Pte and Stetsys US,
committed to purchase an aggregate of $16 million of Common Stock upon the
closing of the Acquisition at a price of $3.73 per share. This is the same
conversion price of the Note provided to Spar as part of the consideration
for the Acquisition. In addition, Radyne's other shareholders will be offered
approximately $1,660,000 of shares of Common Stock at the same price per
share, in amounts proportionate to their shareholdings. This offering will be
made strictly by means of a prospectus which will be distributed to
shareholders of record at a date to be selected at the time Radyne files its
registration statement for such offering with the Securities and Exchange
Commission.
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7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a. Financial Statements of Businesses Acquired.
To be filed by amendment not later than December 22, 1998.
b. Pro Forma Financial Information.
To be filed by amendment not later than December 22, 1998.
c. Exhibits
4.1 Convertible Promissory Note between Spar and the Company dated October
15, 1998, with the form of Registration Rights Agreement included
as Appendix A thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 29, 1998
RADYNE CORPORATION
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(Registrant)
By: /s/ Garry D. Kline
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Its: Chief Financial Officer
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Exhibit 4.1
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SO REGISTERED OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
RADYNE CORP.
CONVERTIBLE PROMISSORY NOTE
$7,000,000.00 Irvine, California
October 15, 1998
RADYNE CORP., a New York corporation (the "Company"), for value received
hereby promises to pay to SPAR AEROSPACE LIMITED, or its registered assigns, the
sum of Seven Million Dollars ($7,000,000.00), or such lesser amount as shall
then equal the outstanding principal amount hereof and any unpaid accrued
interest hereon, as set forth below. Unless sooner paid, such amounts shall be
due and payable on the Maturity Date, which shall be the earlier to occur of
(i) [Nine Months from Closing], (ii) the consummation of a public or private
equity or debt offering by the Company, excluding bank debt, affiliate debt,
employee stock option grants and exercises and the offering described in Section
7(e) Company (an "Equity Offering") (PROVIDED that in the event the Equity
Offering is in an amount less than the full principal and interest then
outstanding hereunder, the debt shall mature in an amount no greater than the
net amount of the Equity Offering) or (iii) when declared due and payable by the
Holder upon the occurrence of an Event of Default (as defined below). Payment
of all amounts due hereunder shall be made by wire transfer to a bank account
designated in writing by the Holder at least three business days prior to
payment. This Note is issued pursuant to the provisions of Section 2.3 of that
certain Stock Purchase Agreement, dated as of August 28, 1998, by and between
the Company and Spar Aerospace Limited (the "Stock Purchase Agreement").
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees.
1. DEFINITIONS. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Note.
(b) "Holder," when the context refers to a holder of this Note, shall
mean any person who shall at the time be the registered holder of this
Note. As of the date hereof the Holder is Spar Aerospace Limited
Exhibit A
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2. INTEREST. The principal amount of this Note shall bear simple
interest, payable on the Maturity Date, at 8% per annum on the principal of this
Note outstanding (the "Note Rate") during the period beginning on the date of
issuance of this Note and ending on the date that the principal amount hereof is
paid in full. In the event of a partial or full conversion of the Note,
interest shall accrue on the converted amount through the date of the
conversion. Following the occurrence of an Event of Default (as defined below),
the Note Rate shall increase to and shall thereafter be 12%. Interest shall be
computed daily at the Note Rate on the basis of the actual number of days in
which all or any portion of the principal amount hereof is outstanding computed
on the basis of a 360 day year.
3. EVENTS OF DEFAULT. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of the Note may, so long as such condition exists, declare the entire
principal and unpaid accrued interest hereon immediately due and payable, by
notice in writing to the Company:
(a) Default in the payment of the principal and unpaid accrued
interest of this Note when due and payable if such default is not cured by
the Company within five (5) days after the Holder has given the Company
written notice of such default;
(b) The institution by the Company of proceedings to be adjudicated
as bankrupt or insolvent, or the consent by it to institution of bankruptcy
or insolvency proceedings against it or the filing by it of a petition or
answer or consent seeking reorganization or release under the federal
Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the
Company, or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the taking of corporate
action by the Company in furtherance of any such action;
(c) If, within sixty (60) days after the commencement of an action
against the Company (and service of process in connection therewith on the
Company) seeking any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been resolved in favor of the
Company or all orders or proceedings thereunder affecting the operations or
the business of the Company stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days
after the appointment without the consent or acquiescence of the Company of
any trustee, receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such appointment shall
not have been vacated;
(d) If the Company merges or consolidates with any person; or sells,
leases (as lessor) or otherwise disposes of all or substantially all of the
consolidated assets of the Company, or sells, leases (as lessor) or
otherwise dispose of assets representing more than 25% of the corporation's
total consolidated assets in any three-month period (other
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than sales or other dispositions of inventory in the ordinary course of
business); or liquidates or dissolves;
(e) If Stetsys Pte. Ltd. ceases to have the voting power to elect a
majority of the Company's board of directors;
(f) Default in the payment, whether at maturity or otherwise, of any
debt of the Company in an aggregate amount exceeding $3,000,000 and the
lender shall have declared an event of default to be existing under the
relevant loan agreement or agreements.
4. PREPAYMENT. The Company shall have the right, exercisable from time
to time on ten (10) days written notice to the Holder, to call this Note,
without prepayment penalty, and prepay the entirety or any portion of the
outstanding principal amount, together with all accrued interest thereon.
5. CONVERSION. Holder shall have the right (a) at any time to convert
20% of the original principal balance of the Note and (b) at any time after the
Maturity Date, prior to payment in full of the principal balance of this Note,
to convert the then outstanding balance of this Note in accordance with the
provisions of Section 6 hereof, in whole or in part, into shares (the "Shares")
of the Company's common stock, par value $.002 per share (the "Common Stock").
The number of Shares into which this Note may be converted shall be determined
by dividing the aggregate principal amount and all accrued but unpaid interest
to the date of conversion by [price equal to $.50 discount from average OTC
trading price for the first five trading days after announcement of transaction]
(the "Conversion Price"), as such Conversion Price may be adjusted from time to
time in accordance with the terms of Section 7 hereof. Upon conversion of this
Note, the Company shall appoint Spar Representatives to the Board of Directors
of the Company in a number commensurate with Holder's percentage of ownership of
the Company.
6. MECHANICS AND EFFECT OF CONVERSION. No fractional Shares shall be
issued upon conversion of this Note. In lieu of the Company issuing any
fractional shares to the Holder upon the conversion of this Note, the Company
shall pay to the Holder the amount of outstanding principal and interest that is
not so converted. Upon any partial conversion of this Note, the Holder shall
surrender this Note and shall receive a new Note for the remaining principal
amount. Upon the full conversion of this Note, the Holder shall surrender this
Note, duly endorsed, at the principal office of the Company. At its expense,
the Company shall, as soon as practicable thereafter, issue and deliver to such
Holder at such principal office a certificate or certificates for the number of
Shares to which the Holder shall be entitled upon such conversion (bearing such
legends as are required by applicable state and federal securities laws in the
opinion of counsel to the Company), together with any other securities and
property to which the Holder is entitled upon such conversion under the terms of
this Note, including a check payable to the Holder for any cash amounts payable
as described above. Upon conversion of this Note, the Company shall be forever
released from all its obligations and liabilities under this Note, except that
the Company shall be obligated to pay the Holder, within ten (10) days after the
date
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of such conversion, any interest accrued and unpaid or unconverted to and
including the date of such conversion, and no more. Concurrently with the
delivery of the Shares, the Company shall deliver to the Holder an executed
counterpart of the Registration Rights Agreement attached hereto as Exhibit A.
7. ADJUSTMENTS TO CONVERSION PRICE.
(a) If outstanding shares of the Common Stock of the Company shall be
subdivided into a greater number of shares, or a dividend in Common Stock or
other securities of the Company convertible into or exchangeable for Common
Stock (in which latter event the number of shares of Common Stock issuable upon
the conversion or exchange of such securities shall be deemed to have been
distributed) shall be paid in respect to the Common Stock of the Company, the
Conversion Price in effect immediately prior to such subdivision or at the
record date of such dividend shall, simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend, be
proportionately reduced, and conversely, if outstanding shares of the Common
Stock of the Company shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall
simultaneously with the effectiveness of such combination, be proportionately
increased.
Any adjustment to the Conversion Price under this Section 7(a)
shall become effective at the close of business on the date the subdivision or
combination referred to herein becomes effective.
(b) In the event the Company at any time, or from time to time, shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company other than shares of Common Stock or securities
convertible into or exchangeable for Common Stock, then and in each such event,
provision shall be made so that the Holder shall receive upon conversion of the
Note, in addition to the number of shares of Common Stock receivable thereupon,
the amount and kind of securities of the Company which it would have received
had the Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date of conversion, retained such securities receivable by them as aforesaid
during such period, giving application to all adjustments called for during such
period under this Section 7 with respect to the rights of the Holder.
(c) In the event of any capital reorganization, any reclassification
of the Common Stock (other than a change in par value or as a result of a stock
dividend, subdivision, split-up or combination of shares), the consolidation or
merger of the Company with or into another person (collectively referred to
hereinafter as "Reorganizations"), the Holder shall thereafter be entitled to
receive, and provision shall be made therefor in any agreement relating to a
Reorganization, upon conversion of the Note, the kind and number of shares of
Common Stock or other securities or property (including cash) of the Company, or
other corporation resulting from such consolidation or surviving such merger, to
which a holder of the number of shares of the Common Stock of the Company which
the Note entitled the Holder to convert to immediately prior to such
Reorganization would have been entitled to receive with respect to
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such Reorganization; and in any such case appropriate adjustment shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the Holder, to the end that the provisions set forth
herein (including the specified changes and other adjustments to the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares, other securities or property thereafter receivable upon
conversion of the Note. The provisions of this Section 7(c) shall similarly
apply to successive Reorganizations.
(d) (i) If at any time or from time to time the Company shall
issue or sell Additional Shares of Common Stock (as hereinafter defined) other
than as a dividend or other distribution on any class of stock as provided in
Section 7(b) above and other than as a subdivision or combination of shares of
Common Stock as provided in Section 7(a) above, for a consideration per share
less than the then existing Conversion Price, then, and in each such case, the
then existing Conversion Price shall be reduced, as of the opening of business
on the date of such issuance or sale, to a price determined by dividing (1) an
amount equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to that issuance or sale (including as outstanding all shares
of Common Stock issuable upon conversion of the portion of the Note for which
the conversion price is being adjusted) multiplied by such Conversion Price then
in effect, and (B) the consideration, if any, received by the Company upon that
issuance or sale, by (2) the total number of shares of Common Stock outstanding
immediately after that issuance or sale (including as outstanding all shares of
Common Stock issuable upon conversion of the portion of the Note for which the
conversion price is being adjusted).
(ii) For the purpose of making any adjustment in the Conversion
Price or number of shares of Common Stock issuable upon conversion of the Note,
as provided above, the consideration received by the Company for any issue or
sale of securities shall:
(A) To the extent it consists of cash, be computed at
the net amount of cash received by the Company after deduction of any
underwriting or similar commissions, compensations, discounts or concessions
paid or allowed by the Company in connection with such issuance or sale;
(B) To the extent it consists of property other than
cash, the consideration other than cash shall be computed at the fair market
value thereof as determined in good faith by the Board of Directors, at or
about, but as of, the date of the adoption of the resolution specifically
authorizing such issuance or sale, irrespective of any accounting treatment
thereof; and
(C) If Additional Shares of Common Stock, Convertible
Securities (as hereinafter defined) or rights or options to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for
consideration which covers both, the consideration received for the Additional
Shares of Common Stock, Convertible Securities or rights or options shall be
computed as that portion of the consideration so received which is reasonably
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determined in good faith by the Board of Directors to be allocable to such
Additional Shares of Common Stock, convertible Securities or rights or options.
(iii) For the purpose of making any adjustment in the Conversion
Price provided in this Section 7(d), if at any time, or from time to time, the
Company issues any stock or other securities convertible into Additional Shares
of Common Stock (such stock or other securities being hereinafter referred to as
"Convertible Securities") or issues any rights or options to purchase Additional
Shares of Common Stock or Convertible Securities (such rights or options being
hereinafter referred to as "Rights"), then, and in each such case, if the
Effective Conversion Price (as hereinafter defined) of such Rights or
Convertible Securities shall be less than the Conversion Price in effect
immediately prior to the issuance of such Rights or Convertible Securities, the
Company shall be deemed to have issued at the time of the issuance of such
Rights or Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise or conversion thereof and to have received
in consideration for the issuance of such shares an amount equal to the
aggregate Effective Conversion Price of such Rights or Convertible Securities.
For the purposes of this Section 7(d)(iii), "Effective Conversion Price" shall
mean an amount equal to the sum of the consideration, if any, received or
receivable by the Company with respect to each Additional Share of Common Stock
upon issuance of the Rights or Convertible Securities and upon their exercise or
conversion, respectively. No further adjustment of the Conversion Price
adjusted upon the issuance of such Rights or Convertible Securities shall be
made as a result of the actual issuance of Additional Shares of Common Stock on
the exercise of any such Rights or the conversion of any such Convertible
Securities. If any such Rights or the conversion privilege represented by any
such Convertible Securities shall expire without having been exercised, such
Conversion Price as adjusted upon the issuance of such Rights or Convertible
Securities shall be readjusted to the Conversion Price which would have been in
effect had such adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock, if
any, actually issued or sold on the exercise of such Rights or on the conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such Rights, whether or not exercised, plus the
consideration received for issuing or selling the Convertible Securities
actually converted plus the consideration, if any, actually received by the
Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) on the conversion of such Convertible Securities.
(e) "Additional Shares of Common Stock" as used in this Section 7
shall mean all shares of Common Stock issued by the Company, whether or not
subsequently reacquired or retired by the Company, other than (i) shares of
Common Stock issued upon the conversion of the Note, (ii) shares of Common Stock
issued in connection with an offering to existing shareholders of the Company
and employees of the Company announced on or before the closing date of the
Stock Purchase Agreement in which Stetsys US, Inc., a Delaware corporation, and
Stetsys Pte. Ltd., a Singapore corporation, will collectively purchase Common
Stock of the Company, (iii) shares of Common Stock issued in connection with an
Equity Offering the proceeds of which are used to repay all outstanding
principal and accrued but unpaid
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interest on the Note; and (iv) shares issued upon the exercise of employee stock
options or underwriters' warrants.
(f) In each case of an adjustment or readjustment of the Conversion
Price or the number of shares of Common Stock or other securities issuable upon
conversion of the Note, the Company, at its expense, shall cause the Chief
Financial Officer of the Company to compute such adjustment or readjustment in
accordance with the provisions of this Note and prepare a certificate showing
such adjustment or readjustment, and shall mail such certificate, by first-class
mail, postage prepaid, to the registered Holder at the Holder's address as shown
on the Company's stock transfer books. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (i) the
consideration received or to be received by the Company for any Additional
Shares of Common Stock issued or sold or deemed to have been issued or sold,
(ii) the Conversion Price at the time in effect for the Note and (iii) the
number of Additional Shares of Common Stock and the type and amount, if any, of
other property which at the time would be received upon conversion of the Note.
Such notice may be given in advance of such adjustment or readjustment and may
be included as part of a notice required to be given pursuant to Section 7(g)
below.
(g) In the event the Company shall propose to take any action of the
type or types requiring an adjustment to the Conversion Price as set forth
herein, the Company shall give notice to the Holder in the manner set forth in
Section 14 below, which notice shall specify the record date, if any, with
respect to any such action and the date on which such action is to take place.
Such notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Conversion Price and the
number, kind or class of shares or other securities or property which shall be
deliverable upon the occurrence of such action or deliverable upon the
conversion of the Note.
8. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the Note,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect a conversion of the Note, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of the Note, the Company shall promptly seek such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose. In the event of the consolidation or merger of
the Company with another corporation where the Company is not the surviving
corporation, effective provisions shall be made in the certificate or articles
of incorporation, merger or consolidation, or otherwise of the surviving
corporation so that such corporation will at all times reserve and keep
available a sufficient number of shares of Common Stock or other securities or
property to provide for the conversion of the Note in accordance with the
provisions of this Section 8.
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9. PAYMENT OF TAXES. The Company shall pay all taxes and other
governmental charges (other than any income or other taxes imposed upon the
profits realized by the recipient) that may be imposed in respect of the issue
or delivery of shares of Common Stock or other securities or property upon
conversion of the Note, except any tax or other charge imposed in connection
with any transfer involved in the issue and delivery of shares of Common Stock
or other securities in a name other than that of which the Note was registered.
10. COVENANTS.
(a) The Company shall, concurrently with the mailing thereof
to the Company's shareholders, provide the Holder with copies of all Annual
Reports and reports on Forms 10-K, 10-Q and 8-K prepared by the Company. The
Company shall also provide the Holder with copies of all Registration Statements
and Prospectuses prepared with respect to the Company.
(b) The Company will permit any representative designated by
the Holder upon reasonable notice and during normal business hours, to visit and
inspect any of the properties of the Company, examine the corporate and
financial records of the Company and make copies thereof or extracts therefrom,
and to discuss the affairs, finances and accounts of the Company with the
directors, officers, key employees and independent accountants of the Company
provided that no such representative shall unduly interfere with the normal
business and operations of the Company during such visit or inspection.
(c) The Company will perform and observe all of its
obligations to the Holder set forth in this Agreement, and all of its
obligations to holders of Registrable Securities (as defined in the Registration
Rights Agreement attached hereto as Appendix A) set forth in the Registration
Rights Agreement, as the foregoing may from time to time be amended.
(d) The Holder shall maintain the confidentiality of all
nonpublic information obtained by it from the Company; PROVIDED, that (a) the
Holder may, to the extent required by law, disclose such information in
connection with the sale or transfer of the Note (or the Common Stock issued
upon conversion thereof) if the Holder's transferee agrees in writing to be
bound by the provisions hereof and (b) after reasonable notice to the Company,
the Holder may disclose such information (i) at the request of any applicable
regulatory authority or in connection with an examination of the Company by any
such authority, (ii) pursuant to subpoena or other court process, (iii) when
required to-do so in accordance with the provisions of any applicable law, (iv)
to the Holder's independent auditors and other professional advisors provided
such persons acknowledge and agree to be bound by the Holder's confidentiality
obligations hereunder
(e) The Company shall not amend its certificate of
incorporation in a manner that adversely impacts or may adversely impact the
Holder without the prior written consent of the Holder.
11. ASSIGNMENT. The rights and obligations of the Company and the Holder
of this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and
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transferees of the parties. Holder agrees not to assign the Note to any direct
competitor of the Company or its affiliates.
12. WAIVER AND AMENDMENT. Any provision of this Note may only be amended,
waived or modified upon the written consent of the Company and the Holder.
13. TREATMENT OF NOTE. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
14. NOTICE. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if telecopied or mailed by registered or
certified mail, postage prepaid, at the respective addresses of the parties set
forth in the Stock Purchase Agreement. Any party hereto may by notice so given
change its address for future notice hereunder. Notice shall conclusively be
deemed to have been given when personally delivered or when deposited in the
mail or telecopied in the manner set forth in the Stock Purchase Agreement and
shall be deemed to have been received when delivered.
15. DISPUTE RESOLUTION. Any dispute between the Company and the Holder
shall be resolved in accordance with the dispute resolution provisions of the
Stock Purchase Agreement.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, excluding that body of law
relating to conflict of laws.
17. HEADING; REFERENCES. All headings used herein are used for
convenience only and shall not be used to construe or interpret this Note.
Except where otherwise indicated, all references herein to Sections refer to
Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this
15th day of October, 1998.
RADYNE CORP.
By: /s/ R.C. Fitting
-------------------------------------
Name: R.C. Fitting
-----------------------------------
Its: President
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APPENDIX A
TO
CONVERTIBLE PROMISSORY NOTE
RADYNE CORP.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
__________, 199_ by and between RADYNE CORP., a New York corporation (the
"COMPANY"), and [__________] (the "PURCHASER").
RECITALS
A. The Company is the maker of that certain Convertible Promissory Note
dated as of ____________, 1998 (the "Note"), which Note is convertible into
Common Stock, par value $.002, of the Company (the "Common Stock");
B. The Purchaser has exercised its right to convert the Note to Common
Stock and concurrently with the execution of this Agreement the Company is
issuing to the Purchaser [__________] shares of Common Stock (the "Shares").
C. Pursuant to the terms of the Note, the Company is required to execute
and deliver this Agreement with the Shares.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission of the
United States or any other United States federal agency at the time
administering the Securities Act.
"HOLDER" shall mean the Purchaser, and its transferees or assigns as
permitted by SECTION 11 HEREOF, holding Registrable Securities or securities
convertible into or exercisable for Registrable Securities.
"REGISTRABLE SECURITIES" means (i) the Shares and (ii) any shares of
Common Stock issued or issuable in respect of the Shares upon any stock split,
stock dividend, recapitalization, or similar event. Shares shall only be
treated as Registrable Securities if they (A) have not been sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction, or (B) are not able to be sold in a single transaction exempt
pursuant to Rule 144(k) from the registration and prospectus delivery
requirements of the Securities Act
<PAGE>
so that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale.
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 the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRATION EXPENSES" shall mean all expenses, excluding Selling
Expenses (as defined below) except as otherwise stated below, incurred by the
Company in complying with SECTION 2, SECTION 3 and SECTION 4 hereof, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and
reasonable fees and disbursements of one counsel for the Holder selected by the
Holder and approved by the Company (which consent shall not be unreasonably
withheld), Blue Sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holder. Such expenses shall be borne by the Holder.
2. DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. In the event the Company shall receive
a written request from Holders collectively holding at least twenty five percent
(25%) of the Registrable Securities on or after the maturity date of the Note
then held by all Holders of Registrable Securities at the time of such request
that the Company effect any registration, qualification or compliance with
respect to Registrable Securities having an aggregate proposed selling price of
not less than One Million Dollars ($1,000,000) (a "REGISTRATION NOTICE"), the
Company will, as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable Blue Sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request.
Notwithstanding the foregoing, the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this SECTION 2 (i) prior to the effective date of the Company's first registered
public offering of its stock or (ii) after the Company has effected one
registration pursuant to this SECTION 2 and such registrations have been
declared or ordered effective.
Subject to the foregoing clauses (i) and (ii), the Company shall file
a registration statement covering the Registrable Securities so requested to be
registered as soon as practicable,
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<PAGE>
after receipt of the request or requests of the Holder. Notwithstanding the
foregoing, the Company shall be entitled to defer for a reasonable period of
time, but not in excess of 120 days, the filing of any registration statement
otherwise required to be prepared and filed by it under this SECTION 2 if
(i) (A) the Company is at such time conducting or about to conduct an
underwritten public offering of its securities for its own account and the Board
of Directors of the Company determines in good faith that such offering by the
Company would be materially adversely affected by such registration requested by
the Holder(s), (B) the Company is pursuing an acquisition, merger,
reorganization, disposition or other similar transaction and the Board of
Directors of the Company determines in good faith that the Company's ability to
pursue or consummate such transaction would be materially adversely affected by
such registration requested by the Holder(s), or (C) the Company is in
possession of material nonpublic information concerning it or its business and
affairs and the Board of Directors of the Company determines in good faith that
the prompt public disclosure of such information in such registration requested
by the Holder(s) would have a material adverse effect on the Company; and (ii)
the Company so notifies the requesting Holder(s) within ten (10) days after the
Company's receipt of the Registration Notice from such Holder(s).
(b) UNDERWRITING. In the event that a registration pursuant to this
Section is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as part of the notice given pursuant to
SECTION 2(A). In such event, the right of the Holder to registration pursuant
to this Section shall be conditioned upon the Holder's participation in the
underwriting arrangements required by this Section, and the inclusion of the
Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein. The Holder shall, together with
the Company, enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company, but subject
to the reasonable approval of the Holder. If the Holder disapproves of the
terms of any such underwriting, the Holder may elect to withdraw therefrom by
written notice to the Company and the managing underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
3. REGISTRATION ON FORM S-3.
(a) REQUEST FOR REGISTRATION. If at any timeon or after the maturity
date of the Note, or from time to time thereafter, the Holder requests that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3) for a public offering of Registrable Securities and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder may reasonably request. Notwithstanding the foregoing, the Company shall
not be obligated to take any action pursuant to Section 2 and SECTION 3 more
than one (1) time per calendar year.
Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practicable, after receipt of the request or requests of the Holder.
Notwithstanding the foregoing, the Company shall be entitled
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<PAGE>
to defer for a reasonable period of time, but not in excess of 120 days, the
filing or any other actions with respect to any registration statement otherwise
required to be prepared and filed by it under this SECTION 3 if (i) (A) the
Company is at such time conducting or about to conduct an underwritten public
offering of its securities for its own account and the Board of Directors of the
Company determines in good faith that such offering by the Company would be
materially adversely affected by such registration requested by the Holder(s),
(B) the Company is pursuing an acquisition, merger, reorganization, disposition
or other similar transaction and the Board of Directors of the Company
determines in good faith that the Company's ability to pursue or consummate such
transaction would be materially adversely affected by such registration
requested by the Holder(s), or (C) the Company is in possession of material
nonpublic information concerning it or its business and affairs and the Board of
Directors of the Company determines in good faith that the prompt public
disclosure of such information in such registration requested by the Holder(s)
would have a material adverse effect on the Company; and (ii) the Company so
notifies the requesting Holder(s) within ten (10) days after the Company's
receipt of the registration request from such Holder(s).
(b) UNDERWRITING. The substantive provisions of SECTION 2(B) shall
be applicable to each such registration initiated under this Section involving
an underwriting.
4. INCIDENTAL REGISTRATIONS.
(a) NOTICE OF REGISTRATION. If at any time on or after the maturity
date of the Note or from time to time thereafter the Company shall determine to
file a registration statement under the Securities Act for the general
registration of any of its securities to be sold for cash, either for its own
account or the account of a security holder or holders, other than (i) a
registration relating solely to stock option or other employee benefit plans or
(ii) a registration relating solely to a Commission Rule 145 transaction, the
Company will: (A) promptly give the Holders written notice thereof; and (B)
include in such registration (and any related qualification under Blue Sky laws
or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made within
twenty (20) days after receipt of such written notice from the Company, by the
Holder, subject to the terms of SECTION 4(B).
(b) UNDERWRITING. If the registration with respect to which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holder as a part of the written
notice given pursuant to SECTION 4(A). In such event, the right of the Holder
to registration pursuant to this Section shall be conditioned upon the Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. The Holder shall, together
with the Company, enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by the Company. If the
Holder disapproves of the terms of any such underwriting, the Holder may elect
to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration.
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<PAGE>
Notwithstanding any provision contained herein to the contrary, if the
managing underwriter or underwriters of the registration in which the Company
gives notice under this SECTION 4 shall advise the Company in writing that, in
its opinion, the total amount of Registrable Securities that the Holder(s)
request to include in such registration, together with any other securities with
similar incidental or piggyback registration rights (collectively, the
"REQUESTED SECURITIES") would materially reduce the amount of securities to be
offered by the Company or interfere in any material respect with the offer of
the Company's securities, then the amount and kind of Requested Securities to be
offered for the accounts of any Holder whose shares of Requested Securities were
requested to be included in such registration shall be reduced pro rata with
respect to each such Holder to the extent necessary to reduce the total amount
of securities to be included in such registration to the amount recommended by
such managing underwriter or underwriters; PROVIDED, HOWEVER, that such
reduction shall not include the following: (i) if the registration initially
occurs at the insistence of the Company, shares to be issued by the Company; or
(ii) if the registration occurs due to a demand registration right, including
the Demand Registration provided in SECTION 2, shares of the Holder(s) making
that demand.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section prior to the effectiveness of such registration whether or not the
Holder has elected to include Registrable Securities in such registration;
provided, however, if the Holder elects to use its demand registration right
pursuant to SECTION 2, then such registration shall be governed by SECTION 2 and
it shall not be terminated.
5. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Company will not, without the prior written consent of holders
of two-thirds of the Registrable Securities, enter into any agreement with any
holder or prospective holder of any securities of the Company which allows such
holder or prospective holder of any securities of the Company to include such
securities in any registration filed under SECTION 2 hereof, unless, under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not adversely affect the Holder's registration rights pursuant
to such SECTION 2.
6. EXPENSES OF REGISTRATION.
(a) REGISTRATION EXPENSES. The Company shall bear all Registration
Expenses incurred in connection with all registrations pursuant to SECTION 2 or
SECTION 4 hereof, and shall bear all Registration Expenses incurred in
connection with the first registration pursuant to SECTION 3. In the event the
Holder withdraws a Registration Notice, abandons a registration statement or,
following an effective registration pursuant to SECTION 2 hereof, does not sell
Registrable Securities, then all Registration Expenses in respect of such
Registration Notice shall be borne, at the Holder's option, either by the Holder
or by the Company (in which case, if borne by the Company, such withdrawn or
abandoned registration shall be deemed to be an effective registration for
purposes of SECTION 2(A)(II) hereof). The Holder shall bear all Registration
Expenses incurred in connection with the second and any subsequent registration
pursuant to SECTION 3.
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<PAGE>
(b) SELLING EXPENSES. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by the
Holders pro rata on the basis of the number of shares so registered.
7. REGISTRATION AND QUALIFICATION. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
as promptly as is practicable:
(a) prepare and file with the Commission, as soon as practicable, and
use its best efforts to cause to become effective for a time period not to
exceed 90 days, a registration statement under the Securities Act relating to
the Registrable Securities to be offered on such form as the Holder, or if not
filed pursuant to SECTION 2 or SECTION 3 hereof, the Company, determines and for
which the Company then qualifies;
(b) prepare and file with the Commission such amendments (including
post-effective amendments) to such registration statement and the prospectus and
supplements used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
until the earlier of such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition set forth in
such registration statement or the expiration of ninety (90) days after such
registration statement becomes effective; provided that such ninety (90) day
period shall be extended in the case of a registration pursuant to SECTION 2 or
SECTION 3 hereof for such number of days that equals the number of days elapsing
from (i) the date the written notice contemplated by SECTION 7(F) hereof is
given by the Company to (ii) the date on which the Company delivers to the
Holder the supplement or amendment contemplated by SECTION 7(F) hereof;
(c) furnish to the Holder and to any underwriter of Registrable
Securities such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus, and such
other documents, as the Holder or such underwriter may reasonably request;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of such registration statement at the
earliest possible moment;
(e) if requested by the Holder, (i) furnish to the Holder an opinion
of counsel for the Company addressed to the Holder and dated the date of the
closing under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement), and (ii)
use its best efforts to furnish to the Holder a "comfort" or "special
procedures" letter addressed to the Holder and signed by the independent public
accountants who have audited the Company's financial statements included in such
registration statement, in each such case covering substantially the same
matters with respect to such registration statement (and the prospectus included
therein) as are customarily covered in
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<PAGE>
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Holder may reasonably request and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements;
(f) immediately notify the Holder in writing (i) at any time when a
prospectus relating to a registration hereunder is required to be delivered
under the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (ii)
of any request by the Commission or any other regulatory body or other body
having jurisdiction for any amendment of or supplement to any registration
statement or other document relating to such offering, and in either such case
(i) or (ii) at the request of the Holder prepare and furnish to the Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statement therein, in light of the
circumstances under which they are made, not misleading;
(g) use its best efforts to list all such Registrable Securities
covered by such registration statement on each securities exchange and
inter-dealer quotation system on which a class of common equity securities of
the Company is then listed, and to pay all fees and expenses in connection
therewith; and
(h) upon the transfer of Shares by the Holder in connection with a
registration hereunder, furnish unlegended certificates representing ownership
of the Registrable Securities being sought in such denominations as shall be
requested by the Holder or the underwriters.
8. INDEMNIFICATION.
(a) BY THE COMPANY. The Company will indemnify the Holders, their
respective officers, directors, partners, legal counsel and accountants, and
each person controlling any Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statementor prospectus, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein 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,
or any violation by the Company of the Securities Act or any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
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<PAGE>
with any such registration, qualification or compliance, and the Company will
reimburse the Holder, its officers, directors and partners, each person
controlling the Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Holder, controlling person or underwriter and stated to be specifically for use
therein. If the Holder is represented by counsel other than counsel for the
Company, the Company will not be obligated under this SECTION 8(A) to reimburse
legal fees and expenses of more than one separate counsel for the Holder.
(b) BY THE HOLDER. The Holder will indemnify the Company, its
directors, officers, legal counsel, accountants, each underwriter, if any, of
the Company's securities covered by such a registration statement, and each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statementor prospectus, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such directors, officers, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement or prospectus in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Holder and stated to be specifically for use therein. Notwithstanding the
foregoing, the liability of the Holder under this subsection (b) shall be
limited in an amount equal to the net proceeds of the shares sold by the Holder,
unless such liability arises out of or is based on willful misconduct by the
Holder.
(c) PROCEDURE FOR INDEMNIFICATION. Each party indemnified under
paragraph (a) or (b) of this SECTION 8 (the "INDEMNIFIED PARTY") shall, promptly
after receipt of notice of any claim or the commencement of any action against
such Indemnified Party in respect of which indemnity may be sought, notify the
party required to provide indemnification (the "INDEMNIFYING PARTY") in writing
of the claim or the commencement thereof; provided that the failure of the
Indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have to an Indemnified Party
on account of the indemnity agreement contained in paragraph (a) or (b) of this
SECTION 8, unless the Indemnifying Party was materially prejudiced by such
failure, and in no event shall relieve the Indemnifying Party from any other
liability which it may have to such Indemnified Party. If any such claim or
action shall be brought against an Indemnified Party, it shall notify the
Indemnifying Party thereof and the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After
8
<PAGE>
notice from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying Party shall not be
liable (except to the extent the proviso to this sentence is applicable, in
which event it will be so liable) to the Indemnified Party under this SECTION 8
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation; provided that each Indemnified Party shall have the right to
employ separate counsel to represent it and assume its defense (in which case,
the Indemnifying Party shall not represent it) if (i) upon the advice of
counsel, the representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, or
(ii) in the event the Indemnifying Party has not assumed the defense thereof
within ten (10) days of receipt of notice of such claim or commencement of
action, and in which case the fees and expenses of one such separate counsel
shall be paid by the Indemnifying Party. If any Indemnified Party employs such
separate counsel it will not enter into any settlement agreement which is not
approved by the Indemnifying Party, such approval not to be unreasonably
withheld. If the Indemnifying Party so assumes the defense thereof, it may not
agree to any settlement of any such claim or action as the result of which any
remedy or relief, other than monetary damages for which the Indemnifying Party
shall be responsible hereunder, shall be applied to or against the Indemnified
Party, without the prior written consent of the Indemnified Party. In any
action hereunder as to which the Indemnifying Party has assumed the defense
thereof with counsel reasonably satisfactory to the Indemnified Party, the
Indemnified Party shall continue to be entitled to participate in the defense
thereof, with counsel of its own choice, but, except as set forth above, the
Indemnifying Party shall not be obligated hereunder to reimburse the Indemnified
Party for the costs thereof.
If the indemnification provided for in this Section shall for any
reason be unavailable to an Indemnified Party in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each Indemnifying Party shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to 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 Indemnifying Party on the one hand or the Indemnified Party on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission, but not by
reference to any Indemnified Party's stock ownership in the Company. In no
event, however, shall the Holder of Registrable Securities be required to
contribute in excess of the amount of the net proceeds received by the Holder in
connection with the sale of Registrable Securities in the offering which is the
subject of such loss, claim, damage or liability. The amount paid or payable by
an Indemnified Party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph shall be deemed
to include, for purposes of this paragraph, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. No person guilty of
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<PAGE>
fraudulent misrepresentation (within the meaning of Section 12(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. INFORMATION FROM THE HOLDERS. Notwithstanding any provision contained
herein to the contrary, it shall be a condition precedent to the obligation of
the Company to take any action pursuant to this Agreement in respect of the
Registrable Securities that are to be registered at the request of any Holder
thereof that (i) such Holder furnish to the Company such information regarding
the Holder as shall be necessary to enable the Company to comply with the
provisions hereof in connection with any registration, qualification or
compliance referred to in this Agreement, and (ii) such Holder deliver and
perform under any underwriting and selling shareholder agreements as may be
reasonably requested by the underwriters.
10. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission that may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT");
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) Furnish to any Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing the Holder
to sell any such securities without registration.
11. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities under SECTION 2, SECTION 3 or SECTION 4 may be assigned in
connection with any transfer or assignment by the Holder of Registrable
Securities provided that: (a) such transfer may otherwise be effected in
accordance with applicable securities laws; (b) such transfer is effected in
compliance with the restrictions on transfer contained in this Agreement and in
any other agreement between the Company and the Holder; and (c) such assignee or
transferee acquires at least 25% of the Registrable Securities then outstanding
and shall execute a counterpart of this Agreement whereby such assignor or
transferee agrees to be bound by the terms of this Agreement and assumes all of
the obligations of the transferring Holder hereunder.
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No transfer or assignment will divest the Holder or any subsequent owner of such
rights and powers unless all Registrable Securities are transferred or assigned.
12. TERMINATION. This Agreement shall terminate at such time as all
Registrable Securities held by the Holders constitute less than one percent (1%)
of the voting securities of the Company (on an as-converted basis) and can be
sold pursuant to Rule 144, other than Rule 144(k), within a consecutive three
(3) month period without compliance with the registration requirements of the
Securities Act. The respective indemnities, representations and warranties of
the Purchaser and the Company shall survive such termination.
13. MARKET STAND-OFF. If requested by an underwriter of securities of the
Company, each Holder of Registrable Securities shall not sell or otherwise
transfer or dispose of any Registrable Securities held by such Holder during the
one-hundred twenty (120) day period following the effective date of a
registration statement; provided, however, that such agreement shall apply only
to the first registration statement covering the offered securities to be sold
on the Company's behalf to the public in an underwritten offering.
14. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the State of California without given effect to the conflicts
of law principles thereof.
(b) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement 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 Holder of
at least two-thirds (2/3) of the Registrable Securities, voting as a class. Any
amendment or waiver effected in accordance with this paragraph will be binding
upon the Company, each holder of any securities purchased under this Agreement
at the time outstanding (including securities into which such securities are
convertible), and any transferee of such securities.
(c) SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
invalid, unenforceable or void, this Agreement shall continue in full force and
effect without said provision. In such event, the parties shall negotiate, in
good faith, a legal, valid and binding substitute provision which most nearly
effects the intent of the parties in entering into this Agreement.
(d) NOTICES. All notices and other communications required or
permitted hereunder shall be in writing (or in the form of a telex or telecopy
(confirmed in writing) to be given only during the recipient's normal business
hours unless arrangements have otherwise been made to receive such notice by
telex or telecopy outside of normal business hours) and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered by hand,
messenger, or telex-or telecopy (as provided above) addressed (a) if to the
Purchaser, at such address as the Purchaser shall have furnished to the Company
in writing or (b) if to the Company, one copy should be sent to its principal
executive offices and addressed to the
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attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Purchaser.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or, if
by telex or telecopy pursuant to the above, when received.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(f) CAPTIONS. The section captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
RADYNE CORP., a New York corporation
By:
-------------------------------------
Its:
------------------------------------
[ADD PURCHASER]
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