As filed with the Securities and Exchange Commission on April 16,
1997.
Registration No. 333-24591
======================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM S-3
AMENDMENT No. 1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________________
AYDIN CORPORATION
__________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2633708
_______________________________ _____________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700 Dresher Road, Horsham, Pennsylvania 19044; (215) 657-7510
__________________________________________________________________
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
___________________
I. Gary Bard, Chairman of the Board,
President and Chief Executive Officer
Aydin Corporation
700 Dresher Road
P.O. Box 349
Horsham, PA 19044
(215) 657-7510
__________________________________
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
__________________________________
Copy to:
Robert A. Clancy, Esquire
Secretary and Corporate Counsel
Aydin Corporation
700 Dresher Road
P.O. Box 349
Horsham, PA 19044
__________________________________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. ___
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. _X_
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. ___
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. ___
__________________________________
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933, or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation to buy nor shall there
be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
PROSPECTUS
596,927 Shares
AYDIN CORPORATION
Common Stock, $1.00 par value
___________________________
This Prospectus relates to 596,927 shares of Common Stock (the
"Shares"), $1.00 par value, of Aydin Corporation (the "Company")
beneficially owned by EA Industries, Inc. (the "Selling
Stockholder"). The Shares represent approximately 11.5% of the
outstanding shares of Common Stock of the Company. The Shares may
be sold pursuant to the exercise of an option (the "EA Option")
that EA has granted to I. Gary Bard, the Chairman, President and
Chief Executive Officer of the Company, or his assigns, pursuant to
which Mr. Bard or his assigns have the right to purchase all of the
Shares for a purchase price of $11 per Share. The latest date on
which the EA Option may be exercised is June 2, 1997 (the
"Expiration Time"), unless it is extended. The Shares may be
offered and sold pursuant to this Prospectus to Mr. Bard or to
assignees of Mr. Bard, such as institutional or other sophisticated
investors, who agree to purchase the EA Shares at the EA Option
exercise price.
If the Shares are not sold to Mr. Bard or his assigns upon exercise
of the EA Option, prior to the expiration date thereof, the Shares
may thereafter be sold from time to time by the Selling
Stockholder, or by pledgees, donees, transferees or other
successors in interest to the Selling Stockholder, at public or
private sale at prevailing market prices, prices related to
prevailing market prices, negotiated prices or fixed prices (and,
in the case of sales through brokers, upon payment of normal
brokerage commissions).
The Common Stock of the Company is traded on the New York
Stock Exchange under the symbol "AYD." The last reported sale
price of the Common Stock on the New York Stock Exchange on
April 2, 1997 was $11.125 per share.
The Company will not receive any of the proceeds from the sale
of the Shares offered hereunder by the Selling Stockholder.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________________
See "Risk Factors" beginning on page 2 for a discussion of
certain factors that should be considered by prospective purchasers
of the securities offered hereby.
_____________________________
This Prospectus does not constitute an offer to sell
securities in any jurisdiction to any person to whom it is unlawful
to make such offer in such jurisdiction.
No person has been authorized by the Company to give any
information or to make any representations, other than as contained
in this Prospectus, and, if given or made, such information or
representations must not be relied upon.
Neither delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since
the date hereof.
_____________________________
The date of this Prospectus is April 16, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other informa-
tion can be inspected and copied at the offices of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the following regional offices of the
Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048; and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. In addition, the
Commission maintains a Web site that contains such materials at
http://www.sec.gov. The Company's Common Stock is listed on the
New York Stock Exchange, 20 Broad Street, New York, New York 10005,
and such reports, proxy statements and other information concerning
the Company can be inspected at such Exchange.
The Company has filed with the Commission a Registration
Statement (which term shall include all amendments, exhibits and
schedules thereto) on Form S-3 under the Securities Act of 1933
(the "Securities Act") with respect to the Shares offered hereby.
This Prospectus does not contain all the information set forth in
the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements made in this Prospectus
as to the contents of any document referred to are not necessarily
complete. With respect to each such document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for
a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such
reference.
The Company will provide without charge to each person to whom
a Prospectus is delivered, upon the written or oral request of any
such person, a copy of any or all of the documents incorporated by
reference herein, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein. Such
requests should be addressed to: Secretary, Aydin Corporation, 700
Dresher Road, P.O. Box 349, Horsham, Pennsylvania 19044; telephone:
(215) 657-7510.
<PAGE>
RISK FACTORS
This Prospectus, including certain documents incorporated by
reference herein, contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 and the Securities Act of 1933 (the "Securities Act").
Actual results could differ materially from those projected in the
forward-looking statements as a result of certain of the risk
factors set forth below and certain other factors set forth
elsewhere in this Prospectus. In addition to the other information
contained and incorporated by reference in this Prospectus, the
following risk factors should be considered carefully in evaluating
the Company and its business before purchasing the Shares offered
hereby.
Losses for the Most Recent Fiscal Year; Decline in Sales. The
Company incurred a net loss of approximately $14.8 million for the
year ended December 31, 1996. Net sales for 1996 of $117 million
declined by 17% from 1995 sales of $141 million. While the Company
is attempting to broaden its customer base and has sought to
restructure certain parts of the Company's operations, there is no
assurance that the Company will be successful in this effort or
that profitability will return in the near future.
Foreign Operations and Export Sales. The Company's domestic
operations include significant sales derived from customers or
projects located outside of the United States. For the year ended
December 31, 1996, approximately $47.5 million, or 40.7%, of the
Company's sales revenues were from foreign operations and exports.
The Company and its foreign subsidiaries may be adversely affected
by certain risks generally associated with foreign contracts and
operations, including ownership and control limitations, currency
fluctuations, repatriation of profits, enforcement of judgments,
late delivery penalties, potential political or labor instability
and general worldwide economic conditions. The Company has
generally been able to protect itself against foreign credit risks
and currency fluctuations through contract provisions that provide
in most circumstances for payments in U.S. currency, advance
payments, irrevocable letters of credit and price adjustments for
inflation. Furthermore, contract provisions and treaty
arrangements between the United States and certain foreign
governments provide for certain protections with respect to
repatriation of profits and enforcement of judgments. There can be
no assurance, however, that the foregoing steps and protections
will be adequate to prevent future adverse effects associated with
such foreign operations and exports.
Defense Cutbacks and Cancellation of Contracts at the Option
of Governments. For the year ended December 31, 1996, sales to the
U.S. Government (direct and indirect), principally the Department
of Defense, amounted to approximately $38.7 million, or
approximately 33% of the Company's net sales, a decline from
approximately $44.3 million for the year ended December 31, 1995.
The U.S. Government has made cutbacks in military spending in
recent years and may reduce military expenditures further in the
future, which may adversely affect the Company's business. All
contracts with the U.S. Government and some foreign governments are
subject to cancellation at the convenience of such government and
such cancellations may adversely affect the Company's business.
Competition. The market for communications products and
systems is highly competitive and is characterized by continuing
advances in products and technologies. In general, some of the
Company's competitors have greater financial, technical and
marketing resources than the Company. The Company's business,
operating results and financial condition could be materially
adversely affected by such competition.
Working Capital Requirements; Cash Flow. The Company has
financed its operations over the past two years from internal cash
sources because of the limited availability of outside cash
borrowing sources. At December 31, 1996, there was $2.8 million of
short-term cash borrowings outstanding with no current availability
for further cash borrowings. Also, at December 31, 1996, there was
a letter of credit balance of $13.9 million issued against a $49
million advance payment received in 1990 in connection with a
contract from the Government of Turkey. Offsetting the $13.9
million balance was $7.6 million of cash collateral. This letter
of credit is currently being renewed in four-month intervals or
until it reaches zero, whichever comes first. The Company
anticipates that the letter of credit will reach zero during the
second half of 1998. Although there can be no assurance that this
letter of credit will continue to be renewed, management believes
that the letter of credit will be renewed upon its current
expiration and thereafter. The Company is currently seeking new
banking arrangements on terms acceptable to the Company to
supplement internally generated cash flows in meeting future
potential operating requirements. The Company anticipates that its
near-term cash requirements (in addition to renewed short-term
financing requirements) can be financed through internally
generated cash flows. Substantial amounts of cash flows are
expected from certain of the Company's largest current long-term
type contracts on which significant progress toward completion is
expected in 1997. However, if the Company is unable to meet
delivery deadlines or is unable to complete new banking
arrangements on terms acceptable to the Company, cash flow will be
negatively impacted, which could negatively impact the Company's
financial condition and operations.
New Management. Since May 1996, the Company has retained a
new Chairman of the Board, President and Chief Executive Officer, a
new Chief Financial Officer and, later in 1996, a new Vice
President and President of the Aydin Communications Systems Group
and a Vice President of Business Development and International
Sales. Although the new management team has extensive experience,
except for Mr. Bard, it has limited experience with the Company's
products and customers. The Company's future operations will be
substantially dependent on such new management personnel.
THE COMPANY
The Company is a Delaware corporation incorporated in
September 1967. Its principal executive offices are located at 700
Dresher Road, P.O. Box 349, Horsham, Pennsylvania 19044 and its
telephone number is (215) 657-7510.
<PAGE>
SELLING STOCKHOLDER
The Shares of the Company's Common Stock covered by this
Prospectus (the "Shares") are, or may be, offered by the Selling
Stockholder. The Selling Stockholder has been a beneficial owner
of more than 10% of the outstanding shares of the Company's Common
Stock since May 1996, and Irwin L. Gross, Chairman of the Selling
Stockholder, is a director of the Company.
The following table sets forth the Selling Stockholder's name
and address, the number of shares of the Company's Common Stock
owned by the Selling Stockholder prior to the offering made under
this Prospectus, the number of shares to be offered for the account
of the Selling Stockholder and the number of shares and percentage
of the outstanding shares of the Company's Common Stock to be
beneficially owned by the Selling Stockholder upon the sale of the
Shares:
<TABLE>
<CAPTION>
Common Stock
To
Be Beneficially
Owned If All Shares
Common Stock
That May Be
Beneficially Owned
Offered Hereunder
On March 31, 1997 Shares That Are
Sold
__________________ May Be Offered
___________________
Name Shares Percent Hereunder
Shares Percent
______________ _______ ________ ________________
_______ _______
<S> <C> <C> <C> <C>
<C>
EA Industries, Inc.
185 Monmouth Parkway
West Long Branch, NJ 07764 596,927 11.5% 596,927
0 0%
</TABLE>
The EA Option was granted pursuant to a letter agreement
between the Selling Stockholder and the Company dated February 25,
1997 (the "Letter Agreement") in response to the Selling
Stockholder's request that the Company cause the Shares to be to be
registered for sale under the Securities Act pursuant to certain
demand registration rights granted to the Selling Stockholder under
a Registration Rights Agreement dated January 1997 between the
Selling Stockholder and the Company.
Under the Letter Agreement, if Mr. Bard or his assigns
exercise the EA Option in full prior to the Expiration Time, the
Company and the Selling Stockholder have agreed that upon
consummation of the exercise of the Option: (i) the Company will
issue to the Selling Stockholder a warrant (the "Warrant") to
purchase up to 200,000 shares (the "Warrant Shares") of Common
Stock of the Company exercisable for three years, of which 100,000
Warrant Shares would be exercisable at a price of $12.10 per share
and 100,000 Warrant Shares would be exercisable at a price of
$13.20 per share; (ii) the Company will enter into a new
registration rights agreement with the Selling Stockholder with
respect to the Warrant Shares, (iii) the Selling Stockholder will
agree to serve as a consultant to the Company during the three-year
term of the Warrant for the purpose of providing such assistance to
the Company in soliciting customers internationally and exploring
strategic joint ventures as the Selling Stockholder and the Company
mutually deem appropriate in their reasonable discretion; and (iv)
Irwin L. Gross, Chairman of the Selling Stockholder and a director
of the Company, will resign as a director of the Company. If the
EA Option is not exercised in full prior to the Expiration Time,
the foregoing provisions described in this paragraph will become
null and void.
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold pursuant to the exercise of the EA
Option, pursuant to which Mr. Bard or his assigns have the right to
purchase all of the Shares for a purchase price of $11 per Share.
The latest date on which the EA Option may be exercised is June 2,
1997, unless it is extended. The Shares may be offered and sold
pursuant to this Prospectus to Mr. Bard or his assigns, such as
institutional or other sophisticated investors, who agree to
purchase the Shares at the $11 exercise price.
The Company has been advised that if the Shares are not sold
pursuant to the EA Option, the distribution of the Shares by the
Selling Stockholder, or pledgees, donees or transferees of or other
successors in interest to the Selling Stockholder, may be effected
from time to time in one or more transactions (which may involve
block transactions) on the New York Stock Exchange or such other
exchange or market on which the Common Stock may from time to time
be traded, in negotiated transactions or in a combination of any
such transactions. Such transactions may be effected by the
Selling Stockholder at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The Selling Stockholder may
effect such transactions by selling Shares to or through broker-
dealers, including purchases by a broker-dealer as principal and
resale by such broker-dealer for its account pursuant to this
Prospectus. Such broker-dealers will receive compensation in the
form of discounts or commissions from the Selling Stockholder and
may receive commissions from the purchasers of Shares for whom such
broker-dealers may act as agents (which discounts or commissions
from the Selling Stockholder or such purchasers, if in excess of
those customary for the types of transactions involved, will be
disclosed in a supplemental prospectus).
Any broker-dealer that participates with the Selling
Stockholder in the distribution of Common Stock may be deemed to be
an "underwriter" within the meaning of the Securities Act, and any
commissions or discounts received by such broker-dealer and any
profit on the resale of Shares by such broker-dealer may be deemed
to be underwriting discounts and commissions under the Securities
Act.
The costs and expenses of the registration of the Shares,
except for underwriting or selling discounts or commissions, will
be paid by the Company. The costs and expenses borne by the
Company will include, without limitation, all registration and
filing fees, legal and accounting fees, printing expenses and costs
of special audits incident to or required by the registration of
the Shares.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale
of the Shares offered hereunder by the Selling Stockholder.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission
by the Company are incorporated by reference herein:
(a) The Company's Annual Report on Form 10-K for the year
ended December 31, 1996 filed with the Commission on March 31, 1997
by the Company pursuant to Section 13(a) of the Exchange Act.
(b) The Company's definitive proxy statement filed with the
Commission on March 27, 1997 pursuant to Section 14(a) of the
Exchange Act in connection with the Company's 1997 Annual Meeting
of Stockholders to be held on April 25, 1997.
(c) The Company's Registration Statement, File No. 1-7203, as
amended, filed under Section 12(b) of the Exchange Act, containing
a description of the Common Stock of the Company.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the termination of the offering of the Shares covered by this
Prospectus shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of the filing
of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which is also or is deemed to
be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
The Company will provide without charge to each person to whom
this Prospectus is delivered, upon the request of such person, a
copy of any or all of the documents incorporated herein by
reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference herein). Such
requests should be addressed to: Robert A. Clancy, Secretary and
Corporate Counsel, Aydin Corporation, 700 Dresher Road, P.O. Box
349, Horsham, PA 19044; telephone: (215) 657-7510.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby has
been passed upon for the Company by Robert A. Clancy, Corporate
Counsel and Secretary of the Company.
EXPERTS
The consolidated financial statements and schedule of the
Company at December 31, 1996 and 1995, and for each of the three
years in the period ended December 31, 1996, appearing in the
Company's Annual Report on Form 10-K for the year ended December
31, 1996, incorporated by reference in this Prospectus have been
audited by Grant Thornton LLP, independent accountants, to the
extent and for the periods set forth in their reports incorporated
herein by reference, and are incorporated herein in reliance on
such reports given upon the authority of such firm as experts in
accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration fee .................$ 2,035
Legal fees and expenses.............6,000*
Accountants' fees and expenses......4,000*
Miscellaneous....................... 500*
________
Total $12,535*
=========
*Estimated.
The Company will bear all of the foregoing expenses.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware empowers a Delaware corporation to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
In the case of an action or suit by or in the right of the
corporation to procure a judgment in its favor, Section 145
empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by reason of the fact that he
is or was acting in any of the capacities set forth above against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation, except that indemnification is not permitted in
respect of any claim, issue or matter as to which such person is
adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery of the State
<PAGE>
of Delaware or the court in which such action or suit was brought
determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court deems
proper.
Section 145 further provides: that a Delaware corporation is
required to indemnify a director, officer, employee or agent
against expenses (including attorneys' fees) actually and
reasonably incurred by him in defense of any action, suit or
proceeding referred to above or in defense of any claim, issue or
matter therein to the extent that such person has been successful
on the merits or otherwise; that the indemnification provided for
by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; that the
indemnification provided for by Section 145 shall, unless otherwise
provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of such person's heirs, executors and
administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any
liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under Section 145. A Delaware corporation may provide
indemnification only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met
the applicable standard of conduct. Such determination is to be
made (i) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit
or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or (iii) by the
stockholders.
Article VII, Section 7 of the Company's By-Laws provides for
indemnification of directors and officers of the Company to the
fullest extent permitted by the General Corporation Law of the
State of Delaware, as presently or hereafter in effect.
The Company provides liability insurance for each director and
officer for certain losses arising from claims or charges made
against them while acting in their capacities as directors or
officers of the Company up to an aggregate of $5,000,000 inclusive
of defense costs, expenses and charges.
Additionally, Article SIXTH of the Company's Restated
Certificate of Incorporation limits the liability of the Company's
directors to the fullest extent permitted by Section 102(b)(7) of
the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented. Section 102(b)(7) permits the
certificate of incorporation of a Delaware corporation to include a
provision eliminating or limiting the personal liability of a
director of a corporation to the corporation or its stockholders
for monetary damages for breach of his fiduciary duty as a
director; provided, however, that the provision may not eliminate
or limit the liability of a director for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders;
(ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) the
unlawful payment of dividends or unlawful purchase or redemption of
<PAGE>
stock under Section 174 of the General Corporation Law of the State
of Delaware; or (iv) any transaction from which the director
derived an improper personal benefit.
Item 16. Exhibits.
Exhibit No. Exhibit
3.1 Restated Certificate of Incorporation (filed as
Exhibit No. 3(i) to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
3.2 By-Laws (filed as Exhibit No. 3(ii) to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1996 and incorporated herein by
reference).
4.1 Option Agreement dated as of February 25, 1997
between EA Industries, Inc. and I. Gary Bard and
assigns, and Extension to Option Agreement dated
March 19, 1997. (Filed with initial filing.)
4.2 Letter Agreement dated February 25, 1997 between EA
Industries, Inc. and Registrant, with appendices.
(Filed with initial filing.)
4.3 Registration Rights Agreement dated January 1997
between Registrant and EA Industries, Inc. (Filed
with initial filing.)
5. Opinion and Consent of Robert A. Clancy, Esquire,
Counsel to the Registrant with respect to the
Securities being registered. (Filed with initial
filing.)
Management Contracts
---------------------
10.1 Employment Agreement, I. Gary Bard (filed as Exhibit
No. 10.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 28, 1996 and
incorporated herein by reference).
10.2 Employment Agreement, Klaus D. Oebel (filed as
Exhibit No. 10.2 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996
and incorporated herein by reference).
10.3 Employment Agreement, H. Barry Maser (filed as
Exhibit No. 10.3 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996
and incorporated herein by reference).
<PAGE>
10.4 Employment Agreement, James R. Henderson (filed as
Exhibit No. 10.4 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996
and incorporated herein by reference).
10.5 The 1995 Incentive Stock Option Plan, as amended,
(filed as Exhibit No. 10.5 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1996 and incorporated herein by reference).
10.6 The 1996 Equity Incentive Plan, as amended, (filed
as Exhibit No. 10.6 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference).
10.7 Restricted Stock Agreement, Klaus D. Oebel, dated
October 8, 1996 (filed as Exhibit No. 10.7 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
10.8 Restricted Stock Agreement, H. Barry Maser, dated
October 8, 1996 (filed as Exhibit No. 10.8 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
10.9 Consulting Agreement, Ayhan Hakimoglu, dated May 1,
1996 (filed as Exhibit No. 10.9 to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1996 and incorporated herein by
reference).
10.10 Restrictive Covenant Agreement, Ayhan Hakimoglu,
dated May 1, 1996 (filed as Exhibit No. 10.10 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
10.11 Resignation Agreement, Donald S. Taylor, dated
September 13, 1996 (filed as Exhibit No. 10.11 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
21.1 Subsidiaries of Registrant (filed as Exhibit No. 21
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein
by reference).
23.1 Consent of Company Counsel is contained in his
Opinion filed as Exhibit 5.
23.2 Consent of Independent Auditors, Grant Thornton LLP.
24.1 Power of Attorney. (Incorporated by reference to page
II-7 of initial filing.)
99.1 Form of Option Assignment Agreement.
99.2 Form of Escrow Agreement.
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a) to file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to include any additional or changed material information
on the plan of distribution:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement, or
the most recent post-effective amendment hereto, which individually
or in the aggregate, represents a fundamental change in the
information set forth in this Registrational Statement; and
(iii) to include any additional or changed material
information on the plan of distribution;
provided, however, that the undertakings set forth in paragraphs
(i) and (ii) above shall not apply if the information required to
be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement;
(b) that, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment is a new
registration statement of the securities offered, and the offering
of the securities at that time to be deemed the initial bona fide
offering thereof; and
(c) to remove from registration by means of a post-effective
amendment any of the securities which remain unsold at the
termination of the offering.
The undersigned registrant hereby further undertakes that for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated
by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling
person of the
<PAGE>
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Horsham,
Pennsylvania on April 16, 1997.
AYDIN CORPORATION
By: /s/ I. Gary Bard
I. Gary Bard
Chief Executive Officer, President and
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ I. Gary Bard Chief Executive Officer, April 16, 1997
I. Gary Bard President and Chairman of
the Board of Directors
(principal executive officer)
* Executive Vice President April 16, 1997
John F. Vanderslice and Director
* Vice President, Treasurer April 16, 1997
James R. Henderson and Chief Financial Officer
(principal financial officer)
* Controller and Assistant April 16, 1997
Herbert Welber Treasurer
(principal accounting officer)
* Director April 16, 1997
Nev A. Gokcen
____________________ Director _____________
Irwin L. Gross
* Director April 16, 1997
Gary Mozenter
* Director April 16, 1997
Harry D. Train, II
(*) By: /s/ Robert A. Clancy
Robert A. Clancy
Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit No. Exhibit
3.1 Restated Certificate of Incorporation (filed as
Exhibit No. 3(i) to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
3.2 By-Laws (filed as Exhibit No. 3(ii) to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1996 and incorporated herein by
reference).
4.1 Option Agreement dated as of February 25, 1997
between EA Industries, Inc. and I. Gary Bard and
assigns, and Extension to Option Agreement dated
March 19, 1997. (Filed with initial filing.)
4.2 Letter Agreement dated February 25, 1997 between EA
Industries, Inc. and Registrant, with appendices.
(Filed with initial filing.)
4.3 Registration Rights Agreement dated January 1997
between Registrant and EA Industries, Inc. (Filed
with initial filing.)
5 Opinion and Consent of Robert A. Clancy, Esquire,
Counsel to the Registrant with respect to the
securities being registered. (Filed with initial
filing.)
Management Contracts
--------------------
10.1 Employment Agreement, I. Gary Bard (filed as Exhibit
No. 10.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 28, 1996 and
incorporated herein by reference).
10.2 Employment Agreement, Klaus D. Oebel (filed as
Exhibit No. 10.2 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996
and incorporated herein by reference).
10.3 Employment Agreement, H. Barry Maser (filed as
Exhibit No. 10.3 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996
and incorporated herein by reference).
10.4 Employment Agreement, James R. Henderson (filed as
Exhibit No. 10.4 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996
and incorporated herein by reference).
<PAGE>
10.5 The 1995 Incentive Stock Option Plan, as amended,
(filed as Exhibit No. 10.5 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1996 and incorporated herein by reference).
10.6 The 1996 Equity Incentive Plan, as amended, (filed
as Exhibit No. 10.6 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference).
10.7 Restricted Stock Agreement, Klaus D. Oebel, dated
October 8, 1996 (filed as Exhibit No. 10.7 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
10.8 Restricted Stock Agreement, H. Barry Maser, dated
October 8, 1996 (filed as Exhibit No. 10.8 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
10.9 Consulting Agreement, Ayhan Hakimoglu, dated May 1,
1996 (filed as Exhibit No. 10.9 to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1996 and incorporated herein by
reference).
10.10 Restrictive Covenant Agreement, Ayhan Hakimoglu,
dated May 1, 1996 (filed as Exhibit No. 10.10 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
10.11 Resignation Agreement, Donald S. Taylor, dated
September 13, 1996 (filed as Exhibit No. 10.11 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by
reference).
21.1 Subsidiaries of Registrant (filed as Exhibit No. 21
to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein
by reference).
23.1 Consent of Company Counsel (included with option
filed as Exhibit 5 hereto).
23.2 Consent of Independent Auditors, Grant Thornton LLP.
24.1 Power of Attorney. (Incorporated by reference to page
II-7 of initial filing.)
99.1 Form of Option Assignment Agreement.
99.2 Form of Escrow Agreement.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We have issued our reports dated March 7, 1997 accompanying the
consolidated financial statements of Aydin Corporation and
subsidiaries appearing in the 1996 Annual Report of the Company to its
shareholders and accompanying the schedules included in the Annual
Report on Form 10-K for the year ended December 31, 1996 which are
incorporated by reference in this Registration Statement. We consent
to the incorporation by reference in the Registration Statement of the
aforementioned reports and to the use of our name as it appears under
the caption "Experts."
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
April 16, 1997
<PAGE>
Exhibit 99.1
FORM OF
OPTION ASSIGNMENT AGREEMENT
THIS OPTION ASSIGNMENT AGREEMENT is made as of the ___ day of
_______, 1997 by and between I. Gary Bard (the "Option Holder") and
the undersigned assignee (the "Subscriber").
BACKGROUND
WHEREAS, the Option Holder has entered into a Stock Option
Agreement dated February 25, 1997, as amended (the "Option
Agreement"), with EA Industries, Inc. ("EA") pursuant to which the
Option Holder has the option (the "Option") to purchase 596,927 shares
(the "Option Shares") of common stock (the "Common Stock") of Aydin
Corporation ("Aydin") held by EA for the purchase price of $11 per
share (the "Option Exercise Price"), which Option expires at 5:00p.m.,
Philadelphia time, on April 23, 1997 (the "Expiration Time").
WHEREAS, Aydin has filed a registration statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), which Registration Statement was declared
effective by the Securities and Exchange Commission on April 23, 1997;
WHEREAS, the Option Holder desires to assign his right to
purchase ________ Option Shares under the Option Agreement to the
undersigned Subscriber and the undersigned Subscriber agrees to accept
such assignment on the condition that the undersigned Subscriber
exercise such right;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and legal sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound,
agree as follows:
1. The Option Holder hereby assigns, transfers and sets over
unto Subscriber the right of the Option Holder to purchase _____
Option Shares (the "Shares") under the Option Agreement.
2. The Subscriber hereby accepts such assignment and agrees to
be bound by the terms and provisions of the Option Agreement.
3. The Subscriber acknowledges receipt of: copies of Aydin's
Prospectus dated April 16, 1997 filed under the Registration
Statement; Aydin's 10-K Annual Report for the year ended December 31,
1996; Aydin's 1996 Annual Report to Stockholders; and Aydin's proxy
materials in connection with Aydin's 1997 Annual Meeting of
Stockholders. The Subscriber further acknowledges that all documents,
records and books pertaining to the Subscriber's investment in the
Shares requested by the Subscriber have been made available by Aydin
and the Option Holder to the Subscriber and the Subscriber's
representatives, including legal counsel, and that in making the deci-
sion to purchase the Shares, the Subscriber and the Subscriber's rep-
resentatives have been given the opportunity to ask questions of and
to receive answers from Aydin concerning Aydin and to obtain any addi-
tional information that Aydin possesses or can acquire without unrea-
sonable effort or expense.
4. The Subscriber hereby agrees to exercise the right to buy
the Shares and in connection therewith, hereby delivers to the Option
Holder the following:
A. By wire transfer payable to "Duane, Morris &
Heckscher, Escrow Agent," $__________, an amount that is equal to the
number of Shares multiplied by the Option Exercise Price (the "Option
Funds"), the wire instructions for which purpose are attached hereto
as Exhibit A;
B. An executed Subscriber Signature Page to the Escrow
Agreement dated as of ___________, 1997 (the "Escrow Agreement") among
the Option Holder, Duane, Morris & Heckscher, as escrow agent (the
"Escrow Agent"), and the persons executing the Subscriber Signature
Pages thereto;
C. An executed Notice of Option Exercise addressed to EA
in the form attached hereto as Exhibit B (the "Exercise Notice").
The undersigned Subscriber further acknowledges that the Option Holder
will deliver the foregoing to the Escrow Agent, and that such amount
and documents will be held and released in accordance with the terms
of the Escrow Agreement.
5. The Subscriber agrees that the Escrow Agent may release the
Option Funds and the Exercise Notice of the Subscriber to EA in
accordance with the terms of the Option Agreement at any time prior to
the Expiration Time and deliver this Assignment to the Option Holder
if the Escrow Agent shall have received (i) Option Funds for the
purchase of all of the Option Shares and (ii) a statement (the
"Closing Statement") from the Option Holder directing the release of
the Option Funds and the Exercise Notices to EA and the delivery of
the Assignment Agreement to the Option Holder.
6. The Option Holder agrees that he will deliver the Closing
Statement upon receipt of (i) evidence satisfactory to the Option
Holder of the transfer by EA of all the Option Shares free and clear
of all liens, encumbrances, pledges and other security interests to
the Option Holder and the Subscribers, respectively, as the case may
be, and (ii) proxies executed by EA in facor of the Option Holder and
such Subscribers, respectively, in the form attached hereto as Exhibit
C authorizing the Option Holder and the Subscribers, as the case may
be, to vote their respective Option Shares at the 1997 Annual Meeting
of Stockholders of Aydin, if the closing of the Option exercise
precedes such meeting.
7. This Assignment may be executed in any number of
counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute one and the same agreement.
8. This Assignment shall be binding upon, and inure to the
benefit of, the parties and their respective successors and assigns.
9. Any notices, requests or instructions hereunder shall be in
writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, or by confirmed telecopy, or
delivered by a nationally recognized overnight delivery service to the
parties hereto at the following addresses, or such other respective
address as any party hereto may designate in writing from time to
time:
The Option Holder:
I. Gary Bard
700 Dresher Road
P.O. Box 349
Horsham, PA 19044
Telecopy No.: (215) 657-3830
The Subscriber: To the address set forth on the Subscriber's
respective Subscriber Signature Page to the Escrow Agreement.
10. In the event of the invalidity or unenforceability of any
part or provisions of this Agreement, such invalidity or
unenforceability shall not affect the validity or enforceability of
any other part or provision of this Agreement, and the remainder of
this Agreement shall continue in full force and effect in accordance
with its terms.
11. This Agreement shall be governed by the internal laws of the
State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Assignment as
of the day and year first above written.
I. Gary Bard
Subscriber's Name
Subscriber's Name (if more than one)
Subscriber's Signature
Subscriber's Signature
(if more than one)
<PAGE>
EXHIBIT A
ESCROW WIRE INSTRUCTIONS
Duane, Morris & Heckscher Escrow Account Wire Instructions:
Bank Name: CoreStates Bank
ABA#: 031000011
Account Name: Duane, Morris & Heckscher Escrow
Account No.: 82-11422603 Saving Account (Int. Bearing)
<PAGE>
EXHIBIT B
NOTICE OF OPTION EXERCISE
EA Industries, Inc.
441 North Fifth Street
Philadelphia, PA 19123
Attention: President
Gentlemen:
The undersigned, as an assignee of I. Gary Bard under the
Option Agreement dated February 25, 1997, as amended (the "Option
Agreement"), hereby notifies EA Industries, Inc. ("EA") of the
undersigned's exercise of options for the purchase of _________
shares (the "Shares") of common stock, $1.00 par value, of Aydin
Corporation pursuant to the terms of the Option Agreement. The
undersigned hereby tenders $__________ in full payment of the
exercise price for the Shares. The undersigned acknowledges that
the Shares have been registered under the Form S-3 Registration
Statement of Aydin Corporation, which has been declared effective
with the Securities and Exchange Commission.
IN WITNESS WHEREOF, and intending to be legally bound, the
undersigned has executed this Notice as of the date set forth
below.
Date: _______________
Name of Subscriber
By:
Title:
<PAGE>
EXHIBIT C
AYDIN CORPORATION
IRREVOCABLE PROXY
The undersigned hereby constitutes and irrevocably appoints
______________ (the "Transferee") proxy of the undersigned, with
full power of substitution, to vote __________ shares (the
"Shares") of Common Stock, par value $1.00 per share, of Aydin
Corporation (the "Company") that the undersigned may be entitled
to vote at the 1997 Annual Meeting of Stockholders of the Company
and for any other purpose for which a vote or consent with
respect to the Shares is to be taken. This proxy is being
granted pursuant to the transfer of the Shares by the undersigned
to the Transferee and, therefore, is coupled with an interest and
irrevocable.
Dated: April , 1997 EA INDUSTRIES, INC.
Attest:
By: By:
Title: Title:
<PAGE>
Exhibit 99.2
FORM OF
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") made this ____
day of ___________ 1997 among I. Gary Bard (the "Option
Holder"), each of the subscribers set forth on the attached
Subscriber Signature Pages hereto (the "Subscribers"), and
Duane, Morris & Heckscher (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Option Holder has entered into an Option
Agreement dated February 25, 1997, as amended (the "Option
Agreement"), with EA Industries, Inc. ("EA") pursuant to which
the Option Holder and his assigns have the option (the
"Option") to purchase from EA 596,927 shares (the "Shares") of
common stock, par value $1.00 per share, of Aydin Corporation
("Aydin") at a purchase price of $11.00 per share, which Option
expires at 5:00 p.m. Philadelphia time, on April 23, 1997 (the
"Expiration Time"); and
WHEREAS, the Option Holder has assigned portions of the
Option to the Subscribers, and the Subscribers have agreed to
deposit the pro rata portion of the Option purchase price to be
paid by each Subscriber (collectively, the "Option Funds"),
together with the accompanying assignment agreements (the
"Assignment Agreements") and option exercise notices (the
"Exercise Notices"), in escrow with the Escrow Agent to be held
and administered by the Escrow Agent as provided in this
Agreement; and
WHEREAS, if the full Option purchase price for all of the
Shares shall not have been received by the Escrow Agent by the
Expiration Time, the Escrow Agent shall promptly return to the
Subscribers all Option Funds received from the Subscribers
hereunder; and
WHEREAS, the Assignment Agreements provide that the Escrow
Agent may release the Option Funds and Exercise Notices to EA
Industries, Inc. in accordance with the terms of the Option
Agreement at any time prior to the Expiration Time and deliver
the Assignment Agreements to the Option Holder if at such time
the Escrow Agent shall have received (i) Option Funds for the
purchase of all of the Shares under the Option Agreement and
(ii) a statement from the Option Holder directing the release
of the Option Funds and the Exercise Notices to EA and the
delivery of the Assignment Agreements to the Option Holder; and
WHEREAS, the Escrow Agent has agreed to serve as Escrow
Agent for all Option Funds delivered to the Escrow Agent in
accordance with this Agreement;
NOW, THEREFORE, in consideration of the premises and
covenants contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Delivery of Option Funds. The Option Holder shall,
within one business day after receipt, deliver to the Escrow
Agent all Option Funds together with an executed copy of each
Assignment Agreement and Exercise Notice relating thereto. The
Escrow Agent shall furnish the Option Holder, with a receipt
for the Option Funds, Assignment Agreements and Exercise
Notices deposited with the Escrow Agent by the Option Holder,
and the Option Holder shall forward to each Subscriber a copy
of the Escrow Agent's receipt for such Subscriber's Option
Funds, Assignment Agreement and Exercise Notice.
2. Escrow. The Escrow Agent agrees to hold all Option
Funds received by it from the Option Holder or directly from
the Subscribers, as the case may be, in an escrow account
established by the Escrow Agent at an institution chosen by the
Escrow Agent and to hold all Assignment Agreements and Exercise
Notices in its custody. The Assignment Agreements, Exercise
Notices and the Option Agreement shall not be binding upon the
Escrow Agent and the Assignment Agreements, Exercise Notices
and the Option Agreement shall not create any duties or
obligations of the Escrow Agent whose only duties and
obligations shall be those set forth in this Agreement.
3. Investment of Option Funds. Pending the disposition
of the Option Funds by the Escrow Agent as provided in this
Agreement, the Escrow Agent agrees to hold the Option Funds in
an interest-bearing account at the institution chosen under
paragraph 2 above.
4. Disposition of Option Funds, Exercise Notices and
Assignment Agreements.
(a) If on or before the Expiration Time, the Option
Holder shall receive (i) Option Funds for all of the Shares
purchasable under the Option Agreement, (ii) fully executed
Exercise Notices and Assignment Agreements, (iii) evidence
satisfactory to the Option Holder of the transfer of the Shares
by EA to the respective Subscribers; and (iv) irrevocable
proxies from EA in favor of the respective Subscribers
authorizing the Subscribers to vote the respective Shares at
Aydin's 1997 Annual Meeting of Stockholders, if the
consummation of the Option exercise precedes such meeting, the
Option Holder shall deliver to the Escrow Agent a certificate
as to the receipt thereof, accompanied by a letter of
instructions to release the Option Funds and Exercise Notices
to EA and the Assignment Agreements to the Option Holder,
whereupon the Escrow Agent shall forthwith release to EA all
Option Funds and Exercise Notices held by the Escrow Agent and
deliver to the Option Holder all Assignment Agreements held by
the Escrow Agent. All interest earned on the Option Funds -
shall be returned pro rata to each Subscriber, less only that
portion of the fees and expenses of the Escrow Agent as
provided herein as equals the percentage that the Option Funds
of such Subscriber bears to the Option Funds of all Subscribers
held in escrow.
(b) If on or before the Expiration Time, the Option
Holder shall not have received Option Funds for at least
596,927 Shares, the Option Holder shall deliver to the Escrow
Agent a certificate to such effect. Upon receipt by the Escrow
Agent of such certificate from the Option Holder, or if no
certificate of the Option Holder is received by the Escrow
Agent by the close of business of the first business day
following the Expiration Time, the Escrow Agent shall promptly
thereafter return to each Subscriber his Assignment Agreement
and Exercise Notice and refund to each Subscriber his Option
Funds deposited with the Escrow Agent, together with the inter-
est earned on such Subscriber's Option Funds, less only that
portion of the fees and expenses of the Escrow Agent as
provided herein as equals the percentage that the Option Funds
of such Subscriber bears to the Option Funds of all Subscribers
held in escrow.
5. Provisions Concerning the Escrow Agent.
(a) The Escrow Agent shall not be paid a fee for its
services hereunder unless the Escrow Agent is required to
report to the Internal Revenue Service the interest earned on
the Option Funds, in which event the Escrow Agent shall be paid
a service fee of $1,000. The Escrow Agent shall also be
entitled to reimbursement for the reasonable expenses,
including reasonable attorneys' fees, incurred by it in the
performance of its obligations hereunder. The Escrow Agent
shall be entitled to employ such legal counsel and other
experts as it may deem necessary to advise it properly in
connection with its obligations hereunder and may rely on the
advice of such counsel, and may pay them reasonable
compensation therefor. All fees and expenses of the Escrow
Agent and such legal counsel and other experts shall be borne
by the Option Holder and the Subscribers as provided herein.
(b) Notwithstanding any other provision herein
contained, the Escrow Agent may at all times act upon and in
accordance with the written instructions of the Option Holder.
The Escrow Agent shall not be liable for any act done or
omitted by it in accordance with such instructions or the
exercise of its own best judgment or pursuant to the advice of
counsel of its selection.
(c) The duties and responsibilities of the Escrow
Agent shall be limited to those expressly set forth in this
Agreement and instructions given to the Escrow Agent pursuant
to this Agreement, and the Escrow Agent shall not be subject
to, nor obligated to recognize, any other agreement between any
or all of the parties hereto even though reference thereto may
be made herein or a copy thereof furnished to the Escrow Agent,
and the Escrow Agent shall have no responsibility or liability
to any other party hereto with respect to the performance of
any such other agreement; provided, however, that this
Agreement may be amended at any time or times by an instrument
in writing signed by the Option Holder and the Escrow Agent.
(d) The Escrow Agent shall not be responsible for
the sufficiency or accuracy of the form, execution, validity or
genuineness of documents or securities now or hereafter
deposited hereunder, or for any lack of endorsement thereon, or
for any description therein, nor shall it be responsible or
liable in any respect on account of the identity, authority or
rights of the persons executing or delivering or purporting to
execute or deliver any such document, security or endorsement
or this Agreement, and the Escrow Agent shall be fully
protected in relying upon any written notice, demand,
certificate or document which it in good faith believes to be
genuine.
(e) The Escrow Agent is authorized, in its sole
discretion, to disregard any and all notices or instructions
given by any of the undersigned or by any other person, firm,
or corporation, except for such notices or instructions as are
herein provided for and orders or process of any court entered
or issued with or without jurisdiction. If any property
subject hereto is at any time attached, garnished or levied
upon under any court order or in case the payment, assignment,
transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order,
judgment or decree shall be made or entered by any court
affecting such property or any part thereof, then and in any of
such events the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ,
judgment or decree that the Escrow Agent is advised by legal
counsel of its own choosing is binding upon it; and if the
Escrow Agent complies with any such order, writ, judgment or
decree, it shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such
compliance even though such order, writ, judgment or decree may
be subsequently reversed, modified, annulled, set aside or
vacated.
(f) The Option Holder and the Subscribers agree and
do hereby waive any suit, claim, demand or cause of action of
any kind which it may have or may assert against the Escrow
Agent arising out of or relating to the execution or
performance by the Escrow Agent of this Agreement, unless each
suit, claim, demand, or cause of action is based upon the gross
negligence or bad faith of the Escrow Agent. The Option Holder
and the Subscribers further agree to indemnify the Escrow Agent
against and from any and all claims, demands, costs,
liabilities and expenses, including counsel fees, which may be
asserted against it or to which it may be exposed, or which it
may incur by reason of its execution or performance of this
Agreement.
(g) The Escrow Agent may, as a condition to the
disbursement of monies or disposition of securities as provided
herein, require from the payee or the recipient a receipt
therefor and, on final payment or disposition, a release of the
Escrow Agent from any liability arising out of the execution or
performance of this Agreement.
(h) The Escrow Agent may at any time assign its
rights and obligations hereunder to any bank or trust company
that agrees to assume such rights and obligations; and such
successor escrow agent shall have all of the powers of the
Escrow Agent.
6. Notices. Any notices, requests or instructions
hereunder shall be in writing and shall be personally delivered
or sent by registered or certified mail, postage prepaid, or by
confirmed telecopy, or delivered by a nationally recognized
overnight delivery service to the parties hereto at the
following addresses, or such other respective address as any
party hereto may designate in writing from time to time:
The Option Holder:
I. Gary Bard
700 Dresher Road
P.O. Box 349
Horsham, PA 19044
Telecopy No.: (215) 657-3830
Escrow Agent:
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, Pennsylvania 19103-7396
Attention: Sheldon M. Bonovitz, Esq.
Telecopy No.: (215) 979-1020
The Subscribers: To the respective addresses set forth on
the Subscriber Signature Pages hereto.
8. Applicable Law. This Agreement shall be construed
and interpreted under, and governed and enforced according to,
the laws of and in the courts of the Commonwealth of
Pennsylvania.
9. Assignment. This Agreement shall inure to the
benefit and be enforceable by and against the Option Holder,
the Subscribers and the Escrow Agent and their respective
heirs, executors, successors and assigns.
10. Counterparts. This Agreement may be executed by the
parties in several counterparts, each of which shall be deemed
to be an original copy.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Agreement to be executed
as of the day and year first above written.
THE OPTION HOLDER:
I. Gary Bard
THE ESCROW AGENT:
DUANE, MORRIS & HECKSCHER
By:
A partner
<PAGE>
SUBSCRIBER SIGNATURE PAGE
The undersigned agrees to be bound by the terms and
conditions of the foregoing Escrow Agreement as a Subscriber.
IN WITNESS WHEREOF, the undersigned has executed or caused
to be executed this Agreement as of the date set forth below.
Date:
Subscriber's Name
Subscriber's Name
(if more than
one)
Subscriber's Signature
Subscriber's Signature
(if more than one)
Address of Subscriber:
Federal Income Tax I.D. No. of
Subscriber:
Telephone No.:
NOTE to Subscribers: Please attach to this Subscriber
Signature Page wire instruction pursuant
to which the Escrow Agent can return any
amounts to be returned or refunded to
such Subscriber under this Agreement.
