<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
Acrodyne Communications, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
A. Robert Mancuso, President and CEO
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
ACRODYNE COMMUNICATIONS, INC.
516 TOWNSHIP LINE ROAD
BLUE BELL, PA 19422
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 1999
The 1999 Annual Meeting of Stockholders (the "Meeting") of Acrodyne
Communications, Inc. (the "Company"), will be held at the Cedar Brook Country
Club, 180 Penllyn Road, Blue Bell, Pennsylvania 19422 at 11:00 A.M., local time,
for the following purpose:
To consider and vote on the following proposals:
(1) The Election of seven directors to serve for the ensuing year and until
their successors are elected.
(2) The ratification of the appointment of Arthur Andersen LLP as the
Company's independent accountants.
(3) The approval and adoption of the Company's 1999 Long-Term Incentive
Plan (the "1999 Plan").
(4) The transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
The record date for determining stockholders of record eligible to vote at
the Meeting is May 5, 1999.
By Order of the Board of Directors,
/s/ David B. Amy
David B. Amy,
Secretary
May 14, 1999
Stockholders are invited to attend the meeting in person.
STOCKHOLDERS CAN HELP MANAGEMENT AVOID UNNECESSARY EXPENSE AND DELAYS BY
PROMPTLY RETURNING THE ENCLOSED PROXY. WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. THEREFORE, PLEASE FILL
OUT, DATE, SIGN AND RETURN THE PROXY IN THE STAMPED AND ADDRESSED ENVELOPE
ENCLOSED FOR YOUR CONVENIENCE.
<PAGE>
ACRODYNE COMMUNICATIONS, INC.
516 TOWNSHIP LINE ROAD
BLUE BELL, PA 19422
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 1999
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Acrodyne Communications, Inc. (the
"Company") for use in voting at the 1999 Annual Meeting of Stockholders (the
"Meeting") to be held at the Cedar Brook Country Club, 180 Penllyn Road, Blue
Bell, Pennsylvania on June 15, 1999 at 11:00 A.M., local time, and at any
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. Solicitation of proxies will be made by mail,
telephone and, to the extent necessary, personal interviews. Proxies may be
solicited by officers and employees of the Company without additional
compensation to them. All expenses incident to the preparation of proxy material
and solicitation of proxies are to be paid by the Company. It is anticipated
that on or about May 14, 1999 this proxy statement and the enclosed form of
proxy will be mailed to stockholders. The Annual Report to Stockholders for the
fiscal year ended December 31, 1998 will accompany this proxy statement.
The persons (the "Proxies") named in the accompanying proxy have advised
the Company of their intention, if no contrary instructions are given, to vote
the shares represented by the proxies received by them:
(i) FOR the election as directors of the Company of those persons
designated as the Board of Directors nominees;
(ii) FOR the engagement of another independent accountant as the Company's
principal accountant; and
(iii) FOR the approval and adoption of the Company's 1999 Long-Term
Incentive Plan;
(iv) In their discretion with respect to such other business as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL OF THE FOREGOING
PROPOSALS. Please refer to this Proxy Statement for detailed information on each
of these proposals. At this time, management knows of no other matters which are
expected to come before the Meeting. A shareholder executing and returning a
proxy has the power to revoke it at any time before it is voted at the Meeting
by notice in writing to the Secretary of the Company, or by attending the
Meeting and voting in person. Attendance at the Meeting will not, in and of
itself, constitute revocation of a proxy.
RECORD DATE AND SHARE OWNERSHIP
The Board of Directors of the Company has fixed the close of business on
May 5, 1999 as the record date (the "Record Date") for the determination of the
stockholders entitled to receive notice of, and to vote at, the Meeting. The
only outstanding classes of stock of the Company are (i) its Common Stock, par
value $.01 per share (the "Common Stock"), and (ii) its 8% Convertible
Redeemable Preferred Stock, par value $1.00 per share (the "8% Preferred
Stock").
As of April 30, 1999 there were 6,769,523 shares issued and outstanding of
the Common Stock, and 6,500 shares issued and outstanding of the 8% Preferred
Stock.
VOTING
The Common Stock and the 8% Preferred Stock are the only securities of the
Company entitled to vote at the Meeting. At the Meeting, each share of Common
Stock is entitled to one vote and each share of 8% Preferred Stock is entitled
to 27.68 votes. The Common Stock and the 8% Preferred Stock vote as one class.
There are no cumulative voting rights with respect to the Common Stock or the 8%
Preferred Stock.
QUORUM
The presence at the Meeting of the holders of a majority of the shares of
stock outstanding on the Record Date, in person or by proxy, constitutes a
quorum for the transaction of business by such holders at the Meeting. The
stockholders present may adjourn the meeting despite the absence of a quorum.
OTHER PROPOSALS
The Board does not know of any matter other than the foregoing that is
expected to be presented for consideration at the Meeting.
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The seven individuals named in the table below are the Company's nominees
for election to the Board of Directors. Each of the nominees currently serves on
the Company's Board of Directors. The directors are elected for a term of one
year and will hold office until the next annual meeting of the stockholders or
until his or her successor has been elected and qualified. At the Annual
Meeting, all directors will be elected to serve until the 2000 Annual Meeting of
Stockholders.
Each of the nominees has consented to being named as a nominee in this
Proxy Statement and has agreed to serve if elected. Should any nominee become
unable or unwilling to serve for any reason, it is intended that the persons
named in the solicited proxy will vote for the election of such other person in
their stead as may be designated by the Board of Directors.
The nomination and election of directors is subject to the provisions of an
investment agreement, dated as of January 27, 1999 among Sinclair, the Company
and Mr. Mancuso which was previously approved by the Company's stockholders at a
special meeting. Pursuant to the investment agreement, the Board of Directors
shall comprise of 3 directors nominated by Sinclair Broadcast Group, Inc.,
("Sinclair") including Nathaniel Ostroff as Chairman, 2 directors nominated by
Acrodyne's president and CEO, Robert Mancuso, and 2 independent directors not
affiliated with Sinclair or the Company.
<TABLE>
<CAPTION>
SERVED AS
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- --------------------------------------------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
Nat S. Ostroff............................... 58 Chairman of the Board of Directors January 1999
A. Robert Mancuso............................ 61 President and Chief Executive Officer May 1991
of the Company and Acrodyne
Industries, Inc.
Martin J. Hermann............................ 60 Director of the Company May 1991
David S. Smith............................... 48 Director of the Company January 1999
David B. Amy................................. 46 Director and Secretary of the Company January 1999
Richard P. Flam.............................. 56 Director of the Company January 1999
Michael E. Anderson.......................... 44 Director of the Company March 1999
</TABLE>
Proxies will be voted FOR the election of all of the above named nominees
unless the stockholders indicate that the proxy shall not be voted for all or
any one of the nominees. In no event, however, shall the proxies be voted for a
greater number of persons than the number of nominees named.
Nat S. Ostroff has served as Chairman of the Board of Directors since he
was elected at the special meeting of the stockholders of the Company, on
January 27, 1999. Mr. Ostroff is Vice President for New Technology since joining
Sinclair in January of 1996. Prior to joining Sinclair, he was the President and
CEO of Comark Communications, Inc., a manufacturer of UHF transmission
equipment. Mr. Ostroff founded Acrodyne Industries, Inc. in 1968 and served as
its first President and CEO. He is the Chairman of ALTV Engineering Advisory
Committee.
A. Robert Mancuso has been President and Chief Executive Officer of the
Company since May 1991. Mr. Mancuso had also served as the Chairman of the Board
of Directors of the Company from October 1994 through January 1999. Mr. Mancuso
has also served as President and Chief Executive Officer of Acrodyne Industries,
Inc. a wholly-owned subsidiary of the Company, since its acquisition by the
Company in October 1994. From July 1991 to October 1994, he was also president
of R.M. Hudson Co., Inc. financial consultants for mergers and acquisitions.
From January 1987 to June 1991, he served as vice president of Reichhold
Chemicals, a specialty chemical company. From January 1987 to June 1991, he also
served as president of RBH Dispersions, another specialty chemical company. From
July 1986 to December 1989, he was senior vice president of Polychrome
Corporation, a manufacturer of film and printing plates for the ink industry.
Prior to 1986, Mr. Mancuso was employed by Union Carbide Corporation for 26
years.
2
<PAGE>
Martin J. Hermann has served as Secretary and General Counsel of the
Company from May 1991 through January 27, 1999. Mr. Hermann serves as Director,
a position he has held since May 1991. Mr. Hermann has been engaged in the
private practice of law since 1963.
David D. Smith has served as Director since he was elected at the special
meeting of stockholders of the Company held on January 27, 1999. Mr. Smith has
served as President, Chief Executive Officer and Chairman of the Board of
Sinclair since September 1990. From 1984 to 1990, he served as General Manager
of WPTT in Pittsburgh, Pennsylvania. In 1980, Mr. Smith founded Comark
Television, Inc. From 1978 to 1986, Mr. Smith co-founded and served as an
officer and director of Comark Communications, Inc.
David B. Amy has served as Director since he was elected at the special
meeting of stockholders of the Company held on January 27, 1999. Mr. Amy has
served as Chief Financial Officer of Sinclair since October 1994. In addition,
he serves as Secretary of Sinclair Communications, Inc., a Sinclair subsidiary,
which owns and operates Sinclair's broadcasting operations. From 1986 until
October 1994, Mr. Amy served as Sinclair's Corporate Controller. Mr. Amy
originally joined Sinclair in 1986, as a business manager for WPTT in
Pittsburgh, Pennsylvania.
Richard P. Flam has served as Director since he was elected at the special
meeting of stockholders of the Company held on January 27, 1999. Mr. Flam is a
Consultant of RF, Microwave and Antenna technology to companies in the
Electronics Manufacturing sector. From 1980 to 1996 he was President and CEO of
Flam & Russell, Inc., a producer of sophisticated RF Equipment and Systems for
military applications and a leader in test systems for Stealth Technology.
Previously, he held management and engineering positions with Hazeltine
Corporation and American Electronic Laboratories, Inc. Mr. Flam is a Fellow of
the Institute of Electrical and Electronic Engineers and holds B.S. and M.S.
degrees in Physics from Rensselaer Polytechnic institute and Rutgers University,
respectively.
Michael E. Anderson has served as Director since March 22, 1999.
Mr. Anderson is a Managing Director in the Media and Leisure group at Salomon
Smith Barney with a primary focus on the Broadcasting and Cable Industries.
Prior to the Salomon Smith Barney merger, Mr. Anderson was a member of the
Media/Telecom group at Smith Barney having joined the firm in June 1992.
Mr. Anderson was formerly a Senior Vice President at Kidder, Peabody & Company
Inc., having served from 1983 to 1992 in various capacities, including
assignments in the Media and Communications and Advisory group, as well as two
years in their London office. From 1977 to 1981, Mr. Anderson served as officer
in the U.S. Navy. He received his M.B.A. from Columbia University and a B.S.
from Cornell University.
Directors will serve in such capacity until the next annual meeting of
stockholders or until their successors have been duly elected and qualified.
Executive officers are elected by the Board of Directors on an annual basis and
serve at the discretion of the Board or pursuant to an employment agreement.
BOARD OF DIRECTORS MEETINGS, COMPENSATION.
The Board of Directors held three (3) meetings during the fiscal year ended
December 31, 1998 at which all directors were present and acted by unanimous
written consent on several occasions. The Company does not have a standing
audit, compensation or nominating committee, and the directors were nominated
for election at the Meeting pursuant to the Investment Agreement.
Directors are reimbursed for travel and other reasonable expenses related
to Board of Directors meetings. Directors are not paid any fees for attending
Board of Directors meetings.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES REPRESENTING A MAJORITY OF
THE VOTING RIGHTS ISSUED AND OUTSTANDING IS REQUIRED TO ELECT THE COMPANY'S
NOMINEES FOR THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE COMPANY'S NOMINEES FOR THE BOARD OF DIRECTORS NAMED ABOVE, WHICH IS
DESIGNATED AS PROPOSAL 1 ON THE ENCLOSED PROXY CARD.
3
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information about the executive
officers of the Company. All officers and directors hold office until their
respective successors are elected and qualified, or until their earlier
resignation or removal.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
A. Robert Mancuso.................................... 61 President and Chief Executive Officer of the
Company and Acrodyne Industries, Inc.
Nat S. Ostroff....................................... 58 Chairman of the Board of Directors of the
Company and Chairman of the Management
Committee of Acrodyne Industries, Inc.
Ronald R. Lanchoney.................................. 53 Chief Financial Officer of Acrodyne
Industries, Inc.
</TABLE>
A. Robert Mancuso has been President and Chief Executive Officer of the
Company since its inception in May 1991. Mr. Mancuso had also served as the
Chairman of the Board of Directors of the Company from October 1994 through
January 1999. Mr. Mancuso has also served as President and Chief Executive
Officer of Acrodyne Industries, Inc., a wholly-owned subsidiary of the Company
("Acrodyne"), since its acquisition by the Company in October 1994. From July
1991 to October 1994, he was also president of R.M. Hudson Co., Inc., financial
consultants for mergers and acquisitions. From January 1987 to June 1991, he
served as vice president of Reichhold Chemicals, a specialty chemical company.
From January 1987 to June 1991, he also served as president of RBH Dispersions,
another specialty chemical company. From July 1986 to December 1989, he was
senior vice president of Polychrome Corporation, a manufacturer of film and
printing plates for the ink industry. Prior to 1986, Mr. Mancuso was employed by
Union Carbide Corporation for 26 years.
Nat S. Ostroff has served as Chairman of the Board of Directors since he
was elected at the special meeting of the stockholders of the Company held on
January 27, 1999. Mr. Ostroff has served as Sinclair's Vice President for New
Technology since joining Sinclair Broadcast Group, Inc. in January of 1996.
Prior to joining Sinclair, he was the President and CEO of Comark
Communications, Inc., a manufacturer of UHF transmission equipment. Mr. Ostroff
founded Acrodyne Industries, Inc. in 1968 and served as its first President and
CEO. He is the Chairman of ALTV Engineering Advisory Committee.
Ronald R. Lanchoney has been the Chief Financial Officer of the Company
since March 2, 1998. During the one month period prior to that date,
Mr. Lanchoney held the position of consulting CFO for the Company, providing
financial consulting services to the Company on a part-time basis. As an
independent financial consultant, Mr. Lanchoney operated his own management and
financial consulting business from August 1996 until joining the Company on a
full-time basis in March 1998. From 1978 to mid-1996, Mr. Lanchoney was the
executive vice president of I/O Corporation, a company which he co-founded and
which is a distributor of advanced technology electrical and electronic control
equipment. From 1970 to 1978, Mr. Lanchoney held various positions including
division controller with I-T-E Imperial Corporation, a manufacturer of high and
low voltage electrical switch gear, distribution and control equipment.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation earned by the Company's
executive officers for services provided during the Company's fiscal years ended
December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
-------------------------- SECURITIES
FISCAL OTHER UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS (#)
- ------------------------------------------------------------ ------ -------- -------------- ------------
<S> <C> <C> <C> <C>
A. Robert Mancuso
Chairman of the Board, President and CEO.................. 1998 $150,000 $900/month 200,000
1997 $150,000 auto allowance None
1996 $150,000 137,500
Daniel D. Traynor
General Manager and Vice President
of Acrodyne 1996.......................................... 1998 $126,500 75,000
1997 $126,500 None
1996 $126,500 37,500
Dr. Timothy P. Hulick
Vice President--Engineering
of Acrodyne............................................... 1998 $113,000 75,000
1997 $113,000 None
1996 $113,000 37,500
Ronald R. Lanchoney, CFO.................................... 1998 90,000 50,000
1997 None None
</TABLE>
Mr. Lanchoney was hired as Chief Financial Officer on March 2, 1998 at an
annual salary of $80,000. During the one month period prior to that date,
Mr. Lanchoney served as consulting CFO to the Company, providing financial
consulting services to the Company on a part-time basis. On August 31, 1998,
Mr. Lanchoney began receiving compensation of $90,000.
As of January 27, 1999, Mr. Traynor and Mr. Hulick were not re-elected as
corporate officers of the Company for the year 1999, but operating under
Employment agreements, their compensation remains the same, with their varied
duties.
On January 27, 1999 Mr. Nat Ostroff was elected as Chairman of the Board of
Directors and Chairman of the Management committee of the Company and was
granted compensation in the amount of $150,000 annually.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The Company has two stock option plans approved by the Board of Directors
and the Company's stockholders: the 1993 Stock Option Plan and the 1997 Stock
Option Plan.
The purpose of the Stock Plans are to advance the interests of the
Corporation by encouraging and enabling the acquisition of a larger personal
propriety interest in the Corporation by employees and directors of, and
consultants to, the Corporation and its Subsidiaries upon whose judgments and
keen interest the Corporation is largely dependent for the successful conduct of
its operations and by providing such employees, directors and consultants with
incentives to put forth maximum efforts for the success of the Corporation's
business. It is also expected that such incentives will enable the Corporation
and its Subsidiaries to attract desirable personnel.
1993 Stock Option Plan. Under this plan, options for 250,000 were granted
to executive employees in 1993 and 1994, all of which are exercisable.
5
<PAGE>
1997 Stock Option Plan. Under this plan, options for up to 650,000 shares
of Common Stock may be granted.
In June 1998, the Board of Directors granted 450,000 options under the 1997
Stock Option Plan to employees. The options had an exercise price of $4.50 per
share. On October 16, 1998, in a response to the decline in the public market
price of Acrodyne's securities and the public stock markets generally, the Board
of Directors resolved to reprice such options to $3.00 per share.
Both plans were amended on November 19, 1998 to make options exercisable
for 10 years from the date of grant, unless prior to the expiration of such
options, the option holder ceases to be employed by Acrodyne due to Acrodyne's
termination for cause, the option holder's voluntary termination, or the option
holder's death or permanent and total disability. In such events, the option
remains exercisable for a period not extending beyond three months after the
date of cessation of employment.
OPTION/SAR GRANTS IN LAST FISCAL YEAR 1998
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES PRICE PER
NAME OPTIONS IN 1998 SHARE EXPIRATION DATE
- ----------------------------------------------------- ---------- ------------- --------- ----------------
<S> <C> <C> <C> <C>
A. Robert Mancuso.................................... 200,000 44.44% $3.00 June 8, 2008
Daniel D. Traynor.................................... 75,000 16.67% $3.00 June 8, 2008
Dr. Timothy P. Hulick................................ 75,000 16.67% $3.00 June 8, 2008
Ronald R. Lanchoney.................................. 50,000 11.11% $3.00 June 8, 2008
Brian Byrnes......................................... 7,500 1.67% $3.00 June 8, 2008
Elmer Lipsey......................................... 15,000 3.33% $3.00 June 8, 2008
Martin Hermann....................................... 20,000 4.44% $3.00 June 8, 2008
Robert Raucci........................................ 7,500 1.67% $3.00 June 8, 2008
Mesa Capital......................................... 25,000 $3.50 December 8, 2008
Total grants in fiscal 1998........................ 475,000
</TABLE>
In January 1999, Mr. Mancuso received 175,000 stock options from the 1997
Stock Option Plan, at an exercise price of $3.88, as part of his 1999 Employment
Agreement.
The Stock Options for Mr. Mancuso, Mr. Hulick, Mr. Traynor, and
Mr. Lanchoney, will become exercisable over a four year period, beginning on
June 30, 1997. The Stock Options for Mr. Byrnes became exercisable on June 30,
1998. The Stock Options for Mr. Lipsey became exercisable on June 30, 1997.
12,500 of the Stock Options held by Mr. Hermann became exercisable on June 30,
1997 and 7,500 on June 30, 1998. The Stock Options for Mr. Raucci became
exercisable on June 30, 1998.
In December of 1998, the Company granted 25,000 stock options at an
exercise price of $3.50, from the 1997 Stock Option Plan to a consultant, Mesa
Capital, for services. Such options were valued at $65,000 at the time of
issuance and were recorded as an expense for fiscal year ending December 31,
1998.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-
SHARES OPTIONS AT YEAR-END MONEY OPTIONS AT YEAR-END
NUMBER OF ACQUIRED ON EXERCISABLE (E)/ EXERCISABLE (E)/
NAME HELD OPTIONS EXERCISE UNEXERCISABLE (U) UNEXERCISABLE
- ---------------------------------- ------------ ----------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
A. Robert Mancuso................. 612,500 -0- E 395,833 E $251,999
U 216,667 U $101,000
Daniel D. Traynor................. 112,500 -0- E 75,000 E $51,750
U 37,500 U $35,250
Dr. Timothy P. Hulick............. 112,500 -0- E 75,000 E $51,750
U 37,500 U $35,250
Ronald R. Lanchoney............... 50,000 -0- E 25,000 E $23,500
U 25,000 U $23,500
Directors/Consultants............. 75,000 -0- E 75,000 E $58,000
U 0 U $0
</TABLE>
EMPLOYMENT AGREEMENTS
Mancuso Employment Agreement
As a condition to the Sinclair investment, the Company entered into an
employment agreement with Mr. Mancuso (the "Employment Agreement"). The
Employment Agreement has an initial three year term, and automatically renews
for successive two year terms. Mr. Mancuso is entitled to a minimum base salary
of $175,000 per year and an annual bonus, not to exceed his base salary, equal
to 5% of Acrodyne's earnings before interest and taxes for each fiscal year,
excluding costs for research and development, as determined from Acrodyne's
audited statement of operations. In addition, Mr. Mancuso was given options to
purchase up to 175,000 shares of Common Stock under the 1997 stock option plan
at an exercise price of $3.88 per share. 58,333 of these options became
exercisable on January 1, 1999, 58,333 will become exercisable on January 1,
2000 and 58,334 will become exercisable on January 1, 2001. Mr. Mancuso also has
an automobile allowance of $900.00 per month. Mr. Mancuso's employment agreement
includes a non-competition obligation that extends for two years following the
expiration of the agreement or the earlier termination of his employment.
Mr. Mancuso is entitled, upon his termination without cause, to a severance
payment in an amount equal to his base salary for the then-remaining term of his
employment agreement plus one additional year of base salary.
Traynor Employment Agreement
Mr. Traynor is employed by the Company under an employment agreement which
will be subject to a renewal on October 24, 1999. Under such employment
agreement, Mr. Traynor is entitled to, among other things, a minimum base salary
of $126,500 per year and a bonus equal to between 10% and 70% of Mr. Traynor's
base salary. Such percentage is to be based on the relationship between
Acrodyne's actual earnings before taxes for each year and Acrodyne's budgeted
earnings before taxes for such year.
Hulick Employment Agreement
Mr. Hulick is employed by the Company under an employment agreement which
will be subject to a renewal on October 24, 1999. Under such employment
agreement, Mr. Hulick is entitled to, among other things, a minimum base salary
of $113,000 per year and a bonus equal to between 10% and 70% of Mr. Hulick's
base salary. Such percentage is to be based on the relationship between
Acrodyne's actual earnings before taxes for each year and Acrodyne's budgeted
earnings before taxes for such year.
Pursuant to the terms of their respective employment agreements, each of
Mr. Traynor and Dr. Hulick are entitled, upon a termination without cause, to a
severance payment in an amount equal to base salary for the then remaining term
of such employment agreement plus one additional year thereafter.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock, as of April 30, 1999, and 8% Preferred
Stock, as of the same date, by (i) each person known by the Company to be the
owner of more than 5% of the outstanding shares of Common Stock or 8% Preferred
Stock, (ii) each director, (iii) each director nominee, (iv) the executive
officers and (v) all directors and officers as a group:
<TABLE>
<CAPTION>
NAME & ADDRESS AMOUNT & NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER(A) OWNERSHIP OF VOTING STOCK
- ------------------------------------------------- ----------------------- ----------------- ---------------
<S> <C> <C> <C>
Common Stock..................................... Sinclair 2,897,999 shares(b) 32.10%
Common Stock..................................... A. Robert Mancuso 612,500 shares(c) 6.41%
Common Stock..................................... Martin J. Hermann 63,000 shares(d) 0.90%
Common Stock..................................... Ronald R. Lanchoney 50,000 shares(e) 0.35%
All officers and directors as a group
(3 persons).................................... 533,833 shares(f) 7.68%
<CAPTION>
PREFERRED STOCK
NAME & ADDRESS ASSUMING
OF BENEFICIAL CONVERSION
OWNER(A) INTO COMMON STOCK
----------------------- -----------------
<S> <C> <C> <C>
8% Preferred Stock............................... Furst Associates 85,116 shares(g) 1.22%
8% Preferred Stock............................... Eagle Partners 45,672 shares(g) 0.65%
8% Preferred Stock............................... FM Partners 35,292 shares(g) 0.50%
8% Preferred Stock............................... Dynamic Value Partners 13,840 shares(g) 0.19%
</TABLE>
- ------------------
(a) The address of Sinclair Broadcast Group, Inc. is 2000 W. 41st Street,
Baltimore, Maryland 21212. The address of Mr. Mancuso and Mr. Lanchoney is
c/o the Company, 516 Township Line Road, Blue Bell, Pennsylvania 19422. The
address of Mr. Hermann is 725 Glen Cove Avenue, Glen Head, New York 11545.
The address of Furst Associates, Eagle Partners and FM Partners is
Suite 105, 621 E. Germantown Pike, Plymouth Valley, Pennsylvania 19401. The
address of Dynamic Value Partners is 1959 Fourth Street, South Naples,
Florida 34102.
(b) Includes 1,431,333 shares of Common Stock issued to Sinclair under the
subscription agreement, includes 800,000 shares of Common Stock which
Sinclair purchased from the Scorpion Investors and 666,666 shares of Common
Stock issuable upon the exercise of warrants exercisable immediately after
the closing of the Sinclair Investment on January 27, 1999.
(c) Includes 237,500 shares of Common Stock issuable upon the exercise of stock
options granted to Mr. Mancuso consisting of (i) 137,500 shares of Common
Stock issuable pursuant to the 1993 Stock Option Plan, of which 100,000 and
37,500 options vested on October 14, 1995 and June 9, 1996, respectively and
(ii) 100,000 shares of Common Stock issuable upon the exercise of options
issued pursuant to the terms of Mr. Mancuso's 1994 employment agreement, of
which 33,333 options vested on January 1, 1995 ,1996 and 1997. Includes
200,000 shares of Common Stock granted under the 1997 Stock Option Plan of
which 50,000 vested on June 30, 1997 and 50,000 vested on June 30, 1998.
Includes 200,000 shares of Common Stock granted according to the 1999
Employment Agreement under the 1997 Stock Option Plan of which 58,333 vested
on January 1, 1999.
(d) Includes 20,000 shares of Common Stock issuable upon the exercise of vested
options granted under Acrodyne's 1997 Stock Option Plan.
(e) Includes 25,000 shares of Common Stock issuable upon the exercise of vested
options granted under Acrodyne's 1997 Stock Option Plan.
(f) Reflects beneficial ownership of all directors and officers and includes
598,333 shares of Common Stock issuable upon the exercise of options. None
of the officers or directors of Acrodyne beneficially owns any shares of
Preferred Stock.
(Footnotes continued on next page)
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(Footnotes continued from previous page)
(g) Preferred Stockholders own in aggregate 6,500 share of Preferred Stock at a
conversion rate at which one share of Preferred Stock equals 27.68 shares of
Common Stock. Furst Associates owns 3,075 shares of Preferred Stock or
47.31% of the issued and outstanding Preferred Stock. Eagle Partners owns
1,650 shares of Preferred Stock or 25.38% of the issued and outstanding
Preferred Stock. FM Partners owns 1,275 shares of Preferred Stock or 19.62%
of the issued and outstanding Preferred Stock and Dynamic Value Partners
owns 500 shares of Preferred Stock or 7.69% of the issued and outstanding
Preferred Stock. Since the Preferred class does not vote as an independent
class, this table assumes the conversion of all Preferred Stock to Common
Stock to accurately reflect beneficial ownership.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 27, 1999 Sinclair Broadcast Group acquired a significant equity
interest in Acrodyne. Pursuant to the subscription agreement, Sinclair has made
a cash infusion of $4.3 million in Acrodyne in receipt of 1,431,333 shares of
Acrodyne's common stock and warrants to purchase up to an aggregate of 8,719,225
shares over a term of seven years at prices ranging from $3.00 to $6.00 per
share. Of such warrants, 6,000,000 are exercisable only upon Acrodyne's
achievement of increased product sales or sales of products with new technology.
Sinclair has also acquired an additional 800,000 shares of common stock
previously held by the Scorpion/New Light investment group. Sinclair now holds
an aggregate of 2,231,333 shares of Acrodyne, representing approximately 32.1%
of issued common stock, assuming no warrants are exercised. If Sinclair were to
exercise all warrants received pursuant to the Subscription Agreement, Sinclair
would own 10,950,558 shares of Common Stock, representing 59.06% of all
outstanding voting stock on a fully diluted basis.
This transaction also included an investment agreement, dated as of
January 27, 1999 among Sinclair, Acrodyne and Mr. Mancuso (the "Investment
Agreement"), with respect to Acrodyne's governance and providing for, among
other things, the composition of the Board of Directors, restrictions on certain
corporate, securities and affiliated party transactions, a standstill agreement
by Sinclair and an enhanced role for Acrodyne's independent directors.
As a condition to the Sinclair Investment and under the terms of the
Investment Agreement, Acrodyne's Board of Directors was reconstituted to include
seven members: three directors nominated by Sinclair, including Mr. Nat Ostroff
as Chairman, Mr. David Smith and Mr. David Amy, as Directors, two additional
directors nominated by Mr. A. Robert Mancuso, which includes Mr. Mancuso and
Mr. Martin Herman and in addition two independent directors who were nominated
by mutual consent of Sinclair and Mr. Mancuso, Mr. Richard Flam and Mr. Michael
Anderson.
Any future transactions between the Company and any affiliate thereof will
be on terms no less favorable to the Company than those which are generally
available from unaffiliated third parties and must be ratified by a majority of
independent members of the Company's Board of Directors who do not have an
interest in such transaction.
REDEMPTION OF SERIES A PREFERRED STOCK
As part of the Sinclair transaction, on January 27, 1999, the Company
redeemed all 326,530 shares of the Series A 8% Redeemable Convertible Preferred
Stock issued in September 1998 to the Scorpion/New Light investment group. The
Company paid a total of $1,031,780 for the shares and accrued dividends.
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PROPOSAL II
ENGAGEMENT OF ARTHUR ANDERSEN LLP
AS THE COMPANY'S INDEPENDENT AUDITOR
Subject to shareholder ratification, the Board of Directors has resolved
not to re-appoint the firm of PricewaterhouseCoopers LLP as the Company's
independent auditor. It has further been resolved that the Company appoint
Arthur Andersen LLP, as the Company's independent auditor and principal
accountant commencing on April 30, 1999.
PricewaterhouseCoopers LLP had served as the Company's independent auditor
since the Company's inception in May 1991. PricewaterhouseCoopers LLP's reports
of the company's financial statements for the past two fiscal years ended
December 31, 1998 and 1997 did not contain an adverse opinion or a disclaimer of
opinion and were not modified as to uncertainty, audit scope or accounting
principles. Since their appointment, there were no disagreements with
PricewaterhouseCoopers, LLP, whether or not resolved, on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
Representatives of PricewaterhouseCoopers LLP are expected to attend the
Meeting and will have the opportunity to make a statement if they desire and to
respond to appropriate questions.
The Board of Directors recommends that stockholders vote FOR the engagement
of Arthur Andersen, LLP as the Company's independent auditor. Any shares not
voted (whether by abstention, broker non-vote or otherwise) have no impact on
the vote.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES REPRESENTING A MAJORITY OF
THE VOTING RIGHTS ISSUED AND OUTSTANDING IS REQUIRED TO APPOINT A NEW
INDEPENDENT AUDITOR.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ENGAGEMENT OF
ARTHUR ANDERSEN DESIGNATED AS PROPOSAL 2 ON THE ENCLOSED PROXY CARD.
PROPOSAL III
ADOPTION OF THE 1999 LONG-TERM INCENTIVE PLAN
The summary of the main features of the Long-Term Incentive Plan is
qualified in its entirety by the complete text of the plan which is set out as
Appendix A to this Proxy Statement.
THE 1999 PLAN
On March 22, 1999, the Board of Directors adopted, subject to the approval
of the Company's stockholders, the 1999 Long-Term Incentive Plan of Acrodyne
(the "1999 Plan"). The 1999 Plan will become effective only upon approval by a
majority of the issued and outstanding shares of the Company entitled to vote at
the Annual Meeting. Awards made pursuant to the 1999 Plan may be in the form of
stock, restricted stock, stock options, stock appreciation rights, or cash.
Assuming that the stockholders approve the 1999 Plan, the Company will be able
to make stock-based awards to participants in the 1999 Plan (each, a
"Participant") of up to an aggregate of 2,000,000 shares of Common Stock. In
addition, an award may be in the form of a "performance award" which will be
paid or vested only upon attaining one or more pre-established objective
performance goals related to the Company or its subsidiaries and as determined
by the committee administrating the 1999 Plan.
Purpose
The purpose of the 1999 Plan is to advance the interests of the Company, by
enabling the Company to attract, retain and motivate qualified individuals to
make major contributions to the success of the Company and to align the
financial interests of such individuals with those of the Company's stockholders
by providing for or increasing their proprietary interest in the Company.
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Eligibility
Any individual (employee or non-employee) whose performance, in the
judgment of an independent committee elected by the Board, can have an effect on
the success of the Company is eligible to be a Participant under the 1999 Plan.
Terms
The maximum number of shares of Common Stock with respect to which awards
consisting of options or stock appreciation rights may be issued to any one
Participant in any one calendar year under the 1999 Plan is 1,500,000 shares.
Such maximum will be decreased for any Participant by the number of shares of
Common Stock underlying existing options or stock appreciation rights previously
granted to such Participant pursuant to the 1999 Plan.
The maximum number of shares of Common Stock or units denominated in such
shares (other than any awards consisting of options or stock appreciation
rights) that may be awarded to any one Participant in any one calendar year is
350,000 shares.
The maximum aggregate award to any one Participant in any one calendar year
consisting of cash or otherwise, shall be $300,000 (other than awards consisting
of options or stock appreciation rights, or otherwise consisting of shares of
Common Stock or units denominated in such shares).
The price at which shares of Common Stock may be purchased upon exercise of
an Incentive Option shall not be less than the fair market value of the Common
Stock on the date of grant. The price at which shares of Common Stock may be
purchased upon the exercise of a non-qualified option shall be not less than 50%
of fair market value of the Common Stock on the date of grant.
Administration
The 1999 Plan is administered by a committee consisting of at least two
members of the Board of Directors who qualify as Non-Employee Director under
rule 16b-3(d)(3)(i) of the Exchange Act. The Committee shall be appointed from
time to time by the Board of Directors. The 1999 Plan authorizes the Committee
to prescribe, or take actions as deemed appropriate to implement or interpret
the provisions of the 1999 Plan. The Board of Directors may amend the 1999 Plan
at any time as determined appropriate, without further action of the
stockholders except as required by law; provided, however, that no change in any
option granted may be made that would impair the rights of the optionee without
the consent of such optionee. Notwithstanding the foregoing, the 1999 Plan
cannot be amended to increase the total number of shares issuable thereunder, or
the maximum number of shares with respect to which options or stock appreciation
rights may be issued to any Participant in any calendar year, without the
approval of the stockholders.
FEDERAL INCOME TAX CONSEQUENCES
The following does not purport to be a complete summary of the Federal
income tax considerations relevant to awards granted under the 1999 Plan. In
addition, the tax consequences of awards under state, local or foreign law may
differ from the consequences under Federal income tax law as described below.
Stock Options
Options Granted to Non-Employee Participants.
A non-employee Participant who is granted a stock option pursuant to the
1999 Plan generally will recognize no taxable income at the time of the grant,
but generally will recognize taxable income upon the exercise of such stock
option. The amount of income recognized by such Participant upon the exercise of
the stock option will be measured by the excess, if any, of the fair market
value of the shares of Common Stock acquired at the time of exercise over the
exercise price paid therefor. The Company will generally be entitled to a
compensation deduction corresponding to the amount of income recognized by the
non-employee participant.
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Options Granted to Employee Participants.
Options granted to employee Participants under the 1999 Plan may consist of
incentive stock options ("ISOs") intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and non-qualified stock
options ("NQSOs").
An employee Participant that receives a stock option qualifying as an ISO
pursuant to the 1999 Plan generally will recognize no taxable income upon the
grant of such option. Further, subject to the discussion below, such Participant
generally will not recognize taxable income upon the exercise of such option and
the receipt of the Common Stock subject to such option. Provided the
requirements for an ISO are complied with, the Company will not be entitled to a
compensation deduction with respect to the issuance or exercise of an ISO to a
participating employee.
If shares of Common Stock received upon exercise of an ISO are disposed of
within either (a) two years from the date of grant of the ISO or (b) one year
from the date of transfer of such shares of Common Stock to the Participant upon
exercise, the excess of the fair market value of the shares of Common Stock on
the date of the ISO's exercise (or, if less, the amount realized upon the
disposition of the shares) over the exercise price of the ISO will be includible
in the Participant's income as ordinary compensation income, and the remainder
of any gain upon such disposition will constitute capital gain to the
Participant. If the amount realized upon such disposition is less than the
exercise price paid for the shares of Common Stock, the Participant will
recognize no ordinary income upon such exercise and will recognize a capital
loss to the extent of such shortfall. The Company generally will be entitled to
a compensation deduction only to the extent that the Participant realizes
ordinary compensation income.
An employee Participant who is granted an NQSO pursuant to the 1999 Plan
generally will recognize no taxable income at the time of the grant of such
option, but generally will recognize taxable income upon the exercise of such
option. The amount of income recognized upon such exercise will be measured by
the excess, if any, of the fair market value of the shares of Common Stock
subject to such option at the time of exercise over the exercise price paid
therefor. The Company will generally be entitled to a compensation deduction
corresponding to the amount of income recognized by the employee Participant.
Stock Appreciation Rights.
In general, a Participant that receives an award consisting of a stock
appreciation right (an "SAR") will not recognize taxable income upon the grant
of such SAR. Upon exercise of an SAR, the amount of cash or fair market value of
any unrestricted shares of Common Stock received by the Participant will be
taxable to such Participant as ordinary income and the Company will be entitled
to a corresponding compensation deduction in the same amount.
Awards of Shares of Common Stock.
A Participant that receives an award consisting of unrestricted shares of
Common Stock generally will recognize compensation income at the time of grant
in an amount equal to the fair market value of such shares at the time of grant,
and the Company will be entitled to a corresponding compensation deduction at
such time.
A Participant that receives an award consisting of restricted shares of
Common Stock generally will not realize taxable income at the time of grant, and
the Company will not be entitled to a corresponding compensation deduction at
such time, assuming that the restrictions constitute a "substantial risk of
forfeiture" for federal income tax purposes. Upon the vesting of the shares of
Common Stock subject to an award, the Participant will recognize ordinary income
in an amount equal to the fair market value of such shares at the time of
vesting, and the Company will be entitled to a corresponding compensation
deduction. Dividends paid with respect to restricted shares of Common Stock
during the restriction period, if so provided, will also be compensation income
to the Participant and the Company will be entitled to a corresponding
deduction. A Participant may elect pursuant to Section 83(b) of the Code to have
income recognized at the date of grant of a restricted stock award. If such an
election is made, the Company will be entitled to a corresponding compensation
deduction at such time.
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Application of Section 162(m).
Section 162(m) of the Code generally disallows a federal income tax
deduction to public companies to the extent that compensation paid to the
company's chief executive officer and each of the company's four other most
highly compensated officers in any single fiscal year exceeds $1 million.
Certain compensation, including "performance-based" compensation meeting the
requirements of Section 162(m), is excluded from the determination as to whether
the $1 million threshold has been reached with respect to a particular employee.
Provided the Company's shareholders approve the 1999 Plan as described above,
the Company believes that any compensation attributable to stock options and
stock appreciation rights that are granted with an exercise price at least equal
to the fair market value of the underlying shares of Common Stock at the time of
grant will qualify as "performance-based" compensation and so will not be
includible in the calculation of the $1 million threshold with respect to any
Participant. The Company is continuing to evaluate whether it is necessary or
desirable to comply with the requirements of Section 162(m) with respect to
other compensation issuable to a Participant under the 1999 Plan.
OPTIONS GRANTED UNDER THE 1999 PLAN.
Subject to shareholders approval, the Board of Directors intends to grant
Nat. S. Ostroff options to purchase 300,000 shares of Common Stock at an
exercise price of $3 per share under the 1999 Plan. The Board has not yet
determined the exercise schedule of these options. On April 30, 1999, the
Company's Common Stock traded for $3.00 per share.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES REPRESENTING A MAJORITY OF
THE VOTING RIGHTS IS REQUIRED TO ADOPT THE 1999 LONG-TERM INCENTIVE PLAN.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE LONG-TERM INCENTIVE PLAN OF ACRODYNE, WHICH IS DESIGNATED AS PROPOSAL 3 ON
THE ENCLOSED PROXY CARD.
STOCKHOLDERS PROPOSALS
Stockholders who wish to present proposals at the 2000 Annual Meeting
should submit their proposals in writing to the Secretary of the Company at the
address set forth on the first page of this proxy statement. Proposals must be
received no later than January 11, 2000 for inclusion in next year's proxy
statement and proxy card.
ANNUAL REPORT ON FORM 10-KSB
Upon the written request of any shareholder, the Company will provide,
without charge, a copy of the Company's Annual Report on Form 10-KSB filed with
the Commission for the year ended December 31, 1998. This request should be
directed to the Corporate Secretary, Acrodyne Communications, Inc., 516 Township
Line Road, Blue Bell, PA 19422.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, as well as persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of the Common Stock. Directors, executive officers and
greater than ten percent stockholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) reports they file.
Based solely on a review of the copies of such reports furnished to the
Company, or written representations that no Form 5 was required, the Company
believes that all persons subject to the reporting requirements of
Section 16(a) filed all required reports on a timely basis during the past
fiscal year.
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GENERAL INFORMATION
The cost of soliciting the enclosed form of Proxy will be borne by the
Company. In addition, the Company will reimburse brokerage firms and other
persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners.
Directors, officers and regular employees of the Company may, without
additional compensation, solicit proxies either personally or by telephone,
telegram or special letter.
At this time, the Board of Directors knows of no other business that will
come before the Meeting. However, if any other matters properly come before the
Meeting, the persons named as Proxies will vote on any such matters in
accordance with their best judgment.
By Order of the Board of Directors
/s/ David B. Amy
David B. Amy,
Secretary
April 30, 1999
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EXHIBIT # 1
1999 LONG-TERM INCENTIVE PLAN OF ACRODYNE COMMUNICATIONS, INC.
1. Objectives. This 1999 Long-Term Incentive Plan of Acrodyne
Communications, Inc. (the "Plan") is adopted by Acrodyne Communications, Inc., a
Delaware corporation (the "Company"), to reward key individuals for making major
contributions to the success of the Company and its subsidiaries (as hereinafter
defined). These objectives are to be accomplished by making Awards (as
hereinafter defined) under the Plan and thereby providing Participant (as
hereinafter defined) with a proprietary interest in the growth and performance
of the Company and its Subsidiaries.
2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
"Authorized Officer" means the Chairman of the Board or the Chief Executive
Officer of the Company or a Subsidiary (or any other senior officer of the
Company or a Subsidiary to whom either of them shall delegate the authority to
execute any Award Agreement).
"Award" means the grant of any Option, SAR Stock Award, Cash Award or
Performance Award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
"Award Agreement" means a written agreement between the Company and a
Participant setting forth the terms, conditions and limitations applicable to an
Award.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning specified in Paragraph 1 hereof.
"Committee" means the Compensation Committee of the Board or such other
committee of the Board as is designated by the Board to administer the Plan.
"Common Stock" means the Class A Common Stock, par value $.01 per share, of
the Company.
"Dividend Equivalents" means, with respect to shares of Restricted Stock
that are to be issued at the end of the Restriction Period, an amount equal to
all dividends and other distributions (or the economic equivalent thereof) which
are payable to stockholders of record during the Restriction Period on a like
number of shares of Common Stock.
"Effective Date" means the date upon which this Plan shall be adopted and
made effective in accordance with Section 17 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" of a share of Common Stock means, as of a particular
date, (i) if shares of Common Stock are listed on a national securities
exchange, the mean between the highest and lowest sales price per share of
Common Stock on the consolidated transaction reporting system for the principal
national securities exchange on which shares of Common Stock are listed on that
date, or if there shall have been no such sale so reported on that date, on the
last preceding date on which such a sale was so reported, (ii) if shares of
Common Stock are not so listed but are quoted on the NASDAQ National Market, the
mean between the highest and lowest sales price per share of Common Stock
reported by the NASDAQ National Market on that date, or if there shall have been
no such sale so reported on that date, on the last preceding date on which such
a sale was so reported, or (iii) if the Common Stock is not so listed or quoted,
the mean between the closing bid and asked price on that date, or if there are
no quotations available for such date, on the last preceding date on which such
quotations shall be available, as reported by the NASDAQ Stock Market, or if not
reported by the NASDAQ Stock Market, by the National Quotation Bureau
Incorporated.
"Incentive Option" means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.
"Non-qualified Stock Option" means an Option that is not an Incentive
Option.
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"Option" means a right to purchase a specified number of shares of Common
Stock at a specified price.
"Participant" means an employee of, or an individual otherwise performing
services for or on behalf of the Company or any of its Subsidiaries, and to whom
an Award has been made under this Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant that is subject to the attainment of one or more Performance Goals.
"Performance Goal" means a standard established by the Committee to
determine in whole or in part whether a Performance Award shall be earned.
"Plan" has the meaning specified in Section 1 hereof.
"Restricted Stock" means any Common Stock that is restricted or subject to
forfeiture provisions.
"Restricted Period" means a period of time beginning as of the date upon
which an Award of Restricted Stock is made pursuant to this Plan and ending as
of the date upon which the Common Stock subject to such Award is no longer
restricted or subject to forfeiture provisions.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor rule.
"SAR" means a right to receive a payment, in cash or Common Stock, equal to
the excess of the Fair Market Value or other specified valuation of a specified
number of shares of Common Stock on the date the right is exercised over a
specified strike price (in each case, as determined by the Committee).
"Stock Award" means an award in the form of shares of Common Stock or units
denominated in shares of Common Stock.
"Subsidiary" means (a) in the case of a corporation, any corporation of
which the Company directly or indirectly owns shares representing more than 50%
of the combined voting power of the shares of all classes or series of capital
stock of such corporation which have the right to vote generally on matters
submitted to a vote of the stockholders of such corporation, and (b) in the case
of a partnership or other business entity not organized as a corporation, any
such business entity of which the Company directly or indirectly owns more than
50% of the voting, capital, or profits interests (whether in the form of
partnership interests, membership interests, or otherwise).
3. Eligibility. Individuals eligible for an Award under this Plan are
those whose performance, in the judgment of the Committee, can have an effect on
the success of the Company and its Subsidiaries.
4. Common Stock Available for Awards. Subject to the provisions of
Section 13 hereof, there shall be available for Awards under this Plan granted
wholly or partly in Common Stock (including rights or options which may be
exercised for or settled in Common Stock) an aggregate of 2,000,000 shares of
Common Stock. The number of shares of Common Stock that are the subject of
Awards under this Plan that are forfeited or terminated, expire unexercised, are
settled in cash in lieu of Common Stock or in a manner such that all or some of
the shares covered by an Award are not issued to a Participant or are exchanged
for Awards that do not involve Common Stock, shall again immediately become
available for Awards hereunder. The Committee may from time to time adopt and
observe such procedures concerning the counting of shares against the Plan
maximum as it may deem appropriate. The Board and the appropriate officers of
the Company shall from time to time take whatever actions are necessary to file
any required documents with governmental authorities, stock exchanges, and
transaction reporting systems to ensure that shares of Common Stock are
available for issuance pursuant to Awards.
5. Administration.
(a) This Plan shall be administered by the Committee. The Committee
shall consist of at least two members of the Board who meet the
requirements of the definition of a "Non-Employee Director" in Rule
16b-3(b)(3)(i) promulgated under the Exchange Act or any successor rule.
(b) Subject to the provisions hereof, the Committee shall have full
and exclusive power and authority to administer this Plan and to take all
actions which are specifically contemplated hereby or are necessary or
appropriate in connection with the administration hereof. The Committee
shall also have full and exclusive
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power to interpret this Plan and to adopt such rules, regulations and
guidelines for carrying out this Plan as it may deem necessary or proper,
all of which powers shall exercised in the best interests of the Company
and in keeping with the objectives of this Plan. The Committee may, in its
discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make
less restrictive any restrictions contained in an Award, waive any
restriction or other provision of this Plan or an Award, or otherwise amend
or modify an Award in any manner that is either (i) not adverse to the
Participant to whom such Award was granted, or (ii) consented to by such
Participant. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the manner and
to the extent the Committee deems necessary or desirable to carry it into
effect. Any decision of the Committee in the interpretation and
administration of this Plan shall lie within its sole and absolute
discretion and shall be final, conclusive, and binding on all parties
concerned.
(c) No member of the Committee or officer of the Company to whom the
Committee has delegated authority in accordance with the provisions of
Section 6 of this Plan shall be liable for anything done or omitted to be
done by him or her, by any member of the Committee, or by any officer of
the Company in connection with the performance of any duties under this
Plan, except for his or her own willful misconduct or as expressly provided
by statute.
6. Delegation of Authority. The Committee may delegate its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish, except that the Committee may not delegate to any person the
authority to grant Awards to or take other action with respect to Participants
who are (a) subject to Section 16 of the Exchange Act, or (b) not employees of
the Company or any of its Subsidiaries.
7. Awards.
(a) The Committee shall determine the type or types of Awards to be
made under this Plan and shall designate from time to time the individuals
who are to be the recipients of such Awards. Each Award shall be embodied
in an Award Agreement, which shall contain such terms, conditions, and
limitations as shall be determined by the Committee in its sole discretion
and shall be signed by the Participant to whom the Award is made and by an
Authorized Officer (other than the Participant) for on behalf of the
Company. Awards may consist of those listed in this Section 7(a) and may be
granted singly, in combination or in tandem. Awards may also be made in
combination or in tandem with, in replacement of, or as alternatives to
grants or rights under this Plan or any other plan of the Company or any of
its Subsidiaries, including the plan of any acquired entity. An Award may
provide for the grant or issuance of additional, replacement, or
alternative Awards upon the occurrence of specified events, including the
exercise of the original Award granted to a Participant. All or part of an
Award may be subject to conditions established by the Committee, which may
include, but are not limited to, continuous service with the Company and
its Subsidiaries, achievement of specific business objectives, increases in
specified indices, attainment of specified growth rates, and other
comparable measurements of performance.
(i) Stock Option. An Award may be in the form of an Option. An
Option awarded pursuant to this Plan may consist of an Incentive
Option or a Non-qualified Option. The price at which shares of Common
Stock may be purchased upon the exercise of an Incentive Option shall
be not less than the Fair Market Value of the Common Stock on the
date of grant. The price at which shares of Common Stock may be
purchased upon the exercise of a Non-qualified Option shall be not
less than 50% of Fair Market Value of the Common Stock on the date of
grant. Subject to the foregoing provisions, the terms, conditions,
and limitations applicable to any Options awarded pursuant to this
Plan, including the term of any Options and the date or dates upon
which they become exercisable, shall be determined by the Committee.
(ii) Stock Appreciation Right. An Award may be in the form of
an SAR. The terms, conditions, and limitations applicable to any SARs
awarded pursuant to this Plan, including the term of any SARs and the
date or dates upon which they become exercisable, shall be determined
by the Committee.
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(iii) Stock Award. An Award may be in the form of a Stock
Award. The terms, conditions, and limitations applicable to any Stock
Awards granted pursuant to this Plan shall be determined by the
Committee.
(iv) Cash Award. An Award may be in the form of a Cash Award.
The terms, conditions, and limitations applicable to any Cash Awards
granted pursuant to this Plan shall be determined by the Committee.
(v) Performance Award. Without limiting the type or number of
Awards that may be made under the other provisions of this Plan, an
Award may be in the form of a Performance Award. A Performance Award
shall be paid, vested or otherwise deliverable solely on account of
the attainment of one or more pre-established, objective Performance
Goals established by the Committee prior to the earlier to occur of
(A) 90 days after the commencement of the period of service to which
the Performance Goal relates, and (B) the elapse of 25% of the period
of service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is
met. Such a Performance Goal may be based on one or more business
criteria that apply to the individual, one or more business units of
the Company, or the Company as a whole, and may include one or more
of the following: revenue, cash flow, net income, stock price, market
share, earnings per share, return on equity, return on assets or
decrease in costs. Unless otherwise stated, such a Performance Goal
need not be based upon an increase or positive result under a
particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses (measured, in
each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and
Performance Awards, it is the intent of the Plan to conform with the
standards of Section 162(m) of the Code and Treasury Regulations
1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions. Prior to
the payment of any compensation based on the achievement of
Performance Goals, the Committee must certify in writing to the Board
that applicable Performance Goals and any of the material terms
thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions, and limitations applicable to any
Performance Awards made pursuant to this Plan shall be determined by
the Committee.
(b) Notwithstanding anything to the contrary contained in this Plan,
the following limitations shall apply to any Awards made hereunder.
(i) no Participant may be granted, during any calendar year,
Awards consisting of Options or SARs that are exercisable for more
than the remainder of 1,500,000 shares of Common Stock less, if any,
the number of shares of Common Stock underlying existing Options or
SARs granted to such Participant under the Plan;
(ii) no Participant may be granted, during any calendar year,
Awards consisting of shares of Common Stock or units denominated in
such shares (other than any Awards consisting of Options or SARs)
covering or relating to more than 350,000 shares of Common Stock (the
limitation set forth in this clause (ii), together with the
limitation set forth in clause (i) above, being hereinafter
collectively referred to as the "Stock Based Awards Limitations");
and
(iii) no Participant may be granted Awards consisting of cash or
in any other form permitted under this Plan (other than Awards
consisting of Options or SARs or otherwise consisting of shares of
Common Stock or units denominated in such shares) in respect of any
calendar year having a value determined on the date of grant in
excess of $300,000.00.
8. Payment of Awards.
(a) General. Payment of Awards may be made in the form of cash or
Common Stock, or a combination thereof, and may include such restrictions
as the Committee shall determine, including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions. If payment of an Award
is made in the form of Restricted Stock, the Award Agreement relating to
such shares shall specify whether they are to
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be issued at the beginning or end of the Restriction Period. In the event
that s of Restricted Stock are to be issued at the beginning of the
Restriction Period, the certificates evidencing such shares (to the extent
that such shares are so evidenced) shall contain appropriate legends and
restrictions that describe the terms and conditions of the restrictions
applicable thereto. In the event that shares of Restricted Stock are to be
issued at the end of the Restricted Period, the right to receive such
shares shall be evidenced by book entry registration or in such other
manner as the Committee may determine.
(b) Deferral. With the approval of the Committee, payments in respect
of Awards may be deferred, either in the form of installments or a future
lump sum payment. The Committee may permit selected Participants to elect
to defer payments of some or all types of Awards in accordance with
procedures established by the Committee. Any deferred payment of an Award,
whether elected by the Participant or specified by the Award Agreement or
by the Committee, may be forfeited if and to the extent that the Award
Agreement so provides.
(c) Dividends and Interest. Rights to dividends or Dividend
Equivalents may be extended to and made part of any Award consisting of
shares of Common Stock or units denominated in shares of Common Stock,
subject to such terms, conditions and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for the
crediting of interest on deferred cash payments and Dividend Equivalents
for Awards consisting of shares of Common Stock or units denominated shares
of Common Stock.
(d) Substitution of Awards. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another
Award or Awards of the same or different type.
9. Stock Option Exercise. The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise in cash
or, if elected by the optionee, the optionee may purchase such shares by means
of tendering Common Stock or surrendering another Award, including Restricted
Stock, valued at Fair Market Value on the date of exercise, or any combination
thereof. The Committee shall determine acceptable methods for Participants to
tender Common Stock or other Awards. If permitted by the Committee, payment may
be made by successive exercises by a Participant. The Committee may provide for
loans from the Company to a Participant to permit the exercise or purchase of
Awards and may provide for procedures to permit the exercise or purchase of such
Awards by use of the proceeds to be received from the sale of Common Stock
issuable pursuant to an Award. Unless otherwise provided in the applicable Award
Agreement, in the event shares of Restricted Stock are tendered as consideration
for the exercise of an Option, a number of the shares issued upon the exercise
of the Option, equal to the number of shares of Restricted Stock used as
consideration therefor, shall be subject to the same restrictions as the
Restricted Stock so submitted as well as any additional restrictions that may be
imposed by the Committee.
10. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting of
cash or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owed by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.
11. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that (a) no amendment or alteration that would impair the rights
of any Participant under any Award previously granted to such Participant shall
be made without the consent of such Participant, and (b) no amendment or
alteration shall be effective prior to approval by the stockholders of the
Company to the extent such approval is then required pursuant to Rule 16b-3 in
order to preserve the applicability of any exemption provided by such rule to
any Award then outstanding (unless the holder of such Award consents) or to the
extent stock approval is otherwise required by applicable legal requirements.
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12. Assignability. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under the
Exchange Act shall be assignable or otherwise transferable except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act or the rules thereunder. The Committee may prescribe and include in
applicable Award Agreements other restrictions on transfer. Any attempted
assignment of an Award or any other benefit under this Plan in violation of this
Paragraph 12 shall be null and void.
13. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes
in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stock (whether or not such issue is prior to, on a
parity with or junior to the Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of
Common Stock or other stock split, then (i) the number of shares of Common
Stock reserved under this Plan, (ii) the number of shares of Common Stock
covered by outstanding Awards in the form of Common Stock or units
denominated in Common Stock, (iii) the exercise or other price in respect
of such Awards, and (iv) the appropriate Fair Market Value and other price
determinations for such Awards shall each be proportionately adjusted by
the Board to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any
consolidation or merger of the Company with another corporation or entity,
the adoption by the Company of any plan of exchange affecting the Common
Stock or any distribution to holders of Common Stock of securities or
property (other than normal cash dividends or dividends payable in Common
Stock), the Board shall make appropriate adjustments to (i) the number of
shares of Common Stock covered by Awards in the form of Common Stock or
units denominated in Common Stock, (ii) the exercise or other price in
respect of such Awards, and (iii) the appropriate Fair Market Value and
other price determinations for such Awards to give effect to such
transaction; provided that such adjustments shall only be such as are
necessary to maintain the proportionate interest of the holders of the
Awards and preserve, without exceeding, the value of such Awards. In the
event of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Board shall be
authorized to issue or assume Awards by means of substitution of new
Awards, as appropriate, for previously issued Awards or an assumption of
previously issued Awards as part of such adjustment.
14. Restrictions. Unless otherwise agreed to by the Company, no Common
Stock or other form of payment shall be issued with respect to any Award unless
the Company shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state securities
laws. It is the intent of the Company that this Plan comply with Rule 16b-3 with
respect to persons subject to Section 16 of the Exchange Act unless otherwise
provided herein or in an Award Agreement that any ambiguities or inconsistencies
in the construction of this Plan be interpreted to give effect to such
intention, and that if any provision of this Plan is found not to be in
compliance with Rule 16b-3, such provision shall be null and void to the extent
required to permit this Plan to comply with Rule 16b-3. Certificates evidencing
shares of Common Stock certificates delivered under this Plan (to the extent
that such shares are so evidenced) may be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any securities exchange or transaction reporting system upon which the Common
Stock is then listed or to which it is admitted for quotation, and any
applicable federal and state securities law. The Committee may cause a legend or
legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
15. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a
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bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor
shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Participant with respect to an
Award of cash, Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by this Plan and any
Award Agreement, and no such liability or obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Board nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by this Plan.
16. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Maryland.
17. Effectiveness. This Plan shall become effective as of the date set
forth in the resolutions of the Board approving and adopting this Plan;
provided, however, that the effectiveness of this Plan is expressly conditioned
upon (a) the approval of this Plan by the Board and the Compensation Committee
of the Company, and (b) the approval of this Plan by the holders of common stock
of the Company of all classes voting together as a single class.
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PROXY
ACRODYNE COMMUNICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
The undersigned stockholder of ACRODYNE COMMUNICATIONS, INC. hereby appoints
A. Robert Mancuso as proxy with full power of substitution, for and in the name,
place and stead of the undersigned, to represent the undersigned at the Annual
Meeting of Stockholders of ACRODYNE COMMUNICATIONS, INC. to be held at the Cedar
Brook Country Club, 180 Penllyn Road, Blue Bell, Pennsylvania 19422 on June 15,
1999 at 11:00 a.m., and at any adjournments thereof, and to vote all shares of
Common Stock, 8% Preferred Stock standing in the name of the undersigned with
all the powers the undersigned would possess if personally present, in
accordance with the instructions below and on the reverse hereof, and in their
discretion upon such other business as may properly come before the meeting.
THIS PROXY WILL BE VOTED ON THE REVERSE HEREOF, AND WILL BE VOTED IN FAVOR
OF PROPOSALS 1 & 2 & 3 IF NO INSTRUCTIONS ARE INDICATED.
1. ELECTION OF DIRECTORS:
Nominees: A. Robert Mancuso, Martin J. Hermann, Richard P. Flam, Michael E.
Anderson, Nat Ostroff, David D. Smith, David B. Amy
/ / FOR all nominees listed (except as marked to the contrary)
/ / WITHHOLD AUTHORITY (to vote for all nominees listed)
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below)
------------------------------------------------------------------------
2. PROPOSAL FOR THE ENGAGEMENT OF ANOTHER INDEPENDENT ACCOUNTANT AS THE
COMPANY'S PRINCIPAL ACCOUNTANT.
/ / FOR / / AGAINST / / ABSTAIN
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
<PAGE>
(Continued from other side)
3. ADOPTION OF THE COMPANY'S 1999 LONG-TERM INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
Common Stock ____________ 8% Preferred Stock_____________
/ / I PLAN TO ATTEND MEETING
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<S> <C>
The undersigned hereby acknowledges receipt of
the Notice of Annual Meeting of Stockholders to
be held June 15, 1999 and the Proxy Statement
furnished herewith.
---------------------------------------------------
Signature
--------------------------------------------------
Date
Please sign exactly as name appears hereon. When
signing as attorney, executor, administrator,
trustee or guardian, give full title as such. If
more than one name appears hereon, all parties
named should sign.
</TABLE>
