SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
Acrodyne Communications, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
00500E104
- --------------------------------------------------------------------------------
(CUSIP Number)
Sinclair Broadcast Group, Inc.
2000 West 41st Street
Baltimore, Maryland 21211
(410) 467-5005
c/o David D. Smith,
President and Chief Executive Officer
with copies to:
George P. Stamas, Esquire
Wilmer, Cutler & Pickering
2445 M. Street, N.W.
Washington, D.C. 20037
(202) 663-6000
and
Steven A. Thomas, Esquire
Thomas & Libowitz, P.A.
100 Light Street -- Suite 1100
Baltimore, MD 21202
(410) 752-2468
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 27, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (e), (f) or (g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of this schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on the following page(s))
<PAGE>
CUSIP NO. 00500E104 Page 2 of 11
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Sinclair Broadcast Group, Inc.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
52-1494660
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Maryland
- --------------------------------------------------------------------------------
NUMBER OF (7) Sole Voting Power: 0
SHARES
BENEFICIALLY (8) Shared Voting Power: 3,448,832
OWNED BY
EACH REPORTING (9) Sole Dispositive Power: 2,897,999
PERSON WITH
(10) Shared Dispositive Power: 550,833
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,448,832
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
<PAGE>
Page 3 of 11
Item 1. Security and Issuer.
- -----------------------------
This Schedule 13D relates to shares of common stock (the "Shares") and
warrants to purchase shares of common stock (the "Warrant Shares"), $.01 par
value per share, of Acrodyne Communications, Inc. ("Acrodyne," or the "Issuer").
The principal executive offices of the Issuer are located at 516 Township Line
Road, Blue Bell, PA 19422.
Item 2. Identity and Background.
- ---------------------------------
This Schedule 13D is filed by Sinclair Broadcast Group, Inc., a Maryland
corporation ("Sinclair"). Sinclair is a publicly-held diversified broadcasting
company (NASDAQ symbol: SBGI) that owns or programs under local marketing
agreements a number of television and radio stations in markets across the
United States. Sinclair's principal executive offices are located at 2000 West
41st Street, Baltimore, Maryland 21211.
By virtue of a voting arrangement in the Investment Agreement described in
Item 6, Sinclair may be deemed a member of a group including A. Robert Mancuso
with respect to the ownership of securities of Acrodyne. This report is filed on
behalf of Sinclair only, and information in this report relating to the
ownership of Acrodyne securities by Mr. Mancuso is to the best knowledge of
Sinclair.
(a-c) Following are the names, addresses and principal occupations of the
executive officers and directors of Sinclair.
<TABLE>
<CAPTION>
NAME ADDRESS PRINCIPAL OCCUPATION
<S> <C> <C>
(1) David D. Smith 2000 West 41st Street, President, Chief Executive
Baltimore, Maryland 21211 Officer, Director and
Chairman of the Board of
Sinclair
(2) Frederick G. Smith 2000 West 41st Street, Vice President and Director
Baltimore, Maryland 21211 of Sinclair
(3) J. Duncan Smith 2000 West 41st Street, Vice President, Secretary and
Baltimore, Maryland 21211 Director of Sinclair
(4) Robert E. Smith 2000 West 41st Street, Director of Sinclair
Baltimore, Maryland 21211
(5) David B. Amy 2000 West 41st Street, Vice President and Chief
Baltimore, Maryland 21211 Financial Officer of Sinclair
</TABLE>
<PAGE>
Page 4 of 11
<TABLE>
<CAPTION>
NAME ADDRESS PRINCIPAL OCCUPATION
<S> <C> <C>
(6) Lawrence E. McCanna 1818 Charles Center South Partner, Gross, Mendelsohn
36 S. Charles Street & Associates, P.A.
Baltimore, MD 21202
(7) Basil A. Thomas 100 Light Street, Suite 1100, Of Counsel, Thomas &
Baltimore, MD 21202 Libowitz, P.A.
</TABLE>
(d) Neither Sinclair nor any of the persons identified as (1) through (7)
on the above table (collectively, the "Sinclair Parties") has, during the last
five years, been convicted in a criminal proceeding (excluding traffic
violations, or similar misdemeanors).
(e) None of the Sinclair Parties has, during the last five years, been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) All of the Sinclair Parties are U.S. citizens.
Item 3. Source and Amount of Funds or Other Consideration.
- ----------------------------------------------------------
On January 27, 1999, Sinclair paid $4.3 million in cash from working
capital (some of which was obtained through a draw on its bank credit facility
with the Chase Manhattan Bank, as agent) to Acrodyne in consideration of the
issuance of 1,431,333 shares of Acrodyne's common stock for a price per share of
$3.00 and the issuance of warrants to purchase up to an aggregate of 8,719,225
shares of common stock 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.
Simultaneously with the purchase of the newly-issued shares, Sinclair also
purchased 800,000 shares of common stock of Acrodyne from a group consisting of
Scorpion-Acrodyne Investors LLC, Newlight Associates, LP, and Newlight
Associates (BVI), LP. Sinclair paid the selling stockholders $3.50 per share for
an aggregate purchase price of $2,800,000 in cash from its working capital (some
of which was obtained through a draw on its bank credit facility).
Item 4. Purpose of Transaction.
- -------------------------------
Sinclair has purchased the common stock and warrants of Acrodyne as part of
a strategic investment arrangement and not for the purpose of acquiring control
of Acrodyne, except to the extent the arrangements described herein constitute
control of Acrodyne. Sinclair and Acrodyne presently intend for Acrodyne to
continue its existence as an independent public company.
<PAGE>
Page 5 of 11
Sinclair has a right of first refusal concerning the shares of Acrodyne
held by Mr. Mancuso, as well as preemptive rights to purchase its pro rata
portion of any newly issued shares of common stock. Sinclair is prohibited,
however, from purchasing additional shares of common stock of Acrodyne (other
than by exercise of the warrants), or from effecting a business combination with
Acrodyne unless certain approvals are obtained. See Item 6 for details.
The board of directors of Acrodyne has been expanded and reconstituted. As
of the date hereof, the board consists of three directors nominated by Sinclair
and two directors nominated by Mr. Mancuso. The two additional directorships are
to be nominated by mutual agreement of Sinclair and Mr. Mancuso and will be
filled in due course.
The management structure of Acrodyne has been altered as well. The
day-to-day management of the company is conducted by a management committee. The
management committee consists of three persons. Sinclair nominates one member,
who is also chairman of the committee. Sinclair also nominates a second member,
who must also be the chief operating officer of Acrodyne, but Mr. Mancuso must
consent to this nominee. Mr. Mancuso nominates the third member, who must also
be the chief executive officer of Acrodyne.
The transaction reported on this Schedule 13D may impede the acquisition of
control of Acrodyne by a third party for a number of reasons. Sinclair
beneficially owns 43.5% of the common stock of Acrodyne. After exercise of all
of the warrants issued to Sinclair in connection with its investment (some of
which are conditional), Sinclair could increase its beneficial ownership to
73.1%. Together with Sinclair's right to nominate three directors and approve
the two independent directors, these voting rights will make it highly unlikely
a third party could take over Acrodyne without the prior consent of Sinclair.
Further, the charter documents of Acrodyne have been amended to (i) increase the
number of authorized shares of common stock from 10,000,000 to 35,000,000; and
(ii) provide that all actions of shareholders must be presented to shareholders
at a meeting duly convened and held for such purpose. Both of these changes may
make it more difficult for a third party to mount a proxy contest or otherwise
acquire a controlling interest in Acrodyne.
Except as described above, Sinclair has no plan that relates to or would
result in any of the following:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or of
any of its subsidiaries;
<PAGE>
Page 6 of 11
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy of
the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination pursuant to Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
- ----------------------------------------------
(a) Sinclair, through (A) its direct ownership of 2,231,333 shares of
common stock of the Issuer, (B) its right to purchase 666,666 shares of common
stock of the Issuer pursuant to the Investor Warrant described in Item 6, and
(C) its voting agreement with Mr. Mancuso described in Item 6, is deemed to be
the beneficial owner of 3,448,832 shares of common stock, representing
approximately 43.5% of the issued and outstanding common stock of the Issuer, of
which 55,000 shares are shares Sinclair believes are held by Mr. Mancuso and
495,833 are shares Sinclair believes are obtainable upon exercise of options
held by Mr. Mancuso. Sinclair holds additional warrants to purchase shares of
common stock of the Issuer which become exercisable from time to time, as
described in Item 6, below. Sinclair has a preemptive right to purchase its pro
rata share of stock Acrodyne proposes to issue and a right of first refusal to
purchase shares Mr. Mancuso proposes to sell, as described in Item 6.
(b) Sinclair's right to vote the Shares is subject to the voting agreement
and proxy arrangements in the Investment Agreement described more particularly
in Items 4 and 6. Sinclair has the sole right to dispose of the Shares.
(c) Except for the acquisitions described in Items 3 and 4, Sinclair has
not effected any transactions in the common stock of Acrodyne during the sixty
days preceding the date of this Schedule 13D. The transactions described in
Items 3 and 4 were the culmination of private discussions and negotiations among
Mr. Mancuso and representatives of Sinclair, Acrodyne, and Scorpion Holdings
(representing the selling shareholders identified in Item 3) in Blue Bell,
Pennsylvania, Baltimore, Maryland, and elsewhere during the summer and fall of
1998. The
<PAGE>
Page 7 of 11
parties signed the definitive documentation for the transactions on November 23,
1998, and closed the transactions after obtaining the approval of the Acrodyne
shareholders at a special meeting held in Blue Bell, Pennsylvania on January 27,
1999.
(d)-(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
- --------------------------------------------------------------------------------
Securities of the Issuer.
- -------------------------
Pursuant to the warrant agreements, Acrodyne has granted Sinclair the
following rights to purchase common stock of Acrodyne:
o Investor Warrant. The Investor Warrant entitles Sinclair to purchase up to
2,000,000 shares of common stock at $3.00 per share. Sinclair may purchase
up to 666,666 shares at any time, up to 1,333,333 shares from and after
January 27, 2000, and up to 2,000,000 shares from and after January 27,
2001. The Investor Warrant will expire on January 27, 2006.
o Anti-Dilution Warrant. The Anti-Dilution Warrant entitles Sinclair to
purchase up to 719,225 shares of common stock at $3.00 per share. The
Anti-Dilution Warrant is designed to prevent a dilution of Sinclair's
equity ownership, and is only exercisable if and to the extent that other
holders of outstanding options and warrants exercise their rights to
purchase common stock. The Anti-Dilution Warrant will expire on January 27,
2006.
o Bonus Warrant. The Bonus Warrant entitles Sinclair to purchase up to
6,000,000 shares of common stock, starting at a price of $3.00 per share
and increasing 20% per year to a maximum of $6.00 per share. The Bonus
Warrant is only exercisable if Acrodyne meets certain sales goals. In each
fiscal year, Sinclair will receive the right to purchase one share of
common stock for each $20 of Acrodyne's sales that are either (i) in excess
of Acrodyne's 1998 sales or (ii) realized from new product lines. The Bonus
Warrant will expire on January 27, 2006.
Under the Subscription Agreement between Sinclair and Acrodyne (see Item
7), Acrodyne is required to register the sale by Sinclair of the Shares and the
Warrant Shares. Sinclair may assign its registration rights to a transferee of
the Shares, provided the transferee is an accredited investor that agrees to be
bound by the terms of the Subscription Agreement, and certain other conditions
are fulfilled. Sinclair also undertakes in the Subscription Agreement to refrain
until January 27, 2000 from transferring, encumbering, or entering into a voting
agreement concerning the Shares, the Warrant Shares, or the 800,000 shares
purchased from the Scorpion/Newlight investment group (see Item 3).
<PAGE>
Page 8 of 11
Under the Investment Agreement among Sinclair, Mr. Mancuso, and Acrodyne
(see Item 7), Sinclair and Mr. Mancuso agree to vote their shares to elect the
directors nominated by each of them, and each grants an irrevocable proxy to the
other to ensure this agreement is implemented (see Item 4). The proxies will
remain in effect until the termination of the Investment Agreement, which
remains in effect for so long as Sinclair owns at least 20% of the voting power
of all shares of Acrodyne capital stock. Sinclair and Mr. Mancuso are also
restricted from voting their shares to remove the directors nominated solely by
the other.
Under the Investment Agreement, Sinclair has the right to purchase its pro
rata portion of common stock and securities convertible into common stock that
Acrodyne may propose to issue. Sinclair has thirty days from receipt of notice
from Acrodyne to exercise these preemptive rights.
The Investment Agreement contains certain standstill provisions, which will
remain in effect until at least January 27, 2006 (notwithstanding the earlier
termination of the Investment Agreement). The Investment Agreement provides
that, unless approved by a majority of the board of directors of Acrodyne that
includes both independent directors, Sinclair may not own more than 2,231,333
shares of common stock, not including the Warrant Shares. The foregoing
restriction does not apply, however, during the time in which any person
unaffiliated with Sinclair has commenced and is continuing a tender offer
involving Acrodyne's securities or has both made a public announcement
regarding, and is pursuing, any form of acquisition of Acrodyne. The Investment
Agreement further provides that, unless approved by a majority of the board of
directors of Acrodyne that includes both independent directors, or as otherwise
allowed in the Investment Agreement, neither Sinclair, Mr. Mancuso or their
affiliates may (i) commence a proxy solicitation, (ii) form a group within the
meaning of Section 13(d)(3) of the Act, (iii) deposit common stock in a voting
trust or otherwise enter into a voting agreement, (iv) initiate a stockholder
proposal, (v) seek election to the Board of Directors, or seek to remove
directors, (vi) call a meeting of shareholders, (vii) solicit or negotiate with
any third party regarding a business combination with Acrodyne, or (viii)
encourage any third party to take any of the foregoing actions.
The Investment Agreement also grants Sinclair a right of first refusal to
purchase, or arrange for a third party to purchase, any or all of Mr. Mancuso's
shares at the same price and on the same terms and conditions as any bona fide
offer which Mr. Mancuso receives from a third party and wishes to accept.
Sinclair has thirty days from receipt of notice from Mr. Mancuso within which to
exercise its rights. If Sinclair does not exercise its rights, Mr. Mancuso is
free to sell his shares to the third party offeror at a price and on terms no
less favorable than those contained in the original offer. If any of Mr.
Mancuso's shares are publicly resalable, then he may freely sell up to 10,000 of
them in any calendar quarter through a broker or market maker and, for
transactions over 10,000, Sinclair must exercise its right of first refusal
within 24 hours of receipt of Mr. Mancuso's notice.
<PAGE>
Page 9 of 11
Under the Letter Agreement between Sinclair and Acrodyne dated November 23,
1998, Acrodyne undertakes to issue additional shares of common stock or warrants
to Sinclair if Acrodyne's representations and warranties in the Subscription
Agreement regarding capital stock are inaccurate. The intent expressed in the
Letter Agreement is to ensure Sinclair receives sufficient shares and warrants
to reflect the parties' understanding as to the percentage ownership of the
stock of Acrodyne that Sinclair is acquiring pursuant to the Subscription
Agreement.
<PAGE>
Page 10 of 11
Item 7. Material to Be Filed as Exhibits.
- ------------------------------------------
(1) Subscription Agreement dated November 23, 1998 by and between Sinclair
Broadcast Group, Inc. and Acrodyne Communications, Inc.*
(2) Investor Warrant dated January 27, 1999 to purchase 2,000,000 shares of
common stock of Acrodyne Communications, Inc. issued to Sinclair Broadcast
Group, Inc.*
(3) Anti-Dilution Warrant dated January 27, 1999 to purchase 719,225 shares
of common stock of Acrodyne Communications, Inc. issued to Sinclair Broadcast
Group, Inc.*
(4) Bonus Warrant dated January 27, 1999 to purchase 6,000,000 shares of
common stock of Acrodyne Communications, Inc. issued to Sinclair Broadcast
Group, Inc.*
(5) Investment Agreement dated January 27, 1999 by and among Sinclair
Broadcast Group, Inc., Acrodyne Communications, Inc., and A. Robert Mancuso
relating to certain corporate governance and voting rights for shares of
Acrodyne.*
(6) Letter Agreement dated November 23, 1998 by and between Sinclair
Broadcast Group, Inc. and Acrodyne Communications, Inc. regarding issuance of
additional shares and warrants to remedy any breach of the capital stock
representations and warranties in the Subscription Agreement.
- ------------------------
*Incorporated by reference from exhibits to the Proxy Statement for Acrodyne
Communications, Inc. filed pursuant to Schedule 14A on December 28, 1998.
<PAGE>
Page 11 of 11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 5, 1999 Sinclair Broadcast Group, Inc.
Baltimore, Maryland
By: /s/ David B. Amy
------------------------
David B. Amy
Chief Financial Officer
EXHIBIT 6
SINCLAIR BROADCAST GROUP, INC.
2000 W. 41st Street
Baltimore, Maryland 21211
Phone: (410) 467-4545 Fax: (410) 467-5043
November 23, 1998
Acrodyne Communications, Inc.
516 Township Line Road
Blue Bell, Pennsylvania 19422
Attn: Mr. A. Robert Mancuso
Dear Mr. Mancuso:
Reference is hereby made to that certain Subscription Agreement by and
between Sinclair Broadcast Group, Inc. ("SBG") and Acrodyne Communications, Inc.
(the "Company"), dated as of November 23, 1998 (the "Subscription Agreement").
Capitalized terms used herein, but not otherwise defined herein, shall have the
meanings assigned to such terms under the Subscription Agreement. This Letter
Agreement is intended to be, and shall be, legally binding upon the parties
hereto.
The purpose of this Letter Agreement is to supplement certain provisions of
the Subscription Agreement and to sent forth certain understandings with respect
thereto, and shall be considered as part of the Subscription Agreement.
1. ISSUANCE OF ADDITIONAL SHARES TO SBG. The capitalization of the Company
and the Company's representations and warranties as to the capitalization of the
Company are set forth in Schedule 4(d) and Section 4(d),respectively, of the
Subscription Agreement. The Company believes that the representations and
warranties set forth in Section 4(d) and Schedule 4(d) of the Subscription
Agreement are true and correct. In the event, however, that it is determined
that either the representations and warranties set forth in Section 4(d) or the
capitalization schedule set forth on Schedule 4(d) are inaccurate to the extent
they fail to reflect the total issued and outstanding common stock, stock
options and warrants (such outstanding stock options and warrants collectively,
the "Convertible Securities"), the Company hereby agrees to issue to SBG
additional shares of common stock (or, if the inaccuracy is with respect to the
Convertible Securities), warrants exercisable for common stock on substantially
the same terms as the Anti-Dilution Warrant of the Company sufficient to reflect
the parties' understanding as to the percentage ownership of the stock of the
Company SBG is acquiring under the terms and conditions of the Subscription
<PAGE>
Acrdyne Communications, Inc.
November 23, 1998
Page 2 of 3
Agreement. The issuance to SBG of additional common stock or warrants, as the
case mat be, pursuant to the terms of this Letter Agreement shall be without
cost to SBG.
Except as supplemented hereby, the Subscription Agreement and each of the
Annexes, Schedules, Exhibits, Certificates or other documents thereof or
delivered in connection therewith are affirmed and restated.
If the foregoing accurately reflects your understanding and constitutes an
agreement, please sign below, evidencing your acceptance and agreement with the
foregoing, and return one copy of this Letter Agreement to the undersigned. This
Letter Agreement may be signed in counterparts, all of which taken together
shall constitute an instrument, and any of the parties hereto may execute this
Letter Agreement by signing any such counterpart.
[REST OF PAGE INTENTIONALLY BLANK
SIGNATURES ON FOLLOWING PAGE]
<PAGE>
Acrdyne Communications, Inc.
November 23, 1998
Page 3 of 3
Very truly yours,
SINCLAIR BROADCAST GROUP, INC.
By: /s/ Patrick J. Talamantes
--------------------------
Name: Patrick J. Talamantes
------------------------
Title: TREASURER
-----------------------
The terms of the foregoing Letter Agreement are agreed to and accepted as
of the date of this Letter Agreement:
ACRODYNE COMMUNICATIONS, INC.
By: /s/ A. Robert Mancuso
--------------------------
Name: A. Robert Mancuso,
Chairman and President
