Document:

Prepared by MERRILL CORPORATION

THE

SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES

LAWS (THE "STATE ACTS"), AND SHALL NOT BE SOLD, PLEDGED,

HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR

CONSIDERATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE CORPORATION OF A

FAVORABLE OPINION OF ITS COUNSEL AND/OR SUBMISSION TO THE CORPORATION OF SUCH

OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL FOR THE CORPORATION, TO THE

EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE

STATE ACTS.

 

 

ACRODYNE COMMUNICATIONS, INC.

(a Delaware Corporation)

 

March _____, 2000

 

$2,000,000.00

 

Acrodyne

Communications, Inc., a Delaware corporation (the "Corporation"), is

indebted and, for value received, promises to pay to the order of Sinclair

Broadcast Group, Inc. ("Sinclair") on demand (the "Due

Date") (unless this Debenture shall have been sooner called for redemption

as herein provided), upon presentation of this Debenture, Two Million Dollars

($2,000,000.00) (the Principal Amount"), or so much thereof as has been

advanced or re-advanced hereunder from time to time, and to pay interest on the

Principal Amount at the rate of ten and one-half percent (10.5%) per annum (calculated

on the basis of three hundred sixty days (360) per year) as provided herein.

 

The Corporation covenants, promises and agrees as

follows:

 

1.             Interest.  Interest which shall accrue on the Principal

Amount shall be payable in monthly installments on the first day of each month

in each and every calendar year until the Principal Amount and all accrued and

unpaid interest shall have been paid in full. If this Debenture shall be issued

on a date other than the first day of a calendar month, the interest payable

shall be prorated upon the number of days of such calendar month period during

which this Debenture shall have been issued and outstanding. The first payment

of interest shall be made on April 1, 2000.  All accrued and unpaid interest shall be payable on the Due Date.

All payments of principal and interest or principal or interest shall be made

at 10706 Beaver Dam Road, Cockeysville, Maryland 21030, or at such other place

as may be designated by the holder hereof.

 

2.             Redemption.

2.1.          This

Debenture is subject to redemption at the option of the Corporation in whole or

in part prior to the Due Date at any time and from time to time without penalty

or premium. The Corporation may exercise its right to redeem this Debenture

prior to maturity by giving notice (the "Redemption Notice") thereof

to the holder of this Debenture as it appears on the books of the Corporation,

which notice shall specify the terms of redemption (including the place at

which the holder of the Debenture may obtain payment), the principal amount of

the Debenture to be redeemed (the "Redemption Amount") and shall fix

a date for redemption (the "Redemption Date"), which date shall not

be less than thirty (30) days nor more than forty five (45) days after the date

of the Redemption Notice.

 

2.2.          On

the Redemption Date, the Corporation shall pay all accrued and unpaid interest

on the Debenture up to and including the Redemption Date and shall pay to the

holder hereof a dollar amount equal to the Redemption Amount.

 

3.             Conversion.

 

3.1.          The holder

of this Debenture shall have the right, at such holder's option, at any time,

to convert all, but not less than all, of this Debenture into such number of

fully paid and nonassessable shares of Voting Common Stock, $0.01 par value, of

the Corporation (the "Common Stock") as shall be provided herein.

 

3.2.          The

holder of this Debenture may exercise the conversion right provided in this

Section 3 by giving written notice (the "Conversion Notice") to the

Corporation of the exercise of such right and stating the name or names in

which the stock certificate or stock certificates for the shares of Common

Stock are to be issued and the address to which such certificates shall be

delivered. The Conversion Notice shall be accompanied by this Debenture and

payment of the Conversion Rate (as defined below). The number of shares of

Common Stock that shall be issuable upon conversion of the Debenture shall

equal Three Dollars and Forty Five Cents ($3.45) per share (the

"Conversion Rate") as applied proportionately to the Principal Amount

outstanding on the Conversion Date (as defined below); provided, however, that

in the event that this Debenture shall have been partially redeemed, shares of

Common Stock shall be issued pro rata, rounded to the nearest whole share.

 

3.3.          Conversion

shall be deemed to have been effected on the date the Conversion Notice is

given (the "Conversion Date"). Within five (5) business days after

receipt of the Conversion Notice, the Corporation shall issue and deliver by

hand against a signed receipt therefor or by United States registered mail,

return receipt requested, to the address designated by the holder of this

Debenture in the Conversion Notice, a stock certificate or stock certificates

of the Corporation representing the number of shares of Common Stock to which

such holder is entitled and a check or cash in payment of all interest accrued

and unpaid on the Debenture up to and including the Conversion Date.

 

3.4.          Taxes.

The Corporation shall pay all documentary, stamp or other transactional taxes

and charges attributable to the issuance or delivery of shares of stock of the

Corporation upon conversion; provided, however, that the Corporation shall not

be required to pay any taxes which may be payable in respect of any transfer

involved in the issuance or delivery of any certificate for such shares in a

name other than that of the record holder of this Debenture.

 

3.5.          Reservation of Shares.  The Corporation shall at all times reserve

and keep available, free from preemptive rights, unissued or treasury shares of

Common Stock sufficient to effect the conversion of this Debenture.

 

3.6.          No further advances under this

Debenture shall be made on or after the Conversion Date.

 

4.             Default.

 

4.1.          The

entire unpaid and unredeemed balance of the Principal Amount and all Interest

accrued and unpaid on this Debenture shall, at the election of the holder, be

and become immediately due and payable upon the occurrence of any of the

following events (a "Default Event"):

 

(a)           The

non–payment by the Corporation when due of principal and interest or

principal or interest or of any other payment as provided in this Debenture or

with respect to any other Debenture issued by the Corporation.

 

(b)           A

breach by the Corporation under that certain Investment Agreement dated

January 27, 1999 by and among the Corporation, Sinclair, and A. Robert

Mancuso (the "Investment Agreement"), or the Corporation's breach or

default under any of the Warrants as described in the Investment Agreement.

 

(c)           If

the Corporation (i) applies for or consents to the appointment of, or if there

shall be a taking of possession by, a receiver, custodian, trustee or

liquidator for the Corporation or any of its property; (ii) becomes generally

unable to pay its debts as they become due; (iii) makes a general assignment

for the benefit of creditors or becomes insolvent; (iv) files or is served with

any petition for relief under the Bankruptcy Code or any similar federal or

state statute; (v) has any judgment entered against it in excess of Twenty Five

Thousand Dollars ($25,000.00) in any one instance or in the aggregate during

any consecutive twelve (12) month period or has any attachment or levy made to

or against any of its property or assets; (vi) defaults with respect to any

evidence of indebtedness or liability for borrowed money, or any such

indebtedness shall not be paid as and when due and payable; or (vii) has

assessed or imposed against it, or if there shall exist, any general or

specific lien for any federal, state or local taxes or charges against any of

its property or assets.

 

(d)           Any

failure by the Corporation to issue and deliver shares of Common Stock as

provided herein upon conversion of this Debenture.

 

4.2.          Each right, power or remedy of the

holder hereof upon the occurrence of any Default Event as provided for in this

Debenture or now or hereafter existing at law or in equity or by statute shall

be cumulative and concurrent and shall be in addition to every other right,

power or remedy provided for in this Debenture or now or hereafter existing at

law or in equity or by statute, and the exercise or beginning of the exercise

by the holder or transferee hereof of any one or more of such rights, powers or

remedies shall not preclude the simultaneous or later exercise by the holder hereof

of any or all such other rights, powers or remedies.

 

5.             Fair Market Value.  The term Fair Market Value as used in this

Debenture with respect to assets or property received by the Corporation shall

be the fair market value, regardless of any prior accounting treatment, of such

assets or property, determined by the Board of Directors of the Corporation,

which determination shall be final, conclusive and binding. If the Board of

Directors shall be unable to agree as to such fair market value, the fair market

value shall be determined by the independent certified public accountants at

that time retained by the Corporation to audit its books and records, and a

determination by such independent certified public accountant shall be final,

conclusive and binding or, if there be none, or if such accountants shall

refuse or be unable to make such a determination then the sole issue of fair

market value shall be submitted to and settled by binding arbitration under and

pursuant to the Maryland Uniform Arbitration Act and the rules and regulations

of the American Arbitration Association, and the decision or award of the

arbitrator or arbitrators in such arbitration shall be final, conclusive and

binding and a final judgment may be entered thereon by any court of competent

jurisdiction.

 

No failure or delay by the holder hereof to insist upon

the strict performance of any term of this Debenture or to exercise any right,

power or remedy consequent upon a default hereunder shall constitute a waiver

of any such term or of any such breach, or preclude the holder hereof from

exercising any such right, power or remedy at any later time or times. By

accepting payment after the due date of any amount payable under this

Debenture, the holder hereof shall not be deemed to waive the right either to

require payment when due of all other amounts payable under this Debenture, or

to declare a default for failure to effect such payment of any such other

amount.

 

The failure of the holder of this Debenture to give

notice of any failure or breach of the Corporation under this Debenture shall

not constitute a waiver of any right or remedy in respect of such continuing

failure or breach or any subsequent failure or breach.

 

6.             Consent to Jurisdiction.  The Corporation hereby agrees and consents

that any action, suit or proceeding arising out of this Debenture may be

brought in any appropriate court in the State of Maryland, including the United

States District Court for the District of Maryland, Northern Division, and/or

in any other court having jurisdiction over the subject matter, all at the sole

election of the holder hereof, and by the issuance and execution of this

Debenture the Corporation irrevocably consents to the jurisdiction of each such

court. The Corporation hereby irrevocably appoints A. Robert Mancuso as agent

of the Corporation to accept service of process for and on behalf of the

Corporation in any action, suit or proceeding arising out of this Debenture.

 

7.             Transfer.   This Debenture shall be transferred on the

books of the Corporation only by the registered holder hereof or by his

attorney duly authorized in writing or by delivery to the Corporation of a duly

executed Assignment substantially in the form attached hereto as Exhibit A. The

Corporation shall be entitled to treat any holder of record of the Debenture as

the holder in fact thereof and shall not be bound to recognize any equitable or

other claim to or interest in this Debenture in the name of any other person,

whether or not it shall have express or other notice thereof, save as expressly

provided by the Laws of Texas.

 

8.             Notices.  All notices and communications under

this Debenture shall be in writing and shall be either delivered in person or

accompanied by a signed receipt therefor or mailed first–class United

States certified mail, return receipt requested, postage prepaid, and addressed

as follows: if to the Corporation, to Acrodyne Communications, Inc., 516

Township Line Road, Blue Bell, Pennsylvania 19422, Attention  President; and if to the holder of this

Debenture, to the address of such holder as it appears in the books of the

Corporation. Any notice of communication shall be deemed given and received as

of the date of such delivery or mailing.

 

9.             Governing Law.

 

This Debenture shall be governed by and construed and

enforced in accordance with the laws of the State of Maryland, or, where

applicable, the laws of the United States.

 

IN WITNESS WHEREOF, the Corporation has caused this

Debenture to be duly executed under its corporate seal.

 

	

  ATTEST:

  	

   

  	

   

  	

  ACRODYNE COMMUNICATIONS, INC.

  	

   

  	 

	

   

  	

   

  	

   

  	

   

  	

   

  	 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  	

  (SEAL)

  	 

	

   

  	

   

  	

  Name:

  	

   

  	

   

  	 

	

  Secretary

  	

   

  	

  Title:

  	

   

  	

   

  	 

 

This Note is subject to the terms of a Subordination

Agreement in favor of PNC Bank, National Association.  Notwithstanding any contrary statement contained in the within

instrument, no payment on account of any obligation arising from or in

connection with the within instrument or any related agreement (whether of

principal interest or otherwise) shall be made, paid, received or accepted

except in accordance with the terms of said Subordination Agreement.

 

Exhibit A

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby assigns to

_______________________________ the ten and one-half percent (10.5%)

Convertible Debenture due December 31, 2000 of Acrodyne Communications, Inc.,

No. 1, and hereby irrevocably appoints Steven A. Thomas, Attorney, to transfer

said debenture on the books of the within named corporation, with full power of

substitution in the premises.

 

WITNESS

my hand and seal this _____ day of _______________, 2000.

 

 

	

  (SEAL)

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  (SEAL)

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  WITNESS:Prepared by MERRILL CORPORATION

PROMISSORY NOTE

 

	

   

  	

   

  	

  _______________, 2001

  
	

  $4,000,000.00

  	

   

  	

  Baltimore, Maryland

  

 

FOR VALUE RECEIVED, on demand, Acrodyne

Communications, Inc., a Delaware corporation (the "Maker"), promises

to pay to the order of Sinclair Broadcast Group, Inc., a Maryland corporation

(the "Lender"), the amount on the date of such demand of the unpaid

indebtedness of the Maker to the Lender debited to the Maker's account with the

Lender pursuant to the provisions of a certain Loan Agreement of even date

herewith by and between the Lender and the Maker (the "Loan

Agreement"), plus all accrued but unpaid interest thereon. Those terms

defined in the Loan Agreement are used herein with the same meaning. The face

amount of this Note is the Lender's Committed Amount. The actual unpaid balance

of the principal amount of this Note outstanding at any time shall be the

unpaid indebtedness of the Maker to the Lender debited to the Maker's account

with the Lender as of the date of computation.

 

Additionally, the Maker promises to pay to the order

of the Lender interest on the unpaid indebtedness of the Maker to the Lender

debited to the Maker's account with the Lender (calculated on a daily basis)

from time to time outstanding under the provisions of the Loan Agreement from

the date hereof until the maturity of this Note (whether by declaration,

extension, or otherwise) at a fixed rate of interest equal to twelve percent

(12%) per annum. Interest accrued on the unpaid indebtedness of the Maker to

the Lender debited to the Maker's account with the Lender from the date hereof

until the maturity of this Note (whether by declaration, extension, or

otherwise) during each month or portion thereof shall be paid by the Maker to

the Lender monthly on or before the 1st day of the next succeeding month commencing

with the first such date following the date of this Note and on the same day of

each thereafter until the maturity of this Note (whether by declaration,

extension, or otherwise). After the maturity of this Note (whether by

declaration, extension, or otherwise), the Maker promises to pay to the order

of the Lender upon demand interest on the unpaid indebtedness of the Maker to

the Lender debited to the Maker's account with the Lender from the date of such

maturity until the unpaid indebtedness of the Maker to the Lender debited to

the Maker's account with the Lender together with all accrued and unpaid

interest thereon is paid in full at a fixed rate of interest equal to ten and

one-half percent (10.5%) per annum. Interest shall be computed on the basis of

a 360-day year and the actual number of days elapsed.

 

This Note is the "Note" issued pursuant to

the provisions of the Loan Agreement. The Lender is entitled to the rights and

benefits of the Loan Agreement. The Maker hereby waives demand, notice,

presentment, and protest.

 

All payments of the unpaid indebtedness of the Maker

to the Lender debited to the Maker's account with the Lender and interest

thereon shall be paid in lawful money of the United States of America during

regular business hours of the Lender at 10706 Beaver Dam Road, Cockeysville,

Maryland 21030 or at such other place as the Lender or any other holder of this

Note may at any time or from time to time designate in writing to the Maker.

 

If this Note is forwarded to an attorney for

collection after maturity hereof (whether by declaration, extension, or

otherwise), the Maker shall pay on demand all costs and expenses of collection

including attorneys' fees of fifteen percent (15%) of the unpaid indebtedness

of the Maker to the Lender debited to the Maker's account with the Lender then

outstanding.

 

After maturity of this Note (whether by declaration,

extension, or otherwise), the Maker hereby authorizes any attorney designated

by the Lender or any clerk of any court of record to appear for the Maker in

any court of record and confess judgment against the Maker without prior

hearing in favor of the Lender for and in the amount of the unpaid indebtedness

of the Maker to the Lender debited to the Maker's account with the Lender then

outstanding plus interest accrued and unpaid thereon, together with costs of

suit and attorneys' fees of fifteen percent (15%) of the unpaid indebtedness of

the Maker to the Lender debited to the Maker's account with the Lender then

outstanding.

 

This Note shall be governed by and construed under the

laws of the State of Maryland.

 

IN WITNESS WHEREOF, the Maker has caused this Note to

be executed in its name, under its seal, and on its behalf the day and year

first written above.

 

	

  WITNESS/ATTEST:

  	

   

  	

  MAKER:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Acrodyne Communications, Inc.

  
	

   

  	

   

  	

  By:

  	

   

  	

  (SEAL)

  
	

   

  	

   

  	

  Nat Ostroff, Chairman

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