SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-10696
LogiMetrics, Inc.
(Exact name of small business issuer in its charter)
Delaware 112171701
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Orville Drive, Bohemia, New York 11716
(Address of principal executive offices) (Zip Code)
Issuer's telephone number:(516) 784-4110
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant Section 12 (g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X]
State issuer's revenues for its most recent fiscal year: $11,374,182
As of December 12, 1997, the aggregate market value of voting stock held by
non-affiliates of the Registrant was $2,111,000 as computed by reference to the
closing bid price of the stock ($0.44) multiplied by the number of shares of
voting stock outstanding on December 12, 1997 held by non-affiliates.
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of the latest practicable date.
Class of Common Stock Outstanding at December 12, 1997
--------------------- --------------------------------
Common Stock, par value 25,601,814 shares
$.01 per share
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
LOGIMETRICS, INC.
FORM 10-KSB
YEAR ENDED JUNE 30, 1997
INDEX
PART I
Page
Item 1. Description of Business.................................. 3
Item 2. Description of Property.................................. 10
Item 3. Legal Proceedings........................................ 10
Item 4. Submission of Matters to a Vote of Security Holders...... 10
PART II
Item 5. Market for Common Equity and Related Stockholder Matters. 11
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 11
Item 7. Consolidated Financial Statements........................ 15
Item 8. Changes in and Disagreements on Accounting and Financial
Disclosures.............................................. 37
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act by the Company........................................... 37
Item 10. Executive Compensation....................................... 40
Item 11. Security Ownership of Certain Beneficial Owners and
Management................................................... 43
Item 12. Certain Relationships and Related Transactions............... 46
PART IV
Item 13. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K..................................................... 48
<PAGE>
PART I
Item 1. Description of Business
General
The Company manufactures and sells high-power amplifiers, including traveling
wave tube amplifiers ("TWTAs") and other peripheral transmission equipment, used
to transmit communication signals. The Company also manufactures and sells
instrumentation amplifiers for industrial, commercial and military applications,
either as stand-alone units or as part of electromagnetic test systems used to
measure the electromagnetic compatibility ("EMC") and electromagnetic
susceptibility ("EMS") of various equipment, including satellite earth stations,
wireless communication systems, automobiles and other transportation equipment.
These systems frequently incorporate multiple TWTAs. The Company's customers
include military and other governmental agencies, manufacturers and testing
laboratories. Customers using the Company's amplifiers, systems and test systems
in the communications area include CellularVision Technology &
Telecommunications, L.P. ("CT&T"), the National Aeronautics and Space
Administration, the European Space Agency, Eaton Corporation and the NASA Lewis
Research Center Jet Propulsion Laboratory, and in the EMC/EMS area include
General Motors Proving Ground, TRW, Inc., Lockheed Martin Corporation and Space
Systems Loral.
The TWTAs sold by the Company are used for a variety of purposes, including:
Local Multipoint Distribution Service ("LMDS") and Very Small Aperture Terminal
("VSAT") transmitting devices, EMC/EMS testing, microwave studies and general
high-power component testing. In addition, the Company sells complete specialty
systems in response to specific customer requests. These systems are typically
designed to meet specific customer needs and range from automated EMS testing
systems to sophisticated electronic ground-based or airborne electronic warfare
equipment. These systems typically incorporate one or more TWTAs and may also
include software and ancillary equipment.
Since March 1996, the Company has sought to redirect its business focus away
from defense applications and toward commercial opportunities. In particular,
the Company is now actively pursuing the sale of TWTAs, other high-power
amplifiers and peripheral equipment operating in the Ka band (26-40 GHz) for use
in the emerging market for LMDS service and for new satellite applications.
In furtherance of this change in strategic focus, in April 1997, the Company
merged with mmTech, Inc. ("mmTech") which designs, develops, manufactures and
sells telecommunications equipment for use in the LMDS market. See "Management's
Discussion and Analysis." The Company's customers in the LMDS market presently
consist of CT&T and certain licensees of CT&T. See "Sales and Marketing."
The Company was founded in December 1968. The Company's headquarters are located
at 50 Orville Drive, Bohemia, New York 11716 and its telephone number is (516)
784-4110.
Industry Overview
The Company believes that many of the existing markets for its TWTAs, other
high-power amplifiers and related products are maturing and, in some instances,
are in decline. For instance, prior to 1995, a significant portion of the
Company's business consisted of sales of high-power electronic jamming systems
and related products to the U.S. military and foreign military organizations.
However, in conjunction with the contraction of the U.S. defense industry, the
Company's military sales have declined.
Other traditional markets for the Company's TWTAs, other high-power amplifiers
and related products have historically been characterized by low revenue growth.
For instance, the Company sells equipment to manufacturers for testing the
sensitivity of various products to electromagnetic forces. In the EMC/EMS
market, the Company's products are generally used to flood an instrument or
piece of equipment with electromagnetic energy over a broad spectrum of
frequencies and to record the results of the test. The Company believes that
this and other traditional markets for the Company's products are growing at a
rate of approximately 5% per year.
In response to the decline in the U.S. defense industry and the low growth rates
characterizing other existing markets for the Company's products, the Company
has sought new markets for its products, with particular emphasis on the LMDS
market and other broad band applications.
LMDS generically describes a proposed method of providing two-way broad band
services, such as video programming distribution, video teleconferencing,
wireless local loop telephony and high speed data transmission (including
Internet access). The Federal Communications Commission (the "FCC") has
announced that in February 1998 it will grant, through a competitive auction
process, licenses to offer LMDS services in all of the 493 basic trading areas
in the U.S. ("BTAs"), excluding the New York Primary Metropolitan Statistical
Area ("PMSA") where CellularVision of New York, L.P. ("CVNY"), an affiliate of
CT&T, has an existing license. Two licenses will be awarded for each BTA. One
license will include 1,150 MHz of spectrum (the "Block A License"), consisting
of frequencies in the 27.5 GHz - 28.35 GHz, 29.1 GHz - 29.25 GHz and 31.075 GHz
- - 31.225 GHz bands. The other license will include 150 MHz of spectrum (the
"Block B License"), consisting of frequencies in the 31.0 GHz
<PAGE>
- - 31.075 GHz and 31.225 GHz - 31.3 GHz bands. See "Government Regulation."
The Company believes that, as a result of this auction process, a new segment of
the telecommunications industry will emerge, although no assurances can be given
in that regard. As of December 12, 1997, CVNY is the only entity with a
commercial license to provide LMDS services in the U.S. The Company has, through
CT&T, supplied CVNY with the transmitters and other equipment used by it in the
New York market.
In addition to the LMDS market in the U.S., several foreign countries, such as
Canada, the Philippines, Thailand, Russia and the Republic of Korea, have
reserved spectrum for the provision of LMDS services. The Company has, through
CT&T, provided transmitters and other equipment to licensees of CT&T's
technology providing those services outside the United States. The Company
believes that, as a result of the FCC's auction of LMDS licenses, additional
countries will begin to authorize the provision of LMDS services. Due to these
developments, the Company believes that the LMDS market could experience
significant growth in the future, although no assurances can be given in that
regard. The Company's objective is to build on its experience as a supplier of
LMDS equipment to capitalize on the expected growth of this market. In addition,
many of the components used in the Company's LMDS equipment can be used for
Ka-band satellite communications.
LMDS Systems
The Company designs, develops, manufactures and sells transmitters, repeaters,
relays and other infrastructure equipment used to provide LMDS service. LMDS
services use signals transmitted at relatively high frequencies (28 GHz)
compared to other transmission methods. At higher frequency, signals attenuate
more quickly ("path loss") and can be adversely affected by rain ("rain fade").
As currently contemplated, LMDS service will be provided in a cellular system to
minimize the effects of the relatively short distances traveled by high
frequency signals (typically three miles or less) because of path loss and rain
fade. By utilizing a cellular system, and by employing certain techniques to
limit inter-cell interference, frequencies can be re-used from cell to cell,
thereby effectively covering a large area and maximizing the amount of bandwidth
available to carry video, voice or data transmissions.
Video, telephone services or data signals to be transmitted through an LMDS
system are received by the system from satellite transponders, terrestrial
microwave facilities and/or studios at a head-end. Signals are generally
processed at the head-end and are then sent to transmitters located in each
adjacent cell which, in turn, transmit the signals to subscribers within the
cell. Point-to-point relays, which are installed with the transmitter, are used
to transmit signals to remote cells. Because of the high frequency used by LMDS
and the resulting attenuation of the signal, transmission of the signal is
generally by line of sight. Where topographical conditions, such as mountains,
tall buildings and heavy foliage, result in areas where the original signal
cannot readily be received, a repeater is used to capture and re-transmit the
signal to the shadowed area. Signals can be "repeated" in this fashion several
times without any noticeable loss of signal quality.
A small, narrow beam antenna is used by subscribers to receive signals, and the
Company's system utilizes a square, flat-panel antenna which is approximately 7
inches square for this purpose. As a result of the high frequencies involved,
this small antenna has the same gain as much larger antennas typically used to
receive broadcast television signals.
The Company's transmitters can transmit a wide variety of signals, including,
video, voice and data, without the need for significant modification and it is
possible to send different signals for different services from the same
transmitter. In addition, the system can be readily configured to transmit
either digital or analog signals, or a combination of the two.
Advantages of LMDS Service
The Company believes that LMDS service has several significant advantages over
other existing transmission techniques. The Company believes that the most
important advantages are the broad bandwidth made available for LMDS services,
and the lack of restrictions on the services that licensees will be allowed to
offer.
Under the FCC's current proposal, 1,300 MHz of bandwidth will be available to
LMDS licensees in each BTA. Currently, transmission of an analog television
signal requires approximately 20 MHz per channel. Accordingly, approximately 50
channels could be transmitted simultaneously under a Block A License. With
digital transmission of television signals and using existing compression
technologies, over 200 channels could be transmitted simultaneously under a
Block A License. Similarly, a typical telephone call requires approximately 30
KHz of bandwidth. Under a Block A License, an LMDS service could handle over
33,000 simultaneous phone conversations. If certain currently available
compression techniques were used, that number could be increased to over
150,000.
<PAGE>
The Company believes that LMDS operators could also offer wireless Internet
access to subscribers. For example, with a Block B License, LMDS operators may
provide one-way Internet service equivalent in speed to current ISDN service
(approximately 128 KB) to over 1,200 simultaneous users. CVNY has recently
commenced providing fast Internet access (500 KB) to subscribers in New York,
and the Company expects that other LMDS operators will offer similar Internet
access services in the future. The Company currently manufactures equipment used
for the provision of this Internet access service.
Unlike other spectrum grants, the LMDS service authorized by the FCC is not
limited to a specific use. Instead, the FCC will allow the marketplace to
determine the most valuable use of the spectrum. As a result, LMDS providers
will be able to use their licenses to provide a wide variety of one-way and
two-way services, such as video programming, telephony or data transmission,
either exclusively, or as a package of related services. The Company believes
that this broad service authorization will enhance the value of LMDS licenses
and will increase the potential uses of the spectrum grant.
The Company believes that LMDS will offer certain advantages over existing
transmission techniques. Those advantages include the following:
Low Cost Infrastructure. The Company believes that LMDS systems offer a low
cost, high quality and dependable broad band alternative to both franchised
cable systems and satellite systems, such as Direct Broadcast Satellite ("DBS")
and fiber optic systems. The Company believes that LMDS providers will be able
to offer substantially the same services at significantly lower prices than
franchised cable systems because LMDS providers will not require the extensive
networks of cables and amplifiers or the constant maintenance, repair and cost
of upgrading system architecture inherent in such systems. DBS systems have a
lower cost per household passed than will LMDS systems, but involve other
expenses associated with high-power direct broadcast satellites. In addition,
subscribers are required to pay monthly charges comparable to cable rates. By
comparison, subscribers to CVNY's video transmission service currently pay a
one-time installation fee of approximately $50 and monthly charges that are
lower than competing cable rates.
Higher Quality Picture. The Company's LMDS transmitter is capable of delivering
a generally superior picture quality as compared to the quality generally
characteristic of franchised cable or current Multichannel Multipoint
Distribution Service ("MMDS") systems. In a franchised cable system, each time a
television signal passes through an amplifier, some measure of noise is added
which results in a "grainier" picture. As a result, franchised cable picture
quality generally degrades significantly depending on the distance the signal
travels from the head-end to the subscriber. Current MMDS systems lack the FM or
digital video fidelity associated with the Company's system and the Company
believes that these systems are also generally subject to perceptible
interference. The Company's LMDS transmitter, by contrast, has been designed to
deliver a video picture without perceptible interference under most conditions,
although the signals can be subject to temporary degradation as a result of
atmospheric conditions, such as rain fade.
Dependability. As compared to franchised cable systems, the Company believes
that LMDS systems provide a highly reliable signal because there are no cables,
amplifiers or processing and filtering equipment between the transmitter which
serves the subscriber and the subscriber's household to potentially break or
malfunction. Failure of any one of these components in the chain may "black-out"
large portions of a franchised cable system, and diagnosis and repair efforts
involve a network consisting of hundreds of miles of cable and related relay
equipment, in contrast to the subscriber/cell alignment which the Company
believes will be used by LMDS providers. In addition, the Company believes that
many LMDS providers will use fully redundant transmitter installations, such as
those currently employed by CVNY.
Compact Antenna. Unlike currently available MMDS systems, which require rooftop
mounted antennas of varying sizes up to three feet in diameter, or DBS systems,
which require an outdoor dish aimed directly at a stationary satellite, the
antennas used with the Company's system, in many cases, permit reception of
signals when mounted inside the subscriber's window, eliminating the need for
outdoor installations. The wireless nature of LMDS transmissions allow these
antennas, in many cases, to be used for delivery of LMDS services to apartment
buildings and office towers in urban areas without extensive in-building wiring.
This wiring is necessary not only in the case of franchised cable, but also with
wireless technologies such as MMDS, Satellite Master Antenna ("SMATV") service
and DBS, whose signals require a direct line-of-sight to the transmitter, and,
consequently, in densely populated urban environments, generally require rooftop
antenna installation in apartment or office buildings and internal wiring of the
building to deliver service to subscribers. However, an LMDS signal can be
received in the same manner as MMDS and SMATV signals and then transmitted to
subscribers within an apartment building or office building or other structure
through in-building cable.
Localized Programming and Advertising Options. Because of the cellular nature of
LMDS services, the Company believes that channel offerings can be localized on a
cell-by-cell basis, permitting, for example, channels targeted to demographic or
linguistic groups in particular neighborhoods, as well as micro-marketing. In
comparison, cable operators generally offer uniform programming throughout a
geographic service area, and DBS systems offer the same programming on a
nationwide basis and, to date, do not offer any local programming.
<PAGE>
Accurate, High-Speed Data Transmission. The Company's transmission equipment has
high signal-to-noise ratios and broad band width, enabling it to transmit large
volumes of data at least as accurately under normal operating conditions as
fiber optic systems. This capability should make LMDS services particularly well
suited for high-speed, broad band data transmission, including Internet access.
Mitigation of the Multipath Phenomenon. Multipath is a phenomenon in broadcast
transmission which results in the reception of multiple signals at the receiver
(literally on multiple transmission paths) which can severely degrade the
picture and audio quality or cause undesirable levels of errors in digital
systems. Multipath can be a severe drawback in systems such as VHF/UHF
television and currently available MMDS systems, which use AM modulation and
relatively broad beam width receive antennas. The Company's system, which
employs FM or digital modulation and narrow beam receive antennas, can reject
multipath degradation of the signal. Because of this advantage, the Company
believes that its transmitters will be relatively immune to picture "ghosting"
and other degradations that result from multipath.
Large Spectrum Grant and Efficient Spectrum Usage. As described above, the LMDS
licenses currently contemplated by the FCC will encompass approximately 1,300
MHz of spectrum, all or a significant portion of which can be re-used from cell
to cell. This large spectrum grant may result in advantages over competing
technologies, such as MMDS systems, which typically have access to a maximum of
200 MHz of fragmented spectrum and use frequencies only once in a metropolitan
area. In other countries, an even broader spectrum may be reserved for LMDS
services. For instance, in Canada, 3 GHz of bandwidth has been allocated to the
provision of LMDS services (which the Canadian government calls Local
Multi-point Communications Service, or "LMCS").
Sales and Marketing
The Company sells its TWTAs and other high-power amplifiers through a direct
sales organization from its facilities in New York and New Jersey. In addition,
the Company utilizes a network of independent sales representatives located in
the U.S., Europe and the Far East. Sales prospects generally are targeted by the
Company or its independent sales representatives, although the Company also
responds to requests for proposals. Substantially all of the Company's specialty
systems are sold through competitive bidding after receipt of a request for
proposal.
Due to cash constraints caused by the Company's history of operating losses, the
Company has been unable to pay amounts due to its representatives on a timely
basis. As a result, certain representatives have terminated their relationships
with the Company or have reduced the level of their support for the Company's
products, which, in certain cases, has resulted in lost business opportunities.
There can be no assurance that future disruptions in the Company's relationships
with its independent representatives will not occur, or as to the effects
thereof.
To date, the Company has not actively marketed its LMDS equipment. Pursuant to
an agreement with CT&T, mmTech is permitted to sell certain of its products only
to CT&T, licensees of CT&T's technology and third parties approved by CT&T.
Under that agreement, mmTech pays to CT&T a royalty equal to 2.5% of the gross
sales from such products. See "Patents, Trademarks and Proprietary Rights."
Under current arrangements between CT&T and its licensees, such as CVNY, CT&T
receives orders for transmitters and other equipment from its licensees and in
turn places orders with the Company and other suppliers for such equipment. CT&T
has publicly disclosed that it intends to alter its method of doing business
with its licensees to address certain potential conflict of interest issues
raised by its current procurement policies. As a result, the Company expects in
the future sales of transmitters and other LMDS equipment will be made directly
to such end users, although there can be no assurance this will be the case.
Upon request, the Company provides training at a customer's location to teach
operators how to use its equipment. The Company generally provides a one-year
parts and labor warranty on its equipment, although the Company provides a
two-year warranty at an additional cost to CT&T and its licensees, and from time
to time, the Company has provided extended warranties to other customers. During
the fiscal year ended June 30, 1997, the Company incurred warranty repair
expenses of approximately $200,000. During the fiscal year ended June 30, 1997,
CT&T and its licensees accounted for approximately 54% of the Company's
consolidated revenues. The Company anticipates that CT&T and its licensees will
account for a substantial percentage of the Company's consolidated revenues
during fiscal 1998.
Backlog
The Company measures its backlog as orders for which contracts or purchase
orders have been signed, but that have not yet been shipped and for which
revenues have not yet been recognized. The Company includes in its backlog only
those customer orders that are scheduled for delivery within the next 18 months.
The Company typically ships its products within six months of receiving an
order. At June 30, 1997, the Company had a $7.1 million backlog of orders for
its equipment, approximately $6.0 million of which related to the LMDS market.
Substantially all of the Company's backlog at June 30, 1997 is expected to be
shipped during the current fiscal year. Any failure by the Company to meet an
agreed-upon schedule could lead to the cancellation of the related order. All
orders are
<PAGE>
subject to cancellation or delay by the customer and, accordingly, there can be
no assurance that such backlog will eventually result in revenues.
Manufacturing and Assembly
The Company manufactures and assembles TWTAs and other high-power
amplifiers at its facility in Bohemia, New York, and LMDS transmitting equipment
and related components at its facility in Eatontown, New Jersey. The Company
assembles its products from components supplied to it by various suppliers and
parts manufactured internally. Once the products are assembled, they are "burned
in" and tested to assure their proper functioning. After successful completion
of this procedure, the products are shipped to customers.
Although many of the basic components used in the Company's products, such as
chipboards, resistors, capacitors and other similar components, are readily
available from a number of sources, the Company typically purchases such
components from single suppliers to take advantage of available volume
discounts. However, to assure an adequate supply of traveling wave tubes, a
critical component in many of the Company's products, the Company has
established multiple supply sources. A limited number of components and
sub-assemblies are manufactured for the Company pursuant to the Company's
proprietary specifications, but the Company does not believe it is dependent on
any single source for these items. The Company does not have any long-term
supply arrangements.
Due to cash constraints caused by the Company's history of operating losses, the
Company has been unable to pay amounts due to its suppliers on a timely basis.
As a result, certain suppliers have terminated their relationships with the
Company or have refused to extend trade credit to the Company, which has
resulted in supply disruptions from time to time that have materially and
adversely affected its business. There can be no assurance that the Company will
not experience future supply disruptions, or as to the effects thereof.
Competition
In the markets for TWTAs and other high-power amplifiers, the Company competes
with other entities, including Communications and Power Industries, Inc.,
Amplifier Research Corp. and Xicom Technology, a number of which have
significantly greater financial, marketing and other resources than the Company.
In the emerging LMDS market, the Company expects that its competitors will
include Wytech, PCS Wireless, Inc. and certain major communications equipment
manufacturers, a number of which have significantly greater financial, marketing
and other resources than the Company. The Company believes that principal
competitive factors in its respective markets include performance capability,
reliability, size, weight and price. Until recently, the Company has not engaged
in significant product development activities in its high-power amplifier
business. Accordingly, the Company has not kept pace with its competitors in the
markets for TWTAs and other high-power amplifiers in reducing the size and
weight of its products. As a result, the Company may be at a competitive
disadvantage in the markets for those products. See "Product Development." There
can be no assurance that the Company will be able to compete successfully with
its competitors or be able to compete with new market entrants or in new markets
that may develop.
Government Regulation
The Company's business is not subject to significant direct government
regulation. However, the Company believes that demand for its LMDS products will
be significantly affected by government regulation because customers for its
LMDS products will be required to obtain licenses from the FCC and governmental
agencies in other countries in order to provide LMDS services. A description of
the FCC's authorization of LMDS service is provided below.
The FCC has set aside a total of 1,300 MHz of spectrum for LMDS service in the
United States and certain of its territories: 850 MHz in the 27.5-28.35 GHz
band, 150 MHz in the 29.1-29.25 GHz band, and 300 MHz in the 31.0-31.3 MHz band.
The LMDS spectrum will be licensed regionally on the basis of 493 BTAs
throughout the United States. Two licenses with ten-year terms will be awarded
in each BTA: one 1,150 MHz "Block A" license, and one 150 MHz "Block B" license.
The Block A license will consist of 1,000 MHz located in the 28 GHz band
(27.5-28.35 GHz and 29.1-29.25 GHz) and 150 MHz of spectrum in the middle of the
300 MHz of spectrum in the 31 GHz band (31.075-31.225 GHz). The Block B license
will consist of the two 75 MHz segments located at each end of the 300 MHz block
(31.0-31.75 GHz and 31.225-31.3 GHz).
The FCC has placed few restrictions on the use of the spectrum allocated to
LMDS. Significantly, LMDS licensees will have substantial discretion to develop
services in response to market demand. Potential uses of LMDS spectrum include
video broadcasting, local telephony, Internet access, and point-to-point
communications. LMDS licensees can choose to provide services on a common
carrier basis, a non-common carrier basis, or a combination of the two.
LMDS licensees will receive exclusive licenses and will be protected from
interference in most of the 1,300 MHz of spectrum allocated for LMDS use.
However, LMDS operations in the 150 MHz of the Block A spectrum in the
29.1-29.25 GHz band will be on a co-primary basis with Mobile Satellite Service
("MSS") operations and will be restricted to hub-to-subscriber transmissions
because of FCC concerns about potential interference to MSS feeder links. Block
B LMDS licensees will also be
<PAGE>
co-primary with incumbent licensees in their band and will be required to afford
interference protection to those licensees. However, the incumbent operations
protected in the Block B 150 MHz licenses are limited in scope: protection is to
be afforded only to (i) 19 state and local government agency licensees in six
states whose operations are confined to localized vehicular traffic management
and control services and (ii) eight private business licensees who use the
spectrum solely for internal business purposes.
The LMDS licenses will be awarded by the FCC through an auction process which is
scheduled to commence on February 18, 1998. However, the auction has been
delayed in the past and future delays are possible. Block A and Block B licenses
will be auctioned separately for each of the 493 BTAs in the United States and
certain of its territories. However, due to CVNY's incumbency in the New York
PMSA, the Block A license for the New York City BTA will consist of only those
portions of the BTA not covered by CVNY's license. There will be no restrictions
on the number of licenses an entity may acquire. Parties can acquire the Block A
and Block B licenses in a BTA through the auction and combine the two licenses
to create a 1.3 GHz LMDS system.
In order to encourage competition in the video and telephony markets, the FCC
determined in its Second Report and Order in its LMDS proceeding (the "Second
Report and Order") to limit the right of local telephone companies (known as
"local exchange carriers" or "LECs") and cable television companies (known as
"multiple system operators" or "MSOs") to acquire Block A licenses in their
respective service regions. Under rules adopted in the Second Report and Order,
LECs and MSOs will be ineligible to acquire a 20% or greater ownership interest
in a Block A license in their service region for the three years following
completion of the auction. LECs and MSOs are considered "in-region" in a
particular BTA if 10% of the BTA's population is within the authorized service
area of the LEC or MSO. There is no restriction on LECs or MSOs acquiring Block
B licenses within their respective service areas or Block A licenses outside of
their respective service areas.
The eligibility restrictions on LECs and MSOs with respect to in-region Block A
licenses may be extended beyond the initial three-year period if the FCC
determines that incumbent LECs and/or MSOs continue to have substantial market
power. Conversely, the FCC can waive the restriction on a case-by-case basis
during the initial three-year period if a LEC or MSO makes a showing to the FCC
that its particular market is sufficiently competitive and that it no longer
possesses substantial market power. As described below, certain LECs and MSOs
sought FCC reconsideration of the eligibility restrictions, and other parties
challenged those restrictions in court appeals of the relevant FCC decisions.
The Second Report and Order adopted a number of service and technical rules
governing operations by LMDS licensees. In particular, the FCC will allow LMDS
licensees up to ten years to provide "substantial service" to their respective
service areas. While it declined to define "substantial service" in the LMDS
context on a generic basis, the FCC did offer examples of service that would
qualify as "substantial." For an LMDS licensee offering video distribution
services, a demonstration of coverage of 20% of the population of its licensed
service area at the 10-year mark would constitute substantial service. For a
licensee offering point-to-point services, the construction of four links per
million people in its service area would be sufficient. In making its
determination as to whether a licensee is providing "substantial" service, the
FCC said that it may consider such factors as (i) whether the licensee is
offering a specialized or technologically sophisticated service that does not
require a high level of coverage to be of benefit to customers, and (ii) whether
the licensee's operations serve niche markets or focus on serving populations
outside of areas served by other licensees.
Because of the FCC's liberal service requirements, the Company cannot predict
when bidders receiving LMDS licenses in the auction will purchase the equipment
necessary to provide LMDS services. However, the Company believes that many of
such LMDS licensees may delay purchases of equipment for a significant period
following the auction. Accordingly, the Company does not expect that the
completion of the auction will have a material impact on the Company's business
in the short-term.
The FCC will allow licensees to disaggregate and partition their licenses.
Disaggregation refers to the assignment of a portion of the licensee's
authorized spectrum to another entity; partitioning refers to the assignment of
a portion of the licensee's geographic service area to another entity. The
Company believes that disaggregation and partitioning opportunities will
encourage the deployment of LMDS services, although no assurances can be given
in that regard. The FCC has asked for public comment on specific procedural,
administrative, and operational rules to implement LMDS disaggregation and
partitioning. However, as of February 6, 1998, the FCC had not issued any final
rules in that regard.
Various parties sought reconsideration and judicial review of certain aspects of
the FCC's Second Report and Order and other decisions concerning LMDS. The
issues raised include (i) LEC and MSO eligibility; (ii) the allocation of
spectrum in the 31 GHz band to LMDS and the reinstatement of numerous 31 GHz
applications that were previously dismissed by the FCC; (iii) further
reconsideration of the FCC's denial of 971 waiver applications to provide LMDS
service filed in the wake of the FCC's 1991 grant of the waiver application
filed by CVNY's predecessor-in-interest to authorize the provision of LMDS
service in New York City; (iv) clarifications of various technical and service
rules; and (v) the level of bidding credits for qualifying entities and other
auction rules. On February 3, 1998, the FCC adopted an order addressing the
petitions for reconsideration. While the order itself was not released as of
February 6, 1998, the FCC issued a News Release announcing the adoption of the
order, which stated that the order "generally affirmed" the challenged
provisions of the FCC's LMDS rules. According to the News Release, the order
"generally denied" the petitions filed by various LECs and MSOs seeking a change
in the LMDS eligibility rules. The order also generally upheld (i) the FCC's
plan for allocation of LMDS spectrum; (ii) the FCC's liberal LMDS construction
requirements; and (iii) the denial of the 971 waiver applications.
On February 6, 1998, the United States Court of Appeals for the District of
Columbia Circuit released a decision denying various petitioners' challenges to
(i) the eligibility restrictions on LECs and MSOs; and (ii) the denial of the
971 waiver applications.
No assurance can be given regarding the effect of either the FCC's
reconsideration order or the Court's decision on the marketplace for LMDS
services as the FCC order is subject to court appeal and the Court's decision is
subject to further review by the Court or by the United States Supreme Court.
<PAGE>
A number of countries, such as Canada, the Republic of Korea and the
Philippines, have authorized the provision of LMDS services or services
substantially similar thereto. The Company expects that other countries will
only authorize the provision of LMDS services pursuant to licensing or other
permitting processes.
Under the FCC's rules, the Company is required to obtain certification of its
LMDS equipment to the extent that the equipment is capable of emitting RF
energy. The certification process is designed to insure that there is no excess
RF radiation or other effects which could be inconsistent with other FCC rules
or the public interest. The Company has obtained such certification for all of
the equipment that it currently intends to market to LMDS licensees.
If and when the Company develops new equipment or encounters changes to the
FCC's rules, shifts in market demand, or technological developments, the Company
may have to develop new equipment which would require FCC certification. While
such certification can be routinely granted by the FCC in due course, any
inability of the Company to obtain such certification, or any delay in marketing
its equipment due to the delays occasioned by the certification process, could
have a material adverse effect on the Company's business.
Product Development
The Company incurred $647,919 and $628,967, respectively, in research and
development expenses for the fiscal years ended June 30, 1997 and 1996, amounts
related to the development of new products and enhancement of the Company's
existing products. Until recently, the Company has not engaged in significant
product development activities in its high-power amplifier business.
Accordingly, the Company has not kept pace with its competitors in the markets
for TWTA's and other high-power amplifiers in reducing the size and weight of
its products. As a result, the Company may currently be at a competitive
disadvantage in the markets for those products.
The Company is currently developing a new power supply system for its TWTAs and
other high-power amplifiers. If development of the new power supply system is
successfully completed, the Company believes that it will be able to reduce
substantially the size and weight of its TWTAs and other high-power amplifiers.
There can be no assurance that the Company will successfully complete the
development of the new power supply system, or as to the timing thereof. In
addition, there can be no assurance that any products incorporating the new
power supply system would, if successfully developed, achieve market acceptance
or a significant level of sales.
Patents, Trademarks and Proprietary Rights
The Company does not own any patents or trademarks relating to its TWTAs or
other high-power amplifiers. The basic technology used in the design and
manufacture of those products is not proprietary to the Company and is available
in the public domain, however the Company believes that the know-how it has
developed with respect to such products is proprietary and cannot be readily
duplicated by its competitors.
In connection with its development of LMDS technology, CT&T has obtained a
patent in the United States (the "LMDS Patent") which purports to cover the
system architecture and transmission methods for LMDS service. In addition, CT&T
has filed applications in a number of foreign countries for the issuance of
foreign patents substantially similar to the LMDS Patent.
The design and development of the initial LMDS transmitter sold by mmTech was
undertaken pursuant to an agreement with CT&T. Under that agreement, CT&T
retained ownership of all intellectual property created during such development
phase, including the design of the transmitters sold to CT&T pursuant to that
agreement. Pursuant to the terms of that agreement, mmTech has agreed to sell
transmitters utilizing such intellectual property or otherwise intended to
implement or imitate the CT&T transmission system only to CT&T, its licensees
and third parties approved by CT&T. mmTech is required to pay CT&T a royalty of
2.5% of its gross sales from the sale of such transmitters. mmTech is currently
seeking to amend the terms of the agreement, which has no fixed term, to allow
mmTech to sell transmitters to purchasers without restriction. However, there
can be no assurance that CT&T will agree to amend the agreement or as to the
terms of any such amendment.
The LMDS Patent, its foreign counterparts and any other patents issued to CT&T
covering the LMDS market may have the effect of significantly limiting the
markets for the Company's LMDS equipment to those entities which have obtained
appropriate licenses from CT&T. In addition, if CT&T does not agree to amend the
terms of the agreement described above, mmTech may not sell transmitters of the
type developed pursuant to the CT&T agreement to entities that do not obtain a
license from CT&T without CT&T's consent, even if such entities could provide
LMDS service without violating the LMDS
<PAGE>
Patent or other intellectual property rights of CT&T. There can be no assurance
that potential customers of the Company will choose to obtain the required
licenses from CT&T or that licenses will be available from CT&T on terms which
are acceptable to potential customers.
Employees
As of June 30, 1997, the Company had 62 full-time and 4 part-time employees, of
whom 46 were engaged in manufacturing, 6 were engaged in product development
activities and 14 were engaged in sales, service and general administration.
None of the Company=s employees is represented by a union, and the Company
considers its relationships with its employees to be satisfactory.
Item 2. Description of Property
The Company does not own any real property and currently conducts its operations
at the following leased premises:
<TABLE>
<CAPTION>
Approximate
Square Annual Lease
Location Description of Facility Footage Lease Cost Expiration
<C> <C> <C> <C>
50 Orville Drive Corporate headquarters, 14,000 $130,000 7/31/04
Bohemia, New York manufacturing and assembly,
11716 sales and customer support
20 Meridian Way Manufacturing and assembly, 11,500 $ 95,000 3/31/00
Eatontown, customer support, adminis-
New Jersey 07724 tration, research and
development
</TABLE>
The Company believes that its existing facilities will be sufficient to meet the
Company=s needs for the foreseeable future.
Item 3. Legal Proceedings
The Company is not a party to any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders, held May 27, 1997, the
Company's stockholders: (i) elected five directors; (ii) approved a proposal to
amend the Company's Certificate of Incorporation to increase the authorized
shares of common stock, par value $.01 per share (the "Common Stock"), from
35,000,000 to 100,000,000; (iii) approved the adoption of the LogiMetrics, Inc.
1997 Stock Compensation Program (the "Stock Compensation Program"); and (iv)
ratified the appointment of Deloitte & Touche LLP as the Company's independent
auditors. The votes cast by the stockholders on each matter presented at the
meeting were as follows:
<TABLE>
Election of Directors:
<CAPTION>
Nominee For Against Abstain Broker Non-Votes
<S> <C> <C> <C> <C>
Charles S. Brand 20,122,519 0 0 0
---------- ---------- ---------- --------
Frank A. Brand 20,122,519 0 0 0
---------- ---------- ---------- --------
Jean-Francois Carreras 20,122,519 0 0 0
---------- ---------- ---------- --------
Alfred Mendelsohn 20,122,519 0 0 0
---------- ---------- ---------- --------
Norman M. Phipps 20,122,519 0 0 0
---------- ---------- ---------- --------
</TABLE>
<TABLE>
<CAPTION>
Increase in Authorized Common Stock:
<S> <C> <C> <C> <C>
For Against Abstain Broker Non-Votes
20,122,519 0 0 0
------- ------ ----------------
Adoption of Stock Compensation Program:
For Against Abstain Broker Non-Votes
20,122,519 0 0 0
------- ------- ----------------
Appointment of Deloitte & Touche LLP:
For Against Abstain Broker Non-Votes
20,071,119 51,400 0 0
------- ------- ----------------
</TABLE>
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Market Information:
The Common Stock is traded in the over-the-counter market under the symbol
ALGMTA.@ There is no established trading market for any of the Company's
outstanding warrants. The following table sets forth, for the periods indicated,
the high and low bid quotations for the Common Stock as reported on the OTC
Bulletin Board. Such quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions.
For the Quarter Ended High Low
Fiscal 1996
September 30, 1995 * *
December 31, 1995 * *
March 31, 1996 * *
June 30, 1996 $2.375 $ .875
Fiscal 1997
September 30, 1996 $1.250 $ .5000
December 31, 1996 1.250 .3750
March 31, 1997 .625 .4375
June 30, 1997 .875 .4375
* Not reported
(b) Holders:
On December 12, 1997, there were approximately 400 holders of record of the
Common Stock.
(c) Dividends:
The Company has never declared or paid cash dividends on its Common Stock. The
Board of Directors currently intends to retain future earnings to support its
business and does not anticipate paying dividends in the foreseeable future.
Payment of future dividends, if any, will be at the discretion of the Board of
Directors after taking into account various factors, including the Company=s
financial condition, results of operations, current and anticipated cash needs
and plans for expansion. Substantially all of the Company=s indebtedness
prevents the payment of dividends by the Company.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Overview
On April 25, 1997, a wholly owned subsidiary of the Company merged into mmTech,
in a transaction accounted for as a pooling of interests. Accordingly, the
consolidated financial statements have been restated to include the accounts of
mmTech for all periods presented.
Fiscal Year Ended June 30, 1997 Compared to Fiscal Year Ended June 30, 1996
Net Revenues. For the fiscal year ended June 30, 1997, net revenues increased by
$2.5 million, or 28.1%, to $11.4 million from $8.9 million for the fiscal year
ended June 30, 1996, primarily due to increased sales of equipment for the LMDS
market. Net revenues from the sale of TWTAs and other high-power amplifiers in
the Company's traditional markets were approximately the same as for the prior
year.
Gross Profit. For the fiscal year ended June 30, 1997, gross profit increased by
$3.8 million to $2.8 million from a negative $1.0 million for the fiscal year
ended June 30, 1996. As a percentage of net revenues, gross profit increased to
24.7% for the 1997 fiscal year from a negative 10.7% for the 1996 fiscal year.
The improvement in gross profit was attributable to increased sales of LMDS
equipment, which typically have higher margins than the Company's other
products. In addition, gross profit for the 1996 fiscal year was adversely
affected as a result of a $1.4 million charge relating to the revaluation of the
Company's inventories.
Selling, General and Administrative. For the fiscal year ended June 30, 1997,
selling, general and administrative expenses increased by $309,000, or 9.6%, to
$3.5 million from $3.2 million for the fiscal year ended June 30, 1996. As a
percentage of net revenues, selling, general and administrative expenses
decreased to 30.9% in the 1997 fiscal year from 36.2% in the 1996 fiscal year.
Selling, general and administrative expenses increased as a result of higher
commission
<PAGE>
expenses resulting from increased sales, as well as higher professional fees
related to the mmTech merger and business development efforts. The decrease in
selling, general and administrative expenses as a percentage of net revenues was
primarily attributable to the spreading of expenses over a higher revenue base
and actions taken by management to conserve cash and rationalize the Company's
operations.
Research and Development. For the fiscal year ended June 30, 1997, research and
development expense increased by $19,000, or 3.0%, to $648,000 from $629,000 for
the fiscal year ended June 30, 1996. Research and development expenses for the
fiscal year ended June 30, 1997 related to both new product development as well
as enhancements of the Company's existing LMDS product line.
Interest Expense. For the fiscal year ended June 30, 1997, interest expense
increased by $308,000, or 67.6%, to $764,000 from $456,000 for the fiscal year
ended June 30, 1996. Interest expense increased primarily as a result of
increased borrowings used to finance the Company's working capital needs, as
well as an increase in the average rate of interest resulting from the failure
of the Company to comply with certain registration covenants contained in
certain of the Company's debt instruments.
Income Taxes. In the fiscal year ended June 30, 1997, the Company had an income
tax expense of $380,000, compared to an income tax benefit of $299,000 for the
fiscal year ended June 30, 1996. The Company and mmTech currently file separate
federal and state tax returns. The tax expense recorded in 1997 relates to
pre-tax income generated by mmTech.
Financial Condition, Liquidity and Capital Resources
As of June 30, 1997, the Company had cash and cash equivalents of $368,000. As
of such date, the Company had total current assets of $6.7 million and total
current liabilities of $9.7 million.
Net cash provided by operating activities was $212,000 for the 1997 fiscal year,
compared to cash used for operating activities of $2.1 million in fiscal 1996.
Net cash provided by operating activities during fiscal 1997 resulted primarily
from a significant increase in accounts payable and accrued expenses as the
Company sought to defer payments to suppliers to conserve cash, offset in part
by a higher level of inventory, and the Company's net loss of $2.5 million. Net
cash used in operating activities during fiscal 1996 resulted primarily from the
Company's net loss of $4.9 million, offset in part by an increase in cash
resulting from payments received under certain long-term contracts, an increase
in accounts payable and accrued expenses and a decrease in accounts receivable
as the Company continued its efforts to conserve cash.
Net cash used for investing activities was $159,000 for the 1997 fiscal year,
and $139,000 for the 1996 fiscal year. Net cash used for investing activities in
each fiscal year resulted from the purchase of equipment to support the
Company's operations.
Net cash provided by financing activities was $46,000 for the 1997 fiscal year
and $2.2 million for the 1996 fiscal year. Net cash provided by financing
activities during fiscal 1997 resulted primarily from the proceeds of certain
debt and warrant issuances by the Company, offset in part by the repayment of
certain outstanding indebtedness. Net cash provided by financing activities
during fiscal 1996 resulted primarily from increased borrowings, offset in part
by the repayment of certain outstanding indebtedness.
The Company's capital expenditures during fiscal 1997 aggregated $159,000. Such
expenditures consisted primarily of the acquisition of equipment needed to
support the Company's operations. The Company anticipates that capital
expenditures during fiscal 1998 will increase, in part as a result of the
Company's intent to modernize its management information systems.
During the fiscal years ended June 30, 1997 and June 30, 1996, the Company
raised approximately $3.0 million from the private sales of convertible
debentures, convertible preferred stock and warrants to fund a portion of its
cash flow needs. To the extent that the Company is unable to meet its working
capital requirements by generating positive cash flow from operations, the
Company intends to continue to fund a portion of its working capital
requirements through the sale of its securities. See "Right to Designate
Directors; Changes in Control." There can be no assurance that the Company can
continue to finance its operations through the sale of securities or as to the
terms of any such sales that may occur in the future. If the Company is unable
to generate sufficient cash flows from operations or other sources, the Company
may not be able to achieve its growth objectives, may have to curtail further
its marketing, development or operations, and may be unable to continue as a
going concern.
The Company is a party to a Restated and Amended Term Loan Note, dated as of
April 25, 1997, and a Sixth Restated and Amended Revolving Credit Note, dated as
of April 25, 1997, pursuant to which North Fork Bank (the "Bank") has provided
the Company with a $640,000 term loan (the "Term Loan") which matures December
31, 1998 and a revolving credit facility (the "Revolver") which matures April
30, 1998, pursuant to which the Company is entitled to draw up to $2,200,000
assuming sufficient eligible inventory and accounts receivable (the Term Loan
and the Revolver are referred to herein collectively as the "Facility"). The
Term Loan and the Revolver bear interest at the rate of 2% per
<PAGE>
annum in excess of the Bank's prime rate. At June 30, 1997, the Bank's prime
rate was 8.5%. As a result of the Company's losses during fiscal 1997, as of
June 30, 1997, the Company was in violation of a covenant contained in the
Facility that the Company report net income of at least $1.00 for each fiscal
quarter beginning with the quarter ended June 30, 1997 (the "Net Income
Covenant"). Additionally, as of October 28, 1997, the Company was in violation
of a covenant contained in the Facility which required the Company to deliver
audited financial statements for the fiscal year ended June 30, 1997, and as of
November 14, 1997, the Company was in violation of a covenant contained in the
Facility requiring the Company to deliver to the Bank financial statements for
the fiscal quarter ended September 30, 1997 (these covenants are collectively
referred to herein as the "Reporting Requirement Covenants"). The Bank has
waived the Net Income Covenant default in respect of the fiscal quarters ended
June 30, 1997 and September 30, 1997. The Bank has also waived the Reporting
Requirement Covenants defaults until February 28, 1998.
In addition to the Facility, at June 30, 1997 the Company had issued and
outstanding $1,500,000 of its 12% Convertible Senior Subordinated Debentures due
December 31, 1998 (which were subsequently exchanged for the Amended and
Restated Class B 13% Senior Subordinated Debentures due July 29, 1999, the
"Class B Debentures"), which contain financial covenants identical to those
contained in the Facility. Accordingly, as of June 30, 1997, the Company was in
default in respect of the Net Income Covenant contained in the Class B
Debentures to the same extent as under the Facility. Additionally, as of October
28, 1997 and November 14, 1997, the Company was in default of the Reporting
Requirement Covenants to the same extent as under the Facility. The holder of
the Class B Debentures has waived the Net Income Covenant default in respect of
the fiscal quarters ended June 30, 1997, September 30, 1997 and December 31,
1997, and has waived the Reporting Requirement Covenants defaults until February
28, 1998. Pursuant to the terms of the Class B Debentures, the Company is
required to file a registration statement covering, among other things, the
resale of the shares of Common Stock issuable upon the conversion of Class B
Debentures on or prior to October 27, 1997 and to have the registration
statement declared effective by the Securities and Exchange Commission (the
"SEC") on or prior to January 25, 1998. The Company has not yet filed the
registration statement. As a result, effective October 28, 1997 the interest
rate on the Class B Debentures was increased by 1-1/2% per annum pursuant to
their terms. Unless the Company complies with its registration obligations, the
interest rate on the Class B Debentures will continue to increase (subject to a
maximum interest rate of 17% per annum). The holder of the Class B Debentures
has the right to declare all amounts thereunder due and payable if the
registration statement is not declared effective by the SEC on or prior to April
25, 1998. The holder of the Class B Debentures has waived until February 28,
1998 any default arising as a result of the Company's failure to file the
required registration statement.
At December 12, 1997, CT&T was indebted to the Company in the amount of
approximately $3.4 million, representing amounts due and owing as a result of
equipment purchased by CT&T, approximately $3.1 million of which was more than
60 days past due at such date. The Company has been engaged in discussions with
CT&T pursuant to which, among other things, the Company has sought payment of
all amounts past due from CT&T. In connection with those discussions, CT&T has
alleged that it is entitled to certain credits or offsets against amounts it
owes to the Company. The Company believes the objections to payment raised by
CT&T in its discussions with the Company are without merit.
In December 1997, CVNY entered into a letter agreement with the Company pursuant
to which CVNY agreed to pay on behalf of CT&T approximately $3.0 million of the
amounts owed by CT&T. Under the terms of the letter agreement, CVNY paid
$350,000 to the Company, and delivered to the Company a secured promissory note
in the principal amount of approximately $2.6 million (the "CVNY Note"). As of
December 28, 1997, CVNY had paid $49,500 pursuant to the CVNY Note. On December
31, 1997, the Company sold the CVNY Note for approximately $2.4 million.
There can be no assurance that the Company will receive payment of the remaining
amounts owed to it by CT&T or as to the timing of any such payments that are
ultimately made. The Company may be required to institute litigation against
CT&T for the payment of the amounts owed. Any such litigation is likely to
result in the incurrence of significant expenses by the Company and may continue
for an extended period of time. In addition, there can be no assurance that the
Company will prevail in any such litigation or that any amount awarded to the
Company in such litigation will ultimately be collectible. Further, there can be
no assurance that CT&T would continue to purchase equipment from the Company if
such litigation were instituted.
Net Operating Loss Carry Forward
The Company and mmTech currently file separate federal and state income tax
returns. As of June 30, 1997, the Company had a $6.1 million net operating loss
carry forward available to be used to offset future income.
Inflation
Inflation was not a material factor in either the sales or the operating
expenses of the Company during the periods presented herein.
<PAGE>
Recent Pronouncements of the Financial Accounting Standards Board
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128") which establishes standards for computing and presenting earnings per
share. SFAS 128 replaces the presentation of primary earnings per share and
fully diluted earnings per share with basic earnings per share and diluted
earnings per share, respectively. Basic earnings per share excludes dilution and
is computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share is computed similarly to fully diluted earnings per share. The standard is
effective for financial statements for periods ending after December 15, 1997,
with earlier application not permitted.
Because the Company incurred losses in both of the fiscal years ended June 30,
1997 and 1996, the reported losses per share would not have been affected by
using this new standard.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information,"
which requires disclosure of reportable operating segments and will be effective
for financial statements issued for fiscal years beginning after December 31,
1997. The Company will be reviewing this pronouncement to determine its
applicability to the Company, if any.
Forward-Looking Statements
This Annual Report on Form 10-KSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements include,
but are not limited to, the anticipated development and growth of the markets
for the Company's products, the anticipated growth in the demand for the
Company's products, the Company's opportunities to increase sales through, among
other things, the development of new markets for the Company's products, the
development of new products, the probability of the Company's success in the
sale of its products in current or future markets, the potential effect of
government regulations, the Company's liquidity and capital requirements and the
Company's need for additional working capital. Although the Company believes
that the expectations reflected in such forward-looking statements are based on
reasonable assumptions, there can be no assurance that its expectations will be
realized. Forward-looking statements involve known and unknown risks that may
cause the Company's actual results for future periods to differ materially from
management's expectations. Future events and actual results, financial and
otherwise, could differ materially from those set forth in or contemplated by
the forward-looking statements contained herein. Factors that could cause
results to differ materially from the Company's expectations include, but are
not limited to, the following: general economic and political conditions, as
well as conditions in the markets for the Company's products; the Company's
history of losses, cash constraints and ability to continue as a going concern;
the recent shift in the Company's business focus; the Company's dependence on
and the effects of government regulation; the Company's dependence on the LMDS
market and uncertainties relating to the size and timing of any such market that
ultimately develops; the Company's dependence on large orders and the effects of
customer concentrations; the Company's relationship with CT&T and the resulting
limitations on the Company's ability to sell certain of its products to third
parties; the Company's dependence on the sale of securities to meet its working
capital needs; the Company's dependence on future product development and market
acceptance of the Company's products, particularly in the LMDS market; the
Company's limited proprietary technology; possible fluctuations in quarterly
results; the effects of competition; risks related to international business
operations; the Company's dependence on independent sales representatives; and
the Company's dependence on a limited number of suppliers. Other factors may be
described from time to time in the Company's other filings with the SEC, news
releases and other communications.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Item 7. Consolidated Financial Statements
Page
Opinions of Independent Certified Public Accountants 16, 17
Balance Sheet - June 30, 1997 18
Statements of Operations 19
Years ended June 30, 1997 and 1996
Statements of Stockholders' Equity (Deficiency) 20, 21
Years ended June 30, 1997 and 1996
Statements of Cash Flows 22
Years ended June 30, 1997 and 1996
Notes to Financial Statements 23-36
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
LogiMetrics, Inc. and Subsidiaries
Bohemia, New York
We have audited the accompanying consolidated balance sheet of LogiMetrics, Inc.
and Subsidiaries (the "Company") as of June 30, 1997 and the related
consolidated statements of operations, stockholders' equity (deficiency) and
cash flows for each of the two years in the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We did not audit the statements of income, accumulated deficit and
cash flows of mmTech, Inc., a wholly-owned subsidiary, for the year ended
October 31, 1996, which statements reflect total revenues constituting 43% of
consolidated total revenues for the year ended June 30, 1996. Those financial
statements were audited by other auditors whose report (which as to 1996 is
qualified because they were unable to perform an opening physical inventory
observation, the effect of which, in our opinion, is not material in relation to
the consolidated financial statements) has been furnished to us, and our
opinion, insofar as it relates to the amounts included for mmTech, Inc. is based
solely on the report of such auditors.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of June 30, 1997, and the results of their
operations and their cash flows for each of the two years in the period ended
June 30, 1997 in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company's losses from operations, its
deficiency in working capital and the stockholders' capital deficiency raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Jericho, New York
January 5, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
mmTech, Inc.
We have audited the statements of income, accumulated deficit, and cash flows of
mmTech, Inc. for the year ended October 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
We did not observe the physical inventory (stated at $390,868) taken as of
October 31, 1995, since that date was prior to our engagement as auditors for
the Company.
In our opinion, except for the effects of any adjustments that might have been
determined to be necessary in the statements of income, accumulated deficit, and
cash flows had we been able to observe the physical inventory taken as of
October 31, 1995, the financial statements referred to in the first paragraph
present fairly, in all material respects, the results of operations and cash
flows of mmTech, Inc. for the year ended October 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Reydel, Perier & Neral
REYDEL, PERIER & NERAL, PA
Wall, New Jersey
February 7, 1997
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED BALANCE SHEET
June 30, 1997
ASSETS
<S> <C> <C>
Current Assets
Cash (Note 8) $ 368,327
Accounts receivable, less allowance
for doubtful accounts of $150,000 2,156,464
Costs and estimated earnings in excess of
billings on uncompleted contracts (Note 4) 785,013
Inventories (Note 5) 3,349,036
Prepaid expenses and other current assets 89,512
----------
Total current assets 6,748,352
Equipment and fixtures (net) (Note 7) 620,243
Deferred financing costs 216,462
Other assets 38,443
----------
TOTAL ASSETS $ 7,623,500
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and other accrued expenses $ 4,975,804
Advance payments 1,125,907
Income taxes payable 416,564
Current portion of long-term debt (Note 8) 3,193,018
---------
Total current liabilities 9,711,293
Long term debt 1,594,314
----------
TOTAL LIABILITIES 11,305,607
----------
Commitments (Note 12)
Stockholders' deficiency (Notes 8 and 10)
Preferred Stock:
Series A, stated value $50,000 per share;
authorized, 200 shares; issued and
outstanding, 30 shares 990,564
Warrants (Note 10) 1,023,234
Common Stock:
Par Value $.01; authorized,
100,000,000 shares; issued and
outstanding, 22,391,434 shares 223,914
Additional paid-in capital 1,644,583
Deficit (7,401,452)
Stock subscriptions receivable ( Note 10 ) (162,950)
-----------
TOTAL STOCKHOLDERS' DEFICIENCY (3,682,107)
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 7,623,500
==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED JUNE 30,
1997 1996
----- ----
Restated (Note 2)
Net Revenues $ 11,374,182 $ 8,879,544
Cost and expenses:
Cost of revenues ( Note 4 ) 8,563,694 9,831,316
Selling, general and
administrative expenses 3,520,094 3,211,232
Research and development 647,919 628,967
--------- ---------
Loss from operations (1,357,525) (4,791,971)
Interest expense 763,801 455,741
---------- ----------
Loss before income taxes (2,121,326) (5,247,712)
( Benefit ) provision for
income taxes ( Note 9 ) 380,000 (299,000)
---------- ------------
Net loss (2,501,326) (4,948,712)
Preferred stock dividends 234,164 57,205
---------- ------------
Net loss attributable
to common shareholders $ (2,735,490) $ (5,005,917)
=============== ===============
Loss per common
share ( Note 11 ) $ (0.12) $ (0.23)
Weighted average number of common
shares and equivalents outstanding
( Note 10 ) 22,282,361 22,202,754
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY ( DEFICIENCY )
Par Value
Class A Class B Additional Stock Retained Stockholders'
Common Common Preferred Paid-in Subscriptions Earnings Equity
Stock Stock Stock Capital Warrants Receivable (Deficit) (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1995
as previously reported $ 261,060 $ 25,000 - $ 1,949,209 - $ (177,950) $ 601,395 $ 2,658,714
Common stock issued
pursuant to merger
(Note 3 ) 1,924,780 - - (1,923,780) - - (216,400) (215,400)
_________ _______ ______ ___________ ______ ___________ __________ ___________
Balance, June 30, 1995
as restated (Note 3) 2,185,840 25,000 - 25,429 - (177,950) 384,995 2,443,314
_________ _______ ______ ___________ ______ ____________ ___________ ___________
Receipt of stock
subscription payments - - - - - 13,750 - 13,750
Issuance of Warrants
Series A - - - - 11,285 - - 11,285
Series B - - - - 28,215 28,215
Series C - - - - 457,628 457,628
Series D 509,436 509,436
Series E 10,000 10,000
Series F 6,670 6,670
Preferred Stock issuance 990,564 990,564
Conversion of Class B
Common Stock to Class
A Common Stock 25,000 (25,000) - - - - - -
Change in par value per
share from
$.10 to $.01 (1,989,756) - - 1,989,756 - - - -
Exercise of Series D
Warrants 943 - - - - - - 943
Expenditures relating to
Preferred Stock
offering and
registration
statement - - - (370,602) - - - (370,602)
Net loss - - - - - - (4,948,712) (4,948,712)
Preferred Stock dividends - - - - - - (57,205) (57,205)
________ _________ ______ ________ _______ _____ __________ __________
Balance, June 30, 1996 222,027 - 990,564 1,644,583 1,023,234 (164,200) (4,620,922) (904,714)
________ _________ ______ ________ _______ _____ __________ __________
Receipt of stock
subscription payments 1,250 1,250
Exercise of Series D
Warrants 1,887 1,887
Net loss (2,501,326) (2,501,326)
Change in year end of pooled
company (45,040) (45,040)
Preferred Stock dividends - - - - - - (234,164) (234,164)
___________ ________ ________ _________ _________ ________ ____________ ____________
Balance, June 30, 1997 $ 223,914 $ - $ 990,564 $ 1,644,583 $ 1,023,234 $(162,950) $ (7,401,452)$(3,682,107)
=========== ======== ======== ========== =========== ========== ============= ===========
(continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (Continued)
Class A Class B Preferred
Common Stock Common Stock Stock
<S> <C> <C> <C>
Shares Outstanding
Balance at June 30, 1995
As previously reported 2,610,614 250,000 -
Common Stock issued pursuant to the merger
(Note 3) 19,247,800 - -
Balance, June 30, 1995
As restated (Note 3) 21,858,414 250,000 -
Issuance of Preferred
Stock - - 30
Conversion of Class B
Common Stock to Class A 250,000 (250,000) -
Exercise of Series D
Warrant 94,340 - -
Balance at June 30, 1996 22,202,754 - 30
Exercise of Series D Warrants 188,680 - -
Balance, June 30, 1997 22,391,434 - 30
========== ======== ======
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED JUNE 30,
1997 1996
------ ----
Restated (Note 3)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (2,501,326) $ (4,948,712)
---------------- ---------------
Adjustments to reconcile net loss to net cash
provided by ( used for ) operating activities:
Depreciation and amortization 462,861 198,662
Allowance for doubtful accounts 75,000 70,500
Deferred income tax ( benefit ) - (299,000)
Increase ( decrease ) in cash from:
Accounts receivable 443,865 428,080
Costs and estimated earnings
in excess of billings on
uncompleted account contracts 216,750 2,357,220
Inventories (929,883) (963,956)
Prepaid expenses and other
current assets 134,485 (124,195)
Accounts payable and accrued expenses 1,870,188 657,427
Other assets 440,282 564,726
--------- ---------
Total adjustments 2,713,548 2,889,464
--------- ---------
Net cash provided by ( used for ) operating activities 212,222 (2,059,248)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and fixtures (159,301) (139,325)
--------- ---------
Net cash used for investing activities (159,301) (139,325)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of debt issuance - net 291,003 568,602
Proceeds of warrant issuance - 1,023,234
Proceeds of preferred stock issuance - 1,129,398
Repayment of loans from stockholders (5,972) (86,032)
Proceeds from exercise of warrants 1,887 943
Decrease in stock subscriptions receivable 1,250 13,750
Repayment of debt (242,010) (429,191)
--------- ---------
Net cash provided by financing activities 46,158 2,220,704
--------- ---------
NET INCREASE IN CASH 99,079 22,131
CASH and CASH EQUIVALENTS, beginning of period 269,248 230,991
--------- ---------
CASH and CASH EQUIVALENTS, end of period $ 368,327 $ 253,122
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997 AND 1996
1. Description of Business and Summary of Significant Accounting Policies
a. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
LogiMetrics, Inc. ("LogiMetrics") and its wholly owned subsidiaries, mmTech,
Inc. ("mmTech") and LogiMetrics FSC, Inc. (collectively, the "Company"). All
intercompany balances and transactions have been eliminated. The consolidated
financial statements of the Company have been prepared to give retroactive
effect to the business combination with mmTech (Note 3) which occurred on April
25, 1997 and has been accounted for as a pooling of interests.
b. Revenue Recognition
Revenues related to products with short-term production cycles are recognized
when the products are shipped. The Company reports revenues from the sale of
products which have production cycles longer than three months on the
percentage-of-completion method for financial reporting purposes. Revenues under
these contracts are recognized based on the proportion of contract costs
incurred to total estimated contract costs. Contract costs include all direct
material and labor costs and those indirect costs related to contract
performance, such as indirect labor, supplies, tools, repairs, and depreciation
costs. Selling, general, and administrative costs are charged to expense as
incurred. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined.
The net sales value of partially completed contracts in excess of billings is
included in current assets.
c. Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
d. Equipment and Fixtures
Equipment and fixtures are recorded at cost and include equipment under capital
leases. Depreciation and amortization are provided by the straight-line method
over an estimated useful life of five or ten years and in the case of leasehold
improvements, the remaining lease term.
e. Income Taxes
The Company accounts for income taxes pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes." Under this
method, deferred tax assets are determined based on differences between the
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
f. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
g. Long-Lived Assets
Effective July 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("Statement 121"). Statement 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used for long-lived assets and certain identifiable intangibles to be
disposed of. Statement 121 requires the review of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
of an asset may not be recoverable. The adoption of Statement 121 did not have a
material effect on the consolidated financial statements of the Company.
h. Fair Value of Financial Instruments
At June 30, 1997, the carrying amount of the Company's financial instruments,
including cash, accounts receivable, accounts payable, accrued liabilities, and
notes payable, approximated fair value because of their short-term maturities.
Long-term borrowings bear interest at variable rates, which approximate market.
i. Deferred Financing Costs
Deferred financing costs are amortized on a straight-line basis over the lives
of the related obligations.
j. Reclassifications
Certain amounts in the 1996 financial statements have been reclassified to
conform with 1997 presentation.
2. Financial Condition and Liquidity
On March 7, 1996, LogiMetrics was recapitalized and new management was brought
in to lead a restructuring of the company's operations (the "Restructuring").
The primary objective of the Restructuring was to redirect LogiMetrics' focus
toward the higher value-added, broad band wireless communications market.
Consistent with this focus, on April 25, 1997, a subsidiary of LogiMetrics
merged into mmTech, a manufacturer of broad band wireless communications
equipment. (The merger is further discussed in note 3.) As a result of the
change in focus, the merger and other operating inefficiencies preceding the
change in control, operations for the fiscal years ended June 30, 1997 and 1996,
have been significantly impacted.
As shown in the financial statements, during the years ended June 30, 1997 and
1996 the Company incurred net losses of $2,501,326 and $4,948,712, respectively,
and, at June 30, 1997, the Company's current liabilities exceeded its current
assets by $2,962,941, while its total liabilities exceeded its total assets by
$3,682,107. The net losses have caused the Company to be in default with respect
to certain covenants contained in the Company's debt instruments. While the
Company has currently obtained waivers covering such defaults (such defaults and
related waivers are more fully discussed in note 8), there can be no assurance
that the holders of such debt will agree to new waivers, if necessary, once the
original waivers expire.
The Company has not paid any dividends on its Series A 12% Cumulative
Convertible Redeemable Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), which have accumulated in the amount of approximately
$380,000 through December 12, 1997. Additionally, as of December 12, 1997, the
Company is past due in payments to vendors in an amount of approximately
$1,800,000.
Recognizing the need for additional resources to fund the Company's anticipated
operating shortfalls, management has entered into discussions with investment
bankers and other consultants to assist with identifying and pursuing additional
funding sources. In relation to these efforts, during the years ended June 30,
1997 and 1996, the Company raised approximately $3.0 million from the private
sale of convertible debentures, convertible preferred stock and warrants.
Through December 12, 1997 the Company raised approximately an additional $3.4
million through the private issuance of convertible debentures and warrants; and
on December 31, 1997, the Company sold approximately $2.6 million of notes
receivable for approximately $2.4 million in cash (refer to note 16 for further
information). While management expects that the continuing efforts of the
investment bankers and other consultants will result in the identification of
new financing sources, no assurance can be given that the Company will be
successful in raising capital.
Based upon the above information, the Company's financial statements for the
year ended June 30, 1997 have been prepared on a going concern basis which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company's continuation as a
going concern is dependant upon its ability to generate sufficient cash flow to
meet its obligations on a timely basis, to comply with the terms and covenants
of its financial agreements, to obtain additional financing or refinancing as
may be required, and ultimately to attain successful operations. If the Company
is unable to generate sufficient cash
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
flows from operations or other sources, the Company may not be able to achieve
its growth objectives, may have to curtail further its marketing, development or
operations, and may be unable to continue as a going concern.
3. Acquisition
On April 25, 1997, a wholly owned subsidiary of LogiMetrics merged into mmTech,
pursuant to which LogiMetrics issued 19,247,800 shares of its common stock, par
value $0.01 per share (the "Common Stock"), to Mr. Charles S. Brand, the sole
stockholder of mmTech. mmTech is primarily engaged in the design, development,
manufacturing and sale of telecommunications equipment used in Local Multipoint
Distribution Service ("LMDS") systems that deliver wireless video, telephone and
data signals. The acquisition has been accounted for as a pooling of interests
and, accordingly, the consolidated financial statements have been restated to
include the accounts of mmTech for all periods presented. The accompanying
consolidated financial statements for the year ended June 30, 1997 include the
operations of mmTech on a common fiscal year. The accompanying consolidated
financial statements for the year ended June 30, 1996 include the operations of
mmTech for the fiscal year ended October 31, 1996. Accordingly, as a result of
conforming fiscal years, mmTech=s net income for the period July 1, 1996 through
October 31, 1996 of $45,040 is included twice in the accompanying consolidated
statements of operations for the fiscal years ended June 30, 1997 and 1996, and
has been included as an adjustment to consolidated accumulated deficit. Included
in the operating results of the Company for the year ended June 30, 1997 are
approximately $3,600,000 of revenues and approximately $400,000 of net income of
mmTech prior to the date of acquisition. Because the acquisition was accounted
for as a pooling of interests, acquisition expenses of $135,000 have been
charged against results of operations in the year ended June 30, 1997.
The following is a reconciliation of certain restated amounts with amounts
previously reported for 1996:
Revenues:
As previously reported $ 5,038,193
Effect of mmTech pooling of interests 3,841,351
-----------
As restated $ 8,879,544
-----------
Net income (loss):
As previously reported $(5,196,067)
Effect of mmTech pooling of interests 190,150
-----------
As restated $ (5,005,917)
------------
Net income (loss) per share:
Primary:
As previously reported $ (1.82)
Effect of mmTech pooling of interests 1.59
-----------
As restated $ (0.23)
-----------
4. Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts
Costs and estimated earnings in excess of billings on uncompleted contracts
consist of the following at June 30, 1997:
Costs and estimated earnings $1,235,707
Less: Estimated loss upon completion (293,094)
Progress billings (157,600)
----------
$ 785,013
=========
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Inventories
Inventory consists of the following at June 30, 1997:
Raw material and components $1,573,727
Work-in-progress 1,211,598
Finished goods 563,711
__________
$3,349,036
==========
6. Supplementary Information - Statement of Cash Flows
Cash paid during the period for:
Year ended June 30,
1997 1996
---- ----
Interest $359,214 $331,356
Income taxes $ -0- $ 9,931
Non-cash investing and financing activities during the period for:
Year ended June 30,
1997 1996
---- ----
Machinery and equipment
purchased under capital lease $117,685 $ 107,686
7. Equipment and Fixtures
Equipment and fixtures, at cost, are summarized as follows at June 30, 1997:
Machinery and equipment $2,434,271
Furniture and fixtures 141,115
Leasehold improvements 179,562
----------
2,754,948
Less: accumulated depreciation and amortization (2,134,705)
-----------
$ 620,243
==========
8. Long-Term Debt
Long-term debt consists of the following at June 30, 1997:
Notes payable to Bank $2,375,961
Senior debentures 1,500,000
Less: Discount at issuance (457,628)
Plus: Amortization of discount 214,515
Subordinated debentures 300,000
Notes payable - officer (Note 15) 623,086
Notes payable - other 45,000
Capital lease obligations 186,398
----------
4,787,332
Less: current portion (3,193,018)
----------
1,594,314
==========
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Subordinated Debentures and Series A and Series B Warrants
On July 14, 1995, the Company completed a private offering of 15 units of its
securities at a price of $20,800 per unit. Each unit consisted of one $20,000
12% Convertible Subordinated Debenture and one Common Stock Purchase Warrant,
Series A. For managing the financing, Common Stock Purchase Warrants, Series B,
to purchase 1,500,000 shares of Common Stock were sold to SFM Group, Ltd.
("SFM") at a price of $.02 per share, with an exercise price of $0.25 per share.
Subsequently, on March 7, 1996, in connection with the Restructuring, all of the
holders of the 12% Convertible Subordinated Debentures and Common Stock Purchase
Warrants, Series A, and Common Stock Purchase Warrants, Series B, exchanged such
debentures and warrants for Amended and Restated 12% Convertible Subordinated
Debentures (the "Subordinated Debentures") and Amended and Restated Series A and
Series B Warrants of like tenor (the "Series A Warrants" and "Series B
Warrants", respectively). Refer to Note 10c for a further discussion of the
Series A Warrants and Series B Warrants.
At June 30, 1997, accrued interest on the Subordinated Debentures totaled
approximately $79,000. The principal was payable in one balloon payment on July
14, 1997. On that date, the holders of the Subordinated Debentures converted all
of the Subordinated Debentures into an aggregate of 1,200,000 shares of Common
Stock. All accrued interest on the Subordinated Debentures was paid on August
29, 1997.
North Fork Bank Credit Facilities
The Company is a party to a Restated and Amended Term Loan Note, dated as of
April 25, 1997, and a Sixth Restated and Amended Revolving Credit Note, dated as
of April 25, 1997, pursuant to which North Fork Bank (the "Bank") has provided
the Company with a $640,000 term loan (the "Term Loan") which matures December
31, 1998 and a revolving credit facility (the "Revolver") which matures April
30, 1998, pursuant to which the Company is entitled to draw up to $2,200,000
assuming sufficient eligible inventory and accounts receivable (the Term Loan
and the Revolver are referred to herein collectively as the "Facility"). The
Term Loan and the Revolver bear interest at the rate of 2% per annum in excess
of the Bank's prime rate. At June 30, 1997, the Bank's prime rate was 8.5%. As a
result of the Company's losses during fiscal 1997, as of June 30, 1997, the
Company was in violation of a covenant contained in the Facility that the
Company report net income of at least $1.00 for each fiscal quarter beginning
with the quarter ended June 30, 1997 (the "Net Income Covenant"). Additionally,
as of October 28, 1997, the Company was in violation of a covenant contained in
the Facility which required the Company to deliver audited financial statements
for the fiscal year ended June 30, 1997, and as of November 14, 1997, the
Company was in violation of a covenant contained in the Facility requiring the
Company to deliver to the Bank financial statements for the fiscal quarter ended
September 30, 1997 (these covenants are collectively referred to herein as the
"Reporting Requirement Covenants"). The Bank has waived the Net Income Covenant
default in respect of the fiscal quarters ended June 30, 1997 and September 30,
1997. The Bank has also waived the Reporting Requirement Covenants defaults
until February 28, 1998.
Senior Debentures and Series C Warrants
In connection with the Restructuring, the Company and Cerberus Partners, L.P.
("Cerberus") entered into a Unit Purchase Agreement, dated March 7, 1996 (the
"Unit Purchase Agreement"), pursuant to which the Company issued to Cerberus 30
Units (the "Units"), each Unit consisting of $50,000 in aggregate principal
amount of the Company's 12% Senior Subordinated Convertible Debentures due
December 31, 1998 (the "Senior Debentures") and a Common Stock Purchase Warrant
Series C (the "Series C Warrants") to purchase 84,746 shares of Common Stock for
$.01 per share at any time prior to March 7, 2003. The Company allocated the
$1,500,000 proceeds between the Senior Debentures and the Series C Warrants
based upon their estimated fair value as of March 7, 1996. On July 29, 1997, the
Senior Debentures were exchanged for the Amended and Restated Class B 13%
Convertible Senior Subordinated Debentures due July 29, 1999 (the "Class B
Debentures").
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Each Class B Debenture is convertible into 84,746 shares of Common Stock. The
Class B Debentures were senior in right of payment to the Company's Subordinated
Debentures, but are subordinate to the Company's Term Loan and Revolver. As a
result of the exchange of the Senior Debentures for the Class B Debentures, the
principal is payable on the Class B Debentures in one balloon payment due July
29, 1999.
The Class B Debentures contain financial covenants identical to those contained
in the Facility. Accordingly, as of June 30, 1997, the Company was in default in
respect of the Net Income Covenant contained in the Class B Debentures to the
same extent as under the Facility. Additionally, as of October 28, 1997 and
November 14, 1997, the Company was in default of the Reporting Requirement
Covenants to the same extent as under the Facility. The holder of the Class B
Debentures has waived the Net Income Covenant default in respect of the fiscal
quarters ended June 30, 1997, September 30, 1997 and December 31, 1997, and has
waived the Reporting Requirement Covenants defaults until February 28, 1998.
Pursuant to the terms of the Class B Debentures, the Company is required to file
a registration statement covering, among other things, the resale of the shares
of Common Stock issuable upon the conversion of Class B Debentures on or prior
to October 27, 1997 and to have the registration statement declared effective by
the Securities and Exchange Commission (the "SEC") on or prior to January 25,
1998. The Company has not yet filed the registration statement. As a result,
effective October 28, 1997 the interest rate on the Class B Debentures was
increased by 1-1/2% per annum pursuant to their terms. Unless the Company
complies with its registration obligations, the interest rate on the Class B
Debentures will continue to increase (subject to a maximum interest rate of 17%
per annum). The holder of the Class B Debentures has the right to declare all
amounts thereunder due and payable if the registration statement is not declared
effective by the SEC on or prior to April 25, 1998. The holder of the Class B
Debentures has waived until February 28, 1998 any default arising as a result of
the Company's failure to file the required registration statement.
Principal payments due on all long-term debt consist of the following:
Fiscal year ending June 30, 1998 $3,193,018
Fiscal year ending June 30, 1999 1,568,231
Fiscal year ending June 30, 2000 14,505
thereafter 11,578
----------
$4,787,332
==========
9. Income Taxes
The provision for (benefit from) income taxes consists of the following:
Year Ended June 30, 1997 Federal State Total
Current $ 272,000 $108,000 $ 380,000
Deferred (1,330,000) (307,000) (1,637,000)
Valuation Allowance 1,330,000 307,000 1,637,000
---------------------------------------
$ 272,000 $108,000 $ 380,000
======================================
Year Ended June 30, 1996 Federal State Total
Current - - -
Deferred $(1,476,000) - $(1,476,000)
Valuation Allowance 1,177,000 - 1,177,000
----------------------------------------
$ (299,000) - $ (299,000)
========================================
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following is a summary of deferred tax assets as of June 30, 1997:
Current Deferred Taxes:
Costs in excess of deferred revenue $ 328,000
Inventory Reserves 356,000
Accounts Receivable 63,000
Accrued Expenses 70,000
-----------
Total Current 817,000
-----------
Non-Current Deferred Taxes:
Depreciation 18,000
NOL Carry-forward 2,553,000
---------
Non-Current 2,571,000
---------
Total Deferred Tax Assets 3,388,000
Valuation Allowance (3,388,000)
----------
Net Deferred Tax Assets $ -
===========
The Company's effective tax rate differs from the anticipated federal statutory
rate. A reconciliation of the federal statutory rate to the Company's effective
tax rate is as follows:
% of Pretax Earnings
Years Ended June 30,
1997 1996
Federal statutory tax rate (34.0)% (34.0)%
Permanent difference 1.3 -
Net operating loss not producing
a current tax benefit 32.7 28.3
Federal and state taxes
related to the earnings
of mmTech:
State 3.4 -
Federal 12.8 1.4
Utilization of net operating
loss carry-forward - (1.4)
Other 1.7 -
------ ----
Final provision 17.9% (5.7)%
====== =====
10. Stockholders' Deficiency
a. Common and Preferred Stock
In August 1995, all 250,000 outstanding shares of Class B common stock were
converted to Common Stock.
In March 1996, the Company's Certificate of Incorporation was amended. Among
other things, the authorized common stock of the Company was increased from
7,000,000 shares of Class A common stock, par value $.10 per share, to
35,000,000 shares of Common Stock. The appellation "Class A" was eliminated from
the common stock, since there were no longer any shares of Class B common stock
outstanding. In addition, the Company's Certificate of Incorporation was amended
to authorize 200 shares of Preferred Stock.
In May 1997, the Company's Certificate of Incorporation was amended. Among other
things, the authorized Common Stock of the Company was increased from 35,000,000
shares of Common Stock to 100,000,000 shares of Common Stock. As of June 30,
1997, the Company had outstanding 22,391,434 shares of Common Stock and 30
shares of Preferred Stock. In addition, as of June 30, 1997, the Company had
20,312,980 shares of Common Stock reserved for issuance pursuant to stock
options, warrants and convertible securities outstanding as of that date. As of
December 12, 1997, the Company had outstanding 25,601,814 shares of Common Stock
and 28 shares of Preferred Stock. In addition, as of December 12, 1997, the
Company had 32,960,109 shares of Common Stock reserved for issuance pursuant to
stock options, warrants and convertible securities outstanding as of that date.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Preferred Stock and Series D Warrants
On March 7, 1996, the Company completed a private offering with respect to an
additional 30 units of its securities. Each unit was comprised of one share of
Preferred Stock and one Common Stock Purchase Warrant, Series D (the "Series D
Warrants"). Each share of Preferred Stock is convertible into 94,340 shares of
Common Stock. Each Series D Warrant entitles the holder thereof to purchase
94,340 shares of Common Stock at $.01 per share at any time prior to March 7,
2003. Holders of Preferred Stock have no voting or preemptive rights. The
Company allocated the $1,500,000 received between the Preferred Stock and the
Series D Warrants based upon their estimated fair value as of March 7, 1996.
Dividends on the Preferred Stock are payable quarterly, beginning June 15, 1996.
With respect to all the dividend payments due until December 12, 1997, the Board
of Directors has elected to defer payment until the Company has sufficient cash
for that purpose. Pursuant to the terms of the Preferred Stock and the Series D
Warrants, the Company is required to effect the registration for resale of,
among other things, the shares of Common Stock issuable upon the conversion of
the Preferred Stock and the exercise of the Series D Warrants. The Company has
not yet effected such registration.
The accumulated amount of dividends due on the Preferred Stock as of December
12, 1997 is approximately $380,000. As a result of the Company's failure to
effect the registration rights of the holders of the Preferred Stock, the
dividend rate on the Preferred Stock increased to 17% per annum effective March
4, 1997. Until the Company complies with its registration obligations, the
dividend rate will remain at 17% per annum.
The Preferred Stock is redeemable, at the Company's option, upon the giving of
thirty days prior written notice, unless the price of the Company's Common Stock
fell below $5.00 per share during the 120-day period immediately preceding the
date of the notice. If redeemed by the Company, the Preferred Stock must be
redeemed at stated value plus all accrued and unpaid accumulated dividends.
b. Stock Options
The Company applies APB Opinion No. 25 and related interpretations in accounting
for its stock option plans. Accordingly, no compensation cost has been
recognized for the fixed portion of its stock option plans. Had compensation
cost for the Company's fixed stock options been determined based on fair value
at the grant dates consistent with Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation to Employees" the Company=s
net loss attributable to common shareholders and net loss per share would have
increased to the pro forma amounts indicated below:
1997
As Pro
Reported Forma
Net loss attributable to
common shareholders $(2,735,490) $(3,321,825)
Net loss per share $(.12) $(.15)
The fair value of each option grant is estimated on the date of grant using the
Black Scholes option pricing model with the following weighted average
assumptions used for grants. The weighted average fair value of options granted
during fiscal 1997 was $0.55 per share.
1997
Dividend yield 0%
Expected volatility 100.0%
Risk-free interest rate 6.22%
Expected option lives, in years 5
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
LogiMetrics, Inc. 1997 Stock Compensation Program
In May 1997, the Company adopted the LogiMetrics, Inc. 1997 Stock Compensation
Program (the "Stock Compensation Program") which authorizes the granting of
incentive stock options, non-qualified supplementary options, stock appreciation
rights, performance shares and stock bonus awards to employees and consultants
of the Company (the "Employee Plans"). The Stock Compensation Program also
authorizes automatic option grants to directors who are not otherwise employed
by the Company (the "Independent Director Plan"). A total of 4,000,000 shares of
Common Stock are reserved for issuance in connection with the Stock Compensation
Program, of which up to 3,850,000 shares may be issued under the Employee Plans
and up to 150,000 shares may be issued under the Independent Director Plan.
In the event that an option or award granted under the Stock Compensation
Program expires, is terminated or forfeited or certain performance objectives
with respect thereto are not met prior to exercise or vesting, then the number
of shares of Common Stock covered thereby will again become eligible for grant
under the Stock Compensation Program. The Company will receive no consideration
for grants of options or awards under the Stock Compensation Program.
A summary of the status of the Stock Compensation Program at June 30, 1997 is
presented below:
Weighted
Weighted Average
Shares Average Remaining
Underlying Exercise Contractual
Options Price Life
Outstanding at beginning of year - - -
Granted 2,798,800 .55 10 Years
Exercised - -
Forfeited - -
-----------
Outstanding at end of year 2,798,800 $ .55
========= ======
Exercisable at end of year 1,442,935 $ .55 10 Years
========== ========
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Stock Option Grants
In May 1996, the Board of Directors granted non-qualified stock options to an
officer of the Company to purchase 250,000 shares of Common Stock at an exercise
price of $.50 per share, exercisable at any time on or prior to March 7, 2003.
In March 1996, the Board of Directors granted non-qualified stock options to a
former officer to purchase 1,000,000 shares of Common Stock at exercise prices
ranging from $.40 per share to $3.40 per share. Subsequently, on September 14,
1996, in connection with a settlement agreement with the former officer, the
grant was reduced to a total of 225,000 shares of Common Stock at $.40 per
share.
The options are exercisable in accordance with the following vesting schedule:
Date Vested Exercise Price Number of Shares
----------- -------------- ----------------
March 7, 1996 $.40 125,000
September 14, 1996 $.40 100,000
-------
Total 225,000
=======
In May 1994, the Board of Directors granted non-qualified stock options to two
officers to each purchase 300,000 shares of Common Stock at the fair market
value of $.10 per share. These options were exercisable in whole or in part at
any time until December 31, 1998. During the year ended June 30, 1995, each
officer exercised options for 100,000 shares of Common Stock. During the year
ended June 30, 1996, each officer agreed to terminate options for 100,000 shares
of Common Stock. At June 30, 1997, the balance of these exercisable options
equaled 100,000 shares of Common Stock for each of the two former officers.
c. Warrants
As of June 30, 1997, the Company had outstanding several series of warrants.
The Series A Warrants were issued in July 1995 in connection with the issuance
of the Subordinated Debentures and as of June 30, 1997 were exercisable for an
aggregate of 600,000 shares of Common Stock at an exercise price of $.25 per
share (subject to adjustment in certain circumstances). The Series A Warrants
expire on July 15, 2002.
The Series B Warrants were issued in July 1995 in connection with the issuance
of the Subordinated Debentures and as of June 30, 1997 were exercisable for an
aggregate of 1,500,000 shares of Common Stock at an exercise price of $.25 per
share (subject to adjustment in certain circumstances). The Series B Warrants
expire on July 15, 2002.
The Series C Warrants were issued in March 1996 in connection with the issuance
of the Senior Debentures and as of June 30, 1997 were exercisable for an
aggregate of 2,542,380 shares of Common Stock at an exercise price of $.01 per
share (subject to adjustment in certain circumstances). The Series C Warrants
expire on March 7, 2003.
The Series D Warrants were issued in March 1996 in connection with the issuance
of the Preferred Stock and as of June 30, 1997 were exercisable for an aggregate
of 2,547,180 shares of Common Stock at an exercise price of $.01 per share
(subject to adjustment in certain circumstances). The Series D Warrants expire
on March 7, 2003.
The Common Stock Purchase Warrants, Series E (the "Series E Warrants") were
issued in March 1996 in connection with a consulting agreement and as of June
30, 1997 were exercisable for an aggregate of 1,000,000 shares of Common Stock
at an exercise price of $.40 per share (subject to adjustment in certain
circumstances). The Series E Warrants expire on March 7, 2003.
The Common Stock Purchase Warrants, Series F (the "Series F Warrants") were
issued in May 1996 to certain directors, officers and other related parties as
compensation for services performed and as of June 30, 1997 were exercisable for
an aggregate of 667,040 shares of Common Stock at an exercise price of $.50 per
share (subject to adjustment in certain circumstances). The Series F Warrants
expire on March 7, 2003.
The Series A Warrants, Series B Warrants, Series C Warrants, Series D Warrants,
Series E Warrants and Series F Warrants are referred to herein collectively as
the "Warrants". Pursuant to the terms of the Warrants, the Company is required
to effect the registration for resale of, among other things, the shares of
Common Stock issuable upon the exercise of the Warrants. The Company has not yet
effected such registration.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
d. Stock Subscriptions Receivable
As of June 30, 1997, two former officers of the Company owed the Company
$106,350 and $56,600 for Common Stock purchased from the Company. By agreement,
such amounts are payable at the rate of $.25 per common share as shares are
sold. During the year ended June 30, 1997, $1,250 was paid to the Company by one
of the former officers.
e. Registration Rights
Under the terms of the Class B Debentures, the Preferred Stock, the Warrants,
and the options granted to an officer of the Company, the Company was obligated
to effect the respective holders' registration rights within 90 days after
issuance. The Company has not yet complied with these obligations.
11. Loss Per Share
Loss per common share was computed by dividing the net loss by the weighted
average number of shares of Common Stock outstanding during each of the years
presented. The loss per share calculations for 1997 and 1996 do not give effect
to common stock equivalents because they would have an antidilutive effect.
12. Commitments
a. Lease Agreements
The Company is obligated under several non-cancelable leases for office space
and equipment rentals. Annual minimum lease payments under non-cancelable
operating leases as of June 30, 1997 were as follows:
Fiscal year ending June 30, 1998 $ 285,827
Fiscal year ending June 30, 1999 284,625
Fiscal year ending June 30, 2000 230,523
thereafter 13,320
b. Employment Agreements
In connection with the merger with mmTech in April 1997, the Company entered
into five-year employment agreements with two officers of the Company, which
provide for base compensation totaling $350,000, subject to periodic increases
at the discretion of the Company's Board of Directors. The agreements also
provide for certain life insurance and severance benefits.
13. Major Customers
One customer accounted for 54% and 41% of revenues, for the years ended June 30,
1997 and 1996, respectively.
Sales to foreign customers by geographic location, as a percentage of total
revenues, were as follows:
Years ended June 30, 1997 1996
--------------------------- ---- ----
Asia 16% 34%
Canada 11 2
Europe 9 5
---- ---
36% 41%
==== ====
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Pension Plan
The Company had two separate defined contribution plans covering eligible
full-time employees as of June 30, 1997. Participation in each plan is voluntary
and participants may contribute up to 15% of their compensation, subject to
federal limitations. The Company, at its discretion, can make matching
contributions to the LogiMetrics, Inc. Employees 401(k) Savings Plan (the
"LogiMetrics Plan"). For the years ended June 30, 1997 and 1996, the Company has
made no matching contribution to the LogiMetrics Plan. The mmTech, Inc. 401(k)
Plan and Trust (the "mmTech Plan") provides for a Company match of 5% of
participant contributions, plus a discretionary amount based on profitability.
Discretionary Company contributions are vested ratably over a 6-year period.
Company contributions for the year ended June 30, 1997 totaled $2,823 under the
mmTech Plan. The Company made no discretionary contributions to the mmTech Plan
in the fiscal year ended June 30, 1997.
15. Certain Relationships and Related Party Transactions
In July 1995, the Company sold to SFM Series B Warrants to purchase 1,500,000
shares of Common Stock, at a price of $.02 per share, with an exercise price of
$0.25 per share, in connection with obtaining financing for the Company. Alfred
Mendelsohn and Lawrence I. Schneider, former directors of the Company, were
principals in SFM. Mark B. Fisher, a director of the Company, was also a
principal in SFM.
In December 1995, the Company entered into a consulting agreement with two
companies, SFM and Phipps, Teman & Company, L.L.C. ("PTCO"), for services to be
rendered in obtaining additional financing for the Company. SFM and PTCO were
granted Series E Warrants to purchase a total of 1,000,000 shares of the
Company's Common Stock at $.50 per share any time prior to March 7, 2003. SFM
and PTCO also were subsequently paid fees of $87,500 and $216,377, respectively,
when the financing was provided in March 1996. Norman M. Phipps, a director of
the Company, and Wade Teman, a former officer of the Company, are principals in
PTCO.
In May 1996, a former director of the Company, Lawrence I. Schneider, was
elected Chairman of the Executive Committee for a five-year term. As
compensation, he was paid $100,000, in June 1996. Mr. Schneider resigned as a
director in November 1996.
During the fiscal year ended June 30, 1996, the Company paid Orbitrex
International, Inc. ("Orbitrex"), whose President is Alfred Mendelsohn, a former
director of the Company, $71,000 for business development services provided to
the Company. Additionally, the Company granted Mr. Mendelsohn Series F Warrants
to purchase 100,000 shares of Common Stock at $.50 per share.
In June 1997, the Company entered into a consulting agreement with Orbitrex.
Under the consulting agreement, Orbitrex agreed to provide certain services in
connection with product development and international marketing opportunities.
Under the consulting agreement, Orbitrex is entitled to receive payments
aggregating $60,000, payable in monthly installments on or prior to April 30,
1998. In the consulting agreement, Orbitrex agreed to certain confidentiality,
non-competition and intellectual property covenants.
In July 1997, Mr. Phipps purchased 850,000 shares of Common Stock from the
Company for $467,500, or $0.55 per share. In connection with the purchase,
$8,500 was paid in cash from the proceeds of a one-time bonus paid to Mr. Phipps
and the remainder was paid in the form of a non-recourse secured promissory note
(the "Phipps Note"). The Phipps Note does not bear interest, has no fixed
maturity date, and is secured by a pledge of the shares of Common Stock
purchased by Mr. Phipps. The Phipps Note will automatically be forgiven upon the
occurrence of a "Change in Control Event" (as defined in the Phipps Note). The
Phipps Note will become due and payable upon the occurrence of certain events,
including a sale or other disposition by Mr. Phipps of the shares of Common
Stock or the termination of Mr. Phipps' employment as a result of a "Termination
for Cause" (as defined in the Phipps Note). If Mr. Phipps' employment
terminates, other than as a result of a Termination for Cause or a "Without
Cause Termination" (as defined in the Phipps Note), the Phipps Note will become
payable in 60 monthly installments. The Company has agreed to make certain
payments to Mr. Phipps in respect of certain federal income tax consequences
which may result from the terms of the Phipps Note.
Prior to its acquisition by the Company, Mr. Brand, the Company's Chairman and
Chief Executive Officer, lent certain amounts to mmTech on an as-needed basis to
fund a portion of mmTech's working capital requirements. The maximum amount
advanced by Mr. Brand was $649,150, and $623,086 in such advances were
outstanding at June 30, 1997. Pursuant to an agreement between Mr. Brand and the
Company, the Company has agreed to pay interest on the unpaid advances (which
previously had been interest-free) at a rate of seven percent per annum. The
Company also agreed that, subject to its cash flow requirements, it would use
its best efforts to repay up to $300,000 of such advances on or before September
30, 1997 and that the remaining advances
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
would be repaid at a rate of $50,000 per month, commencing in October 1997. As
of December 12, 1997, the Company has paid Mr. Brand $200,000 pursuant to the
arrangements described above.
Mr. Brand owns 40% of the outstanding common stock of Advanced Control
Components, Inc. ("ACC"). ACC currently sublets space from the Company at its
Eatontown, New Jersey facility and pays to mmTech $33,312 in annual rent.
Employees from mmTech perform services for ACC and employees from ACC perform
services for mmTech from time to time. The company utilizing such services pays
to the company providing such services an amount equal to two times the base
hourly salary of the employees providing such services for the number of hours
involved. Pursuant to such arrangements, ACC paid to mmTech net amounts of
$230,686 during the fiscal year ended June 30, 1997 and $154,850 during the
fiscal year ended June 30, 1996.
Certain holders of the Company's securities, including directors, officers and
beneficial owners of more than 5% of the Common Stock are entitled to certain
registration rights with respect to securities of the Company held by them.
16. Subsequent Events
In July 1997 the Company entered into a Purchase Agreement (the "Purchase
Agreement") with a group of institutional investors (the "Purchasers"),
including certain entities affiliated with Mark B. Fisher, a director of the
Company. Pursuant to the terms of the Purchase Agreement, the Company issued and
sold to the Purchasers $2,750,000 in aggregate principal amount of the Company's
Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures due July 29,
1999 (the "Class A Debentures"), Common Stock Purchase Warrants - Series G (the
"Series G Warrants") to purchase an aggregate of 7,350,000 shares of Common
Stock at an exercise price of $0.50 per share, Common Stock Purchase Warrants -
Series H (the "Series H Warrants") to purchase an aggregate of 1,100,000 shares
of Common Stock at an exercise price of $0.60 per share and Common Stock
Purchase Warrants - Series I (the "Series I Warrants") to purchase an aggregate
of 550,000 shares of Common Stock at an exercise price of $1.125 per share, for
a total purchase price of $3,352,500. Pursuant to the terms of the Purchase
Agreement, the Purchasers have the right, at any time prior to July 28, 1998, to
purchase an additional $833,333 in aggregate principal amount of the Class A
Debentures, Series G Warrants to purchase an aggregate of 2,000,000 shares of
Common Stock, Series H Warrants to purchase an aggregate of 333,333 shares of
Common Stock and Series I Warrants to purchase an aggregate of 166,667 shares of
Common Stock for a total purchase price of $1,000,000 (the "Purchase Option").
In connection with the transactions contemplated by the Purchase Agreement, the
Purchasers, the Company and Charles S. Brand entered into a Stockholders
Agreement (the "Stockholders Agreement") pursuant to which, among other things,
Mr. Brand agreed to certain restrictions on his ability to sell his shares of
Common Stock. Pursuant to the terms of the Stockholders Agreement, the size of
the Board of Directors was increased to seven members and the Purchasers
received the right to appoint three directors. In the event that the Purchase
Option is exercised in full, the number of directors will be increased to eight,
and the Purchasers will have the right to appoint an additional director. At any
time that the Purchasers are entitled to appoint at least four directors, at
either the request of Mr. Brand or the Purchasers, the size of the Board will be
further increased by one and Mr. Brand and the Purchasers will have the right to
mutually select an independent director to fill the resulting vacancy. Further,
in the event that Cerberus (or any subsequent holder of the Class B Debentures)
exercises its right under the Unit Purchase Agreement to designate a member of
the Board of Directors, the number of directors will be increased by two, the
holder of the Class B Debentures will have the right to appoint one director and
Mr. Brand and the Purchasers will have the right to appoint an additional
independent director.
Pursuant to the terms of the Stockholders Agreement, Mr. Brand has appointed
himself, Dr. Brand, Mr. Carreras and Mr. Phipps and the Purchasers have
appointed Messrs. Fisher, Garcia and Thompson as directors of the Company. To
facilitate the recomposition of the Board of Directors, Mr. Mendelsohn resigned
as a director of the Company effective upon the closing of the transactions
contemplated by the Purchase Agreement.
Under the terms of the Stockholders Agreement, the parties agreed to cause (i)
the Executive Committee of the Board of Directors to be comprised of two
directors designated by Mr. Brand and one director designated by the Purchasers,
(ii) the Audit Committee of the Board of Directors to be comprised of two
directors designated by Mr. Brand and two directors designated by the
Purchasers, and (iii) the Compensation Committee of the Board of Directors to be
comprised of two directors designated by Mr. Brand and two directors designated
by the Purchasers. In the event that the Purchase Option is exercised in full,
the Purchasers will have the right to designate a second director to serve on
the Executive Committee of the Board of Directors.
Pursuant to the terms of the Stockholders Agreement, an ad hoc committee of the
Board of Directors is to be formed to search for a permanent successor to Mr.
Brand as the Company's Chief Executive Officer. Mr. Brand has the right, in his
sole discretion, to approve any such
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
successor. Under the terms of the Stockholders Agreement, the successor Chief
Executive Officer will be treated as a director designated by Mr. Brand and will
be entitled to serve as a member of the Executive Committee of the Board of
Directors (which will be further increased in size to permit such appointment).
As of December 12, 1997, the ad hoc committee had not yet been formed.
Under the terms of the Stockholders Agreement, the holders of a majority of the
shares of Common Stock beneficially owned by the Purchasers have the right,
subject to certain limitations, to cause the Company to enter into a "Company
Sale". A Company Sale is defined to include (i) a sale of all or substantially
all of the assets of the Company (other than to certain affiliates), (ii) a
merger, consolidation, share exchange or other similar transaction in which the
holders of the Company's voting stock receive less than 50% of the voting power
of the surviving entity, (iii) a sale, disposition or issuance of shares of
voting stock of the Company in which a person or entity (other than a party to
the Stockholder Agreement or its affiliates) acquires 50% or more of the total
voting power of the Company, and (iv) the formation of certain partnerships,
joint ventures and other strategic alliances involving the sale or transfer of
all or substantially all of the assets of the Company to a third party.
The Stockholders Agreement terminates upon the earliest to occur of (i) the
written consent of the holders of a majority of the shares of Common Stock
beneficially owned by the Purchasers and the holders of a majority of the shares
of Common Stock then beneficially owned by Mr. Brand and certain transferees,
(ii) Mr. Brand and certain transferees, as a group, or the Purchasers, as a
group, becoming the beneficial owners of less than 10% of the outstanding Common
Stock (determined on a fully-diluted basis), or (iii) upon the consummation of a
Company Sale in accordance with the terms of the Stockholders Agreement.
MBF Capital Corporation ("MBF"), an entity controlled by Mark B. Fisher, a
director of the Company, paid $35,000 of the purchase price payable by it in
connection with its July 1997 purchase of the Class A Debentures, Series G
Warrants, Series H Warrants, and Series I Warrants in the form of a non-recourse
secured promissory note (the "MBF Note"). The MBF Note matures on July 29, 2000
and bears interest (compounded annually) at a rate of 6.07% per annum, which is
payable at maturity. The MBF Note is secured by a pledge of the Series G
Warrants purchased by MBF. The MBF Note will become immediately due and payable
upon the occurrence of certain events, including a sale or other disposition by
MBF of the Series G Warrants purchased by it or the consummation of a Company
Sale (as defined in the Stockholders Agreement).
On December 31, 1997, the Company sold without recourse approximately $2.6
million of notes receivable for approximately $2.4 million cash.
<PAGE>
Item 8. Changes in and Disagreements on Accounting and Financial Disclosures
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act by the Company
(a) The following table sets forth certain information regarding the Company=s
executive officers and directors as of December 12, 1997.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C> <C>
Charles S. Brand (1) 58 Chairman of the Board and Chief Executive Officer
Norman M. Phipps (1) 37 President, Chief Operating Officer
and Director
Russell J. Reardon 47 Senior Vice President-Finance and
Administration, Treasurer and Secretary
Frank A. Brand (2)(3) 73 Director
Jean-Francois Carreras (2)(3) 47 Director
Mark B. Fisher 38 Director
Francisco A. Garcia (2)(3) 46 Director
Kenneth C. Thompson (1)(2)(3) 50 Director
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
</TABLE>
Charles S. Brand. Mr. Brand has served as the Chairman of the Board and Chief
Executive Officer of the Company since April 1997. Since February 1994, Mr.
Brand has been the President of mmTech, which was acquired by the Company in
April 1997. Prior to founding mmTech, Mr. Brand was the founder and President of
Trontech, Inc., a manufacturer of wireless equipment for the cellular and PCS
markets. Mr. Brand has been involved in the development of LMDS systems and
architecture for over ten years. Mr. Brand is the nephew of Dr. Frank A. Brand.
Norman M. Phipps. Mr. Phipps has served as the President and Chief Operating
Officer of the Company since April 1997. From May 1996 to April 1997, Mr.
Phipps, served as Chairman of the Board and Acting President. Mr. Phipps has
served as a principal of Phipps, Teman & Company L.L.C. (APTCO@), a private
investment firm, since August 1993. From January 1991 to July 1993, Mr. Phipps
was Managing General Partner of CP Capital Partners, a private investment firm.
Mr. Phipps is a director of Avery Communications, Inc.
Russell J. Reardon. Mr. Reardon has served as the Senior Vice President-Finance
and Administration of the Company since April 1996 and as Secretary since May
1996. From October 1995 to April 1996, he served as Executive Vice President of
On Hold Productions, Inc., a telephone services and production firm. From
February 1991 to October 1995, he served as Chief Financial Officer of Faulding,
Inc., a generic pharmaceutical company.
Dr. Frank A. Brand. Dr. Brand has been a director in the Company since April
1997. Since 1991, Dr. Brand has been a private investor and consultant. Prior to
his retirement in 1991, Dr. Brand held several senior management positions with
M/A-COM, Inc., a major manufacturer of telecommunications products and systems,
including Chief Technical Officer, Chief Operating Officer and Acting Chief
Executive Officer. Dr. Brand is a Life-Fellow of the Institute of Electrical and
Electronic Engineers, a Fellow of Polytechnic University and a member of the
Engineering Dean=s Council at UCLA.
Jean-Francois Carreras. Mr. Carreras has been a director of the Company since
April 1997. Since October 1994, Mr. Carreras has been a partner in the Paris law
firm of Sokolow, Dunaud, Mercadier and Carreras. From October 1994 to July 1995,
Mr. Carreras was also a partner in the law firm of Arent, Fox, Kintner, Plotkin
& Kahn. Prior thereto, until October 1994, Mr. Carreras was a partner in the law
firm of Coudert Brothers. Mr. Carreras is a French citizen.
Mark B. Fisher. Mr. Fisher is the President of MBF Capital Corporation, Inc.
("MBF"), a firm that invests in and advises technology driven companies. From
1990 to 1996, Mr. Fisher served as a principal of Alex. Brown & Sons, Inc.(now,
BT Alex. Brown).
Francisco A. Garcia. Mr. Garcia has been a director of the Company since July
1997. From 1987 to December 1997, Mr. Garcia has served as Chairman of the Board
of Neptune Management Company, Inc., a manager of funds and accounts investing
in distressed securities, obligations and consumer receivables. Since 1991, Mr.
Garcia has also served as President of Nethuns, Inc., a firm engaged in
financial advisory, consumer finance and investment activities. Mr. Garcia is a
Spanish citizen.
<PAGE>
Kenneth C. Thompson. Mr. Thompson has been a director of the Company since July
1997. Since April 1997, Mr. Thompson has been a private investor and consultant.
Prior to April 1997, Mr. Thompson held several senior management positions with
Glenayre Electronics, Inc., including President of the Voice and Data
Technologies Group and Executive Vice President - Sales and Marketing. Glenayre
is a manufacturer of infrastructure equipment for the paging and cellular
industry.
Each director serves until the next annual meeting of stockholders and until his
successor is duly elected and qualified.
The Company currently does not regularly compensate directors for their service
to the Company. However, directors are reimbursed for out-of-pocket expenses
incurred in their capacity as directors of the Company.
Dr. Brand, Mr. Fisher and Mr. Thompson provide consulting services to the
Company and receive or will receive certain fees and/or options to purchase the
Company's Common Stock in connection therewith. See "Employment Agreements and
Compensation Arrangements."
Pursuant to the terms of the Stock Compensation Program, each director who has
not been a full-time employee of the Company or any subsidiary for at least the
prior 12 months receives an option to purchase 5,000 shares of Common Stock each
year on the earlier of (i) the date of the Company's annual meeting of
stockholders, or (ii) June 1. Options granted to such directors under the Stock
Compensation Program have an exercise price equal to the fair market value of
the underlying shares of Common Stock on the date of grant. See "1997 Stock
Compensation Program."
Right to Designate Directors; Changes in Control
In connection with the March 1996 recapitalization of the Company (the
"Restructuring"), the Company and Cerberus Partners, L.P. ("Cerberus") entered
into a Unit Purchase Agreement, dated March 7, 1996 (the "Unit Purchase
Agreement"), pursuant to which the Company issued to Cerberus 30 Units (the
"Units"), each Unit consisting of $50,000 in aggregate principal amount of the
Company's 12% Senior Subordinated Convertible Debentures due December 31, 1998
(subsequently exchanged for the Class B Debentures) and a Common Stock Purchase
Warrant Series C (the "Series C Warrants") to purchase 84,746 shares of Common
Stock. Pursuant to the terms of the Unit Purchase Agreement, Cerberus currently
has the right to require the Company to increase the size of the Board of
Directors by one person and to designate a person to fill the vacancy created by
such increase. Cerberus has not exercised its right to designate a director.
To assist the Company in effecting the Restructuring, the Company retained PTCO
and SFM Group, Ltd. ("SFM") pursuant to the terms of a consulting agreement,
dated December 20, 1995 (the "Consulting Agreement"). Pursuant to the terms of
the Consulting Agreement, among other things, Murray H. Feigenbaum, a former
President of the Company, and Jerome Deutsch, a former Executive Vice President
of the Company, granted irrevocable proxies to PTCO and SFM to vote the shares
of Common Stock owned by them at that time on certain matters, including the
election of directors (the "Voting Rights"). Under the terms of the Consulting
Agreement, PTCO had the right to elect three directors and SFM had the right to
elect two directors. Accordingly, since Mr. Feigenbaum and Mr. Deutsch owned
more than 50% of the Common Stock then outstanding, PTCO and SFM were deemed to
have acquired control of the Company at that time. In connection with the
acquisition of mmTech, PTCO and SFM irrevocably waived their rights under the
Consulting Agreement to appoint directors and to exercise the Voting Rights. SFM
is no longer in existence and its principals, which included Alfred Mendelsohn
and Lawrence I. Schneider, former directors of the Company, and Mark B. Fisher,
a director of the Company, have succeeded to its rights under the Consulting
Agreement and the proxy arrangements referenced above.
Pursuant to the terms of the Agreement and Plan of Merger, dated December 18,
1996, as amended (the "Merger Agreement"), among the Company, mmTech, a wholly
owned subsidiary of the Company ("Merger Sub"), and Charles S. Brand, Merger Sub
merged with and into mmTech (the "Merger") and mmTech became a wholly owned
subsidiary of the Company. Pursuant to the Merger, each outstanding share of
mmTech common stock was converted into 192,478 shares of Common Stock, resulting
in the issuance of a total of 19,247,800 shares of Common Stock to Mr. Brand.
Upon consummation of the Merger, Mr. Brand became the Chairman and Chief
Executive Officer of the Company and its largest stockholder. Accordingly, upon
consummation of the Merger, Mr. Brand acquired control of the Company. At that
time, Norman M. Phipps, previously the Chairman and Acting President of the
Company, became the President and Chief Operating Officer of the Company.
Following the Merger, the Company's Board of Directors was reconstituted to
consist of Mr. Brand, Dr. Frank A. Brand, Jean-Francois Carreras, Alfred
Mendelsohn and Mr. Phipps.
In July 1997 the Company entered into a Purchase Agreement (the "Purchase
Agreement") with a group of institutional investors (the "Purchasers"),
including certain entities affiliated with Mark B. Fisher, a director of the
Company. Pursuant to the terms of the Purchase Agreement, the Company issued and
sold to the Purchasers $2,750,000 in aggregate principal amount of the Company's
Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures due July 29,
1999
<PAGE>
(the "Class A Debentures"), Common Stock Purchase Warrants - Series G (the
"Series G Warrants") to purchase an aggregate of 7,350,000 shares of Common
Stock at an exercise price of $0.50 per share, Common Stock Purchase Warrants -
Series H (the "Series H Warrants") to purchase an aggregate of 1,100,000 shares
of Common Stock at an exercise price of $0.60 per share and Common Stock
Purchase Warrants - Series I (the "Series I Warrants") to purchase an aggregate
of 550,000 shares of Common Stock at an exercise price of $1.125 per share, for
a total purchase price of $3,352,500. Pursuant to the terms of the Purchase
Agreement, the Purchasers have the right, at any time prior to July 28, 1998, to
purchase an additional $833,333 in aggregate principal amount of the Class A
Debentures, Series G Warrants to purchase an aggregate of 2,000,000 shares of
Common Stock, Series H Warrants to purchase an aggregate of 333,333 shares of
Common Stock and Series I Warrants to purchase an aggregate of 166,667 shares of
Common Stock for a total purchase price of $1,000,000 (the "Purchase Option").
In connection with the transactions contemplated by the Purchase Agreement, the
Purchasers, the Company and Charles S. Brand entered into a Stockholders
Agreement (the "Stockholders Agreement") pursuant to which, among other things,
Mr. Brand agreed to certain restrictions on his ability to sell his shares of
Common Stock. Pursuant to the terms of the Stockholders Agreement, the size of
the Board of Directors was increased to seven members and the Purchasers
received the right to appoint three directors. In the event that the Purchase
Option is exercised in full, the number of directors will be increased to eight,
and the Purchasers will have the right to appoint an additional director. At any
time that the Purchasers are entitled to appoint at least four directors, at
either the request of Mr. Brand or the Purchasers, the size of the Board will be
further increased by one and Mr. Brand and the Purchasers will have the right to
mutually select an independent director to fill the resulting vacancy. Further,
in the event that Cerberus (or any subsequent holder of the Class B Debentures)
exercises its right under the Unit Purchase Agreement to designate a member of
the Board of Directors, the number of directors will be increased by two, the
holder of the Class B Debentures will have the right to appoint one director and
Mr. Brand and the Purchasers will have the right to appoint an additional
independent director.
Pursuant to the terms of the Stockholders Agreement, Mr. Brand has appointed
himself, Dr. Brand, Mr. Carreras and Mr. Phipps and the Purchasers have
appointed Messrs. Fisher, Garcia and Thompson as directors of the Company. To
facilitate the recomposition of the Board of Directors, Mr. Mendelsohn resigned
as a director of the Company effective upon the closing of the transactions
contemplated by the Purchase Agreement.
Under the terms of the Stockholders Agreement, the parties agreed to cause (i)
the Executive Committee of the Board of Directors to be comprised of two
directors designated by Mr. Brand and one director designated by the Purchasers,
(ii) the Audit Committee of the Board of Directors to be comprised of two
directors designated by Mr. Brand and two directors designated by the
Purchasers, and (iii) the Compensation Committee of the Board of Directors to be
comprised of two directors designated by Mr. Brand and two directors designated
by the Purchasers. In the event that the Purchase Option is exercised in full,
the Purchasers will have the right to designate a second director to serve on
the Executive Committee of the Board of Directors. All directors have been
designated by either Mr. Brand or the Purchasers to serve on the respective
Board committees set forth in the table in Part III. Pursuant to the terms of
the Stockholders Agreement, an ad hoc committee of the Board of Directors is to
be formed to search for a permanent successor to Mr. Brand as the Company's
Chief Executive Officer. Mr. Brand has the right, in his sole discretion, to
approve any such successor. Under the terms of the Stockholders Agreement, the
successor Chief Executive Officer will be treated as a director designated by
Mr. Brand and will be entitled to serve as a member of the Executive Committee
of the Board of Directors (which will be further increased in size to permit
such appointment). As of December 12, 1997, the ad hoc committee had not yet
been formed.
Under the terms of the Stockholders Agreement, the holders of a majority of the
shares of Common Stock beneficially owned by the Purchasers have the right,
subject to certain limitations, to cause the Company to enter into a "Company
Sale". A Company Sale is defined to include (i) a sale of all or substantially
all of the assets of the Company (other than to certain affiliates), (ii) a
merger, consolidation, share exchange or other similar transaction in which the
holders of the Company's voting stock receive less than 50% of the voting power
of the surviving entity, (iii) a sale, disposition or issuance of shares of
voting stock of the Company in which a person or entity (other than a party to
the Stockholder Agreement or its affiliates) acquires 50% or more of the total
voting power of the Company, and (iv) the formation of certain partnerships,
joint ventures and other strategic alliances involving the sale or transfer of
all or substantially all of the assets of the Company to a third party.
The Stockholders Agreement terminates upon the earliest to occur of (i) the
written consent of the holders of a majority of the shares of Common Stock
beneficially owned by the Purchasers and the holders of a majority of the shares
of Common Stock then beneficially owned by Mr. Brand and certain transferees,
(ii) Mr. Brand and certain transferees, as a group, or the Purchasers, as a
group, becoming the beneficial owners of less than 10% of the outstanding Common
Stock (determined on a fully-diluted basis), or (iii) upon the consummation of a
Company Sale in accordance with the terms of the Stockholders Agreement.
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee is currently comprised of Dr. Brand and
Messrs. Carreras, Garcia and Thompson. During the fiscal year ended June 30,
1997, Mr. Mendelsohn was also a member of the Compensation Committee. Mr.
Mendelsohn has entered into a consulting agreement with the Company.
The Company has entered into a consulting agreement with Dr. Brand pursuant to
which Dr. Brand provides strategic, technological and other services to the
Company for up to 90 days in any calendar year. Under the consulting agreement,
which expires April 30, 1999, Dr. Brand is entitled to receive a quarterly
payment of 36,363 shares of Common Stock. In the consulting agreement, Dr. Brand
has agreed to certain confidentiality, non-competition and intellectual property
covenants.
The Company intends to enter into a consulting agreement with Mr. Thompson
pursuant to which Mr. Thompson will provide strategic, technological and other
services to the Company for a period of six months. Under the consulting
agreement, Mr. Thompson will be entitled to receive a monthly retainer of
$12,000, reimbursement of certain office expenses and options to purchase 72,000
shares of Common Stock, a portion of which will be refundable in the event Mr.
Thompson is unable to provide services to the Company. In the consulting
agreement, Mr. Thompson will agree to certain confidentiality, non-competition
and intellectual property covenants.
No executive officer of the Company and no member of the Compensation Committee
is a member of any other business entity that has an executive officer that sits
on the Company's Board or on the Compensation Committee.
Item 10. Executive Compensation
The following table sets forth certain compensation paid to the Company's Chief
Executive Officer and each other executive officer of the Company whose total
annual salary and bonus for the fiscal year ended June 30, 1997 exceeded
$100,000 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
--------------------------------------------------------- Long-Term
Other Compensation
Name and Fiscal Annual Awards/Option
Principal Position Year Salary Bonus Compensation (# of Shares)
<S> <C> <C> <C> <C> <C>
Charles S. Brand 1997 $150,000 $-- * 20,000
Chairman of the Board 1996 150,000 -- * --
And Chief Executive Officer 1995 150,000 -- * --
Norman M. Phipps (A) 1997 $153,395 -- * 825,000
President and Chief 1996 -- -- -- --
Operating Officer 1995 -- -- -- --
Russell J. Reardon(B) 1997 $100,000 $50,000 * 310,000
Senior Vice President-- 1996 25,000 -- * 250,000
Finance and Administration 1995 -- -- -- --
</TABLE>
___________________
(A) Includes $130,325 in consulting fees paid to Mr. Phipps prior
to his employment by the Company in April 1997.
(B) Employment commenced in April 1996.
* Less than 10% of salary plus bonus.
<PAGE>
Option Grants
The following table summarizes certain information relating to the grant of
options to purchase Common Stock to each of the Named Executive Officers during
the fiscal year ended June 30, 1997:
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year(1)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
<S> <C> <C> <C> <C>
Charles S. Brand 20,000 .8% $.605 6/20/07
Norman M. Phipps 825,000 33.8% $.550 6/20/07
Russell J. Reardon 310,000 12.7% $.550 6/20/07
</TABLE>
(1) The Company did not grant stock appreciation rights during the fiscal year
ended June 30, 1997.
Fiscal Year-End Option Values
The following table sets forth information with respect to the Named Executive
Officers concerning unexercised options held by such Named Executive Officers as
of June 30, 1997. No stock options were exercised during the fiscal year ended
June 30, 1997.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Options Value of Unexercised
at Fiscal Year End In-The-Money Options at
(#) Exercisable/Unexercisable Fiscal Year End ($) (1)
----------------------------- -----------------------
<S> <C> <C>
Charles S. Brand -/20,000 $-/$-
Norman M. Phipps 543,334/281,666 $-/$-
Russell J. Reardon 350,000/210,000 $12,500/$-
</TABLE>
(1) Based on an estimated market value of $.55 per share for the Common
Stock on June 30, 1997.
1997 Stock Compensation Program
In May 1997, the Company adopted the Stock Compensation Program in order to
promote the interests of the Company, its direct and indirect present and future
subsidiaries and its stockholders by providing eligible persons with the
opportunity to acquire an ownership interest, or to increase their ownership
interest, in the Company as an incentive to remain in the service of the
Company. The Stock Compensation Program authorizes the granting of incentive
stock options, non-qualified stock options, stock appreciation rights,
performance shares and stock bonus awards to employees and consultants of the
Company and its subsidiaries, including those employees serving as officers or
directors of the Company (the "Employee Plans"). The Stock Compensation Program
also authorizes automatic option grants to directors who are not otherwise
employed by the Company (the "Independent Director Plan"). In connection with
the Stock Compensation Program, 4,000,000 shares of Common Stock are reserved
for issuance, of which up to 3,850,000 shares may be issued under the Employee
Plans and up to 150,000 shares may be issued under the Independent Director
Plan. The Stock Compensation Program is administered by the Compensation
Committee of the Board of Directors ("the Administrator").
Options and awards granted under the Stock Compensation Program may have an
exercise or payment price as established by the Compensation Committee, provided
that the exercise price of incentive stock options granted under the Employee
Plans may not be less than the fair market value of the underlying shares on the
date of grant. Options granted under the Independent Director Plan must have an
exercise price equal to the fair market value of the underlying shares on the
date of grant.
Unless otherwise provided at the date of grant, no option or award may vest
within one year of the date of grant and no option or award may be exercised
more than 10 years from the date of grant. Options granted under the Independent
Director Plan vest one year following the date of grant and expire if not
exercised on or before the fifth anniversary thereof. Unless otherwise specified
by the Compensation Committee, options and awards (other than pursuant to the
Independent Director Plan) vest in four equal installments on the first, second,
third and fourth anniversaries of the date of grant. Vesting of any option or
award granted under the Stock Compensation Program may be accelerated in certain
circumstances, including upon the occurrence of a "Change in Control Event" (as
defined in the Stock Compensation Program).
<PAGE>
Options and awards granted under the Stock Compensation Program are
nontransferable, except by will or by the laws of descent and distribution.
However, the Compensation Committee may permit the recipient of a non-incentive
stock option granted under the Employee Plans and options granted under the
Independent Director Plan to transfer the option to a family member or a trust
created for the benefit of family members. During the lifetime of a participant,
an option may be exercised only by the participant or a permitted transferee. In
the event that a participant's employment or service terminates as a result of
death, all vested awards will be paid to the participant's estate by the Company
and the participant's estate or any permitted transferee will have the right to
exercise vested options for a period ending on the earlier of the expiration
dates of such options or one year from the date of death. If the participant's
employment or service terminates as a result of retirement or a "disability" (as
set forth in the Stock Compensation Program), all vested awards will be paid to
the participant by the Company and the participant or any permitted transferee
will have the right to exercise vested options for a period ending on the
earlier of the expiration dates of such options or one year from the date of
termination. If the participant's employment or service terminates for cause,
all options and awards will automatically expire upon termination. If the
participant's employment or service terminates other than as a result of death,
disability, retirement or termination for cause, the participant will have the
right to collect all vested awards immediately and the participant or any
permitted transferee will have the right to exercise vested options for a period
ending on the earlier of the expiration dates of such options or awards or 30
days from the date of termination, subject to extension at the discretion of the
Administrator, or three months from the date of termination in the case of
options granted pursuant to the Independent Director Plan. In all cases, any
unvested options or awards will terminate as of the date of termination of
employment or service.
The Stock Compensation Program will terminate on April 30, 2007, unless earlier
terminated by the Board of Directors. No options or awards may be granted under
the Stock Compensation Program after its termination; however, termination of
the Stock Compensation Program will not affect the status of any option or award
outstanding on the date of termination.
Employment Agreements and Compensation Arrangements
In connection with the Merger, Mr. Charles Brand and Mr. Phipps entered into
five-year employment agreements with the Company. Pursuant to such agreements,
Mr. Brand receives an annual base salary of $200,000 and Mr. Phipps receives an
annual base salary of $150,000, subject to periodic increases at the discretion
of the Board of Directors. Mr. Brand and Mr. Phipps are entitled to participate
in all compensation and employee benefit plans, including such bonuses as may be
authorized by the Board of Directors from time to time. The Company also agreed
to provide and maintain a $1,000,000 term-life insurance policy for the benefit
of each of Mr. Brand and Mr. Phipps. In the event of the termination of
employment by the Company (other than upon death, permanent disability or a
"termination for cause"), each of Mr. Brand and Mr. Phipps would be entitled to
receive his then-current base salary for a period equal to the greater of (i)
the remainder of the term of his employment agreement, or (ii) twelve months
from the effective date of termination.
In July 1997, the Company entered into a consulting agreement with MBF, an
entity which is controlled by Mr. Fisher, pursuant to which MBF agreed to cause
Mr. Fisher to provide certain financial consulting services to the Company for
up to 25% of Mr. Fisher's business time. Under the consulting agreement, MBF is
entitled to receive a monthly payment of $5,000. The consulting agreement has a
term of 18 months.
In addition, the Company has entered into a consulting agreement with Dr. Brand
and intends to enter into a consulting agreement with Mr. Thompson. See
"Compensation Committee Interlocks and Insider Participation"
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Company's directors and executive officers and persons holding more than 10% of
a registered class of the Company's equity securities are required to file with
the SEC and to provide the Company with initial reports of ownership, reports of
changes in ownership and annual reports of ownership of common stock and other
equity securities of the Company. Based solely upon a review of such reports and
any amendments thereto which have been furnished to the Company, the Company has
not identified any reports required to be filed during the fiscal year ended
June 30, 1997 that were not filed in a timely manner.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of December 12, 1997 with respect
to beneficial ownership of the Common Stock by (i) each current director, (ii)
each Named Executive Officer, and (iii) all current executive officers and
directors as a group. The mailing address of each such person is c/o
LogiMetrics, Inc., 50 Orville Drive, Bohemia, New York 11716.
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership (1) Class
Charles S. Brand 19,374,467 (2) 75.5%
Norman M. Phipps 1,876,452 (3) 7.1%
Frank A. Brand - -
Jean-Francois Carreras 32,500 (4) *
Mark B. Fisher 4,776,365 (5) 15.8%
Francisco A. Garcia - -
Kenneth C. Thompson - -
Russell J. Reardon 353,333 (6) 1.4%
All Executive Officers 26,413,117 83.3%
And Directors as a (2,3,4,5,6)
group (8 persons)
* Less than 1%
(1) Each shareholder possesses sole voting and investment power with respect to
the shares listed, except as otherwise indicated. Includes shares of Common
Stock which the individual has the right to acquire within 60 days of
December 12, 1997.
(2) Includes (i) 40,000 shares of Common Stock issuable upon the exercise of
Amended and Restated Common Stock Purchase Warrants Series A (the "Series A
Warrants") held by Mr. Brand, and (ii) 6,667 shares of Common Stock
issuable upon the exercise of stock options exercisable within 60 days of
December 12, 1997.
(3) Includes (i) 296,042 shares of Common Stock issuable upon the exercise of
Common Stock Purchase Warrants Series E (the "Series E Warrants") held by
Mr. Phipps, (ii) 134,906 shares of Common Stock issuable upon the exercise
of Common Stock Purchase Warrants Series F ("the Series F Warrants") held
by Mr. Phipps, (iii) 23,585 shares of Common Stock issuable upon the
conversion of one-quarter share of Series A 12% Cumulative Convertible
Redeemable Preferred Stock, stated value $50,000 per share (the "Preferred
Stock") held by Mr. Phipps, and (iv) 548,334 shares of Common Stock
issuable upon the exercise of stock options exercisable within 60 days of
December 12, 1997.
(4) Consists of (i) 20,000 shares of Common Stock issuable upon the exercise of
Series E Warrants held by Mr. Carreras, and (ii) 12,500 shares of Common
Stock issuable upon the exercise of Series F Warrants held by Mr. Carreras.
(5) Includes (i) 264,105 shares of Common Stock issuable upon the conversion of
Class A Debentures held by Mr. Fisher, (ii) 60,000 shares of Common Stock
issuable upon the exercise of Series A Warrants held by Mr. Fisher, (iii)
520,000 shares of Common Stock issuable upon the exercise of Amended and
Restated Common Stock Purchase Warrants Series B (the "Series B Warrants")
held by Mr. Fisher, (iv) 241,935 shares of Common Stock issuable upon the
exercise of Series G Warrants held by Mr. Fisher,(v) 12,943 shares of
Common Stock issuable upon the exercise of Series H Warrants held by Mr.
Fisher, and (vi) 6,472 shares of Common Stock issuable upon the exercise of
Series I Warrants held by Mr. Fisher. Also includes (i) 500,000 shares of
Common Stock issuable to MBF upon the exercise of Series G Warrants held by
MBF, (ii) 528,210 shares of Common Stock issuable upon the conversion of
Class A Debentures held by MBF Broadband Systems, L.P. ("Broadband
Systems"), (iii) 483,871 shares of Common Stock issuable upon the exercise
of Series G Warrants held by Broadband Systems, (iv) 25,886 shares of
Common Stock
<PAGE>
issuable upon the exercise of Series H Warrants held by
Broadband Systems, (v) 12,943 shares of Common Stock issuable upon the
exercise of Series I Warrants held by Broadband Systems, (vi) 383,721
shares of Common Stock issuable upon the exercise of Series G Warrants held
by Phineas Broadband Systems, L.P. ("Phineas"), (vii) 767,442 shares of
Common Stock issuable upon the exercise of Series H Warrants held by
Phineas and (viii) 383,721 shares of Common Stock issuable upon the
exercise of Series I Warrants held by Phineas. Also includes 465,116 shares
of Common Stock issuable upon the exercise of additional Series G Warrants,
Series H Warrants and Series I Warrants which Phineas has the right to
acquire within 60 days of December 12, 1997. Mr. Fisher is the sole
officer, director and shareholder of MBF and MBF Broadband Systems, Inc.,
the general partner of both Broadband Systems and Phineas. Accordingly, Mr.
Fisher is deemed to be the beneficial owner of all shares of Common Stock
beneficially owned by each of MBF, Broadband Systems and Phineas.
(6) Consists of 353,333 shares of Common Stock issuable upon the exercise of
stock options exercisable within 60 days of December 12, 1997.
(a) Other Beneficial Owners: The following table provides information, as of
December 12, 1997, regarding the beneficial ownership of more than five
percent (5%) of the Company's Common Stock held by persons who are not
listed in the preceding table. Certain information contained herein has
been derived solely from filings made by such persons with the SEC.
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
Stephen Feinberg 5,156,370 (1) 16.8%
450 Park Avenue
New York, NY 10022
Gregory Manocherian 3,553,883 (2) 12.2%
3 New York Plaza
18th Floor
New York, NY 10004
Gerald B. Cramer 2,094,329 (3) 7.6%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
A.C. Israel
Enterprises, Inc. 2,094,329 (4) 7.6%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
CRM Partners, LP 1,884,896 (5) 6.9%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
CRM 1997 Enterprise
Fund, LLC 1,403,201 (6) 5.2%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
(1) Consists of (i) 2,613,990 shares of Common Stock issuable upon the exercise
of Class B Debentures held by Cerberus, and (ii) 2,542,380 shares of Common
Stock issuable upon the exercise of Series C Warrants held by Cerberus. Mr.
Feinberg is the Managing Member of Cerberus Associates, L.L.C., the general
partner of Cerberus and, accordingly, is deemed to be the beneficial owner
of all shares of Common Stock beneficially owned by Cerberus.
(2) Includes (i) 47,170 shares of Common Stock issuable upon the conversion of
one-half of a share of Preferred Stock held by Mr. Manocherian, (ii) 20,000
shares of Common Stock issuable upon the exercise of Series A Warrants held
by Mr. Manocherian, (iii) 47,170 shares of Common Stock issuable upon the
exercise of Common Stock Purchase Warrants, Series D held by Mr.
Manocherian. Also includes (i) 105,642 shares of Common Stock issuable upon
the conversion of Class A Debentures held by Kabuki Partners ADP, GP
("Kabuki"), (ii) 96,774 shares of Common Stock issuable upon the
<PAGE>
exercise of Series G Warrants held by Kabuki, (iii) 5,177 shares of Common
Stock issuable upon the exercise of Series H Warrants held by Kabuki, (iv)
2,589 shares of Common Stock issuable upon the exercise of Series I
Warrants held by Kabuki, (v) 391,486 shares of Common Stock issuable upon
the conversion of Class A Debentures held by Whitehall Properties LLC
("Whitehall"), (vi) 375,246 shares of Common Stock issuable upon the
exercise of Series G Warrants held by Whitehall, (vii) 19,186 shares of
Common Stock issuable upon the exercise of Series H Warrants held by
Whitehall, (viii) 9,593 shares of Common Stock issuable upon the exercise
of Series I Warrants held by Whitehall, (ix) 782,972 shares of Common Stock
issuable upon the conversion of Class A Debentures held by Pamela Equities
Corp. ("PEC"), (x) 750,492 shares of Common Stock issuable upon the
exercise of Series G Warrants held by PEC, (xi) 38,371 shares of Common
Stock issuable upon the exercise of Series H Warrants held by PEC, and
(xii) 19,186 shares of Common Stock issuable upon the exercise of Series I
Warrants held by PEC. Also includes (i) 268,276 shares of Common Stock
issuable upon the exercise or conversion of additional Class A Debentures,
Series G Warrants, Series H Warrants and Series I Warrants which Whitehall
has the right to acquire within 60 days of December 12, 1997, and (ii)
536,553 Shares of Common Stock issuable upon the exercise or conversion of
additional Class A Debentures, Series G Warrants, Series H Warrants and
Series I Warrants which PEC has the right to acquire within 60 days of
December 12, 1997. Mr. Manocherian is (i) the controlling general partner
of Kabuki, (ii) a member of Whitehall, and (iii) an officer of PEC.
Accordingly, Mr. Manocherian may be deemed to be the beneficial owner of
all shares of Common Stock beneficially owned by each of Kabuki, Whitehall
and PEC.
(3) Consists of (i) 782,972 shares of Common Stock issuable upon the conversion
of Class A Debentures held by Mr. Cramer, (ii) 717,247 shares of Common
Stock issuable upon the exercise of Series G Warrants held by Mr. Cramer,
(iii) 38,371 shares of Common Stock issuable upon the exercise of Series H
Warrants held by Mr. Cramer, and (iv) 19,186 shares of Common Stock
issuable upon the exercise of Series I Warrants held by Mr. Cramer. Also
includes 536,553 shares of Common Stock issuable upon the exercise or
conversion of additional Class A Debentures, Series G Warrants, Series H
Warrants and Series I Warrants which Mr. Cramer has the right to acquire
within 60 days of December 12, 1997.
(4) Consists of (i) 782,972 shares of Common Stock issuable upon the conversion
of Class A Debentures held by A.C. Israel Enterprises, Inc. ("ACIE"), (ii)
717,247 shares of Common Stock issuable upon the exercise of Series G
Warrants held by ACIE, (iii) 38,371 shares of Common Stock issuable upon
the exercise of Series H Warrants held by ACIE, and (iv) 19,186 shares of
Common Stock issuable upon the exercise of Series I Warrants held by ACIE.
Also includes 536,553 shares of Common Stock issuable upon the exercise or
conversion of additional Class A Debentures, Series G Warrants, Series H
Warrants and Series I Warrants which ACIE has the right to acquire within
60 days of December 12, 1997.
(5) Consists of (i) 704,675 shares of Common Stock issuable upon the conversion
of Class A Debentures held by CRM Partners, L.P. ("CRM Partners"), (ii)
645,522 shares of Common Stock issuable upon the exercise of Series G
Warrants held by CRM Partners, (iii) 34,534 shares of Common Stock issuable
upon the exercise of Series H Warrants held by CRM Partners, and (iv)
17,267 shares of Common Stock issuable upon the exercise of Series I
Warrants held by CRM Partners. Also includes 482,898 shares of Common Stock
issuable upon the exercise or conversion of additional Class A Debentures,
Series G Warrants, Series H Warrants and Series I Warrants which CRM
Partners has the right to acquire within 60 days of December 12, 1997.
(6) Consists of (i) 524,591 shares of Common Stock issuable upon the conversion
of Class A Debentures held by CRM 1997 Enterprise Fund, L.L.C. ("CRM
Enterprise Fund"), (ii) 480,556 shares of Common Stock issuable upon the
exercise of Series G Warrants held by CRM Enterprise Fund, (iii) 25,709
shares of Common Stock issuable upon the exercise of Series H Warrants held
by CRM Enterprise Fund, and (iv) 12,854 shares of Common Stock issuable
upon the exercise of Series I Warrants held by CRM Enterprise Fund. Also
includes 359,491 shares of Common Stock issuable upon the exercise or
conversion of additional Class A Debentures, Series G Warrants, Series H
Warrants and Series I Warrants which CRM Enterprise Fund has the right to
acquire within 60 days of December 12, 1997.
(b) Changes in Control: See "Right to Designate Directors; Changes in Control"
<PAGE>
Item 12. Certain Relationships and Related Transactions
In July 1995, the Company sold to SFM Series B Warrants to purchase 1,500,000
shares of Common Stock, at a price of $.02 per share, with an exercise price of
$0.25 per share, for services rendered in obtaining financing for the Company.
Alfred Mendelsohn and Lawrence I. Schneider, former directors of the Company,
were principals in SFM. Mark B. Fisher, a director of the Company was also a
principal in SFM.
In December 1995, the Company entered into a consulting agreement with two
companies, SFM and PTCO, for services to be rendered in obtaining additional
financing for the Company. SFM and PTCO were granted Series E Warrants to
purchase a total of 1,000,000 shares of the Company's Common Stock at $.50 per
share any time prior to March 7, 2003. SFM and PTCO also were subsequently paid
fees of $87,500 and $216,377, respectively, when the financing was provided in
March 1996. Norman M. Phipps, a director of the Company, and Wade Teman, a
former officer of the Company, are principals in PTCO.
In May 1996, a former director of the Company, Lawrence I. Schneider, was
elected Chairman of the Executive Committee for a five-year term. As
compensation, he was paid $100,000, in June 1996. Mr. Schneider resigned as a
director in November 1996.
During the fiscal year ended June 30, 1996, the Company paid Orbitrex
International, Inc. ("Orbitrex"), whose President is Alfred Mendelsohn, a former
director of the Company, $71,000 for business development services provided to
the Company. Additionally, the Company granted Mr. Mendelsohn Series F Warrants
to purchase 100,000 shares of Common Stock at $.50 per share.
In June 1997, the Company entered into a consulting agreement with Orbitrex.
Under the consulting agreement, Orbitrex agreed to provide certain services in
connection with product development and international marketing opportunities.
Under the consulting agreement, Orbitrex is entitled to receive payments
aggregating $60,000, payable in monthly installments on or prior to April 30,
1998. In the consulting agreement, Orbitrex agreed to certain confidentiality,
non-competition and intellectual property covenants.
In July 1997, Mr. Phipps purchased 850,000 shares of Common Stock from the
Company for $467,500, or $0.55 per share. In connection with the purchase,
$8,500 was paid in cash from the proceeds of a one-time bonus paid to Mr. Phipps
and the remainder was paid in the form of a non-recourse secured promissory note
(the "Phipps Note"). The Phipps Note does not bear interest, has no fixed
maturity date, and is secured by a pledge of the shares of Common Stock
purchased by Mr. Phipps. The Phipps Note will automatically be forgiven upon the
occurrence of a "Change in Control Event" (as defined in the Phipps Note). The
Phipps Note will become due and payable upon the occurrence of certain events,
including a sale or other disposition by Mr. Phipps of the shares of Common
Stock or the termination of Mr. Phipps' employment as a result of a "Termination
for Cause" (as defined in the Phipps Note). If Mr. Phipps' employment
terminates, other than as a result of a Termination for Cause or a "Without
Cause Termination" (as defined in the Phipps Note), the Phipps Note will become
payable in 60 monthly installments. The Company has agreed to make certain
payments to Mr. Phipps in respect of certain federal income tax consequences
which may result from the terms of the Phipps Note.
MBF, an entity controlled by Mark B. Fisher, a director of the Company, paid
$35,000 of the purchase price payable by it in connection with its July 1997
purchase of Class A Debentures, Series G Warrants, Series H Warrants, and Series
I Warrants in the form of a non-recourse secured promissory note (the "MBF
Note"). The MBF Note matures on July 29, 2000 and bears interest (compounded
annually) at a rate of 6.07% per annum, which is payable at maturity. The MBF
Note is secured by a pledge of the Series G Warrants purchased by MBF. The MBF
Note will become immediately due and payable upon the occurrence of certain
events, including a sale or other disposition by MBF of the Series G Warrants
purchased by it or the consummation of a Company Sale (as defined in the
Stockholders Agreement).
Prior to its acquisition by the Company, Mr. Brand, the Company's Chairman and
Chief Executive Officer, lent certain amounts to mmTech on an as-needed basis to
fund a portion of mmTech's working capital requirements. The maximum amount
advanced by Mr. Brand was $649,150, and $623,086 in such advances were
outstanding at June 30, 1997. Pursuant to an agreement between Mr. Brand and the
Company, the Company has agreed to pay interest on the unpaid advances (which
previously had been interest-free) at a rate of seven percent per annum. The
Company also agreed that, subject to its cash flow requirements, it would use
its best efforts to repay up to $300,000 of such advances on or before September
30, 1997 and that the remaining advances would be repaid at a rate of $50,000
per month, commencing in October 1997. As of December 12, 1997, the Company has
paid Mr. Brand $200,000 pursuant to the arrangements described above.
Mr. Brand owns 40% of the outstanding common stock of Advanced Control
Components, Inc. ("ACC"). ACC currently sublets space from the Company at its
Eatontown, New Jersey facility and pays to mmTech $33,312 in annual rent.
Employees from mmTech perform services for ACC and employees from ACC perform
services for mmTech from time to time. The company utilizing such services pays
<PAGE>
to the company providing such services an amount equal to two times the base
hourly salary of the employees providing such services for the number of hours
involved. Pursuant to such arrangements, ACC paid to mmTech net amounts of
$230,686 during the fiscal year ended June 30, 1997 and $154,850 during the
fiscal year ended June 30, 1996.
Certain holders of the Company's securities, including directors, officers and
beneficial owners of more than 5% of the Common Stock are entitled to certain
registration rights with respect to securities of the Company held by them.
For a description of certain other transactions between the Company and certain
of its directors, executive officers and major stockholders, See "Right to
Designate Directors; Changes in Control."
<PAGE>
PART IV
Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) The following exhibits are filed as part of this Form 10-KSB:
Number Description
3.1 Certificate of Incorporation, as amended, of LogiMetrics, Inc. (the
"Company").
3.2 By-laws, as amended, of the Company.
4.1 Form of the Company's Class A 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due July 29, 1999.
4.2 Form of Company's Amended and Restated Class B 13% Senior Subordinated
Convertible Pay-in-Kind Debentures due July 29, 1999.
10.1 Restated and Amended Term Loan Note, dated as of April 25, 1997, in favor
of North Fork Bank (the "Bank").
10.2 Sixth Restated and Amended Revolving Credit Note, dated as of April 25,
1997, in favor of the Bank.
10.3 Amended and Restated General Security Agreement, dated as of April 25, 1997
in favor of the Bank.
10.4 Purchase Agreement, dated as of July 29, 1997, among the Company and the
purchasers party thereto.
10.5 Stockholders Agreement, dated as of July 29, 1997, among the Company,
Charles S. Brand and the purchasers party thereto.
10.6 Unit Purchase Agreement, dated as of March 7, 1996, by and between the
Company and Cerberus Partners, L.P. ("Cerberus")
10.7 Amended and Restated Security Agreement dated March 7, 1996, as amended and
restated as of July 29, 1997, among the Company and Cerberus.
10.8 Agreement to Purchase and Sell Equipment, dated as of June 30, 1994, by and
between mmTech, Inc. and CellularVision Technology & Telecommunications,
L.P. ("CT&T").*
10.9 Letter Agreement, dated as of October 23, 1996, by and between the Company
and CT&T (previously filed as Exhibit 10 to the Company's Quarterly Report
on Form 10-QSB for the fiscal quarter ended December 31, 1996 and
incorporated herein by reference).
10.10 Letter Agreement, dated December 1, 1997, by and between the Company and
CellularVision of New York, L.P.
10.11 Assignment Agreement, dated as of December 31, 1997, by and between
the Company and NewStart Factors, Inc.
10.12 Agreement of Lease, dated as of April 22, 1997, by and between the Company
and Reckson FS Limited Partnership.
10.13 Lease, dated January 24, 1994, by and between Mid Atlantic Industrial Co.
and mmTech, Inc., as amended.
10.14 Employment Agreement, dated as of April 25, 1997, by and between the
Company and Charles S. Brand.
10.15 Employment Agreement, dated as of April 25, 1997, by and between the
Company and Norman M. Phipps.
10.16 Consulting Agreement, dated as of July 29, 1997, by and between the
Company and MBF Capital Corp. ("MBF").
10.17 Non-Recourse Secured Promissory Note, dated July 22, 1997, made by Norman
M. Phipps in favor of the Company.
10.18 Pledge Agreement, dated as of July 22, 1997, by and between the Company
and Norman M. Phipps.
10.19 Letter Agreement, dated as of August 6, 1997, by and between the Company
and Charles S. Brand.
10.20 Non-Recourse Secured Promissory Note, dated July 29, 1997, made by MBF in
favor of the Company.
10.21 Pledge Agreement, dated July 29, 1997, by and between the Company and MBF.
10.22 Stock Option Agreement, dated as of May 1, 1996, by and between the
Company and Russell J. Reardon.
10.23 LogiMetrics, Inc. 1997 Stock Compensation Program.
10.24 Form of Indemnification Agreement for Directors.
10.25 Consulting Agreement, dated January 20, 1998, by and between the Company
and Dr. Frank A. Brand.
11.1 Statement re: Computation of Net Loss per Share.
21.1 List of Subsidiaries of the Company.
27.1 Financial Data Schedule.
____________________
*Certain portions of this exhibit have been omitted based upon a request for
confidential treatment. The omitted portions of this exhibit have been
separately filed with the Securities and Exchange Commission.
<PAGE>
(b) Reports on Form 8-K:
On May 12, 1997, the Company filed with the SEC a Current Report on Form 8-K
dated April 25, 1997, relating to the acquisition of mmTech, Inc.
On July 9, 1997, the Company filed with the SEC an amended Current Report on
Form 8-K/A dated April 25, 1997, relating to the acquisition of mmTech, Inc.
<PAGE>
SIGNATURES
In accordance with Section 13 of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
LOGIMETRICS, INC.
Date: February __, 1998 By: /s/Charles S. Brand
_______________________________
Charles S. Brand
Chairman of the Board
Principal Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, this report on Form 10-KSB has been signed below by the following
persons on behalf of the Company and its capacities and on the dates indicated.
Date: February __, 1998 By: /s/Norman M. Phipps
_______________________________
Norman M. Phipps
President
Chief Operating Officer
Date: February __, 1998 By: /s/Frank A. Brand
_______________________________
Frank A. Brand, Director
Date: February __, 1998 By: /s/Jean-Francois
_______________________________
Jean-Francois, Director
Date: February __, 1998 By: /s/Mark B. Fisher
_______________________________
Mark B. Fisher, Director
Date: February __, 1998 By: /s/Francisco A. Garcia
_______________________________
Francisco A. Garcia, Director
Date: February __, 1998 By: /s/Kenneth C. Thompson
_______________________________
Kenneth C. Thompson, Director
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
THE UNDERSIGNED, a natural person, for the purpose of organizing a
corporation under the provisions and subject to the requirements of the General
Corporation Law of the State of Delaware, hereby certifies that:
FIRST: The name of the Corporation is LOGIMETRICS, INC.
SECOND: The registered office of the Corporation is to be located at
306 South State Street, in the City of Dover, in the County of Kent, in the
State of Delaware. The name of its registered agent at that address is the
United States Corporation Company.
THIRD: The purpose of the Corporation is to engage in any lawful act of
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: (a) The aggregate number of shares of stock which the
Corporation shall have authority to issue is one million (1,000,000) shares of
which eight hundred thousand (800,000) shares with a par value of ten cents
($.10) per share shall be designated "Class A Common Stock" and two hundred
thousand (200,000) shares with a par value of forty cents ($.40) per share shall
be designated "Class B Common Stock."
(b) The relative rights, preferences and limitations of the
shares of each class are as follows:
(i) the holders of the Class A Common Stock shall have one
vote per share for all purposes and the holders of the Class B Common Stock
shall have four votes per share for all purposes.
<PAGE>
(ii) at any time after the Corporation first has net
earnings after all federal, state and local taxes in any fiscal year, of
the sum of two hundred and fifty thousand ($250,000) dollars as determined
by the Corporation's regularly employed independent Certified Public
Accountant in accordance with generally accepted accounting principles each
share of Class B Common Stock may, at the option of the holder thereof, be
converted into four shares of Class A Common Stock.
FIFTH: The name and address of the incorporator is:
NAME ADDRESS
Robert S. Persky 477 Madison Avenue
New York, New York 10022
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and shareholders:
(1) The number of directors of the Corporation shall be such as
from time to time shall be fixed by, or in the manner provided in the
by-laws. Election of directors need not be by ballot unless the by-laws so
provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders.
(a) to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation;
<PAGE>
(b) to fix and vary the amount to be reserved for any
proper purpose;
(c) to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the Corporation;
(d) to determine the use and disposition of any surplus
or net profits;
(e) to determine from time to time whether, and to what
extent, and at what times and places, and under what conditions
and regulations, the accounts and books of the Corporation (other than
the stock ledger) or any of them, shall be open to the inspection of
the stockholders.
(3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or
at any meeting of the stockholders called for the purpose of considering
any such act or contract, and any contract or act that shall be approved or
be ratified by the vote of the holders of a majority of the stock of the
Corporation which is represented in person or by proxy at such meeting and
entitled to vote thereat (provided that a lawful quorum of stockholders be
there represented in person or by proxy) shall be as valid and as binding
upon the Corporation and upon all the stockholders as though it had been
approved or ratified by every stockholder of the
<PAGE>
Corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any
by-laws from time to time made by the directors or stockholders; provided,
however, that no by-laws so made shall invalidate any prior act of the
directors which would have been valid if such by-law had not been made.
SEVENTH: The Corporation shall, to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended from time to time,
indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of
<PAGE>
trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of Title B of the Delaware Code
order a meeting of the creditors or class or creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the 20th day
of December, 1968.
/s/Robert S. Persky
___________________(L.S.)
ROBERT S. PERSKY
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that personally appeared before me, on 20th day of
December, 1968, the undersigned, a Notary Public duly authorized to take
acknowledgment of deeds by the laws of the place where the foregoing certificate
of incorporation was signed, Robert S. Persky, the incorporator who signed the
foregoing certificate of incorporation, known to me personally to be such, and
who acknowledged the same to be his act and deed, and that the facts herein
stated are true. Given under my hand and seal of office the day and year
aforesaid.
/s/Stephen
______________________
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
The undersigned corporation, in order to amend its Certificate of
Incorporation, hereby certifies as follows:
FIRST: The name of the corporation is LOGIMETRICS, INC.
SECOND: The amendment to the Certificate of Incorporation to be
effected hereby is as follows:
(a) The paragraph number "Fourth" of the Certificate of Incorporation,
relating to capitalization is amended to read as follows:
"FOURTH: The total number of shares of stock which
the corporation shall have authority to issue is One
Million (1,000,000), of the par value of $.10 per share,
of which Eight Hundred Thousand (800,000) shares are
designated as Class A Common Stock and Two Hundred
Thousand (200,000) shares are designated as Class B
Common Stock."
Except as otherwise provided by law or herein, the holders of Class A
Common Stock shall have the sole voting power for the election of directors of
the corporation and no holder of Class B Common Stock shall have any right to
vote for the election of directors of the corporation. At every meeting of the
shareholders (i) each holder of Class A Common Stock shall be entitled to one
vote per share, voting with the holders of any other class of stock entitled to
vote, without regard to class, on all matters to be voted on by the shareholders
of the corporation and (ii) each holder of Class B Common Stock shall be
entitled to one vote per share, voting with the holders of any other class of
stock entitled to vote, without regard to class, on all matters to be voted on
by shareholders of the corporation other than for the election of directors of
the corporation. Subject to and upon compliance with the provisions of this
Article FOURTH, each record holder of Class B Common Stock shall be entitled at
any time and from time to time to convert any or all of the shares of Class B
Common Stock held by him into the same number of shares of Class A Common Stock.
Each conversion of shares of Class B Common Stock into shares of Class
A Common Stock shall be effected by the surrender of the certificate or
certificates representing the shares of Class B Common Stock to be converted at
the office of the
<PAGE>
Secretary of the corporation (and at such additional place or places as may from
time to time be designated by the Secretary or an Assistant Secretary of the
corporation) together with written notice by the holder of such Class B Common
Stock stating that such holder desires to convert the shares, or a stated number
of the shares, of Class B Common Stock represented by such certificate, into
Class A Common Stock, which notice shall also state the name or names (with
addresses) and denominations in which the certificate or certificates for Class
A Common Stock shall be issued and shall include instructions for delivery
thereof. Promptly after such surrender and the receipt of such written notice,
the corporation shall issue and deliver in accordance with such instructions the
certificate or certificates for the Class A Common Stock issuable upon such
conversion. Such conversion shall be deemed to have been effected as of the
close of business on the date on which such certificate or certificates shall
have been surrendered and such notice shall have been received by the
corporation and at such time the rights of the holder of such Class B Common
Stock (or specified portion thereof) as such shareholder shall cease and the
person or persons in whose name or names any certificate or certificates for
shares of Class A Common Stock are to be issued upon such conversion shall be
deemed to have become the holder or holders of record of the shares of Class A
Common Stock represented thereby.
If the certificate or certificates for Class A Common Stock are to be
registered in a name other than the name of the registered holder of Class B
Common Stock surrendered for conversion, the corporation shall not be required
to issue or deliver any certificate unless and until the holder of the stock
surrendered has paid to the corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance or shall establish
to the satisfaction of the corporation that such tax has been paid.
The corporation shall at all times reserve and keep available, out of
its authorized but unissued Class A Common Stock, such number of shares of Class
A Common Stock as shall be sufficient to effect conversion of all shares of
Class B Common Stock then outstanding.
When and as dividends are declared, whether payable in cash, in
property or in shares of stock of the corporation, the holders of Class B Common
Stock and the holders of Class A Common Stock shall be entitled to share
equally, share for share, in such dividends, except that if dividends are
declared which are payable in shares of Class B Common Stock or Class A Common
Stock, dividends shall be declared which are payable at the same rate in both
classes of stock and the dividends payable in shares of Class B Common Stock
shall be payable to holders of that class of stock and the dividends payable in
shares of Class A Common Stock shall be payable to holders of that class of
stock.
If the corporation shall in any manner subdivide or combine the
outstanding shares of Class A Common Stock, the outstanding shares of Class B
Common Stock shall be proportionately subdivided or combined.
<PAGE>
Shares of Class B Common Stock which are converted into shares of
Class A Common Stock as provided in this Article FOURTH shall not be reissued.
Except as herein otherwise expressly provided, all shares of Class B
Common Stock and Class A Common Stock shall be identical and shall entitle the
holders thereof to the same rights and privileges.
(b) The capital of the corporation will not be reduced under or by
reason of this Amendment.
THIRD: The amendment effected herein was authorized by the affirmative
vote of the holders of a majority of the outstanding shares entitled to vote
thereon at a meeting of shareholders pursuant to Section 222 and 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the corporation has caused this certificate to be
executed under its corporate seal the 3rd day of July, 1970.
ATTEST: LOGIMETRICS, INC.
/s/Robert S. Persky /s/Melvin Dubin
_________________________ By: __________________________
Robert S. Persky, Secretary Melvin Dubin, President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Be it remembered that on this 3rd day of July, 1970, personally came
before me, a Notary Public in and for the County and State aforesaid, Melvin
Dubin, who stated that he is the President of Logimetrics, Inc., and who is
known personally to me to be such, and acknowledged the foregoing document to be
the act and deed of the signers thereof, and that the facts stated therein are
true.
Given under my hand and seal of office the day and year aforesaid.
/s/Donald S. Snider
__________________________
Donald S. Snider
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
----------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
---------------------------------------------------
We, FRANK J. SPOSATO, President, and CARL J. BARONE, Secretary, of
LOGIMETRICS, INC., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article
FOURTH thereof as it now exists and inserting in lieu thereof a new first
paragraph of said Article FOURTH, reading as follows:
FOURTH: The total number of shares of stock which
the corporation shall have authority to issue is One
Million Five Hundred Thousand (1,500,000), of the par
value of $.10 per share, of which One Million Three
Hundred Thousand (1,300,000) shares are designated as
Class A Common Stock and Two Hundred Thousand (200,000)
shares are designated as Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted in accordance with
the provisions of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of a majority of the stock entitled to vote at a
meeting of stockholders.
IN WITNESS WHEREOF, we have signed this certificate this 13th day of
March, 1975.
/s/Frank J. Sposato
_________________________
Frank J. Sposato, President
/s/Carl Barone
_________________________
Carl J. Barone, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
---------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
--------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and JOEL HASEN, Assistant
Secretary of LOGIMETRICS, Inc., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which
the corporation shall have authority to issue is Three
Million Two Hundred Thousand (3,200,000), of the par
value of $.10 per share, of which Three Million
(3,000,000) shares are designated as Class A Common
Stock and Two Hundred Thousand (200,000) shares are
designated as Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 228(a) of the General Corporation Law of the State of
Delaware by the written consent of the holders of a majority of the shares of
Common Stock of said corporation entitled to vote at a meeting of stockholders,
and that written notice of the taking of such action has been given to the
holders of all such Common Stock.
IN WITNESS WHEREOF, we have signed this certificate this 25th day of
June, 1982.
/s/Murray H. Feigenbaum
_______________________________
Murray H. Feigenbaum, President
ATTEST:
/s/Joel Hasen
_______________________________
Joel Hasen, Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
--------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
--------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and JOEL HASEN, Assistant
Secretary of LOGIMETRICS, Inc., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which
the corporation shall have authority to issue is Six
Million Two Hundred Thousand (6,200,000), of the par
value of $.10 per share, of which Six Million
(6,000,000) shares are designated as Class A Common
Stock and Two Hundred Thousand (200,000) shares are
designated as Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 242(c) of the General Corporation Law of the State of
Delaware by the affirmative vote of a majority of the issued and outstanding
shares of stock entitled to vote thereon at the annual meeting of stockholders
of the corporation duly called and held November 23, 1983.
IN WITNESS WHEREOF, we have signed this certificate this 27th day of
November, 1983.
/s/Murray H. Feigenbaum
_______________________________
Murray H. Feigenbaum, President
/s/Joel Hasen
_______________________________
Joel Hasen, Assistant Secretary
<PAGE>
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
To: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is registered
agent, hereby certifies that:
1. The name of the agent is United States Corporation Company.
2. The address of the old registered office was 306 South State
Street, Dover, Delaware 19901.
3. The address to which the registered office is to be changed is 229
South State Street, Dover, Delaware 19901. The new address will be effective on
February 18th, 1986.
4. The names of the corporations represented by said agent are set
forth on the list annexed to this certificate and made a part hereof by
reference.
IN WITNESS WHEREOF, said agent has caused this certificate to be
signed on its behalf by its Vice President and Secretary this 13th day of
February, 1986.
UNITED STATES CORPORATION COMPANY
/s/Dennis E. Howarth
___________________________________
Dennis E. Howarth
Vice President
ATTEST:
/s/Grant Dawson
_________________________
Grant Dawson
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
------------------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
------------------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and JOEL HASEN, Assistant
Secretary, of LOGIMETRICS, INC., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which
the corporation shall have authority to issue is Six
Million Two Hundred Fifty Thousand (6,250,000), of the
par value of $.10 per share, of which Six Million
(6,000,000) shares are designated as Class A Common
Stock and Two Hundred Fifty Thousand (250,000) shares
are designated as Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 242 and Section 228 of the General Corporation Law of the
State of Delaware by the written consent of a majority of the issued and
outstanding shares of each class of stock entitled to vote thereon.
IN WITNESS WHEREOF, we have signed this certificate this ______ day of
July, 1988.
/s/Murray H. Feigenbaum
______________________________
Murray H. Feigenbaum, President
ATTEST:
/s/Joel Hasen
______________________________
Joel Hasen, Assistant Secretary
<PAGE>
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is registered
agent, hereby certifies that:
1. The name of the agent is United States Corporation Company.
2. The address of the old registered office was 229 South State
Street, Dover, Kent County, Delaware 19901.
3. The address to which the registered office is to be changed is 32
Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19901. The new
address will be effective on October 27, 1989.
4. The names of the corporations represented by said agent are set
forth on the list annexed to this certificate and made a part hereof by
reference.
IN WITNESS WHEREOF, said agent has caused this certificate to be
signed on its behalf by its Vice President and Assistant Secretary this 10th day
of October 1989.
UNITED STATES CORPORATION COMPANY
/s/Alan Spiewak
___________________________________
Alan Spiewak, Vice President
ATTEST:
/s/Richard L. Kushay
______________________________________
Richard L. Kushay, Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
------------------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
------------------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and BARBARA DIVACK, Secretary, of
LOGIMETRICS, INC., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which
the corporation shall have authority to issue is Seven
Million (7,250,000), of the par value of $.10 per
share, of which Seven Million (7,000,000) shares are
designated as Class A Common Stock and Two Hundred
Fifty Thousand (250,000) shares are designated as Class
B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 242(c) of the General Corporation Law of the State of
Delaware by the resolution adopted on June 13, 1995 by stockholders holding a
majority of the issued and outstanding shares of stock entitled to vote thereon.
IN WITNESS WHEREOF, we signed this certificate this 15th day of June,
1995.
/s/Murray H. Feigenbaum
______________________________
Murray H. Feigenbaum, President
/s/Barbara Divack
______________________________
Barbara Divack, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
------------------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
------------------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and BARBARA DIVACK, Secretary, of
LOGIMETRICS, INC., do hereby certify as follows:
FIRST: The amendments to the Certificate of Incorporation of said
corporation to be effected hereby as follows:
1. The whole of Article FOURTH thereof as it now exists shall be
deleted and, in lieu thereof, a new Article FOURTH shall be inserted, reading as
follows:
"FOURTH: The total number of shares of stock which
the Corporation shall have the authority to issue is
Thirty Five Million Two Hundred (35,000,200) shares, of
which Thirty Five Million (35,000,000) shares are
designated as Common Stock, $.01 par value per share,
and Two Hundred (200) shares are designated as
Preferred Stock $.01, par value per share."
The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series and the voting powers thereof, full or limited, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
<PAGE>
The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall by cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares
of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting
rights;
(d) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion privileges, including
provision for adjustment of the conversion rate in such events as the Board
of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date
or dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(h) Any other relative rights, preferences and limitations of
that series."
<PAGE>
The capital of the Corporation will be reduced by reason of the above
amendment; however, assets of the Corporation remaining after such reduction are
sufficient to pay debts of the Corporation for which payment has not otherwise
been provided.
2. The whole of Article SEVENTH thereof as it now exists shall be
deleted and in lieu thereof, a new Article SEVENTH shall be inserted, reading as
follows:
"SEVENTH: (a) Every person who is or was a
director, officer, employee or agent of the Corporation
shall be indemnified by the Corporation pursuant to the
provisions of Section 145 of the General Corporation
Law of the State of Delaware (or any similar provision
or provisions of applicable law at the time in effect)
to the fullest extent permitted thereby against all
liabilities and expenses imposed upon or incurred by
that person in connection with any proceeding in which
that person may be made, or threatened to be made, a
party, or in which that person may become involved by
reason of that person being or having been a director
or officer or continues to serve in any capacity with
any other enterprise at the request of the Corporation.
The foregoing right of indemnification shall not be
deemed to be exclusive of any other rights to which
those seeking indemnification may be entitled under any
by-law, agreement, vote of stockholders or
disinterested directors, or otherwise. No repeal or
amendment of this Article shall adversely affect any
right or protection of any person existing at the time
of such repeal or amendment."
(b) No director of the Corporation shall be
personally liable to the Corporation or its
stockholders for any monetary damages for breach of
fiduciary duty as a director; provided, however, that
the foregoing clause shall not apply to any liability
of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders; (ii)
for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the General
Corporation Law of the State of Delaware; or (iv) for
any transaction from which the director derived an
improper personal benefit. If the General Corporation
Law of the State of Delaware is amended to authorize
corporate action further eliminating or limiting the
personal liability of directors, then by virtue of this
Article SEVENTH, the liability of a director of the
Corporation shall be eliminated or limited to the
fullest extent permitted thereby, as so amended. Any
repeal or amendment of this Article shall not adversely
affect any right or protection of a director of the
Corporation existing at the time of such repeal or
amendment."
SECOND: That such amendments have been duly adopted in accordance with
the provisions of Section 242(b) of the General Corporation Law of the State of
Delaware by the affirmative vote of a majority of the issued and outstanding
shares of the corporation at a Special Meeting of Stockholders duly called and
held on February 9, 1996. IN WITNESS WHEREOF, we have signed this certificate
this 7th day of March, 1996.
/s/Murray H. Feigenbaum
_________________________________
Murray H. Feigenbaum, President
/s/Barbara Divack
______________________________
Barbara Divack, Secretary
<PAGE>
CERTIFICATE OF DESIGNATION OF
SERIES A 12% CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
CERTIFICATE OF DESIGNATION
OF
12% CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
OF
LOGIMETRICS, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
LogiMetrics, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 151(g) thereof,
HEREBY CERTIFIES:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on March 6, 1996 adopted the following resolutions creating a series of 30
shares of preferred stock designated as Series A 12% Cumulative Convertible
Redeemable Preferred Stock:
WHEREAS, the Board of Directors is granted authority, subject to the
provisions of Article FOURTH of the Certificate of Incorporation, to authorize
the issue of one or more series of preferred stock and to fix and determine with
respect to each series:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the share of that series, whether
dividends shall be cumulative, and, if so, from which date
or dates, and the relative rights of priority, if any, of
payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion
privileges, including provision for adjustment of the
conversion rate in such events as the Board of Directors
shall determine;
<PAGE>
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or date upon or after which
they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the corporation, and the relative rights of priority,
if any, of payment of shares of that series; and
(h) Any other relative rights, preferences and limitations of
that series;
WHEREAS, the Corporation has made a private offering of a minimum of
15 and a maximum of 30 units, at a price of $50,000 per unit, each unit to be
composed of (a) one share of 12% Series A cumulative convertible redeemable
preferred stock, convertible at any time, but only in whole, into 94,340 shares
of Common Stock, par value $.01 per share, and (b) one seven-year series D
warrant to purchase 94,340 shares of Common Stock of the Corporation at a price
of $.01 per share, all pursuant to that certain Confidential Private Offering
Memorandum dated February 5, 1996 ("Memorandum");
NOW THEREFORE BE IT RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation by the provisions of Article FOURTH of
the Certificate of Incorporation to authorize the issuance of one or more series
of preferred stock and to fix and determine with respect to each series the
designation, powers, preferences and relative participating, optional,
conversion or other rights and qualifications, limitations and restrictions
thereof, the Corporation shall, and hereby does authorize issuance of a series
of thirty (30) shares of Series A cumulative convertible redeemable preferred
stock, having the following designation, powers, preferences and relative
participating, optional, conversion or other rights and qualifications,
limitations and restrictions:
1. Designation. Such series of cumulative convertible redeemable
preferred stock shall be designated and known as: "Series A 12% Cumulative
Convertible Redeemable Preferred Stock" ("Preferred Stock"). The stated value of
each share of Preferred Stock shall be $50,000 ("Stated Value").
2. Dividends. The holders of shares of Preferred Stock shall be
entitled to receive, but only when and as declared by the Board of Directors,
cash dividends in an amount equal to twelve percent (12%) of the Stated Value
per share per annum, payable quarterly on such dates in each year as shall be
fixed by the Board of Directors.
Such dividends on the Preferred Stock shall be cumulative from and
after such date or dates as shall be fixed by the Board of Directors for such
Series. No dividends shall be paid or
<PAGE>
set apart for payment on the Corporation's Common Stock, nor shall any
distribution be made on the Common Stock, other than a dividend payable in
Common Stock or in stock ranking junior to the Preferred Stock ("Junior Stock"),
nor shall any shares of Common Stock or Junior Stock be redeemed, retired or
otherwise acquired for a valuable consideration (except upon the conversion
thereof) unless full cumulative dividends on all Preferred Stock for all
dividend periods shall have been declared and the Corporation shall have paid
such dividends or shall have set aside a sum sufficient for the payment thereof.
Any accumulation of dividends on the Preferred stock shall not bear
interest. The holders of Preferred Stock shall not be entitled to receive any
dividends thereon other than the dividends provided for herein.
Dividends on Preferred Stock shall be declared if, when and as the
Board of Directors shall in its sole discretion deem advisable, and only from
the net profits or surplus of the Corporation as such shall be fixed and
determined by the said Board of Directors. The determination of the Board of
Directors at any time of the amount of net profits or surplus available for
dividend shall be binding and conclusive on the holders of all the stock of the
Corporation at the time outstanding.
3. No preemptive rights. No holder of the Preferred Stock shall be
entitled, as of right, to purchase or subscribe for any part of the unissued
stock of the Corporation or of any stock of the Corporation to be issued by
reason of any increase of the authorized capital stock of the Corporation, or to
purchase or subscribe for any bonds, certificates of indebtedness, debentures or
other securities convertible into or carrying options or warrants to purchase
stock or other securities of the Corporation or to purchase or subscribe for any
stock of the Corporation purchased by the Corporation or by its nominee or
nominees, or to have any preemptive rights now or hereafter defined by the laws
of the State of Delaware.
4. Preference on liquidation, etc. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, or any
reduction in its capital resulting in any distribution of assets to its
stockholders, holders of Preferred Stock shall be entitled to receive in cash
out of the assets of the Corporation, whether from capital or from earnings,
available for distribution to its stockholders, before any amount shall be paid
to the holders of Common Stock, a sum equal to Stated Value, plus an amount
equal to all accumulated and unpaid dividends thereon to the date fixed for
payment of such distributive amount. The purchase or redemption by the
Corporation of stock of any class, in any manner permitted by law, shall not for
the purpose of this paragraph be regarded as a liquidation, dissolution or
winding up of the Corporation or as a reduction of its capital. Neither the
consolidation nor merger of the Corporation with or into any other corporation
or corporations, nor the sale or transfer by the Corporation of all or any part
of its assets, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for the purposes of this paragraph. A dividend or distribution
to stockholders from net profits or surplus earned after the date of any
reduction of capital shall not be deemed to be a distribution resulting from
such reduction in capital. No holder of Preferred Stock shall be entitled to
receive any amounts with respect thereto upon any
<PAGE>
liquidation, dissolution or winding up of the Corporation other than the amounts
provided for in this paragraph.
5. Redemption. The Corporation, by action of its Board of Directors,
may redeem all (but not less than all) the Preferred Stock at any time after six
(6) months from the date of issuance of the Preferred Stock at a price equal to
the Stated Value of each share redeemed, plus a sum equal to all accumulated and
unpaid dividends thereon to the date fixed for redemption, but only if the
average closing price of the Corporation's Common Stock on the dates during the
120-day period immediately prior to the date notice of redemption is given (as
provided herein below) such Common Stock was traded shall have been not less
than $5.00 per share, and the closing price of the Corporation's Common Stock
for each of the thirty (30) trading days immediately preceding the date of such
notice shall have been not less than $5.00 per share, adjusted in each case for
stock splits, stock dividends or other similar transactions effecting the price
of the Common Stock.
Notice of the election of the Corporation to redeem any Preferred
Stock shall be given by the Corporation by mailing a copy of such notice in
person or by registered or certified mail, return receipt requested not less
than thirty (30) business days prior to the date designated therein as the date
for such redemption, to the holders of record of the Preferred Stock to be
redeemed, addressed to them at their respective address appearing on the books
of the Corporation.
The Board of Directors shall have full power and authority, subject to
the limitations and provisions herein contained, to prescribe the manner in
which and the terms and conditions upon which the Preferred Stock shall from
time to time be redeemable. On and after the date specified in such notice, each
holder of the Preferred Stock called for redemption as aforesaid, upon
presentation and surrender at the place designated in such notice of the
certificate or certificates for such Preferred Stock held by him, properly
endorsed in blank for transfer or accompanied by proper instruments of
assignment in blank (if required by the Corporation) and bearing all necessary
stock transfer tax stamps thereto affixed and cancelled, shall be entitled to
receive therefor the redemption price thereof.
From and after the date of redemption specified in such notice (unless
default shall be made by the Corporation in providing moneys for the payment of
the redemption price) all dividends upon the Preferred Stock so called for
redemption shall cease to accrue and, from and after said date (unless default
shall be made by the Corporation as aforesaid) or, if the Corporation shall so
elect, from and after the date specified therefor in the notice of redemption
(prior to the date of redemption so specified) on which the Corporation shall
provide the moneys for the payment of the redemption price by depositing the
amount thereof in trust for such purpose with a bank or trust company doing
business in the City, County and State of New York, and having a capital and
surplus of at least $500,000,000, all rights of the holders of the Preferred
Stock so called for redemption as stockholders of the Corporation, excepting
only the right to receive the redemption price of such shares on and after the
redemption date without interest thereon, shall cease and determine.
<PAGE>
In the event the rights of the holders of the Preferred Stock as
stockholders of the Corporation shall cease prior to the date of redemption as
aforesaid, the amount of dividends which would otherwise have accrued (if such
rights had not ceased) on such Preferred Stock from the time such rights cease
to the date of redemption, shall be deemed an additional premium. Any interest
accrued on funds so deposited shall be paid to the Corporation from time to
time. In case any holders of Preferred Stock so called for redemption shall not,
within six years after such deposit, claim the amounts deposited with respect to
the redemption thereof, any such bank or trust company shall, upon demand, pay
over to the Corporation such unclaimed amounts and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof to such
holders.
All Preferred Stock at any time redeemed shall be cancelled and shall
not be reissued.
The Corporation may also from time to time, to the extent now or
hereafter permitted by law, purchase Preferred Stock at a purchase price not
exceeding the redemption price thereof. Except in accordance with an offer made
to all holders of Preferred Stock, the Corporation shall not at any time
purchase less than the whole amount of its then outstanding Preferred Stock
unless full cumulative dividends to such date of purchase (if the same be a
dividend payment date, or to the next preceding dividend payment date if such
date of purchase is not a dividend payment date) upon all Preferred Stock
outstanding, and not then to be purchased, shall have been paid or declared and
set apart for payment.
6. Conversion. The holders of shares of Preferred Stock shall have the
right, at their option, to convert such shares into shares of Common Stock of
the Corporation ("Conversion Right") on the following terms and conditions:
(a) Each share of Preferred Stock shall be convertible, but only in
whole, at any time commencing ninety (90) days after its issuance (or, if such
share is called for redemption, at any time up to and including, but not after,
the close of business on the fifth full business day prior to the date fixed for
such redemption, unless default shall be made by the Corporation in providing
moneys for the payment of the redemption price), into ninety-four thousand,
three hundred forty (94,340) fully paid and non-assessable shares of Common
Stock of the Corporation as constituted at the time of such conversion. Every
reference herein to the Common Stock of the Corporation (unless a different
intention is expressed) shall be to the shares of the Common Stock of the
Corporation, par value $.01 per share, as such stock exists immediately after
the issuance of shares of Preferred Stock provided for hereunder, or to stock
into which said Common Stock may be changed from time to time thereafter.
(b) The Conversion Right is exercisable upon presentation and
surrender of the certificate of Preferred Stock, duly endorsed for transfer, at
the principal office to the Corporation or at any other office or agency
maintained by the Corporation for the transfer of the Preferred Stock, whereupon
the holder of such Preferred Stock, shall be entitled, subject to the
limitations herein contained, to receive in exchange therefor a certificate or
certificates for fully paid and nonassessable shares of Common Stock, as
provided above. The Preferred Stock shall be deemed to have been converted and
the person converting the same to have become the holder
<PAGE>
of record of Common Stock, for the purpose of receiving dividends and for all
other purposes whatever, as of the date when the certificate or certificates for
such Preferred Stock are surrendered to the Corporation as aforesaid. The
Corporation shall not be required to make any such conversion, and no surrender
of the Preferred Stock shall be effective for such purpose, while the books for
the transfer of either class of stock are closed for any purpose, but the
surrender of such shares of the Preferred Stock for conversion during any period
while such books are closed shall become effective for all purposes of
conversion immediately upon the reopening of such books, as if the conversion
had been made on the date such shares of Preferred Stock were surrendered.
7. Dilution.
(a) In case, at any time or from time to time after the date of
issuance of the Preferred Stock ("Issuance Date"), the Corporation shall issue
or sell shares of its Common Stock (other than any Common Stock issued upon (i)
conversion of the Corporation's (A) 12% Convertible Subordinated Debentures and
(B) 12% Convertible Senior Subordinated Debentures (together "Debentures"), (ii)
exercise of those certain Amended and Restated Series A Warrants dated March 7,
1996 to purchase 600,000 shares of Common Stock ("Series A Warrants"), (iii)
exercise by each of Murry H. Feigenbaum and Jerome Deutsch of his option to
purchase 100,000 shares of Common Stock at a price of $.10 per share
("Principals' Options"), (iv) exercise of those certain Amended and Restated
Series B Warrants dated March 7, 1996 to purchase 1,500,000 shares of Common
Stock ("Series B Warrants"), (v) exercise of those certain Series C Warrants
dated March 7, 1996 to purchase 2,542,380 shares of Common Stock ("Series C
Warrants"), (vi) exercise of those certain Series D Warrants dated March 7, 1996
to purchase 2,830,200 shares of Common Stock ("Series D Warrants"), (vii)
exercise of those certain Series E Warrants dated March 7, 1996 to purchase
1,000,000 shares of Common Stock ("Series E Warrants" and together with the
Series A, B, C and D Warrants, "Warrants") and (viii) exercise of those certain
Stock Options, dated March 7, 1996 to purchase 1,000,000 shares of Common Stock
issued to Richard K. Laird ("Laird Options" and together with the Debentures,
the Warrants, the Principals' Options and the Laird Options, the "Subject
Securities") for a consideration per share less than $.27 per share ("Trigger
Price"), or, if a Pro Forma Adjusted Trigger Price (hereinafter defined) shall
be in effect as provided below in this paragraph 7, then less than such Pro
Forma Adjusted Trigger Price per share, then and in each such case the holder of
Preferred Stock, upon the conversion hereof as provided in paragraph (a) hereof,
shall be entitled to receive, in lieu of the shares of Common Stock theretofore
receivable upon the conversion of the Preferred Stock, a number of shares of
Common Stock determined by (a) dividing the Trigger Price by a Pro Forma
Adjusted Trigger Price per share to be computed as provided below in this
paragraph 7, and (b) multiplying the resulting quotient by the number of shares
of Common Stock into which the Preferred Stock is convertible. A Pro Forma
Adjusted Trigger Price per share shall be the price computed (to the nearest
cent, a fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of
the Corporation outstanding immediately prior to such
issue or sale by the Trigger Price (or, if a Pro Forma
Adjusted Trigger Price shall be in effect,
<PAGE>
by such Price), and (y) the consideration, if any,
received by the Corporation upon such issue or sale, by
(ii) the number of shares of Common Stock of the
Corporation outstanding immediately after such issue or
sale.
For the purpose of this paragraph 7:
(1) In case the Corporation splits its Common
Stock or shall declare any dividend, or make
any other distribution, upon any stock of the
Corporation of any class payable in Common
Stock, or in any stock or other securities
directly or indirectly convertible into or
exchangeable for Common Stock (any such stock
or other securities being hereinafter called
"Convertible Securities"), such split,
declaration or distribution shall be deemed
to be an issue or sale (as of the record date
for such split, dividend or other
distribution), without consideration, of such
Common Stock or such Convertible Securities,
as the case may be.
(2) In case the Corporation shall issue or sell
any Convertible Securities other than the
Subject Securities, there shall be determined
the price per share for which Common Stock is
issuable upon the conversion or exchange
thereof, such determination to be made by
dividing (a) the total amount received or
receivable by the Corporation as
consideration for the issue or sale of such
Convertible Securities, plus the minimum
aggregate amount of additional consideration,
if any, payable to the Corporation upon the
conversion or exchange thereof, by (b) the
maximum number of shares of Common Stock of
the Corporation issuable upon the conversion
or exchange of all such Convertible
Securities.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Pro Forma Adjusted Trigger Price) as of the date of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale for cash (as of
the date of issue or sale of such Convertible Securities) of such maximum number
of shares of Common Stock at the price per share so determined, provided that,
if such Convertible Securities shall by their terms provide for an increase or
increases, with the passage of time, in the amount of additional consideration,
if any, payable to the Corporation, or in the rate of exchange, upon the
conversion or exchange thereof, the Pro Forma Adjusted Trigger Price per share
shall, forthwith upon any such increase becoming effective, be readjusted to
reflect the same, and provided, further, that upon the expiration of such rights
of conversion or exchange of such Convertible Securities, if any thereof shall
not have been exercised, the Pro Forma Adjusted Trigger Price per share shall
forthwith be readjusted and thereafter be the price which it would have been had
an adjustment been made on the basis that the only shares of Common Stock so
<PAGE>
issued or sold were those issued or sold upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the consideration
actually received by the Corporation upon such conversion or exchange, plus the
consideration, if any, actually received by the Corporation for the issue or
sale of all such Convertible Securities which shall have been converted or
exchanged.
(b) In case the Corporation shall grant any rights or options to
subscribe for, purchase or otherwise acquire Common Stock of any class other
than the Subject Securities, there shall be determined the price per share for
which Common Stock is issuable upon the exercise of such rights or options, such
determination to be made by dividing (a) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the exercise of such rights or options, by
(b) the maximum number of shares of Common Stock issuable upon the exercise of
such rights or options.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then the granting of such
rights or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number of shares
of Common Stock at the price per share so determined, provided that, if such
rights or options shall be their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration, if any,
payable to the Corporation upon the exercise thereof, the Pro Forma Adjusted
Trigger Price per share shall, forthwith upon any such increase becoming
effective, be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights or options, if any thereof shall not have been
exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock so issued
or sold were those issued or sold upon the exercise of such rights or options
and that they were issued or sold for the consideration actually received by the
Corporation upon such exercise, plus the consideration, if any, actually
received by the Corporation for the granting of all such rights and options,
whether or not exercised.
(c) In case the Corporation shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities, such
Convertible Securities shall be deemed, for the purposes of paragraph 7(a)(2)
above, to have been issued or sold for the total amount received or receivable
by the Corporation as consideration for the granting of such rights or options
plus the minimum aggregate amount of additional consideration, if any, payable
to the Corporation upon the exercise of such rights or options, provided that,
upon the expiration of such rights or options, if any thereof shall not have
been exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith
be readjusted and thereafter be the price which it would have been had an
adjustment been made upon the basis that the only Convertible Securities so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such rights or
options, whether or not exercised.
<PAGE>
(d) In case any shares of stock or other securities, other than Common
Stock of the Corporation, shall at any time be receivable upon the conversion of
Preferred Stock, and in case any additional shares of such stock or any
additional such securities (or any stock or other securities convertible into or
exchangeable for any such stock or securities) shall be issued or sold for a
consideration per share such as to dilute the purchase rights evidenced by
Preferred Stock, then and in each such case the Pro Forma Adjusted Trigger Price
per share shall forthwith be adjusted, substantially in the manner provided for
above in this paragraph 7, so as to protect the holder of Preferred Stock
against the effect of such dilution.
(e) In case any shares of Common Stock or Convertible Securities or
any rights or options to subscribe for, purchase or otherwise acquire any Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, after deducting any expenses incurred and any underwriting
or similar commissions, compensation or concessions paid or allowed by the
Corporation in connection with such issue or sale.
(f) In case any shares of Common Stock or Convertible Securities or
any rights or options to subscribe for, purchase or otherwise acquire any Common
Stock or Convertible Securities shall be issued or sold for a consideration
other than cash (or a consideration which includes cash, if any cash constitutes
a part of the assets of a corporation or business substantially all of the
assets of which are being received a such consideration) then, for the purpose
of this paragraph 7(f), the Board of Directors of the Corporation shall promptly
determine the fair value of such consideration, and such Common Stock,
Convertible Securities, rights or options shall be deemed to have been issued or
sold on the date of such determination in good faith. Such value shall not be
more than the amount at which such consideration is recorded in the books of the
Corporation for accounting purposes except in the case of an acquisition
accounted for on a pooling of interest basis. In case any Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold together with other stock or securities or other assets of the Corporation
for a consideration which covers both, the Board of Directors of the Corporation
shall promptly determine what part of the consideration so received is to be
deemed to be the consideration for the issue or sale of such Common Stock or
Convertible Securities or such rights or options.
The Corporation covenants and agrees that, should any determination of
fair value of consideration or of allocation of consideration be made by the
Board of Directors of the Corporation, pursuant to this paragraph 7(f), it will,
not less than seven (7) days after any and each such determination, deliver to
the holder of the Preferred Stock a certificate signed by the President or a
Vice President and the Treasurer or an Assistant Treasurer of the Corporation
reciting such value as thus determined and setting forth the nature of the
transaction for which such determination was required to be made, the nature of
any consideration, other than cash, for which Common Stock, Convertible
Securities, rights or options have been or are to be issued, the basis for its
valuation, the number of shares of Common Stock which have been or are to be
<PAGE>
issued, and a description of any Convertible Securities, rights or options which
have been or are to be issued, including their number, amount and terms.
(g) In case the Corporation shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (a) to
receive a dividend or a distribution payable in Common Stock or in Convertible
Securities, or (b) to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities, then such record date shall be deemed to be the date
of the issue or sale of the Common Stock issued or sold or deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution, or the date of the granting of such rights of subscription,
purchase or other acquisition, as the case may be.
(h) The number of shares of Common Stock outstanding at any given time
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock, but shall exclude shares in the treasury of
the Corporation.
(i) Following each computation or readjustment of a Pro Forma Adjusted
Trigger Price as provided in this paragraph 7, the newly computed or adjusted
Pro Forma Adjusted Trigger Price shall remain in effect until a further
computation or readjustment thereof is required by this paragraph 7.
(j) In case at the time or from time to time after the Issuance Date
the holders of the Common Stock of the Corporation of any class (or other shares
of stock or other securities at the time receivable upon the conversion of
Preferred Stock) shall have received, or, on or after the record date fixed for
the determination of eligible stockholders, shall have become entitled to
receive:
(A) other or additional stock or other securities or property
(other than cash) by way of dividend:
(B) any cash or paid or payable out of capital or pain-in surplus
or surplus created as a result of a revaluation of property by way of
dividend; or
(C) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off, split-off,
split-up, reclassification, combination of shares or similar corporate
rearrangement;
(other than additional shares of Common Stock issued to holders of common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph 7), then in each case the holder of
the Preferred Stock, upon the conversion thereof as provided in paragraph 6,
shall be entitled to receive, in lieu of, or in addition to, as the case may be,
the shares theretofore receivable upon the conversion of the Preferred Stock,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Corporation into
which the Preferred Stock is convertible and had thereafter, during the period
from the Issuance Date to and including the date of such conversion, retained
such shares
<PAGE>
and/or all other or additional (or less) stock or other securities or property
(including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during the period from the Issuance Date and
including the date of such conversion, retained such period by paragraphs 7(a)
and 7(k) hereof.
(k) In case of any reorganization of the Corporation (or any other
corporation the stock or other securities of which are at the time deliverable
on the conversion of the Preferred Stock) after the date hereof, or in case,
after such date, the Corporation (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all its assets to another corporation, then and in each such case
the holder of the Preferred Stock, upon the conversion thereof as provided in
paragraph 6 hereof, at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive the stock or
other securities or property to which such holder would have been entitled upon
such consummation if such holder had converted the Preferred Stock immediately
prior thereto, all subject to further adjustments as provided for herein; in
each such case, the terms of the Preferred Stock shall be applicable to the
shares of stock or other securities or property receivable upon the conversion
of the Preferred Stock after such consummation.
(l) The Corporation will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Preferred Stock, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holder hereof
against dilution or other impairment. Without limiting the generality of the
foregoing, the Corporation will not increase the par value of any shares of
stock receivable upon the conversion of the Preferred Stock above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Corporation may validly and
legally issue fully paid and non-assessable stock upon the conversion of the
Preferred Stock.
(m) In each case of an adjustment in the number of shares of Common
Stock or other stock, securities or property receivable on the conversion of the
Preferred Stock, at the request of the holder of the Preferred Stock the
Corporation at its expense shall promptly cause independent public accountants
of recognized standing, selected by the Corporation, to compute such adjustment
in accordance with the terms of the Preferred Stock and prepare a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based, including a statement of (A) the consideration received or
to be received by the Corporation for any additional shares issued or sold or
deemed to have been issued or sold, (B) the number of shares of Common Stock
outstanding or deemed to be outstanding and (C) the Pro Forma Adjusted Trigger
Price. The Corporation will forthwith mail a copy of each such certificate to
the holder of the Preferred Stock.
(n) In case:
(A) The Corporation shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
conversion of the Preferred
<PAGE>
Stock) for the purpose of entitling or enabling them to receive any
dividend (other than a cash or stock dividend at the same rate as the rate
of the last cash or stock dividend theretofore paid) or other distribution,
or to exercise any preemptive right pursuant to the Corporation's charter,
or to receive any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right; or
(B) of any capital reorganization of the Corporation, any
reclassification of the capital stock of the Corporation, any consolidation
or merger of the Corporation with or into another corporation, or any
conveyance of all or substantially all of the assets of the Corporation to
another corporation; or
(C) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in each such case, the Corporation will mail or cause to be mailed to
the holder of the Preferred Stock a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up is to take place, and the times, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of the Preferred Stock) shall be entitled to
exchange their shares of Common Stock of any class (or such other stock or
securities) for reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up or (iii) the amount and character of the
stock or other securities proposed to be issued or granted, the date of such
proposed issuance or grant and the persons or class of persons to whom such
stock or other securities are to be offered, issued or granted. Such notice
shall be mailed at least thirty (30) days prior to the date therein specified.
(o) The Corporation shall, so long as any of the Preferred Stock is
outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the
Preferred Stock, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all shares of the Preferred
Stock, then outstanding. The Corporation shall from time to time increase its
authorized Common Stock and take such other action as may be necessary to permit
the issuance from time to time of the shares of Common Stock, as fully paid and
nonassessable shares, upon the conversion of the Preferred Stock, as herein
provided.
(p) The Corporation shall pay any and all taxes which may be imposed
upon it with respect to the issuance and delivery of Common Stock upon the
conversion of Preferred Stock as herein provided. The Corporation shall not be
required in any event to pay any transfer or other taxes by reason of the
issuance of such Common Stock in names other than those in which the Preferred
stock surrendered for conversion may stand, and no such conversion of issuance
of Common Stock shall be made unless and until the person requesting such
issuance has paid to the Corporation the amount of any such tax, or has
established to the satisfaction of the Corporation and its transfer agent, if
any, that such tax has been paid. Upon any conversion of
<PAGE>
Preferred Stock, as herein provided, no adjustment or allowance shall be made
for dividends on the Preferred Stock, so converted, and all rights to dividends,
if any, shall cease and be deemed satisfied, but nothing in this sentence shall
be deemed to relieve the Corporation from its obligation to pay any dividends
which shall have been declared and shall be payable to holders of Preferred
Stock, of record as of a date prior to such conversion even though the payment
date for such dividend is subsequent to the date of conversion.
(q) Preferred Stock surrendered upon conversion thereof shall not be
reissued and no Preferred Stock shall be issued in lieu thereof or in exchange
thereof.
8. Voting Rights of Preferred. Except as herein or by law expressly
provided, the Preferred Stock shall have no right or power to vote on any
questions or in any proceeding or to be represented at or to receive notice of
any meeting of the stockholders. Notwithstanding the provisions of the preceding
sentence, so long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote at a meeting (the notice of
which shall state the general character of the matters to be submitted thereat),
or the written consent with or without a meeting, of the holders of at least two
thirds (66 2/3%) of the then outstanding shares of Preferred Stock:
(a) increase the authorized amount of Preferred Stock, or authorize or
create; or increase the authorized amount of, any additional class of stock
ranking prior to or on a parity with the Preferred Stock as to dividends or
assets; or authorize or create, or increase the authorized amount of, any class
of stock or obligations convertible into or evidencing the right to purchase any
class of stock ranking prior to or on a parity with the Preferred Stock as to
dividends or assets; or
(b) amend, alter or repeal any of the provisions of the Certificate of
Incorporation or any of the rights, preferences or powers of the outstanding
Preferred Stock fixed herein or determined by the Board of Directors for any
series of Preferred Stock as herein authorized; so as adversely to affect the
rights, preferences or powers of the preferred stock or its holders; provided,
however, that if any such amendment, alteration or repeal would adversely affect
the rights, preferences or powers of outstanding shares of preferred stock of
any particular series without correspondingly affecting the rights, preferences
or powers of the outstanding shares of all series, then like vote or consent by
the holders of at least two thirds (66 2/3%) of the Preferred Stock of that
particular series at the time outstanding shall also be necessary for effecting
or validating any such amendment, alteration or repeal; or
(c) sell, lease or convey all, or substantially all, of its property
or business; or
(d) merge or consolidate with or into any other corporation or
corporations, unless the corporation surviving or resulting from such merger or
consolidation will have after such merger or consolidation no class of stock
either authorized or outstanding ranking prior to or on a parity with the
Preferred Stock as to dividends or assets except the same number of shares of
Preferred Stock with the same rights, preferences and powers as the preferred
stock of the Corporation authorized and outstanding immediately preceding such
merger or consolidation, and unless each
<PAGE>
holder of Preferred Stock at the time of such merger or consolidation and in
connection therewith shall continue to hold (in the case of a merger in which
the Corporation is the surviving corporation) his shares of Preferred Stock, or
(in the case of a consolidation or a merger of the Corporation into some other
corporation) shall receive the same number of shares of Preferred Stock, with
the same rights, preferences and powers, of such resulting Corporation; or
(e) amend or repeal any of the provisions of this paragraph 8.
9. Registration Rights. Within 90 days after the date of issuance of
the Preferred Stock, the Corporation shall prepare and file a registration
statement ("Registration Statement") with the Securities and Exchange Commission
("SEC") covering the shares of Common Stock issuable upon conversion of the
Preferred Stock ("Registrable Securities"), and will use its best efforts to
cause the Registration Statement to become effective within ninety (90) days
following the date of such filing. Once effective, the Corporation shall keep
the Registration Statement effective for a period of seven (7) years from the
date it is declared effective by the SEC.
In the event (i) the registration Statement is not filed by the
Corporation with the SEC on or prior to ninety (90) days after the date of
issuance of the Preferred Stock or (ii) the Registration Statement has not been
declared effective by the SEC on or prior to one hundred-eighty (180) days after
the date of issuance of the Preferred Stock, the annual dividend rate on the
Preferred Stock shall be increased to thirteen and one-half percent (13-1/2%)
per annum for the first three (3) months immediately following the expiration of
such ninety (90) day period or one hundred-eighty (180) day period, as the case
may be, and by an additional one-half percent (1/2%) per annum at the beginning
of each subsequent thirty (30) day period thereafter, until such time as the
requirements of clause (i) or (ii) above, as the case may be, have been
satisfied, at which time such dividend rate shall revert to the rate that
otherwise would be in effect but for the operation of this sentence; provided,
however, that in no event shall the dividend rate applicable to the Preferred
Stock exceed seventeen percent (17%) per annum pursuant to this sentence.
Except as otherwise expressly stated herein, the following provisions
shall be applicable to the Registration Statement:
(a) The Corporation will use its best efforts to cause the
Registration Statement to become effective as promptly as possible within the
time periods specified above, and if any stop order shall be issued by the SEC
in connection therewith to use its reasonable efforts to obtain the removal of
such order. Following the effective date of the Registration Statement, the
Corporation shall, upon the request of the holder, forthwith supply such
reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Securities Act, and
other documents necessary or incidental to a public offering of the Registrable
Securities, as shall be reasonably requested by the holder to permit the holder
to make a public distribution of its, his or her Registrable Securities. The
Corporation will use its reasonable efforts to qualify the Registrable
Securities for sale in such states as the holder of Registrable Securities shall
reaonsably request, provided that no such qualification will be required in any
jurisdiction where, solely as a result thereof, the Corporation would be subject
<PAGE>
to service of general process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction. The obligations of the
Corporation hereunder with respect to the holder's Registrable Securities are
expressly conditioned on the holder's furnishing to the Corporation such
appropriate information concerning the holder, the holder's Registrable
Securities and the terms of the holder's offering of such Registrable Securities
as the Corporation may reasonably request.
(b) The Corporation shall pay all expenses incurred in complying with
the provisions of this paragraph 9, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), printing expenses, fees and
disbursements of counsel to the Corporation, securities law and blue sky fees
and expenses and the expenses of any regular and special audits incident to or
required by any such registration. All underwriting discounts and selling
commissions applicable to the sales of the Registrable Securities, and any state
or federal transfer taxes payable with respect to the sales of the Registrable
Securities and all fees and disbursements of counsel for the holder, if any, in
each case arising in connection with registration of the Registrable Securities
shall be payable by the holder.
(c) In connection with the registration of the Registrable Securities
pursuant to this paragraph 9, the Corporation shall indemnify and hold harmless
the holder, its affiliates, officers, directors, partners, employees, agents and
representatives, each person, if any, who controls the holder within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any person
claiming by or through any of them (collectively, the "Indemnified Persons")
from and against all losses, claims, damages, expenses or liabilities (or
actions in respect thereof) which arise out of or are based upon any untrue
statement of any material fact contained in the Registration Statement or
alleged untrue statement, under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading, or any violation by the Corporation
of the Securities Act, the Exchange Act or state securities or blue sky laws
applicable to the Corporation and relating to action or inaction required of the
Corporation in connection with such registration or qualification under such
state securities or blue sky laws; and will reimburse the Indemnified Persons
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Corporation will not be liable in any such
case to any Indemnified Person to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or omission made
in the Registration Statement, said preliminary prospectus or said final
prospectus or said amendment or supplement or any document incident thereto in
reliance upon and in conformity with written information furnished to the
Corporation by or on behalf of the holder.
(d) The holder will indemnify and hold harmless the Corporation and
each person, if any, who controls the Corporation within the meaning of the
Securities Act or the Exchange Act,
<PAGE>
each officer of the Corporation who signs the Registration Statement and each
director of the Corporation from and against any and all such losses, claims,
damages or liabilities arising from any untrue statement in, or omission from,
the Registration Statement, any such preliminary or final prospectus, amendment,
or supplement or document incident thereto if the statement or omission in
respect of which such loss, claim, damage or liability is asserted was made in
reliance upon and in conformity with information furnished in writing to the
Corporation by or on behalf of the holder for use in connection with the
preparation of the Registration Statement or such prospectus or amendment or
supplement thereof.
(e) The reimbursements required by subparagraphs 9(c) and (d) shall be
made by periodic payments during the course of the investigation or defense as
and when bills are received or expenses incurred; provided, however, that to the
extent that an indemnified party receives periodic payments for legal or other
expenses during the course of an investigation or defense, and such party
subsequently received payments for such expenses from any other parties to the
proceeding, such payments shall be used by the indemnified party to reimburse
the indemnifying party for such periodic payments. Any party which proposes to
assert the right to be indemnified under subparagraphs 9(c) or (d) will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
any indemnified party hereunder, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served, but the failure to so notify such indemnifying party of any such action,
suit or proceeding shall not relieve the indemnifying party from any obligation
which it may have to any indemnified party hereunder unless and only to the
extent that the indemnifying party is prejudiced by said lack of notice. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expense, other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the reasonable fees and expenses of such counsel shall be at the
expense of such indemnified party, when and as incurred, unless (A) the
employment of counsel by such indemnified party has been authorized by the
indemnified party, (B) the indemnified party has reasonably concluded (based on
advice of counsel), that there may be legal defenses available to it that are
different from or in addition to those available to the indemnifying party, (C)
the indemnified party shall have reasonably concluded (based on advice of
counsel) that there may be a conflict of interest between the indemnifying party
and the indemnified party in the conduct of defense of such action (in which
case the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party), or (D) the indemnifying party
shall not in fact have employed counsel to assume the defense of such action
within 15 days after receipt of notice of such action. An indemnifying party
shall not be liable for any settlement or any action or claim effected without
its consent.
<PAGE>
(f) If the indemnification provided for in this paragraph 9 is
unavailable to any indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth herein,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(g) The Corporation has determined that it would not be just and
equitable if contribution pursuant to subparagraph 9(f) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations reeferred to in the immediately preceding
paragraph. Notwithstanding any other provisions hereof, in no event shall the
contribution obligation of the indemnifying party be greater in amount than the
excess of (A) the dollar amount of proceeds received by the indemnifying party
upon the sale of the securities giving rise to such contribution obligation over
(B) the dollar amount of any damages that the indemnifying party has otherwise
been required to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(h) Neither the filing of the Registration Statement by the
Corporation nor the making of any request for prospectuses by the holder shall
impose upon the holder any obligation to sell his, her or its Registrable
Securities.
(i) The holder, upon receipt of notice from the Corporation that an
event has occurred which requires a post-effective amendment to the Registration
Statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of his, her or its Registrable Securities until the holder
receives a copy of a supplemented or amended prospectus from the Corporation,
which the Corporation shall provide as soon as practicable after such notice.
10. Replacement of certificates. Upon receipt of evidence reasonably
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
the certificate of Preferred Stock and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with surety if reasonably
required) in an amount reasonably satisfactory to it, or (in the case of
<PAGE>
mutilation) upon surrender and cancellation thereof, the Corporation will issue,
in lieu thereof, a new certificate of like tenor.
AND IT BE FURTHER RESOLVED, that the appropriate officers of the
corporation be, and they hereby are authorized and directed to execute and
deliver certificates evidencing such shares of Preferred Stock in exchange for
payment of the purchase price of $50,000 per share.
IN WITNESS WHEREOF, LogiMetrics, Inc. as caused this certificate to be
duly executed this 8th day of April, 1997.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
________________________
Norman M. Phipps
Acting President
Attest:
/s/Russell Reardon
__________________________
Russell Reardon
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
of
LOGIMETRICS, INC.
LogiMetrics, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
The following amendment to the Corporation's Certificate of
Incorporation, approved by the Corporation's Board of Directors and
stockholders, was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware:
"The first paragraph of Article FOURTH of the Certificate of
Incorporation, as amended, of LogiMetrics, Inc. is hereby amended to read in its
entirety as follows:
FOURTH: The total number of shares of stock which
the Corporation shall have the authority to issue is
One Hundred Million Two Hundred (100,000,200) shares,
of which One Hundred Million (100,000,000) shares are
designated as Common Stock, $.01 par value per share,
and Two Hundred (200) shares are designated as
Preferred Stock, $.01 par value per share."
IN WITNESS WHEREOF, LogiMetrics, Inc. has caused this Certificate to
be signed and attested by its duly authorized officers this 27th day of May,
1997.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
______________________________________
Norman M. Phipps
President and Chief Operating Officer
ATTEST:
/s/Russell J. Reardon
______________________________
Russell J. Reardon, Secretary
EXHIBIT 3.2
BY-LAWS
of
LOGIMETRICS, INC.
_______________________________
ARTICLE I - OFFICES
The principal office of the Corporation shall be located in the City
of New York, County of New York, and State of New York.
The Corporation may also maintain offices at such other places as the
Board of Directors may from time to time determine.
ARTICLE II - MEETINGS OF STOCKHOLDERS
Section 1. - Annual Meetings:
The annual meeting of the stockholders of the Corporation shall be
held within five (5) months after the close of the fiscal year of the
Corporation, for the purpose of electing directors and transacting such other
business as may properly come before the meeting.
Section 2. - Special Meetings:
Special meetings of the stockholders may be called at any time by the
President, and shall be called by the President or the Secretary at the written
request of a majority of the Board of Directors.
Section 3. - Place of Meetings:
All meetings of stockholders shall be held at the principal office of
the Corporation, or at such other places as the Board of Directors may select,
and as shall be designated in the respective notices or waivers of notice of
such meetings.
Section 4. - Notice of Meetings:
(a) Except as otherwise provided by statute, written notice of each
meeting of stockholders, whether annual or special, stating the purpose for
which the meeting is called, and the time when and place where it is to be held,
shall be served either personally or by mail, not less than ten nor more than
forty days before the meeting upon each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be directed to each such
stockholder at his address as it appears on the stock books of the Corporation,
unless he shall have previously filed with the Secretary of the Corporation a
written request that notices intended for
<PAGE>
him be mailed to some other address, in which case it shall be mailed to the
address designated in such request.
(b) Notice of any meeting need not be given to any person who may
become a stockholder of record after the mailing of such notice and prior to the
meeting, or to any stockholder who attends such meeting in person or by proxy,
or to any stockholder who, in person or by attorney thereunto authorized, waives
notice of any meeting in writing either before or after such meeting. Notice of
any adjourned meeting of stockholders need not be given, unless otherwise
required by statute.
Section 5. - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the
Certificate of Incorporation (such Certificate and any amendments thereof being
hereinafter collectively referred to as the "Certificate of Incorporation"), at
all meetings of stockholders of the Corporation, the presence in person or by
proxy of stockholders holding of record 35% (as amended 10/2/__) of the total
number of shares of the Corporation, then issued and outstanding and entitled to
vote, shall be necessary and sufficient to constitute a quorum for the
transaction of any business.
(b) In the absence of a quorum at any annual or special meeting of
stockholders, the stockholders present in person or by proxy and entitled to
vote thereat or, if by proxy, any officer authorized to preside at or act as
Secretary of such meeting, may adjourn the meeting from time to time for a
period not exceeding twenty days at such adjourned meeting at which a quorum is
present. At any such adjourned meeting, at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called if a quorum had been present.
Section 6. - Voting:
(a) Except as otherwise provided herein, or by statute, or by the
Certificate of Incorporation, the affirmative vote of those holdings of record
in the aggregate at least a majority of the issued and outstanding shares of
stock present in person or by proxy and entitled to vote at a meeting of
stockholders with respect to a question or matter brought before such meeting
shall be necessary and sufficient to decide such question or matter.
(b) Except as otherwise provided by statute, or by the Certificate of
Incorporation, at each meeting of stockholders, each holder of record of stock
of the Corporation entitled to vote thereat shall be entitled to one vote for
each share of stock held by him and registered in his name on the books of the
Corporation.
(c) Each stockholder entitled to vote may vote by proxy, provided,
however, that the instrument authorizing such proxy to act shall have been
executed in writing by the stockholder himself, or by his attorney-in-fact
thereunto duly authorized in writing. No proxy shall be valid after the
expiration of eleven months from the date of its execution, unless the person
executing it shall have specified therein the length of time it is to continue
in force. Such
<PAGE>
instrument shall be exhibited to the Secretary at the meeting and shall be filed
with the records of the Corporation.
(d) Any resolution in writing, signed by all of the stockholders
entitled to vote thereon, shall be and constitute action by such stockholders to
the effect therein expressed, with the same force and effect as if the same had
been duly passed by unanimous vote at a duly called meeting of such
stockholders, and it shall be the duty of the Secretary to place such resolution
so signed in the Minute Book of the Corporation under its proper date.
ARTICLE III - BOARD OF DIRECTORS
Section 1. - Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be . If the
number is not set forth therein, a majority of the Board of Directors (1) shall
fix the number of directors from time to time, (2) may determine, in advance of
each meeting of stockholders for the election of directors, the number of
directors to be elected at such meeting within the maximum and minimum limits
specified in the Certificate of Incorporation, and (3) during any interval
between meetings of stockholders for the election of directors, may increase the
number of directors within the maximum limits specified in the Certificate of
Incorporation, and, if any such increase shall be deemed to create any vacancies
in the Board, they shall be filled in the manner prescribed in Section 8 of this
Article III.
(b) Except as herein or in the Certificate of Incorporation otherwise
provided, the members of the Board of Directors of the Corporation, who need not
be stockholders, shall be elected by the vote of stockholders holding of record
in the aggregate at least a plurality of the shares of stock of the Corporation
present in person or by proxy and entitled to vote at the annual meeting of
stockholders.
(c) Each director shall hold office until the annual meeting of the
stockholders next succeeding his election and until his successor is elected and
qualified or until his prior death, resignation or removal.
Section 2. - Duties, Powers and Committees:
(a) The Board of Directors shall be responsible for the control and
management of the affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation except as herein provided, in the
Certificate of Incorporation, or by statute expressly conferred upon or reserved
to the stockholders.
(b) The Board of Directors may create and appoints committees to
assist the directors in the conduct of the Corporation's affairs.
Section 3. - Annual and Regular Meetings: Notice:
<PAGE>
(a) A regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the stockholders at the place of
such annual meeting of stockholders.
(b) The Board of Directors from time to time may provide by resolution
for the holding of other regular meetings of the Board of Directors, and may fix
the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not
be required to be given; provided, however, that in case the Board of Directors
shall fix or change the time or place of any regular meeting, notice of such
action shall be mailed promptly to each director who shall not have been present
at the meeting at which such action was taken, addressed to him at his residence
or usual place of business, unless such notice shall be waived in the manner set
forth in paragraph (c) of Section 4 of this Article III.
Section 4. - Special Meetings: Notice:
(a) Special meetings of the Board of Directors shall be held whenever
called by the President, or by one of the directors, at such time and place as
may be specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of such special
meetings shall be mailed directly to each director, addressed to him at his
residence or usual place of business, at least two (2) days before the day on
which the meeting is to be held, or shall be sent to him at such place by
telegram, radio or cable, or shall be delivered to him personally not later than
the day before the day on which the meeting is to be held.
(c) Notice of any special meeting shall not be required to be given to
any directors who shall attend such meeting in person or to any director who
shall waive notice of such meeting in writing or by telegram, radio or cable,
whether before or after the time of such meeting; and any such meeting shall be
a legal meeting without any notice thereof having been given, if all the
directors shall be present thereat. Notice of any adjourned meeting shall not be
required to be given.
Section 5. - Chairman:
At all meetings of the Board of Directors, the President, or in his
absence, a chairman chosen by the directors, shall preside.
Section 6. - Quorum:
(a) At all meetings of the Board of Directors, the presence of a
majority of the total number of directors shall be necessary and sufficient to
constitute a quorum for the
<PAGE>
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these by-laws.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the same
from time to time without further notice, until a quorum shall be present.
Section 7. - Manner of Acting:
(a) At all meetings of the Board of Directors, each director present
shall have one vote, irrespective of the number of shares of stock, if any,
which he may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these by-laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 8. - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an
increase in the number of directors or by reason of the death, resignation,
disqualification, removal or inability to act of any director, or otherwise,
shall be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9. - Resignation:
Any director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 10. - Removal:
Any director may be removed with or without cause at any time by the
affirmative vote of stockholders holding of record in the aggregate at least a
majority of the outstanding shares of stock of the Corporation, given at a
special meeting of the stockholders called for the purpose.
Section 11. - Salary:
No stated salary shall be paid to directors, as such, for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
<PAGE>
Section 12. - Contracts:
(a) No contract or other transaction between this Corporation and any
other corporation shall be impaired, affected or invalidated, nor shall any
director be liable in any way by reason of the fact that any one or more of the
directors of this Corporation is or are interested in, or is a director or
officer, or are directors or officers of such other corporation, provided that
such facts are disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or
may be interested in any contract or transaction of this Corporation, and no
director shall be liable in any way by reason of such interest, provided that
the fact of such interest be disclosed or made known to the Board of Directors,
and provided that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote of any such director)
of a majority of a quorum, notwithstanding the presence of any such director at
the meeting at which such action is taken. Such director or directors may be
counted in determining the presence of a quorum at such meeting. This Section
shall not be construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law (common,
statutory or otherwise) applicable thereto.
Section 13. - Executive Committee:
The Executive Committee shall consist of two members of the Board of
Directors appointed at the annual meeting of the stockholders of the Corporation
to hold office during the pleasure of the Directors. Its function shall be to
exercise all the functions and powers of the Board of Directors between the
annual meetings of the Board of Directors.
ARTICLE IV - OFFICERS
Section 1. - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, one
or more Vice-Presidents, a Secretary, a Treasurer, and such number of Assistant
Secretaries and Assistant Treasurers as the Board of Directors may from time to
time deem advisable. The President shall be and remain a director of the
Corporation during the term of his office. Any other officer may, but is not
required to be, a director of the Corporation. Any two or more offices, except
the offices of President and Vice-President, may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of stockholders.
(c) Each officer shall hold office until the annual meeting of the
Board of Directors next succeeding his election and until his successor shall
have been elected and qualified, or until his death, resignation or removal.
<PAGE>
Section 2. - Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
by such officer, and the acceptance of such resignation shall not be necessary
to make it effective.
Section 3. - Removal:
(a) Any officer specifically designated in Section 1 of this Article
IV may be removed, either with or without cause, and a successor elected, by a
majority vote of the Board of Directors, regularly convened at a regular or
special meeting.
(b) The officers and agents appointed in accordance with the
provisions of Section 11 of this Article IV may be removed, either with or
without cause, by a majority vote of the Board of Directors, regularly convened
at a regular or special meeting or by any superior officer or agent upon whom
such power of removal shall have been conferred by the Board of Directors.
Section 4. - Vacancies:
(a) A vacancy in any office specifically designated in Section 1 of
this Article IV, by reasons of death, resignation, inability to act,
disqualification, removal, or any other cause, shall be filled for the unexpired
portion of the term by a majority vote of the Board of Directors regularly
convened at any regular or special meeting.
(b) In the case of a vacancy occurring in the office of an officer or
agent appointed in accordance with the provisions of Section 11 of this Article
IV, such vacancy may be filled by vote of the Board of Directors or by any
officer or agent upon whom such power shall have been conferred by the Board of
Directors.
Section 5 - President:
The President shall be the chief executive officer of the Corporation
and, subject to the direction of the Board of Directors, shall have general
charge of the business, affairs and property of the Corporation and general
supervision over its officers and agents. He shall, if present, preside at all
meetings of the Board of Directors and at all meetings of stockholders. In
general, he shall perform all duties incident to the office of President, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
Section 6 - Vice-Presidents:
During the absence or disability of the President, the Vice-President
or, if there be more than one, the Vice-
<PAGE>
President designated by the Board of Directors as Executive Vice-President,
shall exercise all the functions of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice-President shall have such powers and discharge such duties
as may be assigned to him from time to time by the Board of Directors.
Section 7 - Secretary:
The Secretary shall:
(a) Record all the proceedings of the meetings of the stockholders and
Board of Directors in a book to be kept for that purpose;
(b) Cause all notices to be duly given in accordance with the
provisions of these by-laws and as required by statute;
(c) Be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing stock of the
Corporation prior to their issuance, and to all instruments, the execution of
which on behalf of the Corporation under its seal shall have been duly
authorized in accordance with these by-laws;
(d) If called upon to do so, prepare or cause to be prepared, and
submit at each meeting of the stockholders, a certified list in alphabetical
order of the names of the stockholders entitled to vote at such meeting,
together with the number of shares of the respective class of stock held by
each;
(e) See that the books, reports, statements, certificates and all
other documents and records of the Corporation required by statute are properly
kept and filed;
(f) In general, perform all duties incident to the office of Secretary
and such other duties as are given to him by these by-laws, or as from time to
time may be assigned to him by the Board of Directors or the President.
Section 8 - Assistant Secretaries:
Whenever requested by or in the absence or disability of the
Secretary, the Assistant Secretary designated by the Secretary (or in the
absence of such designation, the Assistant Secretary designated by the Board of
Directors) shall perform all the duties of the Secretary, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
Secretary.
Section 9 - Treasurer:
The Treasurer shall:
<PAGE>
(a) Have charge of and supervision over and be responsible for the
funds, securities, receipts and disbursements of the Corporation;
(b) Cause the moneys and other valuable effects of the Corporation to
be deposited in the name and to the credit of the Corporation in such banks or
trust companies as the Board of Directors may select; or as may be selected by
any officer or officers or agent or agents authorized so to do by the Board of
Directors;
(c) Cause the funds of the Corporation to be disbursed by checks or
drafts, with such signatures as may be authorized by the Board of Directors,
upon the authorized depositaries of the Corporation, and cause to be taken and
preserved proper vouchers for all moneys disbursed;
(d) Render to the President or the Board of Directors whenever
requested, a statement of the financial condition of the Corporation and of all
his transactions as Treasurer; and render a full financial report at the annual
meeting of the stockholders if called upon to do so;
(e) Keep the books of account of all the business and transactions of
the Corporation;
(f) Be empowered to require from all officers or agents of the
Corporation reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation; and
(g) In general, perform all duties incident to the office of Treasurer
and such other duties as are given to him by these by-laws or as from time to
time may be assigned to him by the Board of Directors or the President.
Section 10 - Assistant Treasurers:
Whenever requested by or in the absence or disability of the
Treasurer, the Assistant Treasurer designated by the Treasurer (or in the
absence of such designation, the Assistant Treasurer designated by the Board of
Directors) shall perform all the duties of the Treasurer, and when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
Treasurer.
Section 11 - Subordinate Officers and Agents:
The Board of Directors may from time to time appoint such other
officers and agents as it may deem necessary or advisable, to hold office for
such period, have such authority and perform such duties as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any officer or agent the power to appoint any such subordinate officers or
agents, and to prescribe their respective terms of office, authorities and
duties.
<PAGE>
Section 12 - Salaries:
The salaries or other compensation of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary or any compensation by reason of the fact that he is also
a director of the Corporation. The Board of Directors may delegate to any
officer or agent the power to fix from time to time the salaries or other
compensation of officers or agents appointed in accordance with the provisions
of Section 11 of this Article IV.
Section 13 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer or agent
of the Corporation shall execute to the Corporation a bond in such sum and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificates of Stock:
(a) The certificates of stock of the Corporation shall be numbered and
shall be entered in the books of the Corporation as they are issued. They shall
exhibit the holder's name and the number of shares, and shall be signed by (i)
the President or a Vice-President, and (ii) the Secretary or Treasurer, or any
Assistant Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) There shall be entered on the stock books of the Corporation, at
the time of the issuance of each share, the number of the certificate issued,
the kind of certificate issued, the name of the person owning the shares
represented thereby, the number of such shares, and the date of issuance
thereof. Every certificate exchanged or returned to the Corporation shall be
marked "cancelled" with the date of cancellation.
Section 2 - Lost or Destroyed Certificates:
The holder of any shares of stock of the Corporation shall immediately
notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it alleged to have been lost or
destroyed, and the Board of Directors may require the owner of the lost or
destroyed certificate, or his legal representatives, to give the Corporation a
bond in such sum as the Board may direct, and with such surety or sureties as
may be satisfactory to the Board, to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss or destruction of any
such certificate. A new certificate may be issued without requiring any bond
when, in the judgment of the Board of Directors, it is proper so to do.
<PAGE>
Section 3 - Transfers of Shares:
(a) Transfers of shares of the capital stock of the Corporation shall
be made on the transfer books of the Corporation by the holder of record
thereof, in person or by his duly authorized attorney, upon surrender and
cancellation of the certificate or certificates representing such shares.
(b) The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other claim
to, or interest in such share or shares on the part of any other person, whether
or not it or they shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4 - Closing of Transfer Books:
The Board of Directors shall have the power to close the stock
transfer books of the Corporation for a period of not more than ten days during
the thirty day period immediately preceding (1) any stockholder's meeting, or
(2) any date upon which stockholders shall be called upon to or have a right to
take action without a meeting, or (3) any date fixed for the payment of a
dividend or any other form of distribution, and only those stockholders of
record at the time the stock transfer books are closed, shall be recognized as
such for the purpose of (1) receiving notice of or voting at such meeting, or
(2) allowing them to take appropriate action, or (3) entitling them to receive
any dividend or other form of distribution.
Section 5 - Agreements:
Whenever two or more stockholders shall enter into a written agreement
respecting their shares of stock in the Corporation, and shall deposit such
agreement with the Corporation, the Board of Directors shall have the power to
provide by resolution that the shares of capital stock owned by the signatory
stockholders shall be transferable only in accordance with the provisions of
such agreement, and may direct that a reference to such agreement be endorsed
upon every certificate of stock affected thereby.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
any funds available therefor, as often, in such amounts, and at such time or
times as the Board of Directors may determine.
ARTICLE VII - EXECUTION OF INSTRUMENTS
All checks, drafts, bills of exchange, acceptances, bonds,
endorsements, notes or other obligations, or evidences of indebtedness of the
Corporation, and all deeds, mortgages, indentures, bills of sale, conveyances,
endorsements, assignments, transfers, stock powers or other instruments of
transfer, contracts, agreements, dividend or other orders, powers of attorney,
<PAGE>
proxies, waivers, consents, returns, reports, certificates, demands, notices or
documents, and other instruments or rights of any nature, may be signed,
executed, verified, acknowledged and delivered by such persons (whether or not
officers, agents or employees of the Corporation) and in such manner as from
time to time may be determined by the Board of Directors.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors from time to tome as the needs of the corporate business requires.
ARTICLE IX - CORPORATE SEAL
The corporate seal shall be circular in form, and shall bear the name
of the Corporation, the words "Corporate Seal", and words and figures denoting
its organization under the laws of this State, and the year thereof, and
otherwise shall be in such form as shall be approved from time to time by the
Board of Directors.
ARTICLE X - AMENDMENTS
Section - By Stockholders:
All by-laws of the Corporation shall be subject to alteration or
repeal, and new by-laws may be made, by the affirmative vote of stockholders
holding of record in the aggregate at lease a majority of the outstanding shares
of stock of the Corporation entitled to vote, given at any annual or special
meeting, the notice or waiver of notice of which shall have summarized or set
forth in full the proposed amendment.
Section 2. - By Directors:
The Board of Directors shall have power to make, adopt, alter, amend
and repeal from time to time by-laws of the Corporation; provided, however, that
the stockholders entitled to vote with respect thereto as in this Article X
above-provided may alter, amend or repeal by-laws made by the Board of Directors
and may from time to time limit or define the right of the Board of Directors to
alter, amend or repeal any by-law or by-laws made or adopted by the
stockholders.
ARTICLE XI - INDEMNITY
Any person made a party to any action, suit or proceeding, by reason
of the fact that he, his testator or intestate representative is or was a
director, officer or employee of the Corporation, or of any corporation in which
he served as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or
<PAGE>
in connection with any appeal therein that such officer, director or employee is
liable for negligence or misconduct in the performance of his duties.
The foregoing right of indemnification shall not be deemed exclusive
of any other rights to which any officer or director or employee may be entitled
apart from the provisions of this section.
The amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board of Directors, except that in any case where
there is no disinterested majority of the Board available, the amount shall be
fixed by arbitration pursuant to the then existing rules of the American
Arbitration Association.
<PAGE>
SUPPLEMENTAL RESOLUTIONS ADOPTED
BY
THE BOARD OF DIRECTORS
OF
LOGIMETRICS, INC.
Dated: July 28, 1997
RESOLVED, that ARTICLE I, Section 2 of the By-laws of LogiMetrics,
Inc. (the "Corporation") is hereby amended to read as follows:
Special meetings of the stockholders may be called at any time by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board, the President or the Secretary at the written request of a majority
of the Board of Directors.
RESOLVED, that ARTICLE II, Section 6(d) of the Corporation's By-laws
is hereby amended to read in its entirety as follows:
Any action required to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which
may be taken at any annual or special meeting if such
stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the Corporation by
delivery to the registered office of the Corporation in the State
of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Any
delivery of a consent to the Corporation's registered office in
the State of Delaware shall be by hand or by certified or
registered mail, return receipt requested.
RESOLVED, that the first sentence of ARTICLE III, Section 13 of the
Corporations' By-laws is hereby amended to read in its entirety as follows:
The Executive Committee shall consist of not more than five
members of the Board of Directors, to be selected by the Board of
Directors and to hold office during the pleasure of the Board of
Directors.
RESOLVED, that the first sentence of ARTICLE IV, Section 1(a) of the
Corporation's By-laws is hereby amended to read in its entirety as follows:
<PAGE>
The officers of the Corporation shall consist of a Chairman of the
Board, a President, one or more Vice Presidents, a Secretary, a Treasurer, and
such number of Assistant Secretaries and Assistant Treasurers as the Board of
Directors may from time to time deem advisable.
RESOLVED, that ARTICLE IV, Section 5 of the Corporation's By-laws is
hereby amended by deleting Sections 5 and 6, replacing them with the provisions
set forth below, and renumbering Sections 7 though 13 thereof accordingly:
Section 5. - Chairman of the Board:
The Chairman of the Board, if any, shall preside at all meetings of
the Board of Directors and of the stockholders at which he or she shall be
present and shall have and may exercise such powers as may, from time to time,
be assigned to him or her by the Board or as may be provided by law. Unless
otherwise determined by the Board of Directors, the Chairman of the Board shall
be the chief executive officer and shall have general charge and supervision of
the business of the Corporation and, in general, shall perform all duties
incident to the office of president of a corporation and such other duties as
may, from time to time, be assigned to him or her by the Board of Directors or
as may be provided by law.
Section 6. - President:
In the absence of the Chairman of the Board, the President shall
preside at all meetings of the Board of Directors and of the stockholders at
which he or she shall be present. Unless otherwise determined by the Board of
Directors, the President shall be the chief operating officer and shall have
general charge and supervision of the business of the Corporation, subject to
the supervision of the Chairman of the Board, and, in general, shall perform all
duties as may, from time to time, be assigned to him or her by the Board of
Directors or the Chairman of the Board or as may be provided by law.
Section 7. -- Vice Presidents:
The Vice President or Vice Presidents, at the request or in the
absence of the Chairman of the Board or the President or during the Chairman of
the Board's or President's inability to act, shall perform the duties of the
chairman of the Board or the President, and when so acting shall have the powers
attributable thereto. If there be more than one Vice President, the Board of
Directors may determine which one or more of the Vice Presidents shall perform
any of such duties; or if such determination is not made by the Board, the
Chairman of the board or the President may make such determination; otherwise
any of the Vice Presidents may perform any of such duties. The Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may, from
<PAGE>
time to time, be assigned to him or her or them by the Board of Directors or the
Chairman of the Board or as may be provided by law.
EXHIBIT 4.1
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF JULY 29, 1997 AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN.
CLASS A 13% CONVERTIBLE SENIOR
SUBORDINATED PAY-IN-KIND DEBENTURE DUE 1999
[Date of Issuance]
LOGIMETRICS, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of [name of purchaser] (together with its, his or her
successors and assigns, the "Holder") the principal amount of
_____________________ Dollars ($______________)in lawful money of the United
States, together with interest thereon calculated from the date hereof and
payable in accordance with the provisions of this debenture ("Debenture").
By accepting this Debenture, the Holder agrees that the obligations of the
Company to the Holder under this Debenture shall be subordinated only to the
Senior Debt (as hereinafter defined) of the Company, all upon the terms set
forth in paragraph 4 hereof.
This Debenture may be surrendered for transfer or exchange by the Holder
hereof upon surrender of this Debenture, together with a properly completed bond
power or other instrument of transfer, and any required signature guarantees, at
the office of the Company set forth in Section 11 hereof. Upon proper surrender,
the Company shall issue one or more replacement Debentures of like tenor
registered in the names and in the denominations requested by the surrendering
Holder and dated the date of issuance thereof; provided, however, that (i)
appropriate adjustments shall be made to reflect the date of issue and principal
amount of each such replacement Debenture, (ii) the aggregate principal amount
of all Debentures, excluding Accrued Interest Debentures (as defined below),
shall be limited to $3,583,333, and (iii) no Debenture shall be issued in a
principal amount of less than $50,000 unless in connection with a transfer
resulting from the complete liquidation of the original Holder of this
Debenture. All Debentures shall rank pari passu.
1. Payment of Interest. Subject to subparagraph 6(c)(xviii)(C) hereof,
interest will accrue from the date hereof at the rate of thirteen percent (13%)
per annum on the unpaid principal amount of this Debenture outstanding from time
to time on the basis of a 360-day year for the actual number of days elapsed.
Subject to paragraph 4 hereof, the Company will pay to the Holder all accrued
and unpaid interest on this Debenture on [first interest payment date following
the issuance date] and quarterly thereafter, in arrears, on the 15th day of
[January], the
<PAGE>
15th day of [April], the 15th day of [July] and the 15th day of [October] (each,
an "Interest Payment Date") to and including the earlier to occur of the
Conversion Date (hereinafter defined) or the Due Date (hereinafter defined).
Interest will accrue at the greater of the Default Rate (hereinafter defined)
and the rate of fifteen percent (15%) per annum on any principal payment past
due under this Debenture and, unless prohibited under applicable law (and if so
prohibited then only to the extent not so prohibited), on any interest which has
not been paid on the date on which it is due and payable (without giving effect
to any applicable grace periods or paragraph 4 hereof) until such time as
payment therefor is actually delivered to the Holder.
On each Interest Payment Date other than the Due Date (as defined below),
in payment of the interest due on this Debenture on such Interest Payment Date,
the Company shall deliver to the Holder of this Debenture a new Debenture (an
"Accrued Interest Debenture"), in the form of this Debenture, dated such
Interest Payment Date (and bearing interest from such Interest Payment Date) and
having a principal amount corresponding to the interest due on this Debenture on
such Interest Payment Date. On the Due Date, in payment of the interest due on
this Debenture on such date, the Company shall deliver, at the option of the
Holder, either (a) a cash payment in such amount, or (b) the number of shares of
Common Stock, par value $.01 per share ("Common Stock"), into which Accrued
Interest Debentures would be convertible pursuant to Section 6 hereof if Accrued
Interest Debentures had been issued to the Holder on the Due Date in payment of
such interest and such Accrued Interest Debentures were converted by the Holder
immediately thereafter. Unless the Holder gives the Company not less than 10
days' prior written notice of the exercise of such option, the Holder shall be
deemed to have irrevocably elected to receive payment of such interest in cash
on the Due Date. Any exercise or deemed exercise of such option shall be binding
on any subsequent Holder of this Debenture.
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company will repay the principal amount of this
Debenture on [two years from date of issue] [date] ("Due Date").
(b) Optional Prepayment. At any time after nine months from the date
hereof, provided that the Registration Statement (hereinafter defined) is
effective and available for sales of Registrable Securities (hereinafter
defined) thereunder, the Company may at any time hereafter prepay, without
premium or penalty, all (but not less than all) of the outstanding principal
amount of the Debentures (including, for this purpose, the Accrued Interest
Debentures), together with interest accrued on such prepaid amount to the date
of payment; provided (i) the average closing price of the Company's Common Stock
on days the Common Stock traded during the 120-day period immediately preceding
the date of the notice provided for in paragraph (c) hereinbelow shall have been
not less than $5.00, and (ii) the closing price of the Common Stock for each of
the 30 trading days immediately preceding the date of such notice shall have
been not less than $5.00, adjusted in each case for stock splits, stock
dividends or other similar transactions affecting the price of the Common Stock.
All such prepayments shall be applied pro rata to all of the Debentures. At the
option of the Holder, interest accrued on the prepaid amount to the date of
payment shall be paid either (a) in cash or (b) by the issuance by the Company
to
<PAGE>
the Holder of shares of Common Stock into which Accrued Interest Debentures
would be convertible pursuant to Section 6 hereof if Accrued Interest Debentures
had been issued to the Holder on such date in payment of such interest and such
Accrued Interest Debentures were converted by the Holder immediately thereafter.
Unless the Holder gives the Company not less than 10 days' prior written notice
of the exercise of such option, the Holder shall be deemed to have irrevocably
elected to receive payment of such interest in cash. Any exercise or deemed
exercise of such option shall be binding on any subsequent Holder of this
Debenture.
(c) Notice of Prepayment. The Company will give written notice of its
election to prepay this Debenture to the Holder in person or by registered or
certified mail, return receipt requested, at least thirty (30) and not more than
forty-five (45) days prior to the date of prepayment. On the date of prepayment
specified in the Company's notice, the Company will deliver to the Holder of
this Debenture in person or by registered or certified mail, return receipt
requested, a cashier's or certified check for the entire outstanding principal
amount being prepaid, together with all accrued interest thereon through the
date of prepayment.
3. Intentionally Omitted.
4. Subordination. The Company's payment, whether voluntary or involuntary,
whether in cash, property, securities or otherwise and whether by application of
offset or otherwise (hereinafter "Payment") of any of its obligations under this
Debenture, other than the issuance of Accrued Interest Debentures, shall be
subject to the following restrictions:
(a) Subordination to Senior Debt. Anything in this Debenture to the
contrary notwithstanding, the obligations of the Company in respect of the
principal of and interest (including any premium or penalty) on this Debenture
and any other amounts due under this Debenture (the "Subordinated Debt") shall
be subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to the Senior Debt. "Senior Debt", when used with respect
to the Company, means (i) the Company's indebtedness to North Fork Bank ("Bank")
under (A) that certain $640,000.04 Restated and Amended Term Loan Note, dated
April 25, 1997, and (B) that certain $2,200,000 Sixth Restated and Amended
Revolving Credit Note, dated April 25, 1997, in each case, together with
interest thereon and (ii) renewals, extensions, refinancings, deferrals,
restructurings, amendments, modifications and waivers of the indebtedness
described in clause (i) above.
(b) Default on Senior Debt. So long as the Senior Debt has not been
paid in full, if there shall occur a default in the payment when due of any
amount due and owing on account of Senior Debt (any of the foregoing being a
"Senior Debt Default") then, from and after the receipt of written notice
thereof from the holder of Senior Debt unless and until such Senior Debt Default
shall have been remedied or waived the Company will not make any Payment on any
Subordinated Debt, and the Holders of Subordinated Debt will not receive or
accept any direct or indirect Payment in respect thereof, and the Company may
not redeem or otherwise acquire any Subordinated Debt.
<PAGE>
(c) Changes in Senior Debt. Any holder of Senior Debt may, at any time
and from time to time, without the consent of, or notice to, the Holder and
without incurring responsibility to the Holder, and without impairing or
releasing the obligations of the Holder hereunder:
(i) Change the manner, place or terms of payment or change or
extend the time of payment of or renew or alter the Senior Debt or any
portion thereof; provided, however, that without the written consent of the
Majority Holders (hereinafter defined) the principal amount of and interest
rate applicable from time to time to Senior Debt may not be increased
(other than pursuant to the terms of the Senior Debt as such terms existed
on the date of issuance hereof);
(ii) Sell, exchange, release or otherwise deal with any
collateral securing the Senior Debt or any other property by whomsoever at
any time pledged or mortgaged to secure, or however securing, the Senior
Debt or any portion thereof; and
(iii) Apply any sums by whomsoever paid or however released to
the Senior Debt or any portion thereof.
(d) Consent to Senior Debt. By acceptance of this Debenture, the
Holder hereby consents to the making of Senior Debt and hereby acknowledges that
each current and future holder of Senior Debt has relied, and in the future will
rely, upon the terms of this Debenture. The holders of Senior Debt shall have no
liability to the Holder and the Holder hereby waives any claim which it may have
now or hereafter against any holder of Senior Debt arising from any and all
actions which any holder of Senior Debt may take or omit to take in good faith
with regard to the Senior Debt or its rights or obligations hereunder.
(e) Payments in Trust. Until the Senior Debt has been repaid in full,
in the event the Holder shall receive any Payment in contravention of the
provisions of this paragraph 4 including, Payments arising under the
subordination provisions of any other indebtedness of the Company, the Holder
shall hold all such Payments so received in trust for the holders of Senior Debt
and shall forthwith turn over all such Payments to the holders of Senior Debt in
the form received (except for the endorsement or assignment of the Holder as
necessary, without recourse or warranty) to be applied to payment of the Senior
Debt whether or not then due and payable. Any Payment so received in trust and
turned over to the holders of Senior Debt shall not be deemed a Payment in
satisfaction of the Subordinated Debt by the Company.
(f) Payment in full of Senior Debt; Subrogation. If any Payment to
which a Holder of Subordinated Debt would otherwise have been entitled but for
the provisions of this paragraph 4 shall have been applied, pursuant to the
provisions of this paragraph 4, to the payment of Senior Debt, then and in such
case, the Holder of the Subordinated Debt (i) shall be entitled to receive from
the holders of Senior Debt at the time outstanding any payments or distributions
received by such holders of Senior Debt in excess of the amount sufficient to
pay all Senior Debt in cash in full (whether or not then due), and (ii)
following payment of the Senior
<PAGE>
Debt in full, shall be subrogated to any right of the holders of Senior Debt to
receive any and all further payments or distributions applicable to Senior Debt,
until all the Subordinated Debt shall have been paid in full. If the Holder of
the Subordinated Debt shall have been subrogated to the rights of the holders of
Senior Debt due to the operation of this paragraph 4(f), the Company agrees to
take all such reasonable actions as are requested by such Holders of the
Subordinated Debt in order to cause such Holders to be able to obtain payments
from the Company with respect to such subrogation rights as soon as possible.
(g) No Impairment of the Company's Obligations. Nothing contained in
this paragraph 4, as between the Company and the Holder of this Debenture, shall
impair the obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of and interest on this Debenture as and when
the same shall become due and payable in accordance with the terms hereof.
(h) Advances in Reliance. The Holder of this Debenture, by its
acceptance hereof, agrees that each holder of Senior Debt has advanced funds or
may in the future advance funds in reliance upon the terms and conditions
hereof.
(i) Non-Waiver of Rights. No right of any holder of Senior Debt to
enforce its right of subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company, or by any act or failure to act by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Debenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(j) Recaptured Payments. Any Payments received by a holder of Senior
Debt from the Company or the Holder which, in connection with an Insolvency
Event or Proceeding (hereinafter defined), is required to be remitted to the
payor or the bankrupt estate shall not be deemed a Payment to such holder of
Senior Debt for all purposes hereunder.
5. Security. The obligations of the Company to the Holder of this Debenture
(including the obligation to pay the Accrued Interest Debentures when due) are
secured by certain Collateral to the extent provided in the Amended and Restated
Security Agreement, dated as of March 7, 1996, as amended and restated as of
July 29, 1997 ("Security Agreement"), made by the Company in favor of Holders of
the Debentures. In addition to all rights and remedies provided herein, Holders
of the Debentures are entitled to the benefits provided in the Security
Agreement. By accepting this Debenture, the Holder hereof agrees to be bound by
the terms of the Security Agreement.
6. Conversion Rights.
(a) The Holder of this Debenture has the right (the "Conversion
Right"), exercisable at his, her or its option at any time during which the
principal amount of this Debenture is outstanding, to convert this Debenture,
but only in whole, into _____________
<PAGE>
(___________) shares of Common Stock, subject to adjustment in certain
circumstances as provided herein.
(b) The Conversion Right is exercisable upon surrender of this
Debenture, together with a conversion notice, in the form attached hereto as
Exhibit A, duly executed and completed, evidencing the election of the Holder to
exercise the Conversion Right, at the Company's principal office at 50 Orville
Drive, Bohemia, New York 11716. The registered owner of this Debenture shall
become the record holder of the shares of Common Stock issuable upon conversion
as of the date of exercise of the Conversion Right (the "Conversion Date"). The
shares issued in connection with the Conversion Right shall be registered
initially in the name of the Holder, and delivered to the Holder no later than
two (2) business days after receipt of a properly completed conversion notice.
Upon conversion, the Company shall pay to the Holder accrued but unpaid interest
on this Debenture up to, but excluding, the Conversion Date. At the option of
the Holder, such accrued but unpaid interest shall be paid either (a) in cash or
(b) by the issuance by the Company to the Holder of shares of Common Stock into
which Accrued Interest Debentures would be convertible pursuant to Section 6
hereof if Accrued Interest Debentures had been issued to the Holder on such date
in payment of such interest and such Accrued Interest Debentures were converted
by the Holder immediately thereafter. Unless the Holder gives the Company not
less than 10 days' prior written notice of the exercise of such option, the
Holder shall be deemed to have irrevocably elected to receive payment of such
interest in cash. Any exercise or deemed exercise of such option shall be
binding on any subsequent Holder of this Debenture.
(c) In case, at any time or from time to time after the date of
issuance of this Debenture ("Issuance Date"), the Company shall issue or sell
shares of its Common Stock (other than any Common Stock issuable upon the
exercise or conversion of (i) the Debentures (and any replacement Debenture or
Debentures issued upon transfer or exchange of this Debenture), (ii) any Accrued
Interest Debentures (and any replacement Accrued Interest Debenture or Accrued
Interest Debentures issued upon transfer or exchange of the Accrued Interest
Debentures), (iii) the Company's Amended and Restated Class B 13% Convertible
Senior Subordinated Pay-in-Kind Debentures due 1999 (the "Class B Debentures")
(and any replacement Class B Debenture or Class B Debentures issued upon
transfer or exchange of the Class B Debentures), (iv) any additional securities
issued in lieu of cash interest otherwise payable on the Class B Debentures (the
"Class B Accrued Interest Debentures") (and any replacement Class B Accrued
Interest Debenture or Class B Accrued Interest Debentures issued upon transfer
or exchange of the Class B Accrued Interest Debentures), (v) securities
outstanding on the date hereof, (vi) awards made pursuant to the Company's Stock
Compensation Program (the "Plan"), (vii) awards made pursuant to any incentive
compensation plan or arrangement approved by the Company's Board of Directors or
by the Compensation Committee of the Company's Board of Directors, (viii) the
Company's Series G Warrants, (ix) the Company's Series H Warrants, or (x) the
Company's Series I Warrants) (such securities, collectively, the "Subject
Securities") for a consideration per share less than $.52 per share ("Trigger
Price"), or, if a Pro Forma Adjusted Trigger Price (hereinafter defined) shall
be in effect as provided below in this paragraph (c), then less than such Pro
Forma Adjusted Trigger Price per share, then and in each such case the Holder of
this Debenture, upon the conversion hereof as provided in paragraph (a) hereof,
shall be entitled to
<PAGE>
receive, in lieu of the shares of Common Stock theretofore receivable upon the
conversion of this Debenture, a number of shares of Common Stock determined by
(a) dividing the Trigger Price by a Pro Forma Adjusted Trigger Price per share
to be computed as provided below in this paragraph (c), and (b) multiplying the
resulting quotient by the number of shares of Common Stock into which this
Debenture is then convertible. A Pro Forma Adjusted Trigger Price per share
shall be the price computed (to the nearest cent, a fraction of half cent or
more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Company outstanding
immediately prior to such issue or sale by the Trigger Price (or, if a
Pro Forma Adjusted Trigger Price shall be in effect, by such Price),
and (y) the consideration, if any, received by the Company upon such
issue or sale, by (ii) the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale.
For the purpose of this paragraph (c):
(i) In case the Company splits its Common Stock or shall declare
any dividend, or make any other distribution, upon any stock of the Company
of any class payable in Common Stock, or in any stock or other securities
directly or indirectly convertible into or exchangeable for Common Stock
(any such stock or other securities being hereinafter called "Convertible
Securities"), such split, declaration or distribution shall be deemed to be
an issue or sale (as of the record date for such split, dividend or other
distribution), without consideration, of such Common Stock or such
Convertible Securities, as the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be determined the
price per share for which Common Stock is issuable upon the conversion or
exchange thereof, such determination to be made by dividing (a) the total
amount received or receivable by the Company as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (b) the maximum number of shares of
Common Stock of the Company issuable upon the conversion or exchange of all
such Convertible Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale, then
such issue or sale shall be deemed to be an issue or sale for cash (as of
the date of issue or sale of such Convertible Securities) of such maximum
number of shares of Common Stock at the price per share so determined,
provided that, if such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in the amount of
additional consideration, if any,
<PAGE>
payable to the Company, or in the rate of exchange, upon the conversion or
exchange thereof, the Pro Forma Adjusted Trigger Price per share shall,
forthwith upon any such increase becoming effective, be readjusted to
reflect the same, and provided, further, that upon the expiration of such
rights of conversion or exchange of such Convertible Securities, if any
thereof shall not have been exercised, the Pro Forma Adjusted Trigger Price
per share shall forthwith be readjusted and thereafter be the price which
it would have been had an adjustment been made on the basis that the only
shares of Common Stock so issued or sold were those issued or sold upon the
conversion or exchange of such Convertible Securities, and that they were
issued or sold for the consideration actually received by the Company upon
such conversion or exchange, plus the consideration, if any, actually
received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
(iii) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Common Stock of any class
other than the Subject Securities, there shall be determined the price per
share for which Common Stock is issuable upon the exercise of such rights
or options, such determination to be made by dividing (a) the total amount,
if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise
of such rights or options, by (b) the maximum number of shares of Common
Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale, then
the granting of such rights or options shall be deemed to be an issue or
sale for cash (as of the date of the granting of such rights or options) of
such maximum number of shares of Common Stock at the price per share so
determined, provided that, if such rights or options shall by their terms
provide for an increase or increases, with the passage of time, in the
amount of additional consideration, if any, payable to the Company upon the
exercise thereof, the Pro Forma Adjusted Trigger Price per share shall,
forthwith upon any such increase becoming effective, be readjusted to
reflect the same, and provided, further, that upon the expiration of such
rights or options, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been
made on the basis that the only shares of Common Stock so issued or sold
were those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options,
whether or not exercised.
(iv) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities other
than the Subject Securities, such Convertible Securities shall be deemed,
for the purposes of
<PAGE>
subparagraph (iii) above, to have been issued or sold for the total amount
received or receivable by the Company as consideration for the granting of
such rights or options plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of such
rights or options, provided that, upon the expiration of such rights or
options, if any thereof shall not have been exercised, the Pro Forma
Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been
made upon the basis that the only Convertible Securities so issued or sold
were those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options,
whether or not exercised.
(v) In case any shares of stock or other securities, other than
Common Stock of the Company, shall at any time be receivable upon the
conversion of this Debenture, and in case any additional shares of such
stock or any additional such securities (or any stock or other securities
convertible into or exchangeable for any such stock or securities) shall be
issued or sold for a consideration per share such as to dilute the purchase
rights evidenced by this Debenture, then and in each such case the Pro
Forma Adjusted Trigger Price per share shall forthwith be adjusted,
substantially in the manner provided for above in this paragraph (c), so as
to protect the Holder of this Debenture against the effect of such
dilution.
(vi) In case any shares of Common Stock or Convertible Securities
or any rights or options to subscribe for, purchase or otherwise acquire
any Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, after deducting any expenses incurred and
any underwriting or similar commissions, compensation or concessions paid
or allowed by the Company in connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or sold
for a consideration other than cash (or a consideration which includes cash
and other assets) then, for the purpose of this paragraph (c), the Board of
Directors of the Company shall promptly determine the fair value of such
consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount
at which such consideration is recorded in the books of the Company for
accounting purposes except in the case of an acquisition accounted for on a
pooling of interest basis. In case any Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Company for
a consideration which covers
<PAGE>
both, the Board of Directors of the Company shall promptly determine in
good faith what part of the consideration so received is to be deemed to be
the consideration for the issue or sale of such Common Stock or Convertible
Securities or such rights or options.
The Company covenants and agrees that, should any determination
of fair value of consideration or of allocation of consideration be made by
the Board of Directors of the Company, pursuant to this subparagraph (vii),
it will, not less than seven (7) days after any and each such
determination, deliver to the Holder of this Debenture a certificate signed
by the President or a Vice President and the Treasurer or an Assistant
Treasurer of the Company reciting such value as thus determined and setting
forth the nature of the transaction for which such determination was
required to be made, the nature of any consideration, other than cash, for
which Common Stock, Convertible Securities, rights or options have been or
are to be issued, the basis for its valuation, the number of shares of
Common Stock which have been or are to be issued, and a description of any
Convertible Securities, rights or options which have been or are to be
issued, including their number, amount and terms.
(viii) In case the Company shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (a) to
receive a dividend or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the Common Stock issued or
sold or deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the
granting of such rights of subscription, purchase or other acquisition, as
the case may be.
(ix) The number of shares of Common Stock outstanding at any
given time shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock, but shall exclude
shares in the treasury of the Company.
(x) Following each computation or readjustment of a Pro Forma
Adjusted Trigger Price as provided in this paragraph (c), the newly
computed or adjusted Pro Forma Adjusted Trigger Price shall remain in
effect until a further computation or readjustment thereof is required by
this paragraph (c).
(xi) In case at any time or from time to time after the Issuance
Date the holders of the Common Stock of the Company of any class (or any
other shares of stock or other securities at the time receivable upon the
exercise of this Debenture) shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have
become entitled to receive:
(A) other or additional stock or other securities or
property (other than cash) by way of dividend;
<PAGE>
(B) any cash paid or payable out of capital or paid-in
surplus or surplus created as a result of a revaluation of property by
way of dividend; or
(C) other or additional (or less) stock or other securities
or property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph (c)), then in each case the Holder
of this Debenture, upon the conversion hereof as provided in paragraph (a)
hereof, shall be entitled to receive, in lieu of, or in addition to, as the case
may be, the shares theretofore receivable upon the conversion of this Debenture,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such Holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Company into
which this Debenture is convertible and had thereafter, during the period from
the Issuance Date to and including the date of such conversion, retained such
shares and/or all other or additional (or less) stock or other securities or
property (including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during such period by paragraph (c) and subparagraph
(xii) hereof.
(xii) In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time
deliverable on the conversion of this Debenture) after the date hereof, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all its assets to another corporation, then and in each such
case the Holder of this Debenture, upon the conversion hereof as provided
in paragraph (a) hereof, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the stock or other securities or property to which such Holder
would have been entitled upon such consummation if such Holder had
converted this Debenture immediately prior thereto, all subject to further
adjustments as provided for herein; in each such case, the terms of this
Debenture shall be applicable to the shares of stock or other securities or
property receivable upon the conversion of this Debenture after such
consummation.
(xiii) The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Debenture, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such action as may be necessary or appropriate in order to protect
the rights of the Holder hereof against dilution or other impairment.
Without limiting the generality of the foregoing, the Company will not
increase the par value of any shares of
<PAGE>
stock receivable upon the conversion of this Debenture above the amount
payable therefor upon such exercise, and at all times will take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable stock upon the
conversion of this Debenture.
(xiv) In each case of an adjustment in the number of shares of
Common Stock or other stock, securities or property receivable on the
conversion of this Debenture, at the request of the Holder of this
Debenture the Company at its expense shall promptly cause independent
public accountants of recognized standing, selected by the Company, to
compute such adjustment in accordance with the terms of this Debenture and
prepare a certificate setting forth such adjustment and showing in detail
the facts upon which such adjustment is based, including a statement of (A)
the consideration received or to be received by the Company for any
additional shares issued or sold or deemed to have been issued or sold, (B)
the number of shares of Common Stock outstanding or deemed to be
outstanding and (C) the Pro Forma Adjusted Trigger Price. The Company will
forthwith mail a copy of each such certificate to the Holder of this
Debenture.
(xv) In case:
(A) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable
upon the conversion of this Debenture) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise any
preemptive right pursuant to the Company's charter, or to receive any
right to subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right; or
(B) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(C) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Debenture a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Debenture) shall be entitled to
<PAGE>
exchange their shares of Common Stock of any class (or such other stock or
securities) for reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up or (iii) the amount and character of the
stock or other securities proposed to be issued or granted, the date of such
proposed issuance or grant and the persons or class of persons to whom such
stock or other securities are to be offered, issued or granted. Such notice
shall be mailed at least thirty (30) days prior to the date therein specified.
(xvi) The Company will at all times reserve and keep available,
solely for issuance and delivery upon the conversion of this Debenture and
other similar Debentures, such shares of Common Stock and other stock,
securities and property as from time to time shall be issuable upon the
exercise of this Debenture and all other similar Debentures at the time
outstanding.
(xvii) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Debenture and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement in an amount reasonably satisfactory to it, or (in the case of
mutilation) upon surrender and cancellation thereof, the Company will
issue, in lieu thereof, a new Debenture of like tenor.
(xviii) (A) On or prior to [90 days after date of issuance]
[date], the Company will file a registration statement ("Registration
Statement") with the Securities and Exchange Commission ("SEC") covering
the shares of Common Stock issuable upon conversion of the Debentures and
any Accrued Interest Debentures (and covering such other securities as the
Company shall determine in its sole discretion) (collectively "Registrable
Securities"), and will use its best efforts to cause the Registration
Statement to become effective on or prior to the ninetieth day after such
filing and to keep the Registration Statement effective until the earlier
of (i) seven years from the date it is declared effective by the SEC, or
(ii) the sale of all of the Registrable Securities.
(B) The following provisions shall be applicable to the
Registration Statement:
(aa) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as
possible, and if any stop order shall be issued by the SEC in
connection therewith to use its reasonable efforts to obtain the
removal of such order. Following the effective date of the
Registration Statement, the Company shall, upon the request of
the Holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Act, and other documents
necessary or incidental to a public offering of the Registrable
Securities, as shall be reasonably requested by the Holder to
permit the Holder to make a public distribution of its, his or
her Registrable Securities; provided, however,
<PAGE>
that by accepting this Debenture, the Holder agrees, if requested
by the managing underwriter(s) in connection with an underwritten
public offering of the Company's equity securities, to enter into
a customary agreement with such managing underwriter(s) not to
offer for sale or sell its, his or her Registrable Securities for
up to 180 days after such offering. The Company will use its
reasonable efforts to qualify the Registrable Securities for sale
in such states as the holder of Registrable Securities shall
reasonably request, provided that no such qualification will be
required in any jurisdiction where, solely as a result thereof,
the Company would be subject to service of general process or to
taxation or qualification as a foreign corporation doing business
in such jurisdiction. The obligations of the Company hereunder
with respect to the Holder's Registrable Securities are expressly
conditioned on the Holder's furnishing to the Company such
appropriate information concerning the Holder, the Holder's
Registrable Securities and the terms of the Holder's offering of
such Registrable Securities as the Company may reasonably
request.
(bb) The Company shall pay all expenses incurred in
complying with the provisions of this subparagraph (xviii),
including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), printing expenses, fees
and disbursements of counsel to the Company, securities law and
blue sky fees and expenses and the expenses of any regular and
special audits incident to or required by any such registration.
All underwriting discounts and selling commissions applicable to
the sales of the Registrable Securities, and any state or federal
transfer taxes payable with respect to the sales of the
Registrable Securities and all fees and disbursements of counsel
for the Holder, if any, in each case arising in connection with
registration of the Registrable Securities shall be payable by
the Holder.
(cc) In connection with the registration of the
Registrable Securities pursuant to this subparagraph (xviii), the
Company shall indemnify and hold harmless the Holder, its
affiliates, officers, directors, partners, employees, agents and
representatives, each person, if any, who controls the Holder
within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any person deemed to be an
underwriter of the Registrable Securities and any person claiming
by or through any of them (collectively, the "Indemnified
Persons") from and against all losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arising out of or
are based upon any untrue statement of any material fact
contained in the Registration Statement or alleged untrue
statement, under which such securities were registered under the
Securities Act, any
<PAGE>
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not
misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws
applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and
will reimburse the Indemnified Persons for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not
be liable in any such case to any Indemnified Person to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission made in the
Registration Statement, said preliminary prospectus or said final
prospectus or said amendment or supplement or any document
incident thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the
Holder.
(dd) The Holder will indemnify and hold harmless the
Company and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, each
officer of the Company who signs the Registration Statement and
each director of the Company from and against any and all such
losses, claims, damages or liabilities arising from any untrue
statement in, or omission from, the Registration Statement, any
such preliminary or final prospectus, amendment, or supplement or
document incident thereto if the statement or omission in respect
of which such loss, claim, damage or liability is asserted was
made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Holder
for use in connection with the preparation of the Registration
Statement or such prospectus or amendment or supplement thereof.
(ee) The reimbursements required by clauses (cc) and
(dd) shall be made by periodic payments during the course of the
investigation or defense as and when bills are received or
expenses incurred; provided, however, that to the extent that an
indemnified party receives periodic payments for legal or other
expenses during the course of an investigation or defense, and
such party subsequently received payments for such expenses from
any other parties to the proceeding, such payments shall be used
by the indemnified party to reimburse the indemnifying party for
such periodic payments. Any party which proposes to assert the
right to be indemnified under clause (cc) or (dd) will, promptly
after receipt of notice
<PAGE>
of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against any
indemnified party hereunder, notify each such indemnifying party
of the commencement of such action, suit or proceeding, enclosing
a copy of all papers served, but the failure to so notify such
indemnifying party of any such action, suit or proceeding shall
not relieve the indemnifying party from any obligation which it
may have to any indemnified party hereunder unless and only to
the extent that the indemnifying party is prejudiced by said lack
of notice. In case any such action, suit or proceeding shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent that
it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other
expense, other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the
right to employ its own counsel in any such action, but the
reasonable fees and expenses of such counsel shall be at the
expense of such indemnified party, when and as incurred, unless
(A) the employment of counsel by such indemnified party has been
authorized by the indemnifying party, (B) the indemnified party
has reasonably concluded (based on advice of counsel), that there
may be legal defenses available to it that are different from or
in addition to those available to the indemnifying party, (C) the
indemnified party shall have reasonably concluded (based on
advice of counsel) that there may be a conflict of interest
between the indemnifying party and the indemnified party in the
conduct of defense of such action (in which case the indemnifying
party shall not have the right to direct the defense of such
action on behalf of the indemnified party), or (D) the
indemnifying party shall not in fact have employed counsel to
assume the defense of such action within 15 days after receipt of
notice of such action. An indemnifying party shall not be liable
for any settlement or any action or claim effected without its
consent, which shall not be unreasonably withheld.
(ff) If the indemnification provided for in this
subparagraph (xviii) is unavailable to any indemnified party
hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying
<PAGE>
party and indemnified parties in connection with the actions that
resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates
to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set
forth herein, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
(gg) The Company and the Holder agree that it would not
be just and equitable if contribution pursuant to clause (ff)
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding any other provision hereof, in no
event shall the contribution obligation of the Holder be greater
in amount than the excess of (A) the dollar amount of net
proceeds received by the Holder upon the sale of the securities
giving rise to such contribution obligation over (B) the dollar
amount of any damages that the Holder has otherwise been required
to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(hh) Neither the filing of the Registration Statement
by the Company pursuant to this Agreement nor the making of any
request for prospectuses by the Holder shall impose upon the
Holder any obligation to convert his, her or its Debentures or to
sell his, her or its Registrable Securities.
(ii) The Holder, upon receipt of notice from the
Company that an event has occurred which requires a
post-effective amendment to the Registration Statement or a
supplement to the prospectus included therein, shall promptly
discontinue the sale of his, her or its Registrable Securities
until the Holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as
soon as practicable after such notice.
<PAGE>
(C) In the event (a) the Registration Statement is not filed
by the Company with the SEC on or prior to [the ninetieth day following the
date of issuance hereof] [date], or (b) the Registration Statement has not
been declared effective by the SEC on or prior to [the 180th day following
the date of issuance hereof] [date], the annual interest rate on the
Debentures shall be the rate per annum ("Default Rate") which is 13%
increased by one and one-half percent (1-1/2%) per annum for the first
three (3) months immediately following the expiration of such ninety (90)
day period or one hundred eighty (180) day period, as the case may be, and
by an additional one-half of one percent (1/2%) per annum at the beginning
of each subsequent thirty (30) day period thereafter, until such time as
the requirements of clause (a) or (b) above, as the case may be, have been
satisfied, at which time all increases in the interest rate borne by the
Debentures resulting from the operation of this sentence shall terminate
and the interest rate borne by the Debentures shall revert to the rate that
otherwise would be in effect but for the operation of this sentence;
provided, however, that in no event shall the interest rate borne by the
Debentures exceed seventeen percent (17%) per annum pursuant to this
sentence.
7. Covenants.
(a) Affirmative Covenants: The Company will, and with respect to the
agreements set forth in subsections (i) through (viii) hereof, will cause each
subsidiary to:
(i) with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies
similarly situated and operating like properties, assets or businesses with
responsible insurance companies satisfactory to the Majority Holders said
insurance to indicate the Agent (as defined in the Security Agreement) as
an additional insured;
(ii) duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such
items are being in good faith appropriately contested;
(iii) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs, replacements,
additions, betterments and improvements thereto;
(iv) conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and
conducted;
(v) comply with all statutes, rules and regulations and maintain
its corporate existence;
<PAGE>
(vi) provide the Holder with the following financial information:
(A) annually, as soon as available, but in any event within
one hundred twenty (120) days after the last day of each fiscal year,
audited financial statements, including balance sheets as of the last
day of the fiscal year and statements of income and retained earnings
and changes in financial condition for such fiscal year each prepared
in accordance with generally accepted accounting principles,
consistently applied ("GAAP") for the period and prior periods by
independent Certified Public Accountants satisfactory to the Majority
Holders;
(B) as soon as available, but in any event within forty-five
(45) days after the end of each fiscal quarter, internally prepared
financial statements of the Company each prepared in accordance with
GAAP and jobs-in-progress reports for said period and prior periods;
(C) within a reasonable time after a written request
therefor, such other financial data or information as the Holder may
reasonably request from time to time;
(D) at the same time as it delivers the financial statements
required under the provisions of subsections (A) and (B) hereof, a
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute
such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day
after each such month, backlog reports and accounts receivable agings
of the Company;
(vii) permit the Holder to make or cause to be made, inspections
and audits of any books, records and papers of the Company and of any
parent or subsidiary thereof and to make extracts therefrom at all such
reasonable times and as often as the Holder may reasonably require;
(viii) immediately give notice to the Holder that an Event of
Default has occurred or that an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, has occurred
and specifying the action which the Company has taken and proposes to take
with respect thereto.
(b) Financial Covenants:
<PAGE>
(i) At the end of each fiscal quarter, the Company shall maintain
a Tangible Net Worth of (-3,042,322) or greater (as calculated in
accordance with GAAP). For purposes hereof "Tangible Net Worth" shall mean,
at any date, (i) the net book value of assets (other than patents, patent
rights, trademarks, trade names, franchises, copyrights, licenses, permits,
goodwill and other intangible assets classified as such in accordance with
GAAP) after all appropriate adjustments in accordance with GAAP (including,
without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization) plus (ii) subordinated indebtedness, in each
case computed in accordance with GAAP; and
(ii) At the end of each fiscal quarter, the Company shall report
a net income (gross income less taxes and extraordinary items) of not less
than $1.00.
(c) Negative Covenants: The Company will not, and will not permit
any subsidiary to:
(i) create, incur, assume or suffer to exist any liability for
borrowed money, except (A) indebtedness to the Bank or any other financial
institution constituting "Senior Debt" hereunder; (B) indebtedness
outstanding on the date hereof; (C) indebtedness represented by the
Company's 13% Senior Subordinated Interest Note (the "Note") (and any
replacement Note or Notes issued upon transfer or exchange of the Note),
(D) indebtedness represented by the Debentures (and any replacement
Debenture or Debentures issued upon transfer or exchange of the
Debentures); (E) indebtedness represented by the Accrued Interest
Debentures (and any replacement Accrued Interest Debenture or Accrued
Interest Debentures issued upon transfer or exchange of the Accrued
Interest Debentures); (F) indebtedness represented by the Class B
Debentures (and any replacement Class B Debenture or Class B Debentures
issued upon transfer or exchange of the Class B Debentures); (G)
indebtedness represented by the Class B Accrued Interest Debentures (and
any replacement Class B Accrued Interest Debenture or Class B Accrued
Interest Debentures issued upon transfer or exchange of the Class B Accrued
Interest Debentures); and (H) other indebtedness for borrowed money
(whether or not constituting a refinancing of existing indebtedness) so
long as (x) such indebtedness is not secured by collateral securing
repayment of the Debentures, (y) such indebtedness contains provisions
reasonably satisfactory to the Majority Holders subordinating the payment
of principal and interest thereon to the prior payment of principal and
interest on the Debentures, and (z) the incurrence of which will not cause
an Event of Default, or an event which with notice or the lapse of time or
both would constitute an Event of Default, hereunder (collectively,
"Permitted Indebtedness");
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in, any of its
property or assets now owned or hereafter acquired except (A) mortgages,
liens, pledges and security interests securing Permitted Indebtedness; (B)
other liens, charges and encumbrances incidental to the conduct of its
business or the ownership of its property and assets which are not incurred
in connection with the borrowing of money or the obtaining of advances or
<PAGE>
credit and which do not materially impair the use thereof in the operation
of its business; (C) liens for taxes or other governmental charges which
are not delinquent or which are being contested in good faith and for which
a reserve shall have been established in accordance with GAAP; (D) liens
granted to secure purchase money financing of equipment, provided such
liens are limited to the equipment financed; and (E) liens granted to
refinance unencumbered equipment provided such liens are limited to the
equipment refinanced and the incurrence of which will not cause a default
hereunder or in any Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (B) engage in or
permit any person to engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended) involving any pension plan which would subject the Company to
any material tax, penalty or other liability, (C) incur or suffer to exist
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, involving any pension plan, or (D) allow or
suffer to exist any event or condition, which presents a material risk of
incurring a material liability to the PBGC by reason of termination of any
pension plan;
(v) amend, supplement or modify the terms of the Subject
Securities or increase the outstanding amount of any Subject Securities
(excluding awards granted under the Plan or under an incentive compensation
plan or arrangement approved by the Company's Board of Directors or by the
Compensation Committee of the Company's Board of Directors) without the
prior consent of the Majority Holders;
(vi) enter into any merger or consolidation unless the Company
shall be the surviving entity in any such merger or consolidation, and
after giving effect to the transaction no Event of Default and no event
which with the giving of notice or passage of time or both would constitute
an Event of Default shall have occurred and be continuing, or liquidate,
wind-up or dissolve itself or sell, transfer or lease or otherwise dispose
of all or any substantial part of its assets;
(vii) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except (A) investments in United States
Government obligations and certificates of deposit of any bank institution
with combined capital and surplus of at least $200,000,000, (B) trade
credit, (C) security deposits, or acquire or otherwise cause any other
entity to become a subsidiary of the Company (as used herein the term
"subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of
<PAGE>
which the Company or any other subsidiary of the Company beneficially owns
a majority of the voting or economic interests), (D) loans made to
Murray H. Feigenbaum and Jerome Deutsch in the aggregate principal amount
of $162,950 existing on the date hereof, and (E) loans made to Norman M.
Phipps and Michael Gaffney in the aggregate amount of $675,000 existing on
the date hereof;
(viii) declare or pay any dividends or distributions on account
of its capital stock or purchase, redeem, retire or otherwise acquire any
of its capital stock or any securities convertible into, exchangeable for,
or giving any person the right to acquire or otherwise subscribe for, any
shares of the Company's capital stock; provided, however, that so long as
no Event of Default or event which, with the giving of notice, the lapse of
time, or both would constitute an Event of Default hereunder has occurred
and is continuing, the Company may pay regular quarterly dividends on the
Preferred Stock in accordance with the terms thereof; or
(ix) engage in any transaction with any person or entity who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company (an
"Affiliate"), other than director and compensation arrangements with
Affiliates serving as officers and/or directors of the Company approved by
the Company's Board of Directors and other than transactions with
Affiliates entered into in the ordinary course of business on terms which
are at least as favorable to the Company as those available from unrelated
third parties. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of the Company, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlled"
and "controlling" have meanings correlative thereto.
8. Events of Default.
(a) Definition. For the purposes of this Debenture, an Event of
Default hereunder will be deemed to have occurred if:
(i) the Company fails to pay the principal amount of this
Debenture when due (whether upon the Due Date, upon acceleration or
otherwise), whether or not such payment is prohibited by paragraph 4
hereof;
(ii) the Company fails to pay any interest, premium or penalty on
this Debenture when due and such failure has continued for a period of ten
(10) days;
(iii) the Company fails to perform or observe the provisions set
forth in Paragraphs 7(b) or 7(c) hereof;
(iv) the Company fails to perform or observe any provision
contained in this Debenture or the Security Agreement (other than those
specifically
<PAGE>
covered by the other provisions of this paragraph 8(a)) and, if such
failure is capable of being cured, such failure continues for a period of
30 days after the Company's receipt of written notice thereof;
(v) the Company shall have failed to pay when due any amount due
and owing under any indebtedness of the Company for borrowed money or any
other default or event of default shall have occurred (and shall have
continued beyond the expiration of any applicable grace period) under any
indebtedness of the Company for borrowed money which would permit the
holder thereof to accelerate the maturity thereof or there shall have been
an acceleration of the stated maturity of any indebtedness of the Company
for borrowed money;
(vi) the Security Agreement shall at any time after its execution
and delivery and for any reason cease to constitute a valid and perfected
lien and security interest in and to the Collateral (as defined therein) or
the Company shall take any position inconsistent therewith or any of the
provisions of the Security Agreement that permit the Holder to exercise its
remedies thereunder cease to be in full force and effect;
(vii) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as
they become due; or an order, judgment or decree is entered adjudicating
the Company as bankrupt or insolvent; or any order for relief with respect
to the Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Company or of any substantial part
of the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction
("Insolvency Event or Proceeding"); or any such petition or application is
filed, or any such proceeding is commenced, against the Company and either
(y) the Company by any act indicates its approval thereof, consents thereto
or acquiescence therein or (z) such petition application or proceeding is
not dismissed within 60 days;
(viii) a final judgment which in the aggregate with other
outstanding final judgments against the Company exceeds $250,000 shall be
rendered against the Company and within 90 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 90 days after the expiration of such stay, such judgment is not
discharged;
(ix) any representation or warranty made by the Company in the
Purchase Agreement, dated July 29, 1997 between the Company and the
original Holder of this Debenture, the Security Documents (as defined in
such Purchase Agreement), or any other certificate or instrument delivered
in connection therewith shall have been untrue in any material respect when
made; or
<PAGE>
(x) the Registration Statement shall not have become effective
[within 270 days after the date hereof] [on or prior to [date]].
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described
in subparagraph 8(a)(vii) above) has occurred, the Holder or Holders
of Debentures representing a majority of the aggregate principal
amount of Debentures then outstanding (the "Majority Holders") may
demand (by written notice delivered to the Company) immediate payment
of all or any portion of the outstanding principal amount of the
Debentures owed by such Holder or Holders. If such Majority Holders
demand immediate payment of all or any portion of such Holder's or
Holders' Debentures, the Company will, to the extent permitted under
the provisions of paragraph 4 hereof, immediately pay to such Holder
or Holders the principal amount of the Debentures requested to be paid
(plus accrued interest hereon). If an Event of Default of the type
described in subparagraph 8(a)(vii) above has occurred, then all of
the outstanding principal amount of the Debentures shall automatically
be immediately due and payable without any action on the part of any
Holders of the Debentures.
(ii) If an Event of Default has occurred, each Holder of the
Debentures will also have any other rights which such Holder may have
pursuant to applicable law, in each case provided such rights are
consistent with the provisions of paragraph 4 hereof.
9. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Debenture may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Majority
Holders, provided, however, neither the interest rate or principal amounts
payable under the Debentures, the dates on which interest or principal under the
Debentures is due nor the obligations to make payments on the Debentures on a
pro rata basis shall be amended without the prior written consent of each Holder
affected thereby, and further provided, however, that any amendment or waiver
which might in any way adversely affect the holders of Senior Debt, including,
but not limited to, any amendment or waiver affecting the provisions of
paragraph 4 or this paragraph 9 shall require the prior written consent of each
holder of Senior Debt. Any amendment or waiver effected in accordance with this
paragraph 9 shall be binding upon each Holder of this Debenture and each future
Holder of this Debenture.
10. Cancellation. After all principal and accrued interest at any time owed
on this Debenture has been paid in full, this Debenture will be surrendered to
the Company for cancellation and will not be reissued.
11. Place of Payment. Payments of principal and interest are to be
delivered to the Holder at the office of the Company, 50 Orville Drive, Bohemia,
New York 11716, or to such
<PAGE>
other address or to the attention of such other Person as specified by prior
written notice to the Company.
12. Waiver of Presentment, Demand and Dishonor. The Company hereby waives
presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures
to exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right the Holder may have,
whether by the laws of the state governing this Debenture, by agreement or
otherwise; and the Company hereby expressly waives the benefit of any statute or
rule of law or equity that would produce a result contrary to or in conflict
with the foregoing.
13. Usury. The Holder and the Company intend that the obligations evidenced
by this Debenture conform strictly to the applicable usury laws from time to
time in force. All agreements between the Company and the Holder, whether now
existing or hereafter arising and whether oral or written, hereby are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of maturity hereof or otherwise, shall the amount paid or agreed to be paid to
the Holder, or collected by the Holder, by or on behalf of the Company for the
use, forbearance or detention of the money to be loaned to the Company hereunder
or otherwise, or for the payment or performance of any covenant or obligation
contained herein of the Company to the Holder, or in any other document
evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed
the maximum amount permissible under applicable usury law. If under any
circumstances whatsoever fulfillment of any provision hereof or any other
document, at the time performance of such provisions shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity; and
if under any circumstances the Holder ever shall receive from or on behalf of
the Company an amount deemed interest, by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the Company's
principal amount owing hereunder and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and such other
indebtedness, the excess shall be deemed to have been a payment made by mistake
<PAGE>
and shall be refunded to the Company or to any other person making such payment
on the Company's behalf.
14. Governing Law. The validity, construction and interpretation of this
Debenture will be governed by the internal laws, but not the law of conflicts
and choices of law, of the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered this Class A 13%
Convertible Senior Subordinated Pay-in-Kind Debenture this ___ day of
____________, 199__.
LOGIMETRICS, INC.
By: ______________________________
Name: Charles S. Brand
Title: Chief Executive Officer
<PAGE>
EXHIBIT A
ELECTION TO CONVERT
(All capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the Class A 13% Convertible Senior
Subordinated Pay-in-Kind Debentures)
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
TO WHOM IT MAY CONCERN:
The undersigned registered owner of the attached Class A 13% Convertible
Senior Subordinated Pay-in-Kind Debenture hereby irrevocably exercises the
option to convert such Debenture into Common Stock of LogiMetrics, Inc. in
accordance with the terms thereof, and directs that any shares issuable and
deliverable upon the conversion be issued in the name of and delivered to the
undersigned.
[Name of Debentureholder]
Dated: _____________, 199__
EXHIBIT 4.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A UNIT PURCHASE AGREEMENT DATED AS OF MARCH 7, 1996 BY AND
BETWEEN THE COMPANY AND CERBERUS PARTNERS, L.P.
AMENDED AND RESTATED CLASS B 13% CONVERTIBLE
SENIOR SUBORDINATED PAY-IN-KIND DEBENTURE DUE 1999
July 29, 1997
LOGIMETRICS, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of Cerberus Partners, L.P. (together with its, his or her
successors and assigns, the "Holder") the principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000) in lawful money of the United States,
together with interest thereon calculated from the date hereof and payable in
accordance with the provisions of this debenture ("Debenture").
By accepting this Debenture, the Holder agrees that the obligations of the
Company to the Holder under this Debenture shall be subordinated only to the
Senior Debt (as hereinafter defined) of the Company, all upon the terms set
forth in paragraph 4 hereof.
This Debenture may be surrendered for transfer or exchange by the Holder
hereof upon surrender of this Debenture, together with a properly completed bond
power or other instrument of transfer, and any required signature guarantees, at
the office of the Company set forth in Section 11 hereof. Upon proper surrender,
the Company shall issue one or more replacement Debentures of like tenor
registered in the names and in the denominations requested by the surrendering
Holder and dated the date of issuance thereof; provided, however, that (i)
appropriate adjustments shall be made to reflect the date of issue and principal
amount of each such replacement Debenture, (ii) the aggregate principal amount
of all Debentures, excluding Accrued Interest Debentures (as defined below),
shall be limited to $1,500,000, and (iii) no Debenture shall be issued in a
principal amount of less than $50,000 unless in connection with a transfer
resulting from the complete liquidation of the original Holder of this
Debenture. All Debentures shall rank pari passu.
1. Payment of Interest. Subject to subparagraph 6(c)(xviii)(C) hereof,
interest will accrue from the date hereof at the rate of thirteen percent (13%)
per annum on the unpaid
<PAGE>
principal amount of this Debenture outstanding from time to time on the basis of
a 360-day year for the actual number of days elapsed. Subject to paragraph 4
hereof, the Company will pay to the Holder all accrued and unpaid interest on
this Debenture on October 15, 1997 and quarterly thereafter, in arrears, on the
15th day of January, the 15th day of April, the 15th day of July and the 15th
day of October (each, an "Interest Payment Date") to and including the earlier
to occur of the Conversion Date (hereinafter defined) or the Due Date
(hereinafter defined). Interest will accrue at the greater of the Default Rate
(hereinafter defined) and the rate of fifteen percent (15%) per annum on any
principal payment past due under this Debenture and, unless prohibited under
applicable law (and if so prohibited then only to the extent not so prohibited),
on any interest which has not been paid on the date on which it is due and
payable (without giving effect to any applicable grace periods or paragraph 4
hereof) until such time as payment therefor is actually delivered to the Holder.
On each Interest Payment Date other than the Due Date (as defined below),
in payment of the interest due on this Debenture on such Interest Payment Date,
the Company shall deliver to the Holder of this Debenture a new Debenture (an
"Accrued Interest Debenture"), in the form of this Debenture, dated such
Interest Payment Date (and bearing interest from such Interest Payment Date) and
having a principal amount corresponding to the interest due on this Debenture on
such Interest Payment Date. On the Due Date, in payment of the interest due on
this Debenture on such date, the Company shall deliver, at the option of the
Holder, either (a) a cash payment in such amount, or (b) the number of shares of
Common Stock, par value $.01 per share ("Common Stock"), into which Accrued
Interest Debentures would be convertible pursuant to Section 6 hereof if Accrued
Interest Debentures had been issued to the Holder on the Due Date in payment of
such interest and such Accrued Interest Debentures were converted by the Holder
immediately thereafter. Unless the Holder gives the Company not less than 10
days' prior written notice of the exercise of such option, the Holder shall be
deemed to have irrevocably elected to receive payment of such interest in cash
on the Due Date. Any exercise or deemed exercise of such option shall be binding
on any subsequent Holder of this Debenture.
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company will repay the principal amount of
this Debenture on July 29, 1999 ("Due Date").
(b) Optional Prepayment. At any time after April 29, 1998, provided
that the Registration Statement (hereinafter defined) is effective and available
for sales of Registrable Securities (hereinafter defined) thereunder, the
Company may at any time hereafter prepay, without premium or penalty, all (but
not less than all) of the outstanding principal amount of the Debentures
(including, for this purpose, the Accrued Interest Debentures), together with
interest accrued on such prepaid amount to the date of payment; provided (i) the
average closing price of the Company's Common Stock on days the Common Stock
traded during the 120-day period
<PAGE>
immediately preceding the date of the notice provided for in paragraph (c)
hereinbelow shall have been not less than $5.00, and (ii) the closing price of
the Common Stock for each of the 30 trading days immediately preceding the date
of such notice shall have been not less than $5.00, adjusted in each case for
stock splits, stock dividends or other similar transactions affecting the price
of the Common Stock. All such prepayments shall be applied pro rata to all of
the Debentures. At the option of the Holder, interest accrued on the prepaid
amount to the date of payment shall be paid either (a) in cash or (b) by the
issuance by the Company to the Holder of shares of Common Stock into which
Accrued Interest Debentures would be convertible pursuant to Section 6 hereof if
Accrued Interest Debentures had been issued to the Holder on such date in
payment of such interest and such Accrued Interest Debentures were converted by
the Holder immediately thereafter. Unless the Holder gives the Company not less
than 10 days' prior written notice of the exercise of such option, the Holder
shall be deemed to have irrevocably elected to receive payment of such interest
in cash. Any exercise or deemed exercise of such option shall be binding on any
subsequent Holder of this Debenture.
(c) Notice of Prepayment. The Company will give written notice of its
election to prepay this Debenture to the Holder in person or by registered or
certified mail, return receipt requested, at least thirty (30) and not more than
forty-five (45) days prior to the date of prepayment. On the date of prepayment
specified in the Company's notice, the Company will deliver to the Holder of
this Debenture in person or by registered or certified mail, return receipt
requested, a cashier's or certified check for the entire outstanding principal
amount being prepaid, together with all accrued interest thereon through the
date of prepayment.
3. Intentionally Omitted.
4. Subordination. The Company's payment, whether voluntary or involuntary,
whether in cash, property, securities or otherwise and whether by application of
offset or otherwise (hereinafter "Payment") of any of its obligations under this
Debenture, other than the issuance of Accrued Interest Debentures, shall be
subject to the following restrictions:
(a) Subordination to Senior Debt. Anything in this Debenture to the
contrary notwithstanding, the obligations of the Company in respect of the
principal of and interest (including any premium or penalty) on this Debenture
and any other amounts due under this Debenture (the "Subordinated Debt") shall
be subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to the Senior Debt. "Senior Debt", when used with respect
to the Company, means (i) the Company's indebtedness to North Fork Bank ("Bank")
under (A) that certain $640,000.04 Restated and Amended Term Loan Note, dated
April 25, 1997, and (B) that certain $2,200,000 Sixth Restated and Amended
Revolving Credit Note, dated April 25, 1997, in each case, together with
interest thereon and (ii) renewals, extensions, refinancings, deferrals,
restructurings, amendments, modifications and waivers of the indebtedness
described in clause (i) above.
<PAGE>
(b) Default on Senior Debt. So long as the Senior Debt has not been
paid in full, if there shall occur a default in the payment when due of any
amount due and owing on account of Senior Debt (any of the foregoing being a
"Senior Debt Default") then, from and after the receipt of written notice
thereof from the holder of Senior Debt unless and until such Senior Debt Default
shall have been remedied or waived the Company will not make any Payment on any
Subordinated Debt, and the Holders of Subordinated Debt will not receive or
accept any direct or indirect Payment in respect thereof, and the Company may
not redeem or otherwise acquire any Subordinated Debt.
(c) Changes in Senior Debt. Any holder of Senior Debt may, at any time
and from time to time, without the consent of, or notice to, the Holder and
without incurring responsibility to the Holder, and without impairing or
releasing the obligations of the Holder hereunder:
(i) Change the manner, place or terms of payment or change or
extend the time of payment of or renew or alter the Senior Debt or any
portion thereof; provided, however, that without the written consent of the
Majority Holders (hereinafter defined) the principal amount of and interest
rate applicable from time to time to Senior Debt may not be increased
(other than pursuant to the terms of the Senior Debt as such terms existed
on the date of issuance hereof);
(ii) Sell, exchange, release or otherwise deal with any
collateral securing the Senior Debt or any other property by whomsoever at
any time pledged or mortgaged to secure, or however securing, the Senior
Debt or any portion thereof; and
(iii) Apply any sums by whomsoever paid or however released to
the Senior Debt or any portion thereof.
(d) Consent to Senior Debt. By acceptance of this Debenture, the
Holder hereby consents to the making of Senior Debt and hereby acknowledges that
each current and future holder of Senior Debt has relied, and in the future will
rely, upon the terms of this Debenture. The holders of Senior Debt shall have no
liability to the Holder and the Holder hereby waives any claim which it may have
now or hereafter against any holder of Senior Debt arising from any and all
actions which any holder of Senior Debt may take or omit to take in good faith
with regard to the Senior Debt or its rights or obligations hereunder.
(e) Payments in Trust. Until the Senior Debt has been repaid in full,
in the event the Holder shall receive any Payment in contravention of the
provisions of this paragraph 4 including, Payments arising under the
subordination provisions of any other indebtedness of the Company, the Holder
shall hold all such Payments so received in trust for the holders of Senior
<PAGE>
Debt and shall forthwith turn over all such Payments to the holders of Senior
Debt in the form received (except for the endorsement or assignment of the
Holder as necessary, without recourse or warranty) to be applied to payment of
the Senior Debt whether or not then due and payable. Any Payment so received in
trust and turned over to the holders of Senior Debt shall not be deemed a
Payment in satisfaction of the Subordinated Debt by the Company.
(f) Payment in full of Senior Debt; Subrogation. If any Payment to
which a Holder of Subordinated Debt would otherwise have been entitled but for
the provisions of this paragraph 4 shall have been applied, pursuant to the
provisions of this paragraph 4, to the payment of Senior Debt, then and in such
case, the Holder of the Subordinated Debt (i) shall be entitled to receive from
the holders of Senior Debt at the time outstanding any payments or distributions
received by such holders of Senior Debt in excess of the amount sufficient to
pay all Senior Debt in cash in full (whether or not then due), and (ii)
following payment of the Senior Debt in full, shall be subrogated to any right
of the holders of Senior Debt to receive any and all further payments or
distributions applicable to Senior Debt, until all the Subordinated Debt shall
have been paid in full. If the Holder of the Subordinated Debt shall have been
subrogated to the rights of the holders of Senior Debt due to the operation of
this paragraph 4(f), the Company agrees to take all such reasonable actions as
are requested by such Holders of the Subordinated Debt in order to cause such
Holders to be able to obtain payments from the Company with respect to such
subrogation rights as soon as possible.
(g) No Impairment of the Company's Obligations. Nothing contained in
this paragraph 4, as between the Company and the Holder of this Debenture, shall
impair the obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of and interest on this Debenture as and when
the same shall become due and payable in accordance with the terms hereof.
(h) Advances in Reliance. The Holder of this Debenture, by its
acceptance hereof, agrees that each holder of Senior Debt has advanced funds or
may in the future advance funds in reliance upon the terms and conditions
hereof.
(i) Non-Waiver of Rights. No right of any holder of Senior Debt to
enforce its right of subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company, or by any act or failure to act by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Debenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(j) Recaptured Payments. Any Payments received by a holder of Senior
Debt from the Company or the Holder which, in connection with an Insolvency
Event or Proceeding
<PAGE>
(hereinafter defined), is required to be remitted to the payor or the bankrupt
estate shall not be deemed a Payment to such holder of Senior Debt for all
purposes hereunder.
5. Security. The obligations of the Company to the Holder of this Debenture
(including the obligation to pay the Accrued Interest Debentures when due) are
secured by certain Collateral to the extent provided in the Amended and Restated
Security Agreement, dated as of March 7, 1996, as amended and restated as of
July 29, 1997 ("Security Agreement"), made by the Company in favor of Holders of
the Debentures. In addition to all rights and remedies provided herein, Holders
of the Debentures are entitled to the benefits provided in the Security
Agreement. By accepting this Debenture, the Holder hereof agrees to be bound by
the terms of the Security Agreement.
6. Conversion Rights.
(a) The Holder of this Debenture has the right (the "Conversion
Right"), exercisable at his, her or its option at any time during which the
principal amount of this Debenture is outstanding, to convert this Debenture,
but only in whole, into Two Million Five Hundred Forty-Two Thousand Three
Hundred Eighty (2,542,380) shares of Common Stock, subject to adjustment in
certain circumstances as provided herein.
(b) The Conversion Right is exercisable upon surrender of this
Debenture, together with a conversion notice, in the form attached hereto as
Exhibit A, duly executed and completed, evidencing the election of the Holder to
exercise the Conversion Right, at the Company's principal office at 50 Orville
Drive, Bohemia, New York 11716. The registered owner of this Debenture shall
become the record holder of the shares of Common Stock issuable upon conversion
as of the date of exercise of the Conversion Right (the "Conversion Date"). The
shares issued in connection with the Conversion Right shall be registered
initially in the name of the Holder, and delivered to the Holder no later than
two (2) business days after receipt of a properly completed conversion notice.
Upon conversion, the Company shall pay to the Holder accrued but unpaid interest
on this Debenture up to, but excluding, the Conversion Date.. At the option of
the Holder, such accrued but unpaid interest shall be paid either (a) in cash or
(b) by the issuance by the Company to the Holder of shares of Common Stock into
which Accrued Interest Debentures would be convertible pursuant to Section 6
hereof if Accrued Interest Debentures had been issued to the Holder on such date
in payment of such interest and such Accrued Interest Debentures were converted
by the Holder immediately thereafter. Unless the Holder gives the Company not
less than 10 days' prior written notice of the exercise of such option, the
Holder shall be deemed to have irrevocably elected to receive payment of such
interest in cash. Any exercise or deemed exercise of such option shall be
binding on any subsequent Holder of this Debenture.
<PAGE>
(c) In case, at any time or from time to time after the date of
issuance of this Debenture ("Issuance Date"), the Company shall issue or sell
shares of its Common Stock (other than any Common Stock issuable upon the
exercise or conversion of (i) the Debentures (and any replacement Debenture or
Debentures issued upon transfer or exchange of this Debenture), (ii) any Accrued
Interest Debentures (and any replacement Accrued Interest Debenture or Accrued
Interest Debentures issued upon transfer or exchange of the Accrued Interest
Debentures), (iii) the Company's Class A 13% Convertible Senior Subordinated
Pay-in-Kind Debentures due 1999 (the "Class A Debentures") (and any replacement
Class A Debenture or Class A Debentures issued upon transfer or exchange of the
Class A Debentures), (iv) any additional securities issued in lieu of cash
interest otherwise payable on the Class A Debentures (the "Class A Accrued
Interest Debentures") (and any replacement Class A Accrued Interest Debenture or
Class A Accrued Interest Debentures issued upon transfer or exchange of the
Class A Accrued Interest Debentures), (v) securities outstanding on the date
hereof, (vi) awards made pursuant to the Company's Stock Compensation Program
(the "Plan"), (vii) awards made pursuant to any incentive compensation plan or
arrangement approved by the Company's Board of Directors or by the Compensation
Committee of the Company's Board of Directors, (viii) the Company's Series G
Warrants, (ix) the Company's Series H Warrants, or (x) the Company's Series I
Warrants) (such securities, collectively, the "Subject Securities") for a
consideration per share less than $.52 per share ("Trigger Price"), or, if a Pro
Forma Adjusted Trigger Price (hereinafter defined) shall be in effect as
provided below in this paragraph (c), then less than such Pro Forma Adjusted
Trigger Price per share, then and in each such case the Holder of this
Debenture, upon the conversion hereof as provided in paragraph (a) hereof, shall
be entitled to receive, in lieu of the shares of Common Stock theretofore
receivable upon the conversion of this Debenture, a number of shares of Common
Stock determined by (a) dividing the Trigger Price by a Pro Forma Adjusted
Trigger Price per share to be computed as provided below in this paragraph (c),
and (b) multiplying the resulting quotient by the number of shares of Common
Stock into which this Debenture is then convertible. A Pro Forma Adjusted
Trigger Price per share shall be the price computed (to the nearest cent, a
fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Company outstanding
immediately prior to such issue or sale by the Trigger Price (or, if a
Pro Forma Adjusted Trigger Price shall be in effect, by such Price),
and (y) the consideration, if any, received by the Company upon such
issue or sale, by (ii) the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale.
For the purpose of this paragraph (c):
(i) In case the Company splits its Common Stock or shall declare
any dividend, or make any other distribution, upon any stock of the Company
of any class
<PAGE>
payable in Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such
stock or other securities being hereinafter called "Convertible
Securities"), such split, declaration or distribution shall be deemed to be
an issue or sale (as of the record date for such split, dividend or other
distribution), without consideration, of such Common Stock or such
Convertible Securities, as the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be determined the
price per share for which Common Stock is issuable upon the conversion or
exchange thereof, such determination to be made by dividing (a) the total
amount received or receivable by the Company as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (b) the maximum number of shares of
Common Stock of the Company issuable upon the conversion or exchange of all
such Convertible Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale, then
such issue or sale shall be deemed to be an issue or sale for cash (as of
the date of issue or sale of such Convertible Securities) of such maximum
number of shares of Common Stock at the price per share so determined,
provided that, if such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange, upon the conversion or exchange thereof, the Pro Forma Adjusted
Trigger Price per share shall, forthwith upon any such increase becoming
effective, be readjusted to reflect the same, and provided, further, that
upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the
Pro Forma Adjusted Trigger Price per share shall forthwith be readjusted
and thereafter be the price which it would have been had an adjustment been
made on the basis that the only shares of Common Stock so issued or sold
were those issued or sold upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the
consideration actually received by the Company upon such conversion or
exchange, plus the consideration, if any, actually received by the Company
for the issue or sale of all such Convertible Securities which shall have
been converted or exchanged.
(iii) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Common Stock of any class
other than the Subject Securities, there shall be determined the price per
share for which Common Stock is issuable upon the exercise of such rights
or options, such determination to be made by
<PAGE>
dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of such rights or options, by (b) the
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale, then
the granting of such rights or options shall be deemed to be an issue or
sale for cash (as of the date of the granting of such rights or options) of
such maximum number of shares of Common Stock at the price per share so
determined, provided that, if such rights or options shall by their terms
provide for an increase or increases, with the passage of time, in the
amount of additional consideration, if any, payable to the Company upon the
exercise thereof, the Pro Forma Adjusted Trigger Price per share shall,
forthwith upon any such increase becoming effective, be readjusted to
reflect the same, and provided, further, that upon the expiration of such
rights or options, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been
made on the basis that the only shares of Common Stock so issued or sold
were those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options,
whether or not exercised.
(iv) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities other
than the Subject Securities, such Convertible Securities shall be deemed,
for the purposes of subparagraph (iii) above, to have been issued or sold
for the total amount received or receivable by the Company as consideration
for the granting of such rights or options plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of such rights or options, provided that, upon the expiration of
such rights or options, if any thereof shall not have been exercised, the
Pro Forma Adjusted Trigger Price per share shall forthwith be readjusted
and thereafter be the price which it would have been had an adjustment been
made upon the basis that the only Convertible Securities so issued or sold
were those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options,
whether or not exercised.
<PAGE>
(v) In case any shares of stock or other securities, other than
Common Stock of the Company, shall at any time be receivable upon the
conversion of this Debenture, and in case any additional shares of such
stock or any additional such securities (or any stock or other securities
convertible into or exchangeable for any such stock or securities) shall be
issued or sold for a consideration per share such as to dilute the purchase
rights evidenced by this Debenture, then and in each such case the Pro
Forma Adjusted Trigger Price per share shall forthwith be adjusted,
substantially in the manner provided for above in this paragraph (c), so as
to protect the Holder of this Debenture against the effect of such
dilution.
(vi) In case any shares of Common Stock or Convertible Securities
or any rights or options to subscribe for, purchase or otherwise acquire
any Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, after deducting any expenses incurred and
any underwriting or similar commissions, compensation or concessions paid
or allowed by the Company in connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or sold
for a consideration other than cash (or a consideration which includes cash
and other assets) then, for the purpose of this paragraph (c), the Board of
Directors of the Company shall promptly determine the fair value of such
consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount
at which such consideration is recorded in the books of the Company for
accounting purposes except in the case of an acquisition accounted for on a
pooling of interest basis. In case any Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Company for
a consideration which covers both, the Board of Directors of the Company
shall promptly determine in good faith what part of the consideration so
received is to be deemed to be the consideration for the issue or sale of
such Common Stock or Convertible Securities or such rights or options.
The Company covenants and agrees that, should any determination
of fair value of consideration or of allocation of consideration be made by
the Board of Directors of the Company, pursuant to this subparagraph (vii),
it will, not less than seven (7) days after any and each such
determination, deliver to the Holder of this Debenture a certificate signed
by the President or a Vice President and the Treasurer or an Assistant
Treasurer of the Company reciting such value as thus determined and setting
forth the
<PAGE>
nature of the transaction for which such determination was required to be
made, the nature of any consideration, other than cash, for which Common
Stock, Convertible Securities, rights or options have been or are to be
issued, the basis for its valuation, the number of shares of Common Stock
which have been or are to be issued, and a description of any Convertible
Securities, rights or options which have been or are to be issued,
including their number, amount and terms.
(viii) In case the Company shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (a) to
receive a dividend or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the Common Stock issued or
sold or deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the
granting of such rights of subscription, purchase or other acquisition, as
the case may be.
(ix) The number of shares of Common Stock outstanding at any
given time shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock, but shall exclude
shares in the treasury of the Company.
(x) Following each computation or readjustment of a Pro Forma
Adjusted Trigger Price as provided in this paragraph (c), the newly
computed or adjusted Pro Forma Adjusted Trigger Price shall remain in
effect until a further computation or readjustment thereof is required by
this paragraph (c).
(xi) In case at any time or from time to time after the Issuance
Date the holders of the Common Stock of the Company of any class (or any
other shares of stock or other securities at the time receivable upon the
exercise of this Debenture) shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have
become entitled to receive:
(A) other or additional stock or other securities or
property (other than cash) by way of dividend;
(B) any cash paid or payable out of capital or paid-in
surplus or surplus created as a result of a revaluation of property by
way of dividend; or
(C) other or additional (or less) stock or other securities
or property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
<PAGE>
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph (c)), then in each case the Holder
of this Debenture, upon the conversion hereof as provided in paragraph (a)
hereof, shall be entitled to receive, in lieu of, or in addition to, as the case
may be, the shares theretofore receivable upon the conversion of this Debenture,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such Holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Company into
which this Debenture is convertible and had thereafter, during the period from
the Issuance Date to and including the date of such conversion, retained such
shares and/or all other or additional (or less) stock or other securities or
property (including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during such period by paragraph (c) and subparagraph
(xii) hereof.
(xii) In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time
deliverable on the conversion of this Debenture) after the date hereof, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all its assets to another corporation, then and in each such
case the Holder of this Debenture, upon the conversion hereof as provided
in paragraph (a) hereof, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the stock or other securities or property to which such Holder
would have been entitled upon such consummation if such Holder had
converted this Debenture immediately prior thereto, all subject to further
adjustments as provided for herein; in each such case, the terms of this
Debenture shall be applicable to the shares of stock or other securities or
property receivable upon the conversion of this Debenture after such
consummation.
(xiii) The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Debenture, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such action as may be necessary or appropriate in order to protect
the rights of the Holder hereof against dilution or other impairment.
Without limiting the generality of the foregoing, the Company will not
increase the par value of any shares of stock receivable upon the
conversion of this Debenture above the amount payable therefor upon such
exercise, and at all times will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and non-assessable stock upon the conversion of this Debenture.
<PAGE>
(xiv) In each case of an adjustment in the number of shares of
Common Stock or other stock, securities or property receivable on the
conversion of this Debenture, at the request of the Holder of this
Debenture the Company at its expense shall promptly cause independent
public accountants of recognized standing, selected by the Company, to
compute such adjustment in accordance with the terms of this Debenture and
prepare a certificate setting forth such adjustment and showing in detail
the facts upon which such adjustment is based, including a statement of (A)
the consideration received or to be received by the Company for any
additional shares issued or sold or deemed to have been issued or sold, (B)
the number of shares of Common Stock outstanding or deemed to be
outstanding and (C) the Pro Forma Adjusted Trigger Price. The Company will
forthwith mail a copy of each such certificate to the Holder of this
Debenture.
(xv) In case:
(A) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable
upon the conversion of this Debenture) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise any
preemptive right pursuant to the Company's charter, or to receive any
right to subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right; or
(B) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(C) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Debenture a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Debenture) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for
<PAGE>
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up or (iii) the amount and character of the stock or other securities
proposed to be issued or granted, the date of such proposed issuance or grant
and the persons or class of persons to whom such stock or other securities are
to be offered, issued or granted. Such notice shall be mailed at least thirty
(30) days prior to the date therein specified.
(xvi) The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of
this Debenture and other similar Debentures, such shares of Common
Stock and other stock, securities and property as from time to time
shall be issuable upon the exercise of this Debenture and all other
similar Debentures at the time outstanding.
(xvii) Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Debenture and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new
Debenture of like tenor.
(xviii) (A) On or prior to October 27, 1997, the Company
will file a registration statement ("Registration Statement") with the
Securities and Exchange Commission ("SEC") covering the shares of
Common Stock issuable upon conversion of the Debentures and any
Accrued Interest Debentures (and covering such other securities as the
Company shall determine in its sole discretion) (collectively
"Registrable Securities"), and will use its best efforts to cause the
Registration Statement to become effective on or prior to the
ninetieth day after such filing and to keep the Registration Statement
effective until the earlier of (i) seven years from the date it is
declared effective by the SEC, or (ii) the sale of all of the
Registrable Securities.
(B) The following provisions shall be applicable to the
Registration Statement:
(aa) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as
possible, and if any stop order shall be issued by the SEC in
connection therewith to use its reasonable efforts to obtain the
removal of such order. Following the effective date of the
Registration Statement, the Company shall, upon the request of
the Holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Act, and other documents
necessary or incidental to a public offering of the Registrable
Securities, as shall be
<PAGE>
reasonably requested by the Holder to permit the Holder to make a
public distribution of its, his or her Registrable Securities;
provided, however, that by accepting this Debenture, the Holder
agrees, if requested by the managing underwriter(s) in connection
with an underwritten public offering of the Company's equity
securities, to enter into a customary agreement with such
managing underwriter(s) not to offer for sale or sell its, his or
her Registrable Securities for up to 180 days after such
offering. The Company will use its reasonable efforts to qualify
the Registrable Securities for sale in such states as the holder
of Registrable Securities shall reasonably request, provided that
no such qualification will be required in any jurisdiction where,
solely as a result thereof, the Company would be subject to
service of general process or to taxation or qualification as a
foreign corporation doing business in such jurisdiction. The
obligations of the Company hereunder with respect to the Holder's
Registrable Securities are expressly conditioned on the Holder's
furnishing to the Company such appropriate information concerning
the Holder, the Holder's Registrable Securities and the terms of
the Holder's offering of such Registrable Securities as the
Company may reasonably request.
(bb) The Company shall pay all expenses incurred in
complying with the provisions of this subparagraph (xviii),
including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), printing expenses, fees
and disbursements of counsel to the Company, securities law and
blue sky fees and expenses and the expenses of any regular and
special audits incident to or required by any such registration.
All underwriting discounts and selling commissions applicable to
the sales of the Registrable Securities, and any state or federal
transfer taxes payable with respect to the sales of the
Registrable Securities and all fees and disbursements of counsel
for the Holder, if any, in each case arising in connection with
registration of the Registrable Securities shall be payable by
the Holder.
(cc) In connection with the registration of the
Registrable Securities pursuant to this subparagraph (xviii), the
Company shall indemnify and hold harmless the Holder, its
affiliates, officers, directors, partners, employees, agents and
representatives, each person, if any, who controls the Holder
within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any person deemed to be an
underwriter of the Registrable Securities and any person claiming
by or through any of
<PAGE>
them (collectively, the "Indemnified Persons") from and against
all losses, claims, damages, expenses or liabilities (or actions
in respect thereof) arising out of or are based upon any untrue
statement of any material fact contained in the Registration
Statement or alleged untrue statement, under which such
securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not
misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws
applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and
will reimburse the Indemnified Persons for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not
be liable in any such case to any Indemnified Person to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission made in the
Registration Statement, said preliminary prospectus or said final
prospectus or said amendment or supplement or any document
incident thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the
Holder.
(dd) The Holder will indemnify and hold harmless the
Company and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, each
officer of the Company who signs the Registration Statement and
each director of the Company from and against any and all such
losses, claims, damages or liabilities arising from any untrue
statement in, or omission from, the Registration Statement, any
such preliminary or final prospectus, amendment, or supplement or
document incident thereto if the statement or omission in respect
of which such loss, claim, damage or liability is asserted was
made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Holder
for use in connection with the preparation of the Registration
Statement or such prospectus or amendment or supplement thereof.
(ee) The reimbursements required by clauses (cc) and
(dd) shall be made by periodic payments during the course of the
investigation
<PAGE>
or defense as and when bills are received or expenses incurred;
provided, however, that to the extent that an indemnified party
receives periodic payments for legal or other expenses during the
course of an investigation or defense, and such party
subsequently received payments for such expenses from any other
parties to the proceeding, such payments shall be used by the
indemnified party to reimburse the indemnifying party for such
periodic payments. Any party which proposes to assert the right
to be indemnified under clause (cc) or (dd) will, promptly after
receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to
be made against any indemnified party hereunder, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the
failure to so notify such indemnifying party of any such action,
suit or proceeding shall not relieve the indemnifying party from
any obligation which it may have to any indemnified party
hereunder unless and only to the extent that the indemnifying
party is prejudiced by said lack of notice. In case any such
action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party
to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expense, other than
reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel
in any such action, but the reasonable fees and expenses of such
counsel shall be at the expense of such indemnified party, when
and as incurred, unless (A) the employment of counsel by such
indemnified party has been authorized by the indemnifying party,
(B) the indemnified party has reasonably concluded (based on
advice of counsel), that there may be legal defenses available to
it that are different from or in addition to those available to
the indemnifying party, (C) the indemnified party shall have
reasonably concluded (based on advice of counsel) that there may
be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of defense of such action (in
which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified
party), or (D) the indemnifying party shall not in fact have
employed counsel to assume the defense of such action within 15
days after receipt of notice of such action.
<PAGE>
An indemnifying party shall not be liable for any settlement or
any action or claim effected without its consent, which shall not
be unreasonably withheld.
(ff) If the indemnification provided for in this
subparagraph (xviii) is unavailable to any indemnified party
hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the
actions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among
other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set
forth herein, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
(gg) The Company and the Holder agree that it would not
be just and equitable if contribution pursuant to clause (ff)
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding any other provision hereof, in no
event shall the contribution obligation of the Holder be greater
in amount than the excess of (A) the dollar amount of net
proceeds received by the Holder upon the sale of the securities
giving rise to such contribution obligation over (B) the dollar
amount of any damages that the Holder has otherwise been required
to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
<PAGE>
(hh) Neither the filing of the Registration Statement
by the Company pursuant to this Agreement nor the making of any
request for prospectuses by the Holder shall impose upon the
Holder any obligation to convert his, her or its Debentures or to
sell his, her or its Registrable Securities.
(ii) The Holder, upon receipt of notice from the
Company that an event has occurred which requires a
post-effective amendment to the Registration Statement or a
supplement to the prospectus included therein, shall promptly
discontinue the sale of his, her or its Registrable Securities
until the Holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as
soon as practicable after such notice.
(C) In the event (a) the Registration Statement is not
filed by the Company with the SEC on or prior to October 27, 1997, or
(b) the Registration Statement has not been declared effective by the
SEC on or prior to January 25, 1998, the annual interest rate on the
Debentures shall be the rate per annum ("Default Rate") which is 13%
increased by one and one-half percent (1-1/2%) per annum for the first
three (3) months immediately following the expiration of such ninety
(90) day period or one hundred eighty (180) day period, as the case
may be, and by an additional one-half of one percent (1/2%) per annum
at the beginning of each subsequent thirty (30) day period thereafter,
until such time as the requirements of clause (a) or (b) above, as the
case may be, have been satisfied, at which time all increases in the
interest rate borne by the Debentures resulting from the operation of
this sentence shall terminate and the interest rate borne by the
Debentures shall revert to the rate that otherwise would be in effect
but for the operation of this sentence; provided, however, that in no
event shall the interest rate borne by the Debentures exceed seventeen
percent (17%) per annum pursuant to this sentence.
7. Covenants.
(a) Affirmative Covenants: The Company will, and with respect to
the agreements set forth in subsections (i) through (viii) hereof, will cause
each subsidiary to:
(i) with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies
similarly situated and operating like properties, assets or businesses with
responsible insurance companies satisfactory to the
<PAGE>
Majority Holders said insurance to indicate the Agent (as defined in the
Security Agreement) as an additional insured;
(ii) duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such
items are being in good faith appropriately contested;
(iii) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs, replacements,
additions, betterments and improvements thereto;
(iv) conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and
conducted;
(v) comply with all statutes, rules and regulations and maintain
its corporate existence;
(vi) provide the Holder with the following financial information:
(A) annually, as soon as available, but in any event within
one hundred twenty (120) days after the last day of each fiscal year,
audited financial statements, including balance sheets as of the last
day of the fiscal year and statements of income and retained earnings
and changes in financial condition for such fiscal year each prepared
in accordance with generally accepted accounting principles,
consistently applied ("GAAP") for the period and prior periods by
independent Certified Public Accountants satisfactory to the Majority
Holders;
(B) as soon as available, but in any event within forty-five
(45) days after the end of each fiscal quarter, internally prepared
financial statements of the Company each prepared in accordance with
GAAP and jobs-in-progress reports for said period and prior periods;
(C) within a reasonable time after a written request
therefor, such other financial data or information as the Holder may
reasonably request from time to time;
(D) at the same time as it delivers the financial statements
required under the provisions of subsections (A) and (B) hereof, a
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which
<PAGE>
any of its properties or assets may be affected, and no event which,
with the giving of notice or the lapse of time, or both, would
constitute such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day
after each such month, backlog reports and accounts receivable agings
of the Company;
(vii) permit the Holder to make or cause to be made, inspections
and audits of any books, records and papers of the Company and of any
parent or subsidiary thereof and to make extracts therefrom at all such
reasonable times and as often as the Holder may reasonably require;
(viii) immediately give notice to the Holder that an Event of
Default has occurred or that an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, has occurred
and specifying the action which the Company has taken and proposes to take
with respect thereto.
(b) Financial Covenants:
(i) At the end of each fiscal quarter, the Company shall maintain
a Tangible Net Worth of (-3,042,322) or greater (as calculated in
accordance with GAAP). For purposes hereof "Tangible Net Worth" shall mean,
at any date, (i) the net book value of assets (other than patents, patent
rights, trademarks, trade names, franchises, copyrights, licenses, permits,
goodwill and other intangible assets classified as such in accordance with
GAAP) after all appropriate adjustments in accordance with GAAP (including,
without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization) plus (ii) subordinated indebtedness, in each
case computed in accordance with GAAP; and
(ii) At the end of each fiscal quarter, the Company shall report
a net income (gross income less taxes and extraordinary items) of not less
than $1.00.
(c) Negative Covenants: The Company will not, and will not permit
any subsidiary to:
(i) create, incur, assume or suffer to exist any liability for
borrowed money, except (A) indebtedness to the Bank or any other financial
institution constituting "Senior Debt" hereunder; (B) indebtedness
outstanding on the date hereof; (C) indebtedness represented by the
Company's 13% Senior Subordinated Interest Note (the "Note") (and any
replacement Note or Notes issued upon transfer or exchange of the Note);
(D) indebtedness represented by the Debentures (and any replacement
Debenture or Debentures issued upon transfer or exchange of the
Debentures); (E) indebtedness
<PAGE>
represented by the Accrued Interest Debentures (and any replacement Accrued
Interest Debenture or Accrued Interest Debentures issued upon transfer or
exchange of the Accrued Interest Debentures); (F) indebtedness represented
by the Class A Debentures (and any replacement Class A Debenture or Class A
Debentures issued upon transfer or exchange of the Class A Debentures); (G)
indebtedness represented by the Class A Accrued Interest Debentures (and
any replacement Class A Accrued Interest Debenture or Class A Accrued
Interest Debentures issued upon transfer or exchange of the Class A Accrued
Interest Debentures); and (H) other indebtedness for borrowed money
(whether or not constituting a refinancing of existing indebtedness) so
long as (x) such indebtedness is not secured by collateral securing
repayment of the Debentures, (y) such indebtedness contains provisions
reasonably satisfactory to the Majority Holders subordinating the payment
of principal and interest thereon to the prior payment of principal and
interest on the Debentures, and (z) the incurrence of which will not cause
an Event of Default, or an event which with notice or the lapse of time or
both would constitute an Event of Default, hereunder (collectively,
"Permitted Indebtedness");
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in, any of its
property or assets now owned or hereafter acquired except (A) mortgages,
liens, pledges and security interests securing Permitted Indebtedness; (B)
other liens, charges and encumbrances incidental to the conduct of its
business or the ownership of its property and assets which are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit and which do not materially impair the use thereof in the operation
of its business; (C) liens for taxes or other governmental charges which
are not delinquent or which are being contested in good faith and for which
a reserve shall have been established in accordance with GAAP; (D) liens
granted to secure purchase money financing of equipment, provided such
liens are limited to the equipment financed; and (E) liens granted to
refinance unencumbered equipment provided such liens are limited to the
equipment refinanced and the incurrence of which will not cause a default
hereunder or in any Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (B) engage in or
permit any person to engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended) involving any pension plan which would subject the Company to
any material tax, penalty or other liability, (C) incur or suffer to
<PAGE>
exist any material "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or not waived, involving any pension plan, or (D)
allow or suffer to exist any event or condition, which presents a material
risk of incurring a material liability to the PBGC by reason of termination
of any pension plan;
(v) amend, supplement or modify the terms of the Subject
Securities or increase the outstanding amount of any Subject Securities
(excluding awards granted under the Plan or under an incentive compensation
plan or arrangement approved by the Company's Board of Directors or by the
Compensation Committee of the Company's Board of Directors) without the
prior consent of the Majority Holders;
(vi) enter into any merger or consolidation unless the Company
shall be the surviving entity in any such merger or consolidation, and
after giving effect to the transaction no Event of Default and no event
which with the giving of notice or passage of time or both would constitute
an Event of Default shall have occurred and be continuing, or liquidate,
wind-up or dissolve itself or sell, transfer or lease or otherwise dispose
of all or any substantial part of its assets;
(vii) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except (A) investments in United States
Government obligations and certificates of deposit of any bank institution
with combined capital and surplus of at least $200,000,000, (B) trade
credit, (C) security deposits, or acquire or otherwise cause any other
entity to become a subsidiary of the Company (as used herein the term
"subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of which the Company or any other
subsidiary of the Company beneficially owns a majority of the voting or
economic interests), (D) loans made to Murray H. Feigenbaum and Jerome
Deutsch in the aggregate principal amount of $162,950 existing on the date
hereof, and (E) loans made to Norman M. Phipps and Michael Gaffney in the
aggregate amount of $675,000 existing on the date hereof;
(viii) declare or pay any dividends or distributions on account
of its capital stock or purchase, redeem, retire or otherwise acquire any
of its capital stock or any securities convertible into, exchangeable for,
or giving any person the right to acquire or otherwise subscribe for, any
shares of the Company's capital stock; provided, however, that so long as
no Event of Default or event which, with the giving of notice, the lapse of
time, or both would constitute an Event of Default hereunder has occurred
and is continuing, the Company may pay regular quarterly dividends on the
Preferred Stock in accordance with the terms thereof; or
<PAGE>
(ix) engage in any transaction with any person or entity who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company (an
"Affiliate"), other than director and compensation arrangements with
Affiliates serving as officers and/or directors of the Company approved by
the Company's Board of Directors and other than transactions with
Affiliates entered into in the ordinary course of business on terms which
are at least as favorable to the Company as those available from unrelated
third parties. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of the Company, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlled"
and "controlling" have meanings correlative thereto.
8. Events of Default.
(a) Definition. For the purposes of this Debenture, an Event of
Default hereunder will be deemed to have occurred if:
(i) the Company fails to pay the principal amount of this
Debenture when due (whether upon the Due Date, upon acceleration or
otherwise), whether or not such payment is prohibited by paragraph 4
hereof;
(ii) the Company fails to pay any interest, premium or penalty on
this Debenture when due and such failure has continued for a period of ten
(10) days;
(iii) the Company fails to perform or observe the provisions set
forth in Paragraphs 7(b) or 7(c) hereof;
(iv) the Company fails to perform or observe any provision
contained in this Debenture or the Security Agreement (other than those
specifically covered by the other provisions of this paragraph 8(a)) and,
if such failure is capable of being cured, such failure continues for a
period of 30 days after the Company's receipt of written notice thereof;
(v) the Company shall have failed to pay when due any amount due
and owing under any indebtedness of the Company for borrowed money or any
other default or event of default shall have occurred (and shall have
continued beyond the expiration of any applicable grace period) under any
indebtedness of the Company for borrowed money which would permit the
holder thereof to accelerate the maturity thereof or there shall have been
an acceleration of the stated maturity of any indebtedness of the Company
for borrowed money;
<PAGE>
(vi) the Security Agreement shall at any time after its execution
and delivery and for any reason cease to constitute a valid and perfected
lien and security interest in and to the Collateral (as defined therein) or
the Company shall take any position inconsistent therewith or any of the
provisions of the Security Agreement that permit the Holder to exercise its
remedies thereunder cease to be in full force and effect;
(vii) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as
they become due; or an order, judgment or decree is entered adjudicating
the Company as bankrupt or insolvent; or any order for relief with respect
to the Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Company or of any substantial part
of the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction
("Insolvency Event or Proceeding"); or any such petition or application is
filed, or any such proceeding is commenced, against the Company and either
(y) the Company by any act indicates its approval thereof, consents thereto
or acquiescence therein or (z) such petition application or proceeding is
not dismissed within 60 days;
(viii) a final judgment which in the aggregate with other
outstanding final judgments against the Company exceeds $250,000 shall be
rendered against the Company and within 90 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 90 days after the expiration of such stay, such judgment is not
discharged;
(ix) any representation or warranty made by the Company in the
Unit Purchase Agreement, dated March 7, 1996 between the Company and the
original Holder of this Debenture, the Security Documents (as defined in
such Unit Purchase Agreement), or any other certificate or instrument
delivered in connection therewith shall have been untrue in any material
respect when made; or
(x) the Registration Statement shall not have become effective on
or prior to April 25, 1998.
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described in
subparagraph 8(a)(vii) above) has occurred, the Holder or Holders of
Debentures representing a majority of the aggregate principal amount of
Debentures then outstanding (the "Majority Holders") may demand (by written
notice delivered to the Company)
<PAGE>
immediate payment of all or any portion of the outstanding principal amount
of the Debentures owed by such Holder or Holders. If such Majority Holders
demand immediate payment of all or any portion of such Holder's or Holders'
Debentures, the Company will, to the extent permitted under the provisions
of paragraph 4 hereof, immediately pay to such Holder or Holders the
principal amount of the Debentures requested to be paid (plus accrued
interest hereon). If an Event of Default of the type described in
subparagraph 8(a)(vii) above has occurred, then all of the outstanding
principal amount of the Debentures shall automatically be immediately due
and payable without any action on the part of any Holders of the
Debentures.
(ii) If an Event of Default has occurred, each Holder of the
Debentures will also have any other rights which such Holder may have
pursuant to applicable law, in each case provided such rights are
consistent with the provisions of paragraph 4 hereof.
9. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Debenture may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Majority
Holders, provided, however, neither the interest rate or principal amounts
payable under the Debentures, the dates on which interest or principal under the
Debentures is due nor the obligations to make payments on the Debentures on a
pro rata basis shall be amended without the prior written consent of each Holder
affected thereby, and further provided, however, that any amendment or waiver
which might in any way adversely affect the holders of Senior Debt, including,
but not limited to, any amendment or waiver affecting the provisions of
paragraph 4 or this paragraph 9 shall require the prior written consent of each
holder of Senior Debt. Any amendment or waiver effected in accordance with this
paragraph 9 shall be binding upon each Holder of this Debenture and each future
Holder of this Debenture.
10. Cancellation. After all principal and accrued interest at any time owed
on this Debenture has been paid in full, this Debenture will be surrendered to
the Company for cancellation and will not be reissued.
11. Place of Payment. Payments of principal and interest are to be
delivered to the Holder at the office of the Company, 50 Orville Drive, Bohemia,
New York 11716, or to such other address or to the attention of such other
Person as specified by prior written notice to the Company.
12. Waiver of Presentment, Demand and Dishonor. The Company hereby waives
presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of
<PAGE>
limitations or any moratorium, appraisement, exemption or homestead now provided
or that hereafter may be provided by any federal or applicable state statute,
including but not limited to exemptions provided by or allowed under the Federal
Bankruptcy Code, both as to itself and as to all of its property, whether real
or personal, against the enforcement and collection of the obligations evidenced
by this Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures to
exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right the Holder may have,
whether by the laws of the state governing this Debenture, by agreement or
otherwise; and the Company hereby expressly waives the benefit of any statute or
rule of law or equity that would produce a result contrary to or in conflict
with the foregoing.
<PAGE>
13. Usury. The Holder and the Company intend that the obligations evidenced
by this Debenture conform strictly to the applicable usury laws from time to
time in force. All agreements between the Company and the Holder, whether now
existing or hereafter arising and whether oral or written, hereby are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of maturity hereof or otherwise, shall the amount paid or agreed to be paid to
the Holder, or collected by the Holder, by or on behalf of the Company for the
use, forbearance or detention of the money to be loaned to the Company hereunder
or otherwise, or for the payment or performance of any covenant or obligation
contained herein of the Company to the Holder, or in any other document
evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed
the maximum amount permissible under applicable usury law. If under any
circumstances whatsoever fulfillment of any provision hereof or any other
document, at the time performance of such provisions shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity; and
if under any circumstances the Holder ever shall receive from or on behalf of
the Company an amount deemed interest, by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the Company's
principal amount owing hereunder and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and such other
indebtedness, the excess shall be deemed to have been a payment made by mistake
and shall be refunded to the Company or to any other person making such payment
on the Company's behalf.
14. Governing Law. The validity, construction and interpretation of this
Debenture will be governed by the internal laws, but not the law of conflicts
and choices of law, of the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered this Amended and
Restated Class B 13% Convertible Senior Subordinated Pay-in-Kind Debenture this
29th day of July, 1997.
LOGIMETRICS, INC.
By: _______________________________
Name: Charles S. Brand
Title: Chief Executive Officer
<PAGE>
EXHIBIT A
ELECTION TO CONVERT
(All capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the Amended and Restated Class B
13% Convertible Senior Subordinated Pay-in-Kind Debentures)
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
TO WHOM IT MAY CONCERN:
The undersigned registered owner of the attached Amended and Restated Class
B 13% Convertible Senior Subordinated Pay-in-Kind Debenture hereby irrevocably
exercises the option to convert such Debenture into Common Stock of LogiMetrics,
Inc. in accordance with the terms thereof, and directs that any shares issuable
and deliverable upon the conversion be issued in the name of and delivered to
the undersigned.
_________________________________
[Name of Debentureholder]
Dated:_______________ , 199_
EXHIBIT 10-1
For Bank use only
Received by:_________________
Approved by:_________________
Other:_______________________
NORTH FORK BANK
RESTATED AND AMENDED TERM LOAN NOTE
The within is a restatement and amendment and
continuation of that certain prior Amended and
Restated Term Note between Apple Bank for Savings
and Logimetrics, Inc., said Note having been
previously assigned by Apple Bank for Savings to
North Fork Bank pursuant to an Assignment and
Assumption Agreement dated December 18, 1992; said
Note having been previously restated and amended
pursuant to a Restated and Amended Term Loan Note
in the principal amount of $358,322 dated November
18, 1993; said Note having been previously
restated, increased and amended pursuant to a
Further Restated, Increased and Amended Term Loan
Note in the principal amount of $800,000 dated
March 7, 1996.
BORROWER: LOGIMETRICS, INC.
PRINCIPAL: $640,000.04 Date: April 25, 1997
PROMISE TO PAY: The undersigned (the "Borrower"), does hereby promise to pay to
the order of NORTH FORK BANK (the "Bank") at its offices at 245 Love Lane,
Mattituck, New York 11952, or at any of its branches, the sum of SIX HUNDRED
FORTY THOUSAND and 04/100 ($640,000.04) DOLLARS plus interest thereon, from the
date hereof in the manner set forth below (the "Loan").
RATE AND PAYMENT: The unpaid principal balance hereof shall bear interest at
that rate equal to two (2%) percent per annum in excess of that rate stated by
the Bank to be its Prime Rate from time to time in effect, payable monthly in
arrears commencing on May 1, 1997 and on the 1st day of each month thereafter.
In addition to the aforementioned payments of interest, the Borrower shall pay
to the Bank twenty (20) equal consecutive monthly payments of principal each in
the amount of Thirty-Two Thousand ($32,000) Dollars commencing on May 1, 1997
and on the 1st day of each month thereafter together with a final payment of all
outstanding principal, interest and/or related charges on December 31, 1998,
which shall be the maturity day of this Note.
<PAGE>
Wherever any payment to be made under this Note is required to be paid on a date
that is a Saturday, Sunday or public holiday, or the equivalent for banks under
the laws of the State of New York, such payment may be made on the next
succeeding business day, and such extension of time shall in such case be
included in the computation of interest due.
The Bank may charge any account of the Borrower for any payment due to the Bank
hereunder.
All payments due under the Note shall be made by automatic debit from an account
maintained by the Borrower for such purpose at the Bank in which the Borrower
shall maintain balances sufficient to pay each monthly payment due to the Bank
under the Loan. In the event that the money maintained in such account is
insufficient for any payment due under this Note, the Bank may charge any
account of the Borrower for any payment due to the Bank under this Note.
Payments shall be applied first to interest on unpaid principal balances to the
date payment is received by the Bank and then to reduction of principal. If the
interest rate is based on the Bank's announced Prime Rate, the interest rate
shall change when the Prime Rate changes and nothing herein shall prevent the
Bank from loaning money at less than Prime Rate on such terms and conditions as
it deems advisable. Interest shall be calculated on a 360 day year and actual
number of days elapsed.
PREPAYMENT: Prepayment in whole or in part may be made at any time without
penalty.
DEFAULT INTEREST RATE: The unpaid principal sum due under this Note shall bear
interest at a rate equal to five (5%) percent above the rate set forth above on
and after the occurrence of any event of default and until the entire principal
sum hereof has been fully paid, both before and after the entry of any judgment
with respect to such event, but in no event shall the rate either before or
after the occurrence of any event of default exceed the highest rate of
interest, if any, permitted under applicable New York or Federal Law. Such rate
of interest shall continue until such time as any event of default that may be
cured by the Borrower is cured to the satisfaction of the Bank, at which time
the previously stated interest rate shall re-commence. In no event shall the
rate either before or after the occurrence of any such default exceed the
highest rate of interest, if any, permitted under applicable New York or Federal
Law.
RIGHT OF OFFSET: If any payment is not made on time, or if the entire balance
becomes due and payable and is not paid, all or part of the amount due may be
offset out of any account or other property which the Borrower has at the Bank
or any affiliate of the Bank without prior notice or demand.
LATE CHARGES: The Borrower will pay a charge of five (5%) percent of the amount
of any payment which is not made within ten (10) days of its respective due
date, or, if applicable, which cannot be debited from its account due to
insufficient balance on the debit date.
<PAGE>
SECURITY: This Note is secured by:
(1) a security interest in and assignment and pledge of all monies,
deposits, or other sums now or hereafter held by the Bank on deposit, in
safekeeping, transit or otherwise, at any time credited by or due from Bank to
the Borrower, or in which the Borrower shall have an interest; and
(2) a continuing first lien against all assets of the Borrower as set
forth, in part, in that certain Restated and Amended General Security Agreement
dated of even date herewith.
CONDITIONS PRECEDENT:
The Borrower shall satisfy the following conditions precedent
including delivery to the Bank of the following:
(a) An executed copy of this Note;
(b) The Bank shall continue to maintain its first perfected security
interest in certain assets of the Borrower (the "Collateral") pursuant to the
general security agreement (the "Security Agreement") as reaffirmed of even date
herewith;
(c) A copy of the resolutions passed by the Borrower's Board of
Directors certified by its Secretary or Assistant Secretary as being in full
force and effect on the date of this Agreement, authorizing the Loan herein
provided for, the execution, delivery and performance of this Note and any other
instrument or agreement required hereunder and containing a certificate of
incumbency as to the person or persons authorized to execute and deliver the
same; and
(d) All other documents reasonably required by the Bank and/or its
counsel in order to evidence and/or secure the Bank's position as set forth
herein.
REPRESENTATIONS AND WARRANTIES: The Borrower hereby represents and warrants to
the Bank that:
(a) The Borrower is duly organized, validly existing and in good
standing under the laws of the State of its formation and is qualified to do
business and in good standing under the laws of each state where its failure to
so qualify would have a material adverse effect on its business, operations or
properties;
(b) This Note, the Security Agreement and all other documents executed
and delivered herewith have been duly authorized, executed and delivered and
constitute the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terms, including the granting to
the Bank of a first perfected security interest in the Collateral;
<PAGE>
(c) The execution and delivery of this Note, the Security Agreement
and all other documents executed and delivered herewith and performance
hereunder and thereunder, will not violate any provision of law;
(d) Except as set forth in the annexed Disclosure Schedule, there are
no actions or proceedings pending before any court or governmental authority,
bureau or agency, with respect to or threatened against or affecting the
Borrower, or any Subsidiary, which if determined adversely would have a material
adverse effect on the business, the assets or the financial condition of the
Borrower or any Subsidiary. As used herein, the term "Subsidiary" or
"Subsidiaries" means any corporation or corporations of which the Borrower
alone, or the Borrower and/or one or more of its Subsidiaries, owns, directly or
indirectly, at least a majority of the securities having ordinary voting power
for the election of directors;
(e) Except as set forth in the annexed Disclosure Schedule, the
Borrower is not in default under, or in violation of, any term of any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to which
it is a party or by which it is bound, or by which any of the properties or
assets owned by or used in the conduct of its business is affected, which
default or violation may have a material adverse effect on its business, assets
or financial condition. The operations of the Borrower comply in all material
respects with all laws, ordinances and regulations applicable to it;
(f) The Borrower is not a party to or bound by, nor are any of the
properties or assets owned by it or used in the conduct of its business affected
by any agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment, or subject to any charter or other corporate restriction, which
materially and adversely affects its business, assets or financial condition;
(g) All balance sheets, profit and loss statements and other financial
information heretofore furnished to the Bank are complete and present fairly the
financial condition of the Borrower and its Subsidiaries as at the dates thereof
and for the periods covered thereby, including contingent liabilities of every
kind, which financial conditions have not materially adversely changed since the
date of the most recently dated balance sheet of the Borrower heretofore
furnished to the Bank;
(h) No part of the proceeds of the Loan which is evidenced by this
Note will be used directly or indirectly for the purpose of purchasing or
carrying, or for payment in full or in part of indebtedness which was incurred
for the purpose of purchasing or carrying, any margin stock as such term is
defined in Sec. 221.3 of Regulation U of the Board of Governors of the Federal
Reserve System;
(i) The Borrower and its Subsidiaries are in compliance in all
material respects with the Employees Retirement Income Security Act of 1974
("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any
of its Subsidiaries has any unfunded vested liability under any type of plan
described in Section 4021(a) of ERISA ("Pension Plan")
<PAGE>
and no reportable event, as set forth in Section 4043(b) of ERISA, has occurred
or is continuing with respect to any Plan.
FINANCIAL STATEMENTS: The Borrower shall deliver to the Bank:
(a) Annually, as soon as available, but in any event within one
hundred twenty (120) days after the last day of each fiscal year, audited
financial statements, including balance sheets as of the last day of the fiscal
year and statements of income and retained earnings and changes in financial
condition for such fiscal year each prepared in accordance with generally
accepted accounting principles, consistently applied ("GAAP") for the period and
prior periods by Deloitte & Touche, LLP or other independent Certified Public
Accountants satisfactory to the Bank;
(b) As soon as available, but in any event within twenty (20) days
after the end of each month (but forty-five (45) days after the end of each
fiscal quarter), internally prepared financial statements of the Borrower each
prepared in accordance with GAAP and jobs-in-progress reports for said period
and prior periods;
(c) 10K and 10Q reports and documentation within the prescribed
reporting period;
(d) Within a reasonable time after a written request therefor, such
other financial data or information as the Bank may reasonably request from time
to time;
(e) At the same time as it delivers the financial statements required
under the provisions of subsections (a) and (b) hereof, a certificate signed by
the President or the chief financial, or accounting, officer of the Borrower, to
the effect that no Event of Default hereunder or material default under any
other agreement to which the Borrower or any Subsidiary is a party or by which
it is bound, or by which any of its properties or assets may be affected, and no
event which, with the giving of notice or the lapse of time, or both, would
constitute such an Event of Default, has occurred, except as set forth in the
annexed Disclosure Schedule;
(f) On not less than a monthly basis, no later than the twentieth
(20th) day after each such month, the Borrowing Base Certificate referenced
herein and backlog reports and accounts receivable agings of the Borrower;
(g) Annual budget at closing and semi-annual budget thereafter on each
January 20 and July 20.
AFFIRMATIVE COVENANTS: The Borrower will, and with respect to the agreements set
forth in subsections (a) through (f) hereof, will cause each Subsidiary to:
(a) With respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies similarly
situated and operating like properties, assets or
<PAGE>
businesses with responsible insurance companies satisfactory to the Bank, said
insurance to indicate the Bank as an additional insured and loss payee;
(b) Duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such items
are being in good faith appropriately contested;
(c) Maintain, preserve and keep its properties in good repair, working
order and condition, and make all reasonable repairs, replacements, additions,
betterments and improvements thereto;
(d) Conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and conducted;
(e) Comply with all statutes, rules and regulations and maintain its
corporate existence;
(f) Permit the Bank to make or cause to be made, inspections and
audits of any books, records and papers of the Borrower and of any Subsidiary
and each endorser hereof and to make extracts therefrom at all such reasonable
times and as often as the Bank may reasonably require;
(g) Immediately give notice to the Bank that an Event of Default has
occurred or that an event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and specifying the
action which the Borrower has taken and proposes to take with respect thereto;
(h) In addition to the aforementioned, the Borrower agrees that the
following financial covenants are covenants upon which the Bank relies in the
extension of the obligation evidenced hereby and that any violation or default
under same shall constitute an Event of Default under the terms hereof:
(1) at the end of each fiscal quarter during the term hereof, the
Borrower shall maintain a Tangible Net Worth of (-$3,042,322) or greater
(as calculated in accordance with GAAP). For purposes hereof "Tangible Net
Worth" shall mean, at any date, (i) the net book value of assets (other
than patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, permits, goodwill and other intangible assets
classified as such in accordance with GAAP) after all appropriate
adjustments in accordance with GAAP (including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and
amortization) plus (ii) subordinated indebtedness, in each case computed in
accordance with GAAP;
(2) at the end of each fiscal quarter during the term hereof, the
Borrower shall report a net income (gross income less taxes and
extraordinary items) of not less than $1.00.
<PAGE>
COMPENSATING BALANCE AND DEFICIENCY FEE AGREEMENT: If at any time during the
term hereof, the aggregate average monthly ledger balance maintained in the
non-interest deposit accounts of the Borrower at the Bank are less than
$220,000, the Borrower shall pay to the Bank an additional fee equal to (a) the
difference between $220,000 and the aggregate average monthly ledger balance
maintained in the non-interest bearing deposit accounts of the Borrower at the
Bank, multiplied by (b) a fixed rate (the "Deficiency Rate") equal to four (4%)
percent in excess of the Bank's Prime Rate, based on a 360 day year and actual
number of days elapsed. The $220,000 Compensating Balance requirement set forth
herein is intended as an aggregate requirement for all obligations of the
Borrower to the Bank. The Deficiency Rate shall be established on the first day
of each January and July and shall be applicable for the immediately ensuing six
(6) month period.
The fee defined herein shall be due and payable within fifteen (15) days
following the end of each calendar quarter and shall be debited by the Bank from
any account maintained by the Borrower at the Bank. The Borrower shall maintain
sufficient funds in said accounts to permit such debit.
Nothing contained herein shall be deemed to require the undersigned to maintain
demand deposit balances at the Bank. The aforementioned is intended as a fee
only and is neither intended, nor to be construed as, an imposition of interest
or other charge.
NEGATIVE COVENANTS: The Borrower will not, and will not permit any Subsidiary
to:
(a) Create, incur, assume or suffer to exist any liability for
borrowed money, except (i) amounts outstanding under the Borrower's twelve (12%)
percent Convertible Senior Subordinated Debentures, (ii) amounts outstanding
under the Borrower's Amended and Restated twelve (12%) percent Convertible
Subordinated Debentures (the aforementioned are collectively referred to herein
as the "Debentures") (iii) indebtedness to the Bank; (iv) existing debt as
reflected on the most recent balance sheet provided to the Bank and further
incurred through the date of this Agreement, which further incurred debt has
been acknowledged by the Borrower to the Bank in writing prior to the execution
hereof; (v) indebtedness of the Borrower not to exceed $2,500,000 to MBF Capital
Corp. (or other entity designated in writing by MBF Capital Corp.), said debt
and any security therefor to be specifically subordinated to the debt of the
Borrower evidenced by this Note and to any security interest granted by the
Borrower to the Bank in connection herewith; and (vi) other indebtedness for
borrowed money (whether or not constituting a refinancing of existing
indebtedness) so long as such indebtedness is not secured by collateral securing
repayment of this Loan and the incurrence of which will not cause a default
hereunder. The Borrower agrees to provide the Bank an opportunity to finance any
additional borrowing needs in excess of $100,000 during the term of this Note;
(b) enter into any merger or consolidation (where the Borrower is not
the surviving entity) or liquidate, wind-up or dissolve itself or sell, transfer
or lease or otherwise dispose of all or any substantial part of its assets;
<PAGE>
(c) lend or advance money, credit or property to or invest in (by
capital contribution, loan, purchase or otherwise) any firm, corporation, or
other person where any event of default has occurred and is continuing or where
such transaction would cause an event of default hereunder;
(d) create, assume or permit to exist, any mortgage, pledge, lien or
encumbrance of or upon or security interest in, any of its property or assets
now owned or hereafter acquired except (i) mortgages, liens, pledges and
security interests in favor of the Bank; (ii) subordinate liens incidental to
the Debentures or to be granted to Charles Brand or MBF Capital Corp. (or other
entity designated in writing by MBF Capital Corp.) as set forth in subsection
(a) hereof; (iii) other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property and assets which were
not incurred in connection with the borrowing of money or the obtaining of
advances or credit and which do not materially impair the use thereof in the
operation of its business; (iv) liens for taxes or other governmental charges
which are not delinquent or which are being contested in good faith and for
which a reserve shall have been established in accordance with generally
accepted accounting principles; (v) liens granted to secure purchase money
financing of equipment, provided such liens are limited to the equipment
financed; and (vi) liens granted to refinance unencumbered equipment provided
such liens are limited to the equipment refinanced and the incurrence of which
will not cause a default hereunder or in any other loan agreements or notes with
the Bank;
(e) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(f) declare or pay any preferred dividends where any Event of Default
has occurred and is continuing;
(g) (i) terminate any Pension Plan so as to result in any material
liability to The Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (the "PBCG"), (ii) engage in or permit any
person to engage in any "prohibited transaction (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended)
involving any Pension Plan which would subject the Borrower to any material tax,
penalty or other liability, (iii) incur or suffer to exist any material
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, involving any Pension Plan, or (iv) allow or suffer to exist any
event or condition, which presents a material risk of incurring a material
liability to the PBCG by reason of termination of any Pension Plan.
COLLATERAL SECURITY:
(a) As collateral security for the payment of any and all sums owing
under this Note and all other obligations, direct or contingent, joint, several
or independent, of the Borrower and of any Subsidiary and each endorser hereof
now or hereafter existing, due or to become due to, or held, or to be held by,
the Bank, whether created directly or acquired by assignment or otherwise (all
of such obligations, including this Note, are hereinafter called the
<PAGE>
"Obligations"), the Borrower hereby grants to the Bank a lien on and security
interest in any and all deposits or other sums at any time credited by or due
from the Bank to the Borrower, whether in regular or special depository accounts
or otherwise, and any and all monies, securities and other property of the
Borrower, and the proceeds thereof, now or hereafter held or received by or in
transit to the Bank from or for the Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and any such deposits, sums,
monies, securities and other property, may at any time after the occurrence of
any Event of Default be set-off, appropriated and applied by the Bank against
any of the Obligations whether or not such Obligations are then due or are
secured by any collateral, or, if they are so secured, whether or not such
collateral held by the Bank is considered to be adequate and with respect to all
collateral security the Bank shall have all the rights and remedies available to
it under the Uniform Commercial Code of New York and other applicable law;
(b) This Note is also secured by the Collateral.
EVENTS OF DEFAULT: The Bank may declare the entire unpaid balance of this Note
due and payable on the happening of any of the following events:
(a) Failure to pay any amount required by this Note within ten (10)
days of its respective due date, or any other obligation owed to the Bank by
Borrower, or, if applicable, failure to have sufficient funds in its account for
loan payments to be debited on the due date;
(b) Failure to perform or keep or abide by any negative or financial
covenant set forth herein contained in this Note, or any other document or
instrument given to the Bank in connection with this Loan;
(c) Failure to perform or keep or abide by any other term, covenant,
or condition contained in this Note, or any other document or instrument given
to the Bank in connection with this Loan, said failure continuing for a period
of thirty (30) days after written notice thereof;
(d) Payment Default by the Borrower or any declared default pursuant
to the Debentures;
(e) The Borrower makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become due;
or an order, judgment or decree is entered adjudicating the Borrower as bankrupt
or insolvent; or any order for relief with respect to the Borrower is entered
under the United States Bankruptcy Code; or the Borrower petitions or applies to
any tribunal for the appointment of a custodian, trustee, receiver or liquidator
of the Borrower or of any substantial part of the assets of the Borrower, or
commences any proceeding relating to the Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced, against the Borrower and either (i)
the Borrower by any act indicates its approval thereof, consents thereto, or
acquiesces therein or (ii) such petition, application or proceeding is not
dismissed within sixty (60) days;
<PAGE>
(f) The happening of any event which, in the reasonable judgment of
the Bank, adversely affects the Borrower's ability to repay or the value of any
collateral;
(g) If any material written representation or material statement made
to the Bank by the Borrower is untrue when made;
(h) The occurrence of a default under any other document or instrument
given to the Bank in connection with this Loan;
(i) Failure to provide any financial information on request or permit
an examination of books and records;
j) In the event that any person or "group" (as defined in Rule 13d-5
promulgated under the Exchange Act), other than Charles Brand acquires or
otherwise obtains the right (whether by contract, through the ownership of
securities or pursuant to any proxy or consent arrangement, voting trust or
otherwise) to appoint, elect or cause the election of a majority of the Board of
Directors of the Company;
(k) if any order is entered by any court or tribunal, at law or in
equity, by or against any of the Obligors for the appointment of any receiver or
any trustee for any of the Obligors and said Order is not discharged within
sixty (60) days from the entry thereof.
ATTORNEYS FEES: In the event the Bank retains counsel with respect to
enforcement of this Note or any other document or instrument given to the Bank,
the Borrower agrees to pay the Bank's reasonable attorneys fees (whether or not
an action is commenced and whether or not in the court of original jurisdiction,
appellate court, bankruptcy court, or otherwise).
SUBSEQUENT AGREEMENTS The Borrower shall be bound by any agreement extending the
time or modifying the above terms of payment made by the Bank without notice to
the Borrower, and the Borrower shall continue to be liable to pay all amounts
due hereunder, but at an interest rate not exceeding the rate set forth herein,
according to the terms of any such agreement of extension or modification.
MISCELLANEOUS:
(a) Only those agreements, representations and warranties made
expressly herein shall survive the delivery of this Note. The Borrower waives
trial by jury, set-off and counterclaim of any nature or description in any
litigation in any court with respect to, in connection with, or arising out of,
this Note or any instrument or document delivered pursuant hereto or the
validity, protection, interpretation, collection or enforcement hereof;
(b) No modification or waiver of or with respect to any provision of
this Note, or consent to any departure by the Borrower from any of the terms or
conditions hereof, shall in any event be effective unless it shall be in writing
and signed by the Bank, and then such waiver
<PAGE>
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Borrower in any case shall, of
itself, entitle it to any other or further notice or demand in similar or other
circumstances;
(c) Each and every right granted to the Bank hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Bank or the holder of this Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right;
(d) In the event that this Note is placed in the hands of an attorney
for collection by reason of any default hereunder, the Borrower agrees to pay
reasonable attorney's fees so incurred. The Borrower promises to pay all
reasonable out-of-pocket expenses of any nature as soon as incurred whether in
or out of court and whether incurred before or after this Note shall become due
at its maturity date or otherwise and costs which the Bank may deem necessary or
proper in connection with the satisfaction of the indebtedness or the
administration, supervision, preservation, protection (including but not limited
to maintenance of adequate insurance) of or the realization upon the collateral;
(e) The Borrower hereby waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, and any or all other notices or
demands except as otherwise expressly provided for herein;
(f) All accounting terms not otherwise defined in this Note shall have
the meanings ascribed thereto under generally accepted accounting principles;
(g) Delay or failure of the Bank to exercise any of its rights under
this Note shall not be deemed a waiver thereof. No waiver of any condition or
requirement shall operate as a waiver of any other or subsequent condition or
requirement. The Bank or any other holder of this Note need not present it
before requiring payment. The Borrower waives trial by jury, offset, and
counterclaim with respect to any action arising out of or relating to this Note.
This Note may not be modified or terminated orally. This Note shall be governed
by the laws of the State of New York without regard to its conflicts of laws
rules. The Borrower irrevocably consents to the jurisdiction and venue of the
New York State Supreme Court, Suffolk County in any action concerning this Note.
This Note is binding upon the Borrower, its heirs, successors and assigns;
(h) The Borrower expressly warrants and represents that no statements,
agreements or representations, whether oral or written, have been made by the
Bank, or by any employee, agent or broker of the Bank with respect to the
obligation or debt evidenced by this Note. The Borrower further expressly
warrants and represents that (i) no oral commitment has been made by the Bank to
extend or continue any credit to the Borrower or any party other than as
expressly stated herein or in those certain documents executed in connection
herewith, (ii) no representation or agreement has been made by or with the Bank,
or any employee, agent or
<PAGE>
broker of the Bank, to forebear or refrain in any way from exercising any right
or remedy in its favor hereunder or otherwise unless expressly set forth herein,
and (iii) the Borrower has not and will not rely on any commitment to extend or
continue any credit, nor on any agreement to forebear or refrain from exercising
rights or remedies unless such commitment or agreement shall be in writing and
duly executed by an authorized officer of the Bank.
NOTICES: All notices, requests and other communications pursuant to this Note
shall be in writing, either by letter (delivered by hand or sent by certified
mail, return receipt requested) or telegram, addressed as follows:
(a) if to the Borrower:
Logimetrics, Inc.
121-03 Dupont Street
Plainview, New York 11803
Attention: Norman Phipps, President
(b) if to the Bank:
North Fork Bank
275 Broad Hollow Road
Melville, New York 11747
Attention: Joseph Walsh, Vice President
Any notice, request or communication hereunder shall be deemed to have
been given when deposited in the mails, postage prepaid, or in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
aforesaid. Any party may change the person
<PAGE>
or address to whom or which the notices are to be given hereunder, but any such
notice shall be effective only when actually received by the party to whom it is
addressed.
IN WITNESS WHEREOF, the Borrower has signed this Note the 25th day of
April, 1997.
LOGIMETRICS, INC.
By: /s/Norman Phipps
_________________________
Norman Phipps, President
STATE OF NEW YORK )
) ss.:
COUNTY OF SUFFOLK )
On this 25th day of April, 1997, before me personally came Norman
Phipps, to me known, who, being by me duly sworn, did depose and say that he has
an address at c/o LOGIMETRICS, INC., 121-03 Dupont Street, Plainview, New York
11803, that he is the
<PAGE>
President of LOGIMETRICS, INC., the corporation described in, and which
executed, the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
/s/Kevin E. Balfe
_______________________________
NOTARY PUBLIC
KEVIN E. BALFE
Notary Public, State of New York
No. 4804466
Qualified In Nassau County
Commission Expires February 28, 1999
<PAGE>
[SCHEDULES OMITTED]
EXHIBIT 10.2
NORTH FORK BANK
SIXTH RESTATED AND AMENDED
REVOLVING CREDIT NOTE
The within is a restatement and amendment and
continuation of that certain Amended and Restated
Revolving Credit and Term Loan Agreement originally
made between Apple Bank for Savings and Logimetrics,
Inc. dated May 19, 1992, previously assigned by Apple
Bank for Savings to North Fork Bank pursuant to an
Assignment and Assumption Agreement dated December 18,
1992; previously restated and amended pursuant to a
Restated and Amended Revolving Credit Note dated
November 18, 1993; previously restated and amended
pursuant to a Second Restated and Amended Revolving
Credit Note dated February 22, 1995; previously
restated and amended pursuant to a Third Restated and
Amended Revolving Credit Note dated June 30, 1995; and
previously restated and amended pursuant to a Fourth
Restated and Amended Revolving Credit Note dated
October 16, 1995; previously restated and amended
pursuant to a Fifth Restated and Amended Revolving
Credit Note dated March 7, 1996.
BORROWER: LOGIMETRICS, INC.
PRINCIPAL: $2,200,000 Date: April 25, 1997
PROMISE TO PAY: The undersigned (the "Borrower"), for value received, does
hereby promise to pay to the order of NORTH FORK BANK (the "Bank") at its
offices at 245 Love Lane, Mattituck, New York 11952, or at any of its branches,
the sum of TWO MILLION TWO HUNDRED THOUSAND ($2,200,000) DOLLARS plus interest
thereon from the date hereof as set forth herein.
RATE AND PAYMENT: The Borrower shall pay said sum, or such lesser amount as may
then be the aggregate unpaid principal balance of all loans made by the Bank to
the Borrower hereunder, (each a "Loan" and collectively the "Loans") on or
before April 30, 1998 (the "Maturity Date").
The Borrower also promises to pay interest (computed on the basis of a 360 day
year for actual days elapsed) at said office on the unpaid principal amount
hereof from time to time outstanding at the rate of two (2%) percent per annum
in excess of that rate stated by the Bank to be its Prime Rate from time to time
in effect, payable monthly in arrears on the first day of each month. Prime Rate
as referred to herein shall refer to the rate of interest determined or
announced by the Bank from time to time as its Prime Rate and the Prime Rate is
not necessarily the lowest rate of interest charged by the Bank on loans and
other credit relationships. Each change in the Prime Rate shall effect a
simultaneous and corresponding change in the interest rate hereunder without
<PAGE>
notice to the Borrower. Interest shall be payable monthly on the first day of
each month commencing on the first such day to occur after the date hereof and
upon payment in full of the unpaid principal amount hereof.
In addition to the foregoing, there shall be due and payable from the Borrower
to the Bank a quarterly fee equal to one-fourth of one (1/4%) percent of the
average unused amount of the Commitment as herein defined during each such
quarter, said fee to be paid to the Bank not later than ten (10) days after the
end of each fiscal quarter.
Wherever any payment to be made under this Note is required to be paid on a date
that is a Saturday, Sunday or public holiday, or the equivalent for banks under
the laws of the State of New York, such payment may be made on the next
succeeding business day, and such extension of time shall in such case be
included in the computation of interest due.
All payments due under the Note shall be made by automatic debit from an account
maintained by the Borrower for such purpose at the Bank in which the Borrower
shall maintain balances sufficient to pay each monthly payment due to the Bank
under the Loan. In the event that the money maintained in such account is
insufficient for any payment due under this Note, the Bank may charge any
account of the Borrower for any payment due to the Bank under this Note.
The Bank may charge any account of the Borrower for any payment due to the Bank
hereunder.
DEFAULT INTEREST RATE: The unpaid principal sum due under this Note shall bear
interest at a rate equal to five (5%) percent above the rate set forth above on
and after the occurrence of any event of default and until the entire principal
sum hereof has been fully paid, both before and after the entry of any judgment
with respect to such event, but in no event shall the rate either before or
after the occurrence of any event of default exceed the highest rate of
interest, if any, permitted under applicable New York or Federal Law. Such rate
of interest shall continue until such time as any event of default that may be
cured by the Borrower is cured to the satisfaction of the Bank, at which time
the previously stated interest rate shall re-commence. In no event shall the
rate either before or after the occurrence of any such default exceed the
highest rate of interest, if any, permitted under applicable New York or Federal
law.
RIGHT OF OFFSET: If any payment is not made on time, or if the entire balance
becomes due and payable and is not paid, all or part of the amount due may be
offset out of any account or other property which the Borrower has at the Bank
or any affiliate of the Bank without prior notice or demand.
<PAGE>
LATE CHARGES: The Borrower will pay a charge of five (5%) percent of the amount
of any payment which is not made within ten (10) days of its respective due
date, or, if applicable, which cannot be debited from its account due to
insufficient balance on the debit date.
SECURITY: This Note is secured by:
(1) a security interest in and assignment and pledge of all monies,
deposits, or other sums now or hereafter held by the Bank on deposit, in
safekeeping, transit or otherwise, at any time credited by or due from Bank to
the Borrower, or in which the Borrower shall have an interest; and
(2) a continuing first lien against all assets of the Borrower as set
forth, in part, in that certain Restated and Amended General Security Agreement
dated of even date herewith.
In consideration of the granting of the Loans evidenced by this Note, the
Borrower hereby agrees as follows:
REVOLVING CREDIT COMMITMENT:
(a) The Loans evidenced by this Note are available in one or more
advances during the period which commences on the date hereof and ends on April
30, 1998 (the "Credit Period") in an aggregate principal amount up to, but not
exceeding at any time the outstanding principal sum of Two Million Two Hundred
Thousand ($2,200,000) Dollars (the "Commitment"). Notwithstanding anything to
the contrary set forth herein, the Commitment as defined herein shall be limited
to $1,800,000 unless and until the Borrower shall have received a cash infusion
(the "Cash Infusion") of not less than $1,500,000 through the issuance of
Convertible Senior Subordinated Debentures and Warrants as described in that
certain letter agreement dated March 5, 1997 between the Borrower and MBF
Capital Corp. During the Credit Period, the Borrower may use the Commitment by
borrowing, prepaying in whole or in part and reborrowing, on a revolving basis,
all in accordance with the terms and conditions hereof; provided, however, that
each Loan or prepayment be in a minimum amount of $10,000;
(b) Notwithstanding anything to the contrary set forth herein, the
outstanding principal balance of the Loans shall at no time exceed the lesser of
the Commitment or the aggregate amount available to the Borrower under the
following Borrowing Base (as such amount shall fluctuate from time to time):
(i) an amount equal to eighty (80%) percent of the
Borrower's "Eligible Accounts Receivable", which shall be
defined as all accounts receivable due to the Borrower from
persons or entities less (A) accounts due from Advanced
Control Components, Inc. (B) uncollectible accounts and/or
accounts remaining unpaid after a date which is ninety (90)
days after the invoice date of said account receivable and
(C) accounts receivable due from any account debtor who has
had one-half (1/2) or more of their accounts receivable
outstanding for more than
<PAGE>
ninety (90) days and (D) amounts due from the Borrower to
Any account receivable debtor; plus
(ii) an amount equal to fifty (50%) percent of the
Borrower's "Eligible Inventory" on hand. Eligible Inventory
shall (A) include only raw materials, unfinished inventory,
components and finished goods (B) exclude work-in-process on
existing "systems". The outstanding principal balance of the
Loans attributable to fifty (50%) percent of the Borrower's
Eligible Inventory as described herein shall not exceed
sixty-five (65%) percent of the total outstanding principal
balance of the Loans prior to (A) July 25, 1997 or (B) the
Cash Infusion, whichever shall first occur, and the lesser
of (Y) $1,000,000 or (Z) sixty (60%) percent of the total
outstanding principal balance of the Loans after the Cash
Infusion. Notwithstanding anything to the contrary set forth
herein, not more than twenty-five (25%) percent of the
inventory of the Borrower acquired through the intended
merger with mm-Tech shall be included in the calculation of
Eligible Inventory until such time as the Bank shall receive
a satisfactory field audit report of said inventory prepared
by BK Commercial Corp. at the expense of the Borrower.
(c) The Borrower shall submit to the Bank at the time of each request
for a Loan, but not less than one time per month, a Borrowing Base Certificate
confirming the calculation of the Borrower's Eligible Accounts Receivable and
Eligible Inventory and calculating the amount available to the Borrower
hereunder. Said Borrowing Base Certificate shall be signed by an authorized
representative of the Borrower;
(d) The date and amount of each Loan and of each payment of principal
shall be maintained by the Bank in its books and records at the time of each
Loan or payment. Absent manifest error on the part of the Bank, all such
notations shall be presumed to be correct and the aggregate net unpaid amount of
Loans set forth therein shall be presumed to be the principal balance hereof;
(e) Each request for a Loan shall be subject to the satisfaction of
the following conditions precedent:
(i) The Borrower shall have given the Bank notice of
such request, setting forth the amount of the Loan requested
and the date thereof. In addition to the aforementioned, the
Borrower shall submit to the Bank at the time of each
request, but in any event not less than one time per month,
a completed Borrowing Base Certificate in the form annexed
hereto as Exhibit "A" satisfactory in form and substance to
the Bank. Such notice may be written or oral and shall be
sufficient if received by 1 p.m. of the date the Loan is
requested. If the request is oral, it shall be thereafter
confirmed in writing delivered by the Borrower to the Bank;
<PAGE>
(ii) No Event of Default, or event which would be an
Event of Default but for the giving of notice or the passage
of time or both, has occurred and is continuing; and all of
the representations and warranties made by the Borrower
herein shall be true and correct in all material respects on
and as of the date of such request as if made on and as of
such date;
(f) The outstanding principal balance of the Loans shall at no time
exceed the amount of the Commitment;
(g) The Borrower acknowledges and represents that the principal amount
of $1,524,989 together with interest thereon is outstanding under the terms
hereof on the date hereof without offset, defense or counterclaim.
CONDITIONS PRECEDENT:
The Borrower shall satisfy the following conditions precedent
including delivery to the Bank of the following:
(a) An executed copy of this Note;
(b) The Bank shall continue to maintain its first perfected security
interest in certain assets of the Borrower (the "Collateral") pursuant to the
general security agreement (the "Security Agreement") as reaffirmed of even date
herewith;
(c) A copy of the resolutions passed by the Borrower's Board of
Directors certified by its Secretary or Assistant Secretary as being in full
force and effect on the date of this Agreement, authorizing the loan herein
provided for, the execution, delivery and performance of this Note and any other
instrument or agreement required hereunder and containing a certificate of
incumbency as to the person or persons authorized to execute and deliver the
same; and
(d) All other documents reasonably required by the Bank and/or its
counsel in order to evidence and/or secure the Bank's position as set forth
herein.
REPRESENTATIONS AND WARRANTIES: The Borrower hereby represents and warrants to
the Bank that:
(a) The Borrower is duly organized, validly existing and in good
standing under the laws of the State of its formation and is qualified to do
business and in good standing under the laws of each state where its failure to
so qualify would have a material adverse effect on its business, operations or
properties;
(b) This Note, the Security Agreement and all other documents executed
and delivered herewith have been duly authorized, executed and delivered and
constitute the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terms, including the granting to
the Bank of a first perfected security interest in the Collateral;
<PAGE>
(c) The execution and delivery of this Note, the Security Agreement
and all other documents executed and delivered herewith and performance
hereunder and thereunder, will not violate any provision of law;
(d) Except as set forth in the annexed Disclosure Schedule, there are
no actions or proceedings pending before any court or governmental authority,
bureau or agency, with respect to or threatened against or affecting the
Borrower, or any Subsidiary, which if determined adversely would have a material
adverse effect on the business, the assets or the financial condition of the
Borrower or any Subsidiary. As used herein, the term "Subsidiary" or
"Subsidiaries" means any corporation or corporations of which the Borrower
alone, or the Borrower and/or one or more of its Subsidiaries, owns, directly or
indirectly, at least a majority of the securities having ordinary voting power
for the election of directors;
(e) Except as set forth in the annexed Disclosure Schedule, the
Borrower is not in default under, or in violation of, any term of any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to which
it is a party or by which it is bound, or by which any of the properties or
assets owned by or used in the conduct of its business is affected, which
default or violation may have a material adverse effect on its business, assets
or financial condition. The operations of the Borrower comply in all material
respects with all laws, ordinances and regulations applicable to it;
(f) The Borrower is not a party to or bound by, nor are any of the
properties or assets owned by it or used in the conduct of its business affected
by any agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment, or subject to any charter or other corporate restriction, which
materially and adversely affects its business, assets or financial condition;
(g) All balance sheets, profit and loss statements and other financial
information heretofore furnished to the Bank are complete and present fairly the
financial condition of the Borrower and its Subsidiaries as at the dates thereof
and for the periods covered thereby, including contingent liabilities of every
kind, which financial conditions have not materially adversely changed since the
date of the most recently dated balance sheet of the Borrower heretofore
furnished to the Bank;
(h) No part of the proceeds of the Loan which is evidenced by this
Note will be used directly or indirectly for rhe purpose of purchasing or
carrying, or for payment in full or in part of indebtedness which was incurred
for the purpose of purchasing or carrying, any margin stock as such term is
defined in Sec. 221.3 of Regulation U of the Board of Governors of the Federal
Reserve System;
(i) The Borrower and its Subsidiaries are in compliance in all
material respects with the Employees Retirement Income Security Act of 1974
("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any
of its Subsidiaries has any unfunded vested liability under any type of plan
described in Section 4021(a) of ERISA ("Pension Plan") and no
<PAGE>
reportable event, as set forth in Section 4043(b) of ERISA, has occurred or is
continuing with respect to any Plan.
FINANCIAL STATEMENTS: The Borrower shall deliver to the Bank:
(a) Annually, as soon as available, but in any event within one
hundred twenty (120) days after the last day of each fiscal year, audited
financial statements, including balance sheets as of the last day of the fiscal
year and statements of income and retained earnings and changes in financial
condition for such fiscal year each prepared in accordance with generally
accepted accounting principles, consistently applied ("GAAP") for the period and
prior periods by Deloitte and Touche, LLP, or other independent Certified Public
Accountants satisfactory to the Bank and a complete signed copy of the
Borrower's Federal Tax Return (and all schedules annexed thereto);
(b) As soon as available, but in any event within twenty (20) days
after the end of each month (but forty-five (45) days after the end of each
fiscal quarter), internally prepared financial statements of the Borrower each
prepared in accordance with GAAP and jobs-in-progress reports for said period
and prior periods;
(c) 10K and 10Q reports and documentation within the prescribed
reporting period;
(d) Within a reasonable time after a written request therefor, such
other financial data or information as the Bank may reasonably request from time
to time;
(e) At the same time as it delivers the financial statements required
under the provisions of subsections (a) and (b) hereof, a certificate signed by
the President or the chief financial, or accounting, officer of the Borrower, to
the effect that no Event of Default hereunder or material default under any
other agreement to which the Borrower or any Subsidiary is a party or by which
it is bound, or by which any of its properties or assets may be affected, and no
event which, with the giving of notice or the lapse of time, or both, would
constitute such an Event of Default, has occurred, except as set forth in the
annexed Disclosure Schedule;
(f) On a monthly basis, no later than the twentieth (20th) day after
each such month, the Borrowing Base Certificate referenced herein and backlog
reports and accounts receivable agings of the Borrower;
(g) Annual budget at closing and semi-annual budget thereafter on each
January 20 and July 20.
AFFIRMATIVE COVENANTS: The Borrower will, and with respect to the agreements set
forth in subsections (a) through (f) hereof, will cause each Subsidiary to:
(a) With respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are
<PAGE>
usually so insured by companies similarly situated and operating like
properties, assets or businesses with responsible insurance companies
satisfactory to the Bank, said insurance to indicate the Bank as an additional
insured and loss payee;
(b) Duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such items
are being in good faith appropriately contested;
(c) Maintain, preserve and keep its properties in good repair, working
order and condition, and make all reasonable repairs, replacements, additions,
betterments and improvements thereto;
(d) Conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and conducted;
(e) Comply with all statutes, rules and regulations and maintain its
corporate existence;
(f) Permit the Bank to make or cause to be made, inspections and
audits of any books, records and papers of the Borrower and of any Subsidiary
and each endorser hereof and to make extracts therefrom at all such reasonable
times and as often as the Bank may reasonably require;
(g) Immediately give notice to the Bank that an Event of Default has
occurred or that an event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and specifying the
action which the Borrower has taken and proposes to take with respect thereto;
(h) In addition to the aforementioned, the Borrower agrees that the
following financial covenants are covenants upon which the Bank relies in the
extension of the obligation evidenced hereby and that any violation or default
under same shall constitute an Event of Default under the terms hereof:
(1) at the end of each fiscal quarter during the
term hereof, the Borrower shall maintain a Tangible Net
Worth of (-$3,042,322) or greater (as calculated in
accordance with GAAP). For purposes hereof "Tangible
Net Worth" shall mean, at any date, (i) the net book
value of assets (other than patents, patent rights,
trademarks, trade names, franchises, copyrights,
licenses, permits, goodwill and other intangible assets
classified as such in accordance with GAAP) after all
appropriate adjustments in accordance with GAAP
(including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and
amortization) plus (ii) subordinated indebtedness, in
each case computed in accordance with GAAP;
<PAGE>
(2) at the end of each fiscal quarter during the
term hereof, the Borrower shall report a net income
(gross income less taxes and extraordinary items) of
not less than $1.00.
COMPENSATING BALANCE AND DEFICIENCY FEE AGREEMENT: If at any time during the
term hereof, the aggregate average monthly ledger balance maintained in the
non-interest deposit accounts of the Borrower at the Bank are less than
$220,000, the Borrower shall pay to the Bank an additional fee equal to (a) the
difference between $220,000 and the aggregate average monthly ledger balance
maintained in the non-interest bearing deposit accounts of the Borrower at the
Bank, multiplied by (b) a fixed rate (the "Deficiency Rate") equal to four (4%)
percent in excess of the Bank's Prime Rate, based on a 360 day year and actual
number of days elapsed. The $220,000 Compensating Balance requirement set forth
herein is intended as an aggregate requirement for all obligations of the
Borrower to the Bank. The Deficiency Rate shall be established on the first day
of each January and July and shall be applicable for the immediately ensuing six
(6) month period.
The fee defined herein shall be due and payable within fifteen (15) days
following the end of each calendar quarter and shall be debited by the Bank from
any account maintained by the Borrower at the Bank. The Borrower shall maintain
sufficient funds in said accounts to permit such debit.
Nothing contained herein shall be deemed to require the undersigned to maintain
demand deposit balances at the Bank. The aforementioned is intended as a fee
only and is neither intended, nor to be construed as, an imposition of interest
or other charge.
NEGATIVE COVENANTS: The Borrower will not, and will not permit any Subsidiary
to:
(a) Create, incur, assume or suffer to exist any liability for
borrowed money, except (i) amounts outstanding under the Borrower's twelve (12%)
percent Convertible Senior Subordinated Debentures, (ii) amounts outstanding
under the Borrower's Amended and Restated twelve (12%) percent Convertible
Subordinated Debentures (the aforementioned are collectively referred to herein
as the "Debentures") (iii) indebtedness to the Bank; (iv) existing debt as
reflected on the most recent balance sheet provided to the Bank and further
incurred through the date of this Agreement, which further incurred debt has
been acknowledged by the Borrower to the Bank in writing prior to the execution
hereof; (v) indebtedness of the Borrower not to exceed $2,500,000 to MBF Capital
Corp. (or other entity designated in writing by MBF Capital Corp.) and to any
security interest granted by the Borrower to the Bank in connection herewith,
said debt and any security therefor to be specifically subordinated to the debt
of the Borrower evidenced by this Note; and (vi) other indebtedness for borrowed
money (whether or not constituting a refinancing of existing indebtedness) so
long as such indebtedness is not secured by collateral securing repayment of
this Loan and the incurrence of which will not cause a default hereunder. The
Borrower agrees to provide the Bank an opportunity to finance any additional
borrowing needs in excess of $100,000 during the term of this Note;
<PAGE>
(b) enter into any merger or consolidation (where the Borrower is not
the surviving entity) or liquidate, wind-up or dissolve itself or sell, transfer
or lease or otherwise dispose of all or any substantial part of its assets;
(c) lend or advance money, credit or property to or invest in (by
capital contribution, loan, purchase or otherwise) any firm, corporation, or
other person where any event of default has occurred and is continuing or where
such transaction would cause an event of default hereunder;
(d) create, assume or permit to exist, any mortgage, pledge, lien or
encumbrance of or upon or security interest in, any of its property or assets
now owned or hereafter acquired except (i) mortgages, liens, pledges and
security interests in favor of the Bank; (ii) subordinate liens incidental to
the Debentures or to be granted to Charles Brand or MBF Capital Corp. (or other
entity designated in writing by MBF Capital Corp.) as set forth in subsection
(a) hereof; (iii) other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property and assets which were
not incurred in connection with the borrowing of money or the obtaining of
advances or credit and which do not materially impair the use thereof in the
operation of its business; (iv) liens for taxes or other governmental charges
which are not delinquent or which are being contested in good faith and for
which a reserve shall have been established in accordance with generally
accepted accounting principles; (v) liens granted to secure purchase money
financing of equipment, provided such liens are limited to the equipment
financed; and (vi) liens granted to refinance unencumbered equipment provided
such liens are limited to the equipment refinanced and the incurrence of which
will not cause a default hereunder or in any other loan agreements or notes with
the Bank;
(e) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(f) declare or pay any preferred dividends where any Event of Default
has occurred and is continuing;
(g) (i) terminate any Pension Plan so as to result in any material
liability to The Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (the "PBCG"), (ii) engage in or permit any
person to engage in any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended)
involving any Pension Plan which would subject the Borrower to any material tax,
penalty or other liability, (iii) incur or suffer to exist any material
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, involving any Pension Plan, or (iv) allow or suffer to exist any
event or condition, which presents a material risk of incurring a material
liability to the PBCG by reason of termination of any Pension Plan.
<PAGE>
COLLATERAL SECURITY:
(a) As collateral security for the payment of any and all sums owing
under this Note and all other obligations, direct or contingent, joint, several
or independent, of the Borrower and of any Subsidiary and each endorser hereof
now or hereafter existing, due or to become due to, or held, or to be held by,
the Bank, whether created directly or acquired by assignment or otherwise (all
of such obligations, including this Note, are hereinafter called the
"Obligations"), the Borrower hereby grants to the Bank a lien on and security
interest in any and all deposits or other sums at any time credited by or due
from the Bank to the Borrower, whether in regular or special depository accounts
or otherwise, and any and all monies, securities and other property of the
Borrower, and the proceeds thereof, now or hereafter held or received by or in
transit to the Bank from or for the Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and any such deposits, sums,
monies, securities and other property, may at any time after the occurrence of
any Event of Default be set-off, appropriated and applied by the Bank against
any of the Obligations whether or not such Obligations are then due or are
secured by any collateral, or, if they are so secured, whether or not such
collateral held by the Bank is considered to be adequate and with respect to all
collateral security the Bank shall have all the rights and remedies available to
it under the Uniform Commercial Code of New York and other applicable law;
(b) This Note is also secured by the Collateral.
EVENTS OF DEFAULT: If any one or more of the following events ("Events of
Default") shall occur the Borrower shall be in default hereunder and, at the
option of the Bank, the entire unpaid balance of the principal of and interest
on the Obligations shall immediately become due and payable:
(a) Failure to pay any amount required by this Note within ten (10)
days of its respective due date, or any other obligation owed to the Bank by
Borrower, or, if applicable, failure to have sufficient funds in its account for
loan payments to be debited on the due date;
(b) Failure to perform or keep or abide by any negative or financial
covenant set forth herein contained in this Note, or any other document or
instrument given to the Bank in connection with this Loan;
(c) Failure to perform or keep or abide by any other term, covenant,
or condition contained in this Note, or any other document or instrument given
to the Bank in connection with this Loan, said failure continuing for a period
of thirty (30) days after written notice thereof;
(d) Payment Default by the Borrower or any declared default pursuant
to the Debentures;
(e) The Borrower makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become due;
or an order, judgment or
<PAGE>
decree is entered adjudicating the Borrower as bankrupt or insolvent; or any
order for relief with respect to the Borrower is entered under the United States
Bankruptcy Code; or the Borrower petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Borrower or
of any substantial part of the assets of the Borrower, or commences any
proceeding relating to the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Borrower and either (i) the Borrower by any
act indicates its approval thereof, consents thereto, or acquiesces therein or
(ii) such petition, application or proceeding is not dismissed within sixty (60)
days;
(f) The happening of any event which, in the reasonable judgment of
the Bank, adversely affects the Borrower's ability to repay or the value of any
collateral;
(g) If any material written representation or material statement made
to the Bank by the Borrower is untrue when made;
(h) The occurrence of a default under any other document or instrument
given to the Bank in connection with this Loan;
(i) Failure to provide any financial information on request or permit
an examination of books and records;
(j) In the event that any person or "group" (as defined in Rule 13d-5
promulgated under the Exchange Act), other than Charles Brand acquires or
otherwise obtains the right (whether by contract, through the ownership of
securities or pursuant to any proxy or consent arrangement, voting trust or
otherwise) to appoint, elect or cause the election of a majority of the Board of
Directors of the Company;
(k) if any order is entered by any court or tribunal, at law or in
equity, by or against any of the Obligors for the appointment of any receiver or
any trustee for any of the Obligors and said Order is not discharged within
sixty (60) days from the entry thereof.
ATTORNEYS FEES: In the event the Bank retains counsel with respect to
enforcement of this Note or any other document or instrument given to the Bank,
the Borrower agrees to pay the Bank's reasonable attorneys fees (whether or not
an action is commenced and whether or not in the court of original jurisdiction,
appellate court, bankruptcy court, or otherwise).
SUBSEQUENT AGREEMENTS: The Borrower shall be bound by any agreement extending
the time or modifying the above terms of payment made by the Bank without notice
to the Borrower, and the Borrower shall continue to be liable to pay all amounts
due hereunder, but at an interest rate not exceeding the rate set forth herein,
according to the terms of any such agreement of extension or modification.
<PAGE>
MISCELLANEOUS:
(a) Only those agreements, representations and warranties made
expressly herein shall survive the delivery of this Note. The Borrower waives
trial by jury, set-off and counterclaim of any nature or description in any
litigation in any court with respect to, in connection with, or arising out of,
this Note or any instrument or document delivered pursuant hereto or the
validity, protection, interpretation, collection or enforcement hereof;
(b) No modification or waiver of or with respect to any provision of
this Note, or consent to any departure by the Borrower from any of the terms or
conditions hereof, shall in any event be effective unless it shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or
demand on the Borrower in any case shall, of itself, entitle it to any other or
further notice or demand in similar or other circumstances;
(c) Each and every right granted to the Bank hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Bank or the holder of this Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right;
(d) In the event that this Note is placed in the hands of an attorney
for collection by reason of any default hereunder, the Borrower agrees to pay
reasonable attorney's fees so incurred. The Borrower promises to pay all
reasonable out-of-pocket expenses of any nature as soon as incurred whether in
or out of court and whether incurred before or after this Note shall become due
at its maturity date or otherwise and costs which the Bank may deem necessary or
proper in connection with the satisfaction of the indebtedness or the
administration, supervision, preservation, protection (including but not limited
to maintenance of adequate insurance) of or the realization upon the collateral;
(e) The Borrower hereby waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, and any or all other notices or
demands except as otherwise expressly provided for herein;
(f) All accounting terms not otherwise defined in this Note shall have
the meanings ascribed thereto under generally accepted accounting principles;
(g) Delay or failure of the Bank to exercise any of its rights under
this Note shall not be deemed a waiver thereof. No waiver of any condition or
requirement shall operate as a waiver of any other or subsequent condition or
requirement. The Bank or any other holder of this Note need not present it
before requiring payment. The Borrower waives trial by jury, offset, and
counterclaim with respect to any action arising out of or relating to this Note.
This Note may not be modified or terminated orally. This Note shall be governed
by the laws of the State of New York without regard to its conflicts of laws
rules. The Borrower irrevocably consents to
<PAGE>
the jurisdiction and venue of the New York State Supreme Court, Suffolk County
in any action concerning this Note. This Note is binding upon the Borrower, its
heirs, successors and assigns;
(h) The Borrower expressly warrants and represents that no statements,
agreements or representations, whether oral or written, have been made by the
Bank, or by any employee, agent or broker of the Bank with respect to the
obligation or debt evidenced by this Note. The Borrower further expressly
warrants and represents that (i) no oral commitment has been made by the Bank to
extend or continue any credit to the Borrower or any party other than as
expressly stated herein or in those certain documents executed in connection
herewith, (ii) no representation or agreement has been made by or with the Bank,
or any employee, agent or broker of the Bank, to forebear or refrain in any way
from exercising any right or remedy in its favor hereunder or otherwise unless
expressly set forth herein, and (iii) the Borrower has not and will not rely on
any commitment to extend or continue any credit, nor on any agreement to
forebear or refrain from exercising rights or remedies unless such commitment or
agreement shall be in writing and duly executed by an authorized officer of the
Bank.
NOTICES: All notices, requests and other communications pursuant to this Note
shall be in writing, either by letter (delivered by hand or sent by certified
mail, return receipt requested) or telegram, addressed as follows:
(a) if to the Borrower:
Logimetrics, Inc.
121-03 Dupont Street
Plainview, New York 11803
Attention: Norman Phipps, President
(b) if to the Bank:
North Fork Bank
275 Broad Hollow Road
Melville, New York 11747
Attention: Joseph Walsh, Vice President
Any notice, request or communication hereunder shall be deemed to have
been given when deposited in the mails, postage prepaid, or in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
aforesaid. Any party may change the person or address to whom or which the
notices are to be given hereunder, but any such notice shall be effective only
when actually received by the party to whom it is addressed.
<PAGE>
IN WITNESS WHEREOF, the Borrower has signed this Note the 25th day of
April, 1997.
LOGIMETRICS, INC.
By: /s/Norman Phipps
__________________
Norman Phipps
President
STATE OF NEW YORK )
) ss.:
COUNTY OF SUFFOLK )
On this 25th day of April, 1997, before me personally came Norman
Phipps, to me known, who, being by me duly sworn, did depose and say that he has
an address at c/o LOGIMETRICS, INC., 121-03 Dupont Street, Plainview, New York
11803, that he is the President of LOGIMETRICS, INC., the corporation described
in, and which executed, the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
/s/Kevin E. Balfe
____________________________
NOTARY PUBLIC
Kevin E. Balfe
Notary Public: State of New York
No: 4804466
Qualified in Nassau County
Commission Expires February 28, 1999
<PAGE>
EXHIBIT "A"
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that:
1. The undersigned has performed and complied in all respects with the
agreements, covenants and conditions of those certain loan agreements dated
April 25, 1997 between North Fork Bank and the undersigned; and
2. On the date hereof, there exists no event of default or default as
defined in the aforementioned agreements, and no material adverse change has
occurred to the financial condition of the Borrower between April 25, 1997 and
the date hereof; and
3. The following information relating to the Borrowing Base as defined
in the agreement is true and accurate and represents fairly and completely the
status of the stated information as of the date hereof. Said calculations
accurately reflect the calculations of and limitations to said definitions as
defined in said agreements.
Eligible Inventory ________ x 50% ______
Eligible Accounts Receivable ________ x 80% ______
Total Eligible Inventory and Accounts Receivable
Less Outstanding Loan (A) ____________
Remaining Eligibility (B) ============
(A + B not to exceed the sum of $2,200,000 or
such maximum available as is defined herein)
LOGIMETRICS, INC.
By: _______________________
Norman Phipps
President
<PAGE>
[SCHEDULES OMITTED]
EXHIBIT 10.3
RESTATED AND AMENDED
GENERAL SECURITY AGREEMENT
The within is a restatement and amendment of that
certain Amended and Restated Security Agreement
originally made between Logimetics, Inc. and Apple Bank
for Savings dated May 19, 1992 and previously assigned
by Apple Bank for Savings to North Fork Bank pursuant
to an Assignment and Assumption Agreement dated
December 18, 1992; said agreement having been
previously restated and amended pursuant to a Restated
and Amended General Security Agreement dated November
18, 1993 and February 22, 1995, respectively and a
Further Restated and Amended General Security Agreement
dated March 7, 1996.
AGREEMENT made this ___ day of April, 1997 by the undersigned to
NORTH FORK BANK, having an office at 245 Love Lane, Mattituck, New York 11952
(the "Bank").
1. Definitions.
The term "Obligations" shall include all indebtedness, obligations,
liabilities, and guarantees of any kind of the undersigned to the Bank (and also
to others to the extent of participations or interests therein of the Bank), now
existing or hereafter arising, and whether direct or indirect, acquired
outright, conditionally or as collateral security from another, absolute or
contingent, joint or several, secured or unsecured, due or not due, contractual
or tortious, liquidated or unliquidated, arising by operation of law or
otherwise, whether or not of a nature presently contemplated by the parties or
subsequently agreed to by them.
The term "Collateral" shall include all personal property and fixtures
in which the undersigned has or shall have an interest (including, but not
limited to, all personal property and fixtures as described herein to be
acquired by the undersigned in connection with the acquisition of mmTech, Inc.),
now or hereafter existing or acquired, and wherever located, tangible or
intangible, including but not limited to all present and hereafter existing or
acquired accounts, accounts receivable, contract rights, general intangibles,
equipment, goods, inventory (raw materials, components, work-in process,
finished merchandise and packing and shipping materials), personal property made
available to the undersigned by the Bank (or its agent or bailee) pursuant to a
trust receipt or other security agreement the effect of which is to continue the
Bank's security interest therein, money, instruments, documents, chattel paper,
securities deposits, patents and patent rights, credits, claims and demands
against the Bank, and all proceeds, products, returns, additions, accessions and
substitutions of and to any of the foregoing.
All other terms used herein which are defined in the Uniform
Commercial Code of the State of New York shall have the meanings therein stated.
<PAGE>
2. Grant of Security Interest.
In consideration of the loan of (a) One Million Five Hundred
Twenty-Four Thousand Nine Hundred Eighty-Nine ($1,524,989) Dollars pursuant to a
Restated and Amended Revolving Credit Note dated of even date herewith and (b)
$640,000.04 pursuant to a Restated and Amended Term Note dated of even date
herewith extended by the Bank to the undersigned and of one or more loans,
advances, or other financial accommodations at any time made or extended by the
Bank to the undersigned, or to any person, firm, or corporation whose
obligations or liabilities are guaranteed at any time by the undersigned to the
Bank, the undersigned hereby grants to the Bank a valid and binding first
security interest in the Collateral, as security for the payment, performance,
and observance by the undersigned of the Obligations. The undersigned hereby
transfers and delivers to the Bank all Collateral which the Bank is required to
take possession of in order to perfect its security interest, and agrees to
transfer and deliver to the Bank all Collateral which the Bank is required to
take possession of in order to perfect its security interest therein, promptly
upon the acquisition by the undersigned after the date hereof of any interest in
such Collateral. The undersigned agrees that the Bank has sole discretion with
regard to the making of any loans, advances, or other financial accommodations
to the undersigned or any such other person, firm, or corporation, and that
nothing herein shall obligate the Bank with respect thereto.
3. Warranties and Agreements. The undersigned warrants and agrees
that:
(a) Collateral location and use. The undersigned's chief place of
business, its financial books and records relating to the Collateral, and the
Collateral, are located and/or based at the address set forth at the foot of
this Agreement. The undersigned will not relocate any of the Collateral from
said location without the prior written consent of the Bank. The Collateral was
and/or will be acquired by the undersigned solely for use in its business at
said location, and the Collateral is not and shall not be used for any other
use.
(b) Existing liens, security interests, and encumbrances. Except
for the security interest granted herein, the undersigned is the legal owner of
all interest in the Collateral and shall keep the Collateral free and clear of
liens, security interests, or encumbrances, and will not assign, sell, mortgage,
lease, transfer, pledge, grant a security interest in, encumber or otherwise
dispose of or abandon any part or all of the Collateral without the prior
written consent of the Bank, except for (i) the sale from time to time in the
ordinary course of business of the undersigned of such items of Collateral as
may constitute all or part of the business inventory of the undersigned and (ii)
that certain subordinate security interests granted or to be granted by the
undersigned to (A) the holder(s) of (i) the Borrower's twelve (12%) percent
Convertible Senior Subordinated Debentures (the "Debentures") (B) Charles Brand,
and (C) MBF Capital Corp. (or other entity to designated in writing by MBF
Capital Corp.). Any default by the undersigned under or with respect to any such
security instrument or obligations secured thereby shall constitute an event of
default under these Agreement.
(c) Taxes, compliance with laws. The undersigned will make due
and timely payment or deposit of all taxes, assessments, or contributions
required by law which may
<PAGE>
be lawfully levied or assessed with respect to any of the Collateral and will
execute and deliver to the Bank, on demand, appropriate certificates attesting
to the timely payment or deposit of all such taxes, assessments or
contributions. The undersigned will use the Collateral for lawful purposes only,
and with all reasonable care and caution, and in conformity with all applicable
laws, ordinances and regulations. At its own cost and expense the undersigned
will keep the Collateral in proper order, repair, and condition.
(d) Inspection. The Bank shall at all times have free access to
and the right of inspection of any part or all of the Collateral and any records
of the undersigned (and the right to make extracts from such records), and the
undersigned shall deliver to the Bank the originals or true copies of such
papers and instruments relating to any or all of the Collateral as the Bank may
request at any time.
(e) Collateral to remain personal property. The Collateral is now
and shall be and remain personal property, notwithstanding the manner in which
the Collateral or any part thereof shall be now or hereafter affixed, attached
or annexed to real property. The undersigned will obtain and deliver to the Bank
such instruments as may be requested by the Bank pursuant to which any person
with an interest in any real estate upon which any part of all of the tangible
Collateral is now or may hereafter be located consents to the security interest
granted herein, disclaims any interest in the tangible Collateral as fixtures,
waives in favor of the Bank all right to distrain or levy upon the Collateral
for rent due or to become due from the undersigned, and authorizes the Bank to
enter upon any premises of the undersigned at any time and to remove the
Collateral.
(f) Insurance. The undersigned, at its own cost and expense, will
insure the Collateral in the name of and with loss or damage payable to the
undersigned and the Bank, as their interests may appear, against loss or damage
by fire and extended coverage, theft, burglary, pilferage, bodily injury and
such other risks as the Bank may require, with such companies and in such
amounts as may be required by the Bank at any time in its sole discretion. All
such policies shall provide for ten days' minimum written notice of cancellation
to the Bank, and the undersigned shall deliver to the Bank the original or
duplicate policies, or certificates or other evidence satisfactory to the Bank,
of compliance with the foregoing insurance provisions. The undersigned assumes
all responsibility and liability arising from the use of the Collateral, either
for negligence or otherwise, by whomsoever used, employed or operated, and will
defend, indemnify and save the Bank harmless from any and all claim, loss or
damage to persons or property caused by the Collateral or by its use and
operation.
(g) Maintain security interests, reports. In addition to all
other provisions hereof, the undersigned will from time to time at the sole
expense of the undersigned, perform any and all steps and/or procedures
requested by the Bank at any time to perfect and maintain the Bank's security
interest in the Collateral, including but not limited to transferring any part
or all of the Collateral to the Bank or any nominee of the Bank (including
warehouses), placing and maintaining signs, appointing custodians, executing and
filing financing statements and notices of lien, delivering to the Bank
documents of title representing the Collateral or evidencing the Bank's security
interest in any other manner acceptable to and requested by the
<PAGE>
Bank. If requested by the Bank, the undersigned will from time to time execute
and deliver to the Bank assignments of accounts in form satisfactory to the
Bank, but should the undersigned fail in any one or more instances to execute
and deliver any such assignments of accounts, such failure shall not constitute
a waiver or limitation of the within security interest in all of the Collateral
(including said accounts) which shall remain in full force and effect.
At the request of the Bank, the undersigned shall deliver to the
Bank all original documents evidencing the sale and delivery of merchandise or
the performance of labor or services which created any account, including but
not limited to all original contracts, orders, invoices, bills of lading,
warehouse receipts and shipping receipts, together with all collateral security
and/or guarantees or other contracts of suretyship held by the undersigned in
respect of the accounts, together with assignments of any of the foregoing where
requested by the Bank.
If at any time any part or all of the Collateral shall be in the
possession or control of any of the undersigned's bailees, agents, or
processors, the undersigned will notify such persons of the Bank's security
interest therein and upon the Bank's request, the undersigned will instruct such
persons to hold all such Collateral for the Bank's account and subject to the
Bank's instructions and the undersigned will obtain and deliver to the Bank such
instrument(s) requested by the Bank pursuant to which such persons consent to
the security interest granted herein, disclaim any interest in the Collateral,
waive in favor of the Bank all liens upon and claims to the Collateral or any
part thereof, and authorize the Bank at any time to enter upon and remove the
Collateral from any premises upon which the same may be located.
(h) Further documentation. The undersigned shall, at its sole
cost and expense, simultaneously herewith and upon the request of the Bank, at
any time and from time to time, execute and deliver to the Bank one or more
financing statements pursuant to the Uniform Commercial Code, and any other
papers, documents or instruments required by the Bank in connection herewith.
The undersigned hereby authorizes the Bank to execute and file, at any time and
from time to time, on behalf of the undersigned, one or more financing
statements with respect to all or any part of the Collateral, the filing of
which is advisable, in the sole judgment of the Bank, pursuant to the law of the
State of New York, although the same may have been executed only by the Bank as
secured party. The undersigned also irrevocably appoints the Bank, its agents,
representatives and designees, as the undersigned's agent and attorney-in-fact,
to execute and file, from time to time, on behalf of the undersigned, one or
more financing statements with respect to all or any part of the Collateral.
(i) Bona fide accounts. The undersigned warrants to the Bank that
each of the debtors named in any account has legal capacity to contract and is
indebted to the undersigned in the amount indicated in the books and records of
the undersigned and in any assignments executed and delivered to the Bank; that
each account is bona fide and arises out of the sale and delivery of merchandise
and/or the performance of labor or services.
(j) Collection of accounts. Upon an event of default as
hereinafter defined, where the Bank so requests, all bills and statements sent
to any customer or any account
<PAGE>
shall state that said account has been assigned to the Bank and is payable only
to the Bank. The Bank may endorse the name of the undersigned on all notes,
checks, drafts, bill of exchange, money orders, commercial paper of any kind
whatsoever, and any other document received in payment of or in connection with
accounts or otherwise, and the Bank or any officer or employee thereof, is
hereby irrevocably constituted and appointed the agent and attorney-in-fact for
the undersigned for the foregoing purpose, and to receive, open and dispose of
all mail addressed to the undersigned, and to notify the Post Office authorities
to change the address for the delivery of mail addressed to the undersigned to
such address(es) as the Bank may designate. Any bank or trust company is hereby
irrevocably authorized to permit the Bank to deposit the proceeds of accounts so
endorsed and to withdraw the same without inquiry as to the circumstances of
endorsement or as to the purpose of withdrawal, and without being required to
answer for the application by the Bank of the monies so withdrawn. The proceeds
of accounts, received by the Bank, shall be applied to the Obligations but shall
not constitute payment thereof until so applied, it being agreed that the order
and method of such application shall be in the discretion of the Bank.
(k) Settlement of accounts. The Bank is authorized and empowered
to compromise or extend the time for payment of any of the Collateral, for such
amounts and upon such terms as the Bank may determine, and to accept the return
of goods represented by any of the Collateral, all without notice to or consent
by the undersigned and without discharging or affecting the obligations of the
undersigned hereunder.
(1) Payment of debtor's obligations, reimbursement. The Bank may
in its discretion, for the account and expense of the undersigned (i) pay any
amount or do any act which is required to be paid or done by the undersigned
under this Agreement (including but not limited to the repair and insuring of
Collateral and payment of taxes) and which the undersigned fails to do or pay as
herein required, (ii) pay any sums due and owing by the undersigned to the
landlord(s) of any premises where any Collateral is located, and (iii) pay or
discharge any lien, security interest or encumbrance in favor of anyone other
than the Bank which covers or affects the Collateral or any part thereof. The
undersigned will promptly reimburse and pay the Bank for any and all sums,
costs, fees, and expenses which the Bank may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
priority thereof or in enforcing payment of the Obligations or in discharging
any lien or claim against the Collateral or any part thereof or in the exchange,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof or for the care of the Collateral, by litigation or otherwise,
and with respect to either the undersigned, account debtors, guarantors of the
undersigned and other persons, including but not limited to all court costs,
collection charges, travel, and reasonable attorneys' fees (not less than 15
percent of the outstanding Obligations where permitted by applicable law) and
all reasonable expenses (including reasonable counsel fees) incident to the
enforcement of payment of any obligations of the undersigned by any action or
participation in, or in connection with, a case or proceeding under chapters 7,
11 or 13 of the Bankruptcy Code, or any successor statute thereto. All sums paid
and all costs, expenses and liabilities incurred by the Bank pursuant to the
foregoing provisions, together with interest thereon at the rate of twelve (12%)
percent per annum, shall be added to and become part of the Obligations secured
hereby.
<PAGE>
4. Transfer of Collateral.
Upon an event of default as hereinafter defined, at its discretion the
Bank may, whether or not any of the Obligations be due, in its name or in the
name of the undersigned or otherwise, notify any account debtor or the obligor
on any instrument to make payment to the Bank, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for, or make any compromise or settlement deemed desirable by the
Bank with respect to, any of the Collateral, but shall be under no obligation to
do so, and/or the Bank may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the undersigned. At any time the Bank may
assign, transfer and/or deliver to any transferee of any of the Obligations any
or all of the Collateral, and thereafter the Bank shall be fully discharged from
all responsibility with respect to the Collateral so assigned, transferred
and/or delivered. Such transferee shall be vested with all the powers and rights
of the Bank hereunder, with respect to such Collateral, but the Bank shall
retain all rights and powers hereby given with respect to any of the Collateral
not so assigned, transferred or delivered.
5. Defaults.
The occurrence of any one or more of the following events shall
constitute an event of default by the undersigned under this Agreement:
(a) if at any time the Bank shall, in its reasonable discretion,
consider the Collateral or any part thereof unsatisfactory or insufficient, and
the undersigned shall fail on demand furnish other Collateral or make payment on
account, satisfactory to the Bank;
(b) if the undersigned or any obligor, maker, endorser, acceptor,
surety or guarantor of, or any other party to any of the Obligations or the
Collateral (the same, including the undersigned, being collectively referred to
herein as "Obligors") shall default in any way under the Obligations (or of any
instruments evidencing the same) or of any terms or conditions of this Agreement
or the Collateral;
(c) if any warranty, representation or statement of fact made
herein or furnished to the Bank at any time by or on behalf of the undersigned
proves to have been false in any material respect when made or furnished;
(d) in the event of loss, theft, substantial damage or
destruction of any of the Collateral, or the making of any levy on, seizure or
attachment of any of the Collateral;
(e) if the undersigned shall execute or file a certificate or
other instrument evidencing the legal change of name of the undersigned without
furnishing the Bank at least ten days' prior written notice thereof;
<PAGE>
(f) in the event any of the Obligors shall be dissolved;
(g) if any of the Obligors shall be party to a merger or
consolidation where said Obligor is not the surviving entity without the prior
written consent of the Bank;
(h) if any of the Obligors shall fail to maintain its corporate
existence in good standing;
(i) if any of the Obligors shall default in the observance or
performance of any term, covenant or agreement contained herein or in any
instrument, document or agreement delivered by any of the Obligors to the Bank;
(j) if any of the Obligors shall make or send notice of an
intended bulk transfer, or fail, after demand, to furnish any financial
information or to permit the inspection of books or records of account;
(k) The Obligor makes an assignment for the benefit of creditors
or admits in writing its inability to pay its debts generally as they become
due; or an order, judgment or decree is entered adjudicating the Obligor as
bankrupt or insolvent; or any order for relief with respect to the Obligor is
entered under the United States Bankruptcy Code; or the Obligor petitions or
applies to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Obligor or of any substantial part of the assets of the
Obligor, or commences any proceeding relating to the Borrower under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Obligor
and either (i) the Obligor by any act indicates its approval thereof, consents
thereto, or acquiesces therein or (ii) such petition, application or proceeding
is not dismissed within sixty (60) days;
(1) if any of the Obligors shall voluntarily or otherwise suspend
or interrupt the transaction of its usual business;
(m) if any Order is entered by any court or tribunal, at law or
in equity, by or against any of the Obligors for the appointment of any receiver
or any trustee for any of the Obligors and said Order is not discharged within
sixty (60) days from the entry thereof;
(n) if any governmental authority or any court or other tribunal
shall take possession or jurisdiction of any substantial part of the property
of, or assume control over the affairs or operations of, or a receiver shall be
appointed of, any substantial part of the property of any of the Obligors and
said action is not discharged within sixty (60) days.
6. Remedies on Default
Upon the occurrence of any one or more of the aforementioned events of
default or at any time thereafter, the Bank may, without notice to or demand
upon the undersigned,
<PAGE>
declare any or all of the Obligations immediately due and payable and the Bank
shall have the following rights and remedies in addition to all rights and
remedies of a secured party under the Uniform Commercial Code or other
applicable statute or rule, in any jurisdiction in which enforcement is sought,
all such rights and remedies being cumulative and not exclusive:
(a) Collateral. The Bank may, at any time and from time to time,
with or without process of law and with or without the aid and assistance of
others, enter upon any premises in which the Collateral or any part thereof may
be located and, without resistance or interference by the undersigned, take
possession of the Collateral; and/or dispose of all or any part of the
Collateral on any premises of the undersigned; and/or require the undersigned to
assemble and make available to the Bank all or any part of the Collateral at any
place and time designated by the Bank which is reasonably convenient to the Bank
and the undersigned; and/or remove all or any part of the Collateral from any
premises on which any part thereof may be located for the purpose of effecting
preservation or sale or other disposition thereof; and/or sell, resell, lease,
assign and deliver, or otherwise dispose of, the Collateral or any part thereof
in its existing condition or following any commercially reasonable preparation
or processing, at public or private proceedings, in one or more parcels at the
same or different times with or without having the Collateral at the place of
sale or other disposition for cash, upon credit or for future delivery, and in
connection therewith the Bank may grant options, at such place or places and
time or times and to such persons, firms or corporations as the Bank deems best,
and without demand for performance or any notice or advertisement to the
undersigned of the place and time of any public sale or of the place and time
after which any private sale or other disposition may be made, and/or liquidate
or dispose of the Collateral or any part thereof in any other commercially
reasonable manner.
If any of the Collateral is sold by the Bank upon credit or for
future delivery, the Bank shall not be liable for the failure of the purchaser
to purchase or pay for the same and, in the event of any such failure, the Bank
may resell such Collateral. The undersigned hereby waives all equity and right
of redemption. The Bank may buy any part or all of the Collateral at any public
sale and if any part of all of the Collateral is of a type which is the subject
of widely distributed standard price quotations the Bank may buy at private
sale, all free from any equity or right of redemption which is hereby waived and
released by the undersigned, and the Bank may make payment therefor (by
endorsement without recourse) in notes of the undersigned to the order of the
Bank in lieu of cash to the amount then due thereon which the undersigned hereby
agrees to accept.
The Bank may apply the cash proceeds actually received from any
sale or other disposition to the reasonable expenses of retaking, holding,
preparing for sale, selling, leasing and the like, to reasonable attorney's fees
(not less than 15 percent of the outstanding Obligations where permitted by law)
if this Agreement or any of the Obligations is referred to an attorney for
enforcement, to all legal expenses, court costs, collection charges, travel and
other expenses which may be incurred by the Bank in attempting to collect the
Obligations or to enforce this Agreement and realize upon the Collateral, or in
the prosecution or defense of any action or proceeding related to the subject
matter of this Agreement; and then to the Obligations in such order and as to
principal or interest as the Bank may in its sole discretion determine; and the
<PAGE>
undersigned shall at all times be and remain liable and, after crediting the net
proceeds of sale or other disposition as aforesaid, will pay the Bank on demand
any deficiency remaining, including interest thereon and the balance of any
expenses at any time unpaid, with any surplus to be paid to the undersigned,
subject to any duty of the Bank imposed by law to the holder of any subordinate
security interest in the Collateral known to the Bank.
(b) Bank deposits, balances, etc. The Bank may appropriate, set
off and apply for the payment of any or all of the Obligations, any and all
balances, sums, property, claims, credits, deposits, accounts, reserves,
collections, drafts, notes, or other items or proceeds of the Collateral in or
coming into the possession of the Bank or its agents and belonging or owing to
the undersigned, without notice to the undersigned, and in such manner as the
Bank may in its sole discretion determine.
(c) Proceeds. Any of the proceeds of the Collateral received by
the undersigned shall not be commingled with other property of the undersigned,
but shall be segregated, held by the undersigned in trust for the Bank as the
exclusive property of the Bank, and the undersigned will immediately deliver to
the Bank the identical checks, moneys or other proceeds of Collateral received,
and the Bank shall have the right to endorse the name of the undersigned on any
and all checks, or other forms of remittance received, where such endorsement is
required to effect collection. The undersigned hereby designates, constitutes
and appoints the Bank and any designee or agent of the Bank as attorney-in-fact
of the undersigned, irrevocably and with power of substitution, with authority
to receive, open and dispose of all mail addressed to the undersigned, to notify
the Post Office authorities to change the address for delivery of mail addressed
to the undersigned, to such address as the Bank may designate; to endorse the
name of the undersigned on any notes, acceptances, checks, drafts, money orders
or other evidences of payment or proceeds of the Collateral that may come into
the Bank's possession; to sign the name of the undersigned on any invoices,
documents, drafts against account debtors of the undersigned, assignments,
requests for verification of accounts and notices to debtors of the undersigned;
to execute any endorsements, assignments, or other instruments of conveyance or
transfer; and to do all other acts and things necessary and advisable in the
sole discretion of the Bank to carry out and enforce this Agreement. All acts of
said attorney or designee shall not be liable for any acts of commission or
omission nor for any error of judgment or mistake of fact or law. This power of
attorney being coupled with an interest is irrevocable while any of the
Obligations shall remain unpaid.
7. Liability Disclaimer.
Under no circumstances whatsoever shall the Bank be deemed to assume
any responsibility for or obligation or duty with respect to any part or all of
the Collateral, of any nature or kind whatsoever, or any matter or proceedings
arising out of or relating thereto. The Bank shall not be required to take any
action of any kind to collect or protect any interest in the Collateral,
including but not limited to any action necessary to preserve its or the
undersigned's rights against prior parties to any of the Collateral. The Bank
shall not be liable or responsible in any way for the safekeeping, care or
custody of any of the Collateral, or for any loss or damage thereto, or for any
diminution in the value thereof, or for any act or default of any agent or
bailee
<PAGE>
of the Bank or the undersigned, or of any carrier, forwarding agency or other
person whomsoever, or for the collection of any proceeds, but the same shall be
at the undersigned's sole risk at all times. The undersigned hereby releases the
Bank from any claims, causes of action and demands at any time arising out of or
with respect to this Agreement or the Obligations, and any actions taken or
omitted to be taken by the Bank with respect thereto, and the undersigned agrees
to defend and hold the Bank harmless from and with respect to any and all such
claims, causes of action and demands. The Bank's prior recourse to any part of
all of the Collateral shall not constitute a condition of any demand for payment
of the Obligations or of any suit or other proceeding for the collection of the
Obligations.
8. Nonwaiver.
No failure or delay on the part of the Bank in exercising any of its
rights and remedies hereunder or otherwise shall constitute a waiver thereof,
and no single or partial waiver by the Bank of any default or other right or
remedy which it may have shall operate as a waiver of any other default, right
or remedy or of the same default, right or remedy on a future occasion.
9. Waivers by Debtor.
The undersigned hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all other notices and demands whatsoever (except as
expressly provided herein) whether or not relating to such instruments. In the
event of any litigation at any time arising with respect to any matter connected
with this Agreement or the Obligations, the undersigned hereby waives the right
to a trial by jury and the undersigned hereby waives any and all defenses,
rights of setoff and rights to interpose counterclaims of any nature.
10. Modification.
No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Agreement and to the provision so
modified or limited, and executed by the party to be charged.
11. Authorization.
The execution and delivery of this Agreement has been authorized by
the Board of Directors of the undersigned and by any necessary vote or consent
of stockholders of the undersigned.
12. Binding Effect.
This Agreement and all Obligations of the undersigned hereunder shall
be binding upon the successors or assigns of the undersigned, and shall,
together with the rights and remedies of the Bank hereunder, inure to the
benefit of the Bank and its successors, endorsees and assigns.
<PAGE>
13. Severability
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
IN WITNESS WHEREOF, the undersigned has executed or caused this
Agreement to be executed in the State of New York on April , 1997.
LOGIMETRICS, INC.
/s/Norman Phipps
By:______________________
Norman Phipps
President
The chief place of business, the location of the books and records
pertaining to the Collateral and the location of the Collateral of Logimetrics,
Inc. is 121-03 Dupont Street, Plainview, New York 11803 and 20 Meridian Road,
Eatontown, New Jersey 07724.
EXHIBIT 10.4
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated July 29, 1997, by and among LogiMetrics,
Inc., a Delaware corporation (the "Company"), and the individuals and entities
listed on the signature pages hereto (collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, on the terms and subject to the conditions set forth herein,
the Company desires to sell to the Purchasers, and the Purchasers desire to
purchase from the Company, (i) $2,750,000 in aggregate principal amount of the
Company's Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures due
July 29, 1999 (the "Debentures") convertible into an aggregate of 6,600,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), of the
Company, subject to adjustment in certain circumstances (the Debentures to be in
substantially the form of Exhibit A hereto), (ii) Common Stock Purchase Warrants
- - Series G (the "Series G Warrants") exercisable at any time prior to July 29,
2004 to purchase an aggregate of 7,350,000 shares of Common Stock, subject to
adjustment in certain circumstances, at an exercise price of $.50 per share
(each Series G Warrant to be in substantially the form of Exhibit B hereto),
(iii) Common Stock Purchase Warrants - Series H (the "Series H Warrants")
exercisable at any time prior to July 29, 2004 to purchase an aggregate of
1,100,000 shares of Common Stock, subject to adjustment in certain
circumstances, at an exercise price of $.60 per share (each Series H Warrant to
be in substantially the form of Exhibit C hereto), and (iv) Common Stock
Purchase Warrants - Series I (the "Series I Warrants" and, together with the
Series G Warrants and the Series H Warrants, the "Warrants") exercisable at any
time prior to July 29, 2004 to purchase an aggregate of 550,000 shares of Common
Stock, subject to adjustment in certain circumstances, at an exercise price of
$1.125 per share (each Series I Warrant to be in substantially the form of
Exhibit D hereto); and
WHEREAS, the Company is a party to an amended and restated credit
facility (the "Credit Facility") with North Fork Bank (the "Bank") pursuant to
which, among other things, the Bank has made available to the Company up to
$2,200,000 in revolving credit loans maturing on April 30, 1998 (unless extended
by the Bank) and a $640,000.04 term loan maturing on December 31, 1998; and
WHEREAS, the Credit Facility is secured by a perfected, first priority
security interest in all of the assets of the Company; and
WHEREAS, the Company has previously entered into a Unit Purchase
Agreement, dated March 7, 1996 (the "Cerberus Purchase Agreement"), with
Cerberus Partners, L.P. ("Cerberus") pursuant to which the Company issued to
Cerberus $1,500,000 in aggregate principal amount of its 12% Convertible Senior
Subordinated Debentures due December 31, 1998 (the "Old Cerberus Debentures")
convertible into an aggregate of 2,542,380 shares of Common Stock, subject to
adjustment in certain circumstances, and Common Stock Purchase Warrants - Series
C (the "Cerberus Warrants") exercisable at any time prior to March 7, 2003 to
purchase an aggregate of
<PAGE>
2,542,380 shares of Common Stock, subject to adjustment in certain
circumstances, at an exercise price of $.01 per share; and
WHEREAS, in connection with certain waivers granted by Cerberus in
respect of the Old Cerberus Debentures, the Company has issued to Cerberus
certain notes in the aggregate principal amount of $45,000 (the "Old Cerberus
Interest Notes"); and
WHEREAS, in connection with the transactions contemplated hereby,
Cerberus has agreed to exchange (i) the Old Cerberus Debentures for $1,500,000
in aggregate principal amount of the Company's Amended and Restated Class B 13%
Convertible Senior Subordinated Debentures due July 29, 1999 (the "Cerberus
Debentures"), and (ii); the Old Cerberus Interest Notes for $45,000 in aggregate
principal amount of the Company's 13% Senior Subordinated Interest Notes (the
"Cerberus Interest Notes");
WHEREAS, pursuant to the terms of a Security Agreement, dated March 7,
1996 (the "Old Security Agreement"), the Cerberus Debentures and the Cerberus
Interest Notes are secured by a perfected security interest in all of the assets
of the Company, junior only to the security interest securing the Credit
Facility (and any authorized replacement thereof); and
WHEREAS, the Debentures and all Accrued Interest Debentures (as
defined below) are to rank pari passu with the Cerberus Debentures, the
additional securities issued in lieu of cash interest otherwise payable on the
Cerberus Debentures (the "Cerberus Accrued Interest Debentures") and the
Cerberus Interest Notes and are to be secured ratably with such Cerberus
Debentures, Cerberus Accrued Interest Debentures and Interest Notes (and any
authorized replacement thereof); and
WHEREAS, in order to secure the Debentures, the Accrued Interest
Debentures, the Cerberus Debentures, the Cerberus Accrued Interest Debentures
and the Interest Notes, the Company and Cerberus have entered into an amendment
and restatement of the Old Security Agreement (as amended and restated, the
"Security Agreement"); and
WHEREAS, the Company, the Purchasers and Charles S. Brand have entered
into a Stockholders Agreement of even date herewith (the Stockholders
Agreement), pursuant to which, among other things, the Purchasers and Mr. Brand
have agreed to certain restrictions on the transfer of shares of Common Stock
beneficially owned by them and to certain provisions regarding the management of
the Company.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and intending to be legally bound, the parties hereto agree as follow:
<PAGE>
Article I
Purchase and Sale of Securities
Section 1.1. Purchase and Sale of Securities. Upon the terms and
subject to the conditions of this Agreement, (a) on the date hereof the Company
shall issue and sell to the Purchasers (other than Broadband, as defined below),
and such Purchasers shall purchase from the Company, (i) $2,535,942 in aggregate
principal amount of the Debentures at a purchase price of $2,535,942, (ii)
Series G Warrants to purchase an aggregate of 6,866,129 shares of Common Stock
at an at an aggregate purchase price of $480,629, (iii) Series H Warrants to
purchase an aggregate of 1,074,114 shares of Common Stock at an aggregate
purchase price of $64,447, and (iv) Series I Warrants to purchase an aggregate
of 537,057 shares of Common Stock at an aggregate purchase price of $21,482 for
a total aggregate purchase price of $3,102,500 (the "Initial Purchase Price"),
and (b) at any time prior to 21 days from the date of this Agreement, unless
extended by the Company (the "Broadband Termination Date") upon not less than
two business days' prior written notice given by Broadband to the Company, the
Company shall issue and sell to MBF Broadband Systems, L.P. ("Broadband") (i)
$214,058 in aggregate principal amount of the Debentures at a purchase price of
$214,058, plus accrued interest on the Debentures from the date hereof, (ii)
Series G Warrants to purchase an aggregate of 483,871 shares of Common Stock at
an aggregate purchase price of $33,871, (iii) Series H Warrants to purchase an
aggregate of 25,886 shares of Common Stock at an aggregate purchase price of
$1,553, and (iv) Series I Warrants to purchase an aggregate of 12,943 shares of
Common Stock at an aggregate purchase price of $518 for a total aggregate
purchase price of $250,000 plus accrued interest on the Debentures from the date
hereof (the "Broadband Purchase Price" and, collectively, with the Initial
Purchase Price, the "Purchase Price"). The amount of Debentures and Warrants
(collectively, the "Securities") to be purchased by each Purchaser pursuant to
this Section 1.1 and the aggregate Purchase Price allocable to each Purchaser is
set forth on Exhibit E attached hereto. The Securities to be purchased by
Broadband pursuant to Section 1.1(b) hereof are hereinafter referred to as the
"Broadband Securities."
Section 1.2. Closing. The closing of the transactions contemplated by
Section 1.1(a) above (the "First Closing") shall take place at the offices of
the Company at 10:00 a.m. on the date hereof, or at such other time and place as
the parties hereto may mutually agree. The time and date of the First Closing is
hereinafter referred to as the "First Closing Date." At the First Closing, the
Purchasers (other than Broadband) shall pay the Initial Purchase Price in
immediately available funds by wire transfer to an account previously designated
by the Company; provided, however, that MBF Capital Corp. ("MBF") may pay up to
$35,000 of the Initial Purchase Price otherwise payable by it by delivering to
the Company a promissory note in such amount in form and substance satisfactory
to the Company. In exchange for the payment of the Initial Purchase Price, the
Company shall execute, issue and deliver to the Purchasers the Securities to be
purchased by them at the First Closing registered in the name of the respective
Purchasers as specified in Exhibit E attached hereto.
The closing of the transactions contemplated by Section 1.1(b) above
(the "Second Closing") shall take place at the offices of the Company at 10:00
a.m. on or prior to the
<PAGE>
Broadband Termination Date on the date set forth in the notice provided by
Broadband to the Company pursuant to Section 1.1(b) hereof, or at such other
time and place as the parties hereto may mutually agree. The time and date of
the Second Closing is hereinafter referred to as the "Second Closing Date." At
the Second Closing, Broadband shall pay the Broadband Purchase Price in
immediately available funds by wire transfer to an account previously designated
by the Company. In exchange for the payment of the Broadband Purchase Price, the
Company shall execute, issue and deliver to Broadband the Broadband Securities
registered in the name of Broadband. In addition, on the Second Closing Date,
the Company shall provide to Broadband updates of the various schedules to this
Agreement so that the representations and warranties of the Company set forth
herein shall be true and complete in all material respects as of the Second
Closing Date. The Company also shall deliver to Broadband the Closing documents
referred to in Section 6.1(a), (b) and (h), in each case dated the Option
Closing Date.
Section 1.3. Non-Purchase by Broadband. If the Second Closing does not
occur on or prior to the Broadband Termination Date, Broadband shall have no
right to purchase the Broadband Securities and the Company shall have no
obligation to sell the Broadband Securities to Broadband. In such event, the
Company shall give prompt notice to Cramer Rosenthal McGlynn, Inc. ("CRM") on
behalf of the Purchasers other than Broadband (the "Other Purchasers") that
Broadband did not purchase the Broadband Securities. For up to 10 days following
receipt of such notice by CRM, the Other Purchasers shall have the right to
purchase the Broadband Securities in exchange for the payment of the Broadband
Purchase Price, which right may be exercised in whole but not in part. In the
event that the Other Purchasers wish to purchase the Broadband Securities, CRM,
on behalf of the Other Purchasers, shall provide irrevocable written notice
thereof to the Company prior to the expiration of such 10-day period, which
notice shall specify the date, which shall not be less than two nor more than
five business days from the date of such notice, on which the Other Purchasers
will purchase the Broadband Securities (the "Interim Closing Date"). Upon
delivery of such notice, the Other Purchasers shall become irrevocably obligated
to purchase the Broadband Securities on the date specified in such notice. The
closing of the transactions contemplated by this Section 1.3 (the "Interim
Closing") shall take place at the offices of the Company at 10:00 a.m. on the
Interim Closing Date. On the Interim Closing Date, the Company shall deliver to
the Other Purchasers the Broadband Securities in such amounts and registered in
the names of the respective Other Purchasers as they may specify against receipt
from the Other Purchasers of the Broadband Purchase Price in immediately
available funds by wire transfer to an account previously designated by the
Company. In addition, on the Interim Closing Date, the Company shall provide to
the Other Purchasers purchasing the Broadband Securities updates of the various
schedules to this Agreement so that the representations and warranties of the
Company set forth herein shall be true and complete in all material respects as
of the Option Closing Date. The Company shall re-deliver to the Other Purchasers
purchasing the Broadband Securities the Closing documents referred to in Section
6.1(a), (b) and (h), in each case updated to the Interim Closing Date.
Notwithstanding the foregoing, Broadband shall have no liability to the Company
or any Other Purchaser in the event that Broadband does not purchase the
Broadband Securities.
Section 1.4. Optional Purchase. The Company hereby grants to the
Purchasers the option (the "Option"), exercisable in whole or in part at any
time during the nine-month period
<PAGE>
immediately following the date hereof (the "Exercise Period"), to purchase up to
(i) $833,333 in aggregate principal amount of the Debentures, (ii) Series G
Warrants to purchase an aggregate of 2,000,000 shares of Common Stock at an
aggregate purchase price of $140,000, (iii) Series H Warrants to purchase an
aggregate of 333,333 shares of Common Stock at an aggregate purchase price of
$20,000, and (iv) Series I Warrants to purchase an aggregate of 166,667 shares
of Common Stock at an aggregate purchase price of $6,667 (collectively, the
"Additional Securities") for an aggregate purchase price of $1,000,000 (the
"Option Purchase Price"). The Additional Securities shall be allocated to each
Purchaser as specified on Exhibit F attached hereto. The Option shall not be
transferable by any Purchaser except that a Purchaser may assign part or all of
its rights under the Option to any other Purchaser. Notwithstanding the
foregoing, in the event that Broadband does not purchase the Broadband
Securities, then Broadband shall not be entitled to purchase any Additional
Securities pursuant to the Option. The Option may only be exercised on one
occasion during the Exercise Period. In the event that the Purchasers wish to
exercise the Option, CRM on behalf of the Purchasers shall provide the Company
with written notice thereof at any time during the Exercise Period, which notice
shall specify the amount of Additional Securities to be purchased and the date
on which the closing of such purchase shall occur (the "Option Closing Date"),
which date shall be not less than five nor more than 10 business days after the
date of such notice. Any notice given by CRM on behalf of the Purchasers
pursuant to this Section 1.4 shall be irrevocable; provided, however, that the
Purchasers shall have the right to change the amount of Additional Securities to
be purchased by them at any time prior to the close of business on the second
business day immediately preceding the Option Closing Date. The closing of the
transactions contemplated by this Section 1.4 (the "Option Closing") shall take
place at the offices of the Company at 10:00 a.m. on the Option Closing Date. On
the Option Closing Date, the Company shall deliver to the Purchasers the
Additional Securities in such amounts and registered in the names of the
respective Purchasers as they may specify against receipt from the Purchasers of
the Option Purchase Price in immediately available funds by wire transfer to an
account previously designated by the Company. In addition, on the Option Closing
Date, the Company shall provide to the Purchasers purchasing Additional
Securities updates of the various schedules to this Agreement so that the
representations and warranties of the Company set forth herein shall be true and
complete in all material respects as of the Option Closing Date. The Company
shall re-deliver to the Purchasers purchasing Additional Securities the Closing
documents referred to in Section 6.1(a), (b) and (h), in each case updated to
the Option Closing Date.
<PAGE>
Article II
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
Section 2.1. Organization and Qualification. Each of the Company and
mmTech, Inc. ("mmTech") is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to own or lease its property and assets and to
carry on its business as presently conducted, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified and in good standing would result in a
material adverse change in the business, financial condition, results of
operations or prospects (financial and other) of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Change"). The Company has
previously provided to the Purchaser true and complete copies of (i) its
Certificate of Incorporation of and all amendments thereto and (ii) its by-laws
as currently in effect. Other than mmTech and LogiMetrics FSB, Inc., the Company
does not own any material amount of any shares of stock of any corporation or
any equity interest in a partnership, joint venture or other business entity,
and the Company does not control or have the right (whether or not presently
exercisable) to control any other corporation, partnership, joint venture or
other business entity by means of ownership, management contract or otherwise.
Section 2.2. Authorization. (a) The Company has the corporate power
and authority to execute and deliver this Agreement, the Security Agreement, the
Stockholders Agreement, the Debentures and the Warrants (collectively, the
"Transaction Documents") and to perform its obligations hereunder and
thereunder, all of which have been duly authorized by all requisite corporate
action. Each of the Agreement, the Stockholders Agreement and the Security
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) The Debentures have been duly authorized and, when issued in
accordance with the terms hereof, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The Company has sufficient authorized and unissued shares of
Common Stock reserved for issuance upon the conversion of the Debentures in
accordance with their terms. The shares of Common Stock issuable upon the
conversion of the Debentures will, when issued in accordance with the terms of
the Debentures, be duly authorized, validly issued, fully paid and
non-assessable.
(c) The additional Debentures issued in payment of interest accrued on
the Debentures (the "Accrued Interest Debentures") have been duly authorized
and, when issued in accordance with the terms of the Debentures, will have been
duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, enforceable in
<PAGE>
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles. The
Company has sufficient authorized and unissued shares of Common Stock reserved
for issuance upon the conversion of the Accrued Interest Debentures in
accordance with their terms. The shares of Common Stock issuable upon the
conversion of the Accrued Interest Debentures will, when issued in accordance
with the terms of the Debentures, be duly authorized, validly issued, fully paid
and non-assessable.
(d) The Warrants have been duly authorized and, when issued in
accordance with the terms hereof, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The Company has sufficient authorized and unissued shares of
Common Stock reserved for issuance upon the exercise of the Warrants in
accordance with their terms. The shares of Common Stock issuable upon the
exercise of the Warrants will, when issued in accordance with the terms of the
Warrants (including the payment of the exercise price specified therein), be
duly authorized, validly issued, fully paid and non-assessable.
(e) The issuance of the Securities and the Additional Securities, the
conversion of the Debentures and the Accrued Interest Debentures and the
exercise of the Warrants will not (i) require the Company to issue any shares of
its capital stock or any security exercisable for or convertible or exchangeable
into shares of its capital stock to any person (other than warrants to purchase
shares of Common Stock issuable to MBF pursuant to the terms of the Consulting
Agreement dated of even date herewith between the Company and MBF (the
"Consulting Agreement")), or (ii) require any adjustment in the exercise price
or number of shares of the Company's capital stock issuable upon the exercise of
the Company's outstanding securities.
Section 2.3. Non-contravention. Except as set forth in Schedule 2.3,
neither the execution and delivery of this Agreement and the other Transaction
Documents by the Company nor the performance by the Company of its obligations
hereunder and thereunder will (i) contravene any provision contained in the
Company's Certificate of Incorporation or by-laws, (ii) violate or result in a
breach (with or without the lapse of time, the giving of notice or both) of or
constitute a default under (A) any contract, agreement, commitment, indenture,
mortgage, lease, pledge, note, license, permit or other instrument or obligation
or (B) any judgment, order, decree, law, rule or regulation or other restriction
of any governmental authority, in each case to which the Company is a party or
by which it is bound or to which any of its assets or properties are subject,
(iii) result in the creation or imposition of any lien, claim, charge, mortgage,
pledge, security interest, equity, restriction or other encumbrance
(collectively, "Encumbrances") on any of the Company's assets or properties,
except as expressly contemplated by the Credit Facility, the Cerberus Debentures
and the Transaction Documents, or (iv) result in the acceleration of, or permit
any person to accelerate or declare due and payable prior to its stated
maturity, any material obligation of the Company.
<PAGE>
Section 2.4. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or the
other Transaction Documents by the Company or the consummation of the
transactions contemplated hereby or thereby by the Company, except (i) for such
consents and approvals as have previously been obtained and are in full force
and effect, and (ii) for such filings and registrations as may be required under
applicable securities laws. Assuming that the representations and warranties
contained in Article III hereof are true and correct in all respects, the offer
and sale of the Securities and the Additional Securities as contemplated hereby
does not require registration under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), or any applicable state securities or
"blue sky" laws.
Section 2.5. Capitalization of the Company. The Company's authorized
capital stock consists solely of 100,000,000 authorized shares of Common Stock,
of which 24,841,434 shares were issued and outstanding as of the date hereof;
and 200 shares of Preferred Stock, par value $.01 per share, of which, 30
shares, designated as Series A 12% Cumulative Convertible Redeemable Preferred
Stock, stated value $50,000 per share, were issued and outstanding as of the
date hereof. No shares of the Company's capital stock are held as treasury
shares. In addition, as of the date hereof 17,715,980 shares of Common Stock
were reserved for issuance upon the exercise or conversion of outstanding
securities of the Company. Except as set forth on Schedule 2.5, the Company does
not have (i) any shares of Common Stock or Preferred Stock reserved for
issuance, or (ii) any outstanding option, warrant, right, call or commitment
relating to its capital stock or any outstanding securities or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire from it, any shares of its capital stock (collectively,
"Company Securities"). There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Company Securities. There are no
pre-emptive or other subscription rights with respect to any shares of the
Company's capital stock or any securities convertible into or exchangeable for
shares of the Company's capital stock and all of the issued and outstanding
shares of capital stock of the Company have been duly authorized, validly
issued, are fully paid and are nonassessable. All of the Company's outstanding
securities were offered, issued, sold and delivered by the Company in compliance
with all applicable state and federal securities laws. None of such securities
were issued in violation of any pre-emptive or subscription rights of any
person.
Section 2.6. SEC Reports. (a) The Company has delivered to the
Purchaser a true and complete copy of each report, schedule and registration
statement, including the exhibits thereto (but excluding exhibits incorporated
therein by reference), filed by the Company with the Securities and Exchange
Commission (the "Commission") since January 1, 1996, which are all the documents
that the Company was required to file with the Commission since that date and
through the date hereof (all of such documents as amended as of the date hereof
collectively, the "SEC Documents"). As of their respective dates, the SEC
Documents (as amended as of the date hereof) complied as to form in all material
respects with the requirements of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder. As of their respective dates,
except to the extent that information contained therein has been revised or
superseded by a later filed SEC Document, none of the SEC Documents contained
any untrue statement of a material fact or
<PAGE>
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q) and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments) the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended.
Section 2.7. Accuracy of Information. The information regarding the
Company and mmTech provided by the Company to Broadband specifically for use in
the private placement memorandum prepared by Broadband in connection with its
private placement of limited partnership interests did not, as of the date of
such information, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
Section 2.8. Absence of Certain Developments. Except as disclosed in
the SEC Documents or in Schedule 2.8, since March 31, 1997, there has not been
any Material Adverse Change. Except for the acquisition of mmTech or as
disclosed in the SEC Documents, and except for this Agreement and the
transactions contemplated hereby, since December 31, 1996 the Company has
conducted its business in the ordinary and usual course consistent with past
practices.
Section 2.9. Governmental Authorizations; Licenses; Etc. Except as
disclosed in the SEC Documents or in Schedule 2.9, the business of each of the
Company and mmTech has been operated in compliance with applicable laws, rules,
regulations, codes, ordinances, orders, policies and guidelines of all
governmental authorities (excluding Environmental Laws which are specifically
covered in Section 2.13 hereof), except for violations which, individually or in
the aggregate, would not result in a Material Adverse Change. Except as
disclosed in the SEC Documents or in Schedule 2.9, each of the Company and
mmTech has all permits, licenses, approvals, certificates and other
authorizations, and has made all notifications, registrations, certifications
and filings with all governmental authorities, necessary or advisable for the
operation of their respective businesses as currently conducted. Except as
disclosed in the SEC Documents or in Schedule 2.9, to the Company's best
knowledge there is no action, case or proceeding pending or overtly threatened
by any governmental authority with respect to (i) any alleged violation by the
Company, mmTech or their respective affiliates of any law, rule, regulation,
code, ordinance, order, policy or guideline of any governmental authority, or
(ii) any alleged failure by the Company, mmTech or their respective affiliates
to have any permit, license, approval, certification or other authorization
required in connection with the operation of its business.
Section 2.10. Litigation. Except as disclosed in the SEC Documents or
in Schedule 2.10, there are no lawsuits, actions, proceedings, claims, orders or
investigations pending or, to the
<PAGE>
Company's best knowledge, overtly threatened against the Company or mmTech (i)
relating to the Company, mmTech, their respective businesses or any product
alleged to have been manufactured or sold by either of them, (ii) seeking to
enjoin the transactions contemplated hereby, or (iii) which, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Change.
Section 2.11. Undisclosed Liabilities. Other than those reflected in
the financial statements included in the SEC Documents, there are no material
liabilities of the Company or mmTech of any kind or nature whatsoever, whether
known or unknown, absolute, accrued, contingent or otherwise, or whether due or
to become due, which are required to be disclosed on financial statements
prepared in accordance with generally accepted accounting principles, other than
liabilities incurred in the ordinary course of business consistent with past
practices since March 31, 1997.
Section 2.12. Taxes. Except as disclosed in the SEC Documents or in
Schedule 2.12, all federal, state, county, local and foreign tax returns and
reports of the Company and mmTech required to be filed have been duly filed.
Except as disclosed in the SEC Documents or in Schedule 2.12, all federal,
state, county, local, foreign and any other taxes (including all income,
withholding and employment taxes), assessments (including interest and
penalties), fees and other governmental charges with respect to the employees,
properties, assets, income or franchises of the Company and mmTech have been
paid or duly provided for, or are being contested in good faith by appropriate
proceedings as previously disclosed to the Purchaser in writing and adequate
reserves therefor have been established pursuant to generally accepted
accounting principles, or have arisen after the date hereof in the ordinary
course of business. The Company has consulted with Deloitte & Touche, LLP, and
upon their advice believes that the issuance of the Securities and the
Additional Securities will not result in any original issue discount under the
Internal revenue Code of 1986, as amended, and the Company will take that
position in all relevant reports and filings.
Section 2.13. Environmental Matters. Except as disclosed in the SEC
Documents or in Schedule 2.13, to the Company's best knowledge (i) the business
of each of the Company and mmTech is being conducted in compliance with all
applicable Environmental Laws, (ii) the real property currently owned or
operated by the Company or mmTech (including, without limitation, soil,
groundwater or surface water on or under the properties and buildings thereon)
(the "Affected Property") does not contain any Regulated Substance other than as
permitted under applicable Environmental Laws, (iii) neither the Company nor
mmTech has received any notice from any governmental authority that the Company
or mmTech may be a "potentially responsible party" (as such term is defined
under the Comprehensive Environmental Response, Compensation and Control Act, 42
U.S.C. Section 9601, et seq.) in connection with any waste disposal site or
facility used by the Company or mmTech, and (iv) the Company, mmTech and the
Affected Property are not presently subject to a suit or judgment arising under
any Environmental Law.
As used herein, "Environmental Laws" means any federal, state and
local law, statute, ordinance, rule, regulation, license, permit, authorization,
approval, consent, court order,
<PAGE>
judgment, decree, injunction, code, requirement or agreement with any
governmental authority, (x) relating to pollution (or the cleanup thereof or the
filing of information with respect thereto), human health or the protection of
air, surface water, ground water, drinking water supply, land (including land
surface or subsurface), plant and animal life or any other natural resource, or
(y) concerning exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production or
disposal of Regulated Substances, in each case as amended and as now or
hereafter in effect. The term Environmental Law includes, without limitation,
(i) the Comprehensive Environmental Response Compensation and Liability Act of
1980, the Water Pollution Control Act, the Clean Air Act, the Clean Water Act,
the Solid Waste Disposal Act (including the Resource Conservation and Recovery
Act of 1976 and the Hazardous and Solid Waste Amendments of 1984), the Toxic
Substances Control Act, the Insecticide, Fungicide and Rodenticide Act, the
Occupational Safety and Health Act of 1970, each as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Regulated Substance.
As used herein, "Regulated Substances" means pollutants, contaminants,
hazardous or toxic substances, compounds or related materials or chemicals,
hazardous materials, hazardous waste, flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products (including, but not limited to,
waste petroleum and petroleum products) as regulated under applicable
Environmental Laws.
Section 2.14. Proprietary Rights. Except as disclosed in the SEC
Documents or in Schedule 2.14, each of the Company and mmTech owns and possesses
all right, title and interest in the patents, patent registrations, patent
applications, trademarks, service marks, trademark and service mark
registrations and applications therefor, copyrights, copyright registrations,
copyrights applications, trade names, corporate names, technology, inventions,
computer software, data and documentation (including electronic media), product
drawings, trade secrets, know-how, customer lists, processes, other intellectual
property and proprietary information or rights used in their respective
businesses as presently conducted; or owns or possesses permits, licenses or
other agreements to or from third parties regarding the foregoing (collectively,
the "Proprietary Rights"). Except as disclosed in the SEC Documents or in
Schedule 2.14, to the Company's best knowledge, there is not pending or overtly
threatened against the Company or mmTech any claim by any third party contesting
the validity, enforceability, use or ownership of any Proprietary Right. Except
as disclosed in the SEC Documents or in Schedule 2.14, to the Company's best
knowledge, neither the Company nor mmTech has received any notice of any
infringement or misappropriation by, or conflict with, any third party with
respect to any of the Proprietary Rights.
Section 2.15. Books and Records. The stock records of the Company
fairly and accurately reflect in all material respects the record ownership of
all of the outstanding shares of the Company's capital stock. The other books
and records of the Company and mmTech,
<PAGE>
including financial records and books of account, are complete and accurate in
all material respects and have been maintained in accordance with sound business
practices.
Section 2.16. Brokers. Except as previously disclosed to the
Purchasers, no person is or will be entitled to a broker's, finder's, investment
banker's, financial adviser's or similar fee from the Company in connection with
this Agreement or any of the transactions contemplated hereby.
Section 2.17. Use of Proceeds. The Company will use the net proceeds
of the sale of the Securities and the Additional Securities (i) to pay interest
due and owing on the Cerberus Debentures, the Old Cerberus Interest Notes and
the Company's 12% Convertible Subordinated Debentures, (ii) to pay accrued and
unpaid dividends on the Company's Series A 12% Cumulative Convertible Redeemable
Preferred Stock, and (iii) for working capital and general corporate purposes.
Section 2.18. Absence of Questionable Payments. Neither the Company,
mmTech nor any affiliate, director, officer, employee, agent, representative or
other person acting on behalf of the Company or mmTech has: (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political
activities to government officials or others, or (ii) accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 2.19. Accuracy of Representations. No representation or
warranty made by the Company in this Agreement or any document delivered, or to
be delivered, by or on behalf of the Company pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading. There is no fact or
circumstance that the Company has not disclosed to the Purchasers in writing
that the Company presently believes has resulted, or could reasonably be
expected to result, in a Material Adverse Change or could reasonably be expected
to have a material adverse effect on the ability of the Company to perform its
obligations under this Agreement.
Article III
Representations and Warranties of the Purchasers
The Purchasers hereby, severally and not jointly, represent and
warrant to the Company as follows:
Section 3.1. Organization. Each Purchaser that is not an individual is
either a corporation, limited liability company, general partnership or limited
partnership, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Schedule 3.1 hereto sets forth the
type of entity and the jurisdiction of organization for each Purchaser that is
not an individual.
<PAGE>
Except as set forth in Schedule 3.1, each of the Purchasers is a "U.S.
person" as such term is defined in Section 7701(a)(30) of the Code. Each
Purchaser that is a U.S. person has previously provided the Company with a
completed Form W-9 certifying that such Purchaser is not subject to back-up
withholding with respect to amounts payable to such Purchaser by the Company.
Each Purchaser that is not a U.S. person has previously provided the Company
with a completed Form W-8 certifying that such Purchaser is not subject to
certain U.S. information return reporting or back-up withholding with respect to
amounts payable to such Purchaser by the Company.
Section 3.2. Authorization. Each Purchaser that is not an individual
has the power and authority (corporate, limited liability company, partnership
and other) to execute and deliver the Transaction Documents to which it is a
party and to perform its obligations hereunder and thereunder, all of which have
been duly authorized by all requisite corporate, limited liability company or
partnership action. Each Purchaser that is an individual has the capacity to
execute and deliver the Transaction Documents to which he or she is a party and
to perform his or her obligations hereunder and thereunder. Each such individual
Purchaser is under no impairment or other disability, legal, physical, mental or
otherwise, that would preclude or limit the ability of such Purchaser to perform
his or her obligations under the Transaction Documents to which he or she is a
party. Each Transaction Document to which it is a party has been duly
authorized, executed and delivered by each Purchaser and constitutes a valid and
binding agreement of such Purchaser, enforceable against such Purchaser in
accordance with its terms.
Section 3.3. Access to Information. The Purchasers have received
copies of the SEC Documents. Any Purchaser formed for the purpose of investing
in the Securities or the Additional Securities (a "New Purchaser") has provided
copies of the SEC Documents to each investor in such Purchaser (the
"Investors"). In addition, the Purchasers and their respective purchaser
representatives, if any, have had an opportunity to ask questions of and receive
answers from representatives of the Company concerning the business of the
Company, its condition and prospects (financial and other) and the terms and
conditions of the offering of the Securities and the Additional Securities.
Section 3.4. Accredited Investor. Each Purchaser is an "Accredited
Investor" as such term is defined in Rule 501 of the rules and regulations of
the Commission promulgated under the Securities Act. No offering or sale of
interests in any Purchaser or any other security of such Purchaser was made to
any person, other than such "Accredited Investors." Schedule 3.4 hereto sets
forth a list of the New Purchasers. Other than such New Purchasers, no Purchaser
was formed for the purpose of investing in the Securities and the Additional
Securities.
Section 3.5. Investment Intent. (a) Each Purchaser is acquiring the
Securities, the Additional Securities and any Accrued Interest Debentures for
its own account for investment only and not for or with a view to resale or
distribution. No Purchaser has entered into any contract, undertaking, agreement
or arrangement with any person to sell, transfer or pledge to such person or
anyone else the Securities, the Additional Securities or any Accrued Interest
Debentures and no Purchaser has any present plans or intentions to enter into
any such contract, undertaking, agreement or arrangement.
<PAGE>
(b) Each Purchaser has the financial ability to bear the economic risk
of losing its entire investment in the Securities, the Additional Securities and
the Accrued Interest Debentures, is prepared to bear the economic risk of its
investment therein for an indefinite time and can afford to sustain a complete
loss of its investment therein.
(c) The overall commitment of each Purchaser to investments which are
not readily marketable is not disproportionate to its net worth, and an
investment in the Securities, the Additional Securities and the Accrued Interest
Debentures will not cause such overall commitment to become excessive. Each
Purchaser's need for diversification in its investment portfolio will not be
impaired by an investment in the Company.
(d) Each Purchaser has adequate means of satisfying its short term
needs for cash and has no present need for liquidity which would require it to
sell its Securities, Additional Securities or any Accrued Interest Debentures,
or any interest therein.
(e) Each Purchaser has substantial experience in making investment
decisions of this type and/or is relying on its own advisors in making this
investment decision and, therefore, either alone or together with its advisors,
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Company.
(f) Each Purchaser understands that the Securities, the Additional
Securities and the Accrued Interest Debentures constitute restricted securities
within the meaning of Rule 144 promulgated under the Securities Act, and that
none of the Securities, the Additional Securities, the Accrued Interest
Debentures or any interest therein, may be sold except pursuant to an effective
registration statement under the Securities Act or in a transaction exempt from
registration under the Securities Act, and understands the meaning and effect of
such restriction.
(g) Each Purchaser has considered and, to the extent such Purchaser
believed such discussion was necessary, discussed with its professional legal,
tax and financial advisers the suitability of an investment in the Company for
such Purchaser's particular tax and financial situation and each Purchaser has
determined that the Securities, the Additional Securities and the Accrued
Interest Debentures are a suitable investment for it.
(h) EACH PURCHASER UNDERSTANDS THAT AN INVESTMENT IN THE SECURITIES
BEING PURCHASED BY IT INVOLVES A HIGH DEGREE OF RISK, INCLUDING WITHOUT
LIMITATION, RISKS RELATING TO THE COMPANY'S HISTORY OF LOSSES, RISKS RELATING TO
THE RECENT CHANGE IN THE COMPANY'S BUSINESS FOCUS, RISKS RELATING TO THE
COMPANY'S DEPENDENCE UPON THE DEVELOPMENT OF NEW MARKETS OF UNCERTAIN SIZE AND
GROWTH PROSPECTS, THE COMPANY'S DEFAULTS UNDER SUBSTANTIALLY ALL OF ITS
INDEBTEDNESS AND OUTSTANDING PREFERRED STOCK, THE COMPANY'S CONTINUING NEED FOR
ADDITIONAL CAPITAL, THE COMPANY'S NEED FOR LIQUIDITY, THE EFFECTS OF
COMPETITION, THE
<PAGE>
COMPANY'S RELIANCE ON KEY PERSONNEL, THE COMPANY'S DEPENDENCE ON TECHNOLOGY AND
TECHNOLOGICAL INNOVATION, THE EFFECTS OF GOVERNMENT REGULATION OF THE
TELECOMMUNICATIONS INDUSTRY, THE RESTRICTIONS ON TRANSFER OF THE SECURITIES, THE
SUBORDINATION PROVISIONS OF THE DEBENTURES, POTENTIAL CONFLICTS OF INTEREST AND
RELATED PARTY TRANSACTIONS INVOLVING THE COMPANY AND THE DIRECTORS AND OFFICERS
OF THE COMPANY, AND RISKS RELATING TO THE SUCCESSFUL EXECUTION OF THE COMPANY'S
BUSINESS AND OPERATING STRATEGY.
(i) Each New Purchaser has received representations and warranties
from each Investor in such New Purchaser similar to those contained in this
Section 3.5, and such representations and warranties specifically authorize the
Company to rely thereon.
(j) The offer and sale of interests in each New Purchaser to the
Investors therein did not require registration under the provisions of the
Securities Act or any applicable state securities or "blue sky" laws. Each New
Purchaser complied in all material respects with the requirements of applicable
state securities or "blue sky" laws with respect to such offer and sale.
(k) The placement materials used by each New Purchaser or its agents
in connection with the offer and sale of interests in such New Purchaser did not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that no representation or warranty is made with respect to information regarding
the Company and mmTech provided to any such New Purchaser by the Company
expressly for use in such placement materials.
Section 3.6. Financial Resources. Each Purchaser has cash or credit
facilities presently available to meet all of its payment obligations hereunder.
Section 3.7. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from any
Purchaser in connection with this Agreement or any of the transactions
contemplated hereby.
Section 3.8. Accuracy of Representations. No representation or
warranty made by the Purchaser in this Agreement or any document delivered, or
to be delivered, by it or on its behalf pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
<PAGE>
Article IV
Restrictions on Transfer; Other Covenants
Section 4.1. Limited Transferability. The Securities, the Additional
Securities, the Accrued Interest Debentures and the shares of Common Stock
issuable upon the conversion of the Debentures and the Accrued Interest
Debentures and the exercise of the Warrants (the "Issuable Shares") shall not be
transferable except in accordance with the provisions of this Article IV, which
provisions are intended to insure compliance with the provisions of the
Securities Act in respect of the transfer of any of such securities.
Section 4.2. Restrictive Legend. Except as otherwise provided in the
Stockholders Agreement, the Debentures, the Accrued Interest Debentures and any
certificates or other instrument representing the Warrants or the Issuable
Shares shall (unless otherwise permitted by the provisions of Section 4.4 below)
be stamped or otherwise imprinted with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN
EXEMPTION UNDER SUCH ACT OR LAWS IS AVAILABLE. THE
TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT
TO THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF
JULY 29, 1997 AMONG THE COMPANY AND THE PURCHASERS
NAMED THEREIN.
For purposes of this Article IV, any references to "Debentures,"
"Accrued Interest Debentures", "Warrants" or "Issuable Shares" shall include any
other securities issued in respect of any of such securities.
Section 4.3. Restrictions on Transfer. (a) Subject to the provisions
of Section 4.4, the Debentures, the Accrued Interest Debentures, the Warrants
and the Issuable Shares shall not be transferred, and the Company shall not be
required to register any transfer thereof on the books of the Company, unless
such transfer is made pursuant to an effective registration statement, in
compliance with Rule 144, or pursuant to another exemption under the Securities
Act; provided, however, that the Company shall not be required to register any
transfer in the event any securities are offered or sold otherwise than pursuant
to an effective registration statement or pursuant to Rule 144 unless the
Company shall have received an opinion of counsel to the Purchaser wishing to
effect such transfer, reasonably satisfactory to the Company, that such transfer
does not require registration under the Securities Act or applicable state
securities laws. Notwithstanding the foregoing, any Purchaser may freely
transfer at any time or from time to time the Debentures, the Accrued Interest
Debentures, the Warrants and/or the Issuable Shares, or any interest therein, to
any other Purchaser or any general partner of such Purchaser, any
<PAGE>
limited partner of such Purchaser, any other fund, account or other entity
managed, directly or indirectly, by any general partner of such Purchaser and
the respective subsidiaries and affiliates of any of the foregoing (each, a
"Permitted Transferee") without complying with the provisions of this Article IV
(a "Permitted Transfer") and the Company shall, or shall cause any registrar or
transfer agent to, promptly register any such Permitted Transfer on the books of
the Company; provided, however, that in connection with any such Permitted
Transfer, the Permitted Transferees shall acknowledge the restrictions on
transferability under applicable law and agree in writing to be bound by the
provisions of this Article IV.
(b) In addition to the restrictions set forth in paragraph (a) above,
for a period of 90 days after purchase (the "Restrictive Period"), no Purchaser
shall sell, assign, transfer or otherwise dispose of the Securities, the
Additional Securities, the Accrued Interest Debentures or any interest therein
(a "Transfer") (other than a Permitted Transfer) without the prior written
consent of the Company which may be withheld by the Company in its sole
discretion. Subject to the restrictions set forth in paragraph (a) above, from
and after the end of the Restrictive Period, a Purchaser may Transfer all or a
portion of its Securities, its Additional Securities, its Accrued Interest
Debentures, or any interest therein, without the consent of the Company.
Section 4.4. Lapse of Restrictions; Removal of Legends. The
restrictions on transfer set forth in Section 4.3 relating to the Warrants and
the Issuable Shares shall lapse upon the effectiveness of the registration
statement relating thereto which the Company is required to file and maintain
effective as specified therein. From and after the effective date of such
registration statement, the Purchasers shall be entitled to exchange the
Warrants and any certificates representing Issuable Shares for replacement
Warrants or certificates not bearing the restrictive legend set forth in Section
4.2 above.
Article V
[Reserved]
Article VI
Deliveries at Closing
Section 6.1. Deliveries by the Company. At the First Closing, the
Company shall deliver to the Purchasers the following in form and substance
reasonably satisfactory to the Purchasers' counsel:
(a) a certificate of the President or a Vice President of the Company,
dated the First Closing Date, to the effect that (i) the person signing such
certificate is familiar with this Agreement, (ii) all representations and
warranties made by the Company in this Agreement are true, correct and complete
in all material respects as of the First Closing, (iii) the Company has duly
performed or complied with, in all material respects, all of the covenants,
obligations and
<PAGE>
agreements to be performed or complied with by it under the terms of this
Agreement on or prior to or at the First Closing, and (iv) except as disclosed
pursuant to this Agreement, there has been no Material Adverse Change or
prospective change which could reasonably be expected to result in a Material
Adverse Change since March 31, 1997;
(b) a certificate of the Secretary or Assistant Secretary of the
Company, dated the First Closing Date, as to the incumbency of any officer of
the Company executing this Agreement or any document related thereto and
covering such other matters as the Purchasers may reasonably request;
(c) a certified copy of the resolutions of the Company's Board of
Directors authorizing the execution, delivery and consummation of this Agreement
and the transactions contemplated hereby;
(d) the Debentures and the Warrants, duly executed, issued and
delivered by the Company and registered in the names of the Purchasers as they
may specify;
(e) a duly executed counterpart of the Security Agreement;
(f) a duly executed counterpart of the Stockholders Agreement;
(g) a duly executed counterpart of the Consulting Agreement; and
(h) an opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A.,
counsel to the Company, covering such matters as the Purchasers may reasonably
request; and
(i) such other documents or instruments as the Purchasers reasonably
request to effect the transactions contemplated hereby.
Section 6.2. Deliveries by the Purchasers. At the First Closing, the
Purchasers shall deliver to the Company the following in form and substance
reasonably satisfactory to the Company's counsel:
(a) evidence that the Initial Purchase Price has been paid in full;
(b) a duly executed counterpart of the Stockholders Agreement;
(c) a duly executed counterpart of the Consulting Agreement; and
(d) such other documents or instruments as the Company reasonably
requests to effect the transactions contemplated hereby.
<PAGE>
ARTICLE VII
Survival, Amendment and Waiver
Section 7.1. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or any certificate
delivered in connection herewith shall survive the applicable Closing, and shall
apply with respect to claims asserted in writing within one year thereof, as
applicable. The provisions of this Section 7.1 shall not limit any covenant or
agreement of the parties hereto which, by its terms, contemplates performance
after the applicable Closing.
Section 7.2. Amendments. This Agreement (including the provisions of
this Section 7.2) may not be amended or modified except by an instrument in
writing signed on behalf of all of the parties affected by such amendment or
modification.
Section 7.3. Extension; Waiver. The parties hereto may (i) extend the
time for performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
of the other parties hereto or satisfaction of any of the conditions to such
party's obligations contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of a party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE VIII
Miscellaneous
Section 8.1. Notices. All notices, requests, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, when delivered by courier, three
days after being deposited in the mail (registered or certified mail, postage
prepaid, return receipt requested), or when received by facsimile transmission
upon receipt of a confirmed transmission report, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
Attention: Chief Executive Officer
and if to the other parties at the address or facsimile transmission number
specified below its name on the signature pages hereto (or, in the case of
Persons who become parties hereto subsequently, at their last addresses or
facsimile transmission numbers shown on the record books of the Company). Any
party hereto, by notice given to the other parties hereto in
<PAGE>
accordance with this Section 8.1 may change the address or facsimile
transmission number to which such notice or other communications are to be sent
to such party.
Section 8.2. Expenses. The Company shall pay its own expenses incident
to this Agreement and the transactions contemplated herein. The Company shall be
responsible for and shall pay at the First Closing the fees and disbursements of
counsel to the Purchasers incurred in connection with the negotiation, execution
and delivery of this Agreement and the other Transaction Documents and the
closing of the transactions contemplated hereby and thereby.
Section 8.3. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 8.4. Assignment; Successors and Assigns; No Third Party
Rights. This Agreement may not be assigned by operation of law or otherwise, and
any attempted assignment shall be null and void; provided, however, that any
Purchaser may assign this Agreement (or any interest herein) to one or more
Permitted Transferees so long as such Purchaser also assigns to such Permitted
Transferees its rights and obligations under the other Transaction Documents to
which it is a party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, permitted
assigns and legal representatives. This Agreement shall be for the sole benefit
of the parties to this Agreement and their respective heirs, successors,
permitted assigns and legal representatives and is not intended, nor shall be
construed, to give any Person, other than the parties hereto and their
respective heirs, successors, assigns and legal representatives, any legal or
equitable right, remedy or claim hereunder.
Section 8.5. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 8.6. Titles and Headings. The titles and headings in this
Agreement are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 8.7. Entire Agreement. This Agreement and the Transaction
Documents constitute the entire agreement among the parties with respect to the
matters covered hereby and
<PAGE>
thereby and supersede all previous written, oral or implied understandings among
them with respect to such matters, including, without limitation, the letter
agreement, dated March 10, 1997, by and between the Company and MBF and the term
sheet attached thereto.
Section 8.8. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 8.9. No Strict Construction. Each of the parties hereto
acknowledge that this Agreement has been prepared jointly by the parties hereto,
and shall not be strictly construed against either party.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/Charles S. Brand
_______________________________
Name:
Title:
CRAMER ROSENTHAL McGLYNN, INC.
By: /s/Eugene A. Trainor
_______________________________
Name: Eugene A. Trainor
Title: Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/Arthur J. Pergament
___________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Gerald B. Cramer
___________________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Edward J. Rosenthal
___________________________________
Edward J. Rosenthal, Keogh
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor
_______________________________
Name: Eugene A. Trainor
Title: Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM PARTNERS, L.P.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
____________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM RETIREMENT PARTNERS, L.P.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
____________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM MADISON PARTNERS, L.P.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
____________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM U.S. VALUE FUND, LTD.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
____________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM EURYCLEIA PARTNERS, L.P.
By: CRM Eurycleia Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor
______________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
A.C. ISRAEL ENTERPRISES, INC.
By: /s/Jay Howard
_____________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor
__________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
______________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Eugene A. Trainor
___________________________
Name: Eugene A. Trainor
Title: Chief Financial
Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
PAMELA EQUITIES CORP.
By: /s/ Gregory Manocherian
_________________________
Name:
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
________________________
Name:
Title: Manager
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
___________________________
Name:
Title: General Partner
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
MBF CAPITAL CORP.
By: /s/Mark B. Fisher
________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
PHINEAS BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
<PAGE>
/s/Mark B. Fisher
_____________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
_______________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Fred M. Filoon
_____________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Euguene A. Trainor
_____________________________
Eugene A. Trainor
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
[SCHEDULES OMITTED]
<PAGE>
EXHIBIT A
FORM OF DEBENTURE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF JULY 29, 1997 AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN.
CLASS A 13% CONVERTIBLE SENIOR
SUBORDINATED PAY-IN-KIND DEBENTURE DUE 1999
[Date of Issuance]
LOGIMETRICS, INC., a Delaware corporation (the "Company"), hereby
promises to pay to the order of [name of purchaser] (together with its, his or
her successors and assigns, the "Holder") the principal amount of
_____________________ Dollars ($______________)in lawful money of the United
States, together with interest thereon calculated from the date hereof and
payable in accordance with the provisions of this debenture ("Debenture").
By accepting this Debenture, the Holder agrees that the obligations of
the Company to the Holder under this Debenture shall be subordinated only to the
Senior Debt (as hereinafter defined) of the Company, all upon the terms set
forth in paragraph 4 hereof.
This Debenture may be surrendered for transfer or exchange by the
Holder hereof upon surrender of this Debenture, together with a properly
completed bond power or other instrument of transfer, and any required signature
guarantees, at the office of the Company set forth in Section 11 hereof. Upon
proper surrender, the Company shall issue one or more replacement Debentures of
like tenor registered in the names and in the denominations requested by the
surrendering Holder and dated the date of issuance thereof; provided, however,
that (i) appropriate adjustments shall be made to reflect the date of issue and
principal amount of each such replacement Debenture, (ii) the aggregate
principal amount of all Debentures, excluding Accrued Interest Debentures (as
defined below), shall be limited to $3,583,333, and (iii) no Debenture shall be
issued in a principal amount of less than $50,000 unless in connection with a
transfer resulting from the complete liquidation of the original Holder of this
Debenture. All Debentures shall rank pari passu.
1. Payment of Interest. Subject to subparagraph 6(c)(xviii)(C) hereof,
interest will accrue from the date hereof at the rate of thirteen percent (13%)
per annum on the unpaid principal amount of this Debenture outstanding from time
to time on the basis of a 360-day year for the actual number of days elapsed.
Subject to paragraph 4 hereof, the Company will pay to the Holder all accrued
and unpaid interest on this Debenture on [first interest payment date following
the issuance date] and quarterly thereafter, in arrears, on the 15th day of
[January], the
<PAGE>
15th day of [April], the 15th day of [July] and the 15th day of [October] (each,
an "Interest Payment Date") to and including the earlier to occur of the
Conversion Date (hereinafter defined) or the Due Date (hereinafter defined).
Interest will accrue at the greater of the Default Rate (hereinafter defined)
and the rate of fifteen percent (15%) per annum on any principal payment past
due under this Debenture and, unless prohibited under applicable law (and if so
prohibited then only to the extent not so prohibited), on any interest which has
not been paid on the date on which it is due and payable (without giving effect
to any applicable grace periods or paragraph 4 hereof) until such time as
payment therefor is actually delivered to the Holder.
On each Interest Payment Date other than the Due Date (as defined
below), in payment of the interest due on this Debenture on such Interest
Payment Date, the Company shall deliver to the Holder of this Debenture a new
Debenture (an "Accrued Interest Debenture"), in the form of this Debenture,
dated such Interest Payment Date (and bearing interest from such Interest
Payment Date) and having a principal amount corresponding to the interest due on
this Debenture on such Interest Payment Date. On the Due Date, in payment of the
interest due on this Debenture on such date, the Company shall deliver, at the
option of the Holder, either (a) a cash payment in such amount, or (b) the
number of shares of Common Stock, par value $.01 per share ("Common Stock"),
into which Accrued Interest Debentures would be convertible pursuant to Section
6 hereof if Accrued Interest Debentures had been issued to the Holder on the Due
Date in payment of such interest and such Accrued Interest Debentures were
converted by the Holder immediately thereafter. Unless the Holder gives the
Company not less than 10 days' prior written notice of the exercise of such
option, the Holder shall be deemed to have irrevocably elected to receive
payment of such interest in cash on the Due Date. Any exercise or deemed
exercise of such option shall be binding on any subsequent Holder of this
Debenture.
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company will repay the principal
amount of this Debenture on [two years from date of issue] [date] ("Due Date").
(b) Optional Prepayment. At any time after nine months from the
date hereof, provided that the Registration Statement (hereinafter defined) is
effective and available for sales of Registrable Securities (hereinafter
defined) thereunder, the Company may at any time hereafter prepay, without
premium or penalty, all (but not less than all) of the outstanding principal
amount of the Debentures (including, for this purpose, the Accrued Interest
Debentures), together with interest accrued on such prepaid amount to the date
of payment; provided (i) the average closing price of the Company's Common Stock
on days the Common Stock traded during the 120-day period immediately preceding
the date of the notice provided for in paragraph (c) hereinbelow shall have been
not less than $5.00, and (ii) the closing price of the Common Stock for each of
the 30 trading days immediately preceding the date of such notice shall have
been not less than $5.00, adjusted in each case for stock splits, stock
dividends or other similar transactions affecting the price of the Common Stock.
All such prepayments shall be applied pro rata to all of the Debentures. At the
option of the Holder, interest accrued on the prepaid amount to the date of
payment shall be paid either (a) in cash or (b) by the issuance by the Company
to
<PAGE>
the Holder of shares of Common Stock into which Accrued Interest Debentures
would be convertible pursuant to Section 6 hereof if Accrued Interest Debentures
had been issued to the Holder on such date in payment of such interest and such
Accrued Interest Debentures were converted by the Holder immediately thereafter.
Unless the Holder gives the Company not less than 10 days' prior written notice
of the exercise of such option, the Holder shall be deemed to have irrevocably
elected to receive payment of such interest in cash. Any exercise or deemed
exercise of such option shall be binding on any subsequent Holder of this
Debenture.
(c) Notice of Prepayment. The Company will give written notice of
its election to prepay this Debenture to the Holder in person or by registered
or certified mail, return receipt requested, at least thirty (30) and not more
than forty-five (45) days prior to the date of prepayment. On the date of
prepayment specified in the Company's notice, the Company will deliver to the
Holder of this Debenture in person or by registered or certified mail, return
receipt requested, a cashier's or certified check for the entire outstanding
principal amount being prepaid, together with all accrued interest thereon
through the date of prepayment.
3. Intentionally Omitted.
4. Subordination. The Company's payment, whether voluntary or
involuntary, whether in cash, property, securities or otherwise and whether by
application of offset or otherwise (hereinafter "Payment") of any of its
obligations under this Debenture, other than the issuance of Accrued Interest
Debentures, shall be subject to the following restrictions:
(a) Subordination to Senior Debt. Anything in this Debenture to
the contrary notwithstanding, the obligations of the Company in respect of the
principal of and interest (including any premium or penalty) on this Debenture
and any other amounts due under this Debenture (the "Subordinated Debt") shall
be subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to the Senior Debt. "Senior Debt", when used with respect
to the Company, means (i) the Company's indebtedness to North Fork Bank ("Bank")
under (A) that certain $640,000.04 Restated and Amended Term Loan Note, dated
April 25, 1997, and (B) that certain $2,200,000 Sixth Restated and Amended
Revolving Credit Note, dated April 25, 1997, in each case, together with
interest thereon and (ii) renewals, extensions, refinancings, deferrals,
restructurings, amendments, modifications and waivers of the indebtedness
described in clause (i) above.
(b) Default on Senior Debt. So long as the Senior Debt has not
been paid in full, if there shall occur a default in the payment when due of any
amount due and owing on account of Senior Debt (any of the foregoing being a
"Senior Debt Default") then, from and after the receipt of written notice
thereof from the holder of Senior Debt unless and until such Senior Debt Default
shall have been remedied or waived the Company will not make any Payment on any
Subordinated Debt, and the Holders of Subordinated Debt will not receive or
accept any direct or indirect Payment in respect thereof, and the Company may
not redeem or otherwise acquire any Subordinated Debt.
<PAGE>
(c) Changes in Senior Debt. Any holder of Senior Debt may, at any
time and from time to time, without the consent of, or notice to, the Holder and
without incurring responsibility to the Holder, and without impairing or
releasing the obligations of the Holder hereunder:
(i) Change the manner, place or terms of payment or change or
extend the time of payment of or renew or alter the Senior Debt or any
portion thereof; provided, however, that without the written consent
of the Majority Holders (hereinafter defined) the principal amount of
and interest rate applicable from time to time to Senior Debt may not
be increased (other than pursuant to the terms of the Senior Debt as
such terms existed on the date of issuance hereof);
(ii) Sell, exchange, release or otherwise deal with any
collateral securing the Senior Debt or any other property by
whomsoever at any time pledged or mortgaged to secure, or however
securing, the Senior Debt or any portion thereof; and
(iii) Apply any sums by whomsoever paid or however released to
the Senior Debt or any portion thereof.
(d) Consent to Senior Debt. By acceptance of this Debenture, the
Holder hereby consents to the making of Senior Debt and hereby acknowledges that
each current and future holder of Senior Debt has relied, and in the future will
rely, upon the terms of this Debenture. The holders of Senior Debt shall have no
liability to the Holder and the Holder hereby waives any claim which it may have
now or hereafter against any holder of Senior Debt arising from any and all
actions which any holder of Senior Debt may take or omit to take in good faith
with regard to the Senior Debt or its rights or obligations hereunder.
(e) Payments in Trust. Until the Senior Debt has been repaid in
full, in the event the Holder shall receive any Payment in contravention of the
provisions of this paragraph 4 including, Payments arising under the
subordination provisions of any other indebtedness of the Company, the Holder
shall hold all such Payments so received in trust for the holders of Senior Debt
and shall forthwith turn over all such Payments to the holders of Senior Debt in
the form received (except for the endorsement or assignment of the Holder as
necessary, without recourse or warranty) to be applied to payment of the Senior
Debt whether or not then due and payable. Any Payment so received in trust and
turned over to the holders of Senior Debt shall not be deemed a Payment in
satisfaction of the Subordinated Debt by the Company.
(f) Payment in full of Senior Debt; Subrogation. If any Payment
to which a Holder of Subordinated Debt would otherwise have been entitled but
for the provisions of this paragraph 4 shall have been applied, pursuant to the
provisions of this paragraph 4, to the payment of Senior Debt, then and in such
case, the Holder of the Subordinated Debt (i) shall be entitled to receive from
the holders of Senior Debt at the time outstanding any payments or distributions
received by such holders of Senior Debt in excess of the amount sufficient to
pay all Senior Debt in cash in full (whether or not then due), and (ii)
following payment of the Senior
<PAGE>
Debt in full, shall be subrogated to any right of the holders of Senior Debt to
receive any and all further payments or distributions applicable to Senior Debt,
until all the Subordinated Debt shall have been paid in full. If the Holder of
the Subordinated Debt shall have been subrogated to the rights of the holders of
Senior Debt due to the operation of this paragraph 4(f), the Company agrees to
take all such reasonable actions as are requested by such Holders of the
Subordinated Debt in order to cause such Holders to be able to obtain payments
from the Company with respect to such subrogation rights as soon as possible.
(g) No Impairment of the Company's Obligations. Nothing contained
in this paragraph 4, as between the Company and the Holder of this Debenture,
shall impair the obligation of the Company, which is absolute and unconditional,
to pay to the Holder the principal of and interest on this Debenture as and when
the same shall become due and payable in accordance with the terms hereof.
(h) Advances in Reliance. The Holder of this Debenture, by its
acceptance hereof, agrees that each holder of Senior Debt has advanced funds or
may in the future advance funds in reliance upon the terms and conditions
hereof.
(i) Non-Waiver of Rights. No right of any holder of Senior Debt
to enforce its right of subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, or by any act or failure to act by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Debenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(j) Recaptured Payments. Any Payments received by a holder of
Senior Debt from the Company or the Holder which, in connection with an
Insolvency Event or Proceeding (hereinafter defined), is required to be remitted
to the payor or the bankrupt estate shall not be deemed a Payment to such holder
of Senior Debt for all purposes hereunder.
5. Security. The obligations of the Company to the Holder of this
Debenture (including the obligation to pay the Accrued Interest Debentures when
due) are secured by certain Collateral to the extent provided in the Amended and
Restated Security Agreement, dated as of March 7, 1996, as amended and restated
as of July 29, 1997 ("Security Agreement"), made by the Company in favor of
Holders of the Debentures. In addition to all rights and remedies provided
herein, Holders of the Debentures are entitled to the benefits provided in the
Security Agreement. By accepting this Debenture, the Holder hereof agrees to be
bound by the terms of the Security Agreement.
6. Conversion Rights.
(a) The Holder of this Debenture has the right (the "Conversion
Right"), exercisable at his, her or its option at any time during which the
principal amount of this Debenture is outstanding, to convert this Debenture,
but only in whole, into _____________
<PAGE>
(___________) shares of Common Stock, subject to adjustment in certain
circumstances as provided herein.
(b) The Conversion Right is exercisable upon surrender of this
Debenture, together with a conversion notice, in the form attached hereto as
Exhibit A, duly executed and completed, evidencing the election of the Holder to
exercise the Conversion Right, at the Company's principal office at 50 Orville
Drive, Bohemia, New York 11716. The registered owner of this Debenture shall
become the record holder of the shares of Common Stock issuable upon conversion
as of the date of exercise of the Conversion Right (the "Conversion Date"). The
shares issued in connection with the Conversion Right shall be registered
initially in the name of the Holder, and delivered to the Holder no later than
two (2) business days after receipt of a properly completed conversion notice.
Upon conversion, the Company shall pay to the Holder accrued but unpaid interest
on this Debenture up to, but excluding, the Conversion Date. At the option of
the Holder, such accrued but unpaid interest shall be paid either (a) in cash or
(b) by the issuance by the Company to the Holder of shares of Common Stock into
which Accrued Interest Debentures would be convertible pursuant to Section 6
hereof if Accrued Interest Debentures had been issued to the Holder on such date
in payment of such interest and such Accrued Interest Debentures were converted
by the Holder immediately thereafter. Unless the Holder gives the Company not
less than 10 days' prior written notice of the exercise of such option, the
Holder shall be deemed to have irrevocably elected to receive payment of such
interest in cash. Any exercise or deemed exercise of such option shall be
binding on any subsequent Holder of this Debenture.
(c) In case, at any time or from time to time after the date of
issuance of this Debenture ("Issuance Date"), the Company shall issue or sell
shares of its Common Stock (other than any Common Stock issuable upon the
exercise or conversion of (i) the Debentures (and any replacement Debenture or
Debentures issued upon transfer or exchange of this Debenture), (ii) any Accrued
Interest Debentures (and any replacement Accrued Interest Debenture or Accrued
Interest Debentures issued upon transfer or exchange of the Accrued Interest
Debentures), (iii) the Company's Amended and Restated Class B 13% Convertible
Senior Subordinated Pay-in-Kind Debentures due 1999 (the "Class B Debentures")
(and any replacement Class B Debenture or Class B Debentures issued upon
transfer or exchange of the Class B Debentures), (iv) any additional securities
issued in lieu of cash interest otherwise payable on the Class B Debentures (the
"Class B Accrued Interest Debentures") (and any replacement Class B Accrued
Interest Debenture or Class B Accrued Interest Debentures issued upon transfer
or exchange of the Class B Accrued Interest Debentures), (v) securities
outstanding on the date hereof, (vi) awards made pursuant to the Company's Stock
Compensation Program (the "Plan"), (vii) awards made pursuant to any incentive
compensation plan or arrangement approved by the Company's Board of Directors or
by the Compensation Committee of the Company's Board of Directors, (viii) the
Company's Series G Warrants, (ix) the Company's Series H Warrants, or (x) the
Company's Series I Warrants) (such securities, collectively, the "Subject
Securities") for a consideration per share less than $.52 per share ("Trigger
Price"), or, if a Pro Forma Adjusted Trigger Price (hereinafter defined) shall
be in effect as provided below in this paragraph (c), then less than such Pro
Forma Adjusted Trigger Price per share, then and in each such case the Holder of
this Debenture, upon the conversion hereof as provided in paragraph (a) hereof,
shall be entitled to
<PAGE>
receive, in lieu of the shares of Common Stock theretofore receivable upon the
conversion of this Debenture, a number of shares of Common Stock determined by
(a) dividing the Trigger Price by a Pro Forma Adjusted Trigger Price per share
to be computed as provided below in this paragraph (c), and (b) multiplying the
resulting quotient by the number of shares of Common Stock into which this
Debenture is then convertible. A Pro Forma Adjusted Trigger Price per share
shall be the price computed (to the nearest cent, a fraction of half cent or
more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or
sale by the Trigger Price (or, if a Pro Forma Adjusted
Trigger Price shall be in effect, by such Price), and
(y) the consideration, if any, received by the Company
upon such issue or sale, by (ii) the number of shares
of Common Stock of the Company outstanding immediately
after such issue or sale.
For the purpose of this paragraph (c):
(i) In case the Company splits its Common Stock or shall declare
any dividend, or make any other distribution, upon any stock of the
Company of any class payable in Common Stock, or in any stock or other
securities directly or indirectly convertible into or exchangeable for
Common Stock (any such stock or other securities being hereinafter
called "Convertible Securities"), such split, declaration or
distribution shall be deemed to be an issue or sale (as of the record
date for such split, dividend or other distribution), without
consideration, of such Common Stock or such Convertible Securities, as
the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be
determined the price per share for which Common Stock is issuable upon
the conversion or exchange thereof, such determination to be made by
dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by (b)
the maximum number of shares of Common Stock of the Company issuable
upon the conversion or exchange of all such Convertible Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale for
cash (as of the date of issue or sale of such Convertible Securities)
of such maximum number of shares of Common Stock at the price per
share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the
passage of time, in the amount of additional consideration, if any,
<PAGE>
payable to the Company, or in the rate of exchange, upon the
conversion or exchange thereof, the Pro Forma Adjusted Trigger Price
per share shall, forthwith upon any such increase becoming effective,
be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised,
the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock
so issued or sold were those issued or sold upon the conversion or
exchange of such Convertible Securities, and that they were issued or
sold for the consideration actually received by the Company upon such
conversion or exchange, plus the consideration, if any, actually
received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
(iii) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Common Stock of any class
other than the Subject Securities, there shall be determined the price
per share for which Common Stock is issuable upon the exercise of such
rights or options, such determination to be made by dividing (a) the
total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of such rights or options, by (b) the
maximum number of shares of Common Stock issuable upon the exercise of
such rights or options.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then the granting of such rights or options shall be deemed to be an
issue or sale for cash (as of the date of the granting of such rights
or options) of such maximum number of shares of Common Stock at the
price per share so determined, provided that, if such rights or
options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration,
if any, payable to the Company upon the exercise thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such
increase becoming effective, be readjusted to reflect the same, and
provided, further, that upon the expiration of such rights or options,
if any thereof shall not have been exercised, the Pro Forma Adjusted
Trigger Price per share shall forthwith be readjusted and thereafter
be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(iv) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities
other than the Subject Securities, such Convertible Securities shall
be deemed, for the purposes of
<PAGE>
subparagraph (iii) above, to have been issued or sold for the total
amount received or receivable by the Company as consideration for the
granting of such rights or options plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
exercise of such rights or options, provided that, upon the expiration
of such rights or options, if any thereof shall not have been
exercised, the Pro Forma Adjusted Trigger Price per share shall
forthwith be readjusted and thereafter be the price which it would
have been had an adjustment been made upon the basis that the only
Convertible Securities so issued or sold were those issued or sold
upon the exercise of such rights or options and that they were issued
or sold for the consideration actually received by the Company upon
such exercise, plus the consideration, if any, actually received by
the Company for the granting of all such rights or options, whether or
not exercised.
(v) In case any shares of stock or other securities, other than
Common Stock of the Company, shall at any time be receivable upon the
conversion of this Debenture, and in case any additional shares of
such stock or any additional such securities (or any stock or other
securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such
as to dilute the purchase rights evidenced by this Debenture, then and
in each such case the Pro Forma Adjusted Trigger Price per share shall
forthwith be adjusted, substantially in the manner provided for above
in this paragraph (c), so as to protect the Holder of this Debenture
against the effect of such dilution.
(vi) In case any shares of Common Stock or Convertible Securities
or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Company therefor, after deducting any
expenses incurred and any underwriting or similar commissions,
compensation or concessions paid or allowed by the Company in
connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash (or a consideration
which includes cash and other assets) then, for the purpose of this
paragraph (c), the Board of Directors of the Company shall promptly
determine the fair value of such consideration, and such Common Stock,
Convertible Securities, rights or options shall be deemed to have been
issued or sold on the date of such determination in good faith. Such
value shall not be more than the amount at which such consideration is
recorded in the books of the Company for accounting purposes except in
the case of an acquisition accounted for on a pooling of interest
basis. In case any Common Stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any
Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Company
for a consideration which covers
<PAGE>
both, the Board of Directors of the Company shall promptly determine
in good faith what part of the consideration so received is to be
deemed to be the consideration for the issue or sale of such Common
Stock or Convertible Securities or such rights or options.
The Company covenants and agrees that, should any determination
of fair value of consideration or of allocation of consideration be
made by the Board of Directors of the Company, pursuant to this
subparagraph (vii), it will, not less than seven (7) days after any
and each such determination, deliver to the Holder of this Debenture a
certificate signed by the President or a Vice President and the
Treasurer or an Assistant Treasurer of the Company reciting such value
as thus determined and setting forth the nature of the transaction for
which such determination was required to be made, the nature of any
consideration, other than cash, for which Common Stock, Convertible
Securities, rights or options have been or are to be issued, the basis
for its valuation, the number of shares of Common Stock which have
been or are to be issued, and a description of any Convertible
Securities, rights or options which have been or are to be issued,
including their number, amount and terms.
(viii) In case the Company shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (a)
to receive a dividend or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the Common
Stock issued or sold or deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution,
or the date of the granting of such rights of subscription, purchase
or other acquisition, as the case may be.
(ix) The number of shares of Common Stock outstanding at any
given time shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock,
but shall exclude shares in the treasury of the Company.
(x) Following each computation or readjustment of a Pro Forma
Adjusted Trigger Price as provided in this paragraph (c), the newly
computed or adjusted Pro Forma Adjusted Trigger Price shall remain in
effect until a further computation or readjustment thereof is required
by this paragraph (c).
(xi) In case at any time or from time to time after the Issuance
Date the holders of the Common Stock of the Company of any class (or
any other shares of stock or other securities at the time receivable
upon the exercise of this Debenture) shall have received, or, on or
after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive:
(A) other or additional stock or other securities or
property (other than cash) by way of dividend;
<PAGE>
(B) any cash paid or payable out of capital or paid-in
surplus or surplus created as a result of a revaluation of
property by way of dividend; or
(C) other or additional (or less) stock or other securities
or property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph (c)), then in each case the Holder
of this Debenture, upon the conversion hereof as provided in paragraph (a)
hereof, shall be entitled to receive, in lieu of, or in addition to, as the case
may be, the shares theretofore receivable upon the conversion of this Debenture,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such Holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Company into
which this Debenture is convertible and had thereafter, during the period from
the Issuance Date to and including the date of such conversion, retained such
shares and/or all other or additional (or less) stock or other securities or
property (including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during such period by paragraph (c) and subparagraph
(xii) hereof.
(xii) In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time
deliverable on the conversion of this Debenture) after the date
hereof, or in case, after such date, the Company (or any such other
corporation) shall consolidate with or merge into another corporation
or convey all or substantially all its assets to another corporation,
then and in each such case the Holder of this Debenture, upon the
conversion hereof as provided in paragraph (a) hereof, at any time
after the consummation of such reorganization, consolidation, merger
or conveyance, shall be entitled to receive the stock or other
securities or property to which such Holder would have been entitled
upon such consummation if such Holder had converted this Debenture
immediately prior thereto, all subject to further adjustments as
provided for herein; in each such case, the terms of this Debenture
shall be applicable to the shares of stock or other securities or
property receivable upon the conversion of this Debenture after such
consummation.
(xiii) The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Debenture, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder hereof
against dilution or other impairment. Without limiting the generality
of the foregoing, the Company will not increase the par value of any
shares of
<PAGE>
stock receivable upon the conversion of this Debenture above the
amount payable therefor upon such exercise, and at all times will take
all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable
stock upon the conversion of this Debenture.
(xiv) In each case of an adjustment in the number of shares of
Common Stock or other stock, securities or property receivable on the
conversion of this Debenture, at the request of the Holder of this
Debenture the Company at its expense shall promptly cause independent
public accountants of recognized standing, selected by the Company, to
compute such adjustment in accordance with the terms of this Debenture
and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a
statement of (A) the consideration received or to be received by the
Company for any additional shares issued or sold or deemed to have
been issued or sold, (B) the number of shares of Common Stock
outstanding or deemed to be outstanding and (C) the Pro Forma Adjusted
Trigger Price. The Company will forthwith mail a copy of each such
certificate to the Holder of this Debenture.
(xv) In case:
(A) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time
deliverable upon the conversion of this Debenture) for the
purpose of entitling or enabling them to receive any dividend
(other than a cash or stock dividend at the same rate as the rate
of the last cash or stock dividend theretofore paid) or other
distribution, or to exercise any preemptive right pursuant to the
Company's charter, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other
securities, or to receive any other right; or
(B) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(C) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Debenture a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Debenture) shall be entitled to
<PAGE>
exchange their shares of Common Stock of any class (or such other stock or
securities) for reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up or (iii) the amount and character of the
stock or other securities proposed to be issued or granted, the date of such
proposed issuance or grant and the persons or class of persons to whom such
stock or other securities are to be offered, issued or granted. Such notice
shall be mailed at least thirty (30) days prior to the date therein specified.
(xvi) The Company will at all times reserve and keep available,
solely for issuance and delivery upon the conversion of this Debenture
and other similar Debentures, such shares of Common Stock and other
stock, securities and property as from time to time shall be issuable
upon the exercise of this Debenture and all other similar Debentures
at the time outstanding.
(xvii) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this
Debenture and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new
Debenture of like tenor.
(xviii) (A) On or prior to [90 days after date of issuance]
[date], the Company will file a registration statement ("Registration
Statement") with the Securities and Exchange Commission ("SEC")
covering the shares of Common Stock issuable upon conversion of the
Debentures and any Accrued Interest Debentures (and covering such
other securities as the Company shall determine in its sole
discretion) (collectively "Registrable Securities"), and will use its
best efforts to cause the Registration Statement to become effective
on or prior to the ninetieth day after such filing and to keep the
Registration Statement effective until the earlier of (i) seven years
from the date it is declared effective by the SEC, or (ii) the sale of
all of the Registrable Securities.
(B) The following provisions shall be applicable to
the Registration Statement:
(aa) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as
possible, and if any stop order shall be issued by the SEC
in connection therewith to use its reasonable efforts to
obtain the removal of such order. Following the effective
date of the Registration Statement, the Company shall, upon
the request of the Holder, forthwith supply such reasonable
number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the
Act, and other documents necessary or incidental to a public
offering of the Registrable Securities, as shall be
reasonably requested by the Holder to permit the Holder to
make a public distribution of its, his or her Registrable
Securities; provided, however,
<PAGE>
that by accepting this Debenture, the Holder agrees, if
requested by the managing underwriter(s) in connection with
an underwritten public offering of the Company's equity
securities, to enter into a customary agreement with such
managing underwriter(s) not to offer for sale or sell its,
his or her Registrable Securities for up to 180 days after
such offering. The Company will use its reasonable efforts
to qualify the Registrable Securities for sale in such
states as the holder of Registrable Securities shall
reasonably request, provided that no such qualification will
be required in any jurisdiction where, solely as a result
thereof, the Company would be subject to service of general
process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction. The
obligations of the Company hereunder with respect to the
Holder's Registrable Securities are expressly conditioned on
the Holder's furnishing to the Company such appropriate
information concerning the Holder, the Holder's Registrable
Securities and the terms of the Holder's offering of such
Registrable Securities as the Company may reasonably
request.
(bb) The Company shall pay all expenses incurred in
complying with the provisions of this subparagraph (xviii),
including, without limitation, all registration and filing
fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel to the Company,
securities law and blue sky fees and expenses and the
expenses of any regular and special audits incident to or
required by any such registration. All underwriting
discounts and selling commissions applicable to the sales of
the Registrable Securities, and any state or federal
transfer taxes payable with respect to the sales of the
Registrable Securities and all fees and disbursements of
counsel for the Holder, if any, in each case arising in
connection with registration of the Registrable Securities
shall be payable by the Holder.
(cc) In connection with the registration of the
Registrable Securities pursuant to this subparagraph
(xviii), the Company shall indemnify and hold harmless the
Holder, its affiliates, officers, directors, partners,
employees, agents and representatives, each person, if any,
who controls the Holder within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any person deemed to be an underwriter of the
Registrable Securities and any person claiming by or through
any of them (collectively, the "Indemnified Persons") from
and against all losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arising out of
or are based upon any untrue statement of any material fact
contained in the Registration Statement or alleged untrue
statement, under which such securities were registered under
the Securities Act, any
<PAGE>
preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to
make the statements made therein, in light of the
circumstances under which they are made, not misleading, or
any violation by the Company of the Securities Act, the
Exchange Act or state securities or blue sky laws applicable
to the Company and relating to action or inaction required
of the Company in connection with such registration or
qualification under such state securities or blue sky laws;
and will reimburse the Indemnified Persons for any legal or
any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the
Company will not be liable in any such case to any
Indemnified Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or omission made in the Registration Statement,
said preliminary prospectus or said final prospectus or said
amendment or supplement or any document incident thereto in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Holder.
(dd) The Holder will indemnify and hold harmless the
Company and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange
Act, each officer of the Company who signs the Registration
Statement and each director of the Company from and against
any and all such losses, claims, damages or liabilities
arising from any untrue statement in, or omission from, the
Registration Statement, any such preliminary or final
prospectus, amendment, or supplement or document incident
thereto if the statement or omission in respect of which
such loss, claim, damage or liability is asserted was made
in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the
Holder for use in connection with the preparation of the
Registration Statement or such prospectus or amendment or
supplement thereof.
(ee) The reimbursements required by clauses (cc) and
(dd) shall be made by periodic payments during the course of
the investigation or defense as and when bills are received
or expenses incurred; provided, however, that to the extent
that an indemnified party receives periodic payments for
legal or other expenses during the course of an
investigation or defense, and such party subsequently
received payments for such expenses from any other parties
to the proceeding, such payments shall be used by the
indemnified party to reimburse the indemnifying party for
such periodic payments. Any party which proposes to assert
the right to be indemnified under clause (cc) or (dd) will,
promptly after receipt of notice
<PAGE>
of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against
any indemnified party hereunder, notify each such
indemnifying party of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served, but
the failure to so notify such indemnifying party of any such
action, suit or proceeding shall not relieve the
indemnifying party from any obligation which it may have to
any indemnified party hereunder unless and only to the
extent that the indemnifying party is prejudiced by said
lack of notice. In case any such action, suit or proceeding
shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in
and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other
expense, other than reasonable costs of investigation
subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party
shall have the right to employ its own counsel in any such
action, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party, when and
as incurred, unless (A) the employment of counsel by such
indemnified party has been authorized by the indemnifying
party, (B) the indemnified party has reasonably concluded
(based on advice of counsel), that there may be legal
defenses available to it that are different from or in
addition to those available to the indemnifying party, (C)
the indemnified party shall have reasonably concluded (based
on advice of counsel) that there may be a conflict of
interest between the indemnifying party and the indemnified
party in the conduct of defense of such action (in which
case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the
indemnified party), or (D) the indemnifying party shall not
in fact have employed counsel to assume the defense of such
action within 15 days after receipt of notice of such
action. An indemnifying party shall not be liable for any
settlement or any action or claim effected without its
consent, which shall not be unreasonably withheld.
(ff) If the indemnification provided for in this
subparagraph (xviii) is unavailable to any indemnified party
hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the
indemnifying
<PAGE>
party and indemnified parties in connection with the actions
that resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by
reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state
a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties,
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the
limitations set forth herein, any legal or other fees or
expenses reasonably incurred by such party in connection
with any investigation or proceeding.
(gg) The Company and the Holder agree that it would not
be just and equitable if contribution pursuant to clause
(ff) were determined by pro rata allocation or by any other
method of allocation that does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding any other provision
hereof, in no event shall the contribution obligation of the
Holder be greater in amount than the excess of (A) the
dollar amount of net proceeds received by the Holder upon
the sale of the securities giving rise to such contribution
obligation over (B) the dollar amount of any damages that
the Holder has otherwise been required to pay by reason of
the untrue or alleged untrue statement or omission or
alleged omission giving rise to such obligation. No person
guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(hh) Neither the filing of the Registration Statement
by the Company pursuant to this Agreement nor the making of
any request for prospectuses by the Holder shall impose upon
the Holder any obligation to convert his, her or its
Debentures or to sell his, her or its Registrable
Securities.
(ii) The Holder, upon receipt of notice from the
Company that an event has occurred which requires a
post-effective amendment to the Registration Statement or a
supplement to the prospectus included therein, shall
promptly discontinue the sale of his, her or its Registrable
Securities until the Holder receives a copy of a
supplemented or amended prospectus from the Company, which
the Company shall provide as soon as practicable after such
notice.
<PAGE>
(C) In the event (a) the Registration Statement is not filed
by the Company with the SEC on or prior to [the ninetieth day
following the date of issuance hereof] [date], or (b) the Registration
Statement has not been declared effective by the SEC on or prior to
[the 180th day following the date of issuance hereof] [date], the
annual interest rate on the Debentures shall be the rate per annum
("Default Rate") which is 13% increased by one and one-half percent
(1-1/2%) per annum for the first three (3) months immediately
following the expiration of such ninety (90) day period or one hundred
eighty (180) day period, as the case may be, and by an additional
one-half of one percent (1/2%) per annum at the beginning of each
subsequent thirty (30) day period thereafter, until such time as the
requirements of clause (a) or (b) above, as the case may be, have been
satisfied, at which time all increases in the interest rate borne by
the Debentures resulting from the operation of this sentence shall
terminate and the interest rate borne by the Debentures shall revert
to the rate that otherwise would be in effect but for the operation of
this sentence; provided, however, that in no event shall the interest
rate borne by the Debentures exceed seventeen percent (17%) per annum
pursuant to this sentence.
7. Covenants.
(a) Affirmative Covenants: The Company will, and with respect to the
agreements set forth in subsections (i) through (viii) hereof, will cause each
subsidiary to:
(i) with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies
similarly situated and operating like properties, assets or businesses with
responsible insurance companies satisfactory to the Majority Holders said
insurance to indicate the Agent (as defined in the Security Agreement) as
an additional insured;
(ii) duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such
items are being in good faith appropriately contested;
(iii) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs, replacements,
additions, betterments and improvements thereto;
(iv) conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and
conducted;
(v) comply with all statutes, rules and regulations and maintain
its corporate existence;
<PAGE>
(vi) provide the Holder with the following financial information:
(A) annually, as soon as available, but in any event within one
hundred twenty (120) days after the last day of each fiscal year,
audited financial statements, including balance sheets as of the last
day of the fiscal year and statements of income and retained earnings
and changes in financial condition for such fiscal year each prepared
in accordance with generally accepted accounting principles,
consistently applied ("GAAP") for the period and prior periods by
independent Certified Public Accountants satisfactory to the Majority
Holders;
(B) as soon as available, but in any event within forty-five (45)
days after the end of each fiscal quarter, internally prepared
financial statements of the Company each prepared in accordance with
GAAP and jobs-in-progress reports for said period and prior periods;
(C) within a reasonable time after a written request therefor,
such other financial data or information as the Holder may reasonably
request from time to time;
(D) at the same time as it delivers the financial statements
required under the provisions of subsections (A) and (B) hereof, a
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute
such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day after
each such month, backlog reports and accounts receivable agings of the
Company;
(vii) permit the Holder to make or cause to be made,
inspections and audits of any books, records and papers of the
Company and of any parent or subsidiary thereof and to make
extracts therefrom at all such reasonable times and as often as
the Holder may reasonably require;
(viii) immediately give notice to the Holder that an Event
of Default has occurred or that an event which, with the giving
of notice or lapse of time, or both, would constitute an Event of
Default, has occurred and specifying the action which the Company
has taken and proposes to take with respect thereto.
(b) Financial Covenants:
<PAGE>
(i) At the end of each fiscal quarter, the Company shall
maintain a Tangible Net Worth of (-3,042,322) or greater (as
calculated in accordance with GAAP). For purposes hereof
"Tangible Net Worth" shall mean, at any date, (i) the net book
value of assets (other than patents, patent rights, trademarks,
trade names, franchises, copyrights, licenses, permits, goodwill
and other intangible assets classified as such in accordance with
GAAP) after all appropriate adjustments in accordance with GAAP
(including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization) plus
(ii) subordinated indebtedness, in each case computed in
accordance with GAAP; and
(ii) At the end of each fiscal quarter, the Company shall
report a net income (gross income less taxes and extraordinary
items) of not less than $1.00.
(c) Negative Covenants: The Company will not, and will not
permit any subsidiary to:
(i) create, incur, assume or suffer to exist any liability
for borrowed money, except (A) indebtedness to the Bank or any
other financial institution constituting "Senior Debt" hereunder;
(B) indebtedness outstanding on the date hereof; (C) indebtedness
represented by the Company's 13% Senior Subordinated Interest
Note (the "Note") (and any replacement Note or Notes issued upon
transfer or exchange of the Note), (D) indebtedness represented
by the Debentures (and any replacement Debenture or Debentures
issued upon transfer or exchange of the Debentures); (E)
indebtedness represented by the Accrued Interest Debentures (and
any replacement Accrued Interest Debenture or Accrued Interest
Debentures issued upon transfer or exchange of the Accrued
Interest Debentures); (F) indebtedness represented by the Class B
Debentures (and any replacement Class B Debenture or Class B
Debentures issued upon transfer or exchange of the Class B
Debentures); (G) indebtedness represented by the Class B Accrued
Interest Debentures (and any replacement Class B Accrued Interest
Debenture or Class B Accrued Interest Debentures issued upon
transfer or exchange of the Class B Accrued Interest Debentures);
and (H) other indebtedness for borrowed money (whether or not
constituting a refinancing of existing indebtedness) so long as
(x) such indebtedness is not secured by collateral securing
repayment of the Debentures, (y) such indebtedness contains
provisions reasonably satisfactory to the Majority Holders
subordinating the payment of principal and interest thereon to
the prior payment of principal and interest on the Debentures,
and (z) the incurrence of which will not cause an Event of
Default, or an event which with notice or the lapse of time or
both would constitute an Event of Default, hereunder
(collectively, "Permitted Indebtedness");
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in,
any of its property or assets now owned or hereafter acquired
except (A) mortgages, liens, pledges and security interests
securing Permitted Indebtedness; (B) other liens, charges and
encumbrances incidental to the conduct of its business or the
ownership of its property and assets which are not incurred in
connection with the borrowing of money or the obtaining of
advances or
<PAGE>
credit and which do not materially impair the use thereof in the
operation of its business; (C) liens for taxes or other
governmental charges which are not delinquent or which are being
contested in good faith and for which a reserve shall have been
established in accordance with GAAP; (D) liens granted to secure
purchase money financing of equipment, provided such liens are
limited to the equipment financed; and (E) liens granted to
refinance unencumbered equipment provided such liens are limited
to the equipment refinanced and the incurrence of which will not
cause a default hereunder or in any Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee
the obligations of any other person except by the endorsement of
negotiable instruments for deposit or collection in the ordinary
course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (the
"PBGC"), (B) engage in or permit any person to engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended)
involving any pension plan which would subject the Company to any
material tax, penalty or other liability, (C) incur or suffer to
exist any material "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, involving any
pension plan, or (D) allow or suffer to exist any event or
condition, which presents a material risk of incurring a material
liability to the PBGC by reason of termination of any pension
plan;
(v) amend, supplement or modify the terms of the Subject
Securities or increase the outstanding amount of any Subject
Securities (excluding awards granted under the Plan or under an
incentive compensation plan or arrangement approved by the
Company's Board of Directors or by the Compensation Committee of
the Company's Board of Directors) without the prior consent of
the Majority Holders;
(vi) enter into any merger or consolidation unless the
Company shall be the surviving entity in any such merger or
consolidation, and after giving effect to the transaction no
Event of Default and no event which with the giving of notice or
passage of time or both would constitute an Event of Default
shall have occurred and be continuing, or liquidate, wind-up or
dissolve itself or sell, transfer or lease or otherwise dispose
of all or any substantial part of its assets;
(vii) lend or advance money, credit or property to or invest
in (by capital contribution, loan, purchase or otherwise) any
firm, corporation, or other person except (A) investments in
United States Government obligations and certificates of deposit
of any bank institution with combined capital and surplus of at
least $200,000,000, (B) trade credit, (C) security deposits, or
acquire or otherwise cause any other entity to become a
subsidiary of the Company (as used herein the term "subsidiary"
means any corporation or other organization, whether incorporated
or unincorporated, of
<PAGE>
which the Company or any other subsidiary of the Company
beneficially owns a majority of the voting or economic
interests), (D) loans made to Murray H. Feigenbaum and Jerome
Deutsch in the aggregate principal amount of $162,950 existing on
the date hereof, and (E) loans made to Norman M. Phipps and
Michael Gaffney in the aggregate amount of $675,000 existing on
the date hereof;
(viii) declare or pay any dividends or distributions on
account of its capital stock or purchase, redeem, retire or
otherwise acquire any of its capital stock or any securities
convertible into, exchangeable for, or giving any person the
right to acquire or otherwise subscribe for, any shares of the
Company's capital stock; provided, however, that so long as no
Event of Default or event which, with the giving of notice, the
lapse of time, or both would constitute an Event of Default
hereunder has occurred and is continuing, the Company may pay
regular quarterly dividends on the Preferred Stock in accordance
with the terms thereof; or
(ix) engage in any transaction with any person or entity who
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the
Company (an "Affiliate"), other than director and compensation
arrangements with Affiliates serving as officers and/or directors
of the Company approved by the Company's Board of Directors and
other than transactions with Affiliates entered into in the
ordinary course of business on terms which are at least as
favorable to the Company as those available from unrelated third
parties. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Company, whether
through the ownership of voting securities, by contract or
otherwise, and the terms "controlled" and "controlling" have
meanings correlative thereto.
8. Events of Default.
(a) Definition. For the purposes of this Debenture, an Event of
Default hereunder will be deemed to have occurred if:
(i) the Company fails to pay the principal amount of this
Debenture when due (whether upon the Due Date, upon acceleration or
otherwise), whether or not such payment is prohibited by paragraph 4
hereof;
(ii) the Company fails to pay any interest, premium or
penalty on this Debenture when due and such failure has continued for a
period of ten (10) days;
(iii) the Company fails to perform or observe the provisions
set forth in Paragraphs 7(b) or 7(c) hereof;
(iv) the Company fails to perform or observe any provision
contained in this Debenture or the Security Agreement (other than those
specifically covered by the other provisions of this paragraph 8(a)) and,
if such failure is capable of being cured, such failure continues for a
period of 30 days after the Company's receipt of written notice thereof;
<PAGE>
(v) the Company shall have failed to pay when due any amount
due and owing under any indebtedness of the Company for borrowed money or
any other default or event of default shall have occurred (and shall have
continued beyond the expiration of any applicable grace period) under any
indebtedness of the Company for borrowed money which would permit the
holder thereof to accelerate the maturity thereof or there shall have been
an acceleration of the stated maturity of any indebtedness of the Company
for borrowed money;
(vi) the Security Agreement shall at any time after its
execution and delivery and for any reason cease to constitute a valid and
perfected lien and security interest in and to the Collateral (as defined
therein) or the Company shall take any position inconsistent therewith or
any of the provisions of the Security Agreement that permit the Holder to
exercise its remedies thereunder cease to be in full force and effect;
(vii) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as
they become due; or an order, judgment or decree is entered adjudicating
the Company as bankrupt or insolvent; or any order for relief with respect
to the Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Company or of any substantial part
of the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction
("Insolvency Event or Proceeding"); or any such petition or application is
filed, or any such proceeding is commenced, against the Company and either
(y) the Company by any act indicates its approval thereof, consents thereto
or acquiescence therein or (z) such petition application or proceeding is
not dismissed within 60 days;
(viii) a final judgment which in the aggregate with other
outstanding final judgments against the Company exceeds $250,000 shall be
rendered against the Company and within 90 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 90 days after the expiration of such stay, such judgment is not
discharged;
(ix) any representation or warranty made by the Company in
the Purchase Agreement, dated July 29, 1997 between the Company and the
original Holder of this Debenture, the Security Documents (as defined in
such Purchase Agreement), or any other certificate or instrument delivered
in connection therewith shall have been untrue in any material respect when
made; or
<PAGE>
(x) the Registration Statement shall not have become
effective [within 270 days after the date hereof] [on or prior to [date]].
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described
in subparagraph 8(a)(vii) above) has occurred, the Holder or Holders of
Debentures representing a majority of the aggregate principal amount of
Debentures then outstanding (the "Majority Holders") may demand (by written
notice delivered to the Company) immediate payment of all or any portion of
the outstanding principal amount of the Debentures owed by such Holder or
Holders. If such Majority Holders demand immediate payment of all or any
portion of such Holder's or Holders' Debentures, the Company will, to the
extent permitted under the provisions of paragraph 4 hereof, immediately
pay to such Holder or Holders the principal amount of the Debentures
requested to be paid (plus accrued interest hereon). If an Event of Default
of the type described in subparagraph 8(a)(vii) above has occurred, then
all of the outstanding principal amount of the Debentures shall
automatically be immediately due and payable without any action on the part
of any Holders of the Debentures.
(ii) If an Event of Default has occurred, each Holder of the
Debentures will also have any other rights which such Holder may have
pursuant to applicable law, in each case provided such rights are
consistent with the provisions of paragraph 4 hereof.
9. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Debenture may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Majority Holders, provided, however, neither the interest rate or principal
amounts payable under the Debentures, the dates on which interest or principal
under the Debentures is due nor the obligations to make payments on the
Debentures on a pro rata basis shall be amended without the prior written
consent of each Holder affected thereby, and further provided, however, that any
amendment or waiver which might in any way adversely affect the holders of
Senior Debt, including, but not limited to, any amendment or waiver affecting
the provisions of paragraph 4 or this paragraph 9 shall require the prior
written consent of each holder of Senior Debt. Any amendment or waiver effected
in accordance with this paragraph 9 shall be binding upon each Holder of this
Debenture and each future Holder of this Debenture.
10. Cancellation. After all principal and accrued interest at any time
owed on this Debenture has been paid in full, this Debenture will be surrendered
to the Company for cancellation and will not be reissued.
11. Place of Payment. Payments of principal and interest are to be
delivered to the Holder at the office of the Company, 50 Orville Drive, Bohemia,
New York 11716, or to such
<PAGE>
other address or to the attention of such other Person as specified by prior
written notice to the Company.
12. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures
to exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right the Holder may have,
whether by the laws of the state governing this Debenture, by agreement or
otherwise; and the Company hereby expressly waives the benefit of any statute or
rule of law or equity that would produce a result contrary to or in conflict
with the foregoing.
13. Usury. The Holder and the Company intend that the obligations
evidenced by this Debenture conform strictly to the applicable usury laws from
time to time in force. All agreements between the Company and the Holder,
whether now existing or hereafter arising and whether oral or written, hereby
are expressly limited so that in no contingency or event whatsoever, whether by
acceleration of maturity hereof or otherwise, shall the amount paid or agreed to
be paid to the Holder, or collected by the Holder, by or on behalf of the
Company for the use, forbearance or detention of the money to be loaned to the
Company hereunder or otherwise, or for the payment or performance of any
covenant or obligation contained herein of the Company to the Holder, or in any
other document evidencing, securing or pertaining to such indebtedness evidenced
hereby, exceed the maximum amount permissible under applicable usury law. If
under any circumstances whatsoever fulfillment of any provision hereof or any
other document, at the time performance of such provisions shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity;
and if under any circumstances the Holder ever shall receive from or on behalf
of the Company an amount deemed interest, by applicable law, which would exceed
the highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the Company's
principal amount owing hereunder and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and such other
indebtedness, the excess shall be deemed to have been a payment made by mistake
<PAGE>
and shall be refunded to the Company or to any other person making such payment
on the Company's behalf.
14. Governing Law. The validity, construction and interpretation of
this Debenture will be governed by the internal laws, but not the law of
conflicts and choices of law, of the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered this Class
A 13% Convertible Senior Subordinated Pay-in-Kind Debenture this ___ day of
____________, 199__.
LOGIMETRICS, INC.
By: ______________________________
Name: Charles S. Brand
Title: Chief Executive Officer
<PAGE>
EXHIBIT A
ELECTION TO CONVERT
(All capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the Class A 13% Convertible Senior
Subordinated Pay-in-Kind Debentures)
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
TO WHOM IT MAY CONCERN:
The undersigned registered owner of the attached Class A 13%
Convertible Senior Subordinated Pay-in-Kind Debenture hereby irrevocably
exercises the option to convert such Debenture into Common Stock of LogiMetrics,
Inc. in accordance with the terms thereof, and directs that any shares issuable
and deliverable upon the conversion be issued in the name of and delivered to
the undersigned.
[Name of Debentureholder]
Dated: _____________, 199__
<PAGE>
EXHIBIT B
FORM OF SERIES G WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF JULY 29, 1997 AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN.
LOGIMETRICS, INC.
Common Stock Purchase Warrant - Series G
LOGIMETRICS, INC. (the "Company"), a Delaware corporation, hereby
certifies that, for value received, [Name of Purchaser], or assigns, is
entitled, subject to the terms set forth below, to purchase from the Company
_____________________ (_____________) fully paid and non-assessable shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"), at
a purchase price, subject to the provisions of Paragraph 3 hereof, of fifty
cents ($.50) per share (the "Purchase Price") at any time prior to July 29,
2004. The number and character of such shares are subject to adjustment as
provided below, and the term "Common Stock" shall mean, unless the context
otherwise requires, the stock or other securities or property at the time
deliverable upon the exercise of this Warrant.
1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant
shall be exercised by the holder hereof ("Holder") surrendering this Warrant,
with the form of subscription at the end hereof duly executed by such Holder, to
the Company at its office in Bohemia, New York (or such other office as may be
designated by the Company from time to time), accompanied by payment (in cash or
by certified or official bank check). This Warrant may be exercised for less
than the full number of shares of Common Stock at the time called for hereby, in
which case the number of shares receivable upon the exercise of this Warrant as
a whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon any such partial exercise, the Company at its
expense will forthwith issue to the Holder hereof a new Warrant or Warrants of
like tenor calling for the number of shares of Common Stock as to which rights
have not been exercised, such Warrant or Warrants to be issued in the name of
the Holder hereof or his nominee.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant and payment of the Purchase Price, and in any
event within five (5) business days thereafter, the Company, at its expense,
will cause to be issued in the name of and delivered to the Holder hereof a
certificate or certificates for the number of fully paid and non-assessable
shares of Common Stock or other securities or property to which such Holder
shall be entitled upon such exercise, plus, in lieu of any fractional share
interest to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then
<PAGE>
current market value of one full share of Common Stock or other securities to
which such Holder shall be so entitled.
3. ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN PURCHASE
PRICE. In case, at any time or from time to time after the date of issuance of
this Warrant ("Issuance Date"), the Company shall issue or sell shares of its
Common Stock (other than any Common Stock issuable upon the exercise or
conversion of (i) the Company's Class A 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due 1999 (the "Debentures") (and any replacement
Debenture or Debentures issued upon transfer or exchange of the Debentures),
(ii) any additional securities issued in lieu of cash interest otherwise payable
on the Debentures ("Accrued Interest Debentures") (and any replacement Accrued
Interest Debenture or Accrued Interest Debentures issued upon transfer or
exchange of the Accrued Interest Debentures), (iii) the Company's Amended and
Restated Class B 13% Convertible Senior Subordinated Pay-in-Kind Debentures due
1999 (the "Class B Debentures") (and any replacement Class B Debenture or Class
B Debentures issued upon transfer or exchange of the Class B Debentures), (iv)
any additional securities issued in lieu of cash interest otherwise payable on
the Class B Debentures (the "Class B Accrued Interest Debentures") (and any
replacement Class B Accrued Interest Debenture or Class B Accrued Interest
Debentures issued upon transfer or exchange of the Class B Accrued Interest
Debentures), (v) securities outstanding on the date hereof, (vi) awards made
pursuant to the Company's Stock Compensation Program, (vii) awards made pursuant
to any incentive compensation plan or arrangement approved by the Company's
Board of Directors or by the Compensation Committee of the Company's Board of
Directors, (viii) the Company's Series G Warrants, (ix) the Company's Series H
Warrants, or (x) the Company's Series I Warrants) (such securities,
collectively, the "Subject Securities") for a consideration per share less than
fifty-two cents ($.52) per share (the "Trigger Price") (or, if a Pro Forma
Adjusted Trigger Price shall be in effect as provided below in this Paragraph 3,
then less than such Pro Forma Adjusted Trigger Price per share), then and in
each such case the Holder of this Warrant, upon the exercise hereof as provided
in Paragraph 1 hereof, shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the exercise of this Warrant, a number
of shares of Common Stock determined by (a) dividing the Trigger Price by a Pro
Forma Adjusted Trigger Price per share to be computed as provided below in this
Paragraph 3, and (b) multiplying the resulting quotient by the number of shares
of Common Stock called for on the face of this Warrant. A Pro Forma Adjusted
Trigger Price per share shall be the price computed (to the nearest cent, a
fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or
sale by the Trigger Price (or, if a Pro Forma Adjusted
Trigger Price shall be in effect, by such Price), and
(y) the consideration, if any, received by the Company
upon such issue or sale, by (ii) the number of shares
of Common Stock of the Company outstanding immediately
after such issue or sale.
<PAGE>
For the purpose of this Paragraph 3:
3.1. Stock Splits, Dividends, etc., in Common Stock or Convertible
Securities. In case the Company splits its Common Stock or shall declare any
dividend, or make any other distribution, upon any stock of the Company of any
class payable in Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such stock or
other securities being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as of the
record date for such split, dividend or other distribution), without
consideration, of such Common Stock or such Convertible Securities, as the case
may be.
3.2. Issuance or Sale of Convertible Securities. In case the Company
shall issue or sell any Convertible Securities other than the Subject
Securities, there shall be determined the price per share for which Common Stock
is issuable upon the conversion or exchange thereof, such determination to be
made by dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (b) the maximum number of
shares of Common Stock of the Company issuable upon the conversion or exchange
of all such Convertible Securities.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then such issue or sale shall
be deemed to be an issue or sale for cash (as of the date of issue or sale of
such Convertible Securities) of such maximum number of shares of Common Stock at
the price per share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration, if any, payable to the Company,
or in the rate of exchange, upon the conversion or exchange thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such increase
becoming effective, be readjusted to reflect the same, and provided, further,
that upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the conversion or exchange of such Convertible Securities,
and that they were issued or sold for the consideration actually received by the
Company upon such conversion or exchange, plus the consideration, if any,
actually received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
3.3. Grant of Rights or Options for Common Stock. In case the Company
shall grant any rights or options to subscribe for, purchase or otherwise
acquire Common Stock of any class other than the Subject Securities, there shall
be determined the price per share for which Common Stock is issuable upon the
exercise of such rights or options, such determination to be
<PAGE>
made by dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, by (b) the maximum number
of shares of Common Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then the granting of such
rights or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number of shares
of Common Stock at the price per share so determined, provided that, if such
rights or options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration, if any,
payable to the Company upon the exercise thereof, the Pro Forma Adjusted Trigger
Price per share shall, forthwith upon any such increase becoming effective, be
readjusted to reflect the same, and provided, further, that upon the expiration
of such rights or options, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the exercise of such rights or options and that they were
issued or sold for the consideration actually received by the Company upon such
exercise, plus the consideration, if any, actually received by the Company for
the granting of all such rights or options, whether or not exercised.
3.4. Grant of Rights or Options for Convertible Securities. In case
the Company shall grant any rights or options to subscribe for, purchase or
otherwise acquire Convertible Securities other than the Subject Securities, such
Convertible Securities shall be deemed, for the purposes of subparagraph 3.2.
above, to have been issued or sold for the total amount received or receivable
by the Company as consideration for the granting of such rights or options plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, provided that, upon the
expiration of such rights or options, if any thereof shall not have been
exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made upon the basis that the only Convertible Securities so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights or options,
whether or not exercised.
3.5. Dilution in Case of Other Stock or Securities. In case any shares
of stock or other securities, other than Common Stock of the Company, shall at
any time be receivable upon the exercise of this Warrant, and in case any
additional shares of such stock or any additional such securities (or any stock
or other securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such as to
dilute the purchase
<PAGE>
rights evidenced by this Warrant, then and in each such case the Pro Forma
Adjusted Trigger Price per share shall forthwith be adjusted, substantially in
the manner provided for above in this Paragraph 3, so as to protect the Holder
of this Warrant against the effect of such dilution.
3.6. Expenses, etc., Deducted. In case any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor, after deducting any expenses incurred
and any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale.
3.7. Determination of Consideration. In case any shares of Common
Stock or Convertible Securities or any rights or options to subscribe for,
purchase or otherwise acquire any Common Stock or Convertible Securities shall
be issued or sold for a consideration other than cash (or a consideration which
includes cash and other assets) then, for the purpose of this Paragraph 3, the
Board of Directors of the Company shall promptly determine the fair value of
such consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount at
which such consideration is recorded in the books of the Company for accounting
purposes except in the case of an acquisition accounted for on a pooling of
interest basis. In case any Common Stock or Convertible Securities or any rights
or options to subscribe for, purchase or otherwise acquire any Common Stock or
Convertible Securities shall be issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
the Board of Directors of the Company shall promptly determine in good faith
what part of the consideration so received is to be deemed to be the
consideration for the issue or sale of such Common Stock or Convertible
Securities or such rights or options.
The Company covenants and agrees that, should any determination of
fair value of consideration or of allocation of consideration be made by the
Board of Directors of the Company, pursuant to this subparagraph 3.7, it will,
not less than seven (7) days after any and each such determination, deliver to
the Holder of this Warrant a certificate signed by the President or a Vice
President and the Treasurer or an Assistant Treasurer of the Company reciting
such value as thus determined and setting forth the nature of the transaction
for which such determination was required to be made, the nature of any
consideration, other than cash, for which Common Stock, Convertible Securities,
rights or options have been or are to be issued, the basis for its valuation,
the number of shares of Common Stock which have been or are to be issued, and a
description of any Convertible Securities, rights or options which have been or
are to be issued, including their number, amount and terms.
3.8. Record Date Deemed Issue Date. In case the Company shall take a
record of the Holders of shares of its stock of any class for the purpose of
entitling them (a) to receive a dividend or a distribution payable in Common
Stock or in Convertible Securities, or (b) to
<PAGE>
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the Common Stock issued or sold or deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution,
or the date of the granting of such rights of subscription, purchase or other
acquisition, as the case may be.
3.9. Shares Considered Outstanding. The number of shares of Common
Stock outstanding at any given time shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock, but
shall exclude shares in the treasury of the Company.
3.10. Duration of Pro Forma Adjusted Trigger Price. Following each
computation or readjustment of a Pro Forma Adjusted Trigger Price as provided in
this Paragraph 3, the newly computed or adjusted Pro Forma Adjusted Trigger
Price shall remain in effect until a further computation or readjustment thereof
is required by this Paragraph 3.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATIONS, ETC. In case at any time or from time to time after the
Issuance Date the Holders of the Common Stock of the Company of any class (or
any other shares of stock or other securities at the time receivable upon the
exercise of this Warrant) shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend;
(b) any cash paid or payable out of capital or paid-in surplus or
surplus created as a result of a revaluation of property by way
of dividend; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of Paragraph 3 hereof), then in each case the Holder
of this Warrant, upon the exercise hereof as provided in Paragraph 1 hereof,
shall be entitled to receive, in lieu of, or in addition to, as the case may be,
the shares theretofore receivable upon the exercise of this Warrant, the amount
of stock or other securities or property (including cash in the cases referred
to in clauses (b) and (c) above) which such Holder would hold on the date of
such exercise if, on the Issuance Date, he had been the holder of record of the
number of shares of Common Stock of the Company called for on the face of this
Warrant and had thereafter, during the period from the Issuance Date to and
including the date of such exercise, retained such shares and/or all other or
additional (or
<PAGE>
less) stock or other securities or property (including cash in the cases
referred to in clauses (b) and (c) above) receivable by him as aforesaid during
such period, giving effect to all adjustments called for during such period by
Paragraphs 3 and 5 hereof.
5. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time deliverable on the exercise of this
Warrant) after the date hereof, or in case, after such date, the Company (or any
such other corporation) shall consolidate with or merge into another corporation
or convey all or substantially all its assets to another corporation, then and
in each such case the Holder of this Warrant, upon the exercise hereof as
provided in Paragraph 1 hereof, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the stock or other securities or property to which such Holder would
have been entitled upon such consummation if such Holder had exercised this
Warrant immediately prior thereto, all subject to further adjustments as
provided in Paragraphs 3 and 4 hereof; in each such case, the terms of this
Warrant shall be applicable to the shares of stock or other securities or
property receivable upon the exercise of this Warrant after such consummation.
6. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
7. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock or other stock, securities or
property receivable on the exercise of this Warrant, at the request of the
Holder of this Warrant the Company at its expense shall promptly cause
independent public accountants of recognized standing, selected by the Company,
to compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any additional
shares issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding and (c) the Pro
Forma Adjusted Trigger Price. The Company will forthwith mail a copy of each
such certificate to the Holder of this Warrant.
<PAGE>
8. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the Holders of its Common
Stock (or other stock or securities at the time deliverable upon
the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise
any preemptive right pursuant to the Company's charter, or to
receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any
other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up or (iii) the amount and character of the stock or
other securities proposed to be issued or granted, the date of such proposed
issuance or grant and the persons or class of persons to whom such stock or
other securities are to be offered, issued or granted. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
9. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant and other similar Warrants, such
shares of Common Stock and other stock, securities and property as from time to
time shall be issuable upon the exercise of this Warrant and all other similar
Warrants at the time outstanding.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement in an amount reasonably satisfactory to it, or (in the case
of mutilation) upon surrender and cancellation thereof, the Company will issue,
in lieu thereof, a new Warrant of like tenor.
<PAGE>
11. REMEDIES. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default by the Company in its
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
12. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms, to all of which each taker or owner hereof consents and agrees:
(a) Title to this warrant may be transferred by endorsement (by the
Holder hereof executing the form of assignment at the end hereof
including guaranty of signature) and delivery in the same manner
as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
granted power to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of every such bona
fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered Holder of this Warrant as
the absolute owner hereof for all purposes without being affected
by any notice to the contrary.
13. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants
issued pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the Holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company which may be subscribed for and purchased hereunder.
14. REGISTRATION RIGHTS.
a. Registration. On or prior to October 27, 1997, the Company
will file a registration statement ("Registration Statement") with the
Securities and Exchange Commission ("SEC") covering (x) the Warrants, and (y)
the shares of Common Stock issuable upon exercise of the Warrants (and covering
such other securities as the Company shall determine in its sole discretion)
(collectively "Registrable Securities"), and will use its best efforts to cause
the Registration Statement to become effective on or prior to the ninetieth day
after such filing and to keep the Registration Statement effective until the
earlier of (i) seven years from the date it is declared effective by the SEC, or
(ii) the sale of all of the Registrable Securities.
<PAGE>
b. Additional Terms. Except as otherwise expressly stated herein,
the following provisions shall be applicable to the Registration Statement:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible, and if
any stop order shall be issued by the SEC in connection therewith to use
its reasonable efforts to obtain the removal of such order. Following the
effective date of the Registration Statement, the Company shall, upon the
request of the Holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus meeting
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and other documents necessary or incidental to a public offering of
the Registrable Securities, as shall be reasonably requested by the Holder
to permit the Holder to make a public distribution of its, his or her
Registrable Securities; provided, however, that by accepting this Warrant,
the Holder agrees, if requested by the managing underwriter(s) in
connection with an underwritten public offering of the Company's equity
securities, to enter into a customary agreement with such managing
underwriter(s) not to offer for sale or sell its, his or her Registrable
Securities for up to 180 days after such offering.. The Company will use
its reasonable efforts to qualify the Registrable Securities for sale in
such states as the Holder of Registrable Securities shall reasonably
request, provided that no such qualification will be required in any
jurisdiction where, solely as a result thereof, the Company would be
subject to service of general process or to taxation or qualification as a
foreign corporation doing business in such jurisdiction. The obligations of
the Company hereunder with respect to the Holder's Registrable Securities
are expressly conditioned on the Holder's furnishing to the Company such
appropriate information concerning the Holder, the Holder's Registrable
Securities and the terms of the Holder's offering of such Registrable
Securities as the Company may reasonably request.
(ii) The Company shall pay all expenses incurred in complying
with the provisions of this Paragraph 14, including, without limitation,
all registration and filing fees (including all expenses incident to filing
with the National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel to the Company, securities law
and blue sky fees and expenses and the expenses of any regular and special
audits incident to or required by any such registration. All underwriting
discounts and selling commissions applicable to the sales of the
Registrable Securities, and any state or federal transfer taxes payable
with respect to the sales of the Registrable Securities and all fees and
disbursements of counsel for the Holder, if any, in each case arising in
connection with registration of the Registrable Securities shall be payable
by the Holder.
(iii) In connection with the registration of the Registrable
Securities pursuant to this Paragraph 14, the Company shall indemnify and
hold harmless the Holder, its affiliates, officers, directors, partners,
employees, agents and representatives, each person, if any, who controls
the Holder within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), any person
<PAGE>
deemed to be an underwriter of the Registrable Securities and any person
claiming by or through any of them (collectively, the "Indemnified
Persons") from and against all losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arising out of or are based
upon any untrue statement of any material fact contained in the
Registration Statement or alleged untrue statement, under which such
securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
are made, not misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state
securities or blue sky laws; and will reimburse the Indemnified Persons for
any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to any Indemnified Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
omission made in the Registration Statement, said preliminary prospectus or
said final prospectus or said amendment or supplement or any document
incident thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder.
(iv) The Holder will indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, each officer of the Company who signs
the Registration Statement and each director of the Company from and
against any and all such losses, claims, damages or liabilities arising
from any untrue statement in, or omission from, the Registration Statement,
any such preliminary or final prospectus, amendment, or supplement or
document incident thereto if the statement or omission in respect of which
such loss, claim, damage or liability is asserted was made in reliance upon
and in conformity with information furnished in writing to the Company by
or on behalf of the Holder for use in connection with the preparation of
the Registration Statement or such prospectus or amendment or supplement
thereof.
(v) The reimbursements required by clauses (iii) and (iv) shall
be made by periodic payments during the course of the investigation or
defense as and when bills are received or expenses incurred; provided,
however, that to the extent that an indemnified party receives periodic
payments for legal or other expenses during the course of an investigation
or defense, and such party subsequently received payments for such expenses
from any other parties to the proceeding, such payments shall be used by
the indemnified party to reimburse the indemnifying party for such periodic
payments. Any party which proposes to assert the right to be indemnified
under clause (iii) or (iv) will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against any indemnified party
hereunder, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served, but the
failure to so notify such indemnifying party of any such action, suit or
proceeding
<PAGE>
shall not relieve the indemnifying party from any obligation which it may
have to any indemnified party hereunder unless and only to the extent that
the indemnifying party is prejudiced by said lack of notice. In case any
such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expense, other than reasonable
costs of investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have the
right to employ its own counsel in any such action, but the reasonable fees
and expenses of such counsel shall be at the expense of such indemnified
party, when and as incurred, unless (A) the employment of counsel by such
indemnified party has been authorized by the indemnifying party, (B) the
indemnified party has reasonably concluded (based on advice of counsel),
that there may be legal defenses available to it that are different from or
in addition to those available to the indemnifying party, (C) the
indemnified party shall have reasonably concluded (based on advice of
counsel) that there may be a conflict of interest between the indemnifying
party and the indemnified party in the conduct of defense of such action
(in which case the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party), or (D) the
indemnifying party shall not in fact have employed counsel to assume the
defense of such action within 15 days after receipt of notice of such
action. An indemnifying party shall not be liable for any settlement or any
action or claim effected without its consent, which shall not be
unreasonably withheld.
(vi) If the indemnification provided for in this Paragraph 14 is
unavailable to any indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the actions
that resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties,
and the parties' relative intent, knowledge, access to information and
<PAGE>
opportunity to correct or prevent such action. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth herein, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(vii) The Company and the Holder agree that it would not be just
and equitable if contribution pursuant to clause (vi) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding any other provision hereof, in no
event shall the contribution obligation of the Holder be greater in amount
than the excess of (A) the dollar amount of proceeds received by the Holder
upon the sale of the securities giving rise to such contribution obligation
over (B) the dollar amount of any damages that the Holder has otherwise
been required to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(viii) Neither the filing of the Registration Statement by the
Company pursuant to this Agreement nor the making of any request for
prospectuses by the Holder shall impose upon the Holder any obligation to
exercise his, her or its Warrants or to sell his, her or its Registrable
Securities.
(ix) The Holder, upon receipt of notice from the Company that an
event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of his, her or its Registrable
Securities until the Holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as soon as
practicable after such notice.
15. MAILING OF NOTICES, ETC. All notices, requests, claims, demands,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, when delivered by
courier, three days after being deposited in the mail (registered or certified
mail, postage prepaid, return receipt requested), or when received by facsimile
transmission upon receipt of a confirmed transmission report, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
Attention: Chief Executive Officer
<PAGE>
and if to the Holder of this Warrant to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing. Either the Company or the Holder of this Warrant, by
notice given to the other parties hereto in accordance with this Section 15, may
change the address or facsimile transmission number to which such notice or
other communications are to be sent to such party.
16. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
17. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may
be changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
<PAGE>
18. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with the laws of the State of New York.
LOGIMETRICS, INC.
By:
Dated: [date of issuance]
Attest:
<PAGE>
[To be signed only upon exercise of Warrant]
To LOGIMETRICS, INC.:
The undersigned, the Holder of the within Series G Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _____________ shares of Common Stock of
LOGIMETRICS, INC. and herewith makes payment of $____________ therefor, and
requests that the certificates for such shares be issued in the name of, and be
delivered to, ___________________-, whose address is _______________________.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the right represented by the within
Series G Warrant to purchase the ___________ shares of the Common Stock of
LOGIMETRICS, INC. to which the within Series G Warrant relates, and appoints
________________________ attorney to transfer said right on the books of
LOGIMETRICS, INC. with full power of substitution in the premises.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
In the presence of
<PAGE>
EXHIBIT C
FORM OF SERIES H WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF JULY 29, 1997 AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN.
LOGIMETRICS, INC.
Common Stock Purchase Warrant - Series H
LOGIMETRICS, INC. (the "Company"), a Delaware corporation, hereby
certifies that, for value received, [Name of Purchaser], or assigns, is
entitled, subject to the terms set forth below, to purchase from the Company
_______________________ (____________) fully paid and non-assessable shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"), at
a purchase price, subject to the provisions of Paragraph 3 hereof, of sixty
cents ($.60) per share (the "Purchase Price") at any time prior to July 29,
2004. The number and character of such shares are subject to adjustment as
provided below, and the term "Common Stock" shall mean, unless the context
otherwise requires, the stock or other securities or property at the time
deliverable upon the exercise of this Warrant.
1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant
shall be exercised by the holder hereof ("Holder") surrendering this Warrant,
with the form of subscription at the end hereof duly executed by such Holder, to
the Company at its office in Bohemia, New York (or such other office as may be
designated by the Company from time to time), accompanied by payment (in cash or
by certified or official bank check). This Warrant may be exercised for less
than the full number of shares of Common Stock at the time called for hereby, in
which case the number of shares receivable upon the exercise of this Warrant as
a whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon any such partial exercise, the Company at its
expense will forthwith issue to the Holder hereof a new Warrant or Warrants of
like tenor calling for the number of shares of Common Stock as to which rights
have not been exercised, such Warrant or Warrants to be issued in the name of
the Holder hereof or his nominee.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant and payment of the Purchase Price, and in any
event within five (5) business days thereafter, the Company, at its expense,
will cause to be issued in the name of and delivered to the Holder hereof a
certificate or certificates for the number of fully paid and non-assessable
shares of Common Stock or other securities or property to which such Holder
shall be entitled upon such exercise, plus, in lieu of any fractional share
interest to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then
<PAGE>
current market value of one full share of Common Stock or other securities to
which such Holder shall be so entitled.
3. ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN PURCHASE
PRICE. In case, at any time or from time to time after the date of issuance of
this Warrant ("Issuance Date"), the Company shall issue or sell shares of its
Common Stock (other than any Common Stock issuable upon the exercise or
conversion of (i) the Company's Class A 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due 1999 (the "Debentures") (and any replacement
Debenture or Debentures issued upon transfer or exchange of the Debentures),
(ii) any additional securities issued in lieu of cash interest otherwise payable
on the Debentures ("Accrued Interest Debentures") (and any replacement Accrued
Interest Debenture or Accrued Interest Debentures issued upon transfer or
exchange of the Accrued Interest Debentures), (iii) the Company's Amended and
Restated Class B 13% Convertible Senior Subordinated Pay-in-Kind Debentures due
1999 (the "Class B Debentures") (and any replacement Class B Debenture or Class
B Debentures issued upon transfer or exchange of the Class B Debentures), (iv)
any additional securities issued in lieu of cash interest otherwise payable on
the Class B Debentures (the "Class B Accrued Interest Debentures") (and any
replacement Class B Accrued Interest Debenture or Class B Accrued Interest
Debentures issued upon transfer or exchange of the Class B Accrued Interest
Debentures), (v) securities outstanding on the date hereof, (vi) awards made
pursuant to the Company's Stock Compensation Program, (vii) awards made pursuant
to any incentive compensation plan or arrangement approved by the Company's
Board of Directors or by the Compensation Committee of the Company's Board of
Directors, (viii) the Company's Series G Warrants, (ix) the Company's Series H
Warrants, or (x) the Company's Series I Warrants) (such securities,
collectively, the "Subject Securities") for a consideration per share less than
fifty-two cents ($.52) per share (the "Trigger Price") (or, if a Pro Forma
Adjusted Trigger Price shall be in effect as provided below in this Paragraph 3,
then less than such Pro Forma Adjusted Trigger Price per share), then and in
each such case the Holder of this Warrant, upon the exercise hereof as provided
in Paragraph 1 hereof, shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the exercise of this Warrant, a number
of shares of Common Stock determined by (a) dividing the Trigger Price by a Pro
Forma Adjusted Trigger Price per share to be computed as provided below in this
Paragraph 3, and (b) multiplying the resulting quotient by the number of shares
of Common Stock called for on the face of this Warrant. A Pro Forma Adjusted
Trigger Price per share shall be the price computed (to the nearest cent, a
fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or
sale by the Trigger Price (or, if a Pro Forma Adjusted
Trigger Price shall be in effect, by such Price), and
(y) the consideration, if any, received by the Company
upon such issue or sale, by (ii) the number of shares
of Common Stock of the Company outstanding immediately
after such issue or sale.
<PAGE>
For the purpose of this Paragraph 3:
3.1. Stock Splits, Dividends, etc., in Common Stock or Convertible
Securities. In case the Company splits its Common Stock or shall declare any
dividend, or make any other distribution, upon any stock of the Company of any
class payable in Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such stock or
other securities being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as of the
record date for such split, dividend or other distribution), without
consideration, of such Common Stock or such Convertible Securities, as the case
may be.
3.2. Issuance or Sale of Convertible Securities. In case the Company
shall issue or sell any Convertible Securities other than the Subject
Securities, there shall be determined the price per share for which Common Stock
is issuable upon the conversion or exchange thereof, such determination to be
made by dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (b) the maximum number of
shares of Common Stock of the Company issuable upon the conversion or exchange
of all such Convertible Securities.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then such issue or sale shall
be deemed to be an issue or sale for cash (as of the date of issue or sale of
such Convertible Securities) of such maximum number of shares of Common Stock at
the price per share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration, if any, payable to the Company,
or in the rate of exchange, upon the conversion or exchange thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such increase
becoming effective, be readjusted to reflect the same, and provided, further,
that upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the conversion or exchange of such Convertible Securities,
and that they were issued or sold for the consideration actually received by the
Company upon such conversion or exchange, plus the consideration, if any,
actually received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
3.3. Grant of Rights or Options for Common Stock. In case the Company
shall grant any rights or options to subscribe for, purchase or otherwise
acquire Common Stock of any class other than the Subject Securities, there shall
be determined the price per share for which Common Stock is issuable upon the
exercise of such rights or options, such determination to be
<PAGE>
made by dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, by (b) the maximum number
of shares of Common Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then the granting of such
rights or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number of shares
of Common Stock at the price per share so determined, provided that, if such
rights or options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration, if any,
payable to the Company upon the exercise thereof, the Pro Forma Adjusted Trigger
Price per share shall, forthwith upon any such increase becoming effective, be
readjusted to reflect the same, and provided, further, that upon the expiration
of such rights or options, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the exercise of such rights or options and that they were
issued or sold for the consideration actually received by the Company upon such
exercise, plus the consideration, if any, actually received by the Company for
the granting of all such rights or options, whether or not exercised.
3.4. Grant of Rights or Options for Convertible Securities. In case
the Company shall grant any rights or options to subscribe for, purchase or
otherwise acquire Convertible Securities other than the Subject Securities, such
Convertible Securities shall be deemed, for the purposes of subparagraph 3.2.
above, to have been issued or sold for the total amount received or receivable
by the Company as consideration for the granting of such rights or options plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, provided that, upon the
expiration of such rights or options, if any thereof shall not have been
exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made upon the basis that the only Convertible Securities so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights or options,
whether or not exercised.
3.5. Dilution in Case of Other Stock or Securities. In case any shares
of stock or other securities, other than Common Stock of the Company, shall at
any time be receivable upon the exercise of this Warrant, and in case any
additional shares of such stock or any additional such securities (or any stock
or other securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such as to
dilute the purchase
<PAGE>
rights evidenced by this Warrant, then and in each such case the Pro Forma
Adjusted Trigger Price per share shall forthwith be adjusted, substantially in
the manner provided for above in this Paragraph 3, so as to protect the Holder
of this Warrant against the effect of such dilution.
3.6. Expenses, etc., Deducted. In case any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor, after deducting any expenses incurred
and any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale.
3.7. Determination of Consideration. In case any shares of Common
Stock or Convertible Securities or any rights or options to subscribe for,
purchase or otherwise acquire any Common Stock or Convertible Securities shall
be issued or sold for a consideration other than cash (or a consideration which
includes cash and other assets) then, for the purpose of this Paragraph 3, the
Board of Directors of the Company shall promptly determine the fair value of
such consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount at
which such consideration is recorded in the books of the Company for accounting
purposes except in the case of an acquisition accounted for on a pooling of
interest basis. In case any Common Stock or Convertible Securities or any rights
or options to subscribe for, purchase or otherwise acquire any Common Stock or
Convertible Securities shall be issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
the Board of Directors of the Company shall promptly determine in good faith
what part of the consideration so received is to be deemed to be the
consideration for the issue or sale of such Common Stock or Convertible
Securities or such rights or options.
The Company covenants and agrees that, should any determination of
fair value of consideration or of allocation of consideration be made by the
Board of Directors of the Company, pursuant to this subparagraph 3.7, it will,
not less than seven (7) days after any and each such determination, deliver to
the Holder of this Warrant a certificate signed by the President or a Vice
President and the Treasurer or an Assistant Treasurer of the Company reciting
such value as thus determined and setting forth the nature of the transaction
for which such determination was required to be made, the nature of any
consideration, other than cash, for which Common Stock, Convertible Securities,
rights or options have been or are to be issued, the basis for its valuation,
the number of shares of Common Stock which have been or are to be issued, and a
description of any Convertible Securities, rights or options which have been or
are to be issued, including their number, amount and terms.
3.8. Record Date Deemed Issue Date. In case the Company shall take a
record of the Holders of shares of its stock of any class for the purpose of
entitling them (a) to receive a dividend or a distribution payable in Common
Stock or in Convertible Securities, or (b) to
<PAGE>
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the Common Stock issued or sold or deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution,
or the date of the granting of such rights of subscription, purchase or other
acquisition, as the case may be.
3.9. Shares Considered Outstanding. The number of shares of Common
Stock outstanding at any given time shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock, but
shall exclude shares in the treasury of the Company.
3.10. Duration of Pro Forma Adjusted Trigger Price. Following each
computation or readjustment of a Pro Forma Adjusted Trigger Price as provided in
this Paragraph 3, the newly computed or adjusted Pro Forma Adjusted Trigger
Price shall remain in effect until a further computation or readjustment thereof
is required by this Paragraph 3.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATIONS, ETC. In case at any time or from time to time after the
Issuance Date the Holders of the Common Stock of the Company of any class (or
any other shares of stock or other securities at the time receivable upon the
exercise of this Warrant) shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend;
(b) any cash paid or payable out of capital or paid-in surplus or
surplus created as a result of a revaluation of property by way
of dividend; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of Paragraph 3 hereof), then in each case the Holder
of this Warrant, upon the exercise hereof as provided in Paragraph 1 hereof,
shall be entitled to receive, in lieu of, or in addition to, as the case may be,
the shares theretofore receivable upon the exercise of this Warrant, the amount
of stock or other securities or property (including cash in the cases referred
to in clauses (b) and (c) above) which such Holder would hold on the date of
such exercise if, on the Issuance Date, he had been the holder of record of the
number of shares of Common Stock of the Company called for on the face of this
Warrant and had thereafter, during the period from the Issuance Date to and
including the date of such exercise, retained such shares and/or all other or
additional (or
<PAGE>
less) stock or other securities or property (including cash in the cases
referred to in clauses (b) and (c) above) receivable by him as aforesaid during
such period, giving effect to all adjustments called for during such period by
Paragraphs 3 and 5 hereof.
5. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time deliverable on the exercise of this
Warrant) after the date hereof, or in case, after such date, the Company (or any
such other corporation) shall consolidate with or merge into another corporation
or convey all or substantially all its assets to another corporation, then and
in each such case the Holder of this Warrant, upon the exercise hereof as
provided in Paragraph 1 hereof, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the stock or other securities or property to which such Holder would
have been entitled upon such consummation if such Holder had exercised this
Warrant immediately prior thereto, all subject to further adjustments as
provided in Paragraphs 3 and 4 hereof; in each such case, the terms of this
Warrant shall be applicable to the shares of stock or other securities or
property receivable upon the exercise of this Warrant after such consummation.
6. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
7. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock or other stock, securities or
property receivable on the exercise of this Warrant, at the request of the
Holder of this Warrant the Company at its expense shall promptly cause
independent public accountants of recognized standing, selected by the Company,
to compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any additional
shares issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding and (c) the Pro
Forma Adjusted Trigger Price. The Company will forthwith mail a copy of each
such certificate to the Holder of this Warrant.
8. NOTICES OF RECORD DATE, ETC. In case:
<PAGE>
(a) the Company shall take a record of the Holders of its Common
Stock (or other stock or securities at the time deliverable upon
the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise
any preemptive right pursuant to the Company's charter, or to
receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any
other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up or (iii) the amount and character of the stock or
other securities proposed to be issued or granted, the date of such proposed
issuance or grant and the persons or class of persons to whom such stock or
other securities are to be offered, issued or granted. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
9. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant and other similar Warrants, such
shares of Common Stock and other stock, securities and property as from time to
time shall be issuable upon the exercise of this Warrant and all other similar
Warrants at the time outstanding.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement in an amount reasonably satisfactory to it, or (in the case
of mutilation) upon surrender and cancellation thereof, the Company will issue,
in lieu thereof, a new Warrant of like tenor.
<PAGE>
11. REMEDIES. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default by the Company in its
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
12. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms, to all of which each taker or owner hereof consents and agrees:
(a) Title to this warrant may be transferred by endorsement (by the
Holder hereof executing the form of assignment at the end hereof
including guaranty of signature) and delivery in the same manner
as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
granted power to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of every such bona
fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered Holder of this Warrant as
the absolute owner hereof for all purposes without being affected
by any notice to the contrary.
13. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants
issued pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the Holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company which may be subscribed for and purchased hereunder.
14. REGISTRATION RIGHTS.
a. Registration. On or prior to October 27, 1997, the Company will
file a registration statement ("Registration Statement") with the Securities and
Exchange Commission ("SEC") covering (x) the Warrants, and (y) the shares of
Common Stock issuable upon exercise of the Warrants (and covering such other
securities as the Company shall determine in its sole discretion) (collectively
"Registrable Securities"), and will use its best efforts to cause the
Registration Statement to become effective on or prior to the ninetieth day
after such filing and to keep the Registration Statement effective until the
earlier of (i) seven years from the date it is declared effective by the SEC, or
(ii) the sale of all of the Registrable Securities.
<PAGE>
b. Additional Terms. Except as otherwise expressly stated herein, the
following provisions shall be applicable to the Registration Statement:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible,
and if any stop order shall be issued by the SEC in connection
therewith to use its reasonable efforts to obtain the removal of such
order. Following the effective date of the Registration Statement, the
Company shall, upon the request of the Holder, forthwith supply such
reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and other documents
necessary or incidental to a public offering of the Registrable
Securities, as shall be reasonably requested by the Holder to permit
the Holder to make a public distribution of its, his or her
Registrable Securities; provided, however, that by accepting this
Warrant, the Holder agrees, if requested by the managing
underwriter(s) in connection with an underwritten public offering of
the Company's equity securities, to enter into a customary agreement
with such managing underwriter(s) not to offer for sale or sell its,
his or her Registrable Securities for up to 180 days after such
offering.. The Company will use its reasonable efforts to qualify the
Registrable Securities for sale in such states as the Holder of
Registrable Securities shall reasonably request, provided that no such
qualification will be required in any jurisdiction where, solely as a
result thereof, the Company would be subject to service of general
process or to taxation or qualification as a foreign corporation doing
business in such jurisdiction. The obligations of the Company
hereunder with respect to the Holder's Registrable Securities are
expressly conditioned on the Holder's furnishing to the Company such
appropriate information concerning the Holder, the Holder's
Registrable Securities and the terms of the Holder's offering of such
Registrable Securities as the Company may reasonably request.
(ii) The Company shall pay all expenses incurred in complying
with the provisions of this Paragraph 14, including, without
limitation, all registration and filing fees (including all expenses
incident to filing with the National Association of Securities
Dealers, Inc.), printing expenses, fees and disbursements of counsel
to the Company, securities law and blue sky fees and expenses and the
expenses of any regular and special audits incident to or required by
any such registration. All underwriting discounts and selling
commissions applicable to the sales of the Registrable Securities, and
any state or federal transfer taxes payable with respect to the sales
of the Registrable Securities and all fees and disbursements of
counsel for the Holder, if any, in each case arising in connection
with registration of the Registrable Securities shall be payable by
the Holder.
(iii) In connection with the registration of the Registrable
Securities pursuant to this Paragraph 14, the Company shall indemnify
and hold harmless the Holder, its affiliates, officers, directors,
partners, employees, agents and representatives, each person, if any,
who controls the Holder within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
any person
<PAGE>
deemed to be an underwriter of the Registrable Securities and any
person claiming by or through any of them (collectively, the
"Indemnified Persons") from and against all losses, claims, damages,
expenses or liabilities (or actions in respect thereof) arising out of
or are based upon any untrue statement of any material fact contained
in the Registration Statement or alleged untrue statement, under which
such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading, or any
violation by the Company of the Securities Act, the Exchange Act or
state securities or blue sky laws applicable to the Company and
relating to action or inaction required of the Company in connection
with such registration or qualification under such state securities or
blue sky laws; and will reimburse the Indemnified Persons for any
legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be
liable in any such case to any Indemnified Person to the extent that
any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or omission made in the Registration
Statement, said preliminary prospectus or said final prospectus or
said amendment or supplement or any document incident thereto in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Holder.
(iv) The Holder will indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, each officer of the Company
who signs the Registration Statement and each director of the Company
from and against any and all such losses, claims, damages or
liabilities arising from any untrue statement in, or omission from,
the Registration Statement, any such preliminary or final prospectus,
amendment, or supplement or document incident thereto if the statement
or omission in respect of which such loss, claim, damage or liability
is asserted was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Holder for use in connection with the preparation of the Registration
Statement or such prospectus or amendment or supplement thereof.
(v) The reimbursements required by clauses (iii) and (iv) shall
be made by periodic payments during the course of the investigation or
defense as and when bills are received or expenses incurred; provided,
however, that to the extent that an indemnified party receives
periodic payments for legal or other expenses during the course of an
investigation or defense, and such party subsequently received
payments for such expenses from any other parties to the proceeding,
such payments shall be used by the indemnified party to reimburse the
indemnifying party for such periodic payments. Any party which
proposes to assert the right to be indemnified under clause (iii) or
(iv) will, promptly after receipt of notice of commencement of any
action, suit or proceeding
<PAGE>
against such party in respect of which a claim is to be made against
any indemnified party hereunder, notify each such indemnifying party
of the commencement of such action, suit or proceeding, enclosing a
copy of all papers served, but the failure to so notify such
indemnifying party of any such action, suit or proceeding shall not
relieve the indemnifying party from any obligation which it may have
to any indemnified party hereunder unless and only to the extent that
the indemnifying party is prejudiced by said lack of notice. In case
any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party for any legal or other
expense, other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its own
counsel in any such action, but the reasonable fees and expenses of
such counsel shall be at the expense of such indemnified party, when
and as incurred, unless (A) the employment of counsel by such
indemnified party has been authorized by the indemnifying party, (B)
the indemnified party has reasonably concluded (based on advice of
counsel), that there may be legal defenses available to it that are
different from or in addition to those available to the indemnifying
party, (C) the indemnified party shall have reasonably concluded
(based on advice of counsel) that there may be a conflict of interest
between the indemnifying party and the indemnified party in the
conduct of defense of such action (in which case the indemnifying
party shall not have the right to direct the defense of such action on
behalf of the indemnified party), or (D) the indemnifying party shall
not in fact have employed counsel to assume the defense of such action
within 15 days after receipt of notice of such action. An indemnifying
party shall not be liable for any settlement or any action or claim
effected without its consent, which shall not be unreasonably
withheld.
(vi) If the indemnification provided for in this Paragraph 14 is
unavailable to any indemnified party hereunder in respect of any
losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified
parties in connection with the actions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and
<PAGE>
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth herein, any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
(vii) The Company and the Holder agree that it would not be just
and equitable if contribution pursuant to clause (vi) were determined
by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding any other provision
hereof, in no event shall the contribution obligation of the Holder be
greater in amount than the excess of (A) the dollar amount of proceeds
received by the Holder upon the sale of the securities giving rise to
such contribution obligation over (B) the dollar amount of any damages
that the Holder has otherwise been required to pay by reason of the
untrue or alleged untrue statement or omission or alleged omission
giving rise to such obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(viii) Neither the filing of the Registration Statement by the
Company pursuant to this Agreement nor the making of any request for
prospectuses by the Holder shall impose upon the Holder any obligation
to exercise his, her or its Warrants or to sell his, her or its
Registrable Securities.
(ix) The Holder, upon receipt of notice from the Company that an
event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included
therein, shall promptly discontinue the sale of his, her or its
Registrable Securities until the Holder receives a copy of a
supplemented or amended prospectus from the Company, which the Company
shall provide as soon as practicable after such notice.
15. MAILING OF NOTICES, ETC. All notices, requests, claims, demands,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, when delivered by
courier, three days after being deposited in the mail (registered or certified
mail, postage prepaid, return receipt requested), or when received by facsimile
transmission upon receipt of a confirmed transmission report, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
Attention: Chief Executive Officer
<PAGE>
and if to the Holder of this Warrant to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing. Either the Company or the Holder of this Warrant, by
notice given to the other parties hereto in accordance with this Section 15, may
change the address or facsimile transmission number to which such notice or
other communications are to be sent to such party.
16. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
17. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may
be changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
<PAGE>
18. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with the laws of the State of New York.
LOGIMETRICS, INC.
By:
Dated: [date of issuance]
Attest:
<PAGE>
[To be signed only upon exercise of Warrant]
To LOGIMETRICS, INC.:
The undersigned, the Holder of the within Series H Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _____________ shares of Common Stock of
LOGIMETRICS, INC. and herewith makes payment of $____________ therefor, and
requests that the certificates for such shares be issued in the name of, and be
delivered to, _______________, whose address is _________________________.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________ the right represented by the within
Series H Warrant to purchase the ____________ shares of the Common Stock of
LOGIMETRICS, INC. to which the within Series H Warrant relates, and appoints
________________________ attorney to transfer said right on the books of
LOGIMETRICS, INC. with full power of substitution in the premises.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
In the presence of
<PAGE>
EXHIBIT D
FORM OF SERIES I WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF JULY 29, 1997 AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN.
LOGIMETRICS, INC.
Common Stock Purchase Warrant - Series I
LOGIMETRICS, INC. (the "Company"), a Delaware corporation, hereby
certifies that, for value received, [Name of Purchaser], or assigns, is
entitled, subject to the terms set forth below, to purchase from the Company
___________________ (___________) fully paid and non-assessable shares of Common
Stock, par value $.01 per share, of the Company (the "Common Stock"), at a
purchase price, subject to the provisions of Paragraph 3 hereof, of $1.125 per
share (the "Purchase Price") at any time prior to July 29, 2004. The number and
character of such shares are subject to adjustment as provided below, and the
term "Common Stock" shall mean, unless the context otherwise requires, the stock
or other securities or property at the time deliverable upon the exercise of
this Warrant.
1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant
shall be exercised by the holder hereof ("Holder") surrendering this Warrant,
with the form of subscription at the end hereof duly executed by such Holder, to
the Company at its office in Bohemia, New York (or such other office as may be
designated by the Company from time to time), accompanied by payment (in cash or
by certified or official bank check). This Warrant may be exercised for less
than the full number of shares of Common Stock at the time called for hereby, in
which case the number of shares receivable upon the exercise of this Warrant as
a whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon any such partial exercise, the Company at its
expense will forthwith issue to the Holder hereof a new Warrant or Warrants of
like tenor calling for the number of shares of Common Stock as to which rights
have not been exercised, such Warrant or Warrants to be issued in the name of
the Holder hereof or his nominee.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant and payment of the Purchase Price, and in any
event within five (5) business days thereafter, the Company, at its expense,
will cause to be issued in the name of and delivered to the Holder hereof a
certificate or certificates for the number of fully paid and non-assessable
shares of Common Stock or other securities or property to which such Holder
shall be entitled upon such exercise, plus, in lieu of any fractional share
interest to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then
<PAGE>
current market value of one full share of Common Stock or other securities to
which such Holder shall be so entitled.
3. ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN PURCHASE
PRICE. In case, at any time or from time to time after the date of issuance of
this Warrant ("Issuance Date"), the Company shall issue or sell shares of its
Common Stock (other than any Common Stock issuable upon the exercise or
conversion of (i) the Company's Class A 13% Senior Subordinated Convertible
Pay-in-Kind Debentures due 1999 (the "Debentures") (and any replacement
Debenture or Debentures issued upon transfer or exchange of the Debentures),
(ii) any additional securities issued in lieu of cash interest otherwise payable
on the Debentures ("Accrued Interest Debentures") (and any replacement Accrued
Interest Debenture or Accrued Interest Debentures issued upon transfer or
exchange of the Accrued Interest Debentures), (iii) the Company's Amended and
Restated Class B 13% Convertible Senior Subordinated Pay-in-Kind Debentures due
1999 (the "Class B Debentures") (and any replacement Class B Debenture or Class
B Debentures issued upon transfer or exchange of the Class B Debentures), (iv)
any additional securities issued in lieu of cash interest otherwise payable on
the Class B Debentures (the "Class B Accrued Interest Debentures") (and any
replacement Class B Accrued Interest Debenture or Class B Accrued Interest
Debentures issued upon transfer or exchange of the Class B Accrued Interest
Debentures), (v) securities outstanding on the date hereof, (vi) awards made
pursuant to the Company's Stock Compensation Program, (vii) awards made pursuant
to any incentive compensation plan or arrangement approved by the Company's
Board of Directors or by the Compensation Committee of the Company's Board of
Directors, (viii) the Company's Series G Warrants, (ix) the Company's Series H
Warrants, or (x) the Company's Series I Warrants) (such securities,
collectively, the "Subject Securities") for a consideration per share less than
fifty-two cents ($.52) per share (the "Trigger Price") (or, if a Pro Forma
Adjusted Trigger Price shall be in effect as provided below in this Paragraph 3,
then less than such Pro Forma Adjusted Trigger Price per share), then and in
each such case the Holder of this Warrant, upon the exercise hereof as provided
in Paragraph 1 hereof, shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the exercise of this Warrant, a number
of shares of Common Stock determined by (a) dividing the Trigger Price by a Pro
Forma Adjusted Trigger Price per share to be computed as provided below in this
Paragraph 3, and (b) multiplying the resulting quotient by the number of shares
of Common Stock called for on the face of this Warrant. A Pro Forma Adjusted
Trigger Price per share shall be the price computed (to the nearest cent, a
fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or
sale by the Trigger Price (or, if a Pro Forma Adjusted
Trigger Price shall be in effect, by such Price), and
(y) the consideration, if any, received by the Company
upon such issue or sale, by (ii) the number of shares
of Common Stock of the Company outstanding immediately
after such issue or sale.
<PAGE>
For the purpose of this Paragraph 3:
3.1. Stock Splits, Dividends, etc., in Common Stock or Convertible
Securities. In case the Company splits its Common Stock or shall declare any
dividend, or make any other distribution, upon any stock of the Company of any
class payable in Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such stock or
other securities being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as of the
record date for such split, dividend or other distribution), without
consideration, of such Common Stock or such Convertible Securities, as the case
may be.
3.2. Issuance or Sale of Convertible Securities. In case the Company
shall issue or sell any Convertible Securities other than the Subject
Securities, there shall be determined the price per share for which Common Stock
is issuable upon the conversion or exchange thereof, such determination to be
made by dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (b) the maximum number of
shares of Common Stock of the Company issuable upon the conversion or exchange
of all such Convertible Securities.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then such issue or sale shall
be deemed to be an issue or sale for cash (as of the date of issue or sale of
such Convertible Securities) of such maximum number of shares of Common Stock at
the price per share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration, if any, payable to the Company,
or in the rate of exchange, upon the conversion or exchange thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such increase
becoming effective, be readjusted to reflect the same, and provided, further,
that upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the conversion or exchange of such Convertible Securities,
and that they were issued or sold for the consideration actually received by the
Company upon such conversion or exchange, plus the consideration, if any,
actually received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
3.3. Grant of Rights or Options for Common Stock. In case the Company
shall grant any rights or options to subscribe for, purchase or otherwise
acquire Common Stock of any class other than the Subject Securities, there shall
be determined the price per share for which Common Stock is issuable upon the
exercise of such rights or options, such determination to be
<PAGE>
made by dividing (a) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, by (b) the maximum number
of shares of Common Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then the granting of such
rights or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number of shares
of Common Stock at the price per share so determined, provided that, if such
rights or options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration, if any,
payable to the Company upon the exercise thereof, the Pro Forma Adjusted Trigger
Price per share shall, forthwith upon any such increase becoming effective, be
readjusted to reflect the same, and provided, further, that upon the expiration
of such rights or options, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the exercise of such rights or options and that they were
issued or sold for the consideration actually received by the Company upon such
exercise, plus the consideration, if any, actually received by the Company for
the granting of all such rights or options, whether or not exercised.
3.4. Grant of Rights or Options for Convertible Securities. In case
the Company shall grant any rights or options to subscribe for, purchase or
otherwise acquire Convertible Securities other than the Subject Securities, such
Convertible Securities shall be deemed, for the purposes of subparagraph 3.2.
above, to have been issued or sold for the total amount received or receivable
by the Company as consideration for the granting of such rights or options plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, provided that, upon the
expiration of such rights or options, if any thereof shall not have been
exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made upon the basis that the only Convertible Securities so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights or options,
whether or not exercised.
3.5. Dilution in Case of Other Stock or Securities. In case any shares
of stock or other securities, other than Common Stock of the Company, shall at
any time be receivable upon the exercise of this Warrant, and in case any
additional shares of such stock or any additional such securities (or any stock
or other securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such as to
dilute the purchase
<PAGE>
rights evidenced by this Warrant, then and in each such case the Pro Forma
Adjusted Trigger Price per share shall forthwith be adjusted, substantially in
the manner provided for above in this Paragraph 3, so as to protect the Holder
of this Warrant against the effect of such dilution.
3.6. Expenses, etc., Deducted. In case any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor, after deducting any expenses incurred
and any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale.
3.7. Determination of Consideration. In case any shares of Common
Stock or Convertible Securities or any rights or options to subscribe for,
purchase or otherwise acquire any Common Stock or Convertible Securities shall
be issued or sold for a consideration other than cash (or a consideration which
includes cash and other assets) then, for the purpose of this Paragraph 3, the
Board of Directors of the Company shall promptly determine the fair value of
such consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount at
which such consideration is recorded in the books of the Company for accounting
purposes except in the case of an acquisition accounted for on a pooling of
interest basis. In case any Common Stock or Convertible Securities or any rights
or options to subscribe for, purchase or otherwise acquire any Common Stock or
Convertible Securities shall be issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
the Board of Directors of the Company shall promptly determine in good faith
what part of the consideration so received is to be deemed to be the
consideration for the issue or sale of such Common Stock or Convertible
Securities or such rights or options.
The Company covenants and agrees that, should any determination of
fair value of consideration or of allocation of consideration be made by the
Board of Directors of the Company, pursuant to this subparagraph 3.7, it will,
not less than seven (7) days after any and each such determination, deliver to
the Holder of this Warrant a certificate signed by the President or a Vice
President and the Treasurer or an Assistant Treasurer of the Company reciting
such value as thus determined and setting forth the nature of the transaction
for which such determination was required to be made, the nature of any
consideration, other than cash, for which Common Stock, Convertible Securities,
rights or options have been or are to be issued, the basis for its valuation,
the number of shares of Common Stock which have been or are to be issued, and a
description of any Convertible Securities, rights or options which have been or
are to be issued, including their number, amount and terms.
3.8. Record Date Deemed Issue Date. In case the Company shall take a
record of the Holders of shares of its stock of any class for the purpose of
entitling them (a) to receive a dividend or a distribution payable in Common
Stock or in Convertible Securities, or (b) to
<PAGE>
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the Common Stock issued or sold or deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution,
or the date of the granting of such rights of subscription, purchase or other
acquisition, as the case may be.
3.9. Shares Considered Outstanding. The number of shares of Common
Stock outstanding at any given time shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock, but
shall exclude shares in the treasury of the Company.
3.10. Duration of Pro Forma Adjusted Trigger Price. Following each
computation or readjustment of a Pro Forma Adjusted Trigger Price as provided in
this Paragraph 3, the newly computed or adjusted Pro Forma Adjusted Trigger
Price shall remain in effect until a further computation or readjustment thereof
is required by this Paragraph 3.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATIONS, ETC. In case at any time or from time to time after the
Issuance Date the Holders of the Common Stock of the Company of any class (or
any other shares of stock or other securities at the time receivable upon the
exercise of this Warrant) shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend;
(b) any cash paid or payable out of capital or paid-in surplus or
surplus created as a result of a revaluation of property by way
of dividend; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of Paragraph 3 hereof), then in each case the Holder
of this Warrant, upon the exercise hereof as provided in Paragraph 1 hereof,
shall be entitled to receive, in lieu of, or in addition to, as the case may be,
the shares theretofore receivable upon the exercise of this Warrant, the amount
of stock or other securities or property (including cash in the cases referred
to in clauses (b) and (c) above) which such Holder would hold on the date of
such exercise if, on the Issuance Date, he had been the holder of record of the
number of shares of Common Stock of the Company called for on the face of this
Warrant and had thereafter, during the period from the Issuance Date to and
including the date of such exercise, retained such shares and/or all other or
additional (or
<PAGE>
less) stock or other securities or property (including cash in the cases
referred to in clauses (b) and (c) above) receivable by him as aforesaid during
such period, giving effect to all adjustments called for during such period by
Paragraphs 3 and 5 hereof.
5. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time deliverable on the exercise of this
Warrant) after the date hereof, or in case, after such date, the Company (or any
such other corporation) shall consolidate with or merge into another corporation
or convey all or substantially all its assets to another corporation, then and
in each such case the Holder of this Warrant, upon the exercise hereof as
provided in Paragraph 1 hereof, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the stock or other securities or property to which such Holder would
have been entitled upon such consummation if such Holder had exercised this
Warrant immediately prior thereto, all subject to further adjustments as
provided in Paragraphs 3 and 4 hereof; in each such case, the terms of this
Warrant shall be applicable to the shares of stock or other securities or
property receivable upon the exercise of this Warrant after such consummation.
6. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
7. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock or other stock, securities or
property receivable on the exercise of this Warrant, at the request of the
Holder of this Warrant the Company at its expense shall promptly cause
independent public accountants of recognized standing, selected by the Company,
to compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any additional
shares issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding and (c) the Pro
Forma Adjusted Trigger Price. The Company will forthwith mail a copy of each
such certificate to the Holder of this Warrant.
8. NOTICES OF RECORD DATE, ETC. In case:
<PAGE>
(a) the Company shall take a record of the Holders of its Common
Stock (or other stock or securities at the time deliverable upon
the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise
any preemptive right pursuant to the Company's charter, or to
receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any
other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up or (iii) the amount and character of the stock or
other securities proposed to be issued or granted, the date of such proposed
issuance or grant and the persons or class of persons to whom such stock or
other securities are to be offered, issued or granted. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
9. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant and other similar Warrants, such
shares of Common Stock and other stock, securities and property as from time to
time shall be issuable upon the exercise of this Warrant and all other similar
Warrants at the time outstanding.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement in an amount reasonably satisfactory to it, or (in the case
of mutilation) upon surrender and cancellation thereof, the Company will issue,
in lieu thereof, a new Warrant of like tenor.
<PAGE>
11. REMEDIES. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default by the Company in its
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
12. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms, to all of which each taker or owner hereof consents and agrees:
(a) Title to this warrant may be transferred by endorsement (by the
Holder hereof executing the form of assignment at the end hereof
including guaranty of signature) and delivery in the same manner
as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
granted power to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of every such bona
fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered Holder of this Warrant as
the absolute owner hereof for all purposes without being affected
by any notice to the contrary.
13. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants
issued pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the Holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company which may be subscribed for and purchased hereunder.
14. REGISTRATION RIGHTS.
a. Registration. On or prior to October 27, 1997, the Company
will file a registration statement ("Registration Statement") with the
Securities and Exchange Commission ("SEC") covering (x) the Warrants, and (y)
the shares of Common Stock issuable upon exercise of the Warrants (and covering
such other securities as the Company shall determine in its sole discretion)
(collectively "Registrable Securities"), and will use its best efforts to cause
the Registration Statement to become effective on or prior to the ninetieth day
after such filing and to keep the Registration Statement effective until the
earlier of (i) seven years from the date it is declared effective by the SEC, or
(ii) the sale of all of the Registrable Securities.
<PAGE>
b. Additional Terms. Except as otherwise expressly stated herein,
the following provisions shall be applicable to the Registration Statement:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible, and if
any stop order shall be issued by the SEC in connection therewith to use
its reasonable efforts to obtain the removal of such order. Following the
effective date of the Registration Statement, the Company shall, upon the
request of the Holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus meeting
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and other documents necessary or incidental to a public offering of
the Registrable Securities, as shall be reasonably requested by the Holder
to permit the Holder to make a public distribution of its, his or her
Registrable Securities; provided, however, that by accepting this Warrant,
the Holder agrees, if requested by the managing underwriter(s) in
connection with an underwritten public offering of the Company's equity
securities, to enter into a customary agreement with such managing
underwriter(s) not to offer for sale or sell its, his or her Registrable
Securities for up to 180 days after such offering.. The Company will use
its reasonable efforts to qualify the Registrable Securities for sale in
such states as the Holder of Registrable Securities shall reasonably
request, provided that no such qualification will be required in any
jurisdiction where, solely as a result thereof, the Company would be
subject to service of general process or to taxation or qualification as a
foreign corporation doing business in such jurisdiction. The obligations of
the Company hereunder with respect to the Holder's Registrable Securities
are expressly conditioned on the Holder's furnishing to the Company such
appropriate information concerning the Holder, the Holder's Registrable
Securities and the terms of the Holder's offering of such Registrable
Securities as the Company may reasonably request.
(ii) The Company shall pay all expenses incurred in
complying with the provisions of this Paragraph 14, including, without
limitation, all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers,
Inc.), printing expenses, fees and disbursements of counsel to the Company,
securities law and blue sky fees and expenses and the expenses of any
regular and special audits incident to or required by any such
registration. All underwriting discounts and selling commissions applicable
to the sales of the Registrable Securities, and any state or federal
transfer taxes payable with respect to the sales of the Registrable
Securities and all fees and disbursements of counsel for the Holder, if
any, in each case arising in connection with registration of the
Registrable Securities shall be payable by the Holder.
(iii) In connection with the registration of the Registrable
Securities pursuant to this Paragraph 14, the Company shall indemnify and
hold harmless the Holder, its affiliates, officers, directors, partners,
employees, agents and representatives, each person, if any, who controls
the Holder within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), any person
<PAGE>
deemed to be an underwriter of the Registrable Securities and any person
claiming by or through any of them (collectively, the "Indemnified
Persons") from and against all losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arising out of or are based
upon any untrue statement of any material fact contained in the
Registration Statement or alleged untrue statement, under which such
securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
are made, not misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state
securities or blue sky laws; and will reimburse the Indemnified Persons for
any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to any Indemnified Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
omission made in the Registration Statement, said preliminary prospectus or
said final prospectus or said amendment or supplement or any document
incident thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder.
(iv) The Holder will indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, each officer of the Company who signs
the Registration Statement and each director of the Company from and
against any and all such losses, claims, damages or liabilities arising
from any untrue statement in, or omission from, the Registration Statement,
any such preliminary or final prospectus, amendment, or supplement or
document incident thereto if the statement or omission in respect of which
such loss, claim, damage or liability is asserted was made in reliance upon
and in conformity with information furnished in writing to the Company by
or on behalf of the Holder for use in connection with the preparation of
the Registration Statement or such prospectus or amendment or supplement
thereof.
(v) The reimbursements required by clauses (iii) and (iv)
shall be made by periodic payments during the course of the investigation
or defense as and when bills are received or expenses incurred; provided,
however, that to the extent that an indemnified party receives periodic
payments for legal or other expenses during the course of an investigation
or defense, and such party subsequently received payments for such expenses
from any other parties to the proceeding, such payments shall be used by
the indemnified party to reimburse the indemnifying party for such periodic
payments. Any party which proposes to assert the right to be indemnified
under clause (iii) or (iv) will, promptly after receipt of notice of
commencement of any action, suit or proceeding
<PAGE>
against such party in respect of which a claim is to be made against any
indemnified party hereunder, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all
papers served, but the failure to so notify such indemnifying party of any
such action, suit or proceeding shall not relieve the indemnifying party
from any obligation which it may have to any indemnified party hereunder
unless and only to the extent that the indemnifying party is prejudiced by
said lack of notice. In case any such action, suit or proceeding shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled
to participate in and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expense, other than
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall
have the right to employ its own counsel in any such action, but the
reasonable fees and expenses of such counsel shall be at the expense of
such indemnified party, when and as incurred, unless (A) the employment of
counsel by such indemnified party has been authorized by the indemnifying
party, (B) the indemnified party has reasonably concluded (based on advice
of counsel), that there may be legal defenses available to it that are
different from or in addition to those available to the indemnifying party,
(C) the indemnified party shall have reasonably concluded (based on advice
of counsel) that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of defense of
such action (in which case the indemnifying party shall not have the right
to direct the defense of such action on behalf of the indemnified party),
or (D) the indemnifying party shall not in fact have employed counsel to
assume the defense of such action within 15 days after receipt of notice of
such action. An indemnifying party shall not be liable for any settlement
or any action or claim effected without its consent, which shall not be
unreasonably withheld.
(vi) If the indemnification provided for in this
Paragraph 14 is unavailable to any indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and
<PAGE>
opportunity to correct or prevent such action. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth herein, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(vii) The Company and the Holder agree that it would not be
just and equitable if contribution pursuant to clause (vi) were determined
by pro rata allocation or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding any other provision hereof, in no
event shall the contribution obligation of the Holder be greater in amount
than the excess of (A) the dollar amount of proceeds received by the Holder
upon the sale of the securities giving rise to such contribution obligation
over (B) the dollar amount of any damages that the Holder has otherwise
been required to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(viii) Neither the filing of the Registration Statement by
the Company pursuant to this Agreement nor the making of any request for
prospectuses by the Holder shall impose upon the Holder any obligation to
sell his, her or its Registrable Securities.
(ix) The Holder, upon receipt of notice from the Company
that an event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of his, her or its Registrable
Securities until the Holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as soon as
practicable after such notice.
15. MAILING OF NOTICES, ETC. All notices, requests, claims, demands,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, when delivered by
courier, three days after being deposited in the mail (registered or certified
mail, postage prepaid, return receipt requested), or when received by facsimile
transmission upon receipt of a confirmed transmission report, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
Attention: Chief Executive Officer
<PAGE>
and if to the Holder of this Warrant to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing. Either the Company or the Holder of this Warrant, by
notice given to the other parties hereto in accordance with this Section 15, may
change the address or facsimile transmission number to which such notice or
other communications are to be sent to such party.
16. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
17. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may
be changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
<PAGE>
18. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with the laws of the State of New York.
LOGIMETRICS, INC.
By:
Dated: [date of issuance]
Attest:
<PAGE>
[To be signed only upon exercise of Warrant]
To LOGIMETRICS, INC.:
The undersigned, the Holder of the within Series I Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, ____________ shares of Common Stock of
LOGIMETRICS, INC. and herewith makes payment of $____________ therefor, and
requests that the certificates for such shares be issued in the name of, and be
delivered to, _______________, whose address is _________________________.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________ the right represented by the within
Series I Warrant to purchase the ____________ shares of the Common Stock of
LOGIMETRICS, INC. to which the within Series I Warrant relates, and appoints
________________________ attorney to transfer said right on the books of
LOGIMETRICS, INC. with full power of substitution in the premises.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
In the presence of
<PAGE>
EXHIBIT E
LIST OF PURCHASERS AND ALLOCATION OF PURCHASE
[OMITTED]
<PAGE>
EXHIBIT F
LIST OF PURCHASERS AND ALLOCATION OF OPTION
[OMITTED]
EXHIBIT 10.5
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of July 29, 1997, by and among
LogiMetrics, Inc., a Delaware corporation (the "Company"), Charles S. Brand
("Brand"), and the other individuals and entities listed on the signature pages
hereto (the "Purchasers" and, collectively with Brand and each other Person who,
in accordance with the terms hereof, shall become a party to or be bound by the
terms of this Agreement after the date hereof, the "Stockholders").
W I T N E S S E T H:
WHEREAS, Brand currently is the beneficial owner of 19,387,800 shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, the Purchasers beneficially own an aggregate of 700,000 shares of
Common Stock; and
WHEREAS, pursuant to the terms of a Purchase Agreement, dated as of even
date herewith (the "Purchase Agreement"), by and among the Company and the
Purchasers, the Purchasers have acquired or will shortly acquire beneficial
ownership of an additional 15,600,000 shares of Common Stock in the aggregate;
and
WHEREAS, under the terms of the Purchase Agreement, the Purchasers have the
right to acquire beneficial ownership of an additional 4,500,000 shares of
Common Stock; and
WHEREAS, the Company and the Stockholders desire to make provision with
respect to (i) the ownership, transfer or other disposition of their equity
interests in the Company, and (ii) the management of the affairs of the Company;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties hereby agree as follows:
ARTICLE I
Certain Definitions
Section 1.1 Certain Definitions. As used in this Agreement, the following
terms have the respective meanings set forth below.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and
<PAGE>
"controlling" have meanings correlative thereto. Any Relative of an individual
shall be deemed to be an Affiliate of such individual for purposes hereof.
"Beneficial owner" (and, with correlative meanings, "beneficially own" and
"beneficial ownership") of any interest means a Person who, together with his,
her or its Affiliates, is or may be deemed a beneficial owner of such interest
for purposes of Rule 13d-3 or 13d-5 under the Securities Exchange Act of 1934,
as amended, or who, together with his, her or its Affiliates, has the right to
become such a beneficial owner of such interest (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise, conversion or
exchange of any warrant, right or other instrument, or otherwise.
"Board" means the Board of Directors of the Company in office at the
applicable time, as elected in accordance with the provisions of this Agreement.
"Company Sale" means any of (i) a Transfer or other disposition of all or
substantially all of the assets of the Company to any Person, or group of
related Persons, other than an Affiliate of the Company, in one transaction or a
series of related transactions, (ii) a merger, consolidation, recapitalization,
share exchange or reorganization of the Company in which the holders of voting
stock of the Company immediately prior thereto will not own at least 50% of the
voting shares of the continuing or surviving entity (whether or not the Company)
immediately thereafter, (iii) the sale or other disposition of voting stock of
the Company representing 50% or more of the total voting power of the Company's
outstanding capital stock in one transaction or a series of related transactions
to any Person, or group of related Persons, other than a Stockholder or any of
its Affiliates, (iv) the issuance of additional shares of voting stock
(including, but not limited to, the issuance of Rights to purchase shares of
voting stock) if, as a result thereof, any Person, or group of related Persons,
other than a Stockholder or any of its Affiliates, would beneficially own 50% or
more of the total voting power of the Company's outstanding capital stock in one
transaction or a series of related transactions, or (v) the formation of any
form of partnership, joint venture, association or other business organization
or strategic alliance, in which the Company would participate if, as a result
thereof, all or substantially all of the assets of the Company would be
Transferred to any Person not wholly owned by the Company or one or more wholly
owned Subsidiaries of the Company.
"Contract" means any written or oral agreement, contract, arrangement or
instrument.
"Person" means an individual, partnership, corporation, joint stock
company, unincorporated organization or association, trust or joint venture, or
a governmental agency or political subdivision thereof.
"Purchaser Group" means, collectively, the Purchasers and all Purchaser
Transferees (as defined in Section 2.1(f)).
<PAGE>
"Relative" means, with respect to any Stockholder, the spouse of such
Stockholder or any of such Stockholder's ancestors, descendants, siblings,
descendants of any such siblings, or the spouse of any of the foregoing
"Right" means any option, warrant, security, right or other instrument
convertible into or exchangeable or exercisable for or otherwise giving the
holder thereof the right to acquire, directly or indirectly, any Common Stock or
any other such option, warrant, security, right or instrument.
"Shares" means shares of Common Stock.
"Subsidiary" means any corporation, association or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is at the time
directly or indirectly owned or controlled by another corporation, association
or other organization, or by any one or more Subsidiaries of such other
corporation, association or other organization, or by such other corporation,
association or other organization and one or more of its Subsidiaries.
"Transfer" means, directly or indirectly, any transfer, sale, assignment,
pledge, hypothecation, gift, or other transfer or disposition, whether or not by
operation of law and whether or not voluntarily, of any Shares or any interest
therein.
Section 1.2. Interpretation. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; and (iii) words importing the singular shall also include the plural, and
vice versa.
ARTICLE II
Restrictions on Certain Transfers
Section 2.1. Tag-Along. (a) Except as set forth in paragraphs (f) and (g)
below, no Stockholder (an "Initiating Stockholder"), whether acting alone or in
concert with any other Stockholder, shall enter into a Contract to Transfer,
arrange for the Transfer of or Transfer to any Person or group (as defined
pursuant to Rule 13d-5 promulgated under the Securities Exchange Act of 1934, as
amended), directly or indirectly or through one or more intermediaries, in a
single transaction or a series of related transactions, any Shares then
beneficially owned by the Initiating Stockholder or any interest therein, if
immediately following the consummation of such Transfer, such acquiring Person
or group, together with any Affiliates thereof (or Affiliate of any member of
such group), would be the beneficial owner, directly or indirectly, of more than
50% of the outstanding Shares (including as outstanding for such purpose any
Shares issuable upon exercise of any Rights to be acquired from such Initiating
Stockholder and all other Rights beneficially
<PAGE>
owned by any such Affiliate, Person, group or member thereof), unless all
Stockholders are given the opportunity to Transfer all (but not less than all)
of the Shares then owned by each of them (including without limitation Shares
issuable upon exercise of Rights then owned by each of them) concurrently with
such proposed Transfer on terms (including, without limitation, the form and
amount of, and the time of receipt of, consideration therefor) identical to
those applicable to such proposed Transfer (the "Tag-Along Rights").
(b) No opportunity shall be deemed given to any Stockholder for purposes of
Section 2.1(a) unless (i) such Stockholder shall have received written notice
from the Initiating Stockholder setting forth the material terms of the proposed
Transfer (a "Tag-Along Notice"), and shall have been given at least twenty days
after receipt of such Tag-Along Notice to exercise its rights contained in this
Section 2.1 by giving written notice thereof to the Initiating Stockholder (a
"Tag-Along Exercise Notice"), (ii) if such Stockholder is then the holder of any
Rights, it shall be permitted to exercise, convert or exchange such Rights
strictly in accordance with the terms thereof, (iii) the terms on which the
Initiating Stockholder actually sells its Shares are no more favorable to the
Initiating Stockholder (including, without limitation, the form and amount of,
and the time of receipt of, consideration therefor), than the terms set forth in
the Tag-Along Notice given by it pursuant to clause (i) of this sentence, (iv)
the Person or group to which the applicable Transfer is proposed to be made
makes an offer to all of the Stockholders to purchase any or all outstanding
Shares then owned by the Stockholders (including Shares issuable upon the
exercise, conversion or exchange of Rights) that (A) is distributed in writing
to all Stockholders, (B) is open for acceptance by all Stockholders for a period
of at least twenty business days after such distribution, and (C) provides for
per Share consideration identical to that being paid in the Transfer to each
Stockholder who accepts such offer, and (v) the Person or group to which the
Initiating Stockholder Transfers its Shares purchases, at or prior to the time
of purchase of such Shares, from each Person exercising his or its rights
pursuant to this Section 2.1, at least such number of Shares as such Person
shall specify in the notice given by such Person pursuant to clause (i) of this
sentence.
(c) The Initiating Stockholder and any proposed Transferee shall have the
right, in their sole discretion, at all times prior to consummation of any
proposed Transfer, to abandon any such proposed Transfer whereupon all Tag-Along
Rights with respect to such proposed Transfer shall terminate, and neither the
Initiating Stockholder nor any proposed Transferees shall have any liability or
obligation to any Stockholder with respect thereto.
(d) In determining the consideration paid for purposes hereof, the
aggregate purchase price shall be increased to the extent that the Initiating
Stockholder or its Affiliates shall receive additional consideration (i) for
covenants against competition, or (ii) for services (such as pursuant to
management or consulting agreements) in amounts in excess of amounts which would
be payable to a third party in an arms' length transaction.
(e) If any Stockholder does not timely deliver a Tag-Along Exercise Notice,
such Stockholder will be deemed to have waived its rights with respect to the
proposed Transfer described in the Tag-Along Notice and the Initiating
Stockholder shall have 60 days after the expiration date for the delivery of
such Tag-Along Exercise Notice in which to Transfer not more
<PAGE>
than the number of Shares described in the Tag-Along Notice on terms not more
favorable to the Initiating Stockholder than were set forth in the Tag-Along
Notice. If, at the end of such 60-day period, the Initiating Stockholder has not
completed the Transfer of its Shares in accordance with the terms described in
the Tag-Along Notice, then all of the restrictions on sale or other disposition
contained in this Agreement with respect to Shares beneficially owned by the
Initiating Stockholder shall again be in effect.
(f) The provisions of this Section 2.1 shall not apply to any Transfer (x)
by any Purchaser that is an individual (an "Individual Purchaser") or a
Purchaser Transferee (as defined below) that is an individual (an "Individual
Transferee"), by inter vivos gift, qualified domestic relations order,
testamentary bequest or otherwise, with or without consideration, of any Shares
which the Individual Purchaser or such Individual Transferee may now or at any
time hereafter own to (i) a trust for the benefit of such Individual Purchaser
or such Individual Transferee, as applicable, or for one or more of such
Individual Purchaser's or such Individual Transferee's Relatives, as applicable,
or (ii) to one or more of such Individual Purchaser's or such Individual
Transferee's Relatives, as applicable, or (y) with or without consideration, by
any Purchaser or a Purchaser Transferee of any Shares which such Person may now
or at any time hereafter own to any other Purchaser, or any Affiliate of any
Purchaser; provided, however, that any such Transferee pursuant to either clause
(x) or clause (y) (a "Purchaser Transferee") shall expressly agree in writing in
an instrument satisfactory to the Company to be bound by the terms of this
Agreement. Any Shares, or any interest therein, Transferred pursuant to this
clause (f) shall continue to be subject to the terms of this Agreement.
(g) The provisions of this Section 2.1 shall not apply to any Transfer by
Brand or a Brand Transferee (as defined below), by inter vivos gift, qualified
domestic relations order, testamentary bequest or otherwise, with or without
consideration, of any Shares which Brand or such Brand Transferee may now or at
any time hereafter own to (i) a trust for the benefit of Brand or such Brand
Transferee, as applicable, or for one or more of Brand's or such Brand
Transferee's Relatives, as applicable, or (ii) to one or more of Brand's or such
Brand Transferee's Relatives, as applicable; provided, however, that any such
Transferee (a "Brand Transferee") shall expressly agree in writing in an
instrument satisfactory to the Company to be bound by the terms of this
Agreement. Any Shares, or any interest therein, Transferred pursuant to this
clause (g) shall continue to be subject to the terms of this Agreement.
Section 2.2. Go-Along Obligations. (a) Subject to the provisions of Section
2.2(c), if at any time after the date hereof, any member of the Purchaser Group
receives a firm, bona fide, written offer from a third party (an "Offeror") to
purchase or otherwise acquire all of the Shares beneficially owned by the
Purchaser Group in one transaction or series of related transactions, and the
holders of a majority of the Shares beneficially owned by all of the members of
the Purchaser Group (the "Majority Holders") have determined to accept such
offer, then, notwithstanding the other provisions of this Agreement, the
Majority Holders shall have the right (the "Go-Along Right") to require all
other Stockholders to sell or otherwise dispose of all Shares beneficially owned
by them to such Offeror on the same terms and conditions set forth in such
offer. In determining the consideration to be paid pursuant to such offer, the
aggregate purchase price for the Shares to be sold by the Purchaser Group shall
be increased to the extent
<PAGE>
that any member of the Purchaser Group or their respective Affiliates shall
receive additional consideration (i) for covenants against competition, or (ii)
for services (such as pursuant to management or consulting agreements) in
amounts in excess of amounts which would be payable to a third party in an arms'
length transaction.
(b) If the Majority Holders elect to exercise their Go-Along Rights
hereunder, they shall provide written notice (the "Go-Along Notice") to the
Company and each other Stockholder of such election at least 20 days prior to
the closing date for such transaction, which Go-Along Notice shall include the
terms and conditions of such offer, the name of the Offeree and the proposed
closing date of such transaction. Each other Stockholder shall be obligated to
sell or otherwise dispose of all Shares beneficially owned by it to such Offeror
in accordance with the terms set forth in the Go-Along Notice. However, if such
transaction is not completed within 90 days of the giving of such Go-Along
Notice, then any exercise by the Majority Holders of their Go-Along Right shall
require a new notice pursuant to this Section 2.2.
(c) Notwithstanding the other provisions of this Section 2.2, no
Stockholder shall be required to Transfer its Shares pursuant to this Section
2.2 unless the consideration to be received by the Stockholders in exchange for
the Shares to be Transferred to the Offeror pursuant to such transaction shall
have been determined to be fair to the Stockholders pursuant to a written
fairness opinion issued by an investment banking firm selected by the Company's
Board of Directors with the concurrence of (x) the holders of a majority of the
Shares then owned by Brand and any Brand Transferees, as a group, and (y) the
Majority Holders.
Section 2.3. Additional Transfer Restrictions. Without the prior approval
of the Majority Holders, which approval shall not be unreasonably withheld or
delayed, neither Brand nor any Brand Transferee, whether acting alone or in
concert with any other Person, shall enter into a Contract to Transfer, arrange
for the Transfer of or Transfer to any Person or group (as defined pursuant to
Rule 13d-5 promulgated under the Securities Exchange Act of 1934, as amended)
(other than to Brand or a Brand Transferee), directly or indirectly or through
one or more intermediaries, in a single transaction or a series of related
transactions, any Shares then beneficially owned by Brand or such Brand
Transferee or any interest therein, if immediately following the consummation of
such Transfer, such acquiring Person or group, together with any Affiliates
thereof (or Affiliate of any member of such group), would be the beneficial
owner, directly or indirectly, of 20% or more of the outstanding Shares
(including as outstanding for such purpose any Shares issuable upon exercise of
any Rights to be acquired from Brand or a Brand Transferee in such transaction
and all other Rights beneficially owned by any such Affiliate, Person, group or
member thereof). For purposes of this Section 2.3, the Majority Holders shall be
deemed to have approved a Transfer pursuant to this Section 2.3 if Brand or the
Brand Transferee, as the case may be, gives written notice to the Purchasers of
his, its or their intention to make a Transfer pursuant to this Section 2.3,
which notice shall include the terms and conditions of such Transfer, the names
of the proposed acquiring Person or group and the proposed closing date of such
Transfer, and Brand or the Brand Transferee, as the case may be, shall not have
received within 10 days thereafter a written notice from the Majority Holders
objecting to the proposed Transfer.
<PAGE>
ARTICLE III
Board of Directors; Committees
Section 3.1. Composition of the Board of Directors. (a) Subject to the
provisions of Section 3.1(b) and 3.1(d), the Company shall use its best efforts
to, and each Stockholder shall, take and cause to be taken all necessary action
(corporate and other), including the voting of Shares, to set the number of
directors at seven and to elect as the members of the Board four individuals
(the "Brand Directors") selected and nominated from time to time by Brand
(provided that such individuals shall be reasonably satisfactory to a majority
of the directors appointed by the Purchaser Group) and three individuals (the
"Purchaser Directors") selected and nominated from time to time by the Purchaser
Group, by action of the Majority Holders (provided that such individuals shall
be reasonably satisfactory to a majority of the Brand Directors); provided,
however, that in the event that the Purchaser Group acquires all of the
Additional Securities (as defined in the Purchase Agreement) pursuant to the
terms of Section 1.4 of the Purchase Agreement, the number of directors shall be
set at eight and the Purchaser Group shall have the right from and after the
Option Closing Date (as defined in the Purchase Agreement) to appoint a fourth
Purchaser Director; provided, further, that if any member of the Purchaser Group
is ever entitled to appoint a member of the Board pursuant to the rights granted
by the Company to the holders of the Cerberus Debentures (as such term is
defined in the Purchase Agreement) as a result of the purchase of the Cerberus
Debentures or otherwise, the size of the Board and the number of directors which
the Purchaser Group shall have the right to appoint pursuant to the terms hereof
shall be reduced by one. At any time during which the Purchaser Group is
entitled to appoint at least four Purchaser Directors pursuant to the provisions
of this Section 3.1(a), at the request of either Brand or the Majority Holders,
the size of the Board shall be increased by one and Brand and the Purchaser
Group, by action of the Majority Holders, shall mutually select one additional
director who shall not be employed by or otherwise be an Affiliate of either the
Company, Brand or any member of the Purchaser Group (the "Independent Director")
to fill the vacancy caused by such increase in the size of the Board.
(b) In the event that Cerberus Partners, L.P. ("Cerberus") or any other
holder of the Cerberus Debentures (Cerberus or such holder, the "Debenture
Holder") exercises its right to appoint a member of the Board pursuant to the
terms of the Unit Purchase Agreement, dated as of March 7, 1996 (the "Cerberus
Agreement"), by and between the Company and Cerberus, the number of directors
shall be increased by two, one of such additional directors shall be the
director appointed by the Debenture Holder (the "Debenture Director") and Brand
and the Purchaser Group, by action of the Majority Holders, shall mutually
select one additional Independent Director to fill the vacancies caused by such
increase in the size of the Board. Each Stockholder shall use its best efforts
to cause the Company to comply with the requirements of the Cerberus Agreement,
including without limitation, voting all of their Shares in favor of the
election of such person as the Debenture Holder may designate as a director of
the Company. In the event that the Debenture Director resigns, is removed or
otherwise is unable to continue to serve as a director of the Company and the
Debenture Holder does not exercise its right to
<PAGE>
appoint a successor Debenture Director, one Independent Director to be mutually
selected by Brand and the Majority Holders shall be deemed to have resigned as a
director effective as of the date that the Debenture Holder notifies the Company
that it will not exercise its rights under the Cerberus Agreement and shall
cease to be a member of the Board of Directors.
(c) The term of office of all directors shall continue until the next
succeeding annual meeting of stockholders of the Company and until their
successors are duly elected and qualified. Each of Brand and the Purchaser Group
shall at all times have the right, exercisable by such Person in his or its sole
discretion, to designate successors for the directors appointed by such Person
(provided that such successors shall be reasonably satisfactory to a majority of
the Purchaser Directors or the Brand Directors, as the case may be), to cause
the Stockholders to remove, with or without cause, one or more of the directors
appointed by such Person, and to fill any vacancy on the Board resulting from
the death, resignation or removal of any director appointed by such Person
(provided that any nominee selected to fill such a vacancy shall be reasonably
satisfactory to a majority of the Brand Directors or the Purchaser Directors, as
the case may be); provided, however, that no such actions may be taken with
respect to any Independent Director unless mutually agreed to by Brand and the
Purchaser Group and; provided, further, that any Independent Director shall be
reasonably satisfactory to a majority of both the Brand Directors and the
Purchaser Directors. Each Stockholder shall vote for such removal and for the
election of such successor or successors at a meeting of the stockholders or
shall execute a written consent to such effect without a meeting and consents to
the prompt holding of a special meeting for that purpose, in each case, at the
written request of the Person seeking to remove and replace such director given
to the Company.
(d) The permanent successor Chief Executive Officer hired pursuant to
Section 4.4 hereof shall become a member of the Board effective as of the
effective date of his or her employment by the Company (the "Commencement Date")
and shall be deemed to be a Brand Director for all purposes hereunder. On or
prior to the Commencement Date, Brand and any Brand Transferees shall take all
action reasonably necessary to cause a Brand Director to resign from the Board
effective as of the Commencement Date and to appoint the permanent Chief
Executive Officer to fill the vacancy created by such resignation.
(e) In the event that either Brand or the Purchaser Group is no longer
entitled to designate directors pursuant to this Article III, all directors
designated by such Person (other than the permanent Chief Executive Officer
hired pursuant to Section 4.4 hereof) shall be deemed to have resigned as
directors effective immediately and shall cease to be members of the Board.
(f) The participation of any former director in the deliberations of the
Board subsequent to the date of his or her termination as a director shall not
affect in any respect any corporate action which has been approved by a majority
of the remaining members of the Board, whether at a meeting at which a quorum of
the Board (excluding any such former director) was present or pursuant to a
written consent signed by the remaining directors.
Section 3.2. Quorum. At all meetings of the Board, the presence, in person
or by proxy, of a majority of the entire Board shall constitute a quorum for the
transaction of business. Any
<PAGE>
director may participate in a meeting of the Board, or any committee thereof, by
means of conference telephone or similar communications equipment by means of
which all Persons participating in the meeting can hear each other.
Section 3.3 Composition of Board Committees. Promptly following the
execution and delivery of this Agreement, the Stockholders shall take and shall
cause their respective director designees to take all actions necessary and
advisable to (i) cause the Executive Committee of the Board (the "Executive
Committee") to be comprised of two Brand Directors to be designated from time to
time by Brand (one of whom shall be the chairman of the committee) and one
Purchaser Director to be designated from time to time by the Purchaser Group;
provided, however, that from and after the Option Closing Date, the size of the
Executive Committee shall be increased by one and the Purchaser Group shall have
the right to designate a second Purchaser Director to be a member of the
Executive Committee, and; provided, further, that from and after the
Commencement Date, the size of the Executive Committee shall be further
increased by one and the permanent Chief Executive Officer of the Company shall
become a member of the Executive Committee, ex officio, (ii) cause the
Compensation Committee of the Board to be comprised of two Brand Directors to be
designated from time to time by Brand and two Purchaser Directors to be
designated from time to time by the Purchaser Group, and (iii) cause the Audit
Committee of the Board to be comprised of two Brand Directors to be designated
from time to time by Brand and two Purchaser Directors to be designated from
time to time by the Purchaser Group.
Section 3.4. Action by Stockholders to Reconstitute Board of Directors or
Committees Thereof. If at any time and for any reason the Board shall fail to be
constituted as required by this Article III, then, at the request of any
Stockholder, the Company shall cause a special meeting of stockholders to be
held or the Stockholders shall act by written consent of stockholders without a
meeting for the purpose of taking whatever action may be necessary to assure
that the Board is constituted as set forth in this Article III as promptly as
practicable. If at any time and for any reason the committees of the Board shall
fail to be constituted as required by this Article III, then, at the request of
any Stockholder, the Company and the Stockholders shall take whatever action may
be necessary to assure that such committees are constituted as set forth in this
Article III as promptly as practicable.
Section 3.5. Certain Covenants. Each Stockholder shall vote, in person or
by proxy, all Shares over which it may have or share voting power, at any annual
or special meeting of stockholders of the Company called for the purpose of
voting on the election of directors, or to execute written consents of
stockholders without a meeting with respect to the election of directors, to
vote in favor of the election of each director nominated in accordance with
Section 3.1 and in favor of the removal of any director who is required to be
removed pursuant to Section 3.1 and to take all other necessary and appropriate
actions to cause such events to occur. The Company shall use its best efforts to
cause Persons to be so nominated, elected or removed, as the case may be, in
accordance with the applicable provisions of this Agreement. Each Stockholder
shall vote all Shares over which it may have or share voting power and shall
take all other actions necessary and appropriate (including, without limitation,
removing any director) to ensure that the Company's Certificate of Incorporation
and by-laws contain all provisions
<PAGE>
necessary to implement the terms of this Agreement and do not at any time
conflict with the provisions of this Agreement and shall not vote to approve (or
consent to the approval of) any amendment to the Company's Certificate of
Incorporation or by-laws which would be inconsistent with this Agreement.
ARTICLE IV
Other Corporate Matters
Section 4.1. Management of the Company; Certain Actions. (a) The business
and affairs of the Company shall be managed by or under the direction of the
Board, subject to the provisions set forth in this Section 4.1 and Section 4.2.
(b) Subject to oversight and control by the Board, the senior management of
the Company shall have the right to manage the day to day operations of the
Company, including, without limitation, the implementation of the Company's
strategic and business plans, ordinary course dealings with customers and
suppliers, the hiring and firing of officers and employees of the Company and
its Subsidiaries, and the ordinary course operation of the Company's business as
it is currently being conducted, and neither any member of the Purchasers nor
the Purchaser Directors shall take any action, directly or indirectly, which may
reasonably be expected to hinder, impede, interfere with or otherwise restrict
the management of the Company's affairs as aforesaid.
(c) In the event that a majority of the Purchaser Directors (a "Purchaser
Majority") recommend to the Board that the Company enter into a Company Sale,
Brand and any Brand Transferees shall use their respective best efforts to cause
the Brand Directors to vote in favor of such Company Sale; provided, however,
that neither Brand nor any Brand Transferee shall have any obligation to cause
the Brand Directors to vote in favor of a Company Sale if counsel of recognized
standing advises the Brand Directors that approval of the Company Sale
recommended by the Purchaser Directors would result in a breach of fiduciary
duty by the Brand Directors.
Section 4.2. Actions Requiring Purchaser Approval. The Company shall not,
and no officer of the Company shall have the power or authority to cause the
Company to, without the consent of a Purchaser Majority:
(a) redeem, repurchase or otherwise acquire shares of the Company's
capital stock except pursuant to or in connection with (i) the conversion
of any class or series of the Company's capital stock into another security
of the Company, (ii) the exercise of any Right, (iii) the redemption, at
the request of the holder thereof, of shares of any class or series of
capital stock that is redeemable at the option of the holder thereof, (iv)
any compensatory plan or arrangement with an officer, director or employee
of the Company or its Subsidiaries; provided, however, that such plan or
arrangement has been approved by the Board or the Compensation Committee
thereof; or
<PAGE>
(b) take any voluntary action in furtherance of the liquidation,
dissolution or winding up of the business of the Company.
Section 4.3. Voting by Stockholders. Each Stockholder shall vote, in person
or by proxy, all Shares over which it may have or share voting power, at any
annual or special meeting of stockholders of the Company (i) in favor of all
matters approved by a majority of the entire Board (or a majority of all of the
members of any duly constituted committee thereof) pursuant to Section 4.1(a),
(ii) in favor of all matters approved by the entire Board upon the
recommendation of a Purchaser Majority pursuant to Section 4.1(c) or Section
4.2, and (iii) against all matters not approved by the Board or a duly
constituted committee thereof pursuant to clauses (i) or (ii).
Section 4.4. Executive Search. Promptly following the execution and
delivery hereof, the Board shall establish an ad hoc committee of the Board (the
"Search Committee"), the members of which shall include the Company's Chief
Executive Officer (who shall be the chairman), the Company's Chief Operating
Officer and two Purchaser Directors, which shall promptly commence a search for
a suitably qualified permanent successor to the Chief Executive Officer. The
Search Committee may establish such regulations for its operations as the
members thereof may determine are necessary or advisable. Without limiting the
generality of the foregoing, the Search Committee shall be authorized to engage
such consultants and other agents to assist in the identification and evaluation
of appropriate candidates as the members thereof deem necessary or advisable.
The Search Committee shall report to the Board on its activities from time to
time as events warrant. Following the completion of its initial screening
process and interviews with appropriate candidates, the Search Committee shall
recommend one or more finalists to the Board and, with consultation from the
Board, shall complete all arrangements relating to the hiring of a new Chief
Executive Officer from the list of finalists; provided, however, that such new
Chief Executive Officer shall be approved by Brand, which approval may be
withheld by Brand in his sole and absolute discretion. The terms and conditions
of any such hiring shall be approved by the Board upon the advice and with the
recommendation of Compensation Committee of the Board. In the event that the
permanent Chief Executive Officer ceases to serve as the Chief Executive Officer
of the Company for any reason, then, for purposes of this Agreement (including,
without limitation, the Board and Board committee composition provisions
hereof), the Company shall be deemed to have not designated a permanent
successor Chief Executive Officer and the provisions of this Section 4.4 shall
again come into effect.
Section 4.5. Indemnification; Maintenance of D&O Insurance. The Company
shall indemnify the directors and officers of the Company to the fullest extent
permissible under Delaware law and, without limiting the generality of the
foregoing, the Company and the Stockholders shall take all actions necessary to
include provisions in the Company's Certificate of Incorporation limiting the
liability of directors to the maximum extent permitted by Delaware law and
providing that the directors and officers shall be indemnified to the maximum
extent permitted by Delaware law. The Company shall maintain appropriate
directors and officers insurance in such amounts and covering such risks as the
Board may determine from time to time in light of the cost and availability of
such insurance.
<PAGE>
ARTICLE V
Legend
Section 5.1. Legends. Any certificates evidencing Shares subject to this
Agreement shall be stamped or endorsed with a legend in substantially the
following form; provided, however, that in the event that Shares are registered
under the Securities Act of 1933, as amended, the Company shall promptly upon
request, but in any event not later than is necessary in order to consummate any
sale pursuant to any underwriting agreement or sales agency agreement relating
thereto, deliver a replacement certificate not containing the first paragraph of
the legend below in exchange for the legended certificate (it being understood
that such legend shall be placed on such replacement certificate if the sale
does not occur in accordance with the terms of the registration statement); and
provided, further, that the Company shall upon termination of this Agreement
promptly upon request deliver a replacement certificate not containing the
second paragraph of the legend below in exchange for the legended certificate:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS,
AND ACCORDINGLY NEITHER THE SHARES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
IN ADDITION, TRANSFERS, VOTING AND OTHER MATTERS IN RESPECT OF THE SHARES OF
COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS
AGREEMENT DATED AS OF JULY 29, 1997 AMONG THE COMPANY AND CERTAIN STOCKHOLDERS
NAMED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY AND MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
COMPANY.
Section 5.2. Removal of Legends. From and after the effective date of any
registration statement registering the Shares subject hereto for sale pursuant
to the Securities Act of 1933, as amended, and compliance by the Company with
any applicable state securities or "Blue Sky" laws, the Stockholders shall be
entitled to exchange the certificates representing their Shares for certificates
not bearing the first restrictive legend set forth in Section 5.1 above. In
connection with any Transfer permitted pursuant to this Agreement (other than
Transfers pursuant to Sections 2.1(f) or 2.1(g)), the Stockholder Transferring
Shares shall be entitled to exchange the certificates representing the Shares
being Transferred for replacement certificates not bearing the second
restrictive legend set forth in Section 5.1 above.
<PAGE>
ARTICLE VI
Effectiveness; Termination
Section 6.1. Effectiveness; Termination of Agreement. This Agreement shall
become effective as of the date first above written and shall terminate upon the
earliest to occur of the following: (i) upon the written consent of (x) the
Majority Holders, and (y) the holders of a majority of the shares of Common
Stock then beneficially owned by Brand and any Brand Transferee, as a group,
(ii) Brand and any Brand Transferees, as a group, or the Purchaser Group
becoming the beneficial owner of less than 10% of the outstanding Common Stock
(determined on a fully-diluted basis), or (iii) the consummation of a Company
Sale, only to the extent that such transaction has been duly approved pursuant
to Section 4.1(c); provided, however, that no such termination shall relieve any
Person of any liability for a breach or default.
ARTICLE VII
Miscellaneous
Section 7.1. Recapitalization, Exchanges, etc. Affecting the Common Stock.
The provisions of this Agreement shall apply to the full extent set forth herein
with respect to (a) the Shares and (b) any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or in substitution for the Shares, by reason of any stock
dividend, split, reverse split, combination, recapitalization, reclassification,
merger, consolidation or otherwise. In the event of any change in the
capitalization of the Company, as a result of any stock split, stock dividend or
stock combination, the provisions of this Agreement shall be appropriately
adjusted.
Section 7.2 No Joint Venture or Partnership. No party shall have any
authority to bind or commit any other party hereto and no such authority shall
be implied by the provisions hereof. Nothing herein shall be deemed or construed
to create a joint venture, partnership or agency relationship between any of the
parties hereto for any purpose.
Section 7.3. Injunctive Relief. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, each other party shall, in addition to any other
rights or remedies which it may have, be entitled to equitable and injunctive
relief, including, without limitation, temporary, preliminary and permanent
injunctive relief, to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and, to the maximum extent permitted by law,
consents to have each provision of this Agreement specifically enforced against
him or it, without the necessity of posting bond or other security against him
or it, and
<PAGE>
consents to the entry of injunctive relief against him or it enjoining or
restraining any breach or threatened breach of such provisions of this
Agreement.
Section 7.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives. This Agreement shall be for the sole benefit
of the parties to this Agreement and their respective successors, assigns and
legal representatives and is not intended, nor shall be construed, to give any
Person, other than the parties hereto and their respective successors, assigns
and legal representatives, any legal or equitable right, remedy or claim
hereunder. This Agreement may not be assigned by operation of law or otherwise,
and any attempted assignment shall be null and void, except that, any
Stockholder may assign its rights hereunder, in whole but not in part, in
connection with a Transfer of Shares made in compliance with all of the
provisions of this Agreement. If any Stockholder shall acquire additional
Shares, in any manner, whether by a Transfer permitted hereunder, operation of
law or otherwise, such Shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such Shares such Person shall be
conclusively deemed to have agreed to be bound by and to comply with all of the
terms and provisions of this Agreement. Any Transferee wishing to become a party
hereto or otherwise required to become such a party shall execute an instrument
in the form of Exhibit A hereof agreeing to be bound by the provisions hereof.
Section 7.5. Expenses. Except as provided in the Purchase Agreement, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereby.
Section 7.6. Amendment; Waiver. (a) This Agreement may be amended by a
written instrument duly executed by the parties affected thereby.
(b) No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon breach thereof shall constitute a waiver of
any such breach or of any other covenant, duty, agreement or condition, any
such waiver being effective only if contained in a writing executed by the
waiving party.
Section 7.7. Notices. Except as otherwise provided in this Agreement, all
notices, requests, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand, when delivered by courier, three days after being deposited in the mail
(registered or certified mail, postage prepaid, return receipt requested), or
when received by facsimile transmission upon receipt of a confirmed transmission
report, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
Attention: Chief Executive Officer
<PAGE>
and if to the other parties at the address or facsimile transmission number
specified below its name on the signature pages hereto (or, in the case of
Persons who become parties hereto subsequently, at their last addresses or
facsimile transmission numbers shown on the record books of the Company). Any
party hereto, by notice given to the other parties hereto in accordance with
this Section 7.7, may change the address or facsimile transmission number to
which such notice or other communications are to be sent to such party. Whenever
pursuant to this Agreement any notice is required to be given by any Stockholder
to any other Stockholder or Stockholders, such Stockholder may request from the
Company a list of addresses and facsimile transmission numbers of all
Stockholders of the Company, which list shall be promptly furnished to such
Stockholder.
Section 7.8. Inspection. For so long as this Agreement shall be in effect,
this Agreement, any amendments hereto and a complete list of the names and
addresses of all Stockholders shall be made available for inspection and copying
on any business day by any Stockholder at the offices of the Company at the
address thereof set forth in Section 7.7 above.
Section 7.9. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF, EXCEPT TO THE EXTENT
THAT THE PROVISIONS OF THE DELAWARE GENERAL CORPORATION LAW APPLY THERETO.
Section 7.10. Headings. The descriptive headings of the several sections in
this Agreement are for convenience only and do not constitute part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 7.11. Integration. This Agreement and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to
its subject matter other than those expressly set forth or referred to herein.
Section 7.12. Severability. If any term or provision of this Agreement or
any application thereof shall be declared or held invalid, illegal or
unenforceable, in whole or in part, whether generally or in any particular
jurisdiction, such provision shall be deemed amended to the extent, but only to
the extent, necessary to cure such invalidity, illegality or unenforceability,
and the validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 7.13. Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of the State of
New York and the United States District Court for the Southern District of New
York for the purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and the transactions contemplated hereby. Service
of process in connection with any such suit, action or proceeding may be served
on each
<PAGE>
party hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 7.14. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
LOGIMETRICS, INC.
/s/Charles S. Brand
By: ____________________________
Name:Charles S. Brand
Title: Chairman and Chief
Executive Officer
/s/Charles S. Brand
____________________________
Charles S. Brand
20 Meridian Road
Eatontown, New Jersey 07724
Tel: (908) 935-7150
Fax: (908) 935-7151
CRAMER ROSENTHAL McGLYNN, INC.
By: /s/Eugene A. Trainer
____________________________
Name: Eugene A. Trainor
Title: Chief Financial
Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/Arthur J. Pergament
___________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Gerald B. Cramer
___________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Edward J. Rosenthal
___________________________
Edward J. Rosenthal, Keogh
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn,
Inc.,
Its Managing Member
By: /s/Eugene A. Trainor
_________________________
Name: Eugene A. Trainor
Title: Chief Financial
Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM PARTNERS, L.P.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
______________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM RETIREMENT PARTNERS, L.P.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM MADISON PARTNERS, L.P.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainer
______________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM U.S. VALUE FUND, LTD.
By: CRM Management, Inc.
Its General Partner
By: /s/Eugene A. Trainor
_______________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM EURYCLEIA PARTNERS, L.P.
By: CRM Eurycleia Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor
_______________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
A.C. ISRAEL ENTERPRISES, INC.
By: /s/Jay Howard
_______________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/ Eugene A. Trainor
_______________________________
Name: Eugene A. Trainor
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/ Richard S. Fuld. Jr.
_________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Eugene A. Trainor
______________________________
Name: Eugene A. Trainor
Title: Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
_________________________
Name:
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
________________________
Name:
Title: Manager
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
________________________
Name:
Title: General Partner
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
MBF CAPITAL CORP.
By: /s/Mark B. Fisher
________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
<PAGE>
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
___________________________
Name: Mark B. Fisher
Title: President
102 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
PHINEAS BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
____________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
/s/Mark B. Fisher
________________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
<PAGE>
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
___________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Fred M. Filoon
______________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor
______________________________
Eugene A. Trainor
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
EXHIBIT A
In consideration of the Transfer of Shares to the undersigned, the
undersigned, having all due authority, hereby agrees to be bound by the terms
and provisions of the Stockholders Agreement, dated as of July 29, 1997 (the
"Stockholders Agreement"), by and among LogiMetrics, Inc. and the Stockholders
party thereto relating to such Shares as a Stockholder thereunder. Capitalized
defined terms used herein without definition shall have the same meanings
respectively as assigned thereto in the Stockholders Agreement.
Name: _____________________________
By: _______________________________
Date: _____________________________
EXHIBIT 10.6
UNIT PURCHASE AGREEMENT
UNIT PURCHASE AGREEMENT, dated March 7, 1996, by and between LogiMetrics,
Inc., a Delaware corporation (the "Company"), and Cerberus Partners, L.P., a
Delaware limited partnership (the "Purchaser").
W I T N E S S E T H:
WHEREAS, on the terms and subject to the conditions set forth herein, the
Company desires to sell to the Purchaser, and the Purchaser desires to purchase
from the Company, an aggregate of 30 units (the "Units"), each Unit consisting
of (i) $50,000 in principal amount of the Company's 12% Convertible Senior
Subordinated Debentures due December 31, 1998 (the "Debentures") convertible
into 84,746 shares of Common Stock, par value $.01 per share (the "Common
Stock"), of the Company, subject to adjustment in certain circumstances (each
Debenture to be in substantially the form of Exhibit A hereto), and (ii) a
Series C Detachable Warrant (collectively, the "Warrants") exercisable at any
time prior to March 7, 2003 to purchase 84,746 shares of Common Stock, subject
to adjustment in certain circumstances, at an exercise price of $.01 per share
(each Warrant to be in substantially the form of Exhibit B hereto); and
WHEREAS, simultaneously herewith, the Company is entering into an amended
and restated credit facility (the "Credit Facility") with North Fork Bank (the
"Bank") pursuant to which, among other things, the Bank will make available to
the Company up to $2,200,000 in revolving credit loans maturing on October 1,
1997 and a $800,000 term loan maturing on December 31, 1998; and
WHEREAS, the Credit Facility will be secured by a perfected, first priority
security interest in all of the assets of the Company; and
WHEREAS, the Company has agreed to secure its obligations under the
Debentures by granting to the Purchaser (and any subsequent holder of the
Debentures) a perfected security interest in all of the assets of the Company,
junior only to the security interest securing the Credit Facility (and any
authorized replacement thereof); and
WHEREAS, in order to evidence the grant of the security interest described
above, the Company has executed and delivered to the Purchaser one or more
security agreements and related documents (the "Security Documents" and,
together with this Agreement, the Debentures and the Warrants, the "Transaction
Documents") and will take all other action necessary or advisable in relation
thereto; and
WHEREAS, simultaneously herewith, the Company proposes to sell to one or
more accredited investors a minimum of 15 and a maximum of 30 units (the
"Preferred Stock Units"), each Preferred Stock Unit consisting of (i) one share
of the Company's Preferred Stock, par value $.01 per share (the "Preferred
Stock"), designated as Series A 12% Cumulative Convertible Redeemable Preferred
Stock, stated value $50,000 per share (the "Convertible Preferred Stock"),
convertible into 94,340 shares of Common Stock, subject to adjustment in certain
circumstances,
<PAGE>
and (ii) a Series D Detachable Warrant (collectively, the "Series D Warrants")
exercisable at any time prior to March 7, 2003 to purchase 94,340 shares of
Common Stock, subject to adjustment in certain circumstances, at an exercise
price of $.01 per share; and
WHEREAS, the Company has entered into a financial advisory agreement (the
"Advisory Agreement") with Phipps, Teman & Co., LLC ("Phipps Teman") and SFM
Group, Ltd. ("SFM") pursuant to which, in return for certain advisory services
to be rendered by Phipps Teman and SFM in connection with the issuance of the
Units and the Preferred Stock Units, the Company has agreed to pay certain cash
fees to Phipps Teman and SFM and issue to Phipps Teman and SFM Series E
Detachable Warrants (collectively, the "Series E Warrants") exercisable at any
time prior to March 7, 2003 to purchase an aggregate of 1,000,000 shares of
Common Stock, subject to adjustment in certain circumstances, at an exercise
price of $.40 per share; and
WHEREAS, in connection with the transactions contemplated hereby, the
Company has entered into an employment agreement with Richard K. Laird (the
"Laird Agreement") pursuant to which Mr. Laird will become the Chairman of the
Board, President and Chief Executive Officer of the Company and will receive
options (the "Laird Options") to purchase 1,000,000 shares of Common Stock,
subject to adjustment in certain circumstances, at exercise prices ranging from
$.40 to $4.00 per share; and
WHEREAS, in connection with the issuance of the Units and the Preferred
Stock Units, the Company is amending the terms of its outstanding 12%
Convertible Subordinated Debentures due July 14, 1997 (as so amended, the "1995
Debentures"), and the related Series A Warrants (as so amended, the "Series A
Warrants"), each of which is exercisable at any time prior to July 14, 2002 to
purchase 40,000 shares of Common Stock, subject to adjustment in certain
circumstances, at an exercise price of $.25 per share, and the Series B Warrants
(as so amended, the "Series B Warrants"), each of which is exercisable at any
time prior to July 14, 2002 to purchase 1,500,000 shares of Common Stock,
subject to adjustment in certain circumstances, at an exercise price of $.25 per
share to provide, among other things, that (i) the 1995 Debentures will be
junior to the Debentures in right of payment, (ii) interest on the Debentures
will be payable quarterly and (iii) that the issuance and exercise of the
Debentures, the Series C Warrants, the Convertible Preferred Stock, the Series D
Warrants, the Series E Warrants and the Laird Options will not trigger certain
anti-dilution adjustments in respect of the 1995 Debentures, the Series A
Warrants and the Series B Warrants (collectively, the "Restructuring"); and
WHEREAS, in order to facilitate the issuance of the Units and the Preferred
Stock Units, the Board of Directors of the Company has unanimously approved an
amendment to the Company's Certificate of Incorporation (the "Amendment")
pursuant to which the Company's authorized shares of capital stock would consist
of 35,000,000 shares of Common Stock, par value $.01 per share, and 200 shares
of Preferred Stock, par value $.01 per share.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and intending to be legally bound, the parties hereto agree as follow:
<PAGE>
Article I
Purchase and Sale of Units
Section 1.1. Purchase and Sale of Units. Upon the terms and subject to the
conditions of this Agreement, on the date hereof the Company shall issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, Thirty
(30) Units at a purchase price of Fifty Thousand Dollars ($50,000) per Unit, for
a total aggregate purchase price of One Million Five Hundred Thousand Dollars
($1,500,000) (the "Purchase Price").
Section 1.2. Closing. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of the Company at 10:00 a.m. on
the date hereof, or at such other time and place as the parties hereto may
mutually agree. The time and date of the Closing is hereinafter referred to as
the "Closing Date."
Section 1.3. Payment for and Delivery of the Units. At the Closing, the
Purchaser shall pay the Purchase Price in immediately available funds by wire
transfer to an account previously designated by the Company. The Company shall
execute, issue and deliver to the Purchaser (i) the Debentures and (ii)
certificates representing the Warrants.
Article II
Representations and Warranties of the Company
The Company represents and warrants to the Purchaser as follows:
Section 2.1. Organization and Qualification; No Material Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to own or lease its property and assets and to carry on its business
as presently conducted, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the failure to be
so qualified and in good standing would result in a material adverse change in
the business, financial condition, results of operations or prospects (financial
and other) of the Company (a "Material Adverse Change"). The Company has
previously provided to the Purchaser true and complete copies of (i) its
Certificate of Incorporation and all amendments thereto and (ii) its by-laws as
currently in effect. The Company does not own any material amount of any shares
of stock of any corporation or any equity interest in a partnership, joint
venture or other business entity, and the Company does not control or have the
right (whether or not presently exercisable) to control any other corporation,
partnership, joint venture or other business entity by means of ownership,
management contract or otherwise, other than its ownership of 100% of the issued
and outstanding shares of the capital stock of LogiMetrics FSC Inc., which
subsidiary is not material to the Company.
Section 2.2. Authorization. (a) The Company has the corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents and to perform its
<PAGE>
obligations hereunder and thereunder, all of which have been duly authorized by
all requisite corporate action. Each of this Agreement, the Security Agreement
and the other Security Documents has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The Debentures have been duly authorized and, when issued in accordance
with the terms hereof, will have been duly executed, issued and delivered and
will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. After giving effect to the Amendment, the Company has sufficient
authorized and unissued shares of Common Stock reserved for issuance upon the
conversion of the Debentures in accordance with their terms. The shares of
Common Stock issuable upon the conversion of the Debentures will, when issued in
accordance with the terms of the Debentures, be duly authorized, validly issued,
fully paid and non-assessable.
(c) The Warrants have been duly authorized and, when issued in accordance
with the terms hereof, will have been duly executed, issued and delivered and
will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. After giving effect to the Amendment, the Company has sufficient
authorized and unissued shares of Common Stock reserved for issuance upon the
exercise of the Warrants in accordance with their terms. The shares of Common
Stock issuable upon the exercise of the Warrants will, when issued in accordance
with the terms of the Warrants (including the payment of the exercise price
specified therein), be duly authorized, validly issued, fully paid and
non-assessable.
(d) Except for the issuance of the Convertible Preferred Stock, the Series
A Warrants, the Series B Warrants, the Series D Warrants, the Series E Warrants
and the Laird Options as expressly contemplated hereby, the issuance of the
Units, the conversion of the Debentures and the exercise of the Warrants will
not (i) require the Company to issue any shares of its capital stock or any
security exercisable for or convertible or exchangeable into shares of its
capital stock to any person, or (ii) after giving effect to the Restructuring,
require any adjustment in the exercise price or number of shares of the
Company's capital stock issuable upon the exercise of the 1995 Debentures, the
Convertible Preferred Stock, the Series A Warrants, the Series B Warrants, the
Series D Warrants, the Series E Warrants, the Laird Options or any other
outstanding or currently contemplated convertible security of the Company
Section 2.3. Non-contravention. Neither the execution and delivery of this
Agreement and the other Transaction Documents by the Company nor the performance
by the Company of its obligations hereunder and thereunder will (i) contravene
any provision contained in the Company's Certificate of Incorporation or
by-laws, (ii) violate or result in a breach (with or without the lapse of time,
the giving of notice or both) of or constitute a default under (A) any contract,
agreement, commitment, indenture, mortgage, lease, pledge, note, license, permit
<PAGE>
or other instrument or obligation or (B) any judgment, order, decree, law, rule
or regulation or other restriction of any governmental authority, in each case
to which the Company is a party or by which it is bound or to which any of its
assets or properties are subject, (iii) result in the creation or imposition of
any lien, claim, charge, mortgage, pledge, security interest, equity,
restriction or other encumbrance (collectively, "Encumbrances") on any of the
Company's assets or properties, except as expressly contemplated by the Credit
Facility and the Security Documents, or (iv) result in the acceleration of, or
permit any person to accelerate or declare due and payable prior to its stated
maturity, any material obligation of the Company.
Section 2.4. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or the
other Transaction Documents by the Company or the consummation of the
transactions contemplated hereby or thereby by the Company, except for such
filings and registrations as may be required under applicable securities laws.
The offer and sale of the Units does not require registration under the
provisions of the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities or "blue sky" laws.
Section 2.5. Capitalization of the Company. After giving effect to the
Amendment and prior to the transactions contemplated hereby, the Company's
authorized capital stock consists solely of 35,000,000 authorized shares of
Common Stock, of which 2,860,602 shares were issued and outstanding as of the
date hereof; and 200 shares of Preferred Stock, of which, as of the date hereof,
no shares were issued and outstanding. No shares of the Company's capital stock
are held as treasury shares. In addition, as of the date hereof and after giving
effect to the Restructuring, (i) the Company has $300,000 in aggregate principal
amount of the 1995 Debentures issued and outstanding which are presently
convertible into an aggregate of 1,200,000 shares of Common Stock at a current
conversion price of $.25 per share, (ii) the Company has Series A Warrants
outstanding to purchase an aggregate of 600,000 shares of Common Stock at a
current exercise price of $.25 per share, (iii) the Company has Series B
Warrants outstanding to purchase an aggregate of 1,500,000 shares of Common
Stock at a current exercise price of $.25 per share, and (iv) the Company has
certain other stock options outstanding to purchase an aggregate of 400,000
shares of Common Stock at an exercise price of $.10 per share. Except as set
forth above, and except for the Warrants, the Debentures, the Convertible
Preferred Stock, the Series D Warrants, the Series E Warrants and the Laird
Options, the Company does not have (i) any shares of Common Stock or Preferred
Stock reserved for issuance, or (ii) any outstanding option, warrant, right,
call or commitment relating to its capital stock or any outstanding securities
or obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire from it, any shares of its capital stock
(collectively, "Company Securities"). There are no outstanding obligations of
the Company to repurchase, redeem or otherwise acquire any Company Securities.
There are no pre-emptive or other subscription rights with respect to any shares
of the Company's capital stock or any securities convertible into or
exchangeable for shares of the Company's capital stock and all of the issued and
outstanding shares of capital stock of the Company have been duly authorized,
validly issued, are fully paid and are nonassessable. All of the Company's
outstanding securities were offered, issued, sold and delivered by the Company
in compliance with all applicable state and federal securities laws. None of
such securities were issued in violation of any pre-emptive or subscription
rights of any person.
<PAGE>
Section 2.6. SEC Reports; Approval of Amendment. (a) The Company has
delivered to the Purchaser a true and complete copy of each report, schedule and
registration statement, including the exhibits thereto (but excluding exhibits
incorporated therein by reference), filed by the Company with the Securities and
Exchange Commission (the "Commission") since January 1, 1995, which are all the
documents that the Company was required to file with the Commission since that
date and through the date hereof (all of such documents collectively, the "SEC
Documents"). As of their respective dates, the SEC Documents complied as to form
in all material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, and the rules and regulations of the Commission thereunder. As of their
respective dates, except to the extent that information contained therein has
been revised or superseded by a later filed SEC Document, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as permitted by Form 10-Q) and fairly
present (subject, in the case of the unaudited statements, to normal, recurring
audit adjustments) the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended.
(b) The proxy statement, dated January 29, 1996 (including any amendments
or supplements thereto), submitted to the stockholders of the Company in
connection with the approval of the Amendment (the "Proxy Statement") contained,
as of the date of mailing and as of the date of the stockholders' meeting
relating thereto (the "Stockholders' Meeting"), the information required by the
Exchange Act and the rules and regulations of the Commission thereunder. As of
the date of mailing and as of the time of the Stockholders' Meeting, the Proxy
Statement did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company has complied with the requirements of all
federal and state securities or "blue sky" laws and the rules and regulations
under such laws with respect to the Amendment and any solicitation of proxies in
connection therewith.
(c) The stockholders approved the Amendment at the Stockholders' Meeting by
the vote required under applicable law. The Company has filed an appropriate
Certificate of Amendment reflecting the Amendment with the Secretary of State of
the State of Delaware and the Amendment has become effective.
Section 2.7. Private Placement Memorandum. As of its date and as of the
date hereof, the Private Placement Memorandum, dated February 5, 1996, relating
to the offering of the Preferred Stock Units (the "Memorandum") complied with
all applicable provisions of the Securities Act and the rules and regulations of
the Commission thereunder and as of such dates
<PAGE>
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. Other than the Memorandum, the term sheets
relating to the Preferred Stock Units and the Units (true and complete copies of
which have previously been delivered to the Purchaser) and the SEC Documents
(collectively, the "Placement Materials"), the Company has not and will not
distribute any offering material in connection with the offer or sale of the
Units, the Preferred Stock Units or any of the other securities being issued on
the date hereof. There is no document or contract of a character required to be
described in the Memorandum which is not so described.
Section 2.8. Absence of Certain Developments. Since September 30, 1995,
there has not been any Material Adverse Change. Except as disclosed in the
Placement Materials and except for this Agreement and the transactions
contemplated hereby, since September 30, 1995 the Company has conducted its
business in the ordinary and usual course consistent with past practices.
Section 2.9. Governmental Authorizations; Licenses; Etc. Except as
disclosed in the Placement Materials, the business of the Company has been
operated in compliance with applicable laws, rules, regulations, codes,
ordinances, orders, policies and guidelines of all governmental authorities
(excluding Environmental Laws which are specifically covered in Section 2.13
hereof), except for violations which, individually or in the aggregate, would
not result in a Material Adverse Change. Except as disclosed in the Placement
Materials, the Company has all permits, licenses, approvals, certificates and
other authorizations, and has made all notifications, registrations,
certifications and filings with all governmental authorities, necessary or
advisable for the operation of its business as currently conducted. Except as
disclosed in the Placement Materials, to the Company's best knowledge there is
no action, case or proceeding pending or overtly threatened by any governmental
authority with respect to (i) any alleged violation by the Company or its
affiliates of any law, rule, regulation, code, ordinance, order, policy or
guideline of any governmental authority, or (ii) any alleged failure by the
Company or its affiliates to have any permit, license, approval, certification
or other authorization required in connection with the operation of the business
of the Company.
Section 2.10. Litigation. Except as disclosed in the Placement Materials,
there are no lawsuits, actions, proceedings, claims, orders or investigations
pending or, to the Company's best knowledge, overtly threatened against the
Company (i) relating to the Company, its business or any product alleged to have
been manufactured or sold by the Company, (ii) seeking to enjoin the
transactions contemplated hereby, or (iii) which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Change.
Section 2.11. Undisclosed Liabilities. Other than those reflected in the
financial statements included in the Placement Materials, there are no material
liabilities of the Company of any kind or nature whatsoever, whether known or
unknown, absolute, accrued, contingent or otherwise, or whether due or to become
due, which are required to be disclosed on financial statements prepared in
accordance with generally accepted accounting principles, other than liabilities
incurred in the ordinary course of business consistent with past practices since
September 30, 1995.
<PAGE>
Section 2.12. Taxes. Except as disclosed in the Placement Materials, all
federal, state, county, local and foreign tax returns and reports of the Company
required to be filed have been duly filed. Except as disclosed in the Placement
Materials, all federal, state, county, local, foreign and any other taxes
(including all income, withholding and employment taxes), assessments (including
interest and penalties), fees and other governmental charges with respect to the
employees, properties, assets, income or franchises of the Company have been
paid or duly provided for, or are being contested in good faith by appropriate
proceedings as previously disclosed to the Purchaser in writing and adequate
reserves therefor have been established pursuant to generally accepted
accounting principles, or have arisen after the date hereof in the ordinary
course of business.
Section 2.13. Environmental Matters. Except as disclosed in the Placement
Materials, to the Company's best knowledge (i) the business of the Company is
being conducted in compliance with all applicable Environmental Laws, (ii) the
real property currently owned or operated by the Company (including, without
limitation, soil, groundwater or surface water on or under the properties and
buildings thereon) (the "Affected Property") does not contain any Regulated
Substance other than as permitted under applicable Environmental Laws, (iii) the
Company has not received any notice from any governmental authority that the
Company may be a "potentially responsible party" (as such term is defined under
the Comprehensive Environmental Response, Compensation and Control Act, 42
U.S.C. section 9601, et seq.) in connection with any waste disposal site or
facility used by the Company, (iv) the Company and the Affected Property are not
presently subject to a suit or judgment arising under any Environmental Law, and
(v) all documents filed by or on behalf of the Company with any governmental
authority pursuant to any Environmental Law in connection with the transactions
contemplated hereby were true, correct and complete in all material respects and
did not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
As used herein, "Environmental Laws" means any federal, state and local
law, statute, ordinance, rule, regulation, license, permit, authorization,
approval, consent, court order, judgment, decree, injunction, code, requirement
or agreement with any governmental authority, (x) relating to pollution (or the
cleanup thereof or the filing of information with respect thereto), human health
or the protection of air, surface water, ground water, drinking water supply,
land (including land surface or subsurface), plant and animal life or any other
natural resource, or (y) concerning exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production or disposal of Regulated Substances, in each case as amended and as
now or hereafter in effect. The term Environmental Law includes, without
limitation, (i) the Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Water Pollution Control Act, the Clean Air Act, the
Clean Water Act, the Solid Waste Disposal Act (including the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984), the Toxic Substances Control Act, the Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act of 1970,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to
<PAGE>
or threatened as a result of the presence of, exposure to, or ingestion of, any
Regulated Substance.
As used herein, "Regulated Substances" means pollutants, contaminants,
hazardous or toxic substances, compounds or related materials or chemicals,
hazardous materials, hazardous waste, flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products (including, but not limited to,
waste petroleum and petroleum products) as regulated under applicable
Environmental Laws.
Section 2.14. Proprietary Rights. Except as disclosed in the Placement
Materials, the Company owns and possesses all right, title and interest in the
patents, patent registrations, patent applications, trademarks, service marks,
trademark and service mark registrations and applications therefor, copyrights,
copyright registrations, copyrights applications, trade names, corporate names,
technology, inventions, computer software, data and documentation (including
electronic media), product drawings, trade secrets, know-how, customer lists,
processes, other intellectual property and proprietary information or rights
used in the business of the Company as presently conducted; and permits,
licenses or other agreements to or from third parties regarding the foregoing
(collectively, the "Proprietary Rights"). Except as disclosed in the Placement
Materials, to the Company's best knowledge, there is not pending or overtly
threatened against the Company any claim by any third party contesting the
validity, enforceability, use or ownership of any Proprietary Right. Except as
disclosed in the Placement Materials, to the Company's best knowledge, the
Company has not received any notice of any infringement or misappropriation by,
or conflict with, any third party with respect to any of the Proprietary Rights.
Section 2.15. Books and Records. The stock records of the Company fairly
and accurately reflect in all material respects the record ownership of all of
the outstanding shares of the Company's capital stock. The other books and
records of the Company, including financial records and books of account, are
complete and accurate in all material respects and have been maintained in
accordance with sound business practices.
Section 2.16. Brokers. With the exception of fees and expenses owed to
Phipps Teman and SFM pursuant to the Advisory Agreement, no person is or will be
entitled to a broker's, finder's, investment banker's, financial adviser's or
similar fee from the Company in connection with this Agreement or any of the
transactions contemplated hereby. The fees and expenses of Phipps Teman and SFM
are the sole responsibility of, and shall be paid by, the Company.
Section 2.17. Use of Proceeds. The Company will use the net proceeds of the
sale of the Units as provided in Exhibit C attached hereto.
Section 2.18. Absence of Questionable Payments. Neither the Company nor any
affiliate, director, officer, employee, agent, representative or other person
acting on behalf of the Company has: (i) used any corporate or other funds for
unlawful contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activities to government
<PAGE>
officials or others, or (ii) accepted or received any unlawful contributions,
payments, gifts or expenditures.
Section 2.19. Accuracy of Representations. No representation or warranty
made by the Company in this Agreement or any document delivered, or to be
delivered, by or on behalf of the Company pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading. There is no fact or
circumstance that the Company has not disclosed to the Purchaser in writing that
the Company presently believes has resulted, or could reasonably be expected to
result, in a Material Adverse Change or could reasonably be expected to have a
material adverse effect on the ability of the Company to perform its obligations
under this Agreement.
Article III
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company as follows:
Section 3.1. Organization. The Purchaser is a limited partnership, duly
organized, validly existing and in good standing under the laws of the state of
Delaware.
Section 3.2. Authorization. The Purchaser has the partnership power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, all of which have been duly authorized by all requisite partnership
action. This Agreement has been duly authorized, executed and delivered by the
Purchaser and constitutes a valid and binding agreement of the Purchaser,
enforceable against the Purchaser in accordance with its terms.
Section 3.3. Access to Information. The Purchaser has received copies of
the Placement Materials. In addition, the Purchaser and its purchaser
representatives, if any, have had an opportunity to ask questions of and receive
answers from representatives of the Company concerning the business of the
Company, its condition and prospects (financial and other) and the terms and
conditions of the offering of the Units.
Section 3.4. Accredited Investor. The Purchaser is an "Accredited Investor"
as such term is defined in Rule 501 of the rules and regulations of the
Commission promulgated under the Securities Act (an "Accredited Investor").
Section 3.5. Investment Intent. (a) The Purchaser is acquiring the Units
for its own account for investment only and not for or with a view to resale or
distribution, except to Permitted Transferees (as defined herein). The Purchaser
has not entered into any contract, undertaking, agreement or arrangement with
any person (other than a Permitted Transferee) to sell, transfer or pledge to
such person or anyone else the Units, or the Debentures and the Warrants
constituting a part thereof and the Purchaser has no present plans or intentions
to enter into any such contract, undertaking, agreement or arrangement.
<PAGE>
(b) The Purchaser has the financial ability to bear the economic risk of
losing its entire investment in the Units, is prepared to bear the economic risk
of its investment in the Units for an indefinite time and can afford to sustain
a complete loss of its investment in the Units.
(c) The overall commitment of the Purchaser to investments which are not
readily marketable is not disproportionate to its net worth, and an investment
in the Units will not cause such overall commitment to become excessive. The
Purchaser's need for diversification in its investment portfolio will not be
impaired by an investment in the Company.
(d) The Purchaser has adequate means of satisfying its short term needs for
cash and has no present need for liquidity which would require it to sell its
Units, or any interest therein.
(e) The Purchaser has substantial experience in making investment decisions
of this type and/or is relying on its own advisors in making this investment
decision and, therefore, either alone or together with its advisors, has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Company.
(f) The Purchaser understands that the Units constitute restricted
securities within the meaning of Rule 144 promulgated under the Securities Act,
and that none of the Units, or any interest therein, may be sold except pursuant
to an effective registration statement under the Securities Act or in a
transaction exempt from registration under the Securities Act, and understands
the meaning and effect of such restriction.
(g) The Purchaser has considered and, to the extent the Purchaser believed
such discussion was necessary, discussed with its professional legal, tax and
financial advisers the suitability of an investment in the Company for the
Purchaser's particular tax and financial situation and the Purchaser has
determined that the Units are a suitable investment for it.
(h) THE PURCHASER UNDERSTANDS THAT AN INVESTMENT IN THE UNITS BEING
PURCHASED BY IT INVOLVES A HIGH DEGREE OF RISK, INCLUDING WITHOUT LIMITATION,
RISKS RELATING TO THE COMPANY'S CONTINUING NEED FOR ADDITIONAL CAPITAL, THE
COMPANY'S NEED FOR LIQUIDITY, THE EFFECTS OF COMPETITION, THE COMPANY'S RELIANCE
ON KEY PERSONNEL, THE COMPANY'S DEPENDENCE ON TECHNOLOGY AND TECHNOLOGICAL
INNOVATION, THE RESTRICTIONS ON TRANSFER OF THE UNITS, AS WELL AS SIMILAR
RESTRICTIONS ON TRANSFERS OF THE SECURITIES COMPRISING THE UNITS, POTENTIAL
CONFLICTS OF INTEREST AND RELATED PARTY TRANSACTIONS INVOLVING THE COMPANY AND
THE DIRECTORS AND OFFICERS OF THE COMPANY, AND THE SUCCESSFUL CONSUMMATION OF
THE COMPANY'S BUSINESS AND OPERATING STRATEGY.
<PAGE>
Article IV
Restrictions on Transfer
Section 4.1. Limited Transferability. The Units, the Debentures and the
Warrants constituting the Units and the shares of Common Stock issuable upon the
conversion of the Debentures and the exercise of the Warrants (the "Issuable
Shares") shall not be transferable except in accordance with the provisions of
this Article IV, which provisions are intended to insure compliance with the
provisions of the Securities Act in respect of the transfer of any of such
securities.
Section 4.2. Restrictive Legend. The Debentures and any certificates or
other instrument representing the Warrants or the Issuable Shares shall (unless
otherwise permitted by the provisions of Section 4.4 below) be stamped or
otherwise imprinted with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE
SOLD OR TRANSFERRED UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS
AN EXEMPTION UNDER SUCH ACT OR LAWS IS AVAILABLE. THE TRANSFERABILITY
OF THESE SECURITIES IS FURTHER SUBJECT TO THE PROVISIONS OF A UNIT
PURCHASE AGREEMENT DATED AS OF MARCH 7, 1996 BY AND BETWEEN THE
COMPANY AND CERBERUS PARTNERS, L.P.
For purposes of this Article IV, any references to "Debentures," "Warrants"
or "Issuable Shares" shall include any other securities issued in respect of any
of such securities.
Section 4.3. Restrictions on Transfer. (a) Subject to the provisions of
Section 4.4, the Debentures, the Warrants and the Issuable Shares shall not be
transferred, and the Company shall not be required to register any transfer
thereof on the books of the Company, unless such transfer is made pursuant to an
effective registration statement, in compliance with Rule 144, or pursuant to
another exemption under the Securities Act; provided, however, that the Company
shall not be required to register any transfer in the event any securities are
offered or sold otherwise than pursuant to an effective registration statement
or pursuant to Rule 144 unless the Company shall have received an opinion of
counsel to the Purchaser, reasonably satisfactory to the Company, that such
transfer does not require registration under the Securities Act or applicable
state securities laws. Notwithstanding the foregoing, the Purchaser may freely
transfer at any time, or from time to time, the Debentures, the Warrants and/or
the Issuable Shares, or any interest therein, to (i) any general partner of the
Purchaser, (ii) any limited partner of the Purchaser, (iii) any other fund,
account or other entity managed, directly or indirectly, by the general partner
of the Purchaser or any general partner of the general partner of the Purchaser,
or (iv) the respective subsidiaries and affiliates of any of the foregoing,
provided that any such transferee specified in clauses (i) through (iv) above is
an Accredited Investor (each, a "Permitted Transferee") without
<PAGE>
complying with the provisions of this Article IV (a "Permitted Transfer") and
the Company shall, or shall cause any registrar or transfer agent to, promptly
register any such Permitted Transfer on the books of the Company; provided,
however, that in connection with any such Permitted Transfer, the Permitted
Transferee shall represent to the Company that it is an Accredited Investor and
shall agree in writing to be bound by the provisions of this Article IV.
(b) In addition to the restrictions set forth in paragraph (a) above, for a
period of 150 days after the Closing (the "Restrictive Period"), the Purchaser
shall not sell, assign, transfer or otherwise dispose of the Debentures or any
interest therein (a "Transfer") (other than a Permitted Transfer) without the
prior written consent of the Company which may be withheld by the Company in its
sole discretion if, as a result thereof, the Purchaser would beneficially own
(as defined in Section 5.1(d)) less than 50% of the Debentures then outstanding.
Subject to the restrictions set forth in paragraph (a) above, from and after the
end of the Restrictive Period, the Purchaser may Transfer all or a portion of
the Debentures, or any interest therein, without the consent of the Company.
Section 4.4. Lapse of Restrictions; Removal of Legends. The restrictions on
transfer set forth in Section 4.3 relating to the Warrants and the Issuable
Shares shall lapse upon the effectiveness of the registration statement relating
thereto which the Company is required to file and maintain effective as
specified therein. From and after the effective date of such registration
statement, the Purchaser shall be entitled to exchange the Warrants and any
certificates representing Issuable Shares for replacement Warrants or
certificates not bearing the restrictive legend set forth in Section 4.2 above.
Article V
Board Representation
Section 5.1. Board Representation. (a) So long as the "Purchaser Group" (as
defined below) beneficially owns at least 10% of the issued and outstanding
shares of Common Stock, the Purchaser shall have the right to designate one
individual to serve on the Board of Directors of the Company; provided, however,
that if the Purchaser Group ceases at any time to beneficially own an aggregate
of at least 10% of the issued and outstanding shares of Common Stock, the rights
set forth in this Section 6.2 shall immediately terminate and shall not re-vest
if at any time thereafter the Purchaser Group beneficially owns an aggregate of
10% or more of the issued and outstanding shares of Common Stock. After the
Closing, promptly upon receipt of a request by the Purchaser, the Company shall
take all action necessary to increase the size of the Board of Directors by one
director and to appoint the person designated by the Purchaser to fill the
vacancy caused by such increase in the size of the Board of Directors. The term
of such designee shall continue until the next succeeding annual meeting of
shareholders of the Company and until his successor is duly elected and
qualified. Thereafter, so long as the Purchaser continues to have the right to
designate a member of the Company's Board of Directors pursuant to this Section
5.1, the Company shall use its best efforts to cause the designee or such other
person designated by the Purchaser from time to time (who shall be reasonably
satisfactory to the Company; provided, however, that any officer of the
Purchaser shall be deemed to be satisfactory
<PAGE>
to the Company) (the "Purchaser Representative") to be elected to the Board of
Directors of the Company at any succeeding annual meeting of the shareholders of
the Company or, if the election of directors occurs other than pursuant to a
meeting of shareholders, to otherwise effect the election of the Purchaser
Representative as a director.
(b) In the event that the Purchaser Representative resigns, is unable to
serve as a director or is removed, with or without cause, the Purchaser shall
give written notice to the Secretary of the Company designating a replacement
Purchaser Representative. Promptly upon receipt of such notice, the Company
shall use its best efforts to fill the resulting vacancy by causing the person
designated in the notice to be appointed to fill such vacancy.
(c) In the event that the Purchaser Group shall, at any time, cease to
beneficially own at least 10% of the issued and outstanding Common Stock, the
Purchaser Representative shall be deemed to have resigned as a director
effective as of the date the Purchaser Group's aggregate beneficial ownership of
Common Stock first falls below 10% and shall cease to be a member of the Board
of Directors; provided, however, that such person's participation in the
deliberations of the Board of Directors subsequent to the date of his
termination as a director shall not affect in any respect any corporate action
which has been approved by a majority of the remaining members of the Board of
Directors, whether at a meeting at which a quorum of the Board of Directors
(excluding the Purchaser Representative for this purpose) was present or
pursuant to a written consent signed by the remaining directors.
(d) As used herein, the term "beneficial owner" (and, with correlative
meanings, "beneficially own" and "beneficial ownership") of any interest means a
person or entity who, together with his or its affiliates, is or may be deemed a
beneficial owner of such interest for purposes of Rule 13d-3 or 13d-5 under the
Exchange Act or who, together with his or its affiliates, has the right to
become such a beneficial owner of such interest (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise, conversion or
exchange of any warrant, right or other instrument, or otherwise. As used
herein, the term "Purchaser Group" means the Purchaser and all Permitted
Transferees of the Purchaser.
Article VI
Deliveries at Closing
Section 6.1. Deliveries by the Company. Prior to or at the Closing, the
Company shall deliver to the Purchaser the following in form and substance
reasonably satisfactory to the Purchaser's counsel:
(a) a certificate of the President or a Vice President of the Company,
dated the date hereof, to the effect that (i) the person signing such
certificate is familiar with this Agreement, (ii) all representations and
warranties made by the Company in this Agreement are true, correct and complete
in all material respects as of the Closing, (iii) the Company has duly performed
or complied with, in all material respects, all of the covenants, obligations
and agreements to be
<PAGE>
performed or complied with by it under the terms of this Agreement on or prior
to or at Closing, and (iv) there has been no Material Adverse Change or
prospective change which could reasonably be expected to result in a Material
Adverse Change since September 30, 1995;
(b) a certificate of the Secretary or Assistant Secretary of the Company,
dated the date hereof, as to the incumbency of any officer of the Company
executing this Agreement or any document related thereto and covering such other
matters as the Purchaser may reasonably request;
(c) a certified copy of the resolutions of the Company's Board of Directors
authorizing the execution, delivery and consummation of this Agreement and the
transactions contemplated hereby;
(d) the Debentures and the Warrants, duly executed, issued and delivered by
the Company and registered in such names as the Purchaser may request;
(e) a duly executed counterpart of the Credit Facility;
(f) a duly executed counterpart of the Security Documents and such
assurances of the perfection, priority and status of the security interests
granted thereby as the Purchaser may request;
(g) a duly executed counterpart of the Advisory Agreement;
(h) a duly executed counterpart of the Laird Agreement;
(i) evidence that the Company has completed the Restructuring and the
offering of at least 15 Preferred Stock Units, the Series E Warrants and the
Laird Options;
(j) a certified copy of the Amendment;
(k) evidence that (i) Jerome Deutsch and Steven Feigenbaum have resigned as
directors of the Company effective as of the Closing, (ii) the size of the Board
of Directors of the Company has been increased to six members, and (iii) Richard
K. Laird, Lawrence Schneider and Norman M. Phipps have been elected as directors
of the Company, effective as of the Closing;
(l) an opinion of Lacher & Lovell-Taylor, counsel to the Company, covering
such matters as the Purchaser may reasonably request; and
(m) such other documents or instruments as the Purchaser reasonably
requests to effect the transactions contemplated hereby.
Section 6.2. Deliveries by the Purchaser. Prior to or at the Closing, the
Purchaser shall deliver to the Company the following in form and substance
reasonably satisfactory to the Company's counsel:
<PAGE>
(a) a certificate of a Managing Director of the Purchaser, dated the date
hereof, to the effect that (i) the person signing such certificate is familiar
with this Agreement, (ii) all representations and warranties made by the
Purchaser are true, correct and complete in all material respects as of the
Closing, and (iii) the Purchaser has duly performed or complied with, in all
material respects, all of the covenants, obligations and agreements to be
performed or complied with by it under the terms of this Agreement on or prior
to or at the Closing;
(b) a certificate of a Managing Director of the Purchaser, dated the date
hereof, as to the incumbency of any officer of the Partnership executing this
Agreement or any document related thereto and covering such other matters as the
Company may reasonably request;
(c) evidence that the Purchase Price has been paid in full; and
(d) such other documents or instruments as the Company reasonably requests
to effect the transactions contemplated hereby.
ARTICLE VII
Survival, Amendment and Waiver
Section 7.1. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or any certificate
delivered in connection herewith shall survive the Closing and shall apply with
respect to claims asserted in writing within one year of the Closing. The
provisions of this Section 7.1 shall not limit any covenant or agreement of the
parties hereto which, by its terms, contemplates performance after the Closing.
Section 7.2. Amendments. This Agreement may be amended by the parties
hereto, at any time prior to the Closing, in the case of the Company, by action
taken by its Board of Directors and, in the case of the Purchaser, by action
taken by its general partner. This Agreement (including the provisions of this
Section 7.2) may not be amended or modified except by an instrument in writing
signed on behalf of all of the parties hereto.
Section 7.3. Extension; Waiver. At any time prior to Closing, the parties
hereto, in the case of the Company, by action taken by its Board of Directors
and, in the case of the Purchaser, by action taken by its general partner, may
(i) extend the time for performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
of the other parties hereto or satisfaction of any of the conditions to such
party's obligations contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of a party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
<PAGE>
ARTICLE VIII
Miscellaneous
Section 8.1. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, two days after the date of mailing, as follows:
If to the Company: 121-03 Dupont Street
Plainview, New York 11803
Telephone: (516) 349-1700
Facsimile: (516) 349-8552
Attention: Chief Executive Officer
With a copy to: Lacher & Lovell-Taylor
770 Lexington Avenue
New York, New York 10021
Telephone: (212) 935-6000
Facsimile: (212) 750-1222
Attention: Joel Hasen, Esq.
If to the Purchaser: Cerberus Partners, L.P.
950 Third Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 421-6300
Facsimile: (212) 750-5212
Attention: Seth Plattus
With a copy to: Lowenstein, Sandler, Kohl,
Fisher & Boylan
65 Livingston Avenue
Roseland, NJ 07068
Telephone: (201) 992-8700
Facsimile: (201) 992-5820
Attention: John D. Hogoboom, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 8.2. Expenses. The Company shall pay its own expenses incident to
this Agreement and the transactions contemplated herein. The Company shall be
responsible for and shall pay the expenses of the Purchaser incident to this
Agreement and the transactions contemplated herein as provided in the Letter,
dated March 5, 1996 (the "Letter"), from the Company to the Purchaser.
<PAGE>
Section 8.3. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of Delaware, without reference to the choice of law principles thereof.
Section 8.4. Assignment; Successors and Assigns; No Third Party Rights.
This Agreement may not be assigned by operation of law or otherwise, and any
attempted assignment shall be null and void; provided, however, that the
Purchaser may assign this Agreement (or any interest herein) to one or more
Permitted Transferees. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, assigns
and legal representatives. This Agreement shall be for the sole benefit of the
parties to this Agreement and their respective heirs, successors, assigns and
legal representatives and is not intended, nor shall be construed, to give any
Person, other than the parties hereto and their respective heirs, successors,
assigns and legal representatives, any legal or equitable right, remedy or claim
hereunder.
Section 8.5. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original agreement, but all of which together
shall constitute one and the same instrument.
Section 8.6. Titles and Headings. The titles and headings in this Agreement
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 8.7. Entire Agreement. This Agreement and the Letter together
constitute the entire agreement among the parties with respect to the matters
covered hereby and supersede all previous written, oral or implied
understandings among them with respect to such matters.
Section 8.8. Severability. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof. If it is
ever held that any restriction hereunder is too broad to permit enforcement of
such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 8.9. No Strict Construction. Each of the parties hereto acknowledge
that this Agreement has been prepared jointly by the parties hereto, and shall
not be strictly construed against either party.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/Murray H. Feigenbaum
______________________________
Name:Murray H. Feigenbaum
Title: President
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.P.,
its General Partner
By: /s/Stephen Feinberg
______________________________
Name: Stephen Feinberg
Title: General Partner
<PAGE>
EXHIBIT A
FORM OF DEBENTURE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A UNIT PURCHASE AGREEMENT DATED AS OF MARCH 7, 1996 BY AND
BETWEEN THE COMPANY AND CERBERUS PARTNERS, L.P.
12% CONVERTIBLE SENIOR SUBORDINATED DEBENTURE
March 7, 1996
LOGIMETRICS, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of Cerberus Partners, L.P. (together with its, his or her
successors and assigns, the "Holder") the principal amount of fifty thousand
dollars ($50,000) together with interest thereon calculated from the date hereof
in accordance with the provisions of this debenture ("Debenture").
This Debenture is one of a series of 12% Convertible Senior Subordinated
Debentures ("Debentures") the principal of which aggregates one million five
hundred thousand dollars ($1,500,000). All Debentures rank pari passu.
By accepting this Debenture, the Holder agrees that the obligations of the
Company to the Holder under this Debenture shall be subordinated only to the
Senior Debt (as hereinafter defined) of the Company, all upon the terms set
forth in paragraph 4 hereof.
1. Payment of Interest. Subject to subparagraph 6(c)(xviii)(C) hereof,
interest will accrue from the date hereof at the rate of twelve percent (12%)
per annum on the unpaid principal amount of this Debenture outstanding from time
to time on the basis of a 360-day year for the actual number of days elapsed.
Subject to paragraph 4 hereof, the Company will pay to the Holder all accrued
and unpaid interest on this Debenture on June 15, 1996 and quarterly thereafter,
in arrears, on the 15th day of September, the 15th day of December, the 15th day
of March and the 15th day of June to and including the earlier to occur of the
Conversion Date (hereinafter defined) or the
<PAGE>
Due Date (hereinafter defined). Interest will accrue at the greater of the
Default Rate (hereinafter defined) and the rate of fifteen percent (15%) per
annum on any principal payment past due under this Debenture and, unless
prohibited under applicable law (and if so prohibited then only to the extent
not so prohibited), on any interest which has not been paid on the date on which
it is due and payable (without giving effect to any applicable grace periods or
paragraph 4 hereof) until such time as payment therefor is actually delivered to
the Holder.
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company will repay the principal amount of
this Debenture on December 31, 1998 ("Due Date").
(b) Optional Prepayment. At any time after nine months from the date
hereof, provided that the Registration Statement (hereinafter defined) is
effective and available for sales of Registrable Securities (hereinafter
defined) thereunder, the Company may at any time hereafter prepay, without
premium or penalty, all (but not less than all) of the outstanding principal
amount of the Debentures, together with interest accrued on such prepaid amount
to the date of payment; provided (i) the average closing price of the Company's
Common Stock on days the Common Stock traded during the 120-day period
immediately preceding the date of the notice provided for in paragraph (c)
hereinbelow shall have been not less than $5.00, and (ii) the closing price of
the Common Stock for each of the 30 trading days immediately preceding the date
of such notice shall have been not less than $5.00, adjusted in each case for
stock splits, stock dividends or other similar transactions effecting the price
of the Common Stock. No Debenture may be prepaid unless all Debentures are
prepaid.
(c) Notice of Prepayment. The Company will give written notice of its
election to prepay this Debenture to the Holder in person or by registered or
certified mail, return receipt requested, at least thirty (30) and not more than
forty-five (45) days prior to the date of prepayment. On the date of prepayment
specified in the Company's notice, the Company will deliver to the Holder of
this Debenture in person or by registered or certified mail, return receipt
requested, a cashier's or certified check for the entire outstanding principal
amount being prepaid, together with all accrued interest thereon through the
date of prepayment.
3. Intentionally Omitted.
4. Subordination. The Company's payment, whether voluntary or involuntary,
whether in cash, property, securities or otherwise and whether by
<PAGE>
application of offset or otherwise (hereinafter "Payment") of any of its
obligations under this Debenture shall be subject to the following restrictions:
(a) Subordination to Senior Debt. Anything in this Debenture to the
contrary notwithstanding, the obligations of the Company in respect of the
principal of and interest (including any premium or penalty) on this Debenture
and any other amounts due under this Debenture (the "Subordinated Debt") shall
be subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to the Senior Debt. "Senior Debt", when used with respect
to the Company, means (i) the Company's indebtedness to North Fork Bank ("Bank")
under (A) that certain $800,000 Further Restated, Increased and Amended Term
Loan Note, dated March 7, 1996, and (B) that certain $2,200,000 Fifth Restated
and Amended Revolving Credit Note, dated March 7, 1996, in each case, together
with interest thereon and (ii) renewals, extensions, refinancings, deferrals,
restructurings, amendments, modifications and waivers of the indebtedness
described in clause (i) above.
(b) Default on Senior Debt. So long as the Senior Debt has not been
paid in full, if there shall occur a default in the payment when due of any
amount due and owing on account of Senior Debt (any of the foregoing being a
"Senior Debt Default") then, from and after the receipt of written notice
thereof from the holder of Senior Debt unless and until such Senior Debt Default
shall have been remedied or waived the Company will not make any Payment on any
Subordinated Debt, and the Holders of Subordinated Debt will not receive or
accept any direct or indirect Payment in respect thereof, and the Company may
not redeem or otherwise acquire any Subordinated Debt.
(c) Changes in Senior Debt. Any holder of Senior Debt may, at any time
and from time to time, without the consent of, or notice to, the Holder and
without incurring responsibility to the Holder, and without impairing or
releasing the obligations of the Holder hereunder:
(i) Change the manner, place or terms of payment or change or
extend the time of payment of or renew or alter the Senior Debt or any
portion thereof; provided, however, that without the written consent of the
Majority Holders (hereinafter defined) the principal amount of and interest
rate applicable from time to time to Senior Debt may not be increased
(other than pursuant to the terms of the Senior Debt as such terms existed
on the date of issuance hereof);
(ii) Sell, exchange, release or otherwise deal with any
collateral securing the Senior Debt or any other property by whomsoever at
any
<PAGE>
time pledged or mortgaged to secure, or however securing, the Senior Debt
or any portion thereof; and
(iii) Apply any sums by whomsoever paid or however released to
the Senior Debt or any portion thereof.
(d) Consent to Senior Debt. By acceptance of this Debenture, the
Holder hereby consents to the making of Senior Debt and hereby acknowledges that
each current and future holder of Senior Debt has relied, and in the future will
rely, upon the terms of this Debenture. The holders of Senior Debt shall have no
liability to the Holder and the Holder hereby waives any claim which it may have
now or hereafter against any holder of Senior Debt arising from any and all
actions which any holder of Senior Debt may take or omit to take in good faith
with regard to the Senior Debt or its rights or obligations hereunder.
(e) Payments in Trust. Until the Senior Debt has been repaid in full,
in the event the Holder shall receive any Payment in contravention of the
provisions of this paragraph 4 including, Payments arising under the
subordination provisions of any other indebtedness of the company, the Holder
shall hold all such Payments so received in trust for the holders of Senior Debt
and shall forthwith turn over all such Payments to the holders of Senior Debt in
the form received (except for the endorsement or assignment of the Holder as
necessary, without recourse or warranty) to be applied to payment of the Senior
Debt whether or not then due and payable. Any Payment so received in trust and
turned over to the holders of Senior Debt shall not be deemed a Payment in
satisfaction of the Subordinated Debt by the Company.
(f) Payment in full of Senior Debt; Subrogation. If any payment or
distribution to which a Holder of Subordinated Debt would otherwise have been
entitled but for the provisions of this paragraph 4 shall have been applied,
pursuant to the provisions of this paragraph 4, to the payment of Senior Debt,
then and in such case, the Holder of the Subordinated Debt (i) shall be entitled
to receive from the holders of Senior Debt at the time outstanding any payments
or distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all Senior Debt in cash in full (whether or not then due), and
(ii) following payment of the Senior Debt in full, shall be subrogated to any
right of the holders of Senior Debt to receive any and all further payments or
distributions applicable to Senior Debt, until all the Subordinated Debt shall
have been paid in full. If the Holder of the Subordinated Debt shall have been
subrogated to the rights of the holders of Senior Debt due to the operation of
this paragraph 4(f), the Company agrees to take all such reasonable actions as
are requested by such Holders of the Subordinated Debt in order to cause such
Holders to
<PAGE>
be able to obtain payments from the Company with respect to such subrogation
rights as soon as possible.
(g) No Impairment of the Company's Obligations. Nothing contained in
this paragraph 4, as between the Company and the Holder of the Subordinated
Debt, shall impair the obligation of the Company, which is absolute and
unconditional, to pay to the Holder the principal of and interest on the
Subordinated Debt as and when the same shall become due and payable in
accordance with the terms hereof.
(h) Advances in Reliance. The Holder of the Subordinated Debt, by its
acceptance thereof, agrees that each holder of Senior Debt has advanced funds or
may in the future advance funds in reliance upon the terms and conditions
hereof.
(i) Non-Waiver of Rights. No right of any holder of Senior Debt to
enforce its right of subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company, or by any act or failure to act by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of the
Subordinated Debt, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
(j) Recaptured Payments. Any Payments received by a holder of Senior
Debt from the Company or the Holder which, in connection with an Insolvency
Event or Proceeding (hereinafter defined), is required to be remitted to the
payor or the bankrupt estate shall not be deemed a Payment to such holder of
Senior Debt for all purposes hereunder.
5. Security. The obligations of the Company to Holders of the Debentures
are secured pursuant to a Security Agreement of even date ("Security Agreement")
made by the Company in favor of Holders of the Debentures. In addition to all
rights and remedies provided herein, Holders of the Debentures are entitled to
the benefits provided in the Security Agreement. By accepting this Debenture,
the Holder hereof agrees to be bound by the terms of the Security Agreement.
6. Conversion Rights.
(a) The Holder of this Debenture has the right (the "Conversion
Right"), exercisable at his, her or its option at any time during which the
principal amount of this Debenture is outstanding, to convert this Debenture,
but only in whole, into eighty four thousand seven hundred forty-six (84,746)
shares of the Company's Common Stock, par value $.01 per share ("Common Stock"),
subject to adjustment in certain circumstances as provided herein.
<PAGE>
(b) The Conversion Right is exercisable upon surrender of this
Debenture, together with a conversion notice, in the form attached hereto as
Exhibit A, duly executed and completed, evidencing the election of the Holder to
exercise the Conversion Right, to the Company's principal office at 121-03
Dupont Street, Plainview, New York 11803. The registered owner of this Debenture
shall become the record Holder of the shares of Common Stock issuable upon
conversion as of the date of exercise of the Conversion Right (the "Conversion
Date"). The shares issued in connection with the Conversion Right shall be
registered initially in the name of the Holder, and delivered to the Holder no
later than two (2) business days after receipt of a properly completed
conversion notice. Upon conversion, the Company shall pay to the Holder accrued
but unpaid interest on this Debenture up to, but excluding, the Conversion Date.
(c) In case, at any time or from time to time after the date of
issuance of this Debenture ("Issuance Date"), the Company shall issue or sell
shares of its Common Stock (other than any Common Stock issuable upon (i)
conversion of the Debentures, (ii) exercise of those certain Amended and
Restated Series A Warrants dated March 7, 1996 to purchase 600,000 shares of
Common Stock ("Series A Warrants"), (iii) exercise by each of Murray H.
Feigenbaum and Jerome Deutsch (the "Principals") of his option to purchase
100,000 shares of Common Stock at a price of $.10 per share ("Principals'
Options"), (iv) exercise of those certain Amended and Restated Series B Warrants
dated March 7, 1996 to purchase 1,500,000 shares of Common Stock ("Series B
Warrants"), (v) conversion of the Company's $300,000 Amended and Restated 12%
Convertible Subordinated Debentures ("1995 Debentures"), (vi) exercise of those
certain Series C Warrants dated March 7, 1996 to purchase an aggregate of
2,542,380 shares of Common Stock ("Series C Warrants"), (vii) exercise of those
certain Series D Warrants dated March 7, 1996 to purchase an aggregate of
2,830,200 shares of Common Stock ("Series D Warrants"), (viii) exercise of those
certain Series E Warrants dated March 7, 1996 to purchase 1,000,000 shares of
the Company's Common Stock ("Series E Warrants" and together with the Series A,
B, C and D Warrants, "Warrants"), (ix) exercise of those certain Stock Options,
dated March 7, 1996 to purchase 1,000,000 shares of Common Stock issued to
Richard K. Laird ("Laird Options") and (x) conversion of the Company's up to 30
shares of Series A 12% Cumulative Convertible Redeemable Preferred Stock
("Preferred Stock" and together with the 1995 Debentures, the Senior
Subordinated Debentures, the Warrants, the Laird Options, the Principals'
Options and any shares of Common Stock issuable upon conversion or exercise
thereof, the "Subject Securities")) for a consideration per share less than $.30
per share ("Trigger Price"), or, if a Pro Forma Adjusted Trigger Price
(hereinafter defined) shall be in effect as provided below in this
paragraph (c), then less than such Pro Forma Adjusted Trigger Price per share,
then and in each such
<PAGE>
case the Holder of this Debenture, upon the conversion hereof as provided in
paragraph (a) hereof, shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the conversion of this Debenture, a
number of shares of Common Stock determined by (a) dividing the Trigger Price by
a Pro Forma Adjusted Trigger Price per share to be computed as provided below in
this paragraph (c), and (b) multiplying the resulting quotient by the number of
shares of Common Stock into which this Debenture is then convertible. A Pro
Forma Adjusted Trigger Price per share shall be the price computed (to the
nearest cent, a fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by multiplying
the number of shares of Common Stock of the Company outstanding
immediately prior to such issue or sale by the Trigger Price (or,
if a Pro Forma Adjusted Trigger Price shall be in effect, by such
Price), and (y) the consideration, if any, received by the
Company upon such issue or sale, by (ii) the number of shares of
Common Stock of the Company outstanding immediately after such
issue or sale.
For the purpose of this paragraph (c):
(i) In case the Company splits its Common Stock or shall declare
any dividend, or make any other distribution, upon any stock of the Company
of any class payable in Common Stock, or in any stock or other securities
directly or indirectly convertible into or exchangeable for Common Stock
(any such stock or other securities being hereinafter called "Convertible
Securities"), such split, declaration or distribution shall be deemed to be
an issue or sale (as of the record date for such split, dividend or other
distribution), without consideration, of such Common Stock or such
Convertible Securities, as the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be determined the
price per share for which Common Stock is issuable upon the conversion or
exchange thereof, such determination to be made by dividing (a) the total
amount received or receivable by the Company as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (b) the maximum number of shares of
Common Stock of the
<PAGE>
Company issuable upon the conversion or exchange of all such Convertible
Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale, then
such issue or sale shall be deemed to be an issue or sale for cash (as of
the date of issue or sale of such Convertible Securities) of such maximum
number of shares of Common Stock at the price per share so determined,
provided that, if such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange, upon the conversion or exchange thereof, the Pro Forma Adjusted
Trigger Price per share shall, forthwith upon any such increase becoming
effective, be readjusted to reflect the same, and provided, further, that
upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the
Pro Forma Adjusted Trigger Price per share shall forthwith be readjusted
and thereafter be the price which it would have been had an adjustment been
made on the basis that the only shares of Common Stock so issued or sold
were those issued or sold upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the
consideration actually received by the Company upon such conversion or
exchange, plus the consideration, if any, actually received by the Company
for the issue or sale of all such Convertible Securities which shall have
been converted or exchanged.
(iii) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Common Stock of any class
other than the Subject Securities, there shall be determined the price per
share for which Common Stock is issuable upon the exercise of such rights
or options, such determination to be made by dividing (a) the total amount,
if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise
of such rights or options, by (b) the maximum number of shares of Common
Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale, then
the granting of such rights or options shall be deemed to be an issue or
sale for cash (as of the date of the granting of such rights or options) of
such maximum number of shares of
<PAGE>
Common Stock at the price per share so determined, provided that, if such
rights or options shall by their terms provide for an increase or
increases, with the passage of time, in the amount of additional
consideration, if any, payable to the Company upon the exercise thereof,
the Pro Forma Adjusted Trigger Price per share shall, forthwith upon any
such increase becoming effective, be readjusted to reflect the same, and
provided, further, that upon the expiration of such rights or options, if
any thereof shall not have been exercised, the Pro Forma Adjusted Trigger
Price per share shall forthwith be readjusted and thereafter be the price
which it would have been had an adjustment been made on the basis that the
only shares of Common Stock so issued or sold were those issued or sold
upon the exercise of such rights or options and that they were issued or
sold for the consideration actually received by the Company upon such
exercise, plus the consideration, if any, actually received by the Company
for the granting of all such rights or options, whether or not exercised.
(iv) In case the Company shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities, such
Convertible Securities shall be deemed, for the purposes of subparagraph
(iii) above, to have been issued or sold for the total amount received or
receivable by the Company as consideration for the granting of such rights
or options plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of such rights or options,
provided that, upon the expiration of such rights or options, if any
thereof shall not have been exercised, the Pro Forma Adjusted Trigger Price
per share shall forthwith be readjusted and thereafter be the price which
it would have been had an adjustment been made upon the basis that the only
Convertible Securities so issued or sold were those issued or sold upon the
exercise of such rights or options and that they were issued or sold for
the consideration actually received by the Company upon such exercise, plus
the consideration, if any, actually received by the Company for the
granting of all such rights or options, whether or not exercised.
(v) In case any shares of stock or other securities, other than
Common Stock of the Company, shall at any time be receivable upon the
conversion of this Debenture, and in case any additional shares of such
stock or any additional such securities (or any stock or other securities
convertible into or exchangeable for any such stock or securities) shall be
issued or sold for a consideration per share such as to dilute the purchase
rights evidenced by this Debenture, then and in each such case the Pro
Forma Adjusted Trigger Price per share shall forthwith be adjusted,
substantially in the manner provided for above in this paragraph (c), so as
to protect the holder of this Debenture against the effect of such
dilution.
<PAGE>
(vi) In case any shares of Common Stock or Convertible Securities
or any rights or options to subscribe for, purchase or otherwise acquire
any Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, after deducting any expenses incurred and
any underwriting or similar commissions, compensation or concessions paid
or allowed by the Company in connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or sold
for a consideration other than cash (or a consideration which includes
cash, if any cash constitutes a part of the assets of a corporation or
business substantially all of the assets of which are being received a such
consideration) then, for the purpose of this paragraph (c), the Board of
Directors of the Company shall promptly determine the fair value of such
consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount
at which such consideration is recorded in the books of the Company for
accounting purposes except in the case of an acquisition accounted for on a
pooling of interest basis. In case any Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or otherwise
acquire any Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Company for
a consideration which covers both, the Board of Directors of the Company
shall promptly determine what part of the consideration so received is to
be deemed to be the consideration for the issue or sale of such Common
Stock or Convertible Securities or such rights or options.
The Company covenants and agrees that, should any determination
of fair value of consideration or of allocation of consideration be made by
the Board of Directors of the Company, pursuant to this subparagraph (vii),
it will, not less than seven (7) days after any and each such
determination, deliver to the holder of this Debenture a certificate signed
by the President or a Vice President and the Treasurer or an Assistant
Treasurer of the Company reciting such value as thus determined and setting
forth the nature of the transaction for which such determination was
required to be made, the nature of any consideration, other than cash, for
which Common Stock, Convertible Securities, rights or options have been or
are to be issued, the basis for its valuation, the number of shares of
Common Stock which have been or are to be
<PAGE>
issued, and a description of any Convertible Securities, rights or options
which have been or are to be issued, including their number, amount and
terms.
(viii) In case the Company shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (a) to
receive a dividend or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the Common Stock issued or
sold or deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the
granting of such rights of subscription, purchase or other acquisition, as
the case may be.
(ix) The number of shares of Common Stock outstanding at any
given time shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock, but shall exclude
shares in the treasury of the Company.
(x) Following each computation or readjustment of a Pro Forma
Adjusted Trigger Price as provided in this paragraph (c), the newly
computed or adjusted Pro Forma Adjusted Trigger Price shall remain in
effect until a further computation or readjustment thereof is required by
this paragraph (c).
(xi) In case at any time or from time to time after the Issuance
Date the holders of the Common Stock of the Company of any class (or any
other shares of stock or other securities at the time receivable upon the
exercise of this Debenture) shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have
become entitled to receive:
(A) other or additional stock or other securities or
property (other than cash) by way of dividend;
(B) any cash paid or payable out of capital or paid-in
surplus or surplus created as a result of a revaluation of property by
way of dividend; or
(C) other or additional (or less) stock or other securities
or property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
<PAGE>
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph (c)), then in each case the holder
of this Debenture, upon the conversion hereof as provided in paragraph (a)
hereof, shall be entitled to receive, in lieu of, or in addition to, as the case
may be, the shares theretofore receivable upon the conversion of this Debenture,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Company into
which this Debenture is convertible and had thereafter, during the period from
the Issuance Date to and including the date of such conversion, retained such
shares and/or all other or additional (or less) stock or other securities or
property (including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during such period by paragraph (c) and subparagraph
(xii) hereof.
(xii) In case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time
deliverable on the conversion of this Debenture) after the date hereof, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all its assets to another corporation, then and in each such
case the holder of this Debenture, upon the conversion hereof as provided
in paragraph (a) hereof, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the stock or other securities or property to which such holder
would have been entitled upon such consummation if such holder had
converted this Debenture immediately prior thereto, all subject to further
adjustments as provided for herein; in each such case, the terms of this
Debenture shall be applicable to the shares of stock or other securities or
property receivable upon the conversion of this Debenture after such
consummation.
(xiii) The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Debenture, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against dilution or other impairment.
Without limiting the generality of the foregoing, the Company will not
increase the par value of any shares of stock
<PAGE>
receivable upon the conversion of this Debenture above the amount payable
therefor upon such exercise, and at all times will take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the conversion of
this Debenture.
(xiv) In each case of an adjustment in the number of shares of
Common Stock or other stock, securities or property receivable on the
conversion of this Debenture, at the request of the holder of this
Debenture the Company at its expense shall promptly cause independent
public accountants of recognized standing, selected by the Company, to
compute such adjustment in accordance with the terms of this Debenture and
prepare a certificate setting forth such adjustment and showing in detail
the facts upon which such adjustment is based, including a statement of (A)
the consideration received or to be received by the Company for any
additional shares issued or sold or deemed to have been issued or sold, (B)
the number of shares of Common Stock outstanding or deemed to be
outstanding and (C) the Pro Forma Adjusted Trigger Price. The Company will
forthwith mail a copy of each such certificate to the holder of this
Debenture.
(xv) In case:
(A) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable
upon the conversion of this Debenture) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise any
preemptive right pursuant to the Company's charter, or to receive any
right to subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right; or
(B) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(C) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
<PAGE>
then, and in each such case, the Company will mail or cause to be mailed to the
holder of this Debenture a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Debenture) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up or (iii) the amount and character of the stock or
other securities proposed to be issued or granted, the date of such proposed
issuance or grant and the persons or class of persons to whom such stock or
other securities ar to be offered, issued or granted. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
(xvi) The Company will at all times reserve and keep available,
solely for insurance and delivery upon the conversion of this Debenture and
other similar Debentures, such shares of Common Stock and other stock,
securities and property as from time to time shall be issuable upon the
exercise of this Debenture and all other similar Debentures at the time
outstanding.
(xvii) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Debenture and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement in an amount reasonably satisfactory to it, or (in the case of
mutilation) upon surrender and cancellation thereof, the Company will
issue, in lieu thereof, a new Debenture of like tenor.
(xviii) (A) Within 90 days after the date hereof, the Company
will file a registration statement ("Registration Statement") with the
Securities and Exchange Commission ("SEC") covering the Subject Securities
(other than the Debentures, the 1995 Debentures and the Preferred Stock)
and the shares of Common Stock issuable upon conversion of the Debentures
and the Subject Securities (collectively "Registrable Securities"), and
will use its best efforts to cause the Registration Statement to become
effective on or prior to the ninetieth day after such filing and to keep
the Registration Statement effective for a period of seven years from the
date it is declared effective by the SEC.
<PAGE>
(B) The following provisions shall be applicable to the
Registration Statement:
(aa) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as
possible, and if any stop order shall be issued by the SEC in
connection therewith to use its reasonable efforts to obtain the
removal of such order. Following the effective date of the
Registration Statement, the Company shall, upon the request of
the holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Act, and other documents
necessary or incidental to a public offering of the Registrable
Securities, as shall be reasonably requested by the holder to
permit the holder to make a public distribution of its, his or
her Registrable Securities. The Company will use its reasonable
efforts to qualify the Registrable Securities for sale in such
states as the holder of Registrable Securities shall reasonably
request, provided that no such qualification will be required in
any jurisdiction where, solely as a result thereof, the Company
would be subject to service of general process or to taxation or
qualification as a foreign corporation doing business in such
jurisdiction. The obligations of the Company hereunder with
respect to the holder's Registrable Securities are expressly
conditioned on the holder's furnishing to the Company such
appropriate information concerning the holder, the holder's
Registrable Securities and the terms of the holder's offering of
such Registrable Securities as the Company may reasonably
request.
(bb) The Company shall pay all expenses incurred in
complying with the provisions of this subparagraph (xviii),
including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), printing expenses, fees
and disbursements of counsel to the Company, securities law and
blue sky fees and expenses and the expenses of any regular and
special audits incident to or required by any such registration.
All underwriting discounts and selling commissions applicable to
the sales of the Registrable Securities, and any state or federal
transfer taxes payable with respect to the sales of the
Registrable Securities and all fees and disbursements of counsel
for the
<PAGE>
Holder, if any, in each case arising in connection with
registration of the Registrable Securities shall be payable by
the Holder.
(cc) In connection with the registration of the
Registrable Securities pursuant to this subparagraph (xviii), the
Company shall indemnify and hold harmless the Holder, its
affiliates, officers, directors, partners, employees, agents and
representatives, each person, if any, who controls the Holder
within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any person claiming by or
through any of them (collectively, the "Indemnified Persons")
from and against all losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arising out of or are
based upon any untrue statement of any material fact contained in
the Registration Statement or alleged untrue statement, under
which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereto, or arise out of or are
based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made,
not misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws
applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and
will reimburse the Indemnified Persons for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not
be liable in any such case to any Indemnified Person to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission made in the
Registration Statement, said preliminary prospectus or said final
prospectus or said amendment or supplement or any document
incident thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the
Holder.
(dd) The Holder will indemnify and hold harmless the
Company and each person, if any, who controls the Company
<PAGE>
within the meaning of the Securities Act or the Exchange Act,
each officer of the Company who signs the Registration Statement
and each director of the Company from and against any and all
such losses, claims, damages or liabilities arising from any
untrue statement in, or omission from, the Registration
Statement, any such preliminary or final prospectus, amendment,
or supplement or document incident thereto if the statement or
omission in respect of which such loss, claim, damage or
liability is asserted was made in reliance upon and in conformity
with information furnished in writing to the Company by or on
behalf of the Holder for use in connection with the preparation
of the Registration Statement or such prospectus or amendment or
supplement thereof.
(ee) The reimbursements required by clauses (cc) and
(dd) shall be made by periodic payments during the course of the
investigation or defense as and when bills are received or
expenses incurred; provided, however, that to the extent that an
indemnified party receives periodic payments for legal or other
expenses during the course of an investigation or defense, and
such party subsequently received payments for such expenses from
any other parties to the proceeding, such payments shall be used
by the indemnified party to reimburse the indemnifying party for
such periodic payments. Any party which proposes to assert the
right to be indemnified under clause (cc) or (dd) will, promptly
after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to
be made against any indemnified party hereunder, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the
failure to so notify such indemnifying party of any such action,
suit or proceeding shall not relieve the indemnifying party from
any obligation which it may have to any indemnified party
hereunder unless and only to the extent that the indemnifying
party is prejudiced by said lack of notice. In case any such
action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party
to such indemnified party of its election so to
<PAGE>
assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expense,
other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its
own counsel in any such action, but the reasonable fees and
expenses of such counsel shall be at the expense of such
indemnified party, when and as incurred, unless (A) the
employment of counsel by such indemnified party has been
authorized by the indemnifying party, (B) the indemnified party
has reasonably concluded (based on advice of counsel), that there
may be legal defenses available to it that are different from or
in addition to those available to the indemnifying party, (C) the
indemnified party shall have reasonably concluded (based on
advice of counsel) that there may be a conflict of interest
between the indemnifying party and the indemnified party in the
conduct of defense of such action (in which case the indemnifying
party shall not have the right to direct the defense of such
action on behalf of the indemnified party), or (D) the
indemnifying party shall not in fact have employed counsel to
assume the defense of such action within 15 days after receipt of
notice of such action. An indemnifying party shall not be liable
for any settlement or any action or claim effected without its
consent.
(ff) If the indemnification provided for in this
subparagraph (xviii) is unavailable to any indemnified party
hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the
actions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among
other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct
<PAGE>
or prevent such action. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the
limitations set forth herein, any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
(gg) The Company and the Holder agree that it would not
be just and equitable if contribution pursuant to clause (ff)
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding any other provision hereof, in no
event shall the contribution obligation of the Holder be greater
in amount than the excess of (A) the dollar amount of net
proceeds received by the Holder upon the sale of the securities
giving rise to such contribution obligation over (B) the dollar
amount of any damages that the Holder has otherwise been required
to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(hh) Neither the filing of the Registration Statement
by the Company pursuant to this Agreement nor the making of any
request for prospectuses by the holder shall impose upon the
holder any obligation to sell his, her or its Registrable
Securities.
(ii) The holder, upon receipt of notice from the
Company that an event has occurred which requires a
post-effective amendment to the Registration Statement or a
supplement to the prospectus included therein, shall promptly
discontinue the sale of his, her or its Registrable Securities
until the holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as
soon as practicable after such notice.
(C) In the event (a) the Registration Statement is not filed
by the Company with the SEC on or prior to the ninetieth (90th) day
after the date hereof, or (b) the Registration Statement has not been
declared
<PAGE>
effective by the SEC on or prior to the one hundred eightieth (180th)
day after the date hereof, the annual interest rate on the Debentures
shall be the rate per annum ("Default Rate") which is 12% increased by
one and one-half percent (1-1/2%) per annum for the first three (3)
months immediately following the expiration of such ninety (90) day
period or one hundred eighty (180) day period, as the case may be, and
by an additional one-half of one percent (1/2%) per annum at the
beginning of each subsequent thirty (30) day period thereafter, until
such time as the requirements of clause (a) or (b) above, as the case
may be, have been satisfied, at which time all increases in the
interest rate borne by the Debentures resulting from the operation of
this sentence shall terminate and the interest rate borne by the
Debentures shall revert to the rate that otherwise would be in effect
but for the operation of this sentence; provided, however, that in no
event shall the interest rate borne by the Debentures exceed seventh
percent (17%) per annum pursuant to this sentence.
7. Covenants.
(a) Affirmative Covenants: The Company will, and with respect to the
agreements set forth in subsections (i) through (viii) hereof, will cause each
subsidiary to:
(i) with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies
similarly situated and operating like properties, assets or businesses with
responsible insurance companies satisfactory to the Majority Holders said
insurance to indicate the Agent (as defined in the Security Agreement) as
an additional insured;
(ii) duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such
items are being in good faith appropriately contested;
(iii) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs, replacements,
additions, betterments and improvements thereto;
<PAGE>
(iv) conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and
conducted;
(v) comply with all statutes, rules and regulations and maintain
its corporate existence;
(vi) provide the Holders with the following financial
information:
(A) annually, as soon as available, but in any event within
one hundred twenty (120) days after the last day of each fiscal year,
audited financial statements, including balance sheets as of the last
day of the fiscal year and statements of income and retained earnings
and changes in financial condition for such fiscal year each prepared
in accordance with generally accepted accounting principles ("GAAP"),
consistently applied for the period and prior periods by independent
Certified Public Accountants satisfactory to the Majority Holders;
(B) as soon as available, but in any event within forty-five
(45) days after the end of each fiscal quarter, internally prepared
financial statements of the Company each prepared in accordance with
GAAP and jobs-in-progress reports for said period and prior periods;
(C) within a reasonable time after a written request
therefor, such other financial data or information as such Holders may
reasonably request from time to time;
(D) at the same time as it delivers the financial statements
required under the provisions of subsections (A) and (B) hereof, a
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute
such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day
after each such month, backlog reports and accounts receivable agings
of the Company;
<PAGE>
(vii) permit each Holder to make or cause to be made, inspections
and audits of any books, records and papers of the Company and of any
parent or subsidiary thereof and to make extracts therefrom at all such
reasonable times and as often as such Holders may reasonably require;
(viii) immediately give notice to the Holders that an Event of
Default has occurred or that an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, has occurred
and specifying the action which the Company has taken and proposes to take
with respect thereto.
(b) Financial Covenants:
(1) at June 30, 1996, the Company shall maintain a Tangible Net
Worth equal to the greater of (a) $4,500,000, or (b) the sum of $4,500,000
and any net profit after taxes for the fiscal year ending June 30, 1996 (as
calculated in accordance with GAAP) less any preferred dividends (as such
shall have been declared during such fiscal year). At each fiscal year end
thereafter, the Company shall maintain a Tangible Net Worth equal to the
greater of (a) the required Tangible Net Worth required hereunder for the
immediately preceding fiscal year, or (b) the sum of said required Tangible
Net Worth and any net profit after taxes for the fiscal year then ending
(as calculated in accordance with GAAP) less any preferred dividends (as
such shall have been declared during such fiscal year). For purposes hereof
"Tangible Net Worth" shall mean, at any date, (i) the net book value of
assets (other than patents, patent rights, trademarks, trade names,
franchises, copyrights, licenses, permits, goodwill and other intangible
assets classified as such in accordance with GAAP) after all appropriate
adjustments in accordance with GAAP (including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and
amortization) plus (ii) subordinated indebtedness, in each case computed in
accordance with GAAP;
(2) As of each June 30 and December 31 of each fiscal year,
commencing with June 30, 1996, the Company shall maintain an excess of
Current Assets to Current Liabilities of not less than 2.75 to 1.0. For
purposes hereof, "Current Assets" shall be defined as the aggregate amount
of all current assets of the Company and its subsidiaries, including
prepaid items such as insurance, taxes, interest, commissions and rents as
may be properly classified as such in accordance with GAAP, other than
goodwill and such other assets as are properly classified as "intangible
assets" or deferred assets. In determining the value of assets hereunder,
investments in Persons other than subsidiaries
<PAGE>
shall be taken at cost or fair market value, whichever is less. For
purposes hereof, "Current Liabilities" shall be defined as the aggregate
amount of all current liabilities of the Company and its subsidiaries
determined in accordance with GAAP;
(3) As of each June 30 and December 31 of each fiscal year,
commencing June 30, 1996, the Company shall maintain Working Capital of not
less than $5,500,000. For purposes hereof, Working Capital shall be defined
as Current Assets less Current Liabilities;
(4) As of each June 30 and December 31 of each fiscal year,
commencing June 30, 1996, the Company shall maintain a ratio of Total
Liabilities (calculated in accordance with GAAP excluding debt pursuant to
the Debentures as hereinafter defined) to Tangible Net Worth of not more
than 1.25 to 1.0;
(5) the Company shall maintain a Debt Service Coverage ratio of
not less than 1.05: 1 at fiscal year end June 30, 1996 and 1.20: 1 at
fiscal year end June 30, 1997. For purposes hereof "Debt Service Coverage"
shall be defined as earnings before interest taxes, depreciation and
amortization for the fiscal year ending on the date of determination
divided by the sum of current maturities of long term debt plus interest
expense whether paid or accrued plus preferred dividends declared during
such fiscal year (as all of the aforementioned are calculated in accordance
with GAAP).
(c) Negative Covenants: The Company will not, and will not permit any
subsidiary to:
(i) create, incur, assume or suffer to exist any liability for
borrowed money, except (A) indebtedness to the Bank or any other financial
institution constituting "Senior Debt" hereunder; (B) indebtedness
contemplated by the Debentures and the 1995 Debentures; (C) other
indebtedness for borrowed money (whether or not constituting a refinancing
of existing indebtedness) so long as (x) such indebtedness is not secured
by collateral securing repayment of this loan, (y) such indebtedness
contains provisions reasonably satisfactory to the Majority Holders
subordinating the payment of principal and interest thereon to the prior
payment of principal and interest on the Debentures, and (z) the incurrence
of which will not cause an Event of Default, or an event which with notice
or the lapse of time or both would constitute an Event of Default,
hereunder;
<PAGE>
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in, any of its
property or assets now owned or hereafter acquired except (A) mortgages,
liens, pledges and security interests securing Senior Debt and the
Debentures; (B) other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property and assets which
are not incurred in connection with the borrowing of money or the obtaining
of advances or credit and which do not materially impair the use thereof in
the operation of its business; (C) liens for taxes or other governmental
charges which are not delinquent or which are being contested in good faith
and for which a reserve shall have been established in accordance with
GAAP; (D) liens granted to secure purchase money financing of equipment,
provided such liens are limited to the equipment financed; and (E) liens
granted to refinance unencumbered equipment provided such liens are limited
to the equipment refinanced and the incurrence of which will not cause a
default hereunder or in any other Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (B) engage in or
permit any person to engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954,
as amended) involving any pension plan which would subject the Company to
any material tax, penalty or other liability, (C) incur or suffer to exist
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, involving any pension plan, or (D) allow or
suffer to exist any event or condition, which presents a material risk of
incurring a material liability to the PBGC by reason of termination of any
pension plan;
(v) amend, supplement or modify the terms of the Subject
Securities or increase the outstanding amount of any Subject Securities
without the prior consent of the Majority Holders;
(vi) enter into any merger or consolidation unless the Company
shall be the surviving entity in any such merger or consolidation, and
after giving effect to the transaction no Event of Default and no event
which with the giving of notice or passage of time or both would constitute
an Event of Default shall have occurred and be continuing, or liquidate,
wind-up or dissolve
<PAGE>
itself or sell, transfer or lease or otherwise dispose of all or any
substantial part of its assets;
(vii) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except (A) investments in United States
Government obligations and certificates of deposit of any bank institution
with combined capital and surplus of at least $200,000,000, (B) trade
credit, (C) security deposits, or acquire or otherwise cause any other
entity to become a subsidiary of the Company (as used herein the term
"subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of which the Company or any other
subsidiary of the Company beneficially owns a majority of the voting or
economic interests) and (D) indebtedness to Murray H. Feigenbaum and Jerome
Deutsch in the aggregate amount of $60,000 existing on the date hereof;
(viii) declare or pay any dividends or distributions on account
of its capital stock or purchase, redeem, retire or otherwise acquire any
of its capital stock or any securities convertible into, exchangeable for,
or giving any person the right to acquire or otherwise subscribe for, any
shares of the Company's capital stock; provided, however, that so long as
no Event of Default or event which, with the giving of notice, the lapse of
time, or both would constitute an Event of Default hereunder has occurred
and is continuing, the Company may pay regular quarterly dividends on the
Preferred Stock in accordance with the terms thereof; or
(ix) engage in any transaction with any person or entity who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company (an
"Affiliate"), other than ordinary director and compensation arrangements
with Affiliates serving as officers and/or directors of the Company and
other than transactions with Affiliates entered into in the ordinary course
of business on terms which are at least as favorable to the Company as
those available from unrelated third parties. As used herein, the term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of the
Company, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlled" and "controlling" have meanings
correlative thereto.
8. Events of Default.
<PAGE>
(a) Definition. For the purposes of this Debenture, an Event of Default
hereunder will be deemed to have occurred if:
(i) the Company fails to pay the principal amount of this Debenture
when due (whether upon the Due Date, upon acceleration or otherwise),
whether or not such payment is prohibited by paragraph 4 hereof;
(ii) the Company fails to pay any interest, premium or penalty on the
Debenture when due and such failure has continued for a period of ten (10)
days;
(iii) the Company fails to perform or observe the provisions set forth
in Paragraphs 7(b) or 7(c) hereof;
(iv) the Company fails to perform or observe any provision contained
in the Debenture or the Security Agreement (other than those specifically
covered by the other provisions of this paragraph 8(a)) and, if such
failure is capable of being cured, such failure continues for a period of
30 days after the Company's receipt of written notice thereof;
(v) the Company shall have failed to pay when due any amount due and
owing under any indebtedness of the Company for borrowed money or any other
default or event of default shall have occurred (and shall have continued
beyond the expiration of any applicable grace period) under any
indebtedness of the Company for borrowed money which would permit the
holder thereof to accelerate the maturity thereof or there shall have been
an acceleration of the stated maturity of any indebtedness of the Company
for borrowed money;
(vi) the Security Agreement shall at any time after its execution and
delivery and for any reason cease to be effective to constitute a valid and
perfected lien and security interest in and to the Collateral (as defined
therein) or if any of the provisions of the Security Agreement that permit
the Secured Party (as defined therein) to exercise its remedies in
accordance with the Uniform Commercial Code of the State of New York cease
to be in full force and effect;
(vii) the Company makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become
due; or an order, judgment or decree is entered adjudicating the Company as
bankrupt or insolvent; or any order for relief with respect to the
<PAGE>
Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Company or of any substantial part
of the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction
("Insolvency Event or Proceeding"); or any such petition or application is
filed, or any such proceeding is commenced, against the Company and either
(y) the Company by any act indicates its approval thereof, consents thereto
or acquiescence therein or (z) such petition application or proceeding is
not dismissed within 60 days;
(viii) a final judgment which in the aggregate with other outstanding
final judgments against the Company exceeds $250,000 shall be rendered
against the Company and within 90 days after entry thereof, such judgment
is not discharged or execution thereof stayed pending appeal, or within 90
days after the expiration of such stay, such judgment is not discharged;
(ix) any person or "group" (as defined in Rule 13d-5 promulgated under
the Exchange Act), other than SFM Group, Ltd. or Phipps, Teman & Company,
L.L.C., acquires or otherwise obtains the right (whether by contract,
through the ownership of securities or pursuant to any proxy or consent
arrangement, voting trust or otherwise) to appoint, elect or cause the
election of a majority of the Board of Directors of the Company;
(x) any representation or warranty made by the Company in the Unit
Purchase Agreement, dated March 7, 1996 between the Company and the
original Holder of this Debenture, the Security Documents (as defined in
such Unit Purchase Agreement), or any other certificate or instrument
delivered in connection therewith shall have been untrue in any material
respect when made; or
(xi) the Registration Statement shall not have become effective within
270 days after the date hereof.
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described in
subparagraph 8(a)(vii) above) has occurred, the Holder or Holders of
Debentures representing a majority of the aggregate principal amount of
Debentures then outstanding (the "Majority Holders") may demand (by written
notice delivered to the Company) immediate payment of all or any portion of
the outstanding
<PAGE>
principal amount of the Debentures owed by such Holder or Holders. If such
Majority Holders demand immediate payment of all or any portion of such
Holder's or Holders' Debentures, the Company will, to the extent permitted
under the provisions of paragraph 4 hereof, immediately pay to such Holder
or Holders the principal amount of the Debentures requested to be paid
(plus accrued interest hereon). If an Event of Default of the type
described in subparagraph 8(a)(vii) above has occurred, then all of the
outstanding principal amount of the Debentures shall automatically be
immediately due and payable without any action on the part of any Holders
of the Debenture.
(ii) If an Event of Default has occurred, each Holder of the
Debentures will also have any other rights which such Holder may have
pursuant to applicable law, in each case provided such rights are
consistent with the provisions of paragraph 4 hereof.
9. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Debenture may be amended and the Company may take any action
herein prohibited and exercise all remedies available to them under the Security
Agreement, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Majority Holders,
provided, however, neither the interest rate or principal amounts payable under
the Debentures, the dates on which interest or principal under the Debentures is
due nor the obligations to make payments on the Debentures on a pro rata basis
shall be amended without the prior written consent of each Holder affected
thereby, and of each holder of Senior Debt, and further provided, however, that
any amendment or waiver which might in any way adversely affect the holders of
Senior Debt, including, but not limited to, any amendment or waiver affecting
the provisions of paragraph 4 or this paragraph 9 shall require the prior
written consent of each holder of Senior Debt. Any amendment or waiver effected
in accordance with this paragraph 9 shall be binding upon each Holder of this
Debenture and each future Holder of this Debenture.
10. Cancellation. After all principal and accrued interest at any time owed
on this Debenture has been paid in full, this Debenture will be surrendered to
the Company for cancellation and will not be reissued.
11. Place of Payment. Payments of principal and interest are to be
delivered to the Holder at the office of the Company, 121-03 Dupont Street,
Plainview, New York 11803, or to such other address or to the attention of such
other Person as specified by prior written notice to the Company.
<PAGE>
12. Waiver of Presentment, Demand and Dishonor. The Company hereby waives
presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures to
exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Debenture, by agreement or otherwise;
and the Company hereby expressly waives the benefit of any statute or rule of
law or equity that would produce a result contrary to or in conflict with the
foregoing.
<PAGE>
13. Usury. The Holder and the Company intend that the obligations evidenced
by this Debenture conform strictly to the applicable usury laws from time to
time in force. All agreements between the Company and Holder, whether now
existing or hereafter arising and whether oral or written, hereby are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of maturity hereof or otherwise, shall the amount paid or agreed to be paid to
Holder, or collected by Holder, by or on behalf of the Company for the use,
forbearance or detention of the money to be loaned to the Company hereunder or
otherwise, or for the payment or performance of any covenant or obligation
contained herein of the Company to Holder, or in any other document evidencing,
securing or pertaining to such indebtedness evidenced hereby, exceed the maximum
amount permissible under applicable usury law. If under any circumstances
whatsoever fulfillment of any provision hereof or any other document, at the
time performance of such provisions shall be due, shall involve transcending the
limit of validity prescribed by law, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity; and if under any
circumstances Holder ever shall receive from or on behalf of the Company an
amount deemed interest, by applicable law, which would exceed the highest lawful
rate, such amount that would be excessive interest under applicable usury laws
shall be applied to the reduction of the Company's principal amount owing
hereunder and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal and such other indebtedness, the excess
shall be deemed to have been a payment made by mistake and shall be refunded to
the Company or to any other person making such payment on the Company's behalf.
14. Governing Law. The validity, construction and interpretation of this
Debenture will be governed by the internal laws, but not the law of conflicts
and choices of law, of the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered this 12%
Convertible Senior Subordinated Debenture this 7th day of March, 1996.
LOGIMETRICS, INC.
By:_____________________________
Name: Murray H. Feigenbaum
Title: President
<PAGE>
EXHIBIT A
ELECTION TO CONVERT
(All capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the 12% Convertible Senior
Subordinated Debenture)
LogiMetrics, Inc.
121-03 Dupont Street
Plainview, NY 11803
TO WHOM IT MAY CONCERN:
The undersigned registered owner of the attached 12% Convertible Senior
Subordinated Debenture hereby irrevocably exercises the option to convert such
Debenture into Common Stock of LogiMetrics, Inc. in accordance with the terms
thereof, and directs that any shares issuable and deliverable upon the
conversion be issued in the name of and delivered to the undersigned.
_________________________________________________________
[Name of Debentureholder]
Dated: ______________, 199_
<PAGE>
EXHIBIT B
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT
OR LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER
SUBJECT TO THE PROVISIONS OF A UNIT PURCHASE AGREEMENT DATED AS OF
MARCH 7, 1996 BY AND BETWEEN THE COMPANY AND CERBERUS PARTNERS, L.P.
LOGIMETRICS, INC.
Common Stock Purchase Warrant
Series C
LOGIMETRICS, INC. (the "Company"), a Delaware corporation, hereby certifies
that, for value received, Cerberus Partners, L.P., or assigns, is entitled,
subject to the terms set forth below, to purchase from the Company Eighty Four
Thousand Seven Hundred Forty Six (84,746) fully paid and non-assessable shares
of Common Stock of the Company, at a purchase price, subject to the provisions
of Paragraph 3 hereof, of one cent ($.01) per share (the "Purchase Price") at
any time prior to the seventh anniversary of the original date of issuance
hereof. The number and character of such shares are subject to adjustment as
provided below, and the term "Common Stock" shall mean, unless the context
otherwise requires, the stock or other securities or property at the time
deliverable upon the exercise of this Warrant. This Warrant is herein called the
"Warrant". This Warrant is one of a series of warrants to purchase 2,542,080
shares of Common Stock ("Series C Warrants").
1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant shall
be exercised by the holder hereof ("Holder") surrendering this Warrant, with the
form of subscription at the end hereof duly executed by such Holder, to the
Company at its office in Plainview, New York, accompanied by payment (in cash or
by certified or official bank check). This Warrant may be exercised for less
than the full number of shares of Common Stock at the time called for hereby, in
which case the number of shares receivable upon the exercise of this Warrant as
a whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon any such partial exercise, the Company at its
expense will forthwith issue to the Holder hereof a new Warrant or Warrants of
like tenor calling for the
<PAGE>
number of shares of Common Stock as to which rights have not been exercised,
such Warrant or Warrants to be issued in the name of the Holder hereof or his
nominee.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable after
the exercise of this Warrant and payment of the Purchase Price, and in any event
within five (5) days thereafter, the Company, at its expense, will cause to be
issued in the name of and delivered to the Holder hereof a certificate or
certificates for the number of fully paid and non-assessable shares or other
securities or property to which such Holder shall be entitled upon such
exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current market value of one full share.
3. ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN PURCHASE
PRICE. In case, at any time or from time to time after the date of issuance of
this Warrant ("Issuance Date"), the Company shall issue or sell shares of its
Common Stock (other than any Common Stock issuable upon (i) conversion of the
Company's Amended and Restated 12% Convertible Subordinated Debentures dated as
of July 14, 1995 ("1995 Debentures"), (ii) exercise of those certain Amended and
Restated Series A Warrants dated March 7, 1996 to purchase 600,000 shares of
Common Stock ("Series A Warrants"), (iii) exercise by each of Murray H.
Feigenbaum and Jerome Deutsch (the "Principals") of their right to purchase
100,000 shares of Common Stock at a price of $.10 per share ("Principals'
Options"), (iv) exercise of those certain Amended and Restated Series B Warrants
dated March 7, 1996 to purchase 1,500,000 shares of Common Stock ("Series B
Warrants"), (v) conversion of the Company's 12% Convertible Senior Subordinated
Debentures dated March 7, 1996 ("Senior Subordinated Debentures"), (vi) exercise
of those certain Series D Warrants dated March 7, 1996 to purchase an aggregate
of 2,830,200 shares of Common Stock ("Series D Warrants"), (vii) exercise of
those certain Series E Warrants dated March 7, 1996 to purchase 1,000,000 shares
of the Company's Common Stock ("Series E Warrants" and together with the
Series A, B, C and D Warrants, "Warrants"), (viii) exercise of those certain
Stock Options, dated March 7, 1996 to purchase 1,000,000 shares of Common Stock
issued to Richard K. Laird ("Laird Options") and (ix) conversion of the
Company's 30 shares of Series A 12% Cumulative Convertible Redeemable Preferred
Stock ("Preferred Stock" and together with the 1995 Debentures, the Senior
Subordinated Debentures, the Warrants, the Laird Options, the Principals'
Options and any shares of Common Stock issuable upon conversion or exercise
thereof, the "Subject Securities")), for a consideration per share less than
thirty cents ($.30) per share (the "Trigger Price") (or, if a Pro Forma Adjusted
Trigger Price shall be in effect as provided below in this Paragraph 3, then
less than such Pro Forma Adjusted Trigger Price per share), then and in each
such case the Holder of this Warrant, upon the exercise hereof as provided in
Paragraph 1 hereof, shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the exercise of this Warrant, a number
of shares of Common Stock determined by (a) dividing the Trigger Price by a Pro
Forma Adjusted Trigger Price per share to be computed as provided
<PAGE>
below in this Paragraph 3, and (b) multiplying the resulting quotient by the
number of shares of Common Stock called for on the face of this Warrant. A Pro
Forma Adjusted Trigger Price per share shall be the price computed (to the
nearest cent, a fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or sale
by the Trigger Price (or, if a Pro Forma Adjusted Trigger
Price shall be in effect, by such Price), and (y) the
consideration, if any, received by the Company upon such
issue or sale, by (ii) the number of shares of Common Stock
of the Company outstanding immediately after such issue or
sale.
For the purpose of this Paragraph 3:
3.1. Stock Splits, Dividends, etc., in Common Stock or Convertible
Securities. In case the Company splits its Common Stock or shall declare any
dividend, or make any other distribution, upon any stock of the Company of any
class payable in Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such stock or
other securities being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as of the
record date for such split, dividend or other distribution), without
consideration, of such Common Stock or such Convertible Securities, as the case
may be.
3.2. Issuance or Sale of Convertible Securities. In case the Company shall
issue or sell any Convertible Securities other than the Subject Securities,
there shall be determined the price per share for which Common Stock is issuable
upon the conversion or exchange thereof, such determination to be made by
dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (b) the maximum number of
shares of Common Stock of the Company issuable upon the conversion or exchange
of all such Convertible Securities.
<PAGE>
If the price per share so determined shall be less than the Trigger Price
(or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than such
Price) as of the date of such issue or sale, then such issue or sale shall be
deemed to be an issue or sale for cash (as of the date of issue or sale of such
Convertible Securities) of such maximum number of shares of Common Stock at the
price per share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration, if any, payable to the Company,
or in the rate of exchange, upon the conversion or exchange thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such increase
becoming effective, be readjusted to reflect the same, and provided, further,
that upon the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised, the Pro
Forma Adjusted Trigger Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the conversion or exchange of such Convertible Securities,
and that they were issued or sold for the consideration actually received by the
Company upon such conversion or exchange, plus the consideration, if any,
actually received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
3.3. Grant of Rights or Options for Common Stock. In case the Company shall
grant any rights or options to subscribe for, purchase or otherwise acquire
Common Stock of any class other than the Subject Securities, there shall be
determined the price per share for which Common Stock is issuable upon the
exercise of such rights or options, such determination to be made by dividing
(a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of such rights or options, by (b) the maximum number of shares
of Common Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the Trigger Price
(or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than such
Price) as of the date of such issue or sale, then the granting of such rights or
options shall be deemed to be an issue or sale for cash (as of the date of the
granting of such rights or options) of such maximum number of shares of Common
Stock at the price per share so determined, provided that, if such rights or
options shall by their terms provide for an increase or increases, with the
passage of time, in the amount of additional consideration, if any, payable to
the Company upon the exercise thereof, the Pro Forma Adjusted Trigger Price per
share shall, forthwith upon any such increase becoming effective, be readjusted
to reflect the same, and provided, further, that upon the expiration of such
rights or options, if any thereof shall not have been exercised, the Pro Forma
Adjusted Trigger Price per share shall forthwith be readjusted and thereafter be
the price which it would have been had an adjustment been made on the basis that
the only shares of Common Stock so issued or
<PAGE>
sold were those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by the
Company upon such exercise, plus the consideration, if any, actually received by
the Company for the granting of all such rights or options, whether or not
exercised.
3.4. Grant of Rights or Options for Convertible Securities. In case the
Company shall grant any rights or options to subscribe for, purchase or
otherwise acquire Convertible Securities, such Convertible Securities shall be
deemed, for the purposes of subparagraph 3.2. above, to have been issued or sold
for the total amount received or receivable by the Company as consideration for
the granting of such rights or options plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
such rights or options, provided that, upon the expiration of such rights or
options, if any thereof shall not have been exercised, the Pro Forma Adjusted
Trigger Price per share shall forthwith be readjusted and thereafter be the
price which it would have been had an adjustment been made upon the basis that
the only Convertible Securities so issued or sold were those issued or sold upon
the exercise of such rights or options and that they were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights or options, whether or not exercised.
3.5. Dilution in Case of Other Stock or Securities. In case any shares of
stock or other securities, other than Common Stock of the Company, shall at any
time be receivable upon the exercise of this Warrant, and in case any additional
shares of such stock or any additional such securities (or any stock or other
securities convertible into or exchangeable for any such stock or securities)
shall be issued or sold for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, then and in each such case the Pro
Forma Adjusted Trigger Price per share shall forthwith be adjusted,
substantially in the manner provided for above in this Paragraph 3, so as to
protect the Holder of this Warrant against the effect of such dilution.
3.6. Expenses, etc., Deducted. In case any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor, after deducting any expenses incurred
and any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale.
3.7. Determination of Consideration. In case any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold for a consideration other than cash (or a consideration which includes
cash, if any cash constitutes a part of the assets of a corporation or business
substantially all of the assets of which are being received a such
<PAGE>
consideration) then, for the purpose of this Paragraph 3, the Board of Directors
of the Company shall promptly determine the fair value of such consideration,
and such Common Stock, Convertible Securities, rights or options shall be deemed
to have been issued or sold on the date of such determination in good faith.
Such value shall not be more than the amount at which such consideration is
recorded in the books of the Company for accounting purposes except in the case
of an acquisition accounted for on a pooling of interest basis. In case any
Common Stock or Convertible Securities or any rights or options to subscribe
for, purchase or otherwise acquire any Common Stock or Convertible Securities
shall be issued or sold together with other stock or securities or other assets
of the Company for a consideration which covers both, the Board of Directors of
the Company shall promptly determine what part of the consideration so received
is to be deemed to be the consideration for the issue or sale of such Common
Stock or Convertible Securities or such rights or options.
The Company covenants and agrees that, should any determination of fair
value of consideration or of allocation of consideration be made by the Board of
Directors of the Company, pursuant to this subparagraph 3.7, it will, not less
than seven (7) days after any and each such determination, deliver to the Holder
of this Warrant a certificate signed by the President or a Vice President and
the Treasurer or an Assistant Treasurer of the Company reciting such value as
thus determined and setting forth the nature of the transaction for which such
determination was required to be made, the nature of any consideration, other
than cash, for which Common Stock, Convertible Securities, rights or options
have been or are to be issued, the basis for its valuation, the number of shares
of Common Stock which have been or are to be issued, and a description of any
Convertible Securities, rights or options which have been or are to be issued,
including their number, amount and terms.
3.8. Record Date Deemed Issue Date. In case the Company shall take a record
of the Holders of shares of its stock of any class for the purpose of entitling
them (a) to receive a dividend or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for, purchase or otherwise acquire
Common Stock or Convertible Securities, then such record date shall be deemed to
be the date of the issue or sale of the Common Stock issued or sold or deemed to
have been issued or sold upon the declaration of such dividend or the making of
such other distribution, or the date of the granting of such rights of
subscription, purchase or other acquisition, as the case may be.
3.9. Shares Considered Outstanding. The number of shares of Common Stock
outstanding at any given time shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock, but shall
exclude shares in the treasury of the Company.
<PAGE>
3.10. Duration of Pro Forma Adjusted Trigger Price. Following each
computation or readjustment of a Pro Forma Adjusted Trigger Price as provided in
this Paragraph 3, the newly computed or adjusted Pro Forma Adjusted Trigger
Price shall remain in effect until a further computation or readjustment thereof
is required by this Paragraph 3.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATIONS, ETC. In case at any time or from time to time after the
Issuance Date the Holders of the Common Stock of the Company of any class (or
any other shares of stock or other securities at the time receivable upon the
exercise of this Warrant) shall have received, or, on or after the record date
fixed for the determination of eligible stockHolders, shall have become entitled
to receive:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend;
(b) any cash paid or payable out of capital or paid-in surplus or
surplus created as a result of a revaluation of property by way
of dividend; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to Holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of Paragraph 3 hereof), then in each case the Holder
of this Warrant, upon the exercise hereof as provided in Paragraph 1 hereof,
shall be entitled to receive, in lieu of, or in addition to, as the case may be,
the shares theretofore receivable upon the exercise of this Warrant, the amount
of stock or other securities or property (including cash in the cases referred
to in clauses (b) and (c) above) which such Holder would hold on the date of
such exercise if, on the Issuance Date, he had been the Holder of record of the
number of shares of Common Stock of the Company called for on the face of this
Warrant and had thereafter, during the period from the Issuance Date to and
including the date of such exercise, retained such shares and/or all other or
additional (or less) stock or other securities or property (including cash in
the cases referred to in clauses (b) and (c) above) receivable by him as
aforesaid during such period, giving effect to all adjustments called for during
such period by Paragraphs 3 and 5 hereof.
5. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case of
any reorganization of the Company (or any other corporation the stock or other
securities of which are at the time deliverable on the exercise of this Warrant)
after the date hereof, or in case, after such date, the Company (or any such
other corporation) shall consolidate
<PAGE>
with or merge into another corporation or convey all or substantially all its
assets to another corporation, then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Paragraph 1 hereof, at any time
after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive the stock or other securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised this Warrant immediately prior thereto, all subject to
further adjustments as provided in Paragraphs 3 and 4 hereof; in each such case,
the terms of this Warrant shall be applicable to the shares of stock or other
securities or property receivable upon the exercise of this Warrant after such
consummation.
6. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
7. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock or other stock, securities or
property receivable on the exercise of this Warrant, at the request of the
Holder of this Warrant the Company at its expense shall promptly cause
independent public accountants of recognized standing, selected by the Company,
to compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any additional
shares issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding and (c) the Pro
Forma Adjusted Trigger Price. The Company will forthwith mail a copy of each
such certificate to the Holder of this Warrant.
8. NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the Holders of its Common
Stock (or other stock or securities at the time deliverable upon
the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to
<PAGE>
exercise any preemptive right pursuant to the Company's charter,
or to receive any right to subscribe for or purchase any shares
of stock of any class or any other securities, or to receive any
other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the Holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up or (iii) the amount and character of the stock or
other securities proposed to be issued or granted, the date of such proposed
issuance or grant and the persons or class of persons to whom such stock or
other securities ar to be offered, issued or granted. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
9. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available, solely for insurance and
delivery upon the exercise of this Warrant and other similar Warrants, such
shares of Common Stock and other stock, securities and property as from time to
time shall be issuable upon the exercise of this Warrant and all other similar
Warrants at the time outstanding.
10. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement in an amount reasonably satisfactory to it, or (in the case
of mutilation) upon surrender and cancellation thereof, the Company will issue,
in lieu thereof, a new Warrant of like tenor.
11. REMEDIES. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default by the Company in its performance of
or compliance
<PAGE>
with any of the terms of this Warrant are not and will not be adequate, and that
the same may be specifically enforced.
12. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to
all of which each taker or owner hereof consents and agrees:
(a) Title to this warrant may be transferred by endorsement (by the
Holder hereof executing the form of assignment at the end hereof
including guaranty of signature) and delivery in the same manner
as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
granted power to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of every such bona
fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered Holder of this Warrant as
the absolute owner hereof for all purposes without being affected
by any notice to the contrary.
13. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants issued
pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the Holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company which may be subscribed for and purchased hereunder.
14. REGISTRATION RIGHTS.
a. Registration. Within 90 days after the date hereof, the Company
will file a registration statement ("Registration Statement") with the
Securities and Exchange Commission ("SEC") covering the Warrants and shares of
Common Stock issuable upon conversion of the 1995 Debentures, the Senior
Subordinated Debentures and the Preferred Stock, and upon exercise of the
Warrants and the Laird Options as well as Common Stock owned by the Principals
and issuable upon exercise of the Principals' Options (collectively "Registrable
Securities"), and will use its best efforts to cause the Registration Statement
to become effective
<PAGE>
on or prior to the ninetieth day after such filing and to keep the Registration
Statement effective for a period of seven years from the date it is declared
effective by the SEC.
b. Additional Terms. Except as otherwise expressly stated herein, the
following provisions shall be applicable to the Registration Statement:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible, and if
any stop order shall be issued by the SEC in connection therewith to use
its reasonable efforts to obtain the removal of such order. Following the
effective date of the Registration Statement, the Company shall, upon the
request of the Holder, forthwith supply such reasonable number of copies of
the Registration Statement, preliminary prospectus and prospectus meeting
the requirements of the Act, and other documents necessary or incidental to
a public offering of the Registrable Securities, as shall be reasonably
requested by the Holder to permit the Holder to make a public distribution
of its, his or her Registrable Securities. The Company will use its
reasonable efforts to qualify the Registrable Securities for sale in such
states as the Holder of Registrable Securities shall reasonably request,
provided that no such qualification will be required in any jurisdiction
where, solely as a result thereof, the Company would be subject to service
of general process or to taxation or qualification as a foreign corporation
doing business in such jurisdiction. The obligations of the Company
hereunder with respect to the Holder's Registrable Securities are expressly
conditioned on the Holder's furnishing to the Company such appropriate
information concerning the Holder, the Holder's Registrable Securities and
the terms of the Holder's offering of such Registrable Securities as the
Company may reasonably request.
(ii) The Company shall pay all expenses incurred in complying
with the provisions of this Paragraph 14, including, without limitation,
all registration and filing fees (including all expenses incident to filing
with the National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel to the Company, securities law
and blue sky fees and expenses and the expenses of any regular and special
audits incident to or required by any such registration. All underwriting
discounts and selling commissions applicable to the sales of the
Registrable Securities, and any state or federal transfer taxes payable
with respect to the sales of the Registrable Securities and all fees and
disbursements of counsel for the Holder, if any, in each case arising in
connection with registration of the Registrable Securities shall be payable
by the Holder.
(iii) In connection with the registration of the Registrable
Securities pursuant to this Paragraph 14, the Company shall indemnify and
hold harmless the Holder, its affiliates, officers, directors, partners,
employees, agents and representatives,
<PAGE>
each person, if any, who controls the Holder within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any
person claiming by or through any of them (collectively, the "Indemnified
Persons") from and against all losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arising out of or are based
upon any untrue statement of any material fact contained in the
Registration Statement or alleged untrue statement, under which such
securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
are made, not misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state
securities or blue sky laws; and will reimburse the Indemnified Persons for
any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to any Indemnified Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
omission made in the Registration Statement, said preliminary prospectus or
said final prospectus or said amendment or supplement or any document
incident thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder.
(iv) The Holder will indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, each officer of the Company who signs
the Registration Statement and each director of the Company from and
against any and all such losses, claims, damages or liabilities arising
from any untrue statement in, or omission from, the Registration Statement,
any such preliminary or final prospectus, amendment, or supplement or
document incident thereto if the statement or omission in respect of which
such loss, claim, damage or liability is asserted was made in reliance upon
and in conformity with information furnished in writing to the Company by
or on behalf of the Holder for use in connection with the preparation of
the Registration Statement or such prospectus or amendment or supplement
thereof.
(v) The reimbursements required by clauses (iii) and (iv) shall
be made by periodic payments during the course of the investigation or
defense as and when bills are received or expenses incurred; provided,
however, that to the extent that an indemnified party receives periodic
payments for legal or other expenses during the
<PAGE>
course of an investigation or defense, and such party subsequently received
payments for such expenses from any other parties to the proceeding, such
payments shall be used by the indemnified party to reimburse the
indemnifying party for such periodic payments. Any party which proposes to
assert the right to be indemnified under clause (iii) or (iv) will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made
against any indemnified party hereunder, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing a
copy of all papers served, but the failure to so notify such indemnifying
party of any such action, suit or proceeding shall not relieve the
indemnifying party from any obligation which it may have to any indemnified
party hereunder unless and only to the extent that the indemnifying party
is prejudiced by said lack of notice. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expense, other than reasonable costs of investigation subsequently incurred
by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any
such action, but the reasonable fees and expenses of such counsel shall be
at the expense of such indemnified party, when and as incurred, unless (A)
the employment of counsel by such indemnified party has been authorized by
the indemnifying party, (B) the indemnified party has reasonably concluded
(based on advice of counsel), that there may be legal defenses available to
it that are different from or in addition to those available to the
indemnifying party, (C) the indemnified party shall have reasonably
concluded (based on advice of counsel) that there may be a conflict of
interest between the indemnifying party and the indemnified party in the
conduct of defense of such action (in which case the indemnifying party
shall not have the right to direct the defense of such action on behalf of
the indemnified party), or (D) the indemnifying party shall not in fact
have employed counsel to assume the defense of such action within 15 days
after receipt of notice of such action. An indemnifying party shall not be
liable for any settlement or any action or claim effected without its
consent.
(vi) If the indemnification provided for in this Paragraph 14 is
unavailable to any indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion
<PAGE>
as is appropriate to reflect the relative fault of the indemnifying party
and indemnified parties in connection with the actions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among
other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and expenses referred
to above shall be deemed to include, subject to the limitations set forth
herein, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
(vii) The Company and the Holder agree that it would not be just
and equitable if contribution pursuant to clause (vi) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding any other provision hereof, in no
event shall the contribution obligation of the Holder be greater in amount
than the excess of (A) the dollar amount of proceeds received by the Holder
upon the sale of the securities giving rise to such contribution obligation
over (B) the dollar amount of any damages that the Holder has otherwise
been required to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(viii) Neither the filing of the Registration Statement by the
Company pursuant to this Agreement nor the making of any request for
prospectuses by the Holder shall impose upon the Holder any obligation to
sell his, her or its Registrable Securities.
(ix) The Holder, upon receipt of notice from the Company that an
event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of his, her or its Registrable
Securities until the Holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as soon as
practicable after such notice.
15. MAILING OF NOTICES, ETC. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first-class certified
mail, postage
<PAGE>
prepaid, to the address furnished to the Company in writing by the last Holder
of this Warrant who shall have furnished an address to the Company in writing.
16. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
17. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
18. GOVERNING LAW. This Series C Warrant shall be construed and enforced in
accordance with the laws of the State of New York.
LOGIMETRICS, INC.
By:_____________________
Dated: March 7, 1996
Attest:
________________________________
<PAGE>
[To be signed only upon exercise of Warrant]
To LOGIMETRICS, INC.:
The undersigned, the Holder of the within Series C Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, ______________shares of Common Stock of
LOGIMETRICS, INC. and herewith makes payment of $___________ therefor, and
requests that the certificates for such shares be issued in the name of, and be
delivered to, ________________, whose address is _____________________.
Dated:
__________________________
________________________________________________________________________________
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
________________________________________________________________________________
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________ the right represented by the within Series C
Warrant to purchase the _____________ shares of the Common Stock of LOGIMETRICS,
INC. to which the within Series C Warrant relates, and appoints
________________________ attorney to transfer said right on the books of
LOGIMETRICS, INC. with full power of substitution in the premises.
Dated:
________________________________________________________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
Address:
________________________________________________________________________________
________________________________________________________________________________
In the presence of
______________________________________
EXHIBIT 10.7
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT ("Agreement"), dated March 7, 1996,
as amended and restated as of July 29, 1997, among LOGIMETRICS, INC., a Delaware
corporation ("Borrower"), and CERBERUS PARTNERS, L.P., a Delaware limited
partnership ("Cerberus"), as Agent (in such capacity, the "Agent") for itself
and any other persons who become Holders (as defined below) of any Debentures
(as defined below).
INTRODUCTION
The Borrower has previously issued a series of 12% Convertible Senior
Subordinated Debentures due 1998 (collectively, the "Old Debentures"). As
required under the Old Debentures, the obligations of the Borrower to the holder
of the Old Debentures were secured by liens against assets of the Borrower
pursuant to this Agreement.
In connection with certain waivers granted by the holder of the Old
Debentures, the Borrower issued to such holder certain interest notes
(collectively, the "Old Interest Notes") which also were secured by liens
against assets of the Borrower pursuant to this Agreement.
The Borrower intends to issue (i) up to $3,583,333 in aggregate principal
amount of its Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures
due 1999 (the "Class A Debentures"), (ii) $1,500,000 in aggregate principal
amount of its Amended and Restated Class B 13% Convertible Senior Subordinated
Pay-in-Kind Debentures due 1999 (the "Class B Debentures") in exchange for the
surrender of the Old Debentures, and (iii) $45,000 in aggregate principal amount
of its 13% Senior Subordinated Interest Notes (the "Interest Notes") in exchange
for the surrender of the Old Interest Notes.
Pursuant to the terms of the Class A Debentures, in lieu of cash interest
otherwise payable thereon, the Company will issue to the holders of the Class A
Debentures additional Class A Debentures (the "Class A Accrued Interest
Debentures"). Pursuant to the terms of the Class B Debentures, in lieu of cash
interest otherwise payable thereon, the Company will issue to the holders of the
Class B Debentures additional Class B Debentures (the "Class B Accrued Interest
Debentures").
Pursuant to the terms of the Class A Debentures, the Class B Debentures,
the Class A Accrued Interest Debentures, the Class B Accrued Interest Debentures
and the Interest Notes (each, a "Debenture" and, collectively, the
"Debentures"), the obligations of the Company to the Holders of the Debentures
are to be secured by liens on assets of the Company. Accordingly, the Company
and Cerberus hereby agree to amend and restate this Agreement as provided
herein.
NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
<PAGE>
1. Definitions.
1.1 Defined Terms. Capitalized terms in this Agreement shall be
defined as follows (and as defined elsewhere in this Agreement):
"Agent" means Cerberus as agent for the Holders pursuant to this
Agreement, or such other Person as shall have been subsequently appointed as a
successor agent pursuant to this Agreement.
"Collateral" means all personal property and fixtures in which the
Borrower has or shall have an interest, now or hereafter existing, created or
acquired, and wherever located, tangible or intangible, including but not
limited to all present and hereafter existing or acquired "accounts", "general
intangibles", "equipment", "goods", "inventory" (including raw materials,
components, work-in process, finished merchandise and packing and shipping
materials), "chattel paper", "documents" and "instruments" (as those terms are
defined in the UCC), and money, documents, securities, deposits, books and
records pertaining to intangible Collateral regardless of the form in which
records are maintained, patents and patent rights, trademarks, copyrights,
credits, claims and demands against the Agent or any Holder, and all proceeds,
products, returns, additions, accessions and substitutions of and to any of the
foregoing.
"Class A Holders" means the Holders of the Class A Debentures.
"Class A Majority Holders" means the Holders of at least a majority in
aggregate principal amount of the Class A Debentures and Class A Accrued
Interest Debentures, taken as a whole, outstanding at the time of determination
of such majority.
"Class B Holders" means the Holders of the Class B Debentures.
"Class B Majority Holders" means the Holders of at least a majority in
aggregate principal amount of the Class B Debentures, Class B Accrued Interest
Debentures and Interest Notes, taken as a whole, outstanding at the time of
determination of such majority.
"Holder" shall mean any registered holder of a Debenture.
"Loan Documents" means the Debentures, this Agreement and any other
agreement, assignment or document executed in connection with the Debentures.
"Obligations" means all indebtedness, obligations, liabilities, and
guarantees of any kind of the Borrower to the Agent or any Holders arising
under, or in connection with, any of the Debentures or any other Loan Document,
now existing or hereafter arising, and whether direct or indirect, acquired
outright, conditionally or as collateral security from another, absolute or
contingent, joint or several, secured or unsecured, due or not due, contractual
or tortious, liquidated or unliquidated, arising by operation of law or
otherwise, whether or not of a nature presently contemplated by the parties or
subsequently agreed to by them including, without
<PAGE>
limitation, all principal, interest, expenses, other sums, duties and
obligations owing from time to time under the Debentures.
"Senior Debt" is defined in the Debentures.
"Senior Lender" means North Fork Bank and any successor lender permitted
under the Debentures.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York from time to time.
1.2 Rules of Construction. In this Agreement, unless specified otherwise:
a. "Any" means "any one or more"; "including" means "including without
limitation"; "or" means "and/or".
b. Singular words include plural, and vice versa.
c. Headings are for convenience only, and do not affect the meaning of
any provision;
d. Reference to an agreement includes reference to its permitted
supplements, restatements, amendments and other modifications.
e. Reference to a law includes reference to any amendment or
modification of the law and to any rules or regulations issued thereunder.
f. Reference to a person includes reference to its permitted
successors and assigns in the applicable capacity.
g. Reference to a Section, Exhibit, or Schedule signifies reference to
a Section, Exhibit, or Schedule of this Agreement, unless the context
clearly indicates otherwise.
h. "Hereunder," "hereto," "hereof," "herein," and like words, refer to
the whole of this Agreement rather than to a particular part hereof, unless
the context clearly indicates otherwise.
1.3 No Strict Construction. The parties acknowledge that this Agreement and
the other Loan Documents have been prepared jointly, and shall not be strictly
construed against any party.
2. Grant of Security Interest.
<PAGE>
The Borrower hereby grants to the Agent, for its benefit and the equal
and ratable benefit of the Holders, a valid and binding security interest
(subject to that pre-existing first security interest in the Collateral held by
the Senior Lender) in, and assigns and pledges to the Agent, for its benefit and
the benefit of the Holders, the Collateral as security for the full payment,
performance, and observance by the Borrower of the Obligations. The Borrower
hereby agrees to transfer and deliver to the Agent all Collateral which the
Agent is required or entitled to take possession of in order to perfect the
security interests, assignments and pledges therein.
3. Warranties and Agreements. The Borrower warrants and agrees that:
(a) Collateral location and use. The Borrower's chief executive offices
and place of business, its financial books and records relating to the
Collateral, and the Collateral, are located at its address for notices contained
in Section 15 of this Agreement. The Borrower will not relocate any of the
Collateral from said location without the proper written consent of the Class A
Majority Holders and the Class B Majority Holders. The Collateral was or will be
acquired by the Borrower solely for use in its business at said location, and
the Collateral is not and shall not be used for any other use.
(b) Existing liens, security interests, and encumbrances. The Borrower
is the legal owner of all interest in the Collateral and shall keep the
Collateral free and clear of liens, security interests, or encumbrances, and
will not assign, sell, mortgage, lease, transfer, pledge, grant a security
interest in, encumber or otherwise dispose of or abandon any part or all of the
Collateral without the prior written consent of the Agent, except for (i) the
sale from time to time in the ordinary course of business of the Borrower of
such items of Collateral as may constitute all or part of the business inventory
of the Borrower, (ii) the security interests granted herein (iii) that certain
senior security interest granted by the Borrower to the Senior Lender to secure
the Senior Debt in an amount not to exceed $3,000,000 and (iv) any other liens
expressly permitted under section 7(c)(ii) of the Debentures.
(c) Taxes, compliance with laws. The Borrower will make due and timely
payment or deposit of all taxes, assessments, or contributions required by law
which may be lawfully levied or assessed with respect to any of the Collateral
and will execute and deliver to the Agent, on demand, appropriate certificates
attesting to the timely payment or deposit of all such taxes, assessments or
contributions. The Borrower will use the Collateral for lawful purposes only,
and with all reasonable care and caution, and in conformity with all applicable
laws, ordinances and regulations. At its own cost and expense the Borrower will
keep the Collateral in proper order, repair, and condition.
(d) Inspection. The Agent (and its designees) shall at all times have
free access to and the right of inspection of any part or all of the Collateral
and any records of the Borrower (and the right to make extracts from such
records), and the Borrower shall deliver to the Agent the originals or true
copies of such papers and instruments relating to any or all of the Collateral
as the Agent, may request at any time.
<PAGE>
(e) Collateral to remain personal property. The Collateral is now and
shall be and remain personal property, notwithstanding the manner in which the
Collateral or any part thereof shall be now or hereafter affixed, attached or
annexed to real property. The Borrower will obtain and deliver to the Agent such
instruments as may be requested by the Agent pursuant to which any person with
an interest in any real estate upon which any part of all of the tangible
Collateral is now or may hereafter be located consents to the security interest
granted herein, disclaims any interest in the tangible Collateral as fixtures,
waives in favor of the Agent (as agent and the Holders) all right to distrain or
levy upon the Collateral for rent due or to become due from the Borrower, and
authorizes the Agent (and its designees) to enter upon any premises of the
Borrower at any time and to remove the Collateral.
(f) Insurance. The Borrower, at its own cost and expense, will insure
the Collateral in the name of the Agent (as agent for the Holders) and, if
required under the documents evidencing the Senior Debt, the Senior Lender, as
their respective interests may appear, against loss or damage by fire and
extended coverage, theft, burglary, pilferage, bodily injury and such other
risks as the Agent may require, with such companies and in such amounts, but not
less than the replacement value of tangible collateral, as may be required by
the Agent at any time in its sole discretion. All such policies shall (a) name
the Agent (as agent for the Holders) and, if required under the documents
evidencing the Senior Debt, the Senior Lender as the sole loss payees as to any
casualty insurance and provide that no claim for loss or damage may be settled,
adjusted or comprised without the prior written consent of the Agent and (b)
name the Agent (as agent for the Holders) as an "additional insured" as to any
liability insurance. All such policies shall further provide for 30 days'
minimum written notice of modification or cancellation to the Agent, together
with duplicate premium notices to the Agent, and the Borrower shall deliver to
the Agent the original or duplicate policies, or certificates or other evidence
satisfactory to the Agent, of compliance with the foregoing insurance
provisions. The Borrower assumes all responsibility and liability arising from
the use of the Collateral, either for negligence or otherwise, by whomsoever
used, employed or operated, and will defend, indemnify and save the Agent and
the Holders (and their respective officers, directors, employees, and agents)
harmless from any and all claim, loss or damage to persons or property caused by
the Collateral or by its use and operation. The Agent may, but shall not be
obligated, to pay any premium with respect to any such insurance which the
Borrower shall fail to timely pay.
(g) Maintain security interests, reports. In addition to all other
provisions hereof, the Borrower will from time to time at the sole expense of
the Borrower, perform any and all steps and/or procedures requested by the Agent
at any time to perfect and maintain the Agent's (and the Holders') security
interest in the Collateral, including but not limited to transferring any part
or all of the Collateral to the Agent or any nominee of the Agent including
delivering the collateral to warehouses, placing and maintaining signs,
appointing custodians, executing and filing financing statements and notices of
lien, delivering to the Agent documents of title representing the Collateral or
evidencing the Agent's security interest in any other manner acceptable to and
requested by the Agent. If requested by the Agent, the Borrower will from time
to time execute and deliver to the Agent assignments of accounts in form
satisfactory to the Agent, but should the Borrower fail in any one or more
instances to execute and deliver any such assignments of accounts, such failure
shall not constitute a waiver or
<PAGE>
limitation of the within security interest in all of the Collateral (including
said accounts) which shall remain in full force and effect.
At the request of the Agent, the Borrower shall deliver to the Agent
all original documents evidencing the sale and delivery of merchandise or the
performance of labor or services which created any account, including but not
limited to all original contracts, orders, invoices, bills of lading, warehouse
receipts and shipping receipts, together with all collateral security and/or
guarantees or other contracts of suretyship held by the Borrower in respect of
the accounts, together with assignments of any of the foregoing where requested
by the Agent.
If at any time any part or all of the Collateral shall be in the
possession or control of any of the Borrower's bailees, agents, or processors,
the Borrower will notify such persons of the Agent's and Holders' security
interest therein and upon the Agent's request, the Borrower will instruct such
persons to hold all such Collateral for the Agent's and Holders' account and
subject to the Agent's instructions and the Borrower will obtain and deliver to
the Agent such instruments requested by the Agent pursuant to which such persons
consent to the security interest granted herein, disclaim any interest in the
Collateral, waive in favor of the Agent and the Holders all liens upon and
claims to the Collateral or any part thereof, and authorize the Agent at any
time to enter upon and remove the Collateral from any premises upon which the
same may be located.
(h) Further documentation. The Borrower shall, at its sole cost and
expense, simultaneously herewith and upon the request of the Agent, at any time
and from time to time, execute and deliver to the Agent one or more financing
statements pursuant to the UCC, and any other papers, documents or instruments
required by the Agent in connection herewith. The Borrower hereby authorizes the
Agent to execute and file, at any time and from time to time, on behalf of the
Borrower, one or more financing statements with respect to all or any part of
the Collateral, the filing of which is advisable, in the sole judgment of the
Agent, the Class A Majority Holders or the Class B Majority Holders, pursuant to
the law of the State of New York, although the same may have been executed only
by the Agent as secured party. The Borrower also irrevocably appoints the Agent,
its agents, representatives and designees, as the Borrower's agent and
attorney-in-fact, to execute and file, from time to time, on behalf of the
Borrower, one or more financing statements with respect to all or any part of
the Collateral, and to take such other steps as the Agent, the Class A Majority
Holders or the Class B Majority Holders reasonably determine are necessary or
desirable to perfect its or the Holders' liens in any Collateral and exercise
their rights and remedies under this Agreement and the other Loan Documents,
including any filings deemed necessary or advisable under federal patent,
trademark or copyright laws.
(i) Bona fide accounts. The Borrower warrants to the Agent and the
Holders that each of the account debtors obligated on any account has legal
capacity to contract and is indebted to the Borrower in the full amount
indicated in the books and records of the Borrower and in any assignments
executed and delivered to the Agent; that each account is bona
<PAGE>
fide and arises out of the sale and delivery of merchandise and/or the
performance of labor or services.
(j) Collection of accounts. Upon and following the occurrence of an
event of default as hereinafter defined, all bills and statements sent to any
customer or any account shall state that said account has been assigned to the
Agent (as agent for the Holders) and is to be paid directly to the Agent at such
address as the Agent may designate. The Agent may endorse the name of the
Borrower on all notes, checks, drafts, bill of exchange, money orders,
commercial paper of any kind whatsoever, and any other document or general
intangible received in payment of or in connection with accounts or otherwise,
and the Agent or any officer or employee thereof, is hereby irrevocably
constituted and appointed the agent and attorney-in-fact for the Borrower for
the foregoing purpose, and to receive, open and dispose of all mail addressed to
the Borrower, and to notify the Post Office authorities to change the address
for the delivery of mail addressed to the Borrower to such address(es) as the
Agent may designate. Any bank or trust company is hereby irrevocably authorized
to permit the Agent to deposit the proceeds of accounts so endorsed and to
withdraw the same without inquiry as to the circumstances of endorsement or as
to the purpose of withdrawal, and without being required to answer for the
application by the Agent of the monies so withdrawn. The proceeds of accounts,
received by the Agent, shall be applied to the Obligations but shall not
constitute payment thereof until so applied, it being agreed that the order and
method of such application shall be in the discretion of the Agent. From and
after the occurrence of an event of default, any proceeds of an account or
general intangible received by the Borrower shall be held in trust and paid over
to the Agent in the exact form received, duly endorsed to the order of the Agent
if payable to the Borrower.
(k) Settlement of accounts. The Agent is authorized and empowered to
compromise or extend the time for payment of any of the Collateral, for such
amounts and upon such terms as the Agent may determine, and to accept the return
of goods represented by any of the Collateral, all without notice to or consent
by the Borrower and without discharging or affecting the obligations of the
Borrower hereunder.
(l) Payment of debtor's obligations, reimbursement. The Agent may in
its discretion or at the direction of either the Class A Majority Holders or the
Class B Majority Holders (but the Agent shall have no obligation to), for the
account and expense of the Borrower (i) pay any amount or do any act which is
required to be paid or done by the Borrower under this Agreement (including but
not limited to the repair and insuring of Collateral and payment of taxes) and
which the Borrower fails to do or pay as herein required, (ii) pay any sums due
and owing by the Borrower to the landlord of any premises where any Collateral
is located, and (iii) pay or discharge any lien, security interest or
encumbrance in favor of anyone other than the Agent (or any Holders) which
covers or affects the Collateral or any part thereof. The Borrower will promptly
reimburse and pay the Agent (or any Holders) for any and all sums, costs, fees,
and expenses which the Agent (or any Holders) may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
priority thereof or in enforcing payment of the Obligations or in discharging
any lien or claim against the Collateral or any part thereof or in the exchange,
collection, compromise or settlement of any of the Collateral or receipt of the
<PAGE>
proceeds thereof or for the care of the Collateral, by litigation or otherwise,
and with respect to either the Borrower, account debtors, guarantors of the
Borrower and other persons, including but not limited to all court costs,
collection charges, travel, and reasonable attorneys' fees and all reasonable
expenses (including reasonable counsel fees) incident to the enforcement of
payment of any obligations of the Borrower by any action or participation in, or
in connection with, a case or proceeding under chapters 7, 11 or 13 of the
Bankruptcy Code, or any successor statute thereto. All sums paid and all costs,
expenses and liabilities incurred by the Agent (or any Holders) pursuant to the
foregoing provisions, together with interest thereon at any default rate in
effect under the Debentures, shall be added to and become part of the
Obligations secured hereby.
(m) Comply with Debentures. The Borrower shall comply with all terms
and conditions of the Debentures and all other Loan Documents.
4. Transfer of Collateral.
Upon and following the occurrence of an event of default as hereinafter
defined, the Agent may, at the direction of either the Class A Majority Holders
or the Class B Majority Holders, whether or not any of the Obligations be due,
in its name or in the name of the Borrower or otherwise, notify any account
debtor or the obligor on any instrument to make payment to the Agent, demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for, or make any compromise or
settlement deemed desirable by the Agent with respect to, any of the Collateral,
but shall be under no obligation to do so, and/or the Agent, acting at the
direction of the Class A Majority Holders and the Class B Majority Holders, may
extend the time of payment, arrange for payment in installments, or otherwise
modify the terms of, or release any of the Collateral, without thereby incurring
responsibility to, or discharging or otherwise affecting any liability of, the
Borrower. If at any time any Holder should transfer its interest in any
Debentures, or the Agent should resign and that resignation becomes effective as
permitted under this Agreement, that Holder or the Agent, as the case may be,
shall be fully discharged from all responsibility to the Borrower with respect
to its interest in the Collateral.
5. Defaults.
The occurrence of any one or more of the following events shall
constitute an event of default by the Borrower under this Agreement:
(a) any "Event of Default" shall occur and be continuing under any of
the Debentures or any other Loan Document;
(b) if at any time the Class A Majority Holders or the Class B Majority
Holders consider the Collateral or any part thereof unsatisfactory or
insufficient, and the Borrower shall on demand fail to furnish other Collateral
or make payment on account, satisfactory to both the Class A Majority Holders
and the Class B Majority Holders;
<PAGE>
(c) if any warranty, representation or statement of fact made herein or
furnished to the Agent (or any Holders) at any time by or on behalf of the
Borrower proves to have been false in any material respect when made or
furnished;
(d) in the event of loss, theft, substantial damage or destruction of
any of the Collateral or the making of any levy on, seizure or attachment of any
of the Collateral; or
(e) if the Borrower fails to observe or perform any of its covenants
contained herein, and such failure continues for 30 days after receipt by the
Borrower of notice thereof; or
(f) if the Borrower shall execute or file a certificate or other
instrument evidencing the legal change of name of the Borrower or commence using
a tradename or change the address of its chief executive offices or any address
where any Collateral is located or books and records are maintained without
furnishing the Agent at least 15 business days' prior written notice thereof..
6. Remedies on Default.
Upon the occurrence of an event of default relating to the bankruptcy
or insolvency of the Borrower shall occur, all Obligations shall automatically,
without notice or demand, be immediately due and payable; upon the occurrence of
any other event of default or at any time thereafter, the Agent may, at the
direction of either the Class A Majority Holders or the Class B Majority Holders
without notice to or demand upon the Borrower, declare the Obligations owed to
the Class A Holders or the Class B Holders, as applicable, immediately due and
payable and the Agent (for the benefit of the Holders) shall have the following
rights and remedies in addition to all rights and remedies of a secured party
under the Uniform Commercial Code or other applicable statute or rule, in any
jurisdiction in which enforcement is sought and all other rights and remedies
under any other Loan Document or other agreement involving any Agent and the
Borrower, all such rights and remedies being cumulative and not exclusive, and
exercisable in any order and in any combination, at the direction of the Class A
Majority Holders or the Class B Majority Holders:
(a) The Agent may institute proceedings to collect all Obligations
from the Borrower or anyone else who may be responsible for the payment of any
Obligations.
(b) The Agent may, at any time and from time to time, with or
without process of law and with or without the aid and assistance of others,
enter upon any premises in which the Collateral or any part thereof may be
located and, without resistance or interference by the Borrower, take possession
of the Collateral; and/or dispose of all or any part of the Collateral on any
premises of the Borrower; and/or require the Borrower to assemble and make
available to the Agent all or any part of the Collateral at any place and time
designated by the Agent which is reasonably convenient to the Agent and the
Borrower; and/or remove all or any part of the Collateral from any premises on
which any part thereof may be located for the purpose of effecting preservation
or sale or other disposition thereof; and/or sell, resell, lease, assign and
<PAGE>
deliver, or otherwise dispose of, the Collateral or any part thereof in its
existing condition or following any commercially reasonable preparation or
processing, at public or private proceedings, in one or more parcels at the same
or different times with or without having the Collateral at the place of sale or
other disposition for cash, upon credit or for future delivery, and in
connection therewith the Agent may grant options, at such place or places and
time or times and to such persons, firms or corporations as the Agent deems
best, and without demand for performance or any notice or advertisement to the
Borrower of the place and time of any public sale or of the place and time after
which any private sale or other disposition may be made, and/or liquidate or
dispose of the Collateral or any part thereof in any other commercially
reasonable manner.
If any of the Collateral is sold by the Agent upon credit or for
future delivery, the Agent shall not be liable for the failure of the purchaser
to purchase or pay for the same and, in the event of any such failure, the Agent
may resell such Collateral. The Borrower hereby waives all equity and right of
redemption. The Agent may buy any part or all of the Collateral at any public
sale and if any part of all of the Collateral is of a type which is the subject
of widely distributed standard price quotations the Agent may buy at private
sale, all free from any equity or right of redemption which is hereby waived and
released by the Borrower, and the Agent may make payment therefor (by
endorsement without recourse) in notes of the Borrower to the order of the Agent
in lieu of cash to the amount then due thereon which the Borrower hereby agrees
to accept.
(c) The Agent (and any Holder acting at the direction of the Class
A Majority Holders or the Class B Majority Holders) may appropriate, set off and
apply for the payment of any or all of the Obligations for the ratable benefit
of the Holders, any and all balances, sums, property, claims, credits, deposits,
accounts, reserves, collections, drafts, notes, or other items or proceeds of
the Collateral in or coming into the possession of the Agent or its agents and
belonging or owing to the Borrower, without notice to the Borrower, and in such
manner as the Agent may in its sole discretion determine.
(d) Collect accounts receivable and any other sums owing to the
Borrower directly, or through an agent or designee, or in the name of the
Borrower.
(e) Any of the proceeds of the Collateral received by the Borrower
shall not be commingled with other property of the Borrower, but shall be
segregated, held by the Borrower in trust for the Agent (as agent for the
Holders) as the exclusive property of the Agent (as agent for the Holders), and
the Borrower will immediately deliver to the Agent the identical checks, moneys
or other proceeds of Collateral received, and the Agent shall have the right to
endorse the name of the Borrower on any and all checks, or other forms of
remittance received, where such endorsement is required to effect collection.
The Borrower hereby designates, constitutes and appoints the Agent and any
designee or agent of the Agent as attorney-in-fact of the Borrower, irrevocably
and with power of substitution, with authority to receive, open and dispose of
all mail addressed to the Borrower, to notify the Post Office authorities to
change the address for delivery of mail addressed to the Borrower, to such
address as the Agent may designate; to endorse the name of the Borrower on any
notes, acceptances, checks, drafts, money
<PAGE>
orders or other evidences of payment or proceeds of the Collateral that may come
into the Agent's possession; to sign the name of the Borrower on any invoices,
documents, drafts against account debtors of the Borrower, assignments, requests
for verification of accounts and notices to debtors of the Borrower; to execute
any endorsements, assignments, or other instruments of conveyance or transfer;
and to do all other acts and things necessary and advisable in the sole
discretion of the Agent to carry out and enforce this Agreement. All acts of
said attorney or designee shall not be liable for any acts of commission or
omission nor for any error of judgment or mistake of fact or law. This power of
attorney being coupled with an interest is irrevocable while any of the
Obligations shall remain unpaid.
7. Liability Disclaimer.
Under no circumstances whatsoever shall the Agent or any Holder be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Collateral, of any nature or kind whatsoever, or any
matter or proceedings arising out of or relating thereto. The Agent (and the
Holders) shall not be required to take any action of any kind to collect or
protect any interest in the Collateral, including but not limited to any action
necessary to preserve their, or the Borrower's rights against prior parties to
any of the Collateral. The Agent (and the Holders) shall not be liable or
responsible in any way for the safekeeping, care or custody of any of the
Collateral, or for any loss or damage thereto, or for any diminution in the
value thereof, or for any act or default of any agent or bailee of the Agent or
the Borrower, or of any carrier, forwarding agency or other person whomsoever,
or for the collection of any proceeds, but the same shall be at the Borrower's
sole risk at all times. The Borrower hereby releases the Agent and the Holders
from any claims, causes of action and demands at any time arising out of or with
respect to this Agreement or the Obligations, and any actions taken or omitted
to be taken by the Agent or any Holders with respect thereto, and the Borrower
agrees to defend and hold the Agent and the Holders harmless from and with
respect to any and all such claims, causes of action and demands. The Agent's
and the Holder's prior recourse to any part of all of the Collateral shall not
constitute a condition of any demand for payment of the Obligations or of any
suit or other proceeding for the collection of the Obligations. This provision
is not intended to limit the Agent's responsibility to the Holders as provided
in Section 9.
8. Application of Proceeds. Upon the occurrence and during the
continuance of an event or default (as described above), the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied by the Agent in the following order of priorities, (subject to the prior
right, if any, of the holders of the Senior Debt to those proceeds):
first, to payment of the reasonable out-of-pocket expenses of
such sale or other realization, including reasonable compensation to
agents and counsel for the Agent, and all reasonable out-of-pocket
expenses, liabilities and advances incurred or made by the Agent in
connection therewith, and any other unreimbursed expenses for which
the Agent or any Holder is to be reimbursed pursuant to the
Debentures, this Agreement or any corresponding provision of any of
the other Loan Documents;
<PAGE>
second, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Obligations;
third, to the ratable payment of unpaid principal of the
Obligations;
fourth, to the ratable payment of all other Obligations, until
all such Secured Obligations shall have been paid in full; and
finally, to payment to the Borrower or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
9. The Agent.
9.1 Actions. Unless a specific provision of this Agreement provides
that the Agent shall act only upon written directions or instructions from a
specific percentage thereof, the Agent shall be deemed to be authorized on
behalf of each Holder to act on behalf of such Holder under this Agreement and
any other Loan Document and, in the absence of written instructions from both
the Class A Majority Holders and the Class B Majority Holders received from time
to time by the Agent (with respect to which the Agent agrees that it will,
subject to the last two sentences of this section 9.1, comply, except as
otherwise advised by counsel, to exercise such powers hereunder and thereunder
as are specifically delegated to or required of the Agent by the terms hereof
and thereof, together with such powers as may be reasonably incidental thereto.
The Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement or any other Loan Document by
the Borrower. By accepting their Debentures, each Holder shall be deemed to have
agreed to indemnify the Agent (which agreement shall survive any termination of
such Holder's percentage), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of this Agreement, the Debentures or any other Loan Document,
including the reimbursement of the Agent for all out-of-pocket expenses
(including attorneys' fees) incurred by the Agent hereunder or in connection
herewith or in enforcing the Obligations of the Borrower under this Agreement or
any other Loan Document, in all cases as to which the Agent is not reimbursed by
the Borrower; provided that no Holder shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or willful misconduct. The Agent shall not be required
to take any action hereunder or under any other Loan Document, or to prosecute
or defend any suit in respect of this Agreement or any other Loan Document,
unless the Agent is indemnified to its reasonable satisfaction by the Holders
against loss, costs, liability and expense. If any indemnity in favor of the
Agent shall become impaired, it may call for additional indemnity and cease to
do the acts indemnified against until such additional indemnity is given.
<PAGE>
In the event that the Agent following the occurrence of an event of
default hereunder receives instructions from either the Class A Majority Holders
or the Class B Majority Holders, as the case may be, to take any action to
foreclose on or otherwise realize on the Collateral, the other Majority Holders
shall not give any contrary instruction to the Agent and, if any such
instruction is given, it shall have no force and effect.
9.2 Exculpation. Neither the Agent nor any of its directors, officers,
partners, employees or agents shall be liable to any Holder for any action taken
or omitted to be taken by it under this Agreement, the Debentures, or any other
Loan Document, or in connection herewith or therewith, except for its own
willful misconduct or gross negligence. The Agent shall not be responsible to
any Holder for any recitals, statements, representations or warranties herein or
in any certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency of any of the Loan Documents, the
financial condition of the Borrower or the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of any of the Loan
Documents, the financial condition of the Borrower or the existence or possible
existence of any default or event of default. The Agent shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which it believes to be genuine and
to have presented by a proper person.
9.3 Resignation of Agent. The Agent may resign as such at any time upon
at least thirty (30) days' prior notice to the Borrower and all Holders, such
resignation not to be effective until a successor Agent is in place. If the
Agent at any time shall resign, the Class A Majority Holders and the Class B
Majority Holders may jointly appoint another Holder as a successor Agent which
shall thereupon become the Agent hereunder. If within 30 days after the retiring
Agent's giving notice of resignation, no successor Agent shall have been so
appointed by the Class A Majority Holders and the Class B Majority Holders, and
shall have accepted such appointment, then the retiring Agent may, on behalf of
the Holders appoint a financial institution organized under the laws of the
United States and having a combined capital and surplus of at least
$500,000,000. Should the successor Agent be a financial institution that, in the
ordinary course of its business, serves as agent for lending facilities, the
Borrower shall pay that successor Agent's reasonable fees for serving as
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor Agent
may reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges, and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents.
9.4 Replacement of Agent. The Class A Majority Holders and the Class B
Majority Holders may at any time and for any reason replace the Agent with a
successor Agent jointly selected by them, upon at least ten days written notice
to the Borrower and the other Holders. Should the successor Agent be a financial
institution that, in the ordinary course of its business, serves as agent for
lending facilities, the Borrower shall pay that successor
<PAGE>
Agent's reasonable fees serving as an agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the terminated Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges, and duties of
the retiring Agent, and the terminated Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents.
9.5 Debentures Held by the Agent. The Agent shall have the same rights
and powers with respect to the Debentures held by it or any of its affiliates,
as any Holder and may exercise the same as if it were not the Agent. The
Borrower hereby waives, and each Holder shall be deemed to waive, any right to
disqualify any Holder (including Cerberus) from serving as the Agent or any
claim against that Holder for serving as Agent.
9.6 Copies, etc. The Agent shall give prompt notice to each Holder of
each notice or request required or permitted to be given to the Agent by the
Borrower pursuant to the terms of this Agreement. The Agent will distribute to
each Holder each instrument and other Loan Document received for its account and
copies of all other communications received by the Agent from the Borrower for
distribution to the Holders by the Agent in accordance with the terms of this
Agreement. Notwithstanding anything herein contained to the contrary, all
notices to and communications with the Borrower under this Agreement and the
other Loan Documents shall be effected by the Holders through the Agent.
10. Nonwaiver.
No failure or delay on the part of the Agent in exercising any of its
rights and remedies hereunder or otherwise shall constitute a waiver thereof,
and no single or partial waiver by the Agent of any default or other right or
remedy which it may have shall operate as a waiver of any other default, right
or remedy or of the same default, right or remedy on a future occasion.
11. Waivers by Borrower.
The Borrower hereby waives presentment, notice of dishonor and protest
of all instruments included in or evidencing any of the Obligations or the
Collateral and any and all other notices and demands whatsoever (except as
expressly provided herein) whether or not relating to such instruments. In the
event of any litigation at any time arising with respect to any matter connected
with this Agreement or the Obligations, the Borrower hereby waives any and all
defenses, rights of setoff and rights to interpose counterclaims of any nature.
The Borrower also waives any right to assert that the Agent or any Holder has
the duty to marshal any assets in favor of the Borrower or any other party or
against or in payment of any Obligations.
<PAGE>
12. Modification.
No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Agreement and to the provision so
modified or limited, and executed by the party to be charged.
13. Binding Effect.
This Agreement and all Obligations of the Borrower hereunder shall be
binding upon the successors or assigns of the Borrower, and shall, together with
the rights and remedies of the Agent and the Holders hereunder, inure to the
benefit of the Agent and the Holders and their respective successors and
assigns.
14. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by the internal laws of the State of New York, without giving effect to
the choice of law rules thereof. The Borrower irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on the
Borrower hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. The Borrower irrevocably consents to
the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The Borrower irrevocably waives any objection
to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
15. Notices. All notices, consents, requests, and other communications
under this Agreement shall be in writing and shall be effective: (a) upon
delivery by hand; (b) one day after being deposited with a recognized overnight
delivery service; or (c) three days after being deposited in the United States
mail, first-class, postage prepaid, registered or certified, return receipt
requested in each case addressed to such party as follows (or to such other
address as hereafter may be designated in writing by such party to the other
party):
If to Borrower:
Logimetrics, Inc.
50 Orville Drive
Bohemia, NY 11716
Attn: President
If to the Agent:
Cerberus Partners, L.P.
450 Park Avenue - 28th Floor
New York, NY 10022
<PAGE>
16. Severability.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
17. No Jury Trial.
Each of Borrower and the Agent (for itself and the Holders) hereby
waives any right to request a trial by jury in any litigation with respect to
any aspect of this Agreement and represents that it has consulted with counsel
specifically with respect to this waiver.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Borrower and the Agent have executed or caused
this Agreement to be executed as of the date first written above.
LOGIMETRICS, INC.
By: /s/Charles S. Brand
_________________________
Name:Charles S. Brand
Title:Chairman and Chief
Executive Officer
CERBERUS PARTNERS, L.P., as Agent
By:/s/Seth P. Plattus
___________________________
Name: Seth P. Plattus,
Title: Managing Director
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS OF THIS EXHIBIT HAVE
BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.8
Agreement to Purchase and Sell Equipment
This Agreement made this 30th day of June, 1994 by and between
CellularVision Technology & Telecommunications, L.P.
with offices at Dag Hammarskjold Boulevard, Freehold, N.J. 07728
(hereinafter referred to as "CT&T"),
and
mm-Tech, Inc, with offices at 246 Industrial Way West, Eatontown, NJ
07724 (hereinafter referred to as "Supplier")
Whereas, CT&T is the owner of and developer (either directly or
through its predecessors and officers) of a certain millimeter wave
telecommunications system known as the CellularVision(TMSM) system for
transmitting information, which system is generally described in United States
Patent number 4,747,160 and foreign counterparts thereto (the "Patent") and
further described in the Federal Communications Commission proceedings regarding
Local Multipoint Distribution Services (In Re Application of Suite 12 Group);
and
Whereas, Supplier is in the business of manufacture and development of
microwave and telecommunications products and has agreed to perform such
services for and on behalf of CT&T in accordance with the specifications
directed by CT&T; and
Whereas, CT&T has agreed to purchase certain equipment from Supplier
under certain terms and conditions and it is the intention of both parties to
set forth such terms and conditions which shall govern the sale of the equipment
as well as the conduct of the parties with regard to proprietary information of
the other which will be necessarily be disclosed in the performance of this
transaction.
Now, therefore, in consideration of the mutual obligations of the
parties hereto as described herein, it is agreed and the parties agree to be
bound as follows:
1. Sale and Purchase. CT&T agrees to purchase and Supplier agrees to
sell certain equipment described in Schedule "A" attached hereto and made a part
hereof (hereinafter referred to as "Specified Equipment"). Schedule "A" may also
contain specifications of the equipment subject to this sale. In the event that
detailed specifications are not included in Schedule "A", then the parties have
agreed to submit such information to the other under separate cover, which
specifications shall be deemed included in Schedule "A" by reference. Schedule
"A" may be amended from time to time by mutual consent of the parties to change
the quantities, pricing, type of equipment, and/or specifications of the
equipment. Such changes shall be evidenced by the signature of an authorized
representative of each party together with the date of the modification being
affixed thereto. Until such modification has been executed by representatives of
both parties, the obligations of the parties to perform based upon the previous
schedule shall remain in full force and effect.
2. Purchase Price. For and in consideration of Supplier rendering full
and proper performance of its obligations hereunder, including the delivery of
the Specified Equipment within
<PAGE>
the time frame set for delivery of same and performance of the Specified
Equipment in accordance with the specifications set forth for same, CT&T agrees
to pay Supplier the sum of $2,190,000.
The aforesaid sum is to be paid as follows: $876,000 to be paid on or
before this date; the remainder to be paid as set forth in Schedule "A". In the
event that the pricing for the Specified Equipment, as same currently exist or
as amended from time to time, is modified, then the pricing information and
payment terms for same, if applicable, shall be modified as set forth in the
amended Schedule "A".
3. Delivery. Supplier shall make delivery of the equipment to CT&T at
CT&T's designated address for delivery of such Specified Equipment. CT&T may
modify the place of delivery from time to time upon notice to Supplier. Delivery
shall be made as set forth in Schedule "A". In the event that an amended
Schedule "A" indicates a different time schedule for delivery, then the amended
delivery date shall be substituted for the instant schedule.
4. Installation. Supplier agrees to install the Specified Equipment at
sites designated by CT&T within the time period set for delivery of same on a
reasonable time and material basis. Such installation may be delayed by CT&T or
its customer, in the event that the site selection or needed infrastructure is
not complete by the delivery date, however, such delays shall not delay the time
in which payment is to be made. Payment shall nevertheless be due on the
original delivery date provided that the Specified Equipment was available for
delivery on such date. Supplier will provide whatever assistance is possible in
evaluation of sites, design of system layouts, etc. to facilitate and expedite
the process of installation of the infrastructure equipment.
5. Warranty. Supplier shall warrant the Specified Equipment to be free
from defects from material and workmanship, to perform in accordance with its
specifications, and to be in conformity with applicable specifications and
drawings for a period of two (2) years from the date of installation of the
equipment at CT&T or CT&T's customer's location, provided however, that this
warranty shall not apply to defects or nonperformance resulting from physical or
electrical abuse or misuse, or from natural disaster. The Traveling Wave Tube
Amplifier shall only be warranted for a period of one (1) year from the date of
installation. Return products will be shipped, transportation prepaid, to
Supplier by the most economical means. Shipping costs will be credited to CT&T
by Supplier. Supplier shall have the option to repair or replace the defective
items, provided, however, that any repairs shall not excessively delay the
receipt of replacement equipment by CT&T.
6. Waiver. CT&T may waive, at its option, any required specifications
and accept nonconforming product. Similarly, it may waive strict performance of
any provision of this Agreement. Any such waiver shall not be deemed to be a
modification of this Agreement and shall not relieve Supplier of its obligation
to perform hereunder except to the extent that CT&T has agreed to such
modification in writing.
7. Monitoring and Testing, Supplier agrees to give CT&T full access to
its site and manufacturing and development program for the purpose of monitoring
Supplier's performance under this contract. CT&T agrees that any confidential
processes of Supplier not covered by
<PAGE>
Paragraphs 7 or 8 hereinafter shall remain the proprietary information of
Supplier and shall be treated in the same manner as Supplier treats proprietary
information of CT&T.
Supplier and CT&T shall jointly develop methods of testing the
Specified Equipment during the manufacture process so as to assure conformance
with the specification, quality control and, if applicable, improvement of the
specifications. CT&T shall obtain FCC typecast approval for the Specified
Equipment if same is necessary.
8. Proprietary Information. Proprietary information will be exchanged
and protected under the Non-Disclosure Agreement between Supplier and CT&T dated
June 30, 1994 and included by reference herein.
9. Intellectual Property. "Intellectual Property" shall mean any
patent, copyright, mask work registration, any application therefor, and the
underlying subject matter thereof. Intellectual Property shall also include the
design of the Product, including all drawings, reports and specifications
relating to the Product, its manufacture, testing, or installation. All
Intellectual Property produced by the Supplier or any of its employees or
consultants in the course of the performance of this Agreement or derived from
Proprietary Information of CT&T shall be owned by CT&T.
Supplier shall promptly inform CT&T of the production of any
intellectual Property to be owned by CT&T pursuant to this Agreement, shall
assure that its employees and consultants do not publish or disclose the subject
matter of such intellectual property to a third party without prior written
permission by CT&T, and shall further assure that its employees and consultants
do not publish or disclose the subject matter of such intellectual property to a
third party without prior written permission by CT&T, and shall further assure
that such employees and consultants cooperate with CT&T in the preparation and
filing, at CT&T's expense, of such applications as CT&T deems necessary and
appropriate in its sole discretion to protect such Intellectual Property
anywhere in the world.
Supplier represents to CT&T that it has, or will have, prior to
commencement of the activities under this Agreement, valid and sufficient
arrangements and written agreements with its respective employees and
consultants, such that CT&T shall own the Intellectual Property granted it
pursuant to the terms of this Agreement, free of any right or claims of said
employees and consultants.
10. Exclusivity. Supplier agrees to sell the Specified Equipment, or
any equipment which is intended to implement the CT&T CellularVision (TM SM)
transmission system or imitate same, to CT&T, its licensees or CT&T approved
purchasers exclusively. Similarly, Supplier shall not utilize CT&T's Proprietary
information or Intellectual Property in the development or production of
equipment for purchasers other than CT&T, its licensees or CT&T approved
purchasers. Seller may utilize, but may not sublicense or authorize third
parties to utilize, Proprietary information or Intellectual Property produced
solely by the Supplier or any of its employees or consultants in the course of
the performance of this Agreement in the development or production of equipment
which is neither Specified Equipment nor intended to implement the CT&T
<PAGE>
CellularVision(TM SM) transmission system or imitate same, provided said
Proprietary Information or Intellectual Property is neither derived from nor
uses any other Proprietary Information or Intellectual Property of CT&T.
11. Favored Contractor. CT&T agrees that Supplier shall be deemed a
"favored contractor" and CT&T shall, whenever possible, offer Supplier the
opportunity to bid on any equipment supply contracts. CT&T, hereby, grants to
Supplier a right to bid on any future orders of the Specified Equipment. In the
event that there is a lower bid(s) from another party(s), Supplier will have the
last look option to match said lower bid and receive an order for a
Proportionate Quantity of the total number of units of Specified Equipment
required. "Proportionate Quantity" is defined as the quotient, rounded up to the
nearest integer, formed by dividing the total quantity of units of Specified
Equipment required by one plus the number of lower bidders meeting the lowest
price.
12. Royalty. Supplier agrees to execute CT&T's standard royalty
agreement with equipment suppliers requiring Supplier to pay CT&T a royalty in
the amount of 2.5% of the Gross Sales Price, exclusive of sales tax, upon
equipment which utilizes CT&T's Proprietary Information, Intellectual Property
or Patent.
13. Identifying Marks and Logos. Supplies shall, at the direction of
CT&T, affix the CellularVision(TM SM) trademark and/or logo and/or CT&T name
upon the Specified Equipment. No other trademark, logo or other corporate
company identifiers may be placed upon the Specified Equipment without written
consent of CT&T. Supplier shall also affix to the Specified Equipment
appropriate bar coding so as to enable CT&T to adequately track the Specified
Equipment.
14. Governing Law. This Agreement shall be governed by the laws of the
State of New Jersey and the parties agree to submit themselves to the
jurisdiction of the State and Federal Courts of the State of New Jersey as the
proper forum for resolution of disputes.
15. Complete Agreement. This Agreement constitutes the entire
understanding between the parties and supersedes any prior understandings. The
terms of this Agreement shall not be modified except in writing duly executed by
the parties hereto.
16. Binding Effect and Assignment. This Agreement shall be binding on
the parties hereto, their successors and assigns. Supplier may not assign its
obligations under this Contract without written consent of CT&T.
<PAGE>
In Witness Whereof, the parties have executed this Agreement the day
and year first above-written.
Attest: CellularVision Technology &
Telecommunications, L.P.
("CT&T")
/s/Bernard Bossard by /s/Shant Hovnanian
_______________________ ______________________
Shant Hovnanian
Chief Executive Officer
Attest: mm-Tech, Inc.
("Supplier")
/s/Charles Brand
_______________________ by ______________________
Charles Brand
President
<PAGE>
SCHEDULE A
Equipment to Be Delivered:
6 Transmitters @ 27.5-28.5 GHz. with redundant TWTAs and automatic switchover
Price: [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] per transmitter totaling [CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].
Paid as follows: 40% due upon execution of this Agreement totaling [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]
Of this amount, [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] has already been paid, therefore, the
additional amount due is [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
The total deposit is to be deemed evenly allocable over each unit [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] per unit) to be delivered.
The remainder due per unit [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] shall be paid 20 days after
delivery of each unit.
Delivery Dates:
One unit to be delivered and installed on each of:
July 1, 1994
July 15, 1994
August 5, 1994
August 15, 1994
September 7, 1994
September 30, 1994
Specifications: Set forth in separate document
Shipped System #5 10/95
<PAGE>
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT, effective June 30th, 1994, (the "Effective
Date"), by and between CellularVision Technology and Telecommunications, L.P.,
having an address at 12 Dag Hammarskjold Boulevard, Suite 12, Freehold, New
Jersey ("CT&T") and mmTech, having an address at 246 Industrial Way West,
Eatontown, NJ 07724 (the "Other Party"), shall govern the conditions of
disclosure by CT&T to the Other Party of confidential technical and business
information of CT&T ("Information") relating to the utilization of millimeter or
other microwave frequencies aboe 12 GHz for the transmission of television or
other signals on a point to multi-point basis (the "Field"). Information, if
disclosed in writing, shall be labeled as "confidential" and if disclosed
orally, shall be identified as confidential at the time of disclosure and
confirmed as confidential in writing by CT&T within 30 days after disclosure.
The Other Party hereby agrees: (i) not to use the Information except for the
purposes of evaluation and determination of whether to enter into a business
relationship with CT&T and its affiliates within the Field, (ii) not to use the
Information to reverse engineer or otherwise design around any CT&T proprietary
project or product, and (iii) not to disclose Information to others without the
express written permission of CT&T, except that the Other Party shall not be
prevented from using or disclosing Information:
a) which is approved in writing by CT&T for release without
restrictions; or
b) which the Other Party can demonstrate by written records was
known to them as of the Effective Date; or
c) which is now public knowledge, or becomes public knowledge in the
future, other than through acts or omissions of the Other Party
in violation of this Agreement; or
d) which is lawfully obtained by the Other Party from sources
independent of CT&T who have a lawful right to disclose such
Information.
It is further agreed that CT&T's furnishing of Information to the Other Party
shall not constitute any grant, option, or license under any patent or other
intellectual property rights now or hereinafter held by CT&T.
In consideration of the disclosure made by CT&T hereunder, the Other Party
agrees that for five years from the date of the last such disclosure, it will
refrain from applying to the Federal Communications Commission ("FCC") or its
foreign counterparts for any licensed frequency allocation within the Field, and
from contesting any FCC or foreign counterpart waiver request o rule-making
sought by or on behalf of CT&T or any affiliates of CT&T, without concurrently
obtaining from CT&T a license to utilize the technology, such license at normal
terms and conditions shall not be unreasonably withheld.
<PAGE>
The Other Party acknowledges that its breach of this Agreement may result in
actual and consequential damages to CT&T, and in further harms, the extent of
which may be difficult or impossible to compensate through a monetary award.
This agreement shall be governed by, and construed and interpreted in accordance
with the laws of the State of New York, United State of America, without
reference to conflict of laws principles or statutory rule of arbitration. If
any term of this Agreement is found to be invalid or unenforceable, then such
term shall be deemed inoperative and this Agreement shall be deemed to have beem
modified accordingly.
This Agreement constitutes the entire and exclusive agreement between the
parties with respect to the subject matter hereof and supersedes and cancels all
previous registrations, agreements, commitments and writings in respect thereof.
Except as otherwise expressly provided herein, the obligations of the Other
Party hereunder shall continue full force and effect for five years after the
Effective Date.
CELLULARVISION TECHNOLOGY and
TELECOMMUNICATIONS, L.P.
("CT&T") ("Other Party")
By:/s/Shant Hovnanian By:/s/Charles Brand
____________________________ ___________________________
Print Name: Shant Hovnanian Print Name: Charles Brand
Title: Partner, CT&T Title: President
EXHIBIT 10.9
October 23, 1996
CellularVision Technology
& Communications, L.P.
Suite 12
Dag Hammerskjold Boulevard
Freehold, New Jersey 07728
Attention: Shant Hovnanian, Partner
Dear Shant:
For the last several weeks we have been discussing the terms and conditions
relating to CT&T's purchase order for four LogiMetrics Re-Rads (as defined
below) and certain other equipment (the "Other Equipment"). As used herein,
"Re-Rad" means an enclosed stand-alone unit, described and specified as
LogiMetrics Model PA800/KA, containing an input signal connection for receiving
microwave signals at frequencies between 27.5 and 31.5 GHz from a receiving
antenna, a traveling wave tube amplifier for amplifying those signals to a high
power level, an output signal connection for providing the amplified signals to
an antenna waveguide, and all required heating or cooling equipment, power
supplies, control, monitoring and auxiliary circuitry. The terms and conditions
of such purchase, as agreed to by us during the course of those discussions, are
as follows:
1. CT&T hereby agrees to purchase the Re-Rads and the Other Equipment at
the purchase prices and on the other terms and conditions set forth in Schedule
1 attached hereto. All amounts invoiced to CT&T with respect to such purchases
shall be paid in full as set forth in Schedule 1. No later than the close of
business on the second business day following the execution of a counterpart of
this letter by CT&T (the "Effective Date"), CT&T shall make a progress payment
to LogiMetrics on account of such purchases of $622,120 (the "Advance"). The
Advance shall be credited against the purchase price for the equipment to be
delivered by LogiMetrics hereunder as shown in Schedule 1.
2. In order to secure LogiMetrics' obligation to repay the Advance as set
forth in paragraph 1 above, LogiMetrics hereby grants to CT&T a perfected, first
priority, purchase money security interest in and lien on the four Re-Rads and
the Other Equipment to be delivered hereunder, any specifically designated
components intended to constitute a part thereof and all proceeds therefrom (the
"Collateral"). Not later than the close of business on the Effective Date,
LogiMetrics shall deliver to CT&T fully executed UCC-1s containing an
appropriate description
<PAGE>
of the Collateral as set forth in Schedule 2. LogiMetrics hereby consents to the
filing of such UCC-1s in such filing jurisdictions as CT&T may reasonably
specify. Upon the final amortization of the Advance, the security interest
granted above shall terminate and be of no further force and effect. At such
time, CT&T shall, promptly following receipt of a request therefor from
LogiMetrics, execute and deliver to LogiMetrics such UCC-3s as LogiMetrics may
reasonably request to evidence the termination of the security interest as set
forth above. LogiMetrics represents and warrants to CT&T that the granting of
the security interest contained in this paragraph 2 will not constitute a breach
or violation of, or result in an event of default under, or event which, with
the giving of notice, the lapse of time or both would constitute an event of
default under, LogiMetrics' borrowing arrangements with its senior lender.
3. (a) LogiMetrics agrees, for a period extending until five years from the
last purchase of Re-Rads under this Agreement, not to disclose to any potential
customer, other than CT&T and its Licensees (as defined below), the
specifications for any product sold or delivered under this Agreement, except to
the extent that such specifications were already made public knowledge as
specifications of a commercial product offered for unrestricted sale. CT&T
acknowledges that from time to time, LogiMetrics publishes a catalog and other
marketing materials that include specifications of the equipment manufactured by
LogiMetrics, including the Other Equipment. Accordingly, notwithstanding the
restrictions contained in the second preceding sentence, LogiMetrics shall have
the right to continue to publish and to update such catalogs and other
materials.
(b) LogiMetrics agrees, for a period extending until five years from the
last purchase of Re-Rads under this Agreement, to sell Re-Rads and/or units
substantially identical to Re-Rads and/or other products including the
intellectual property of CT&T embodied in the Re-Rad (collectively, "Restricted
Products") only to (i) CT&T and its successors and assigns, (ii) persons or
entities designated by CT&T from time to time, (iii) licensees of CT&T and its
successors and assigns ("Licensees"), and (iv) third parties which will use
Restricted Products solely for purposes other than providing local multi-point
distribution service ("LMDS") and for other uses not directly or indirectly
competitive with CT&T and its Licensees. If as a result of an acquisition,
corporate reorganization, consolidation or merger, LogiMetrics shall possess or
acquire information which has not previously been publicly disclosed or
intellectual property rights respecting any other product made or sold
especially for CT&T and its Licensees, then such other products shall be subject
to the same sales restriction as Re-Rads, and the specifications therefor shall
be subject to the disclosure restrictions stated above.
(c) Except as provided in this paragraph 3, LogiMetrics shall have the
right to sell any equipment (including, but not limited to, the Other Equipment)
to any third party, the right to license its intellectual property to any third
parties, and the right to re-design or create products which are derived from
its intellectual property (collectively, "New Products") so long as such New
Products do not include the intellectual property of CT&T. LogiMetrics shall
have the right to sell the New Products to any person or entity for any purpose
whatsoever, including, but not limited to, use in the LMDS market, subject to
any valid patent rights of CT&T, and the provisions of this paragraph 3 and
paragraph 5 shall not apply with respect thereto, except as expressly provided
in paragraph 4 below. Upon the expiration of such five-year period,
<PAGE>
LogiMetrics shall have the same rights with respect to Restricted Products that
it has with respect to New Products under the terms hereof.
4. Notwithstanding the provisions of Section 3, if CT&T or any of CT&T's
employees shall make a substantial contribution or improvement to the
intellectual property rights embodied in the Re-Rad or the Other Equipment after
the date hereof (the "CT&T Contribution"), then LogiMetrics agrees not to
license any property rights that include the CT&T Contribution, or to sell New
Products or Restricted Products embodying such CT&T Contribution to parties who
are not Licensees without first obtaining a license from CT&T, and CT&T agrees
to grant such license on reasonable terms and conditions.
In order to be valid, any claim that CT&T has made a CT&T Contribution must
be in writing and shall be delivered to LogiMetrics within a reasonable period
of time and in no event more than 90 days after the claimed contribution or
improvement was first disclosed to LogiMetrics. In the event that CT&T does not
comply with the provisions of the preceding sentence, it shall be deemed to have
waived any rights it may have to the subject contribution or improvement. If
LogiMetrics disputes any claim that a CT&T Contribution has been made, the
parties agree to use their best efforts to resolve such dispute in good faith.
In the event that the parties are unable to resolve any such dispute within 30
days, the parties shall submit the dispute to binding arbitration pursuant to
the procedures to be contained in the definitive Vendor Supply Agreement
contemplated by paragraph 6 hereof and shall be bound by the final determination
made thereunder.
5. LogiMetrics shall pay to CT&T a royalty of two and one-half percent
(2.5%) of the net sales price (sales price less freight costs, discounts,
credits, returns, sales taxes, value added taxes and goods and services taxes)
actually received from the sale of Re-Rads and Other Equipment to CT&T or any
Licensee during the period that the selling restrictions described in paragraph
3 remain in effect. LogiMetrics will not be required to pay to CT&T or collect
on CT&T's behalf any royalties with respect to the sale of Re-Rads, New Products
or Other Equipment, except to the extent expressly set forth above. CT&T
acknowledges that LogiMetrics is currently engaged in discussions which may
result in a business combination involving LogiMetrics and another supplier of
CT&T (the "Other Supplier"). Accordingly, notwithstanding the other provisions
of this paragraph 5, CT&T agrees that LogiMetrics shall not be obligated to pay
any royalty to CT&T pursuant to this paragraph 5 with respect to any Re-Rads
sold or otherwise transferred to any Other Supplier for incorporation into any
equipment on which said Other Supplier pays a royalty of at least 2.5% of net
selling price to CT&T (calculated with reference to the net sales price of such
Re-Rad to the Other Supplier). In the event that any Other Supplier pays a
royalty of less than 2.5% of the net selling price of the Re-Rads (calculated as
provided above), then LogiMetrics shall be obligated to pay CT&T an additional
royalty on such Re-Rads in an amount equal to the excess of 2.5% of such net
selling price over the royalty paid by the Other Supplier with respect thereto.
6. Promptly following the execution and delivery of this Agreement by the
parties hereto, CT&T and LogiMetrics shall negotiate in good faith the terms and
conditions of a Vendor
<PAGE>
Supply Agreement containing mutually acceptable terms, including certain minimum
purchase undertakings by CT&T.
If the foregoing accurately reflects our mutual understanding, please so
indicate by executing a counterpart of this Agreement and returning it to the
undersigned at which time this Agreement shall become the legal and validly
binding agreement of the parties hereto. We look forward to a long and mutually
profitable relationship between our two companies.
Cordially yours,
/s/ Norman M. Phipps
___________________________
Norman M. Phipps
ACCEPTED AND AGREED:
CellularVision Technology & Telecommunications, L.P.
By: /s/ Shant Hovnanian
_________________________
Shant Hovnanian, Partner
Dated: October 23, 1996
EXHIBIT 10.10
December 1, 1997
CellularVision of New York, L.P.
140 58th Street
Loft 9-W
Brooklyn, New York 11220
Attention: John G. Walber, IV,
President and Chief Operating Officer
Dear John:
As you know, LogiMetrics, Inc. ("LogiMetrics") and mmTech, Inc. ("mmTech")
have been engaged in discussions with CellularVision Technology &
Telecommunications, L.P. ("CT&T") and various of its affiliates for over two
months in an effort to reach mutually agreeable terms pursuant to which, among
other things, we would receive payment in respect of equipment previously
ordered by CellularVision of New York, L.P. ("CVNY") through CT&T. As you know,
because of CT&T's failure to pay amounts due to us, we have, among other things,
suspended deliveries of new equipment to CVNY and warranty service on equipment
purchased by CVNY.
In order to resolve these outstanding matters, CVNY has proposed to enter
into an agreement directly with LogiMetrics pursuant to which CVNY would assume
responsibility for certain equipment purchased through CT&T and, in exchange,
LogiMetrics would agree that it or rnmTech would continue servicing CVNY's
equipment so long as CVNY continues to meet its obligations hereunder.
Accordingly, in consideration of the mutual covenants contained herein and other
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
1. CVNY shall pay on behalf of CT&T the sum of $2,971,694.81 (net of all
royalties, discounts, offsets, damages or other deductions owed to or claimed by
CT&T or CVNY) in respect of equipment previously ordered by CVNY through CT&T
pursuant to the invoices listed on Exhibit A attached hereto (collectively, the
"Invoices"). CVNY hereby confirms the Invoices.
2. In partial payment of the amount set forth in paragraph 1 above, CVNY
has paid to LogiMetrics the sum of $350,000, receipt of which is hereby
acknowledged.
3. To evidence the remaining sums owed to LogiMetrics and mmTech,
simultaneously herewith CVNY is executing and delivering to LogiMetrics a
$2,621,694.81 Secured Promissory Note, in substantially the form of Exhibit B
attached hereto (the "Note"). To secure its obligations under the Note, CVNY is
also executing and delivering to LogiMetrics simultaneously herewith a General
Security Agreement, in substantially the form of Exhibit C attached hereto (the
"Security Agreement"), pursuant to which CVNY has granted to
<PAGE>
LogiMetrics a first priority security interest in the equipment referenced in
the Invoices and the proceeds therefrom. CVNY further agrees that it will
promptly execute and deliver to LogiMetrics such other instruments or documents
as LogiMetrics may reasonably request in order to evidence the grant of the
security interest to it (the "Other Loan Documents").
4. The delivery of Equipment not already in the possession of CVNY shall be
made at such times as the parties hereto may mutually agree from time to time.
5. In consideration of the payments made and to be made by CVNY pursuant to
the Note and this Agreement, LogiMetrics has delivered to CVNY (i) two revision
1 traveling wave tube amplifiers, serial numbers 9008 and 9016, which CVNY had
previously delivered to LogiMetrics for non-warranty service, each of which has
been returned in working order, (ii) one revision 2 traveling wave tube
amplifier, and (iii) one set of high and low voltage and control cables.
6. LogiMetrics shall cause mmTech to provide a limited warranty on mmTech's
then current form on the transmitting equipment to be purchased by CVNY pursuant
to Invoices attached hereto as Exhibit E (collectively, the "Transmitting
Equipment") for a period of two years from the date of shipment (which warranty
shall be freely transferable to unaffiliated third-party purchasers of
Transmitting Equipment); provided, however, that mmTech's standard warranty
shall apply with respect to any traveling wave tubes contained in such
Transmitting Equipment with the warranty period thereunder being deemed to have
commenced on the date of invoice by mmTech. At CVNY's request, LogiMetrics will
or will cause mmTech to use commercially reasonable efforts to cooperate with
CVNY, at CVNY's sole expense, in obtaining extended warranty terms from
unrelated suppliers of components used in the Transmitting Equipment.
7. So long as CVNY is in full compliance with the terms of this Agreement,
the Note, the Security Agreement and the Other Loan Documents, LogiMetrics shall
or shall cause mmTech to perform all warranty repairs and service on equipment
sold by them to CVNY (including equipment which is subsequently re-sold to
non-aff~liated third parties) in accordance with the terms of their respective
limited warranties. The foregoing sentence is not intended to enlarge, extend or
otherwise amend, modify or supplement the terms of such limited warranties.
8. With respect to the eight re-rads remaining to be delivered to CT&T
pursuant to the letter agreement, dated June 5, 1997 (the "Re-Rad Agreement"),
CV~Y agrees that, on behalf of CT&T, it will accept delivery and pay for four of
such re-rads no later than January 30, 1998 and the remaining four re-rads not
later than March 30, 1998. CVNY shall pay LogiMetrics $85,000 for each re-rad
delivered to CVNY no later than the close of business on (x) January 30, 1998,
in the case of the re-rads to be purchased on or prior to January 30, 1998, and
(y) March 30, 1998, in the case of the re-rads to be purchased on or prior to
March 30, 1998, and shall give LogiMetrics a credit of $15,000 per re-rad to
amortize the remaining amount advanced by CT&T to LogiMetrics under the Re-Rad
Agreement. All payments by CVNY shall be made by wire transfer of immediately
available funds to an account or accounts previously specified by Logimetrics.
9. LogiMetrics acknowledges that CVNY is currently negotiating with one or
more lenders the terms and conditions of a proposed senior secured working
capital facility (the "Facility") and that a portion of the proceeds of the
Facility will be used to repay certain amounts
<PAGE>
under the Note. Accordingly, if requested by CVNY, LogiMetrics shall enter into
a mutually acceptable subordination agreement with the lender or lenders under
the Facility pursuant to which LogiMetrics will agree to subordinate its right
to receive payment of an amount not to exceed (i) $1,853,916, less (ii) the net
amount received by LogiMetrics from the sale or other disposition of any
collateral securing CVNY's obligations under Note to CVNY's obligations under
the Facility.
10. Except for its rights under (i) this Agreement, (ii) the Note, (iii)
the Security Agreement, (iv) the Other Loan Documents, (v) the Invoices, and
(vi) the Re-Rad Agreement (collectively, the "Continuing Agreements"), CVNY, on
its own behalf and on behalf of its affiliates (other than the CT&T Parties (as
defined below)), partners, parents, subsidiaries, predecessors, successors,
assigns, legal representatives and any and all persons or entities claiming by
or through any of them (the "CellularVision Parties"), hereby release and
forever discharge LogiMetrics, mmTech, and their respective stockholders,
directors, officers, employees, agents and representatives, and any and all
persons or entities claiming by or through any of them (collectively, the
"LogiMetrics Released Persons") of and from any and all manner of actions,
causes of action, suits, account reckonings, covenants, agreements, darnages,
judgments, claims and demands whatsoever, at law or in equity, whether known or
unknown, contingent or matured, and whether currently existing or hereafter
arising, which the CellularVision Parties ever had, now have or may hereafter
have against the LogiMetrics Released Persons arising on or prior to the date
hereof, however and wherever arising. None of the CellularVision Parties shall
institute any action, claim or complaint of whatever kind or nature against a
LogiMetrics Released Person in any federal, state or local court or other
governmental agency or administrative tribunal relating to any claim which has
been released hereby.
Except for their respective rights under the Continuing Agreements,
LogiMetrics, on its own behalf and on behalf of mmTech and their respective
affiliates, parents, subsidiaries, predecessors, successors, assigns, legal
representatives and any and all persons or entities claiming by or through any
of them (the "LogiMetrics Parties"), hereby release and forever discharge CVNY
and its partners, officers, employees, agents and representatives, and any and
all persons or entities claiming by or through any of them (excluding the CT&T
Parties (as def~ned below)) (collectively, the "CellularVision Released
Persons") of and from any and all manner of actions, causes of action, suits,
account reckonings, covenants, agreements, damages, judgments, claims and
demands whatsoever, at law or in equity, whether known or unknown, contingent or
matured, and whether currently existing or hereafter arising, which the
LogiMetrics Parties ever had, now have or may hereafter have against the
CellularVision Released Persons arising on or prior to the date hereof, however
and wherever arising; provided, however, that this release shall not extend to
any and all manner of actions, causes of action, suits, account reckonings,
covenants, agreements, darnages, judgments, claims and demands whatsoever, at
law or in equity, whether known or unknown, contingent or matured, and whether
currently existing or hereafter arising, which the LogiMetrics Parties ever had,
now have or may hereafter have against CT&T, its partners, officers, employees,
agents and representatives (the "CT&T Parties"). None of the LogiMetrics Parties
shall institute any action, claim or complaint of whatever kind or nature
against any CellularVision Released Person in any federal, state or local court
or other
<PAGE>
governmental agency or administrative tribunal relating to any claim which has
been released hereby.
11. So long as CVNY is in full compliance with the terms of this Agreement,
the Note, the Security Agreement and the Other Loan Documents, LogiMetrics shall
not seek repayment from CT&T for the equipment purchased pursuant to the
Invoices or commence or maintain any action, suit, claim or proceeding seeking
such repayment from CT&T. The provisions of this Section 10 are not intended to
limit or otherwise modify LogiMetrics' rights under this Agreement or to be a
release of any claim LogiMetrics or mrnTech may have against CT&T.
12. CVNY hereby represents and warrants to LogiMetrics as follows:
(a) Such entity is a limited partnership, duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full power
and authority to own or lease its property and assets and to carry on its
business as presently conducted.
(b) Such entity has full power and authority to execute and deliver this
Agreement, the Note, the Security Agreement and the Other Loan Documents and to
perform its obligations hereunder and thereunder, all of which have been duly
authorized by all requisite partnership and general partner action. Each of this
Agreement, the Note, the Security Agreement and the Other Loan Documents has
been duly authorized, executed and delivered by such entity and constitutes a
valid and binding obligation of such entity, enforceable against it in
accordance with its terms.
(c) Neither the execution and delivery of this Agreement, the Note, the
Security Agreement or the Other Loan Documents nor the performance by such
entity of its obligadons hereunder or thereunder will (i) contravene any
provision contained in such entity's Certificate of Limited Partnership or
partnership agreement, (ii) violate or result in a breach (with or without the
lapse of time, the giving of notice or both) of or constitute a default under
(A) any contract, agreement, commitment, indenture, mortgage, lease, pledge,
note, license, permit or other instrument or obligation or (B) any judgment,
order, decree, law, rule or reguladon or other restriction of any governmental
authority, in each case to which such entity is a party or by which it is bound
or to which any of its assets or properties are subject, (iii) result in the
creadon or imposition of any lien, claim, charge, mortgage, pledge, security
interest, equity, restricdon or other encumbrance on any of such entity's assets
or properties (except for the security interests created pursuant to the
Security Agreement), or (iv) result in the acceleration of, or permit any person
or entity to accelerate or declare due and payable prior to its stated maturity,
any obligation of such entity.
(d) No notice to, filing with, or authorization, registration, consent or
approval of any governmental authority or other person or entity is necessary
for the execution, delivery or performance by such entity of this Agreement, the
Note, the Security Agreement and the Other Loan Documents to which it is a party
or the consummation of the transactions contemplated hereby or thereby.
<PAGE>
(e) CT&T has assigned to CVNY all of CT&T's right, title and interest in
and to (i) any advances made to LogiMetrics or mmTech on or prior to the date
hereof in respect of the equipment included in the Invoices and (ii) all royalty
payments to which CT&T may be entitled to receive from LogiMetrics or mmTech
from the sale of (A) the equipment included in the Invoices and (B) transmitting
equipment purchased by WIC Connexus Ltd. on or prior to the date hereof. A true
and complete executed counterpart of such assignment has previously been
provided to LogiMetrics.
13. This letter agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument. This letter agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New Jersey, without regard
to the choice of law provisions thereof. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of New Jersey
and the United States District Court for the District of New Jersey for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Note and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by such methods as are authorized by law. Each of
the parties hereto irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such court.
Each of the parties hereto irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
14. This agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors, assigns and legal
representatives.
[remainder of page intentionally left blank]
<PAGE>
If the foregoing accurately reflects our mutual understanding, please so
indicate by executing a counterpart of this Agreement and returning it to the
undersigned at which time this Agreement shall become the legal and validly
binding agreement of the parties hereto.
Very truly yours,
/s/Norman M. Phipps
______________________________
Norman M. Phipps,
President - LogiMetrics, Inc.
ACCEPTED AND AGREED:
CellularVision of New York, L.P.
By: /s/John G. Walber
_____________________________________
John G.Walber, IV, President and Chief
Operating Officer
Dated: December 1,1997
<PAGE>
Exhibit A
Invoice Number
70318
70411
71401
970323
716012
71602
717011
71901
97041
73501
73503
72801a
972202
972203
9722021
9722031
9722024
72002
72101
72101a
72402
72502
72501
72702
72901
73001
950324
96084
9870
9833
97035
73301
73501
70904
<PAGE>
Exhibit B
Invoice Number
72601
72601a
72704
72704a
72703a
72705
73506
73505
73504
73507
73502
<PAGE>
EXHIBIT C
GENERAL SECURITY AGREEMENT
GENERAL SECURITY AGREEMENT, dated as of December 1, 1997, by and between
CellularVision of New York, L.P., a Delaware limited partnership ("Borrower"),
and LogiMetrics, Inc., a Delaware corporation ("Lender").
WITNESSETH
WHEREAS, Borrower is indebted to Lender in the amount of $2,621,694.81; and
WHEREAS, in order to evidence the indebtedness referred to above, Borrower
has delivered to Lender a $2,621,694.81 Secured Promissory Note (the "Note");
and
WHEREAS, the Note is to be secured by the security interests in the
Collateral granted herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrower and Lender pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors
and assigns. The words "hereof', "herein", "hereunder", "this Agreement" and
words of similar in~port when used in this Agreement shall refer to this
Agreement as a whole and not any par-.icular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. An Event of Default shall exist or
continue or be continuing until such Event of Default is waived in accordance
with Section 7.3. Any accounting term used herein unless otherwise defined in
this Agreement shall have the meanings customarily given to such term in
accordance with GAAP. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below:
1.1 "Equipment" shall mean the equipment and machinery of Borrower listed
on Exhibit A hereto, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.2 "Event of Default" shall have the meaning set forth in Section 6.1
hereof.
1.3 "Financing Agreements" shall mean, collectively, the Note, the Letter
Agreement, dated December 1, 1997, by and between Borrower and Lender, this
Agreement and all notes,
<PAGE>
guarantees, security agreements and other agreements, documents and instruments
now or at any time hereafter executed and/or delivered by Borrower or any other
Obligor in connection with the Note, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.4 "Obligations" shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrower to Lender
and/or its affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, Borrower or
otherwise, whether arising under this Agreement, the other Financing Agreements
or otherwise, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to any Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Lender.
1.5 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations, other than Borrower.
1.6 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects Subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability company, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any government, or
any agency or instrumentality or political subdivision thereof.
1.7 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Equipment, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of Borrower with respect to the foregoing maintained with
or by any other person).
Section 2. Grant of Securitv Interest
To secure payment and performance of all Obligations, Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
2.1 all Equipment;
2.2 all Records; and
<PAGE>
2.3 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
Section 3. Collateral Covenants
3.1 Equipment Covenants. With respect to the Equipment: (a) Borrower shall
keep the Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (b) Borrower shall use the Equipment with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (c) the Equipment is and
shall be used in Borrower's business and not for personal, family, household or
farming use; (d) Borrower shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of the business of Borrower or to
move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrower in the ordinary course of business; (e) the
Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (f) Borrower shall assume all responsibility and liability arising
from the use of the Equipment.
3.2 Power of Attorney. Borrower hereby irrevocably designates and appoints
Lender (and all persons designated by Lender) as its true and lawful
attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name, to: (a)
at any time an Event of Default or event which with notice or passage of time or
both would constitute an Event of Default exists or has occurred and is
continuing at any time to (i) take control in any manner of any item of payment
or proceeds of Collateral, (ii) have access to any lockbox or postal box into
which Borrower's mail is deposited, (iii) endorse Borrower's name upon any items
of payment or proceeds of Collateral and deposit the same in the Lender's
account for application to the Obligations, (iv) endorse Borrower's name upon
any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Collateral, and (v) execute in Borrower's name and
file any UCC financing statement, or amendments thereto. Borrower hereby
releases Lender and its officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, except as a result of Lender's own
gross negligence or willful misconduct as determined pursuant to a final
nonappealable order of a court of competent jurisdiction.
3.3 Right to Cure. Lender may, at its option, at any time an Event of
Default or event which with notice or passage of time or both would constitute
an Event of Default exists or has occurred and is continuing (a) cure any
default by Borrower under any agreement with a third party or pay or bond on
appeal any judgment entered against Borrower, (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral, and (c) pay any amount, incur any expense or perform
any act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and
<PAGE>
the rights of Lender with respect thereto. Lender may add any amounts so
expended to the Obligations and charge Borrower's account(s) therefor, such
amounts to be repayable by Borrower on demand. Lender shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of any of Borrower. Any
payment made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
3.4 Access to Premises. From time to time as requested by Lender, at the
cost and expense of Borrower, (a) Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including, without limitation, the Records, and (b) Borrower shall
promptly furnish to Lender such copies of such books and records or extracts
therefrom as Lender may request, and (c) use during normal business hours such
of Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of and realization of other Collateral.
Section 4. Representations and Warranties
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement):
4.1 Existence, Power and Authority: Subsidiaries. Borrower is a limited
partnership duly organized and in good standing under the laws of its state of
organization. Borrower is duly qualified as a foreign partnership and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on its financial condition, results of
operation or business or the rights of Lender in or to any of the Collateral.
The execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are all
within Borrower's partnership powers, have been duly authorized ant are not in
contravention of law or the terms of Borrower's certificate of limited
partnership, agreement of limited partnership or other organizational
documentation, or any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower or its property are bound. This Agreement and the
other Financing Agreements constitute legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their respective terms.
Borrower does not have any subsidiaries.
4.2 Chief Executive Office; Collateral Locations. The chief executive
office of Borrower and Borrower's Records concerning the Collateral are located
only at the address set forth below Borrower's signature. Each item of Equipment
that has been delivered to Borrower will be located within the State of New
York. Notwithstanding the foregoing, Borrower may establish new locations for
the Collateral in accordance with Section 5.2 below.
<PAGE>
4.3 Trade Names. Borrower does not have or operate in any jurisdiction
under any trade names, fictitious names or other names except its legal name.
4.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens permitted under Section 5.5
hereof. Borrower has good and marketable title to all of its properties and
assets subject to no liens, mortgages, pledges, security interests, encumbrances
or charges of any kind, except those granted to Lender and such others as are
specifically permitted under Section 5.5 hereof.
4.5 Accuracy and Completeness of Information. All information furnished by
or on behalf of Borrower in writing to Lender in connection with this Agreement
or any of the other Financing Agreements or any transaction contemplated hereby
or thereby is true and correct in all material respects on the date as of which
such information is dated and does not omit any material fact necessary in order
to make such information not misleading. No event or circumstance has occurred
which has had or could reasonably be expected to have a material adverse affect
on the business, assets or prospects (financial and other) of Borrower, which
has not been fully and accurately disclosed to Lender in writing.
4.6 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be conclusively
presumed to have been relied on by Lender regardless of any investigation made
or information possessed by Lender. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Borrower shall now or hereafter give, or cause to be given, to
Lender.
Section 5. Affirmative and Negative Covenants
5.1. Maintenance of Existence. Borrower shall at all times preserve, renew
and keep in full force and effect its partnership existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, trade names, approvals, authorizations, leases
and contracts necessary to carry on the business as presently or proposed to be
conducted. Borrower shall give Lender thirty (30) days prior written notice of
any proposed change in its partnership name, which notice shall set forth the
new name and Borrower shall deliver to Lender a copy of the amendment to its
Certificate of Limited Partnership providing for the name change certified by
the Secretary of State of the jurisdiction of formation of Borrower as soon as
it is available.
5.2 New Collateral Locations. Borrower may open any new location within the
continental United States provided Borrower (a) gives Lender thirty (30) days
prior written notice of the intended opening of any such new location and (b)
executes and delivers, or causes to be executed and delivered, to Lender such
agreements, documents, and instruments as Lender may
<PAGE>
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements.
5.3 Insurance. Borrower shall, at all times, maintain with financially
sound and reputable insurers insurance with respect to the Collateral against
loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by Persons of established reputation
engaged in the same or similar businesses and similarly situated. Said policies
of insurance shall be satisfactory to Lender as to form, amount and insurer.
Borrower shall furnish certificates, policies or endorsements to Lender as
Lender shall require as proof of such insurance, and, if Borrower fail to do so,
Lender is authorized, but not required, to obtain such insurance at the expense
of Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Lender of any cancellation or reduction of coverage and that
Lender may act as attorney for Borrower in obtaining, and at any time an Event
of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrower shall cause Lender to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by any of Borrower or any of its
affiliates. At its option, Lender may apply any insurance proceeds received by
Lender at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Lender may determine or hold such proceeds as cash collateral for the
Obligations.
5.4 Other Information. Borrower shall promptly notify Lender in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations having a value or involving an amount of $25,000 or more, or which
would result in any material adverse change in Borrower's business, properties,
assets, goodwill or condition, financial or otherwise, and (ii) the occurrence
of any Event of Default or event which, with the passage of time or giving of
notice or both, would constitute an Event of Default.
5.5 Encumbrances. Borrower agrees that it shall not create, incur, assume
or suffer to exist any security interest, mortgage, pledge, lien, charge or
other encumbrance of any nature whatsoever on the Collateral, except: (a) liens
and security interests of Lender; (b) liens securing the payment of taxes,
either not yet overdue or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books;
and (c) nonconsensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of Borrower's business to the extent: (i)
such liens secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the
<PAGE>
commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books.
5.6 Costs and Expenses. Subject to the terms of the Note, Borrower shall
pay to Lender on demand all costs, expenses, filing fees and taxes paid or
payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
the Obligations, Lender's rights in the CollateraL this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) all title insurance and other insurance premiums,
appraisal fees and search fees; (c) costs and expenses of preserving and
protecting the Collateral; (d) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender arising out
of the transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such matters); and
(e) the fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing.
5.7 Further Assurances. At the request of Lender at any time and from time
to time, Borrower shall, at its expense, at any time or times duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Where permitted by law, Borrower hereby authorizes Lender to execute
and file one or more UCC financing statements signed only by Lender.
5.8 Release of Collateral. Borrower shall have the right to sell any part
of the Collateral free and clear of the security interest and liens created by
this Agreement, provided that the net proceeds of any such sale are applied to
reduce the Obligations (a "Permitted Sale"). In connection with the any
Permitted Sale, Lender, at the request and expense of the Borrower, will duly
assign transfer and deliver to Borrower such of the Collateral as is then being
so sold and as may be in the possession of Lender. At the request of Borrower,
Lender shall, at Borrower's expense, duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and instruments,
and do or cause to be done such further acts as may be necessary or proper to
evidence the release of the security interest and liens on the Collateral being
sold in any such Permitted Sale.
<PAGE>
Section 6. Events of Default and Remedies
6.1 Events of Default. The occurrence or existence of any Event of Default
under the Note is referred to herein individually as an "Event of Default", and
collectively as "Events of Default".
6.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrower or any other Obligor, (except as such notice or
consent is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against Borrower or any other Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in clause (x) of the definition thereof in the Note,
all Obligations shall automatically become immediately due and payable), (ii)
with or without judicial process or the aid or assistance of others, enter upon
any premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (iii) require Borrower, at Borrower's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (v) remove
any or all of the Collateral from any premises on or in which the same may be
located for the purpose of effecting the sale, foreclosure or other disposition
thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower. If any of the Collateral is
sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lender. If notice of disposition of Collateral is required
by law, five (5) days prior notice by Lender to Borrower designating the time
and place of any public sale or the time
<PAGE>
after which any private sale or other intended disposition of Collateral is to
be made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any
Collateral, or seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually received
by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for in the Note and all costs and expenses of collection or
enforcement, including attorneys, fees and legal expenses.
Section 7. Jury Trial Waiver; Other Waivers and Consents: Governing Law
7.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New Jersey, without reference to the
choice of law principles thereof.
(b) Borrower hereby irrevocably consents and submits to the non-exclusive
jurisdiction of the Superior Court for any county in New Jersey and the United
States District Court for the District of New Jersey and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Agreement or in any way connected or related or
incidental to the dealings of Borrower and Lender in respect of this Agreement
or the transactions related hereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and
agrees that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Lender shall have the right to bring any
action or proceeding against Borrower or any of its property in the courts of
any other jurisdiction which Lender deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Borrower or
its property).
(c) Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon Borrower in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, Borrower
shall appear in answer to such process, failing which Borrower shall be deemed
in default and judgment may be entered by Lender against Borrower for the amount
of the claim and other relief requested.
(d) BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER TH[S AGREEMENT OR (ii) IN
ANY WAY CONNECTED WITH OR RELATED OR
<PAGE>
INCIDENTAL TO THE DEALINGS OF BORROWER AND LENDER IN RESPECT OF THIS AGREEMENT
OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTrNG OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR
LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER AND LENDER TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower (whether in tort,
contract, equity or otherwise) for losses suffered by Borrower in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and nonappealable
judgment or court order binding on Lender that the losses were the result of
acts or omissions of Lender constituting Lender's own gross negligence or
willful misconduct. In any such litigation, Lender shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement and the other Financing Agreements.
7.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Lender may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
7.3 Amendments and Waivers. Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender.
Lender shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Lender.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
7.4 Waiver of Counterclaims. Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
7.5 Indemnification. Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities,
<PAGE>
costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, or any undertaking
or proceeding related to any of the transactions contemplated hereby or any act,
omission, event or transaction related or, attendant thereto, including, without
limitation, amounts paid in settlement, Court costs, and the fees and expenses
of counsel. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrower shall pay the maximum portion which it is
permitted to pay under applicable law to Lender in satisfaction of indemnified
matters under this Section. The foregoing indemnity shall survive the payment of
the Obligations, the termination of this Agreement and the payment of the Note.
All of the foregoing costs and expenses shall be part of the Obligations and
secured by the Collateral.
Section 8. Miscellaneous
8.1 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at 50 Orville Drive, Bohemia, New York 11716,
Attention: Norman M. Phipps, and to Borrower at its chief executive office set
forth below, or to such other address as any party may designate by written
notice to the others in accordance with this provision, and (b) deemed to have
been given or made: if delivered in person, immediately upon delivery; if by
telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.
8.2 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
8.3 Successors. This Agreement shall be binding upon Borrower and its
successors and assigns and inure to the benefit of and be enforceable by Lender
and its successors and assigns, except that Borrower may not assign its rights
under this Agreement without the prior written consent of Lender. Any purported
assignment in violation of this Section 8.3 shall be null and void ab initio.
8.4 Entire Agreement. This Agreement, any supplements hereto, and any
instruments or documents delivered or to be delivered in connection herewith
represent the entire agreement and understanding concerning the subject matter
hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written.
<PAGE>
8.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which shall together constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by the undersigned, "hereunto duly authorized, as of the date first
written above.
ATTEST: CELLULARVISION OF NEW YORK, L.P.
By:
_______________________________ ____________________________________
Name: John G. Walber, IV, President
and Chief Operating Officer
Chief Executive Office: 140 58th Street
Loft 9-W
Brooklyn, New York 11220
ATTEST: LOGIMETRICS, INC.
______________________________ By:_________________________________
Name: Norman M. Phipps, President
<PAGE>
EXHIBIT D
[DELETED BY AMENDMENT]
<PAGE>
EXHIBIT E
TRANSMITTING EQUIPMENT
INVOICE NUMBER
72601
72704
72703a
72705
73506
73505
73504
73507
EXHIBIT 10.11
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT, dated as of December 30, 1997, by and between
LogiMetrics, Inc., a Delaware corporation (the "Seller"), and Newstart Factors,
Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller is the sole owner of a $2,621,694.81 Secured
Promissory Note, dated December 1, 1997 (the "Note"), issued by CellularVision
of New York, L.P. ("CVNY" or "Borrower") in favor of the Seller; and
WHEREAS, CVNY's obligation to repay the Note is secured by certain
collateral (the "Collateral") to the extent and as specified in a General
Security Agreement, dated as of December 1, 1997 (the "Security Agreement"), by
and between CVNY and the Seller; and
WHEREAS, the Seller has received the first five principal payments on
the Note, each in the amount of $9,900 (the "Seller Payments"); and
WHEREAS, the Seller and the Purchaser desire that, as of the Closing
Date (as defined below) and subject to the terms and conditions of this
Agreement, the Seller shall sell, assign and transfer to the Purchaser, and the
Purchaser shall purchase and take from the Seller, all of the Seller's right,
title and interest in and to, or arising under or in connection with (i) the
Note, the Security Agreement, all UCC-1s filed or to be filed in favor of the
Seller related thereto and all agreements, instruments and documents executed in
connection with the foregoing (including without limitation, all exhibits,
schedules and amendments thereto and any agreements, documents or instruments
pursuant to which the Seller acquired such rights, title and interests
(collectively, the "Transaction Documents"), (ii) all rights and claims that the
Seller has had, now has or may hereafter acquire to recover or receive cash
payments, securities, interest, dividends or other property under or in respect
of the foregoing or the Related Rights or Guarantee and Collateral Rights (each
as defined below), (iii) all rights and claims (including, without limitation,
"claims" as defined in Section 101(5) of title 11, United States Code (the
"Bankruptcy Code")), choses in action or causes of action of any nature
whatsoever (including, without limitation, all bankruptcy and bankruptcy related
claims) whether or not such claims are fixed, known or unknown, contingent or
noncontingent, secured or unsecured, liquidated or unliquidated, matured or
unmatured to the extent arising under or in connection with the Transaction
Documents (collectively, the "Claims") that the Seller has had, now has or may
hereafter acquire against any party, including CVNY and all other parties
obligated under or in connection with any of the foregoing or the Guarantee and
Collateral Rights, (collectively, the "Related Rights"), (iv) all rights and
claims that the Seller has had, now has or may hereafter acquire against any
Guarantors (each a "Guarantor") or any other person or entity or against, in or
to property under or in connection with any guarantee, security interest, lien,
mortgage, pledge, deed of trust, deposit account, set-off, or other collateral
(and any substitutions therefor or additions thereto) related to or securing, as
the case may be, the obligations under the Transaction Documents (together, the
"Guarantee and Collateral Rights"), (v) any and all rights, claims and causes of
action of the Seller
<PAGE>
against CellularVision Technology & Telecommunications, L.P. ("CT&T") with
respect to the transactions giving rise to the Note, including, without
limitation, the sale of the equipment constituting the Collateral, and (vi) any
and all cash, securities, dividends and other property or consideration,
regardless of type, which may be exchanged for, distributed or collected in
respect of the foregoing (including, without limitation, any fees,
reimbursements and all other amounts payable to the Seller from time to time
under or in respect of the Transaction Documents and the Claims) (collectively,
"Distributions"). All of the Seller's right, title and interest in and to all of
the foregoing rights and assets set forth in this fourth recital are
collectively referred to hereinafter as the "Transferred Interest".
Notwithstanding the foregoing, the Transferred Interest shall not include, and
the Purchaser is not acquiring, any of the Seller's right, title or interest in
or to or obligations under (w) the Letter Agreement, dated as of December 1,
1997 (as amended, modified or supplemented from time to time, the "Letter
Agreement"), by and between the Seller and CVNY, (x) any purchase orders from
CVNY, whether currently existing (provided the same do not relate to any of the
Collateral) or received hereafter, (y) any contract, agreement, arrangement or
understanding between the Seller and CVNY arising after the date hereof (to the
extent not related to the subject matter of this Agreement), or between the
Seller and any other person or entity whenever arising, and (z) any transaction
between the Seller, CVNY, CT&T or any of their respective affiliates occurring
after the date hereof (to the extent not related to the subject matter of this
Agreement) and the term "Transaction Documents" shall not include any of the
foregoing.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound, the parties
hereto hereby agree as follows:
1. The Seller hereby bargains, sells, assigns, transfers and conveys
to the Purchaser, without recourse or warranty of any kind or nature whatsoever,
except as expressly set forth herein, all of its right, title and interest in
the Transferred Interest. To further perfect the Purchaser's acquisition of the
Seller's rights under the Note, the Seller hereby bargains, sells, assigns and
transfers to the Purchaser any and all security interests or liens that it may
have in the collateral securing CVNY's obligations under the Note, whether
arising by operation of law or by agreement, including, without limitation, its
right, title and interest in and under the Security Agreement. Simultaneous
herewith, the Seller is delivering to the Purchaser (i) the Note, duly endorsed
to the order of the Purchaser, without recourse (except as provided for in this
Agreement), together with an original counterpart of the Security Agreement and
copies of all related UCC-1s filed in favor of the Seller; provided, however,
that the Seller shall as promptly as practicable file UCC-1s in respect of the
Collateral with the Secretary of State of New Jersey and the Recorder of Deeds
in Monmouth County, New Jersey and shall deliver to the Purchaser copies of such
UCC-1s promptly following the receipt of acknowledgment copies thereof, and (ii)
duly executed UCC-3s assigning to the Purchaser its rights under the UCC-1s
previously filed by the Seller with respect to such security interests and
liens; provided, however, that the Seller shall deliver to the Purchaser duly
executed UCC-3s in respect of the UCC-1s filed by the Seller in New Jersey
promptly following the receipt of acknowledgment copies of such UCC-1s. On the
Closing Date, the Purchaser and the Seller shall send to CVNY a joint notice
notifying CVNY of the assignment by the Seller of its rights under the Note and
the other Transaction Documents to
<PAGE>
the Purchaser and requesting that all future payments under the Note be made to
such account or accounts as the Purchaser may specify.
2. In payment in full of the purchase price of the Note, the Purchaser
is herewith paying to the Seller $2,380,100 in cash by wire transfer of
immediately available funds to an account or accounts previously specified by
the Seller (the "Purchase Price"). The Purchase Price will be paid upon
Purchaser's receipt of (i) this Agreement duly executed by the Seller, (ii) the
documents referred to in Section 1 hereof (to the extent required to be
delivered on or prior to the Closing Date) and subject to the representations
and warranties of Seller made herein being true and correct. The date on which
the Purchase Price is paid is herein referred to as the "Closing Date."
3. The Seller hereby represents and warrants to the Purchaser on the
date hereof and as of the Closing Date as follows:
3.1. The Seller is a corporation duly organized and validly
existing under the laws of the State of Delaware and has the corporate power and
authority to own its assets and to conduct its business as presently conducted.
3.2. The Seller has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder, all of
which have been duly authorized by all requisite corporate action. This
Agreement has been duly authorized, executed and delivered by the Seller and
constitutes a valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms.
3.3. Neither the execution and delivery of this Agreement nor the
performance by the Seller of its obligations hereunder will (i) contravene any
provision contained in the Seller's Certificate of Incorporation, as amended or
by-laws, or (ii) violate or result in a breach (with or without the lapse of
time, the giving of notice or both) of or constitute a default under (A) any
contract, agreement, commitment, indenture, mortgage, lease, pledge, note,
license, permit or other instrument or obligation or (B) any judgment, order,
decree, law, rule or regulation or other restriction of any governmental
authority, in each case to which the Seller is a party or by which it is bound
or to which any of its assets or properties are subject.
3.4. No notice to, filing with, or authorization, registration,
consent or approval of any governmental authority or other person or entity is
necessary for the execution, delivery or performance of this Agreement by the
Seller or the consummation by the Seller of the transactions contemplated
hereby.
3.5. The Seller is the sole owner of record of the Note, is the
sole beneficial owner of the Note and has good, indefeasible and marketable
title thereto. Upon payment of the purchase price specified in Section 2 hereof,
the Purchaser will acquire good title to the Note free and clear of any lien,
encumbrance, claims or security interests, excluding those created by the
Purchaser.
<PAGE>
3.6. The Seller has not pledged, encumbered, assigned,
transferred, participated, conveyed, disposed of, terminated or granted any
security interest in, in whole or in part, any of its right, title and interest
in and to the Transferred Interest and is not a party to any agreement (other
than this Agreement) which would result in the foregoing.
3.7. No litigation, arbitration or adversarial proceeding is
pending against the Seller or, to the Seller's actual knowledge, threatened
against it which could reasonably be expected to have a materially adverse
effect on the Transferred Interest.
3.8. The Seller is not, nor has it ever been, an "insider" of the
Borrower or any Guarantor as such term is defined in Section 101(31) of the
Bankruptcy Code.
3.9. The unpaid principal amount of the Note is $2,572,194.81.
3.10. The Transferred Interest is a valid obligation of CVNY and
is not subject to avoidance, reduction, disallowance, subordination, except as
set forth in the Letter Agreement, or offset, and the Seller knows of no fact
and has received notice of no allegation which would, if proved, result in the
avoidance, reduction, disallowance, subordination or offset of the Transferred
Interest.
3.11. Other than the Transaction Documents, the Seller is not a
party to or bound by any document, instrument or agreement that could reasonably
be expected to materially and adversely affect the Transferred Interest and the
Seller has not agreed to any waiver, amendment or modification to any of the
Transaction Documents.
3.12. The Seller has not entered into any agreement granting to
the Borrower any right of setoff or recoupment against the Transferred Interest,
nor has the Borrower set off any funds or other property in satisfaction of the
Transferred Interest.
3.13. Except for the Seller Payments, the Seller has not received
any payments or transfers from or on account of the Borrower in respect of the
Transferred Interest on or after the date which is 91 days prior to the Closing
Date.
3.14. The Seller has received, reviewed and relied upon such
information concerning the legal, business and financial condition of the
Borrower and the Transferred Interest as it considers adequate to make an
informed decision regarding the sale of the Transferred Interest.
3.15. The Seller is a sophisticated seller with respect to the
Transferred Interest; the Purchaser has not given any investment advice or
rendered any opinion to it as to whether the sale of the Transferred Interest is
prudent, and the Seller is not relying on any representation or warranty of the
Purchaser except as expressly set forth in this Agreement; the Seller
acknowledges that the Purchase Price may vary from any distributions that the
Purchaser may ultimately recover on account of the Transferred Interest and is
aware that additional information regarding the Transferred Interest may be
obtained from various court or other public files.
<PAGE>
3.16. Without in any way implying that the Transferred Interest
is a "security" within the meaning of applicable securities laws, no offer to
sell or solicitation of any offer to buy any portion of the Transferred Interest
has been made by the Seller in a manner that would violate or require
registration under such applicable securities laws.
3.17. The Seller has not breached any of its representations,
warranties, covenants, agreements or obligations under the Transaction
Documents.
3.18. The Seller has provided the Purchaser with true and
complete copies of the Transaction Documents and any amendments, waivers or
modifications thereof.
3.19. Except as set forth in the Letter Agreement, the Seller has
not subordinated or agreed to subordinate all or any portion of the Transferred
Interest to any other obligation of the Borrower including, without limitation,
any unsecured deficiency claim asserted by a secured creditor.
3.20. The security interests and liens granted to the Seller
under the Security Agreement and the other Transaction Documents (and assigned
to the Purchaser hereunder) constitute valid and perfected first priority liens
and security interests in and upon the Collateral (as defined in the Security
Agreement).
3.21. The Seller has no obligation to make additional loans or
extensions of credit under the Transaction Documents.
3A. The Seller shall perform its obligations under the Letter
Agreement in conformity with the terms thereof as the same become due.
4. The Purchaser hereby represents and warrants to the Seller on the
date hereof and as of the Closing Date as follows:
4.1. The Purchaser is a corporation duly organized and validly
existing under the laws of the State of Delaware and has the corporate power and
authority to own its assets and to conduct its business as presently conducted.
4.2. The Purchaser has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder, all
of which have been duly authorized by all requisite corporate action. This
Agreement has been duly authorized, executed and delivered by the Purchaser and
constitutes a valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
4.3. Neither the execution and delivery of this Agreement nor the
performance by the Purchaser of its obligations hereunder will (i) contravene
any provision contained in the Purchaser's Certificate of Incorporation, as
amended or by-laws, or (ii) violate or result in a breach (with or without the
lapse of time, the giving of notice or both) of or constitute a default
<PAGE>
under (A) any contract, agreement, commitment, indenture, mortgage, lease,
pledge, note, license, permit or other instrument or obligation or (B) any
judgment, order, decree, law, rule or regulation or other restriction of any
governmental authority, in each case to which the Purchaser is a party or by
which it is bound or to which any of its assets or properties are subject.
4.4. No notice to, filing with, or authorization, registration,
consent or approval of any governmental authority or other person or entity is
necessary for the execution, delivery or performance of this Agreement by the
Purchaser or the consummation by the Purchaser of the transactions contemplated
hereby.
4.5. The Purchaser is an Accredited Investor, as such term is
defined in Rule 501 of the rules and regulations of the Commission promulgated
under the Securities Act of 1933, as amended. Without in any way implying that
the Transferred Interest is a "security" within the meaning of applicable
securities laws, the Purchaser is not acquiring the Transferred Interest with a
view to resale or distribution in a manner that would violate applicable
securities laws. The Purchaser has substantial experience in making investment
decisions of the type contemplated hereby and is making its own investment
decision and has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of purchasing the Note as
contemplated hereby. The Purchaser has performed, and will continue to perform,
its own independent credit analysis of CVNY and has obtained from publicly
available sources (other than the Seller and its representatives) sufficient
information regarding CVNY and its business and prospects to allow it to make an
informed decision to purchase the Note as contemplated hereby. The Purchaser
understands that no representative of the Seller has been authorized to give any
information or to make any representations or warranties of any kind or nature
whatsoever in connection with the transactions contemplated hereby, except as
expressly set forth herein, and, if given or made, the Purchaser acknowledges
that such information, representations or warranties were not authorized by the
Seller and, therefore, may not be relied upon by the Purchaser and have not been
relied upon by the Purchaser in making its decision to purchase the Note.
Without limiting the generality of the foregoing, the Purchaser acknowledges
that the Seller has made no representation or warranty except as expressly set
forth herein regarding (i) the accuracy or completeness of any information
obtained by the Purchaser regarding CVNY, its business or prospects, (ii) the
validity, enforceability or legal effect of the Transaction Documents, or (iii)
the creditworthiness of CVNY or the value, adequacy or collectibility of the
Collateral securing the Note. The Purchaser acknowledges that its purchase of
the Note is highly speculative and that it might sustain a complete loss of its
investment therein. The Purchaser has the financial ability to bear the economic
risk of losing its entire investment in the Note.
5. The Seller and the Purchaser shall cooperate fully with each other
and shall (i) execute and deliver to each other such other documents, and (ii)
do such other acts and things, all as the other party may at any time reasonably
request for the purpose of carrying out the intent of this Agreement and the
sale of the Note as contemplated hereby. Should the Seller receive any
Distributions on or after the Closing Date, it will pay the same over to the
Purchaser in the currency received by it or, in the case of securities (to the
extent permissible by law and relevant documentation), without recourse or
warranty of any kind or nature whatsoever, endorse or cause to be registered in
the Purchaser's name or such name as the Purchaser may direct (at the
<PAGE>
Purchaser's sole expense) in writing and deliver to the Purchaser or such person
as the Purchaser may direct such securities within four business days after
receipt of any such Distribution. If any such cash Distribution is not paid to
the Purchaser within such time period, the Seller will pay interest on such
Distribution for the period from the day on which such Distribution was actually
received by the Seller to (but excluding) the day such Distribution is actually
paid to the Purchaser, at a rate per annum equal to the Federal Funds Rate as
most recently reported in the Wall Street Journal (Eastern Edition) prior to the
date of payment by the Seller. Until payment is made pursuant to this Section 5,
the Seller shall hold the same in trust for the Purchaser's account. In the
event that the Seller cannot cause any non-cash Distribution to be re-registered
as set forth above, it will promptly after receipt transfer such non-cash
Distribution to the Purchaser with proper endorsements (without recourse or
warranty, express or implied) or transfer powers duly endorsed in blank, unless
the Seller is prohibited from the foregoing under any law, rule, order or
contract in which case the Seller will continue to hold the same in trust for
the Purchaser. Subject to the occurrence of the Closing Date: (i) if the Seller
receives any documents, notices or correspondence in respect of the Transferred
Interest or Transaction Documents it shall promptly forward the same to the
Purchaser; (ii) the Purchaser shall have sole authority to exercise all voting
and other rights and remedies with respect to the Transferred Interest; and
(iii) in the event that, for any reason, the Purchaser is not permitted to
exercise such voting and other rights and remedies, the Seller agrees that it
will act or refrain from acting in respect of any vote, decision or act (each
such vote, decision, act or inaction, an "Action") to be made by the Seller in
respect of the Transferred Interest strictly in accordance with the instructions
of the Purchaser.
6. (a) The Purchaser shall indemnify and hold harmless the Seller
(and the Seller's officers, directors, partners, employees and agents) from any
actual losses, costs or expenses, including reasonable legal fees and expenses,
which arise out of or are incurred as a result of (i) breaches of any of the
representations, warranties, covenants or agreements made by the Purchaser in
this Agreement, (ii) any Action taken by the Seller pursuant to the direction of
the Purchaser or any subsequent holder of the Transferred Interest pursuant to
Section 5 hereof, or (iii) any act or omission of the Purchaser or any
subsequent holder of the Transferred Interest with respect to the Transferred
Interest on or after the Closing Date.
(b) The Seller shall indemnify and hold harmless the Purchaser
(and the Purchaser's officers, directors, partners, employees and agents) from
any actual losses, costs or expenses, including reasonable legal fees and
expenses, which arise out of or are incurred as a result of (i) breaches of any
of the Seller's representations, warranties, covenants or agreements made in
this Agreement or any Transaction Document, (ii) any obligation of the Purchaser
to disgorge, or otherwise reimburse to the Borrower, or any other party for any
payments received by the Seller in respect of the Transferred Interest, (iii)
any act or omission of the Seller with respect to the Transferred Interest prior
to the Closing Date, or (iv) any act or omission of the Seller in connection
with its continuing business relationship with CVNY or CT&T. In the event that
the Seller is required to make any payment pursuant to clause (ii) above, the
Purchaser shall assign to the Seller any claim or right the Purchaser may have
against the Borrower or any other party in respect thereof.
<PAGE>
7. Each of the Purchaser and the Seller shall pay its own expenses
incident to this Agreement and the transactions contemplated hereby. The Seller
shall be responsible for all costs and expenses reimbursable under or pursuant
to the Transferred Interest and the Transaction Documents which were incurred,
accrued or arose prior to the Closing Date (the "Pre-Closing Expenses"). From
and after the Closing Date, the Purchaser shall be responsible for the payment
of all costs and expenses reimbursable under or in connection with the
Transferred Interest and the Transaction Documents, other than the Pre-Closing
Expenses.
8. All notices, consents, requests, and other communications under
this Agreement shall be in writing and shall be effective: (a) upon delivery by
hand; (b) one day after being deposited with a recognized overnight delivery
service; (c) if sent by facsimile, upon receipt of a clear transmission
report--in each case addressed to such party as follows (or to such other
address as hereafter may be designated in writing by such party to the other
party):
If to the Purchaser:
Newstart Factors, Inc.
2 Stamford Plaza
Suite 1501
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
Attention: James D. Bennett
Telephone: (203) 353-3101
Facsimile: (203) 353-3113
If to the Seller:
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Attention: President
Telephone: (516) 784-4110
Facsimile: (516) 784-4130
9. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without reference to the
choice of law principles thereof. Each of the parties hereto irrevocably submits
to the non-exclusive jurisdiction of the courts of the State of New York and the
United States District Court for the Southern District of New York for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Agreement and the transactions contemplated hereby. Service of process
in connection with any such suit, action or proceeding may be served on each
party hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and
<PAGE>
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
10. The Purchaser shall have the right to sell, assign or otherwise
transfer the Transferred Interest and all of its rights and obligations
hereunder or any portion thereof without the consent of the Seller; provided
that (i) such transfer shall not violate any law, rule, regulation, order, writ,
judgment, injunction or decree, (ii) in connection with any such transfer the
Purchaser shall obtain a representation from its transferee substantially to the
effect set forth in Section 4.5 hereof, and (iii) the Purchaser shall remain
primarily liable for the performance of its obligations hereunder
notwithstanding any such sale, assignment or transfer unless the Seller consents
thereto (which consent shall not be unreasonably withheld). In the event of such
a sale, assignment or transfer, the Seller shall, at the Purchaser's sole cost
and expense, execute and deliver all documents as the Purchaser may reasonably
request to effect the consummation of such sale, assignment or transfer. The
Seller may not assign its obligations hereunder without the Purchaser's consent
(which consent shall not be unreasonably withheld).
11. This Agreement may be executed in counterparts, each of which
shall be deemed an original agreement, and all of which together shall
constitute one and the same instrument.
12. This Agreement constitutes the entire agreement among the parties
with respect to the matters covered hereby and supersedes all previous written,
oral or implied understandings among them with respect to such matters.
13. This Agreement may only be amended or modified in writing signed
by the party against whom enforcement of such amendment or modification is
sought.
14. Any of the terms or conditions of this Agreement may be waived at
any time by the party or parties entitled to the benefit thereof, but only by a
writing signed by the party or parties waiving such terms or conditions.
15. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, such restriction shall be enforced to the
maximum extent permitted by law.
16. Each of the Purchaser and the Seller acknowledge that this
Agreement has been prepared jointly by the parties hereto, and shall not be
strictly construed against either party.
17. The representations, warranties, covenants, agreements and
indemnities contained herein shall survive the execution, delivery and
performance of this Agreement and all documents to be executed in connection
herewith. This Agreement, including, without limitation, the representations,
warranties, covenants and indemnities contained herein, shall be binding upon
and inure to the benefit of the parties hereto and (subject to Section 10) their
respective successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/ Norman M. Phipps
_________________________
Name: Norman M. Phipps
Title: President
NEWSTART FACTORS, INC.
By: /s/ James Bennett
_________________
Name: James Bennett
Title:
Exhibit 10.12
Agreement of Lease, made as of this 22nd day of April 1997, between RECKSON FS
LIMITED PARTNERSHIP, a partnership having its principal office at 225
Broadhollow Road, Melville, New York 11747 party of the first part, hereinafter
referred to as OWNER, and LOGIMETRICS, INC., with an address of 121-03 Dupont
Street, Plainview, New York 11803 party of the second part, hereinafter referred
to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
approximately 14,000 square feet of space as indicated as cross-hatched on
Exhibit ___ in the building containing approximately 28,000 square feet known as
50 Orville Drive, Bohemia, New York for the term of seven (7) years (or until
such term shall sooner cease and expire as hereinafter provided) to commence as
provided in Paragraph 80 in the Rider annexed hereto, and to end on the 31st day
of July two thousand and four, both dates inclusive, at an annual rental rate of
as set forth in the rider annexed hereto which Tenant agrees to pay in lawful
money of the United States which shall be legal tender in payment of all debts
and dues, public and private, at the time of payment, in equal monthly
installments in advance on the first day of each month during said term
contained therein, if any, at the office of Owner or such other place as Owner
may designate, without any set off or deduction whatsoever, except that Tenant
shall pay the first monthly installment(s) on the execution hereof (unless this
lease be a renewal).
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
1. Occupancy: Tenant shall pay the rent as above and as herein-after
provided.
<PAGE>
2. Use: Tenant shall use and occupy demised premises for assembly,
distribution, light manufacturing and testing of communication and electronic
equipment, uses ancillary thereto and administrative offices associated
therewith, provided such use is in accordance with the Certificate of Occupancy
for the building, if any, and for no other purpose.
3. Alterations: Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent which consent shall not be
unreasonably withheld or delayed. Subject to the prior written consent of Owner,
and in the provisions of this article, Tenant at Tenant's expense, may make
alterations, installations, additions or improvements which are non-structural
and which do not affect utility services or plumbing and electrical lines, in or
to the interior of the demised premises using contractors or mechanics first
approved by Owner. Tenant shall, at its expense, before making any alterations,
additions, installments or improvements obtain all permits, approval and
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Owner. Tenant
agrees to carry and will cause Tenant's contractors and sub-contractors to carry
such workman's compensation, general liability, personal and property damage
insurance as Owner may require. If any mechanic's lien is filed against the
demised premises, or the building of which the same forms a part, for work
claimed to have been done for, materials furnished to, Tenant, whether or not
done pursuant to this article, the same shall be discharged by Tenant within
thirty days thereafter, at Tenant's expense, by filing the bond required by law
or otherwise. All fixtures and all paneling, partitions, [garbled unintelligible
lauguage] and like installations, installed in the premises at any time, either
by Tenant or by Owner on Tenant's behalf, shall, upon installation, become the
property of Owner and shall remain upon and be
<PAGE>
surrendered with the demised premises unless Owner, by notice to Tenant no later
than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed from the demised premises by Tenant
prior to the expiration of the lease, at Tenant's expense. Nothing in this
Article shall be construed to give Owner title to or to prevent Tenant's removal
of trade fixtures, moveable office furniture and equipment, but upon removal of
any such from the premises or upon removal of other installations as may be
required by Owner, Tenant shall immediately and at its expense, repair and
restore the premises to the condition existing prior to installation and repair
any damage to the demised premises or the building due to such removal. All
property permitted or required to be removed, by Tenant at the end of the term
remaining in the premises after Tenant's removal shall be deemed abandoned and
may, at the election of Owner, either be retained as Owner's property or removed
from the premises by Owner, at Tenant's expense.
4. Repairs: Subject to the provisions of Article 50 of the Rider
annexed hereto, Owner shall maintain and repair the exterior of and the public
portions of the building. Tenant shall, throughout the term of this lease, take
good care of the demised premises including the bathrooms and lavatory
facilities the windows and window frames and, the fixtures and appurtenances
therein and at Tenant's sole cost and expense promptly make all repairs thereto
and to the building, whether structural or non-structural in nature, caused by
or resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving
<PAGE>
of Tenant's fixtures, furniture or equipment. All the aforesaid repairs shall be
of quality or class equal to the original work or construction. If Tenant fails,
after ten days notice, to proceed with due diligence to make repairs required to
be made by Tenant, the same may be made by the Owner at the expense of Tenant,
and the expenses thereof incurred by Owner shall be collectible, as additional
rent, after rendition of a bill or statement therefor. If the demised premises
be or become infested with vermin, Tenant shall, at its expense, cause the same
to be exterminated. Tenant shall give Owner prompt notice of any defective
condition in any plumbing, heating system or electrical lines located in the
demised premises and following such notice, Owner shall remedy the condition
with due diligence, but at the expense of Tenant, if repairs are necessitated by
damage or injury attributable to Tenant, Tenant's servants, agents, employees,
invitees or licensees as aforesaid. Except as specifically provided in Article 9
or elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. The provisions of this
Article 4 with respect to the making of repairs shall not apply in the case of
fire or other casualty with regard to which Article 9 hereof shall apply.
5. Window Cleaning: Tenant will not clean nor require, permit,
[garbled unintelligble language] or allow any window in the demised premises to
be cleaned from the outside in violation of Section 202 of the New York State
Labor Law or any other applicable law or of the Rules of the Board of Standards
and Appeals, or of any other Board or body having or asserting jurisdiction.
6. Requirements of Law, Fire Insurance, Floor Loads: Prior to the
commencement of the lease term, if Tenant is then in possession, and at all
times thereafter,
<PAGE>
Tenant shall, at Tenant's sole cost and expense, promptly comply with all
present and future laws, orders and regulations of all state, federal, municipal
and local governments, departments, commissions and boards and any direction of
any public officer pursuant to law, and all orders, rules and regulations of the
New York Board of Fire Underwriters, or the Insurance Services Office, or any
similar body which shall impose any violation, order or duty upon Owner or
Tenant with respect to the demised premises, whether or not arising out of
Tenant's use or manner of use thereof, or, with respect to the building. If
arising out of Tenant's use or manner of use of the demised premises or the
building (including the use permitted under the lease). Except as provided in
Article 30 hereof, nothing herein shall require Tenant to make structural
repairs or alterations unless Tenant has, by its manner of use of the demised
premises or method of operation therein, violated any such laws, ordinances,
orders, rules, regulations or requirements with respect thereto. Tenant shall
not do or permit any act or thing to be done in or to the demised premises which
is contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all the insurance
premiums thereafter paid by Owner which shall
<PAGE>
have been charged because of such failure by Tenant. In any action or proceeding
wherein Owner and Tenant are parties, a schedule or "make-up" or rate for the
building or demised premises issued by a body making the insurance rates
applicable to said premises shall be conclusive evidence of the facts therein
stated and of the several items and charges in the fire insurance rates then
applicable to said premises. Tenant shall not place a load upon any floor of the
demised premises exceeding the floor load per square foot area which it was
designed to carry and which is allowed by law. Owner reserves the right to
prescribe the weight and position of all safes, business machines and mechanical
equipment. Such installations shall be placed and maintained by Tenant, at
Tenant's expense, in settlings sufficient, in Owner's judgment, to absorb and
prevent vibration, noise and annoyance.
7. Subordination: This lease is subject and subordinate to all ground
or underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Owner may request.
8. Property - Loss, Damage, Reimbursement, Indemnity: Owner or its
agents shall not be liable for any damages to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwise, not for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due in the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi-public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled in any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant' agents, contractors, employees, invitees or licensees. Tenant'
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant' expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
9. Destruction, Fire and Other Casualty: (a) If the demised premises
or any part thereof shall be damaged by fire or other casualty, Tenant shall
give immediate notice thereof to Owner and this lease shall continue in full
force and effect except as hereinafter set forth. (b) If the demised premises
are partially damaged or rendered partially unusable by fire or other casualty,
the damages thereto shall be repaired by and at the expense of Owner and the
rent, until
<PAGE>
such repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent shall be proportionately paid up to the
time of the casualty and thenceforth shall cease until the date when the
premises shall have been repaired and restored by Owner, subject to Owner's
right to elect not to restore the same as hereinafter provided. (d) If the
demised premises are tendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, specifying a date for the
expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the date specified in such notice the term of
this lease shall expire as fully and completely as if such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the premises without prejudice however, to Owner'
rights and remedies against Tenant under the lease provisions in effect prior to
such termination, and any rent owing shall be paid up to such date and any
payments of rent made by Tenant which were on account of any period subsequent
to such date shall be returned to Tenant. Unless Owner shall serve a termination
notice as provided for herein, Owner shall make the repairs and restorations
under the conditions of (b) and (c) hereof, with all reasonable expedition,
subject to delays due to adjustment of insurance claims, labor troubles and
causes beyond Owner's control. After any such casualty, Tenant shall cooperate
with Owner's restoration by removing from the premises as promptly as reasonably
possible, all of Tenant's salvageable inventory and movable equipment,
furniture, and other property. Tenant's liability for rent shall resume five (5)
days after written notice from Owner that the premises are substantially ready
for Tenant's occupancy. Tenant
<PAGE>
acknowledges that Owner will not carry insurance on Tenant's furniture and/or
furnishings or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Owner will not be obligated to repair any
damage thereto or replace the same. (f) Tenant hereby waives the provisions of
Section 227 of the Real Property Law and agrees that the provisions of this
article shall govern and control in lieu thereof.
10. Eminent Domain: If the whole or any material part of the demised
premises shall be acquired or condemned by Eminent Domain for any public or
quasi-public use or purpose, then and in that event, the term of this lease
shall cease and terminate from the date of title vesting in such proceeding and
Tenant shall have no claim for the value of any unexpired term of said lease.
12. Electric Current: Rates and conditions in respect to submetering
or rent inclusion, as the case may be, to be added in RIDER attached hereto.
Tenant covenants and agrees that at all times its use of electric current shall
not exceed the capacity of existing [garbled unintelligible language] to the
building or the [garbled unintelligble language] or wiring installation and
Tenant may not use any electrical equipment which, in Owner's opinion,
reasonably exercised, will overload such Installations or interfere with the use
thereof by other tenants of the building. The change at any time of the
character of electric service shall in no wise make Owner liable or responsible
to Tenant, for any loss, damages or expenses which Tenant may sustain.
13. Access to Premises:
Owner or Owner's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building on which Owner may elect to perform in
the premises after Tenant's failure to make repairs or perform any work which
Tenant is obligated
<PAGE>
to perform under this lease, or for the purpose of complying with laws,
regulations and other directions of governmental authorities. Tenant shall
permit Owner to use and maintain and replace pipes and conduits in and through
the demised premises and to erect new pipes and conduits therein provided,
wherever possible, they are within walls or otherwise concealed. Owner may,
during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress not to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchases or mortgagees of the building, and during the last
six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon the premises the
usual notices "To Let" and "For Sale" which notices Tenant shall permit to
remain thereon without molestation. If Tenant is not present to open and permit
an entry into the premises, Owner or Owner's agents may enter the same whenever
such entry may be necessary or permissible by master key or forcibly and
provided reasonable care is exercised to safeguard Tenant's property, such entry
shall not render Owner or its agents liable therefor, nor in any event shall the
obligations of Tenant hereunder be affected. If during the last month of the
term Tenant shall have removed all or substantially all of Tenant's property
therefrom. Owner may immediately enter, alter, renovate or redecorate the
demised premises without limitation or abatement of rent, or incurring liability
to Tenant for any compensation and such act shall have no effect on this lease
or Tenant's obligations hereunder.
14. Vault, Vault Space, Areas: No vaults, vault space or area, whether
or not enclosed or covered, not within the property line of the building is
leased hereunder, anything
<PAGE>
contained in or indicated on any sketch, blue print or plan, or anything
contained elsewhere in this lease to the contrary notwithstanding. Owner makes
no representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or elimination or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant, if used by Tenant,
whether or not specifically leased hereunder.
15. Occupancy: Tenant will not at any time use or occupy the demised
premises in violation of the certificate of occupancy issued for the building of
which the demised premises are a part. Tenant has inspected the premises and
accepts them as is, subject to the riders annexed hereto with respect to Owner's
work, if any. In any event, except as specifically provided elsewhere in this
Lease, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record. If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business, Tenant shall be responsible for and
shall procure and maintain such license or permit.
16. Bankruptcy: (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be canceled by Owner by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the
<PAGE>
debtor; or (2) the making by Tenant of an assignment or any other arrangement
for the benefit of creditors under any state statute. Neither Tenant nor any
person claiming through or under Tenant, or by reason of any statute or order of
court, shall thereafter be entitled to possession of the premises demised but
shall forthwith quit and surrender the premises. If this lease shall be assigned
in accordance with its terms, the provisions of this Article 16 shall be
applicable only to the party then owning Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination
of this lease pursuant to (a) hereof, Owner shall forthwith notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rental reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages in any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be
<PAGE>
proved, whether or not such amount be greater, equal to, or less than the amount
of the difference referred to above.
17. Defaults: (1) If Tenant defaults in fulfilling any of the
covenants of this lease other than the covenants for the payment of rent or
additional rent; or if the demised premises becomes vacant or deserted "or if
this lease be rejected under Section 365 of Title 11 of the U.S. Code
(bankruptcy code);" or if any execution or attachment shall be issued against
Tenant or any of Tenant's property whereupon the demised premises shall be taken
or occupied by someone other than Tenant or if Tenant shall have failed, after
thirty (30) days written notice, to redeposit with Owner any portion of the
security deposited hereunder which Owner has applied to the payment of any rent
and additional rent due and payable hereunder; then in any one or more of such
events, upon Owner serving a written thirty (30) days notice upon Tenant
specifying the nature of said default and upon the expiration of said thirty
(30) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied with said thirty (30) day period, and if
Tenant shall not have diligently commenced during such default within such
thirty (30) day period, and shall not thereafter with reasonable diligence and
in good faith, proceed to remedy or cure such default, then Owner may serve a
written three (3) days' notice of cancellation of this lease upon Tenant, and
upon the expiration of said three (3) days this lease and the term thereunder
shall end and expire as fully and completely as if the expiration of such three
(3) day period were the day herein definitely fixed for the end and expiration
of this lease and the term thereof and Tenant shall then quit and surrender the
demised premises to Owner but Tenant shall remain liable as hereinafter
provided.
<PAGE>
(2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein of any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant demised premises and remove their effects and hold the premises as if
this lease had not been made, and Tenant hereby waives the service of notice of
intention to re-enter or to institute legal proceedings to that end. If Tenant
shall make default hereunder prior to the date fixed as the commencement of any
renewal or extension of this lease, Owner may cancel and terminate such renewal
or extension agreement by written notice.
18. Remedies of Owner and Waiver of Redemption: In case of any such
default, re-entry, expiration and/or dispossess by summary proceedings or
otherwise, (a) the rent, and additional rent, shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, (b) Owner
may re-let the premises or any part or parts thereof, either in the name of
Owner or otherwise, for a term or terms, which may at Owner's option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this lease and may grant concessions or free rent or charge a higher
rental than that in this lease, (c) Tenant or the legal representatives of
Tenant shall also pay Owner as liquidated damages for the failure of Tenant to
observe and perform said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and or covenanted to be paid and the net
amount, if any, of the rents collected on account of the subsequent lease or
leases of the demised premises for each month of the period which would
otherwise have constituted the balance of the term of
<PAGE>
this lease. The failure of Owner to re-let the premises or any part or parts
thereof shall not release or affect Tenant's liability for damages. In computing
such liquidated damages there shall be added to the said deficiency such
expenses as Owner may incur in connection with re-letting such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the demised
premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Owner to
collect the deficiency for any subsequent month by a similar proceeding. Owner,
in putting the demised premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any access, if
any, of such net rents collected over the sum payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in the
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
<PAGE>
19. Fees and Expenses: If Tenant shall default in the observance or
performance of any term or covenant on Tenant's part to be observed or performed
under or by virtue of any of the terms or provisions in any article of this
lease beyond the expiration of all applicable cure periods provided herein for
the cure thereof then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to attorney's fees, in instituting, prosecuting or
defending any action or proceedings, then tenant will reimburse Owner for such
sums so paid or obligations incurred with interest and costs. The foregoing
expenses incurred by reason of Tenant's default shall be deemed to be additional
rent hereunder and shall be paid by Tenant to Owner within five (5) days of
rendition of any bill or statement to Tenant therefor. If Tenant's lease term
shall have expired at the time of making of such expenditures or incurring of
such obligations, such sums shall be recoverable by Owners as damages.
20. Building Alterations and Management: Owner shall have the right at
any time without the same constituting an eviction and without incurring
liability to Tenant therefor to change the arrangement and/or location of public
entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets
or other public parts of the building and to change the name, number or
designation by which the building may be known. There shall be no allowance to
Tenant for diminution of rental value and no liability on the part of Owner by
reason of inconvenience, annoyance or injury to business arising from Owner or
other Tenant making any repairs in the building or any such alterations,
additions and improvements. Furthermore, Tenant shall not have any claim against
Owner by reason of Owner's imposition of any controls of the
<PAGE>
manner of access to the building by Tenant's social or business visitors as the
Owner may deem necessary for the security of the building and its occupants.
Such building alterations shall not materially affect Tenant's rights hereunder
and Owner hereby agrees to use its reasonable efforts to minimize its
interference with the operation of Tenant's business at the demised premises.
21. No Representations by Owners: Except as specifically provided
elsewhere in this Lease, neither Owner nor Owner's agents have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation or any other matter or thing affecting or related
to the demised premises or the building except as herein expressly set forth and
no rights, easements or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in the provisions of this lease. Tenant
has inspected the building and the demised premises and is thoroughly acquainted
with their condition and agrees to take the same "as is" on the date possession
is tendered and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
22. End of Term: Upon the expiration or other termination of the term
of this lease, Tenant shall quit and surrender to Owner the demised premises,
broom clean, in good order and condition, ordinary wear and damages which Tenant
is not required to repair as provided
<PAGE>
elsewhere in this lease excepted, and Tenant shall remove all its property from
the demised premises. Tenant's obligation to observe or perform this covenant
shall survive the expiration or other termination of this lease. If the last day
of the term of this lease or any renewal thereof, falls on Sunday, this lease
shall expire at noon on the preceding Saturday unless it be a legal holiday in
which case it shall expire at noon on the preceding business day.
23. Quiet Enjoyment: Owner covenants and agrees with Tenant that upon
Tenant paying the rent and additional rent and observing and performing all the
terms, covenants and conditions, on Tenant's part to be observed and performed,
Tenant may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 34 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
24. Failure to Give Possession: If Owner is unable to give possession
of the demised premises on the date of the commencement of the term hereof,
because of the holding over or retention of possession of any tenant,
undertenant or occupants or if the demised premises are located in a building
being constructed, because such building has not been sufficiently completed to
make the premises ready for occupancy or because of the fact that a certificate
of occupancy has not been procured or if Owner has not completed any work
required to be performed by Owner, or for any other reason, Owner shall not be
subject to any liability for failure to give possession on said date and the
validity of the lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for
Owner's inability to obtain possession or complete any work required) until
after Owner shall have given Tenant notice that the premises are substantially
ready for Tenant's occupancy. If permission is given to
<PAGE>
Tenant to enter into the possession of the demised premises or to occupy
premises other than the demised premises prior to the date specified in the
commencement of the term of this lease. Tenant covenants and agrees that such
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this lease, except as to the covenant to pay rent. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 233-a of the New York Real Property Law.
25. No Waiver: The failure of Owner to seek redress for violation of,
or to insist upon the strict performance of any covenant or condition of this
lease or of any of the Rules or Regulations, set forth or hereafter adopted by
Owner, shall not prevent a subsequent net which would have originally
constituted a violation from having all the force and effect of an original
violation. The receipt by Owner of rent with knowledge of the breach of any
covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. All checks tendered to Owner
as and for the rent of the demised premises shall be deemed payments for the
account of Tenant. Acceptance by Owner of rent from anyone other than Tenant
shall not be deemed to operate as an attornment to Owner by the payer of such
rent or as a consent by Owner to an assignment or subletting by Tenant of the
demised premises to such payer, or as a modification of the provisions of this
lease. No act or thing done by Owner or Owner's agents during the term hereby
demised shall be deemed an
<PAGE>
acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Owner. No employee of Owner
or Owner's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
premises.
26. Waiver of Trial by Jury: It is mutually agreed by and between
Owner and Tenant that the respective parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other (except for personal injury or property
damage) on any matters whatsoever arising out of or in any way connected with
this lease, the relationship of Owner and Tenant, Tenant's use of or occupancy
of said premises, and any emergency statutory or any other statutory remedy. It
is further mutually agreed that in the event Owner commences any summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding.
27. Inability to Perform: This lease and the obligation of Tenant to
pay rent hereunder and perform all of the other covenants and agreements
hereunder on part of Tenant to be performed shall in no wise be affected,
impaired or excused because Owner is unable to fulfill any of its obligations
under this lease or to supply or is delayed in supplying any service expressly
or impliedly to be supplied or is unable to make, or is delayed in making any
repair, additions, alterations or decorations or is unable to supply or is
delayed in supplying any equipment or fixtures if Owner is prevented or delayed
from so doing by reason of strike or labor troubles or any cause whatsoever
beyond Owner's sole control including, but not limited to, government preemption
in connection with a National Emergency or by reason of any rule, order or
regulation
<PAGE>
of any department or subdivision thereof of any government agency or by reason
of the conditions of supply and demand which have been or are affected by war or
other emergency.
28. Bills and Notices: Except as otherwise in this lease provided, a
bill, statement, notice or communication which Owner may desire or be required
to give to Tenant, shall be deemed sufficiently given or rendered it, in
writing, delivered to Tenant personally or sent by registered or certified mail
addressed to Tenant at the building of which the demised premises form a part or
at the last known residence address or business address of Tenant or left at any
of the aforesaid premises addressed to Tenant, and the time of the rendition of
such bill or statement and the giving of such notice or communication shall be
deemed to be the time when the same is delivered to Tenant, mailed, or left at
the premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
29. Water Charges: If Tenant requires, uses or consumes water for any
purpose in addition to ordinary lavatory purposes (of which fact Tenant
constitutes Owner to be the sole judge) Owner may install a water meter and
thereby measure Tenant's water consumption for all purposes. Tenant shall pay
owner for the cost of the meter and the cost of the installation, thereof and
throughout the duration of Tenant's occupancy Tenant shall keep said meter and
installation equipment in good working order and repair at Tenant's own cost and
expense in default of which Owner may cause such meter and equipment to be
replaced or repaired and collect the cost thereof from Tenant, as additional
rent. Tenant agrees to pay for water consumed, as shown on said meter as and
when bills are rendered, and on default in making such payment Owner may pay
such charges and collect the same from Tenant, as additional rent. Tenant
covenants and agrees to pay, as additional rent, the sewer rent, charge or any
other tax,
<PAGE>
rent, levy or charge which now or hereafter is assessed, imposed or a lien upon
the demised premises or the realty of which they are part pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system. If the building or the demised premises or any part thereof is supplied
with water through a meter through which water is also supplied to other
premises Tenant shall pay to Owner, as additional rent, on the first day of each
month Tenant's Proportionate Share (hereinafter defined) % ($ ) of the total
meter charges as Tenant's portion. Independently of and in addition to any of
the remedies reserved to Owner hereinabove or elsewhere in this lease, Owner may
sue for and collect any monies to be paid by Tenant or paid by Owner for any of
the reasons or purposes hereinabove set forth. Notwithstanding anything
contained herein to the contrary, Tenant shall not be obligated to pay for any
additional costs incurred in the event any other tenant uses the building water
supply for non-lavatory purposes.
30. Sprinklers: Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the New York Fire
Insurance Exchange or any bureau, department or official of the federal, state
or city government recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or additional sprinkler heads
or other equipment be made or supplied in an existing sprinkler system by reason
of Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, modifications, alterations, additional sprinkler
heads or other such equipment, become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be
<PAGE>
structural or non-structural in nature. Tenant shall pay to Owner as additional
rent the sum of Tenant's Proportionate Share on the first day of each month
during the term of this lease, as Tenant's portion of the contract price for
sprinkler supervisory service.
33. Captions: The Captions are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this lease nor the intent of any provision thereof.
34. Definitions: The term "Owner" as used in this lease means only the
owner of the fee or of the leasehold of the building, or the mortgagee in
possession, for the time being of the land and building (or the owner of a lease
of the building or of the land and building) of which the demised premises form
a part, so that in the event of any sale or sales of said land and building or
of said lease, or in the event of a lease of said building, or of the land and
building, the said Owner shall be and hereby is entirely freed and relieved of
all covenants and obligations of Owner hereunder, and it shall be deemed and
construed without further agreement between the parties or their successors in
interest, or between the parties and the purchaser, at any such sale, or the
said lessee of the building, or of the land and building, that the purchaser or
the lessee of the building has assumed and agreed to carry out any and all
covenants and obligations of Owner hereunder. The words "re-enter" and
"re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "rent" includes the annual rental rate whether so-expressed or
expressed in monthly installments, and "additional rent." "Additional rent"
means all sums which shall be due to new Owner from Tenant under this lease in
addition to the annual rental rate. The term "business days" as used in this
lease, shall exclude Saturdays (except such portion thereof as is covered by
specific hours in Article 31 hereof), Sundays and all days observed by the State
or Federal Government as legal holidays and those designated as holidays by the
applicable building service
<PAGE>
union employees service contract or by the applicable Operating Engineers
contract with respect to IIVAC service.
35. Adjacent Excavation: If an excavation shall be made upon land
adjacent to the demised premises, or shall be authorized to be Sharing: made,
Tenant shall afford to the person causing or authorized to cause such
excavation, license to enter upon the demised premises for the purpose of doing
such work as said person shall deem necessary to preserve the wall or the
building of which demised premises form a part from injury or damage and in
support the same by proper foundations without any claim for damages or
indemnity against Owner, or diminution or abatement of rent.
36. Rules and Regulations: Tenant and Tenant's servants, employees,
agents, visitors, and licensees shall observe faithfully, and comply strictly
with, the Rules and Regulations annexed hereto and such other and further
reasonable Rules and Regulations as Owner or Owner's agents may from time to
time adopt. Notice of any additional rules or regulations shall be given in such
manner as Owner may elect. In case Tenant disputes the reasonableness of any
additional Rule or Regulation hereafter made or adopted by Owner or Owner's
agents, the parties hereto agree to submit the question of the reasonableness of
such Rule or Regulation for decision to the New York office of the American
Arbitration Association, whose determination shall be final and conclusive upon
the parties hereto. The right to dispute the reasonableness of any additional
Rule or Regulation upon Tenant's part shall be deemed waived unless the same
shall be asserted by service of a notice, in writing upon Owner within ten (10)
days after the giving of notice thereof. Nothing in this lease contained shall
be construed to impose upon Owner any duty or obligation to enforce the Rules
and Regulations or terms, covenants or conditions in any other lease, as against
any other tenant and Owner shall not be liable to Tenant for violation of the
same
<PAGE>
by any other tenant, its servants, employees, agents, visitors or licensees.
Landlord hereby agrees not to enforce the provisions of any rules and
regulations in a manner which discriminates against Tenant.
37. Glass: Owner shall replace, at the expense of the Tenant, any and
all plate and other glass damaged or broken from any cause whatsoever in and
about the demised premises. Owner may insure, and keep insured, at Tenant's
expense, all plate and other glass in the demised premises for and in the name
of Owner. Bills for the premiums therefor shall be rendered by Owner to Tenant
at such times as Owner may elect, and shall be due from, and payable by, Tenant
when rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
38. Estoppel Certificate: Either party at any time, and from time to
time, upon at least 10 days' prior notice by the other party shall execute,
acknowledge and deliver to such party, and/or to any other person, firm or
corporation specified by such party, a statement certifying that this lease is
unmodified in full force and effect (or if there have been modifications, that
the same is in full force and effect as modified and stating the modifications),
stating the dates in which the rent and additional rent have been paid, and
stating whether or not there exists any default by such party under this Lease,
and, if so, specifying each such default.
39. Directory Board Listing: If, at the request of and as
accommodation to Tenant, Owner shall place upon the directory board in the lobby
of the building, one or more names of persons other than Tenant, such directory
board listing shall not be construed at the consent by Owner to an assignment or
subletting by Tenant to such person or persons.
40. Successors and Assigns: The covenants, conditions and agreements
contained in this lease shall bind and inure to the benefit of Owner and Tenant
and their respective heirs, distributees, executors, administrators, successors,
and except as otherwise provided in this lease, their assigns.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
RECKSON FS LIMITED PARTNERSHIP
Witness for Owner: By: RECKSON FS INC.,
it general partner
______________________________ By:/s/Mitchell Reckler (L.S.)
_______________________________
Mitchell Reckler
Witness for Tenant: LOGIMETRICS, INC.
______________________________ By:/s/Russell Reardon (L.S.)
_______________________________
Russell Reardon
<PAGE>
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this _________ day of ______________________, 19__, before me
personally came to me known, who being by me duly sworn, did depose and say that
he resides
in
that he is the _________________________ of
the corporation described in and which executed the foregoing instrument, as
TENANT: that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
___________________________________
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this ___________ day of ___________________________, 19__, before
me
personally came
to me known and known to me to be the individual described in and who, as
TENANT, executed the foregoing instrument and acknowledged to me that ________
he executed the same.
__________________________________
<PAGE>
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and slideguards.
2. The water and wash closets and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any
<PAGE>
way with other Tenants or those having business therein, nor shall any animals
or birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tables shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
No Tenant shall lay linoleum, or other similar floor covering, so that
the same shall come in direct contact with the floor of the demised premises,
and, if linoleum or other similar floor covering is desired to be used [garbled
unintelligble language] of builders deadening felt shall be first affixed to the
floor, by a paste or other material, soluble in water, the use of cement or
other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
12. Tenant shall not bring or permit to be brought or kept in or on
the demised premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.
<PAGE>
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
<PAGE>
RIDER TO LEASE dated April 22, 1997 between RECKSON FS LIMITED PARTNERSHIP, as
Owner, and LOGIMETRICS, INC., as Tenant
41. This lease shall not be recorded. No memorandum of this lease shall be
recorded without the express written consent of Owner.
42. The invalidity or unenforceability of any portion of this lease shall in no
way affect the validity or enforceability of any of the provisions
contained in this lease.
43. There are no oral agreements between the parties hereto affecting this
lease and this lease supersedes and cancels any and all previous
representations, negotiations, arrangements and understandings, if any,
between the parties hereto with respect to the subject matter hereof, and
shall not be used to interpret or construe this lease.
44. Tenant shall furnish and pay for, at its sole cost and expense, all
utilities supplied to the demised premises by any utility company, whether
public or private, including but not limited to gas, electricity and
telephone. Water shall be provided to the demised premises through a common
meter but Tenant shall pay for the cost thereof pursuant to Article 66
below.
45. With respect to all work performed by or on behalf of Tenant in the demised
premises, Tenant will deliver to the Owner certificates evidencing Worker's
Compensation Insurance and Contractor's General Liability Insurance in the
amounts set forth in Paragraph 75(a) herein.
46. It is understood and agreed that in the event that sewer lines are
installed or brought to the building of which the demised premises forms a
part, the Owner shall have no obligation to connect the demised premises to
such sewer lines; however, the Tenant may, at its own cost and expense,
connect to such sewer lines. In the event the Owner is required to connect
the building to such sewer lines, Tenant shall bear Tenant's Proportionate
Share (as hereinafter defined) of all costs and expenses incurred by the
Owner, directly or indirectly, in connection with the Owner's compliance
with such requirement. Notwithstanding the foregoing, if Owner is required
to connect the building to sewer lines during the term or any renewal term
hereunder, Tenant shall only pay for one-fifteenth (1/15) of the cost of
such sewer installation, as such installation would be capitalized in
accordance with GAAP. As of the date hereof, Owner has not received any
written notice that it is required to connect the building to any sewer
lines.
47. Wherever in this lease there is any conflict between the provisions of any
of the printed portions of the lease and the typewritten portions of the
lease, the typewritten provisions shall be deemed to supersede the printed
provisions.
48. Tenant shall pay to Owner, as additional rent, Tenant's Proportionate Share
of Owner's charges for providing sprinkler fireline service. For purposes
of this Lease, the term
<PAGE>
"Tenant's Proportionate Share" shall mean fifty (50) percent, as the same
may be amended from time to time based upon the formula set forth in
Paragraph 51(c) hereof.
49. Any references in the printed portions of this lease to the City of New
York and the Administrative Code of the City of New York are deemed
deleted, and where applicable the town in which the demised premises is
located and other local governmental authorities and their ordinances shall
be substituted in lieu thereof.
50. During the full term of this lease, Owner shall make all structural repairs
to the demised premises except those which shall have been occasioned by
the acts of omission or commission of Tenant, its agents, employees or
invitees. Structural repairs are hereby defined to be repairs to the roof,
foundation footings, the bearing walls, foundation and the structural
steel. Except as aforesaid, Tenant shall, at its own cost and expense, keep
the demised premises in good condition, repair and appearance at all times
throughout the term of this lease including the electrical, heating,
plumbing, sprinkler and air-conditioning facilities exclusively servicing
the demised premises. Except as set forth elsewhere in this lease, Owner
shall be responsible for all electrical, heating, plumbing, sprinkler and
air-conditioning facilities servicing the building except for facilities
exclusively servicing the demised premises. Tenant shall at all times
obtain and keep in full force and effect for the benefit of Owner and
Tenant with a responsible company doing business in Suffolk County a
service repair and maintenance contract with respect to the heating,
ventilating and air-conditioning systems servicing the demised premises. A
copy of such contract and renewals thereof shall upon issuance and
thereafter not later than ten (10) days prior to expiration be furnished to
Owner together with evidence of payment. Owner represents and warrants to
Tenant that the demised premises and the electrical, heating, plumbing,
sprinkler, cesspool and air-conditioning facilities in or serving the
demised premises shall be in good working order and condition as of the
Term Commencement Date and, in connection with the HVAC system only, the
same shall be in good working order for one (1) year after the Term
Commencement Date. Owner shall, at Tenant's sole cost and expense, pump out
the cesspool as and when required. Tenant shall be responsible for the
entire cost and expense incurred in connection with Owner pumping out the
cesspool for as long as Tenant remains the only tenant in the building. In
the event there are other tenants occupying space in the building, Tenant
shall be responsible for Tenant's Proportionate Share of such cost and
expense.
51. If, in any year during the term of this lease or any renewal, extension or
modification thereof, real estate taxes (as hereinafter defined) shall
increase over and above Owner's basic tax liability (as hereinafter
defined), Tenant covenants and agrees to pay Tenant's Proportionate Share
of such increase as additional rental, on the rental installment date
immediately following receipt of "Owner's Statement" (hereinafter defined).
(a) The term "real estate taxes" shall be deemed to mean all taxes and
assessments, special or otherwise, assessed upon or with respect to the
ownership and all other taxable interests in the land and improvements
thereon of which the demised premises are part, imposed by Federal, State
or local governmental authority or any other taxing authority having
<PAGE>
jurisdiction over Owner's tax lot or lots, but shall not include income,
intangible, franchise, capital stock, estate or inheritance taxes, or taxes
based upon the receipt of rentals (unless the same shall be in lieu of
"real estate taxes" as herein defined by whatever name the tax may be
designated).
(b) "Owner's basic tax liability" shall be a sum equal to the lesser of the
amount of taxes as assessed or the said taxes as reduced by appropriate
proceedings, against the land, buildings and improvements of which the
demised premises are part in the tax year 1996/97, excluding, however,
taxes for special assessments for local improvements not located on
property owned by Owner.
(c) "Formula" -
Tenant's total
square footage x Increase = Tenant's share of increase (50%)
Total square footage
of building
(d) "Owner's Statement" shall be that written statement which Owner may at
any time deliver to Tenant containing a computation of the increase above
Owner's basic tax liability and the amount of Tenant's proportionate share
thereof. Upon Tenant's written request, Owner shall provide Tenant with a
copy of the applicable tax bill with Owner's delivery of Owner's Statement.
The failure of Owner to deliver an Owner's Statement as provided above
shall not prejudice nor waive the right of Owner to deliver such statement
for any subsequent tax year, nor from including in said statement, as
additional rental, Tenant's Proportionate Share of any increase for any
year in which no Owner's Statement was delivered to Tenant, but for which
Tenant was otherwise obligated to pay such additional rental. In the event
Owners basic tax liability is reduced as a result of any appropriate
proceeding, Owner shall have the right to adjust the amount of additional
rental hereunder to reflect the new basic tax liability of the Owner, and
Tenant agrees to pay the amount of said adjustment on the next rent
installment day immediately following receipt of a written statement from
Owner setting forth the amount of said adjustment. In no event shall the
base year taxes be less than $44,821.80. Further, in no event shall the
rent due hereunder be reduced as a result of a reduction in the real estate
taxes assessed against the land and the improvements thereon of which the
demised premises forms a part.
(e) With respect to any period at the expiration of the term of this lease
which shall constitute a partial tax year, Owner's Statement shall
apportion the amount of the additional rental due hereunder. The obligation
of Tenant in respect of such additional rental applicable for the last year
of the term of this lease or part thereof shall survive the expiration of
the term and any renewal term of this lease; provided, however, that if
Owner fails to render such Owner's Statement within three (3) years
following the end of any term or renewal term hereunder, no payment of
Tenant's Proportionate Share of real estate taxes shall be due for such tax
year.
<PAGE>
(f) Tenant shall not, without Owner's prior written consent, institute or
maintain any action, proceeding or application in any court or body or with
any governmental authority for the purpose of changing the real estate
taxes. However, if Owner has failed to commence such a proceeding by the
thirtieth (30th) day prior to the final date to file challenges for the tax
year in question and Owner has not provided to Tenant in writing upon
Tenant's written request a reasonable justification for not doing so prior
to such thirtieth (30th) day, then Tenant shall be permitted to commence
such a proceeding for the tax year in question at Tenant's sole cost and
expense and upon prior notice to Owner. In the event Tenant commences such
a proceeding as permitted by this Paragraph, Tenant shall furnish Owner
with copies of all documents delivered and received by or on behalf of
Tenant in connection with said proceeding. Owner agrees to cooperate with
Tenant in commencing such a proceeding in Owner's name and to execute any
documentation reasonably requested by Tenant in connection with said
proceeding. In the event any such action initiated by Owner or Tenant is
successful, then Tenant shall receive, or have credited against its rent
thereafter due (at Owner's option), or, following termination of or
expiration of this Lease (provided such termination is not a result of
Tenant's uncured default hereunder), Owner shall reimburse Tenant for any
tax refund or credit obtained thereby to the extent said real estate taxes
were actually paid by Tenant (after reimbursement to the appropriate party
for reasonable legal fees and other customary out of pocket expenses).
52. If any increase in real estate taxes shall be due to improvements made or
performed by or on behalf of Tenant, such increases shall be paid in full
by Tenant without apportionment.
53. At the request of Owner, Tenant agrees to furnish Owner with a current
financial statement prepared by a certified public accountant or such other
financial information regarding Tenant which is available to the public.
54. The acceptance of rent from any person, association, partnership or
corporation other than the Tenant herein named, shall in no way be deemed
to establish a tenancy with said person, association, partnership or
corporation for making such payment, and shall in no way be deemed to
relieve the Tenant from any and all obligations hereunder.
55. The mailing or delivery of a lease by the Owner to a possible Tenant, its
agent or attorney, shall not be deemed an offer nor shall any obligation or
liability be created on the part of Owner until such time as a lease, duly
executed by the Owner, is delivered to such possible Tenant, its agent or
attorney.
56. Tenant agrees to pay, as additional rent, Tenant's Proportionate Share of
Owner's cost of maintenance and repair of the landscaped and parking areas
which are used in common by all of the tenants of the building, including,
without limitation, snow and ice removal and the cost of the maintenance
and upkeep of the water drainage systems and landscape maintenance. Owner
shall provide the foregoing services throughout the term and any renewal
term hereunder.
<PAGE>
57. If an institution furnishing a mortgage loan on the demised premises or the
building shall require a change or changes in this lease as a condition of
such financing and if Tenant should refuse to agree thereto, then Owner may
terminate this lease at any time, provided such changes shall not
substantially alter the obligations of Tenant or impose on Tenant any
conditions more burdensome than as otherwise exist hereunder (such as an
increase in any monetary obligation of Tenant hereunder or a modification
of the term or any of Tenant's option or offer rights hereunder).
58. Tenant covenants that the demised premises will not be used so as to
interfere with other tenants in the building. Tenant also covenants that no
noise or noxious fumes or odors will be created by Tenant so as to
interfere with the quiet enjoyment of the other tenants of their respective
demised portions of the building.
59. Tenant shall not obstruct or encumber, nor cause to be obstructed or
encumbered, the sidewalks, area ways or other public portions of the
building of which the demised premises forms a part, including, without
limitation, the parking area, driveways and access areas adjacent to the
demised premises and used in conjunction therewith and adjacent to the
building; nor shall Tenant use same nor permit same to be used for any
purpose other than ingress and egress to and from the demised premises.
However, Tenant may use the loading area for loading and unloading.
60. In the event Tenant does not vacate the demised premises upon the
expiration date of this lease, or upon the expiration of any option period
(whether such expiration date shall be the expiration date provided
hereunder or the date of the termination of this lease as provided
hereunder), then and in that event Tenant shall remain as a month to month
Tenant at the monthly rental of one hundred seventy-five (175%) percent of
the rent payable by Tenant for the third month prior to the Expiration Date
(hereinafter defined) in addition to the escalations or additional rent
payable pursuant to the terms of this lease.
61. It is agreed that Owner shall do certain work in and to the demised
premises at Owner's cost and expense prior to the commencement of the lease
term herein. Said items are set forth in Schedule "A" annexed hereto and
made a part hereof. Except for Owner's work, Tenant agrees to accept the
demised premises in its "as is" condition.
Notwithstanding anything contained in this lease to the contrary, subject
to such circumstances set forth in Article 27 hereof and subject further to
the provisions of this Article, Owner hereby agrees to substantially
complete the demised premises by the date which is sixty-three (63) days
from the date that this lease is fully and unconditionally executed by both
Owner and Tenant (the "SC Date"). "Substantially complete" as used herein
is defined to mean when the only items to be completed are those which do
not interfere with the Tenant's occupancy and substantially full enjoyment
of the demised premises; but if Owner shall be delayed in such "substantial
completion" as a result of (a) Tenant's failure to furnish plans and
specifications; (b) Tenant's request for materials, finishes or
installations other than Owner's standard; (c) Tenant's changes in said
plans; (d) the performance or completion of any work, labor or services by
a party employed by
<PAGE>
Tenant; or (e) Tenant's failure to approve final plans or working drawings;
then the Rent Commencement Date (as hereinafter defined) shall be
accelerated by the number of days of such delay.
If Owner does not substantially complete the demised premises by the SC
Date, subject to such circumstances set forth in Article 27 hereof and
subject further to the provisions of this Article, Tenant shall receive, as
its sole and exclusive remedy, a rent credit of $354.00 per day for each
day thereafter until the date Owner substantially completes the demised
premises. In addition, if Owner does not substantially complete the demised
premises by the date which is one hundred and fifty (150) days from the
date that this lease is fully and unconditionally executed by both Owner
and Tenant, Tenant shall have, as its sole and exclusive remedy, the right
to terminate this lease upon its delivery of written notice thereof to
Owner by the date which is one hundred and sixty (160) days from the date
that this lease is fully and unconditionally executed by both Owner and
Tenant.
62. Tenant covenants that it shall not assign this lease nor sublet the demised
premises or any part thereof without the prior written consent of Owner in
each instance, which consent shall not be unreasonably withheld or delayed,
except on the conditions hereinafter stated. Tenant may assign this lease
or sublet the demised premises with Owner's written consent provided:
(a) That such assignment or sublease is for a use which is in compliance
with the then existing zoning regulations and the certificate of occupancy
for the building;
(b) That at the time of such assignment or subletting, there is no default
under the terms of this lease on Tenant's part which has not been cured
prior to the expiration of all applicable grace periods;
(c) That in the event of an assignment, the assignee assume in writing the
performance of all of the terms and obligations to be performed by Tenant
under this lease from and after the date of such assignment;
(d) That a duplicate original of said assignment or sublease be delivered
by certified mail to Owner at the address herein set forth within ten (10)
days from the said assignment or sublease;
(e) That, in the event Tenant shall request Owner's consent to a proposed
assignment of this lease or proposed sublease of all or a portion of the
Demised Premises, Tenant shall pay or reimburse to Owner the reasonable
attorney fees incurred by Owner in processing such request (not to exceed
one thousand ($1,000.00) dollars).
(f) Such assignment or subletting shall not, however, release Tenant from
its liability for the full and faithful performance of all of the terms and
conditions of this lease;
<PAGE>
(g) If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may,
after default by Tenant, collect rent and additional rent from the
assignee, undertenant or occupant, and apply the net amount collected to
the rent and additional rent herein reserved;
(h) Notwithstanding anything contained in this Article 62 to the contrary,
no assignment or underletting shall be made by Tenant in any event until
Tenant has offered to terminate this lease as of the last day of any
calendar month during the term hereof and to vacate and surrender the
demised premises to Owner on the date fixed in the notice served by Tenant
upon Owner (which date shall be prior to the date of such proposed
assignment or the commencement date of such proposed sublease), and Owner,
within thirty (30) days after the receipt thereof, has not accepted in
writing the offer by Tenant to cancel and terminate this lease and to
vacate and surrender the demised premises. The provisions of this Article
62(h) shall not apply with respect to a sublease of the demised premises
for less than 1,400 square feet of space (an "Acceptable Sublease"). Owner
shall have no obligation whatsoever to alter the demised premises
(including, without limitation, the alteration of the bathrooms, utility
meters, entrances and corridors) in connection with an Acceptable Sublease.
(i) The provisions of the foregoing Paragraph 62(h) shall be inapplicable
and Owner's consent shall not be required as to any assignment or
subletting to any corporation which is a successor to Tenant by merger or
consolidation, or is the parent or a wholly owned subsidiary of Tenant or
such successor corporation, or as part of a bona fide sale or other
conveyance by Tenant of its entire business as a going concern or of all or
substantially all of its assets or to Tenant's shareholders in liquidation
or dissolution.
(j) Without affecting any of its other obligations under this lease, except
with respect to any permitted assignment or subletting under subparagraph
62(i) above, Tenant will pay Owner as additional rent any sums or other
economic consideration, which (i) are actually received by Tenant as a
result of an assignment or subletting whether or not referred to as rentals
under the assignment or sublease (after deducting therefrom the reasonable
costs and expenses incurred by Tenant in connection with the assignment or
subletting in question provided such costs were approved in writing by
Owner when it approved the assignment or sublease); and (ii) exceed in
total the sums which Tenant is obligated to pay Owner under this Lease
(prorated to reflect obligations allocable to that portion of the demised
premises subject to such assignment or sublease), it being the express
intention of the parties that Tenant shall not be in any manner whatsoever
be entitled to any profit by reason of such sublease or assignment. The
failure or inability of the assignee or subtenant to pay rent pursuant to
the assignment or sublease will not relieve Tenant from its obligations to
Owner under this Paragraph. Tenant will not amend the assignment or
sublease in such a way as to reduce or delay payment of amounts which are
provided in the assignment or sublease approved by Owner.
(k) Owner agrees that it shall not unreasonably withhold its consent to a
subletting or assignment in accordance with the terms of this Paragraph 62.
In determining reasonableness, there shall be taken into account the
character and reputation of the proposed subtenant or assignee, the
specific nature of the proposed subtenant's or assignee's business and
whether same is in keeping with other tenancies in the building; the
financial standing of the
<PAGE>
proposed subtenant or assignee; and the impact of all of the foregoing upon
the building and the other tenants of Owner therein. Owner shall not be
deemed to have unreasonably withheld its consent if it refuses to consent
to a subletting or assignment to an existing tenant in any building in the
Bohemia area which is owned by Owner or its affiliate or to a proposed
subtenant or assignee with whom Owner is negotiating a lease or if at the
time of Tenant's request, Tenant is in default, beyond applicable grace and
notice periods provided herein for the cure thereof, of any of the terms,
covenants and conditions of this lease to be performed by Tenant. At least
thirty (30) days prior to any proposed subletting or assignment, Tenant
shall submit to Owner a written notice of the proposed subletting or
assignment, which notice shall contain or be accompanied by the following
information:
(i) the name and address of the proposed subtenant or assignee;
(ii) the nature and character of the business of the proposed
subtenant or assignee and its proposed use of the premises to be demised;
(iii) the most recent three (3) years of balance sheets and profit and
loss statements of the proposed subtenant or assignee, if available to Tenant,
or other financial information satisfactory to Owner; and
(iv) such shall be accompanied by a copy of the proposed sublease or
assignment of lease.
63. Tenant shall have the right to use fifty (50) percent of the parking spaces
allocated to the building. The parking areas available for the use of the
Tenant herein and the other tenants of the building of which the demised
premises form a part are to be used by Tenant, its servants, employees,
agents, business invitees and patrons subject to the reasonable rules and
regulations of Owner and it is also understood and agreed that Owner shall
have the right at any time to modify or alter the parking layout and
traffic pattern in the parking areas and to diminish the available parking
areas without any liability to Tenant or any diminution or abatement of
rent or additional rent, provided the same is required by any governmental
body or agency having jurisdiction thereof and provided the available
parking areas are diminished only by a de minimis amount.
64. All janitorial work at the demised premises shall be done at the cost and
expense of Tenant. Tenant shall provide for its own trash, rubbish and
garbage removal at its own expense and all rubbish, trash and garbage shall
be kept at the demised premises subject to the rules and regulations of the
appropriate municipal authorities having jurisdiction thereof, and shall at
all times be kept in closed containers and inside the demised premises
except when necessary for the removal therefrom by the trash and garbage
removal company. Tenant shall be permitted to maintain a dumpster for
garbage removal outside the two (2) doors located in the rear of the
building.
<PAGE>
65. Paragraph 32 of the printed portion of this lease is hereby deleted.
66. Tenant shall pay, as additional rent, Tenant's Proportionate Share of
Owner's cost for water consumed in the building. Tenant shall not use water
for other than normal lavatory purposes.
67. Supplementing Article 3 of the preprinted portion of this lease, any and
all alterations, installations, additions and improvements to the demised
premises and any and all structures or fixtures, except movable trade
fixtures not attached to the realty, installed by or on behalf of Tenant
which shall attach to the realty shall be deemed attached to the freehold
and automatically become the property of Owner upon installation, unless
Owner shall elect otherwise, which election shall be made by giving notice
to Tenant not less than thirty (30) days prior to the expiration or other
termination of this lease. If Owner elects to have Tenant remove same,
Tenant shall do so and repair, at its own cost and expense, any damage to
the demised premises caused by said removal. All alterations,
installations, additions and improvements made to the demised premises,
which, in each instance costs more than $5,000.00, shall be subject to
Owner's supervisory fee of 10% of the cost thereof. There shall be no
supervisory fee due in connection with any construction performed in
initially preparing the demised premises for Tenant's occupancy. In
receiving such fee, Owner assumes no responsibility for the quality or
manner in which such work is performed.
68. Tenant shall indemnify and hold Owner harmless against any and all claims,
suits, damages or causes of action for damages and from and against any
orders or decrees or judgments which may be entered in any suit brought for
damages or alleged damages resulting from any injury to person and/or
property or loss of life sustained in and about the demised premises,
including the violation of any Environmental Law (hereinafter defined)
during the term hereby demised, and from any and all fines that may be
imposed by reason of any violations noted or issued by, any municipal
department or other governmental bureau or agency having jurisdiction, and
from any and all legal fees and other charges to which the Owner may be put
in defending the same.
69. Tenant shall, at is own cost and expense, procure all necessary
certificates, permits, orders or licenses which may be required for the
conduct of its business by any governmental statute, regulation, ordinance
or agency and that all governmental requirements relating to the use or
uses of the demised premises by the Tenant shall be complied with by the
Tenant at its own cost and expense. Notwithstanding the provisions of
Paragraph 6 or this Paragraph 69, it is understood and agreed that Owner
shall deliver the demised premises to Tenant in compliance with all
applicable laws, rules and regulations. Owner shall, at its own cost and
expense, procure all necessary certificates, permits, orders, or licenses
which may be required for the performance of Owner's Work or for the
occupancy of the demised premises by Tenant, except for any certificates,
permits, orders, or licenses which may be necessitated because of Tenant's
particular use of the demised premises, as opposed to the general uses
permitted under this Lease.
<PAGE>
70. In any case in which the rent or additional rent is not paid within ten
(10) days of the day when same is due, Tenant shall pay a late charge equal
to 5 cents for each dollar so due, and in addition thereto, the sum of
$100.00 for the purpose of defraying expenses incident to the handling of
such delinquent account. Tenant further agrees that the late charge imposed
is fair and reasonable, complies with all laws, regulations and statutes,
and constitutes an agreement between Owner and Tenant as to the estimated
compensation for costs and administrative expenses incurred by Owner due to
the late payment of rent by Tenant. Tenant further agrees that the late
charge assessed pursuant to this lease is not interest, and the late charge
does not create a borrower/lender or borrower/creditor relationship between
Owner and Tenant. The demand and collection of the aforesaid late charges
shall in no way be deemed a waiver of any and all remedies that the Owner
may have under the terms of this lease by summary proceedings or otherwise
in the event of a default in payment of rent or additional rent.
71. Tenant shall cause each insurance policy carried by it and insuring its
fixtures and contents, or the betterments and improvements made by Tenant,
against loss by fire and other hazards to be written in a manner so as to
provide that the insurer waives all right of recovery by way of subrogation
against Owner in connection with any loss or damage covered by any such
policy or policies. Owner shall not be liable to the Tenant for any loss or
damage caused by fire or other hazards. If Tenant cannot obtain such waiver
of subrogation provision, or if same is obtainable only by the payment of
an additional premium, Tenant shall notify Owner of such fact and Owner
shall have a period of ten (10) days from the receipt of such notice to
either (a) place such insurance in companies which will carry such
insurance with waiver of subrogation against Owner and which are reasonably
acceptable to Tenant or (b) agree to pay such additional premium if such
subrogation waiver is obtainable at an additional cost, or (c) require
Tenant to name Owner as an additional insured.
72. Owner will cause each insurance policy carried by Owner and insuring the
building and demised premises against loss by fire and other hazards to be
written in such a manner so as to provide that the insurer waives all right
of recovery by way of subrogation against Tenant in connection with any
loss or damage covered by such policy or policies. Tenant shall not be
liable to Owner for any loss or damage caused by fire or other hazard. If
Owner cannot obtain such waiver of subrogation provision or if same is
obtainable only by payment of an additional premium, Owner shall notify
Tenant of such fact and Tenant shall have a period of ten (10) days from
the receipt of such notice to either (a) place such insurance in companies
which will carry such insurance with waiver of such subrogation against
Tenant and which are reasonably acceptable to Owner, or (b) agree to pay
such additional premium if such subrogation waiver is obtainable at
additional cost, or (c) require Owner to name Tenant as an additional
insured.
73. In addition to the rights and remedies set forth in Paragraphs 17 and 18
hereof, Owner shall have the right to cancel this lease in the manner
therein provided in the event that Tenant shall have failed to pay any
installment of rent provided herein within ten (10) days after written
notice and demand for payment thereof or shall have defaulted in payment of
<PAGE>
additional rent set forth herein for a period of twenty (20) days after
written notice and demand for payment of same.
74. If Tenant shall have a sanitary waste system for Tenant's exclusive use,
then Tenant shall be required to maintain, repair and replace same at
Tenant's sole cost and expense. In such event, Tenant shall not be required
to share in the cost and expense of the maintenance, repair and replacement
of any other sanitary waste system used by other tenants of the building of
which the demised premises forms a part.
75. (a) During the term of this lease, Tenant agrees to carry liability
insurance at its own cost and expense in the amount of $1,000,000.00 for
bodily injury and $100,000.00 for property damage, which insurance shall
also name Owner as an additional insured, and Tenant shall furnish Owner
with a new certificate of insurance within ten (10) days after the
expiration of any such policy.
(b) Tenant shall, as additional rent, reimburse Owner for Tenant's
Proportionate Share of Owner's premium for a liability insurance policy in
the minimum amount of $1,000,000.00 for bodily injury and $100,000.00 for
property damage covering the entire building of which the demised premises
forms a part, including common areas and parking areas.
(c) Tenant shall, as additional rent, reimburse Owner for Tenant's
Proportionate Share of all premiums for fire insurance upon the building,
including extended coverage, rental value, vandalism and malicious
mischief, to be maintained upon the building during the term of this lease.
Owner shall obtain and maintain all such insurance throughout the term and
any renewal term hereunder. Said insurance shall be in amount not less than
the full replacement value of the building, but if required by a mortgagee
granting a mortgage or mortgages on the building, then in an amount as
required by said mortgagee. The aforesaid charge shall be due and payable
to Owner as additional rent on the rent date next following the giving of
notice to Tenant by Owner of the amount due toward such premium. Upon
Tenant's written request, Owner shall provide Tenant with bills and/or
invoices evidencing the cost of the premiums for the insurance to be
maintained by Owner hereunder. The parties shall apportion such premium at
the commencement and termination of the lease term.
(d) If a steam boiler is required by Tenant, then Tenant shall also
reimburse Owner for the full premium which Owner shall pay for a policy of
boiler insurance, said reimbursement to be made by Tenant as additional
rent at the same time as the next monthly installment of rent shall be due
from Tenant after a notice from Owner of the amount of the premium.
(e) All policies of insurance to be supplied by Tenant and Owner shall be
obtained only from insurance companies licensed to do business in the State
of New York and will carry thereon and have endorsed the following:
(i) In the event of cancellation or material change in the policy
which may affect the Owner's interest, at least twenty (20) days prior to
such cancellation or material change, written notice of same will be given
to Owner.
<PAGE>
(ii) Owner shall be named as an "Additional Insured" on all of
Tenant's policies except contents policies.
76. Owner and Tenant represent each to the other that the sole broker who
negotiated or brought about this lease or who might be entitled to the
payment of commission is Schuckman Realty, Inc. and that no other person or
firm is entitled to the payment of any commission. The parties agree that
except as otherwise provided herein, if any claim is made for commission by
any broker through or on account of any acts of a party, that party shall
hold the other party harmless from and against any and all liabilities and
expenses in connection therewith including reasonable attorneys' fees in
defending any such action. Owner agrees to pay a commission to such
aforenamed broker pursuant to a separate agreement.
77. Tenant shall not, without the express written consent of Owner, enter upon
the roof or attach or install anything thereon nor make any alterations
thereto. Tenant shall be permitted to penetrate the roof for purposes of
installing vent piping provided: (a) Tenant submits plans and
specifications for the installation of such piping to Owner for Owner's
prior written approval, which approval may be withheld by Owner if such
installation may damage the structural integrity of the roof or interfere
with any service to be provided by Owner, and (b) Tenant hires Owner's roof
contractors to perform all such installation work.
78. Any sums of money required to be paid by Tenant to Owner in addition to the
rent reserved under Article 81, shall be deemed additional rent, shall be
paid without deduction or offset, and in the event Tenant fails to pay such
additional rent, Owner shall be entitled to the same remedies under this
lease or by law, as are available to Owner for the nonpayment of rent,
including, without limitation, summary dispossess proceedings.
79. In the event that Owner shall bring any proceeding against Tenant for
recovery of money damages, or for possession of the demised premises by
reason of nonpayment of rent or additional rent, or for nonperformance by
Tenant of the terms and conditions of this lease, or for breach of lease,
and Owner shall incur costs and expenses by reason thereof or by reason of
such default, such charges, including legal fees, shall be due and payable
from Tenant as additional rent and shall become immediately due and payable
upon the incurrence of same. In the event that Owner shall institute
summary proceedings for nonpayment of rent or additional rent, the legal
fees therefor shall be 25% of the amount demanded in the petition or
$500.00, whichever is greater. Said amount may be included in the petition
and shall be deemed additional rent. In the event Owner shall at any time
be in default hereunder, and if Tenant shall institute an action against
Owner based upon such default and Tenant shall be successful, Owner shall
within thirty (30) days after request therefor, reimburse Tenant for the
expenses of reasonable attorneys' fees and disbursements incurred by
Tenant.
80. The term of this lease shall commence on the date on which Owner
substantially completes the demised premises in accordance with Article 61
hereof (the "Term Commencement Date"). The term of this lease shall
terminate on the day preceding the day which is seven
<PAGE>
(7) years after the Rent Commencement Date, hereinafter referred to as the
"Expiration Date", unless the term shall sooner terminate or be extended
pursuant to any of the terms, covenants or conditions of this lease or
pursuant to law. Tenant's obligation to pay rent shall commence on the date
which is sixty (60) days from the Term Commencement Date, hereinafter
referred to as the "Rent Commencement Date" subject to the terms of Article
61 hereof.
81. During the term of this lease, Tenant shall pay minimum annual rent
("rent") as follows:
During the first year of the term of this lease commencing on the Rent
Commencement Date, the rent shall be $148,633.38 payable $31,850.01 for the
first month of such year and $10,616.67 for each of the second through
twelfth months.
During the second year, the rent shall be $132,495.96, payable in equal
monthly installments of $11,041.33.
During the third year, the rent shall be $137,795.88, payable in equal
monthly installments of $11,482.99.
During the fourth year, the rent shall be $143,307.72, payable in equal
monthly installments of $11,942.31.
During the fifth year, the rent shall be $149,040.00, payable in equal
monthly installments of $12,420.00.
During the sixth year, the rent shall be $155,001.60, payable in equal
monthly installments of $12,916.80.
During the seventh year, the rent shall be $139,968.30, payable $13,433.47
during each of the first through tenth months and $2,816.80 during each of
the eleventh and twelfth months.
The minimum annual rent hereinabove provided for shall be in addition to
all other payments to be made by Tenant as herein provided.
82. (a) Owner and Owner's agents and employees shall not be liable for, and
Tenant waives all claims for, loss or damage to Tenant's business or damage
to person or property sustained by Tenant resulting from any accident or
occurrence (unless caused by or resulting from the negligence of Owner, its
agents, servants or employees other than accidents or occurrences against
which Tenant is insured and except to the extent Tenant is contributorily
negligent) in or upon the demised premises or the building, including, but
not limited to, claims for damage resulting from: (i) any equipment or
appurtenances becoming out of repair; (ii) injury done or occasioned by
wind; (iii) any defect in or failure of plumbing, heating or air
conditioning equipment, electric wiring or installation thereof, gas,
water, or steam pipes, stairs, porches, railings or walks; (iv) broken
glass; (v) the backing up of any sewer pipe or
<PAGE>
downspout;) (vi) the bursting, leaking or running of any tank, tub,
washstand, water closet, waste pipe, drain or other pipe or tank in, upon
or about the building or the demised premises; (vii) the escape of steam or
hot water; (viii) water, snow or ice being upon or coming through the roof,
skylight, trapdoor, stairs, doorways, show windows, walks or any other
place upon or near the building or the demised premises or otherwise; (ix)
the falling of any fixture, plaster, tile or stucco; and (x) any act,
omission or negligence of other tenants, licensees or of any other persons
or occupants of the building or of adjoining or contiguous buildings or of
owners of adjacent or contiguous property.
(b) If Owner or a successor in interest is an individual (which term as
used herein includes aggregates of individuals, such as joint ventures,
general or limited partnerships, or associations) such individual shall be
under no personal liability with respect to any of the provisions of this
lease, and if such individual is in breach or default with respect to its
obligations under this lease, Tenant shall look solely to the equity of
such individual in the land and building of which the demised premises form
a part for the satisfaction of Tenant's remedies and in no event shall
Tenant attempt to enforce any personal judgment against any other assets of
such individual or any principal, partner, employee or agent of Owner by
reason of such default by Owner.
83. INTENTIONALLY DELETED.
84. (a) Tenant shall not cause or permit the presence, use, disposal, storage,
or release of any Hazardous Substances (hereinafter defined) on or in the
demised premises or the land or building of which it is a part, except in a
manner and in quantities permitted under applicable law. Tenant shall not
do, nor allow anyone else to do, anything affecting the demised premises
that is in violation of any Environmental Law (hereinafter defined). Owner
shall have the right to inspect the demised premises and Tenant's
operations during normal business hours, after reasonable notice, for the
purpose of determining the existence or release of Hazardous Substances and
Tenant's compliance with Environmental Law. As used herein, "Hazardous
Substances" are those substances defined as toxic or hazardous substances
by Environmental Law, including, without limitation, the following
substances: gasoline, kerosene, other flammable or toxic petroleum
products, toxic pesticides and herbicides, volatile solvents, materials
containing asbestos or formaldehyde, and radioactive materials.
"Environmental Law" means federal and state laws and laws of the
jurisdiction where the demised premises are located that relate to health,
safety and environmental protection.
(b) Owner represents and warrants to Tenant that as of the Term
Commencement Date, the demised premises and the building shall be in
compliance with all applicable Environmental Law and that no Hazardous
Substances shall have been released at or disposed of at or about the
building or the demised premises, except in a manner and in quantities
permitted under applicable law.
85. The Owner shall furnish a security guard service for the building and other
structures. Tenant shall pay to Owner $1,120.00 during each year of the
term of this Lease (payable in
<PAGE>
equal monthly installments of $93.34). Such charge shall be payable to the
Owner as additional rent with each installment of rent due hereunder.
86. Notwithstanding any provision in this lease to the contrary, the additional
rent which Tenant shall be required to pay to Owner pursuant to Paragraphs
48, 56, 75 and 85 of this lease in respect of amounts incurred by Owner
during the first year of the term (i.e., August 1, 1997 through July 31,
1998) of this lease only shall not exceed $5,600.00.
87. Owner hereby agrees that, upon execution of this lease and upon delivery by
the Tenant of the first month's rent and the insurance certificates
required hereunder, Tenant shall have the right to use and occupy the
demised premises prior to the Rent Commencement Date provided that Tenant
shall comply with all the obligations of Tenant under this lease with the
exception of the obligation to pay rent pursuant to Paragraph 81 of this
lease.
88. Tenant agrees that the value of the demised premises and the reputation of
the Owner will be seriously injured if the demised premises are used for
any obscene or pornographic purposes or if any obscene or pornographic
material is permitted on the premises. Tenant further agrees that Tenant
will not permit any of these uses by Tenant or a sublessee or assignee of
the demised premises. This Paragraph shall directly bind any successors in
interest to Tenant. Tenant agrees that if at any time Tenant violates any
of the provisions of this Paragraph, such violation shall be deemed a
breach of a substantial obligation of the terms of this lease and
objectionable conduct. Pornographic material is defined for purposes of
this Paragraph as any written or pictorial matter with prurient appeal or
any objects or instruments that are primarily concerned with lewd in or
prurient sexual activity. Obscene material is defined here as it is in
Penal Law Section 235.00.
89. Tenant shall not be permitted to store any items including, without
limitation, inventory, furniture and equipment, outside of the demised
premises or the building unless Tenant first obtains Owner's prior written
consent.
90. Owner shall, at Owner's sole cost and expense, and prior to the Rent
Commencement Date, convert the building from electric heat to gas heat.
91. The Tenant shall have the right to be exercised as hereinafter provided, to
extend the term of this lease for one period of five (5) years upon the
following terms and conditions:
(a) That at the time of the exercise of such right and at the time of the
commencement of such extension period, Tenant shall not be in default in
the performance of any of the terms, covenants or conditions which Tenant
is required to the right to lease the Partial Additional Premises, subject
to the terms and conditions of this Paragraph 92.
(b) In the event that Owner proposes to lease the Partial Additional
Premises and/or the Entire Additional Premises pursuant to the terms of
bona fide third party offer, Owner shall notify Tenant of the same by
written notice delivered to Tenant by certified mail, return receipt
requested (the "Offer Notice"). Tenant shall give written notice to Owner
of its
<PAGE>
intent to exercise its right to lease the Partial Additional Premises
hereunder no later than seven (7) business days after Tenant's receipt of
the Offer Notice. Said written notice shall be delivered to Owner by
certified mail, return receipt requested; TIME BEING OF THE ESSENCE WITH
RESPECT TO ALL OF TENANT'S OBLIGATIONS HEREUNDER.
(c) In the event Tenant elects to lease the Partial Additional Premises,
the term "Combined Premises" shall, from and after the Effective Date (as
hereinafter defined), include both the Demised Premises and the Partial
Additional Premises. For purposes hereof, the term "Effective Date" shall
mean the date of delivery of possession of the Partial Additional Premises
to Tenant.
(d) Upon the exercise of Tenant's rights hereunder, Owner and Tenant shall
enter into a lease modification agreement effective as of the Effective
Date, which shall reflect the lease by Tenant of the Combined Premises in
accordance with all of the terms and conditions of the lease except that:
(i) Tenant shall accept the Partial Additional Premises in its then "as is"
condition; however, Owner shall provide an opening in the demising wall
connecting the Demised Premises and the Partial Additional Premises, (ii)
the rental rate shall be as set forth in subparagraph (e) hereof, (iii)
Tenant's Proportionate Share shall be equal to a fraction, the numerator of
which shall be the total number of rentable square feet contained in the
Combined Premises and the denominator of which shall be the total rentable
square feet contained in the Building, (iv) the number of parking spaces
available for use by Tenant shall be increased to reflect the increase in
Tenant's Proportionate Share and (v) Article 62(h) shall be modified to
provide that an Acceptable Sublease shall mean a sublease of the demised
premises for less than ten (10%) percent of the Combined Premises. In any
case, the base year for purposes of calculating Tenant's Proportionate
Share of real estate taxes due in accordance with Paragraph 51 hereof with
respect to the Partial Additional Premises shall be the tax year 1996/97.
Tenant shall pay the first month's rent and two additional months rent due
for the Partial Additional Premises prior to the Effective Date.
(e) The Offer Notice need not specify a rental rate for the Partial
Additional Premises nor shall Tenant be required to accept any rental rate
set forth therein. The initial rental rate for the Partial Additional
Premises shall be $8.50 per square foot of the Partial Additional Premises
if the Partial Additional Premises is leased to Tenant during the first
year of the term of this Lease. Thereafter, the initial rental rate for the
Partial Additional Premises shall escalate at a rate of four (4%) percent
compounded annually as of the commencement date of each succeeding lease
year during the term hereof. By way of example, if the Partial Additional
Premises is leased six (6) months into the first lease year of the initial
term of this Lease, the four (4%) percent escalation shall be effective six
(6) months thereafter on the commencement date of second lease year of the
initial term of this Lease.
(f) In the event Tenant leases the Partial Additional Premises, the renewal
option set forth in Article 91 hereof shall also apply to the Partial
Additional Premises. The rental rate for the Partial Additional Premises
shall reflect an eight (8%) percent increase over the rental rate for the
Partial Additional Premises which may have been due during the last year of
the initial term (adjusted to reflect any advanced rent paid by Tenant
hereunder) and, thereafter
<PAGE>
the rental rate for the Partial Additional Premises shall escalate at a
rate of four (4%) percent compounded annually.
(g) Should Tenant fail to exercise its rights hereunder within the time and
in the manner required above, or waive such right in writing, Owner may
lease the Partial Additional Premises and/or the Entire Additional Premises
without any further obligations to Tenant; provided, however, that if Owner
does not consummate a lease of the Additional Premises with respect to the
first Offer Notice, Tenant's right of first refusal shall again apply with
respect to a second bona fide offer received by Owner only (the "Second
Offer"), which right shall be exercised by Tenant in strict accordance with
the provisions of this Paragraph 92. Should Tenant fail to exercise its
right hereunder with respect to the Second Offer within the time and in the
manner required above, or waive such right in writing, Owner may lease the
Partial Additional Premises and/or the Entire Additional Premises without
any further obligations to Tenant following such Second Offer.
(h) The right to lease the Partial Additional Premises is personal to
LogiMetrics, Inc. and shall not be transferable by operation of law or
otherwise.
93. Owner shall install, at Owner's sole cost and expense, Owner's standard
circular sign at the entrance of the demised premises. Owner shall also
furnish to Tenant one (1) listing on the building directory and one (1)
listing on the office park directory. The initial listings will be made at
Owner's expense and any subsequent changes by Tenant shall be made at
Tenant's expense.
94. Owner hereby represents and warrants that there presently are no mortgages
encumbering the demised premises and the building. Owner hereby agrees to
use its reasonable efforts to obtain a subordination, attornment and
nondisturbance agreement from Owner's future mortgagees on such future
mortgagee's standard form.
95. Owner hereby waives any lien on Tenant's personal property to which Owner,
in the absence of such waiver, might otherwise be entitled by statute,
common law or otherwise. Tenant covenants and agrees that no security
agreement, whether by way of conditional sales agreement, chattel mortgage,
title retention agreement, or other instrument of similar import (a
"Security Agreement") shall be placed upon any improvements made by Tenant
which are affixed to the realty. In the event that any of the machinery,
fixtures, furniture or equipment installed by Tenant in the demised
premises are purchased or acquired by Tenant subject to a Security
Agreement, Tenant undertakes and agrees (i) that no Security Agreement or
Uniform Commercial Code filing statement shall be permitted to be filed as
a lien against the building and/or the real property of which the demised
premises and the Building form a part, and (ii) to cause to be inserted in
any Security Agreement the following provision:
"Notwithstanding anything to the contrary herein,
this chattel mortgage, conditional sales agreement,
title retention agreement, or security agreement shall
not create or be filed as a lien against the land,
building and improvements comprising the real property
in which the
<PAGE>
goods, machinery, equipment, appliances or other personal
property covered hereby are to be located or installed."
If any such lien, based on a Security Agreement or Uniform Commercial
Code filing statement is filed against the building or the real property of
which the demised premises and the building form a part, Tenant shall, within
thirty (30) days following notice thereof from Owner, cause such lien or notice
to be removed or discharged, at Tenant's cost and expense.
96. Notwithstanding anything contained in this lease to the contrary, Tenant
shall have access to the demised premises twenty four (24) hours a day,
seven (7) days a week.
RECKSON FS LIMITED PARTNERSHIP
BY: RECKSON FS, INC.,
its general partner
BY: /s/Mitchell Reckler
_____________________
Mitchell Reckler
LOGIMETRICS, INC.
BY: /s/Russell Reardon
________________________
Russell Reardon
<PAGE>
April 22, 1997
LogiMetrics, Inc.
121-03 Dupont Street
Plainview, New York 11803
Re: Lease Agreement dated April 22, 1997 (the "Lease")
by and between Reckson FS Limited Partnership,
as landlord ("Landlord") and LogiMetrics, Inc.,
as tenant ("Tenant")
Gentlemen:
This letter shall confirm and memorialize the agreement between
Landlord and Tenant with respect to the installation of a satellite dish at the
building located at 50 Orville Drive, Bohemia, New York (the "Building").
Landlord and Tenant agree as follows:
(1) In connection with Tenant entering into the Lease, Tenant may, at
its own cost and expense, install, operate, maintain and replace a satellite
dish (hereinafter the "Satellite Dish") on the roof of the Building from time to
time during the term of the lease.
(2) In consideration of the use of the space on the Building for the
installation, operation, maintenance and replacement of the Satellite Dish,
Tenant agrees to pay to Landlord, in addition to all sums payable by Tenant
under the Lease, the sum of $250.00 on the first day of each calendar month,
commencing on the first day of the first full calendar month immediately
following Landlord's approval of the initial installation and operation of the
Satellite Dish in accordance with the terms hereof and continuing on the first
day of each successive calendar month until such time as the Satellite Dish have
been permanently removed from the Building, and the roof of the Building has
been restored by Tenant, in accordance with the terms of this Agreement. Such
amounts shall be deemed to be additional rent under the Lease.
(3) Tenant shall not install, maintain or operate the Satellite Dish
until it receives the prior written approval of Landlord in each instance.
Landlord may approve or reject the installation, operation and replacement of
the Satellite Dish within a reasonable time after the Tenant submits: (a) plans
and specifications for the installation of the Satellite Dish, (b) copies of all
governmental and quasi-governmental permits, licenses and authorizations which
the Tenant will obtain at its own cost and expense; and (c) a certificate of
insurance evidencing insurance coverage as required by the Lease and any other
insurance reasonably required by the Landlord
<PAGE>
for the installation, operation, maintenance and/or replacement of the Satellite
Dish. Landlord may withhold approval if the installation, operation, maintenance
and/or replacement of the Satellite Dish may damage the structural integrity of
the Building, interfere with any service provided by the Landlord or any tenant,
or reduce the amount of leasable space in the Building.
(4) Tenant covenants and agrees that neither Tenant nor its agents
will cause any damage to the roof during the installation, maintenance,
operation and/or replacement of the Satellite Dish. If Tenant hires contractors,
subcontractors or any other agent to install, maintain, operate or replace the
Satellite Dish, Tenant shall provide Landlord with a waiver of mechanics' lien
from all workers.
(5) If Landlord's insurance premium or real estate tax assessment
increases as a result of the Satellite Dish, Tenant shall pay such increase each
year, as additional rent under the Lease, upon receipt of a bill from the
Landlord.
(6) Tenant shall have no right to an abatement or reduction in the
amount of rent hereunder or under the Lease if for any reason the Tenant is
unable to use the Satellite Dish.
(7) Tenant covenants and agrees that the installation, operation,
maintenance, replacement and removal of the Satellite Dish will be at its sole
risk. Tenant agrees to indemnify and defend Landlord against all claims,
actions, damages, liability and expenses in connection with the loss of life,
personal injury, damage to property or business or any other loss or injury
arising out of the installation, operation, maintenance, replacement or removal
of the Satellite Dish. Tenant agrees to indemnify Landlord for all costs and
expenses (including reasonable attorneys' fees) incurred as a result of any
litigation concerning the Satellite Dish.
(8) Landlord, at its sole option, may require Tenant, at any time
prior to the expiration of this Agreement, to terminate the operation of the
Satellite Dish if it is causing physical damage to the structural integrity of
the Building, interfering with any other service provided by the Building, or
interfering with any other tenant's business.
If, however, Tenant can correct the damage caused by the Satellite
Dish to Landlord's reasonable satisfaction within sixty (60) days, Tenant may
restore its operation. If the Satellite Dish is not corrected and restored to
operation within sixty (60) days, Landlord, at its sole option, may require that
Tenant remove the Satellite Dish at its own expense.
(9) At the expiration or sooner termination of this Agreement or the
Lease or upon termination of the operation of the Satellite Dish, Tenant shall
be required to remove the Satellite Dish from the Building at its own cost.
Tenant shall remove and dispose of the Satellite Dish upon fifteen (15) days'
written notice. Tenant shall leave the portion of the Building where the
Satellite Dish was located, in good order and repair, reasonable wear and tear
excepted. If Tenant does not remove the Satellite Dish when so required, Tenant
hereby authorizes Landlord to remove and dispose of the Satellite Dish and
charge Tenant for all costs and expenses incurred. Tenant agrees that Landlord
shall not be liable for any property disposed or removed by Landlord.
(10) A default under the Lease shall be deemed to be a default under
this Agreement and a default under this Agreement shall be deemed to be a
default under the Lease.
Please sign in the space provided below to acknowledge your agreement
to the foregoing.
Very truly yours,
RECKSON FS LIMITED PARTNERSHIP
BY: RECKSON FS, INC.,
its general partner
BY: /s/Mitchell Reckler
_____________________
Mitchell Reckler
Agreed to this 22nd day of
April, 1997
LOGIMETRICS, INC.
By: /s/Russell Reardon
____________________
Russell Reardon
EXHIBIT 10.13
This Lease Agreement, made the ______ day of _____________________, 19___,
Between John Donato, Jr., d/b/a Donato Construction Company, Inc.
residing or located at Two Industrial Way West in the Borough of Eatontown in
the County of Monmouth and State of New Jersey, herein designated as the
Landlord,
And Charles S. Brand, d/b/a M M Tech
residing or located at 175 Boundary Road in the Town of Colts Neck in the County
of Monmouth and State of New Jersey, herein designated as the Tenant;
Witnesseth that, the Landlord does hereby lease to the Tenant and the
Tenant does hereby rent from the Landlord, the following described premises:
Leasing approximately 3,700 square feet of Hi-Tech space located on the west
side of 246 Industrial Way West, Eatontown, New Jersey
for a term of Three (3) months commencing on February 1, 1994, and ending on
April 30, 1994 to be used and occupied only and for no other purpose than
research and development of cable and wireless systems.
Upon the following Conditions and Covenants:
1st: The tenant covenants and agrees to pay to the Landlord, as rent
for and during the term hereof, the sum of Seventy Eight Hundred Sixty Two
Dollars ($7,862.00) in the following manner: Twenty Six Hundred Twenty One
Dollars ($2,621.00) per month. This will include all taxes, common area
maintenance and utilities.
2nd: The Tenant has examined the premises and has entered into this
lease without any representation on the part of the Landlord as to the condition
thereof. The Tenant shall take good care of the premises and shall at the
Tenant's own cost and expense, make all repairs, including painting and
decorating, and shall maintain the premises in good condition and state of
repair, and at the end or other expiration of the term hereof, shall deliver up
the rented premises in good order and condition, wear and tear from a reasonable
use thereof, and damage by the elements not resulting from the neglect or fault
of the Tenant, excepted. The Tenant shall neither encumber nor obstruct the
sidewalks, driveways, yards, entrances, hallways and stairs, but shall keep and
maintain the same in a clean condition, free from debris, trash, refuse, snow
and ice.
3rd: The Tenant shall promptly comply with all laws, ordinances,
rules, regulations, requirements and directives of the Federal, State and
Municipal Governments or Public Authorities and of all their departments,
bureaus and subdivisions, applicable to and affecting the said premises, their
use and occupancy, for the correction, prevention and abatement of nuisances,
violations or other grievances in, upon or connected with the said premises,
during the term hereof; and shall promptly comply with all orders, regulations,
requirements and directives
<PAGE>
of the Board of Fire Underwriters or similar authority and of any insurance
companies which have issued or are about to issue policies of insurance covering
the said premises and its contents, for the prevention of fire or other
casualty, damage or injury, at the Tenant's own cost and expense.
4th: The Tenant shall not assign, mortgage or hypothecate this lease,
nor sublet or sublease the premises or any party thereof; nor occupy or use the
leased premises or any part thereof, nor permit or suffer the same to be
occupied or used for any purposes other than as herein limited, nor for any
purpose deemed unlawful, disreputable, or extra hazardous, on account of fire or
other casualty. Landlord will not withhold its reasonable consent for
assignment.
5th: No alterations, additions or improvements shall be made, and no
climate regulating, air conditioning, cooling, heating or sprinkler systems,
television or radio antennas, heavy equipment, apparatus and fixtures, shall be
installed in or attached to the leased premises, without the written consent of
the Landlord. Unless otherwise provided herein, all such alternations, additions
or improvements and systems, when made, installed in or attached to the said
premises, shall belong to an become the property of the Landlord and shall be
surrendered with the premises and as part thereof upon the expiration or sooner
termination of this lease, without hindrance, molestation or injury.
6th: In case of fire or other casualty, the Tenant shall give
immediate notice to the Landlord. If the premises shall be partially damaged by
fire, the elements or other casualty, the Landlord shall repair the same as
speedily as practicable, but the Tenant's obligation to pay the rent hereunder
shall not cease. If, in the opinion of the Landlord, the premises be so
extensively and substantially damaged as to render them untenantable, then the
rent shall cease until such time as the premises shall be made tenantable by the
Landlord. However, if, in the opinion of the Landlord, the premises be totally
destroyed or so extensively and substantially damaged as to require practically
a rebuilding thereof, then the rent shall be paid up to the time of such
destruction and then and from thenceforth this lease shall come to an end. In no
event, however, shall the provisions of this clause become effective or be
applicable, if the fire or other casualty and damage shall be the result of the
carelessness, negligence or improper conduct of the Tenant or the Tenant's
agents, employees, guests, licensees, invitees, subtenants, assignees or
successors. In such case, the Tenant's liability for the payment of the rent and
the performance of all the covenants, conditions and terms hereof on the
Tenant's part to be performed shall continue and the Tenant shall be liable to
the Landlord for the damage and loss suffered by the Landlord. If the Tenant
shall have been insured against any of the risks herein covered, then the
proceeds of such insurance shall be paid over to the Landlord to the extent of
the Landlord's costs and expenses to make the repairs hereunder, and such
insurance carriers shall have no recourse against the Landlord for
reimbursement.
7th: The Tenant agrees that the Landlord and the Landlord's agents,
employees or other representatives, shall have the right to enter into and upon
the said premises or any part thereof, at all reasonable hours, for the purpose
of examining the same or making such repairs or alterations therein as may be
necessary for the safety and preservation thereof. This clause shall
<PAGE>
not be deemed to be a covenant by the Landlord nor be construed to create an
obligation on the part of the Landlord to make such inspection or repairs.
8th: The Tenant agrees to permit the Landlord and the Landlord's
agents, employees or other representatives to show the premises to persons
wishing to rent or purchase the same, and Tenant agrees that on and after next
preceding the expiration of the term hereof, the Landlord or the Landlord's
agents, employees or other representatives shall have the right to place notices
on the front of said premises or any part thereof, offering the premises for
rent or for sale; and the Tenant hereby agrees to permit the same to remain
thereon without hindrance or molestation.
9th: [GARBLED UNINTELLIGIBLE LANGUAGE] of any kind whatsoever to the
said premises, caused by the carelessness, negligence or improper conduct on the
part of the Tenant or the Tenant's agents, employees, guests, licensees,
invitees, subtenants, assignees or successors, the Tenant shall repair the said
damage or replace [garbled unintelligible language] restore any destroyed parts
of the premises, as [garbled unintelligible language] as possible, at the
Tenant's own cost and expense.
10th: The Tenant shall not place nor allow to be placed any signs of
any kind whatsoever, upon, in or about the said premises or any part thereof,
except of a design and structure and in or at such places as may be indicated
and consented to by the Landlord in writing. In case the Landlord or the
Landlord's agents, employees or representatives shall deem it necessary to
remove any such signs in order to paint or make any repairs, alterations or
improvements in or upon said premises or any part thereof, they may be so
removed, but shall be replaced at the Landlord's expense when the said repairs,
alterations or improvements shall have been completed. Any signs permitted by
the Landlord shall at all times conform with all municipal ordinances or other
laws and regulations applicable thereto. The reasonable consent of the Landlord
shall not be withheld.
11th: The Landlord shall not be liable for any damage or injury which
may be sustained by the Tenant or any other person, as a consequence of the
failure, breakage, leakage or obstruction of the water, plumbing, steam, sewer,
waste or soil pipes, roof, drains, leaders, gutters, valleys, downspouts or the
like or of the electrical, gas, power, conveyor, refrigeration, sprinkler,
airconditioning or heating systems, elevators or hoisting equipment; or by
reason of the elements; or resulting from the carelessness, negligence or
improper conduct on the part of any other Tenant or of the Landlord or the
Landlord's or this or any other Tenant's agents, employees, guests, licensees,
invitees, subtenants, assignees or successors; or attributable to any
interference with, interruption of or failure, beyond the control of the
landlord, of any services to be furnished or supplied by the Landlord.
12th: This lease shall not be a lien against the said premises in
respect to any mortgages that may hereafter be placed upon said premises. The
recording of such mortgage or mortgages shall have preference and precedence and
be superior and prior in lien to this lease, irrespective of the date of
recording and the Tenant agrees to execute any instruments, without cost, which
may be deemed necessary or desirable, to further effect the subordination of
this lease to any such mortgage or mortgages. A refusal by the Tenant to execute
such instruments shall entitle
<PAGE>
the Landlord to the option of cancelling this lease, and the term hereof is
hereby expressly limited accordingly.
13th: The Tenant has this day deposited with the Landlord the sum of
$3,500.00 as security for the payment of the rent hereunder and the full and
faithful performance by the Tenant of the covenants and conditions on the part
of the Tenant to be performed. Said sum shall be returned to the Tenant, without
interest, after the expiration of the term hereof, provided that the Tenant has
fully and faithfully performed all such covenants and conditions and is not in
arrears in rent. During the term hereof, the Landlord may, if the Landlord so
elects, have recourse to such security, to make good any default by the Tenant,
in which event the Tenant shall, on demand, promptly restore said security to
its original amount. Liability to repay said security to the Tenant shall run
with the reversion and title to said premises, whether any change in ownership
thereof be by voluntary alienation or as the result of judicial sale,
foreclosure or other proceedings, or the exercise of a right of taking or entry
by any mortgagee. The Landlord shall assign or transfer said security, for the
benefit of the Tenant, to any subsequent owner or holder of the reversion or
title to said premises, in which case the assignee shall become liable for the
repayment thereof as herein provided, and the assignor shall be deemed to be
released by the Tenant from all liability to return such security. This
provision shall be applicable to every alienation or change in title and shall
in no wise be deemed to permit the Landlord to retain the security after
termination of the Landlord's ownership of the reversion or title. The Tenant
shall not mortgage, encumber or assign said security without the written consent
of the Landlord.
14th: If for any reason it shall be impossible to obtain fire and
other hazard insurance on the buildings and improvements on the leased premises,
in an amount and in the form and in insurance companies acceptable to the
Landlord, the Landlord may, if the Landlord so elects at any time thereafter,
terminate this lease and the term hereof, upon giving to the Tenant fifteen days
notice in writing of the Landlord's intention so to do, and upon the giving of
such notice, this lease and the term thereof shall terminate. If by reason of
the use to which the premises are put by the Tenant or character of or the
manner in which the Tenant's business is carried on, the insurance rates for
fire and other hazards shall be increased, the Tenant shall upon demand, pay to
the Landlord, as rent, the amounts by which the premiums for such insurance are
increased. Such payment shall be paid with the next installment of rent but in
no case later than one month after such demand, whichever occurs sooner. Any
increase over the base year for 1994.
15th: The Tenant shall pay when due all the rents or charges for water
or other utilities used by the Tenant, which are or may be assessed or imposed
upon the leased premises or which are or may be charged to the Landlord by the
suppliers thereof during the term hereof, and if not paid, such rents or charges
shall be added to and become payable as additional rent with the installment of
rent next due or within 30 days of demand therefor, whichever occurs sooner.
16th: If the land and premises leased herein, or of which the leased
premises are a part, or any portion thereof, shall be taken under eminent domain
or condemnation proceedings, or if suit or other action shall be instituted for
the taking or condemnation thereof, or if in lieu of any formal condemnation
proceedings or actions, the Landlord shall grant an option to purchase
<PAGE>
and/or shall sell and convey the said premises or any portion thereof, to the
governmental or other public authority, agency, body or public utility, seeking
to take said land and premises or any portion thereof, then this lease, at the
option of the Landlord, shall terminate, and the term hereof shall end as of
such date as the Landlord shall fix by notice in writing; and the Tenant shall
have no claim or right to claim or be entitled to any portion of any amount
which may be awarded as damages or paid as the result of such condemnation
proceedings or paid as the purchase price for such option, sale or conveyance in
lieu of formal condemnation proceedings; and all rights of the Tenant to
damages, if any, are hereby assigned to the Landlord. The Tenant agrees to
execute and deliver any instruments, at the expense of the Landlord, as may be
deemed necessary or required to expedite any condemnation proceedings or to
effectuate a proper transfer of title to such governmental or other public
authority, agency, body or public utility seeking to take or acquire the said
lands and premises or any portion thereof. The Tenant covenants and agrees to
vacate the said premises, remove all the Tenant's personal property therefrom
and deliver up peaceable possession thereof to the Landlord or to such other
party designated by the Landlord in the aforementioned notice. Failure by the
Tenant to comply with any provisions in this clause shall subject the Tenant to
such costs, expenses, damages and losses as the Landlord may incur by reason of
the Tenant's breach hereof.
17th: If there should occur any default on the part of the Tenant in
the performance of any conditions and covenants herein contained, or if during
the term hereof the premises or any part thereof shall be or become abandoned or
deserted, vacated or vacant, or should the Tenant be evicted by summary
proceedings or otherwise, the Landlord, in addition to any other remedies herein
contained or as may be permitted by law, may either by force or otherwise,
without being liable for prosecution therefor, or for damages, re-enter the said
premises and the same have and again possess and enjoy; and as agent for the
Tenant or otherwise, re-let the premises and receive the rents therefor and
apply the same, first to the payment of such expenses, reasonable attorney fees
and costs, as the Landlord may have been put to in re-entering and repossessing
the same and in making such repairs and alterations as may be necessary; and
second to the payment of the rents due hereunder. The Tenant shall remain liable
for such rents as may be in arrears and also the rents as may accrue subsequent
to the re-entry by the Landlord, to the extent of the difference between the
rents reserved hereunder and the rents, if any, received by the Landlord during
the remainder of the unexpired term hereof, after deducting the aforementioned
expenses, fees and costs; the same to be paid as such deficiencies arise and are
ascertained each month. Tenant will have 15 days to cure any default.
18th: Upon the occurrence of any of the contingencies set forth in the
preceding clause, or should the Tenant be adjudicated a bankrupt, insolvent or
placed in receivership, or should proceedings be instituted by or against the
Tenant for bankruptcy, insolvency, receivership, agreement of composition or
assignment for the benefit of creditors, or if this lease or the estate of the
Tenant hereunder shall pass to another by virtue of any court proceedings, writ
of execution, levy, sale, or by operation of law, the Landlord may, if the
Landlord so elects, at any time thereafter, terminate this lease and the term
hereof, upon giving to the Tenant or to any trustee, receiver, assignee or other
person in charge of or acting as custodian of the assets or property of the
Tenant, five days notice in writing, of the Landlord's intention so to do. Upon
the giving of such notice, this lease and the term hereof shall end on the date
fixed in such notice
<PAGE>
as if the said date was the date originally fixed in this lease for the
expiration hereof; and the Landlord shall have the right to remove all persons,
goods, fixtures and chattels therefrom, by force or otherwise without liability
for damages.
19th: Any equipment, fixtures, goods or other property of the Tenant,
not removed by the Tenant upon the termination of this lease, or upon any
quitting, vacating or abandonment of the premises by the Tenant, or upon the
Tenant's eviction, shall be considered as abandoned and the Landlord shall have
the right, without any notice to the Tenant, to sell or otherwise dispose of the
same, at the expense of the Tenant, and shall not be accountable to the Tenant
for any part of the proceeds of such sale, if any.
20th: If the Tenant shall fail or refuse to comply with and perform
any conditions and covenants of the within lease, the Landlord may, if the
Landlord so elects, carry out and perform such conditions and covenants, at the
cost and expense of the Tenant, and the said cost and expense shall be payable
on demand, or at the option of the Landlord shall be added to the installment of
rent due immediately thereafter but in no case later than one month after such
demand, whichever occurs sooner, and shall be due and payable as such. This
remedy shall be in addition to such other remedies as the Landlord may have
hereunder by reason of the breach by the Tenant of any of the covenants and
conditions in this lease contained.
21st: This lease and the obligation of the Tenant to pay the rent
hereunder and to comply with the covenants and conditions hereof, shall not be
affected, curtailed, impaired or excused because of the Landlord's inability to
supply any service or material called for herein, by reason of any rule, order,
regulation or preemption by any governmental entity, authority, department,
agency or subdivision or for any delay which may arise by reason of negotiations
for the adjustment of any fire or other casualty loss or because of strikes or
other labor trouble or for any cause beyond the control of the Landlord.
22nd: The terms, conditions, covenants and provisions of this lease
shall be deemed to be severable. If any clause or provision herein contained
shall be adjudged to be invalid or unenforceable by a court of competent
jurisdiction or by operation of any applicable law, it shall not affect the
validity of any other clause or provision herein, but such other clauses or
provisions shall remain in full force and effect.
23rd: The various rights, remedies, options and elections of the
Landlord, expressed herein, are [garbled unintelligble language] and the failure
of the Landlord to enforce strict performance by the Tenant of the conditions
and covenants of this lease or to exercise any election or option or to resort
or have recourse to any remedy herein conferred or the acceptance by the
Landlord of any installment of rent after any breach by the Tenant, in any one
or more instances, shall not be construed or deemed to be a waiver or a
relinquishment for the future by the Landlord of any such conditions and
covenants, options, elections or remedies, but the same shall continue in full
force and effect.
24th: All notices required under the terms of this lease shall be
given and shall be complete by mailing such notices by certified or registered
mail, return receipt requested, to the
<PAGE>
address of the parties as shown at the head of this lease, or to such other
address as may be designated in writing, which notice of change of address shall
be given in the same manner.
25th: The Landlord covenants and represents that the Landlord is the
owner of the premises herein leased and has the right and authority to enter
into, execute and deliver this lease; and does further covenant that the Tenant
on paying the rent and performing the conditions and covenants herein contained,
shall and may peaceably and quietly have, hold and enjoy the leased premises for
the term aforementioned.
26th: This lease contains the entire contract between the parties. No
representative, agent or employee of the Landlord has been authorized to make
any representations or promises with reference to the within letting or to vary,
alter or modify the terms hereof. No additions, changes or modifications,
renewals or extensions hereof, shall be binding unless reduced to writing and
signed by the Landlord and the Tenant.
27th: The Tenant will be responsible for $1,000,000.00 in Liability
Insurance.
28th: The demised floor plan is attached as Exhibit 1.
29th: Should the Landlord need the demised area, he will relocate the
Tenant with sixty (60) days notice to a space which is equal to or better than
the existing space. The Landlord will pay for the costs of the move. Space shall
be equal to or better than the existing one, in the same building or the same
industrial center.
The tenant has the right to extend the Lease for 8 additional three
(3) month period under the same terms and conditions.
The Landlord may pursue the relief or remedy sought in any invalid
clause, by conforming the said clause with the provisions of the statutes or the
regulations of any governmental agency in such case made and provided as if the
particular provisions of the applicable statutes or regulations were set forth
herein at length.
In all references herein to any parties, persons, entities or
corporations the use of any particular gender or the plural or singular number
is intended to include the appropriate gender or number as the text of the
within instrument may require. All the terms, covenants and conditions herein
contained shall be for and shall inure to the benefit of and shall bind the
respective parties hereto, and their heirs, executors, administrators, personal
or legal representatives, successors and assigns.
<PAGE>
In Witness Whereof, the parties hereto have hereunto set their hands
and seals, or cause these presents to be signed by their proper corporate
officers and their proper corporate seal to be hereto affixed, the day and year
first above written.
Signed, Sealed and Delivered /s/John Donato, Jr.
in the presence of or attested by _________________________________
John Donato, Jr. d/b/a Landlord
Donato Construction Co.
____________________________ /s/Charles S. Brand
____________________________________
Charles S. Brand d/b/a Tenant
M M Tech
<PAGE>
State of New Jersey, County of } ss.: Be it Remembered,
that on ___________________, 19____, before me, the subscriber,
_______________________ personally appeared
_________________________________________________, who, I am satisfied,
_______________________________ the person named in and who executed the within
Instrument, and thereupon _____________ acknowledged that _______________
signed, sealed and delivered the same as ____________ act and deed, for the uses
and purposes therein expressed.
____________________________________
State of New Jersey, County of } ss.: Be it Remembered,
that on ___________________, 19____, before me, the subscriber,
_______________________ personally appeared
_________________________________________________, who, being by me duly sworn
on h_____ oath, deposes and makes proof to my satisfaction, that he is the
_______________________ Secretary of ___________________________________________
the Corporation named in the within Instrument; that
___________________________________ is the __________________ President of said
Corporation; that the execution, as well as the making of this Instrument, has
been duly authorized by a proper resolution of the Board of Directors of the
said Corporation; that deponent well knows the corporate seal of said
Corporation; and that the seal affixed to said Instrument is the proper
corporate seal and was thereto affixed and said Instrument signed and delivered
by said _________________________ President as and for the voluntary act and
deed of said Corporation, in presence of deponent, who thereupon subscribed
h______ name thereto as attesting witness.
Sworn to and subscribed before me,
the date aforesaid. ____________________________________
Prepared by:
<PAGE>
Lease
_______________________________________________________
DONATO CONSTRUCTION CO.
TO
M M TECH
__________________________________________________________
Dated, , 19
__________________________________________________________
Expires, May 31, 1994
Rent, $10,500.00
<PAGE>
LEASE AMENDMENT
WHEREAS, John Donato, Jr., t/a Mid Atlantic Industrial Co.,
(Landlord)
and
Charles S. Brand, t/a mm-Tech, Inc.
(Tenant)
have entered into a Lease dated January 24, 1994, covering premises located at
246 Industrial Way West, Eatontown, New Jersey 07724 and;
WHEREAS, the aforesaid parties desire to add the following terms to
the said Lease.
NOW, THEREFORE, in consideration of One ($1.00) Dollar and other good
and valuable consideration the parties agree as follows:
1. There shall be four additional three month renewals at tenant's
option with two months notice to Landlord.
2. mm-Tech, Inc., shall have first option on the space contiguous to
theirs, and mm-Tech, Inc., shall be allowed to utilized the space
behind them (to the North) for storage, in the interim at a cost
of $5.00 per square foot gross - if said storage is for more than
thirty (30) days.
3. As discussed, mm-Tech, Inc. would be agreeable under the above
conditions to splitting the difference, at $3,100.00 per month.
All other terms and conditions of said Lease shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have set their hands and seals this
_____day of __________, 1994.
WITNESS:
/s/ Anna S. Mayer /s/John Donato, Jr.
________________________________ ______________________________
JOHN DONATO, JR., (Landlord)
________________________________ /s/Charles S. Brand
______________________________
mm-Tech, Inc. (Tenant)
<PAGE>
LEASE AMENDMENT
WHEREAS, John Donato, Jr., t/a Mid Atlantic Industrial Co., (landlord)
and
mm-Tech, Inc. (Tenant)
have entered into a Lease dated January 24, 1994, and further amended as of
April, 1994 covering the premises located at 246 Industrial Way WEST, Eatontown,
New Jersey. We hereby amend the terms and conditions of the aforesaid Lease
follows and:
WHEREAS, the aforesaid parties desire to extend the terms of the said
Lease:
NOW, THEREFORE, in consideration of One ($1.00) Dollar and other good
and valuable consideration the parties agree as follows:
1. The Tenant will move into 7000 sq. ft. in Bays 4 & 5 of 20 Meridian
Road on or about April 1, 1995, when the Landlord has completed fit up as
outlined on the attached exhibit.
2. Term of occupancy will be for 5 years from commencement date. The
rent will be as follows:
$5.50 per square foot, triple net for year 1 on 4800 sq. ft. for a
total of $26,400.
$6.00 per square foot, triple net for year 2 on 7000 sq. ft. for a
total of $42,000.
$6.50 per square foot, triple net for year 3 on 7000 sq. ft. for a
total of $45,500.
$7.15 per sq. foot, triple net for years 4 & 5 on 7000 sq. ft. for a
total of $50,500 per year.
3. Should the Tenant desire to terminate the Lease after the first
year, Tenant will pay 3 months rent as penalty. Tenant must notify Landlord 3
months prior to any termination.
4. It is hereby agreed by all parties concerned that the Lease for 20
Meridian will be a completely net Lease with the Tenant being responsible for
it's pro rata share of taxes, common area maintenance, as well as his utilities.
The Tenant will be billed on a monthly basis for these costs. The Tenant will
make arrangements with the appropriate utility companies to provide service to
the facility.
5. Landlord will provide Tenant with fit up as outlined on the
attached exhibit, will obtain Certificate of Occupancy and represents that
premises will comply with all municipal and other governmental codes and
ordinances.
All other non conflicting terms and conditions of said Lease shall
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands and seals this 27
day of March, 1995.
WITNESS:
/s/Hugh J. McGee /s/John Donato, Jr.
____________________________ __________________________
JOHN DONATO, JR. (Landlord)
/s/Hugh J. McGee /s/Charles S. Brand
____________________________ ___________________________
mm-Tech, Inc. (Tenant)
<PAGE>
LEASE AMENDMENT No. 3
THIS LEASE AMENDMENT No. 3 dated as of October ____, 1996,
("Amendment") by and between WHMBL REAL ESTATE LIMITED PARTNERSHIP, a Delaware
limited partnership, having an office at 1650 Tysons Boulevard, 4th Floor,
McLean, Virginia 22102 ("Landlord"), and Charles S. Brand d/b/a mm-Tech, Inc.
("Tenant").
RECITALS
1. Tenant and Landlord's predecessor-in-interest, John Donato, Jr.,
entered into a Lease dated January 24, 1994, and Lease Amendments dated April
11, 1994 and March 27, 1995 (the lease, as amended, the "Lease").
2. Landlord and Tenant now desire to modify the Lease on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and premises
set forth herein, the parties agree as follows:
1. Expansion of Premises. Landlord shall perform the work set forth on
Exhibit A annexed hereto and made a part hereof. Upon the date ("Expansion
Commencement Date") of delivery by Landlord to Tenant of a Certificate of
Occupancy for Bay 6 at 246 Industrial Way West, Eatontown, N.J., Tenant shall
accept Bay 6 as part of the premises, and any and all references to the
"premises" in the Lease shall include, without limitation, Bay 6. Landlord and
Tenant agree Bay 6 contains 4,514 square feet.
2. Increase in Basic Rent. From and after the Expansion Commencement
Date the rent otherwise payable pursuant to paragraph 2 of the March 27, 1995
Amendment will be increased for the remaining term of the Lease by $1.14 per
square foot per year for 7,000 square feet, i.e., $7,980 per year, for each year
or partial year of the remaining term payable in additional monthly payments of
$665. Additionally, the basic rent payable for Bay 6 will be as follows:
$6.50 per square foot, triple net for year 1 of the expansion,
i.e., from the Expansion Commencement Date to the day before the
first anniversary of the Expansion Commencement Date, on 4,514
sq. ft., for a total of $29,341.
$7.15 per square foot, triple net, for each year commencing on an
anniversary of the Expansion Commencement Date, and ending on the
day prior to the next anniversary of the Expansion Commencement
Date.
<PAGE>
3. Term. Landlord and Tenant acknowledges the current term of the
Lease commenced on April 1, 1995 and shall terminate on March 31, 2000.
4. Elimination of Options: Tenant acknowledges that it has no renewal
or expansion options.
5. Limited Termination Right. Tenant's right to terminate the Lease as
set forth in paragraph 3 of the March 27, 1995 Amendment is terminated. Tenant
may not terminate the Lease as to Bay 4 or Bay 5. However, Tenant, on three (3)
months prior notice to Landlord, and the payment of the next three (3) months
rent due in connection with Bay 6 pursuant to this Amendment No. 3, may
terminate this Lease as to Bay 6 only.
6. Estoppel. Tenant hereby releases Landlord from any and all claims
and damages whatsoever arising from any act or failure to act on the part of the
Landlord (including, without, limitation, any of Landlord's
predecessors-in-interest) at any time prior to the date hereof.
7. Broker. Tenant acknowledges that Tenant has not talked to any
broker or other person in connection with this Lease Amendment No. 3 other than
Sheldon Gross Realty, Inc., which Landlord shall pay by separate agreement.
Tenant shall indemnify, defend and hold Landlord harmless from and against any
claims, damages, demands, penalties, costs or expenses due to any other party
who claims a brokerage or finder's fee or other compensation in connection with
the Lease or this Amendment No. 3 due to the alleged acts of Tenant. This
indemnification shall include, without limitation, the cost of enforcing this
indemnity.
8. Lease in Full Force and Effect. Except as specifically set forth
herein, all terms and provisions of the Lease shall continue in full force and
effect. Without limiting the prior sentence, paragraph 4 of the March 27, 1995
Amendment remains in full force and effect and applies to Bay 6. Accordingly,
Tenant's pro rata share of taxes and common area maintenance shall increase to
reflect the taxes and common area maintenance attributable to Bay 6, and Tenant
shall pay utilities, and all other amounts as to Bay 6 as well as the balance of
the premises. If there are any conflicts between the terms and provisions of
this Amendment No. 3 and the Lease, the terms and provisions of the Amendment
No. 3 shall prevail.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Lease
Amendment No. 3 as of the day and year first above written.
LANDLORD:
WHMBL REAL ESTATE PARTNERSHIP,
a Delaware limited partnership
By: WHMBL Gen-Par, Inc.
it's General Partner
By: /s/Richard Schreiber
__________________________
Name: Richard Schreiber
Title: Assistant Vice President
TENANT:
CHARLES S. BRAND
d/b/a mm-Tech, Inc.
/s/Charles S. Brand
_______________________________
CHARLES S. BRAND
<PAGE>
EXHIBIT A
The totality of work to be performed by landlord as follows:
Enclosed is a scale drawing of bays 4, 5, & 6 with the modifications identified.
1. Add a door.
2. Remove entire wall.
3. Add three walls and two doors.
4. Widen opening.
5. Remove entire wall.
6. Add wall with double doors.
7. Add two walls.
8. Remove one wall; add two walls and one door.
9. Remove two walls.
10. Cut one doorway.
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated April 25, 1997, by and
between LogiMetrics, Inc. (the "Company") and Charles S. Brand (the
"Executive"), residing at 175 Boundary Road, Colts Neck, New Jersey 07722.
W I T N E S S E T H:
WHEREAS, the Company, the Executive, mm-Tech, Inc. ("mm-Tech") and mm-Tech
Acquisition Corp. ("Merger Sub") have entered into an Agreement and Plan of
Merger, dated December 18, 1996 (the "Merger Agreement"), pursuant to which,
among other things, Merger Sub will merge with and into mm-Tech and all of the
issued and outstanding capital stock of mm-Tech will be converted into shares of
Common Stock of the Company (the "Merger"); and
WHEREAS, the Executive is willing to serve as the Chairman of the Board of
Directors and the Chief Executive Officer of the Company commencing upon the
consummation of the Merger (the "Commencement Date") and the Company desires to
retain the Executive in that capacity on the terms and conditions herein set
forth; and
WHEREAS, it is a condition to the obligations of the parties under the
Merger Agreement that the Company and the Executive enter into an employment
agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
Section 1. Term of Employment. The Executive's employment shall commence on
the Commencement Date and, subject to earlier termination pursuant to Section 5
hereof, shall continue until the fifth anniversary of the Commencement Date (the
"Term"). In the event that the Commencement Date does not occur prior to April
30, 1997, this Agreement shall become null and void and shall be of no further
force and effect. The Executive hereby represents and warrants that (i) he has
the legal capacity to execute and perform this Agreement; (ii) this Agreement is
a valid and binding agreement enforceable against him according to its terms;
(iii) the execution and performance of this Agreement by him does not violate
the terms of any existing agreement or understanding to which the Executive is a
party or by which he may be bound; and (iv) the Executive knows no reason why he
would not be insurable at regular non-smoker rates.
Section 2. Position and Duties. During the Term, the Executive shall serve
as the Chairman of the Board of Directors and the Chief Executive Officer of the
Company and shall have such powers and duties as are commensurate with such
position and as may be conferred upon him from time to time by the Board of
Directors of the Company (the "Board"). During the Term, the Executive shall
also hold such other positions with one or more of the Company's subsidiaries
and shall perform such duties in connection therewith as may be directed by the
Board. During the Term, and except for illness or incapacity and reasonable
vacation periods of
<PAGE>
no more than four weeks in any calendar year (or such other, longer period as
shall be consistent with the Company's policies for other senior executives),
the Executive shall devote all of his business time, attention, skill and
efforts exclusively to the business and affairs of the Company and its
subsidiaries and affiliates; provided, however, that (i) the Executive may
engage in other personal business activities not constituting Competing
Businesses under the Merger Agreement up to three days in any calendar month and
(ii) the Executive may engage in charitable, educational, religious, civic and
similar types of activities (all of which shall be deemed to benefit the
Company), speaking engagements, membership on the board of directors of other
organizations, and similar activities to the extent that such activities do not
inhibit or prohibit the performance of his duties hereunder or inhibit or
conflict with the business of the Company, its subsidiaries and affiliates.
Section 3. Compensation. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company, or any subsidiary, affiliate or division thereof, the Executive shall
be compensated as follows:
(a) The Company shall pay the Executive a fixed salary at the rate of
$200,000 per annum or such higher annual amount as is being paid from time to
time pursuant to the terms hereof ("Base Salary"). The Base Salary shall be
subject to such periodic review and such periodic increases as the Board (or the
Compensation Committee of the Board) shall deem appropriate in accordance with
the Company's customary procedures and practices regarding the salaries of
senior executives. Base Salary shall be payable in accordance with the customary
payroll practices of the Company, but in no event less frequently than
bi-weekly.
(b) Subject to the approval of the Board (or the Compensation
Committee of the Board), the Executive shall be entitled to participate in all
compensation and employee benefit plans or programs, and to receive all
benefits, perquisites and emoluments, for which any salaried employees of the
Company are eligible under any employee benefit plan or program now or hereafter
established and maintained by the Company. Notwithstanding the foregoing,
nothing in this Agreement shall require the Company to establish or maintain any
such plans or programs or shall preclude the amendment or termination of any
such plan or program established by the Company from time to time, provided that
such amendment or termination is applicable generally to the senior officers of
the Company or any subsidiary or affiliate.
(c) The Company shall provide and maintain a term life insurance
policy on the Executive in the face amount of at least $1 million.
Section 4. Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable travel or other expenses incurred by the Executive
in connection with the performance of his duties and obligations under this
Agreement, subject to the Executive's presentation of appropriate vouchers in
accordance with such procedures as the Company may from time to time establish
for senior officers and to preserve any deductions for Federal income taxation
purposes to which the Company may be entitled.
<PAGE>
Section 5. Effect of Termination of Employment. (a) In the event the
Executive's employment terminates, whether during the Term or following the
expiration of the Term, due to a Without Cause Termination, the Company shall,
as liquidated damages or severance pay, or both, continue, subject to the
provisions of Section 6 below, to pay the Executive's Base Salary as in effect
at the time of such termination for the greater of (i) the remainder of the
then-current Term, or (ii) a period of twelve months from the effective date of
such termination. During the period that the Company is making payments pursuant
to this Section 5(a), the Company shall continue to provide the Executive with
continued group hospitalization, health and related insurance in lieu of any
rights the Executive would otherwise have under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"). For purposes hereof, no Without Cause
Termination shall be effective until 30 days after the Company has given notice
of termination to the Executive.
(b) In the event the Executive's employment terminates, whether during
the Term or following the expiration of the Term, due to a Permanent Disability,
the Company shall continue to pay the Executive's Base Salary as in effect at
the time of such termination for a period of six months from the date of such
termination; provided, that such amounts shall be offset by any amounts
otherwise paid to the Executive under the Company's then-existing disability
program. In addition, earned but unpaid Base Salary as of the date of
termination of employment shall be payable in full. The Executive shall be
entitled to continued group hospitalization, health and related insurance for
the periods specified under COBRA and the Company shall pay any related premiums
for a period of up to twelve months following such termination.
(c) In the event that the Executive dies or the Executive's employment
hereunder terminates due to a Termination for Cause or the Executive terminates
employment with the Company for reasons other than Permanent Disability or
retirement pursuant to any retirement plan then maintained by the Company,
earned but unpaid Base Salary as of the date of termination of employment shall
be payable in full to the Executive or his legal representative. However, no
other payments shall be made, or benefits provided, by the Company under this
Agreement except for benefits that have already become vested under the terms of
employee benefit programs maintained by the Company or its affiliates for its
employees and except as otherwise required by law.
(d) For purposes of this Agreement, the following terms have the
following meanings:
(i) The term "Termination for Cause" means, to the maximum extent
permitted by applicable law, a termination of the Executive's employment by
the Company because the Executive has (a) breached or failed to perform his
duties under applicable law and such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness, (b) committed
an act of dishonesty in the performance of his duties hereunder or engaged
in any conduct detrimental to the business or reputation of the Company,
(c) been convicted of a felony or misdemeanor involving moral turpitude,
(d) breached or failed to perform his
<PAGE>
obligations and duties hereunder, which breach or failure the Executive
shall fail to remedy within 30 days after written demand from the Company,
or (e) violated the representations made in Section 1 above or the
provisions of Section 6 below.
(ii) The term "Without Cause Termination" means a termination of
the Executive's employment by the Company other than due to Permanent
Disability, retirement or expiration of the Term and other than a
Termination for Cause.
(iii) The term "Permanent Disability" means permanently disabled
so as to qualify for full benefits under the Company's then-existing
disability insurance policy; provided, however, that if the Company does
not maintain any such policy on the date of determination, "Permanent
Disability" shall mean the inability of the Executive to work for a period
of six full calendar months during any eight consecutive calendar months
due to illness or injury of a physical or mental nature, supported by the
completion by the Executive's attending physician of a medical
certification form outlining the disability and treatment.
Section 6. Other Obligations and Duties of Executive During and After Term.
(a) The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, or customers of the Company or any
of its subsidiaries or affiliates (any or all of such entities being hereinafter
referred to as the "Business"), as such information may exist from time to time,
other than information that is in the public domain, other than as a result of a
breach by the Executive of his obligations hereunder, is confidential
information and is a unique and valuable asset of the Business, access to and
knowledge of which are essential to the performance of the Executive's duties
under this Agreement. In consideration of the payments made to him hereunder,
the Executive shall not, except to the extent reasonably necessary in the
performance of his duties under this Agreement, divulge to any person, firm,
association, corporation, or governmental agency, any information concerning the
affairs, businesses, clients, or customers of the Business (except such
information as is required by law to be divulged to a government agency or
pursuant to lawful process), or make use of any such information for his own
purposes or for the benefit of any person, firm, association or corporation
(except the Business) and shall use his reasonable best efforts to prevent the
disclosure of any such information by others. All records, memoranda, letters,
books, papers, reports, accountings, experience or other data, and other records
and documents relating to the Business, whether made by the Executive or
otherwise coming into his possession, are confidential information and are,
shall be, and shall remain the property of the Business. No copies thereof shall
be made which are not retained by the Business, and the Executive agrees, on
termination of his employment or on demand of the Company, to deliver the same
to the Company.
(b) The Executive recognizes and acknowledges that the Company shall
own all Work Product created by the Executive during the Term. As used herein,
"Work
<PAGE>
Product" includes, but is not limited to, all intellectual property rights, U.S.
and international copyrights, patentable inventions, creations, discoveries and
improvements, works of authorship and ideas, whether or not patentable or
copyrightable and regardless of their form or state of development. All Work
Product shall be considered work made for hire by the Executive and shall be
owned by the Company.
If any of the Work Product may not, by operation of law, be considered
a work made for hire by the Executive for the Company, or if ownership of all
right, title and interest of the intellectual property rights therein shall not
otherwise vest exclusively in the Company, the Executive shall assign, and upon
creation thereof shall be deemed to have automatically assigned, without further
consideration, the ownership of all such Work Product to the Company and its
successors and assigns. The Company, its successors and assigns shall have the
right to obtain and hold in its or their own name copyrights, patents,
registrations and other protections available to the Work Product. The Executive
shall assist the Company in obtaining and maintaining patent, copyright,
trademark and other appropriate protection for all Work Product in all
countries, at the Company's expense. The Executive hereby irrevocably
relinquishes for the benefit of the Company, its successors and assigns any
moral rights in the Work Product recognized under applicable law.
The Executive shall disclose all Work Product promptly to the Company
and shall not disclose the Work Product to anyone other than authorized Company
personnel without the Company's prior written consent. The Executive shall not
disclose to the Company or induce the Company to use any secret or confidential
information or material belonging to others.
The provisions of this Section 6(b) cover Work Product of any kind
that is conceived or made by the Executive that (i) relates to the business of
the Company, its subsidiaries and affiliates, (ii) results from tasks assigned
to the Executive by the Company, its subsidiaries and affiliates, or (iii) are
conceived or made with the use of facilities or materials provided by the
Company, its subsidiaries and affiliates.
(c) In consideration of the payments made to him hereunder, during the
two-year period commencing on the effective date of the termination of his
employment, the Executive shall not, without express prior written approval of
the Board, directly or indirectly, own or hold any proprietary interest in, or
be employed by or receive remuneration from, any Competing Business (as defined
in the Merger Agreement), other than severance-type or retirement-type benefits
from entities constituting prior employers of the Executive. The Executive also
shall not, during such two-year period, solicit for the account of any Competing
Business, any customer or client of the Company or its affiliates, or, in the
event of the Executive's termination of his employment, any entity or individual
that was such a customer or client during the twelve-month period immediately
preceding the Executive's termination of employment. The Executive also shall
not, during such two-year period, act on behalf of any Competing Business to
interfere with the relationship between the Company or its subsidiaries and
affiliates and their respective employees.
<PAGE>
For purposes of the preceding paragraph, the term "proprietary
interest" means legal or equitable ownership, whether through stockholding or
otherwise, of an equity interest in a business, firm or entity other than
ownership of less than 2 percent of any class of equity interest in a publicly
held business, firm or entity.
(d) The Company's obligation to make payments, or provide for any
benefits under this Agreement (except to the extent vested or exercisable) shall
cease upon a violation of the preceding provisions of this section. The
Executive acknowledges that the restrictions contained in this Section 6 are
reasonable and necessary to protect the legitimate interests of the Company and
that any breach by the Executive of any provision hereof will result in
irreparable injury to the Company. The Executive acknowledges that, in addition
to all remedies available at law, the Company shall be entitled to equitable
relief, including injunctive relief, and an equitable accounting of all
earnings, profits or other benefits arising from such breach and shall be
entitled to receive such other damages, direct or consequential, as may be
appropriate. The Company shall not be required to post any bond or other
security in connection with any proceeding to enforce this Section 6. The
provisions of this Section 6 shall survive the Executive's termination of his
employment with the Company.
Section 7. Withholdings. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, state, city or other
taxes and all other deductions as shall be required pursuant to any law or
governmental regulation or ruling or pursuant to any contributory benefit plan
maintained by or on behalf of the Company.
Section 8. Consolidation, Merger, or Sale of Assets. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially all of its assets to, or engaging in any
other business combination with, any other person or entity which assumes this
Agreement and all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger, transfer of assets or other business combination
and assumption, the term "Company" as used herein shall mean such other person
or entity and this Agreement shall continue in full force and effect.
Section 9. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given if delivered or mailed, postage prepaid, by same day or
overnight mail (i) if to the Executive, at the address set forth above, or (ii)
if to the Company, as follows:
LogiMetrics, Inc.
121-03 Dupont Street
Plainview, New York 11803
Attention: Secretary
Facsimile: (516) 349-8552
or to such other address as either party shall have previously specified in
writing to the other.
<PAGE>
Section 10. No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
10 shall preclude the assumption of such rights by executors, administrators or
other legal representatives of the Executive or his estate and their assigning
any rights hereunder to the person or persons entitled thereto.
Section 11. Source of Payment. All payments provided for under this
Agreement shall be paid in cash from the general funds of the Company. The
Company shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of the Company.
Section 12. Binding Agreement; No Assignment. This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive and the Company
and their respective permitted successors, assigns, heirs, beneficiaries and
representatives. This Agreement is personal to the Executive and may not be
assigned by him without the prior written consent of the Company. Any attempted
assignment in violation of this Section 12 shall be null and void.
Section 13. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.
Section 14. Entire Agreement. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters.
Section 15. Amendments. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 15
may only be amended or otherwise modified by such a writing.
Section 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.
LOGIMETRICS, INC.
By:/s/Norman Phipps
_________________________________
Norman M. Phipps, Acting President
/s/Charles S. Brand
__________________________________
Charles S. Brand
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated April 25, 1997, by and
between LogiMetrics, Inc. (the "Company") and Norman M. Phipps (the
"Executive"), residing at 5 Crystal Court, Neshanic Station, New Jersey 08853.
W I T N E S S E T H:
WHEREAS, the Company, mm-Tech, Inc. ("mm-Tech"), mm-Tech Acquisition Corp.
("Merger Sub") and Charles S. Brand have entered into an Agreement and Plan of
Merger, dated December 18, 1996 (the "Merger Agreement"), pursuant to which,
among other things, Merger Sub will merge with and into mm-Tech and all of the
issued and outstanding capital stock of mm-Tech will be converted into shares of
Common Stock of the Company (the "Merger"); and
WHEREAS, the Executive has previously served as the Chairman of the Board
and Acting President of the Company; and
WHEREAS, the Executive is willing to serve as the President and Chief
Operating Officer of the Company commencing upon the consummation of the Merger
(the "Commencement Date") and the Company desires to retain the Executive in
that capacity on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
Section 1. Term of Employment. The Executive's employment shall commence on
the Commencement Date and, subject to earlier termination pursuant to Section 5
hereof, shall continue until the fifth anniversary of the Commencement Date (the
"Term"). In the event that the Commencement Date does not occur prior to April
30, 1997, this Agreement shall become null and void and shall be of no further
force and effect. The Executive hereby represents and warrants that (i) he has
the legal capacity to execute and perform this Agreement; (ii) this Agreement is
a valid and binding agreement enforceable against him according to its terms;
(iii) the execution and performance of this Agreement by him does not violate
the terms of any existing agreement or understanding to which the Executive is a
party or by which he may be bound; and (iv) the Executive knows no reason why he
would not be insurable at regular smoker rates.
Section 2. Position and Duties. During the Term, the Executive shall serve
as the President and the Chief Operating Officer of the Company and shall have
such powers and duties as are commensurate with such position and as may be
conferred upon him from time to time by the Board of Directors of the Company
(the "Board") or the Chief Executive Officer of the Company. During the Term,
the Executive shall also hold such other positions with one or more of the
Company's subsidiaries and shall perform such duties in connection therewith as
may be directed by the Board. During the Term, and except for illness or
incapacity and reasonable
<PAGE>
vacation periods of no more than four weeks in any calendar year (or such other,
longer period as shall be consistent with the Company's policies for other
senior executives), the Executive shall devote all of his business time,
attention, skill and efforts exclusively to the business and affairs of the
Company and its subsidiaries and affiliates; provided, however, that (i) the
Executive may engage in other personal business activities not constituting
Competing Businesses under the Merger Agreement up to three days in any calendar
month and (ii) the Executive may engage in charitable, educational, religious,
civic and similar types of activities (all of which shall be deemed to benefit
the Company), speaking engagements, membership on the board of directors of
other organizations, and similar activities to the extent that such activities
do not inhibit or prohibit the performance of his duties hereunder or inhibit or
conflict with the business of the Company, its subsidiaries and affiliates.
Section 3. Compensation. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company, or any subsidiary, affiliate or division thereof, the Executive shall
be compensated as follows:
(a) The Company shall pay the Executive a fixed salary at the rate of
$150,000 per annum or such higher annual amount as is being paid from time to
time pursuant to the terms hereof ("Base Salary"). The Base Salary shall be
subject to such periodic review and such periodic increases as the Board (or the
Compensation Committee of the Board) shall deem appropriate in accordance with
the Company's customary procedures and practices regarding the salaries of
senior executives. Base Salary shall be payable in accordance with the customary
payroll practices of the Company, but in no event less frequently than
bi-weekly.
(b) Subject to the approval of the Board (or the Compensation
Committee of the Board), the Executive shall be entitled to participate in all
compensation and employee benefit plans or programs, and to receive all
benefits, perquisites and emoluments, for which any salaried employees of the
Company are eligible under any employee benefit plan or program now or hereafter
established and maintained by the Company. Notwithstanding the foregoing,
nothing in this Agreement shall require the Company to establish or maintain any
such plans or programs or shall preclude the amendment or termination of any
such plan or program established by the Company from time to time, provided that
such amendment or termination is applicable generally to the senior officers of
the Company or any subsidiary or affiliate.
(c) The Company shall provide and maintain a term life insurance
policy on the Executive in the face amount of at least $1 million.
Section 4. Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable travel or other expenses incurred by the Executive
in connection with the performance of his duties and obligations under this
Agreement, subject to the Executive's presentation of appropriate vouchers in
accordance with such procedures as the Company may from time to time establish
for senior officers and to preserve any deductions for Federal income taxation
purposes to which the Company may be entitled.
<PAGE>
Section 5. Effect of Termination of Employment. (a) In the event the
Executive's employment terminates, whether during the Term or following the
expiration of the Term, due to a Without Cause Termination, the Company shall,
as liquidated damages or severance pay, or both, continue, subject to the
provisions of Section 6 below, to pay the Executive's Base Salary as in effect
at the time of such termination for the greater of (i) the remainder of the
then-current Term, or (ii) a period of twelve months from the effective date of
such termination. During the period that the Company is making payments pursuant
to this Section 5(a), the Company shall continue to provide the Executive with
continued group hospitalization, health and related insurance in lieu of any
rights the Executive would otherwise have under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"). For purposes hereof, no Without Cause
Termination shall be effective until 30 days after the Company has given notice
of termination to the Executive.
(b) In the event the Executive's employment terminates, whether during
the Term or following the expiration of the Term, due to a Permanent Disability,
the Company shall continue to pay the Executive's Base Salary as in effect at
the time of such termination for a period of six months from the date of such
termination; provided, that such amounts shall be offset by any amounts
otherwise paid to the Executive under the Company's then-existing disability
program. In addition, earned but unpaid Base Salary as of the date of
termination of employment shall be payable in full. The Executive shall be
entitled to continued group hospitalization, health and related insurance for
the periods specified under COBRA and the Company shall pay any related premiums
for a period of up to twelve months following such termination.
(c) In the event that the Executive dies or the Executive's employment
hereunder terminates due to a Termination for Cause or the Executive terminates
employment with the Company for reasons other than Permanent Disability or
retirement pursuant to any retirement plan then maintained by the Company,
earned but unpaid Base Salary as of the date of termination of employment shall
be payable in full to the Executive or his legal representative. However, no
other payments shall be made, or benefits provided, by the Company under this
Agreement except for benefits that have already become vested under the terms of
employee benefit programs maintained by the Company or its affiliates for its
employees and except as otherwise required by law.
(d) For purposes of this Agreement, the following terms have the
following meanings:
(i) The term "Termination for Cause" means, to the maximum extent
permitted by applicable law, a termination of the Executive's employment by
the Company because the Executive has (a) breached or failed to perform his
duties under applicable law and such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness, (b) committed
an act of dishonesty in the performance of his duties hereunder or engaged
in any conduct detrimental to the business or reputation of the Company,
(c) been convicted of a felony or misdemeanor involving moral turpitude,
(d) breached or failed to perform his
<PAGE>
obligations and duties hereunder, which breach or failure the Executive
shall fail to remedy within 30 days after written demand from the Company,
or (e) violated the representations made in Section 1 above or the
provisions of Section 6 below.
(ii) The term "Without Cause Termination" means a termination of
the Executive's employment by the Company other than due to Permanent
Disability, retirement or expiration of the Term and other than a
Termination for Cause.
(iii) The term "Permanent Disability" means permanently disabled
so as to qualify for full benefits under the Company's then-existing
disability insurance policy; provided, however, that if the Company does
not maintain any such policy on the date of determination, "Permanent
Disability" shall mean the inability of the Executive to work for a period
of six full calendar months during any eight consecutive calendar months
due to illness or injury of a physical or mental nature, supported by the
completion by the Executive's attending physician of a medical
certification form outlining the disability and treatment.
Section 6. Other Obligations and Duties of Executive During and After Term.
(a) The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, or customers of the Company or any
of its subsidiaries or affiliates (any or all of such entities being hereinafter
referred to as the "Business"), as such information may exist from time to time,
other than information that is in the public domain, other than as a result of a
breach by the Executive of his obligations hereunder, is confidential
information and is a unique and valuable asset of the Business, access to and
knowledge of which are essential to the performance of the Executive's duties
under this Agreement. In consideration of the payments made to him hereunder,
the Executive shall not, except to the extent reasonably necessary in the
performance of his duties under this Agreement, divulge to any person, firm,
association, corporation, or governmental agency, any information concerning the
affairs, businesses, clients, or customers of the Business (except such
information as is required by law to be divulged to a government agency or
pursuant to lawful process), or make use of any such information for his own
purposes or for the benefit of any person, firm, association or corporation
(except the Business) and shall use his reasonable best efforts to prevent the
disclosure of any such information by others. All records, memoranda, letters,
books, papers, reports, accountings, experience or other data, and other records
and documents relating to the Business, whether made by the Executive or
otherwise coming into his possession, are confidential information and are,
shall be, and shall remain the property of the Business. No copies thereof shall
be made which are not retained by the Business, and the Executive agrees, on
termination of his employment or on demand of the Company, to deliver the same
to the Company.
(b) The Executive recognizes and acknowledges that the Company shall
own all Work Product created by the Executive during the Term. As used herein,
"Work
<PAGE>
Product" includes, but is not limited to, all intellectual property rights, U.S.
and international copyrights, patentable inventions, creations, discoveries and
improvements, works of authorship and ideas, whether or not patentable or
copyrightable and regardless of their form or state of development. All Work
Product shall be considered work made for hire by the Executive and shall be
owned by the Company.
If any of the Work Product may not, by operation of law, be considered
a work made for hire by the Executive for the Company, or if ownership of all
right, title and interest of the intellectual property rights therein shall not
otherwise vest exclusively in the Company, the Executive shall assign, and upon
creation thereof shall be deemed to have automatically assigned, without further
consideration, the ownership of all such Work Product to the Company and its
successors and assigns. The Company, its successors and assigns shall have the
right to obtain and hold in its or their own name copyrights, patents,
registrations and other protections available to the Work Product. The Executive
shall assist the Company in obtaining and maintaining patent, copyright,
trademark and other appropriate protection for all Work Product in all
countries, at the Company's expense. The Executive hereby irrevocably
relinquishes for the benefit of the Company, its successors and assigns any
moral rights in the Work Product recognized under applicable law.
The Executive shall disclose all Work Product promptly to the Company
and shall not disclose the Work Product to anyone other than authorized Company
personnel without the Company's prior written consent. The Executive shall not
disclose to the Company or induce the Company to use any secret or confidential
information or material belonging to others.
The provisions of this Section 6(b) cover Work Product of any kind
that is conceived or made by the Executive that (i) relates to the business of
the Company, its subsidiaries and affiliates, (ii) results from tasks assigned
to the Executive by the Company, its subsidiaries and affiliates, or (iii) are
conceived or made with the use of facilities or materials provided by the
Company, its subsidiaries and affiliates.
(c) In consideration of the payments made to him hereunder, during the
two-year period commencing on the effective date of the termination of his
employment, the Executive shall not, without express prior written approval of
the Board, directly or indirectly, own or hold any proprietary interest in, or
be employed by or receive remuneration from, any Competing Business (as defined
in the Merger Agreement), other than severance-type or retirement-type benefits
from entities constituting prior employers of the Executive. The Executive also
shall not, during such two-year period, solicit for the account of any Competing
Business, any customer or client of the Company or its affiliates, or, in the
event of the Executive's termination of his employment, any entity or individual
that was such a customer or client during the twelve-month period immediately
preceding the Executive's termination of employment. The Executive also shall
not, during such two-year period, act on behalf of any Competing Business to
interfere with the relationship between the Company or its subsidiaries and
affiliates and their respective employees.
<PAGE>
For purposes of the preceding paragraph, the term "proprietary
interest" means legal or equitable ownership, whether through stockholding or
otherwise, of an equity interest in a business, firm or entity other than
ownership of less than 2 percent of any class of equity interest in a publicly
held business, firm or entity.
(d) The Company's obligation to make payments, or provide for any
benefits under this Agreement (except to the extent vested or exercisable) shall
cease upon a violation of the preceding provisions of this section. The
Executive acknowledges that the restrictions contained in this Section 6 are
reasonable and necessary to protect the legitimate interests of the Company and
that any breach by the Executive of any provision hereof will result in
irreparable injury to the Company. The Executive acknowledges that, in addition
to all remedies available at law, the Company shall be entitled to equitable
relief, including injunctive relief, and an equitable accounting of all
earnings, profits or other benefits arising from such breach and shall be
entitled to receive such other damages, direct or consequential, as may be
appropriate. The Company shall not be required to post any bond or other
security in connection with any proceeding to enforce this Section 6. The
provisions of this Section 6 shall survive the Executive's termination of his
employment with the Company.
Section 7. Withholdings. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, state, city or other
taxes and all other deductions as shall be required pursuant to any law or
governmental regulation or ruling or pursuant to any contributory benefit plan
maintained by or on behalf of the Company.
Section 8. Consolidation, Merger, or Sale of Assets. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially all of its assets to, or engaging in any
other business combination with, any other person or entity which assumes this
Agreement and all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger, transfer of assets or other business combination
and assumption, the term "Company" as used herein shall mean such other person
or entity and this Agreement shall continue in full force and effect.
Section 9. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given if delivered or mailed, postage prepaid, by same day or
overnight mail (i) if to the Executive, at the address set forth above, or (ii)
if to the Company, as follows:
LogiMetrics, Inc.
121-03 Dupont Street
Plainview, New York 11803
Attention: Secretary
Facsimile: (516) 349-8552
or to such other address as either party shall have previously specified in
writing to the other.
<PAGE>
Section 10. No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
10 shall preclude the assumption of such rights by executors, administrators or
other legal representatives of the Executive or his estate and their assigning
any rights hereunder to the person or persons entitled thereto.
Section 11. Source of Payment. All payments provided for under this
Agreement shall be paid in cash from the general funds of the Company. The
Company shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of the Company.
Section 12. Binding Agreement; No Assignment. This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive and the Company
and their respective permitted successors, assigns, heirs, beneficiaries and
representatives. This Agreement is personal to the Executive and may not be
assigned by him without the prior written consent of the Company. Any attempted
assignment in violation of this Section 12 shall be null and void.
Section 13. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.
Section 14. Entire Agreement. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters.
Section 15. Amendments. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 15
may only be amended or otherwise modified by such a writing.
Section 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.
LOGIMETRICS, INC.
By:/s/Russell J. Reardon
_______________________________
Russell J. Reardon,
Senior Vice President
Finance and Administration
/s/Norman M. Phipps
_______________________________
Norman M. Phipps
EXHIBIT 10.16
CONSULTING AGREEMENT
July 29, 1997
Logimetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Attention: Norman Phipps, President
Dear Mr. Phipps:
This will confirm the arrangements, terms and conditions pursuant to
which MBF Capital Corp. (the "Consultant"), has been retained to serve as a
financial consultant and advisor to Logimetrics, Inc., a Delaware corporation
(the "Company"), on a non-exclusive basis. The undersigned hereby agrees to the
following terms and conditions:
1. Duties of Consultant. Consultant shall, at the request of the
Company, upon reasonable notice, provide such financial consulting services and
advice pertaining to the Company's business affairs as the Company may from time
to time reasonably request. Without limiting the generality of the foregoing,
Consultant will assist the Company in developing, studying and evaluating
financing, merger and acquisition, and strategic proposals based upon
documentary information provided to the Consultant by the Company (collectively,
the "Consulting Services").
The Consulting Services may be rendered in person at the offices of
the Company, or any of its subsidiaries or affiliates, at some other mutually
agreeable place, by telephone, or by correspondence. Consulting Services will be
provided on behalf of the Consultant by Mark B. Fisher personally and, without
the prior written consent of the Company, the Consultant shall not subcontract
or delegate to any other person or entity the performance of any such Consulting
Services.
2. Term. The term of this Agreement shall commence on the date hereof
(the "Commencement Date") and shall continue for 18 months after the
Commencement Date (the "Term").
3. Compensation. As compensation for Consulting Services hereunder,
the Company shall pay to Consult a monthly fee of Five Thousand Dollars ($5,000)
with the initial payment due on the Commencement Date and subsequent payments
due on the first day of each calendar month during the Term.
<PAGE>
4. Available Time. Consultant shall cause Mark B. Fisher to devote up
to 25% of his business time to the performance of Consulting Services hereunder
if requested by the Company.
5. Relationship. Nothing herein shall constitute Consultant as an
employee or agent of the Company. Consultant shall not have the authority to
obligate or commit the Company in any manner whatsoever.
6. Indemnification. The Company hereby agrees to indemnify and hold
harmless the Consultant and its affiliates, and the directors, officers,
shareholders, agents and employees of the Consultant (collectively the
"Indemnified Persons"), from and against any and all claims, actions, suits,
proceedings (including, without limitation, those of shareholders), damages,
liabilities and reasonable out-of-pocket expenses as incurred by any of them
(including the reasonable fees and disbursements of counsel) which are (A)
related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company, (ii) any actions taken or omitted to be taken by any Indemnified
Person in connection with the company's engagement of the Consultant pursuant to
this Agreement, or (B) otherwise related to or arising out of the Consultant's
activities on the Company's behalf pursuant to this Agreement, and the Company
shall reimburse any Indemnified Person for all reasonable out-of-pocket expenses
(including the reasonable fees and disbursements of counsel) as incurred by such
Indemnified Person in connection with investigating, preparing or defending any
such claim, action, suit or proceeding (collectively a "Claim"), whether or not
in connection with pending or threatened litigation in which any Indemnified
Person is a party. The Company will not, however, be responsible for any Claim
which is finally judicially determined to have resulted exclusively from the
gross negligence or willful misconduct of the Consultant or any Indemnified
Person.
The Company further agrees that it will not, without the prior written
consent of the Consultant, settle, compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim), unless such settlement, compromise or consent
involves only the payment of money solely by the Company or includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any
and all liability arising out of such Claim.
Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
such Indemnified Person intends to seek indemnification hereunder, such
Indemnified Person shall promptly notify the Company in writing of such
complaint or of such assertion or institution but failure to so notify the
Company shall not relieve the it from any obligation it may have hereunder,
unless and only to the extent such failure prejudices the Company, and will not
in any event relieve the Company from any other obligation or liability it may
have to any Indemnified Person otherwise than under this Agreement. The Company
shall have the right to assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the
payment of the fees and expenses of such counsel, and, except as set forth
below, the Company shall have no
<PAGE>
obligation to pay the fees and disbursements incurred by counsel to the
Indemnified Persons thereafter. In the event, however, that such Indemnified
Person reasonably determines in its sole judgment that having common counsel
would present such counsel with a conflict of interest or if the defendant in,
or target of, any such Claim, includes an Indemnified Person and the Company,
and such Indemnified Person reasonably concludes that there may be legal
defenses available to it or other Indemnified Persons different from or in
addition to those available to the Company, then such Indemnified Person may
employ its own separate counsel to represent or defend it in any such Claim and
the Company shall pay the fees and expenses of such counsel. Notwithstanding
anything herein to the contrary, if the Company fails to timely or diligently
defend, contest, or otherwise protect against any Claim, the Company shall
continue to be responsible for the reasonable fees and disbursements of such
counsel. In any Claim in which the Company assumes the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain its own
counsel therefor at its own expense, other than as set forth above. No Claim
shall be settled or compromised by any Indemnified Person without the prior
written approval of the Company, which approval shall not be unreasonably
withheld or delayed.
The Company agrees that if any indemnity sought by an Indemnified
Person hereunder is held by a court to be unavailable for any reason, then
(whether or not the Consultant is the Indemnified Person), the Company and the
Consultant shall contribute to the Claim for which such indemnity is held
unavailable in such proportion as is appropriate to reflect the relative
benefits to the Company on the one hand and the Consultant on the other, in
connection with the Consultant's engagement referred to above, subject to the
limitation that in no event shall the amount of the Consultant's contribution to
such Claim exceed the amount of cash fees actually received by the Consultant
from the Company pursuant to the Consultant's engagement.
The indemnity, reimbursement and contribution obligations of the
Company pursuant to this Agreement shall be in addition to, and shall in no way
limit or otherwise adversely affect any rights that any Indemnified Party may
have at law or at equity.
The Company hereby consents to personal jurisdiction and service of
process and venue in any court in which any claim for indemnity is brought by
any Indemnified Person.
7. Representations of the Company and the Consultant. Each party
hereto represents and warrants to the other that (i) it has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder, (ii) this Agreement has been duly authorized by all
requisite corporate action by it, and (iii) this agreement is a valid and
binding agreement of it, enforceable against it in accordance with its terms.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile or
sent by certified mail, return receipt requested, and shall be deemed given when
so delivered personally or by facsimile, or if mailed, three days after mailing
as follows: If to the Company to Logimetrics, Inc., 50 Orville Drive, Bohemia,
New York 11716, Attention: Chief Executive Officer, Facsimile: (516) 784-4132,
Telephone: (516) 784-4110, with a copy to Lowenstein, Sandler, Kohl, Fisher &
Boylan, 65 Livingston Avenue, Roseland, New Jersey 07068-1791, Attention: John
D.
<PAGE>
Hogoboom, Esq., Facsimile:(201) 992-5820, Telephone: (201) 992-8700; if to the
Consultant to: MBF Capital Corp. 12 East 49th Street, 35th Floor, New York, New
York 10017, attention: Mark Fisher, Facsimile: (212) 339-2834, Telephone: (212)
339-2861, with a copy to Tenzer Greenblatt LLP, 405 Lexington Avenue, New York,
New York 10174, Attention: Robert J. Mittman, Esq., Facsimile (212) 885-8001,
Telephone (212) 885-5000 .
9. Assignment. This Agreement is personal to the Consultant and may
not be assigned by Consultant without the Company's prior written consent. Any
purported assignment in violation hereof shall be null and void ab initio.
10. Governing Law. This Agreement shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State.
11. Miscellaneous. It is understood that, in connection with the
Consultant's engagement, the Consultant may be engaged by the Company to act in
one or more additional capacities and that the terms of any additional
engagement other than the one set forth in this Agreement may be embodied in one
or more separate written agreements. The provisions of this Agreement shall
remain in full force and effect notwithstanding the completion or termination,
prior to the stated term of this Agreement, of any of the Consultant's other
engagement(s) by the Company.
Very truly yours,
MBF CAPITAL CORP.
By: /s/Mark Fisher
_________________________
Name: Mark Fisher
Title: President
AGREED AND ACCEPTED:
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
_____________________________
Name: Norman M. Phipps
Title:President
EXHIBIT 10.17
NON-RECOURSE SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, Norman M. Phipps (the "Executive") hereby promises to
pay to the order of LogiMetrics, Inc. (the "Company"), at its offices at 50
Orville Drive, Bohemia, New York, or at such other location as the Company may
designate from time to time, the sum of $459,000, without interest, as set forth
below. If the Executive fails to pay any amount hereunder when due, whether at
maturity, upon acceleration or otherwise, and such failure continues for more
than 30 days, interest shall thereafter accrue on any overdue amounts at a rate
of 8% percent per annum, compounded annually, until paid in full. Interest shall
be calculated on the basis of a 365-day year for the actual number of days
elapsed.
Section 1. Prepayment. The Executive shall have the right to prepay all or
part of the outstanding principal amount of this Note at any time and from time
to time without penalty or premium. In the event that the Executive sells,
transfers or otherwise disposes of some or all of the Shares (as defined in the
Pledge Agreement referred to below), whether on or prior to the maturity of this
Note, the Executive shall promptly repay this Note in an amount equal to the net
proceeds, if any, received by the Executive from such disposition.
Section 2. Maturity. This Note shall mature and all amounts due hereunder
shall become immediately due and payable, without demand and without notice to
the Executive, in the event that (a) the Executive sells, transfers or otherwise
disposes of all Shares then owned by him (other than pursuant to a Change in
Control Event, as defined below), (b) the Executive's employment by the Company
is terminated for any reason, other than a Without Cause Termination (as defined
below), (c) the Executive (i) becomes insolvent, (ii) makes an assignment for
the benefit of his creditors generally, or (iii) files a petition seeking
protection under the United States Bankruptcy Code or seeking the appointment of
a receiver, trustee or custodian for the Executive or a substantial portion of
his assets, or (d) any other person or entity (i) files an involuntary petition
under the United States Bankruptcy Code with respect to the Executive, or (ii)
commences an action seeking the appointment of a receiver, trustee or custodian
for the Executive or a substantial portion of his assets, and such petition or
action remains undismissed and unstayed for more than sixty (60) consecutive
days; provided, however, that if the Executive's employment is terminated for
any reason (other than a Without Cause Termination or a Termination for Cause),
amounts due hereunder shall be payable in sixty (60) equal monthly installments,
without interest, on the first business day of each month, commencing with the
first month immediately following the effective date of such termination.
As used herein, (i) "Without Cause Termination" means a termination of the
Executive's employment by the Company other than due to "Permanent Disability"
(as defined below) or retirement and other than a "Termination for Cause" (as
defined below), (ii) "Permanent Disability" means permanently disabled so as to
qualify for full
<PAGE>
benefits under the Company's then-existing disability insurance policy;
provided, however, that if the Company does not maintain any such policy on the
date of determination, "Permanent Disability" shall mean the inability of the
Executive to work for a period of six full calendar months during any eight
consecutive calendar months due to illness or injury of a physical or mental
nature, supported by the completion by the Executive's attending physician of a
medical certification form outlining the disability and treatment, and (iii)
"Termination for Cause" means, to the maximum extent permitted by applicable
law, a termination of the Executive's employment by the Company because the
Executive has (a) breached or failed to perform his duties under applicable law
and such breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness, (b) committed an act of dishonesty in the
performance of his duties or engaged in any conduct detrimental to the business
or reputation of the Company or any of its subsidiaries, (c) been convicted of a
felony or misdemeanor involving moral turpitude, (d) breached or failed to
perform his obligations and duties under any employment agreement between the
Executive and the Company or any of its subsidiaries, which breach or failure
the Executive shall fail to remedy within 30 days after written demand from the
Company or the subsidiary party thereto, or (e) violated the representations
made by him in any such employment agreement or any of the covenants contained
therein.
Section 3. Change in Control. Notwithstanding the provisions of Sections 1
and 2 hereof, all principal and interest, if any, due under this Note shall be
forgiven, and the Executive shall have no further obligation hereunder, upon the
occurrence of a Change of Control Event (as defined below); provided, however,
that the Executive continues to be employed by the Company as of the date
immediately preceding the effective date of a Change in Control Event. As used
herein, a "Change in Control Event" means the occurrence of any of the
following:
(a) any person, firm or corporation (other than Charles S. Brand,
members of his immediate family, or any trust or other entity established for
the benefit of Mr. Brand and/or members of his immediate family) acquires
directly or indirectly the beneficial ownership (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended) of any voting security of the
Company and, immediately after such acquisition, the acquirer has beneficial
ownership of voting securities representing 50% or more of the total voting
power of all the then-outstanding voting securities of the Company;
(b) the individuals who (i) as of the date of this Note constitute the
Board of Directors (the "Original Directors"), (ii) thereafter are elected to
the Board of Directors and whose election or nomination for election to the
Board of Directors was approved by a vote of at least 2/3 of the Original
Directors then still in office (such Directors being called "Additional Original
Directors"), or (iii) are elected to the Board of Directors and whose election
or nomination for election to the Board of Directors was approved by a vote of
at least 2/3 of the Original Directors and Additional Original Directors then
still in office, cease for any reason to constitute a majority of the members of
the Board of Directors;
<PAGE>
(c) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company or the Company
shall consummate any such transaction if stockholder approval is not sought or
obtained, other than any such transaction which would result in holders of
outstanding voting securities of the Company immediately prior to the
transaction having beneficial ownership of at least 50% of the total voting
power represented by the voting securities of the surviving entity outstanding
immediately after such transaction, with the voting power of each such
continuing holder relative to such other continuing holders being not altered
substantially in the transaction; or
(d) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company's assets (i.e., 50% or
more in value of the total assets of the Company).
Section 4. Security. This Note is the Note referred to in the Pledge
Agreement, dated the date hereof, between the Executive and the Company and is
secured by the Shares and the other Collateral described therein. The Pledge
Agreement grants the Company certain rights with respect to the Collateral upon
certain defaults specified therein.
Section 5. Non-Recourse Nature of Obligation to Pay. The Company's sole
recourse for the payment of amounts due under this Note shall be limited to the
Collateral securing this Note. THE COMPANY SHALL NOT HAVE THE RIGHT TO ENFORCE
THIS NOTE AGAINST THE EXECUTIVE OR ANY OF THE EXECUTIVE'S OTHER ASSETS OR
PROPERTY.
Section 6. Waivers. No delay on the part of the holder of this Note in
exercising any power or right hereunder shall operate as a waiver of any such
power or right; nor shall any single or partial exercise of any power or right
preclude any other or further exercise of such power or right, or the exercise
of any other power or right, and no waiver whatsoever shall be valid unless in
writing, signed by the holder of this Note, and then only to the extent
expressly set forth therein. The Executive waives presentment, demand for
payment, diligence, notice of dishonor and all other notices or demands in
connection with the delivery, acceptance, performance, default or indorsement of
this Note.
Section 7. Governing Law; Consent to Jurisdiction. This Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without reference to the choice of law provisions thereof. The Executive
hereby consents and submits to the exclusive jurisdiction of the federal and
state courts located in the State of New York having subject matter jurisdiction
in connection with any and all disputes arising out of or in connection with
this Note. The Executive hereby consents and agrees that service of process by
the holder shall be deemed validly and properly effected against the Executive
upon the mailing of a copy of such process by certified mail, postage
<PAGE>
prepaid, to the Executive at his address as it appears in the personnel records
of the Company.
Witness:
/s/ Stephanie Trocchia /s/ Norman M. Phipps
___________________________ __________________________
Name: Stephanie Trocchia Name: Norman M. Phipps
Dated: July 22, 1997
EXHIBIT 10.18
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 22, 1997, by and between Norman M.
Phipps (the "Executive") and LogiMetrics, Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the Executive has purchased from the Company 850,000 shares (the
"Shares") of the Company's Common Stock, par value $.01 per share ("Common
Stock"); and
WHEREAS, in connection with such purchase the Company has loaned to the
Executive the sum of $459,000; such loan being evidenced by a non-recourse
secured promissory note (the "Note") in the principal amount of $459,000 made by
the Executive in favor of the Company; and
WHEREAS, the loan to the Executive is to be secured by a pledge by the
Executive to the Company of the Shares and the other Collateral referenced
herein; and
WHEREAS, the parties hereto desire to set forth the terms of and to
evidence the Executive's grant to the Company of a security interest in the
Collateral.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Executive hereby agrees with the Company as
follows:
Section 1. Definitions. The following terms, when used in this Agreement,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Default" means the failure to make any payment of principal of or interest
on, or any other amounts due under, the Note when due, whether at maturity, upon
acceleration or otherwise.
"Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from stock splits, reclassifications, warrants, options,
non-cash dividends and other distributions on or with respect to the Shares,
whether similar or dissimilar to the foregoing, but shall not include Dividends.
"Dividends" means regular dividends declared with respect to the Shares.
"Liabilities" means the Note, and all amounts becoming due thereunder, and
all other payment obligations of the Executive hereunder or thereunder or any
instrument executed pursuant hereto or thereto.
<PAGE>
Section 2. Grant of Security Interest. As security for payment of all
Liabilities, the Executive hereby pledges, assigns and transfers to the Company,
and grants to the Company a continuing security interest in and to, the Shares,
together with all Dividends and Distributions, interest and other payments and
rights with respect thereto, together with all proceeds thereof (collectively,
the "Collateral"). The Executive further pledges, assigns and transfers to the
Company, and grants to the Company a continuing security interest in and to, and
agrees to duly endorse to the order of the Company, any additional Collateral,
together will all proceeds thereof, delivered by the Executive to the Company
for the purposes of pledge under this Agreement. Any Collateral delivered by the
Executive to the Company may be endorsed by the Company, in its own name or in
the name of the Executive, on behalf of the Executive to the order of the
Company.
Section 3. Stock Powers, Endorsements, Etc. The Executive shall, from time
to time, upon request of the Company, promptly execute such endorsements and
deliver to the Company such stock powers and similar documents, satisfactory in
form and substance to the Company, with respect to the Collateral as the Company
may reasonably request and shall, from time to time, upon request of the
Company, promptly transfer any securities which are part of the Collateral into
the name of any nominee designated by the Company on the books of the
corporation or other entity issuing such securities; provided, however, that the
Company shall not be entitled to effect or demand a transfer of the Collateral
into the name of the Company or the Company's nominee without the consent of the
Executive unless and until a Default shall have occurred.
Section 4. Certain Other Agreements Regarding Collateral. The Executive
shall deliver (properly endorsed where necessary) to the Company:
(a) after a Default shall have occurred and be continuing, promptly
upon receipt thereof by the Executive and without any request therefor by the
Company, all Dividends and Distributions, and other proceeds of the Collateral,
all of which shall be held by the Company as additional Collateral; and
(b) at any time after a Default shall have occurred and be continuing,
promptly upon request of the Company, such consents or proxies and other
documents as may be necessary to allow the Company to exercise any voting power
or other right with respect to any securities included in the Collateral;
provided, however, that unless a Default shall have occurred and be continuing,
the Executive shall be entitled:
(i) to exercise, as the Executive shall deem appropriate, all
voting or other powers with respect to securities pledged hereunder
(including but not limited to the Shares); and
(ii) to receive and retain for the Executive's own account any
and all Dividends paid in cash.
<PAGE>
Section 5. Actions Upon Default. Whenever a Default shall have occurred and
be continuing, the Company may exercise fro5m time to time any and all rights
and remedies available to it under applicable law, including but not limited to
all rights of a secured party available to it under the Uniform Commercial Code.
Without limiting the above, the Company may from time to time, whether before or
after any of the Liabilities shall become due and payable, but only if a Default
shall have occurred, without notice to the Executive, take any or all of the
following actions:
(a) transfer all or any part of the Collateral into the name of the
Company or its nominee; and
(b) execute (in the name, place and stead of the Executive) any or all
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.
The Executive understands that compliance with the Federal securities
laws, applicable blue sky or other state securities laws or similar laws
analogous in purpose or effect may strictly limit the course of conduct of the
Company if the Company were to attempt to dispose of all or any part of the
Collateral and may also limit the extent to which or the manner in which any
subsequent transferee of the Collateral may dispose of the same. Accordingly,
the Executive agrees that IF ANY COLLATERAL IS SOLD AT ANY PUBLIC OR PRIVATE
SALE, THE COMPANY MAY ELECT TO SELL ONLY TO A BUYER WHO WILL GIVE FURTHER
ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, RESPECTING
COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY AND ALL APPLICABLE STATE SECURITIES LAWS; AND A SALE SUBJECT TO SUCH
CONDITION SHALL BE DEEMED COMMERCIALLY REASONABLE. The Company shall have the
right to bid upon or purchase the Shares, or any other part of the Collateral,
or all of the foregoing, at any such sale, less any and all amounts owing to the
Company by the Executive under the Note, this Agreement or otherwise, and that
any such purchase is commercially reasonable.
Section 6. Application of Moneys. Any moneys received by the Company upon
payment to it of any Collateral held by it or as proceeds of any of the
Collateral may be applied by the Company first to the payment of any expenses
incurred by it in connection with the Collateral, including, without limitation,
reasonable attorneys' fees and legal expenses, and all other amounts payable to
the Company by the Executive, and any balance of such moneys so received by the
Company may be applied to all Liabilities of the Executive (including, without
limitation, the principal amount of the Note outstanding whether or not such
principal amount is at that time due and payable) in such order of application
as the Company in its sole discretion may determine. Any amounts remaining after
payment of the Liabilities may be applied by the Company to the payment of any
and all other amounts owing, whether or not then due, to the Company from the
Executive and any remaining balance thereafter shall be paid to the Executive.
<PAGE>
Section 7. Release of Collateral. Upon the indefeasible payment in full of
the Liabilities, the Company shall, upon the request of the Executive, promptly
reassign and redeliver to the Executive the Collateral which has not been sold,
disposed of, retained or applied by the Company in accordance with the terms
hereof, together with such endorsements, stock powers and similar documents as
the Executive may reasonably request. Such reassignment and redelivery shall be
without warranty by or recourse to the Company, except as to the absence of any
prior assignments by the Company of its interest in the Collateral. In the event
that the Executive proposes to sell, transfer or otherwise dispose of all or a
portion of the Shares, upon the request of the Executive, the Company shall
release from its security interest the Shares to be sold by the Executive and,
at the sole expense of the Executive, shall deliver such Shares as directed by
the Executive, free and clear of any security interest hereunder, upon receipt
from or on behalf of the Executive of the net proceeds of such sale, transfer or
other disposition in cash in next day or immediately available funds.
Section 8. Non-Recourse Nature of Liabilities. The Company's sole recourse
for the payment of the Liabilities shall be limited to the Collateral securing
the Note. THE COMPANY SHALL NOT HAVE THE RIGHT TO ENFORCE THE LIABILITIES
AGAINST THE EXECUTIVE OR ANY OF THE EXECUTIVE'S OTHER ASSETS OR PROPERTY.
Section 9. Miscellaneous.
(a) To the fullest extent permitted by applicable law, this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any amount received by the Company in respect of the Liabilities is rescinded or
must otherwise be restored or returned by the Company upon the insolvency or
bankruptcy of the Executive or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for the Executive or any substantial
part of his assets, or otherwise, all as though such payments had not been made.
(b) No remedy herein conferred is intended to be exclusive of any other
remedy herein conferred or otherwise available to the Company, but every such
remedy shall be cumulative and in addition to every other remedy herein
conferred, or conferred on the Company by any other agreement or instrument or
now or hereafter existing at law, in equity or by statute.
(c) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(d) Except as otherwise expressly provided herein, no term or provision of
this Agreement may be amended, waived, discharged or terminated orally, but only
by an instrument in writing signed by the parties.
<PAGE>
(e) THIS AGREEMENT AND ALL RIGHTS HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. THE EXECUTIVE HEREBY
CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE
COURTS LOCATED IN THE STATE OF NEW YORK HAVING SUBJECT MATTER JURISDICTION IN
CONNECTION WITH ANY AND ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. FURTHER,
THE EXECUTIVE HEREBY CONSENTS AND AGREES THAT SERVICE OF PROCESS BY THE COMPANY,
OR ANY PARTY ACTING ON BEHALF OF THE COMPANY, SHALL BE DEEMED VALIDLY AND
PROPERLY EFFECTED AGAINST THE EXECUTIVE UPON THE MAILING OF A COPY OF SUCH
PROCESS BY CERTIFIED MAIL, POSTAGE PREPAID, TO THE EXECUTIVE AT ITS ADDRESS SET
FORTH ABOVE.
(f) No course of dealing and no delay on the part of any party hereto in
exercising any right, power, or remedy conferred by this Agreement shall operate
as a waiver thereof or otherwise prejudice such party's rights, powers and
remedies hereunder or in connection herewith. No single or partial exercise of
any power or remedy conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
(g) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors, assigns and legal
representatives.
(h) This Agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and supersedes all previous written, oral
or implied agreements and understandings among the parties with respect to such
matters.
(i) All notices or other communications required or permitted hereunder
shall be in writing and shall be delivered personally, by facsimile or sent by
certified, registered or express air mail, postage prepaid, and shall be deemed
given which so delivered personally, or by facsimile, or if mailed, five days
after the date of mailing, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Telephone: (516) 784-4110
Facsimile: (516) 784-4132
Attention: Chief Executive Officer
<PAGE>
If to the Executive: 5 Crystal Court
Neshanic Station, New Jersey 08853
Telephone: (908) 369-5980
Facsimile: (908) 369-4596
or at such other addresses as shall be furnished in writing to the other party
hereto.
(j) The headings in this Agreement are for reference purposes only, and
shall not in any way affect the meaning or interpretation
(k) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
Witness:
/s/Stephanie Trocchia /s/ Norman M. Phipps
______________________________ ________________________
Name: Stephanie Trocchia Norman M. Phipps
LOGIMETRICS, INC.
By: /s/ Russell J. Reardon
____________________________
Name: Russell J. Reardon
Title: Chief Financial Officer
EXHIBIT 10.19
August 6, 1997
Mr. Charles S. Brand
20 Meridian Road
Eatontown, NJ 07724
Re: Indebtedness by LogiMetrics, Inc. to Charles S. Brand
Dear Mr. Brand:
It is hereby acknowledged that as of the date hereof, LogiMetrics, Inc. (the
"Company") is indebted to Charles S. Brand in the amount of $626,793.
For good and valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, it is hereby agreed that the Company will use its
best efforts, in its discretion, subject to the cash flow requirements of the
Company, to repay up to $300,000 of such indebtedness on or before September 30,
1997. Beginning on October 1, 1997, all unpaid amounts of the foregoing
indebtedness shall become due and payable in the amount of $50,000 per month
until repaid in full.
Very truly yours,
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
------------------------
Name: Norman M. Phipps
Title: President and Chief Operating Officer
ACKNOWLEDGED AND AGREED:
/s/Charles S. Brand
---------------------------
Charles S. Brand
EXHIBIT 10.20
NON-RECOURSE SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, MBF Capital Corp. (the "Maker") hereby promises to pay
to the order of LogiMetrics, Inc. or its successors, assigns and legal
representatives (the "Holder"), at its offices at 50 Orville Drive, Bohemia, New
York, or at such other location as the Holder may designate from time to time,
the sum of Thirty-Five Thousand Dollars ($35,000) in lawful money of the United
States of America on July 29, 2000 (the "Maturity Date"), together with interest
thereon, compounded annually, at a rate of 6.07% per annum. Interest shall be
calculated on the basis of a 360-day year for the actual number of days elapsed.
If the date any amount is due hereunder is not a Business Day, then such
amount shall be due and payable on the Business Day next succeeding the original
payment date, together with interest thereon to the date of payment. As used
herein, "Business Day" means any day, other than a Saturday or Sunday or other
day on which commercial banks in New York are authorized or required, by law or
executive order, to be closed.
If the Maker fails to pay any amount hereunder when due, whether on the
Maturity Date, upon acceleration or otherwise, and such failure continues for a
period of five (5) days or more, interest shall thereafter accrue on any overdue
amounts at a rate of 9.07% per annum until paid in full. In such event, the
Maker also shall pay to the Holder the reasonable attorneys' fees and
disbursements and all other out-of-pocket costs incurred by the Holder in order
to collect amounts due and owing under this Note or otherwise to enforce the
Holder's rights and remedies hereunder.
The Maker may prepay this Note at any time, in whole or in part, without
premium or penalty. Any partial prepayments shall be applied first to accrued
interest and second to the payment of principal. The Maker shall not have the
right to set off or otherwise deduct from amounts payable by it hereunder, any
amounts, whether liquidated or unliquidated, which the Holder may owe to the
Maker, which right is hereby expressly waived to the maximum extent permitted by
applicable law. In the event that the Maker sells, transfers or otherwise
disposes of some or all of the Securities (as defined in the Pledge Agreement
referred to below), whether on or prior to the Maturity Date, the Maker shall
promptly repay this Note in an amount equal to the net proceeds, if any,
received by the Maker from such disposition.
This Note and all amounts due hereunder shall become immediately due and
payable, without demand and without notice to the Executive, upon the occurrence
of any of the following events: (i) the sale, transfer or other disposition by
the Maker of all of the Securities then owned by it, (ii) the consummation of a
Company Sale (as such term is defined in the Stockholders Agreement, dated July
29, 1997, among the initial Holder of this Note and the stockholders party
thereto), or (iii) the Maker shall have applied for or consented to the
appointment of a custodian, receiver, trustee or liquidator, or other
court-appointed fiduciary of all or a substantial part of its properties; or a
custodian, receiver, trustee or liquidator or other court appointed fiduciary
shall have been appointed with or without the consent of the Maker; or the Maker
is generally not paying its debts as they become due by means of available
assets or is insolvent, or has made a
<PAGE>
general assignment for the benefit of creditors; or the Maker files a voluntary
petition in bankruptcy, or a petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage or any insolvency law,
or an answer admitting the material allegations of a petition in any bankruptcy,
reorganization or insolvency proceeding or has taken action for the purpose of
effecting any of the foregoing; or if, within sixty (60) days after the
commencement of any proceeding against the Maker seeking any reorganization,
rehabilitation, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Federal bankruptcy code or similar order under
future similar legislation, the appointment of any trustee, receiver, custodian,
liquidator, or other court-appointed fiduciary of the Maker or of all or any
substantial part of its properties, such order or appointment shall not have
been vacated or stayed on appeal or otherwise or if, within sixty (60) days
after the expiration of any such stay, such order or appointment shall not have
been vacated.
This Note is the Note referred to in the Pledge Agreement, dated the date
hereof, between the Maker and the initial holder of this Note and is secured by
the Securities and the other Collateral described therein. The Pledge Agreement
grants the Holder certain rights with respect to the Collateral upon certain
defaults specified therein.
The Holder's sole recourse for the payment of amounts due under this Note
shall be limited to the Collateral securing this Note. THE HOLDER SHALL NOT HAVE
THE RIGHT TO ENFORCE THIS NOTE AGAINST THE MAKER, OR ANY OF ITS OFFICERS,
DIRECTORS OR SHAREHOLDERS OR ANY OTHER ASSETS OR PROPERTY OF ANY OF THEM.
No delay on the part of the Holder in exercising any power or right
hereunder shall operate as a waiver of any such power or right; nor shall any
single or partial exercise of any power or right preclude any other or further
exercise of such power or right, or the exercise of any other power or right,
and no waiver whatsoever shall be valid unless in writing, signed by the Holder,
and then only to the extent expressly set forth therein. The Maker waives
presentment, demand for payment, diligence, notice of dishonor and all other
notices or demands in connection with the delivery, acceptance, performance,
default or indorsement of this Note.
This Note shall be binding upon the Maker and its successors, assigns and
legal representatives. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York, without reference to the
choice of law provisions thereof. The Maker irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this Note and
the transactions contemplated hereby. The Maker irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. The Maker irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed by
the undersigned, thereunto duly authorized, as of the date set forth below.
MBF CAPITAL CORP.
By: /s/Mark B. Fisher
___________________________
Mark B. Fisher, President
Dated: July 29, 1997
EXHIBIT 10.21
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 29, 1997, by and between MBF Capital
Corp. (the "Borrower") and LogiMetrics, Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the Borrower has purchased from the Company Series G Warrants (the
"Warrants") exercisable into 500,000 shares (the "Shares") of the Company's
Common Stock, par value $.01 per share ("Common Stock"); and
WHEREAS, in connection with such purchase the Company has loaned to the
Borrower the sum of $35,000; such loan being evidenced by a non-recourse secured
promissory note (the "Note") in the principal amount of $35,000 made by the
Borrower in favor of the Company; and
WHEREAS, the loan to the Borrower is to be secured by a pledge by the
Borrower to the Company of the Warrants and the Shares (collectively, the
"Securities") and the other Collateral referenced herein; and
WHEREAS, the parties hereto desire to set forth the terms of and to
evidence the Borrower's grant to the Company of a security interest in the
Collateral.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Borrower hereby agrees with the Company as
follows:
Section 1. Definitions. The following terms, when used in this Agreement,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Default" means the failure to make any payment of principal of or interest
on, or any other amounts due under, the Note when due, whether at maturity, upon
acceleration or otherwise.
"Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from the exercise of the Warrants, or any stock splits,
reclassifications, warrants, options, non-cash dividends and other distributions
on or with respect to the Securities, whether similar or dissimilar to the
foregoing, but shall not include Dividends.
"Dividends" means regular dividends declared with respect to the Shares.
<PAGE>
"Liabilities" means the Note, and all amounts becoming due thereunder, and
all other payment obligations of the Borrower hereunder or thereunder or any
instrument executed pursuant hereto or thereto.
Section 2. Grant of Security Interest. As security for payment of all
Liabilities, the Borrower hereby pledges, assigns and transfers to the Company,
and grants to the Company a continuing security interest in and to, the
Securities, together with all Dividends and Distributions, interest and other
payments and rights with respect thereto, together with all proceeds thereof
(collectively, the "Collateral"). The Borrower further pledges, assigns and
transfers to the Company, and grants to the Company a continuing security
interest in and to, and agrees to duly endorse to the order of the Company, any
additional Collateral, together will all proceeds thereof, delivered by the
Borrower to the Company for the purposes of pledge under this Agreement. Any
Collateral delivered by the Borrower to the Company may be endorsed by the
Company, in its own name or in the name of the Borrower, on behalf of the
Borrower to the order of the Company.
Section 3. Stock Powers, Endorsements, Etc. The Borrower shall, from time
to time, upon request of the Company, promptly execute such endorsements and
deliver to the Company such stock powers and similar documents, satisfactory in
form and substance to the Company, with respect to the Collateral as the Company
may reasonably request and shall, from time to time, upon request of the
Company, promptly transfer any securities which are part of the Collateral into
the name of any nominee designated by the Company on the books of the
corporation or other entity issuing such securities; provided, however, that the
Company shall not be entitled to effect or demand a transfer of the Collateral
into the name of the Company or the Company's nominee without the consent of the
Borrower unless and until a Default shall have occurred.
Section 4. Certain Other Agreements Regarding Collateral. The Borrower
shall deliver (properly endorsed where necessary) to the Company:
(a) after a Default shall have occurred and be continuing, promptly upon
receipt thereof by the Borrower and without any request therefor by the Company,
all Dividends and Distributions, and other proceeds of the Collateral, all of
which shall be held by the Company as additional Collateral; and
(b) at any time after a Default shall have occurred and be continuing,
promptly upon request of the Company, such consents or proxies and other
documents as may be necessary to allow the Company to exercise any voting power
or other right with respect to any securities included in the Collateral;
provided, however, that unless a Default shall have occurred and be continuing,
the Borrower shall be entitled:
(i) to exercise, as the Borrower shall deem appropriate, all voting or
other powers with respect to securities pledged hereunder (including but
not limited to the Shares);
<PAGE>
(ii) to exercise any right of conversion or exercise with respect to
securities pledged hereunder; and
(iii) to receive and retain for the Borrower's own account any and all
Dividends paid in cash.
Section 5. Actions Upon Default. Whenever a Default shall have occurred and
be continuing, the Company may exercise from time to time any and all rights and
remedies available to it under applicable law, including but not limited to all
rights of a secured party available to it under the Uniform Commercial Code.
Without limiting the above, the Company may from time to time, whether before or
after any of the Liabilities shall become due and payable, but only if a Default
shall have occurred, without notice to the Borrower, take any or all of the
following actions:
(a) transfer all or any part of the Collateral into the name of the Company
or its nominee; and
(b) execute (in the name, place and stead of the Borrower) any or all
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.
The Borrower understands that compliance with the Federal securities laws,
applicable blue sky or other state securities laws or similar laws analogous in
purpose or effect may strictly limit the course of conduct of the Company if the
Company were to attempt to dispose of all or any part of the Collateral and may
also limit the extent to which or the manner in which any subsequent transferee
of the Collateral may dispose of the same. Accordingly, the Borrower agrees that
IF ANY COLLATERAL IS SOLD AT ANY PUBLIC OR PRIVATE SALE, THE COMPANY MAY ELECT
TO SELL ONLY TO A BUYER WHO WILL GIVE FURTHER ASSURANCES, SATISFACTORY IN FORM
AND SUBSTANCE TO THE COMPANY, RESPECTING COMPLIANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY AND ALL APPLICABLE STATE SECURITIES
LAWS; AND A SALE SUBJECT TO SUCH CONDITION SHALL BE DEEMED COMMERCIALLY
REASONABLE. The Company shall have the right to bid upon or purchase the
Securities, or any other part of the Collateral, or all of the foregoing, at any
such sale, less any and all amounts owing to the Company by the Borrower under
the Note, this Agreement or otherwise, and that any such purchase is
commercially reasonable.
Section 6. Application of Moneys. Any moneys received by the Company upon
payment to it of any Collateral held by it or as proceeds of any of the
Collateral may be applied by the Company first to the payment of any expenses
incurred by it in connection with the Collateral, including, without limitation,
reasonable attorneys' fees and legal expenses, and all other amounts payable to
the Company by the Borrower, and any balance of such moneys so received by the
Company may be applied to all Liabilities of the Borrower (including, without
limitation, the principal amount of the Note outstanding whether or not such
principal amount is at that time due and payable) in such order of application
as the Company in its sole discretion
<PAGE>
may determine. Any amounts remaining after payment of the Liabilities may be
applied by the Company to the payment of any and all other amounts owing,
whether or not then due, to the Company from the Borrower and any remaining
balance thereafter shall be paid to the Borrower.
Section 7. Release of Collateral. Upon the indefeasible payment in full of
the Liabilities, the Company shall, upon the request of the Borrower, promptly
reassign and redeliver to the Borrower the Collateral which has not been sold,
disposed of, retained or applied by the Company in accordance with the terms
hereof, together with such endorsements, stock powers and similar documents as
the Borrower may reasonably request. Such reassignment and redelivery shall be
without warranty by or recourse to the Company, except as to the absence of any
prior assignments by the Company of its interest in the Collateral. In the event
that the Borrower proposes to sell, transfer or otherwise dispose of all or a
portion of the Securities, upon the request of the Borrower, the Company shall
release from its security interest the Securities to be sold by the Borrower
and, at the sole expense of the Borrower, shall deliver such Securities as
directed by the Borrower, free and clear of any security interest hereunder,
upon receipt from or on behalf of the Borrower of the net proceeds of such sale,
transfer or other disposition in cash in next day or immediately available
funds. In the event that the Borrower proposes to exercise the all or a portion
of the Warrants, upon the request of the Borrower, the Company shall release
from its security interest the Warrants to be exercised by the Borrower and, at
the sole expense of the Borrower, shall deliver such Warrants as directed by the
Borrower, free and clear of any security interest hereunder, upon receipt from
or on behalf of the Borrower of the Shares issuable upon such exercise or, in
the event of the simultaneous sale, transfer or other disposition of such
Shares, the net proceeds of such sale, transfer or other disposition in cash in
next day or immediately available funds.
Section 8. Non-Recourse Nature of Liabilities. The Company's sole recourse
for the payment of the Liabilities shall be limited to the Collateral securing
the Note. THE COMPANY SHALL NOT HAVE THE RIGHT TO ENFORCE THE LIABILITIES
AGAINST THE BORROWER OR ANY OF THE BORROWER'S OTHER ASSETS OR PROPERTY.
Section 9. Miscellaneous.
(a) To the fullest extent permitted by applicable law, this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any amount received by the Company in respect of the Liabilities is rescinded or
must otherwise be restored or returned by the Company upon the insolvency or
bankruptcy of the Borrower or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for the Borrower or any substantial
part of his assets, or otherwise, all as though such payments had not been made.
<PAGE>
(b) No remedy herein conferred is intended to be exclusive of any other
remedy herein conferred or otherwise available to the Company, but every such
remedy shall be cumulative and in addition to every other remedy herein
conferred, or conferred on the Company by any other agreement or instrument or
now or hereafter existing at law, in equity or by statute.
(c) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(d) Except as otherwise expressly provided herein, no term or provision of
this Agreement may be amended, waived, discharged or terminated orally, but only
by an instrument in writing signed by the parties.
(e) THIS AGREEMENT AND ALL RIGHTS HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. THE BORROWER HEREBY CONSENTS
AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS
LOCATED IN THE STATE OF NEW YORK HAVING SUBJECT MATTER JURISDICTION IN
CONNECTION WITH ANY AND ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. FURTHER,
THE BORROWER HEREBY CONSENTS AND AGREES THAT SERVICE OF PROCESS BY THE COMPANY,
OR ANY PARTY ACTING ON BEHALF OF THE COMPANY, SHALL BE DEEMED VALIDLY AND
PROPERLY EFFECTED AGAINST THE BORROWER UPON THE MAILING OF A COPY OF SUCH
PROCESS BY CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET
FORTH ABOVE.
(f) No course of dealing and no delay on the part of any party hereto in
exercising any right, power, or remedy conferred by this Agreement shall operate
as a waiver thereof or otherwise prejudice such party's rights, powers and
remedies hereunder or in connection herewith. No single or partial exercise of
any power or remedy conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
(g) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors, assigns and legal
representatives.
(h) This Agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and supersedes all previous written, oral
or implied agreements and understandings among the parties with respect to such
matters.
<PAGE>
(i) All notices or other communications required or permitted hereunder
shall be in writing and shall be delivered personally, by facsimile or sent by
certified, registered or express air mail, postage prepaid, and shall be deemed
given which so delivered personally, or by facsimile, or if mailed, five days
after the date of mailing, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Telephone: (516) 784-4110
Facsimile: (516) 784-4132
Attention: Chief Borrower Officer
<PAGE>
If to the Borrower: 12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
Attention: President
or at such other addresses as shall be furnished in writing to the other party
hereto.
(j) The headings in this Agreement are for reference purposes only, and
shall not in any way affect the meaning or interpretation
(k) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
MBF CAPITAL CORP.
By:/s/Mark B. Fisher
_______________________________
Name: Mark B. Fisher
Title: President
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
_______________________________
Name: Norman M. Phipps
Title: President
EXHIBIT 10.22
LOGIMETRICS, INC.
Stock Option Agreement
Mr. Russell J. Reardon
11 Old Quarry Road
Cedar Grove, NJ 07009
Dear Mr. Reardon:
We are pleased to notify you that by the determination of the Board of
Directors an option to purchase an aggregate of 250,000 shares of the Common
Stock of LogiMetrics, Inc. (herein called the "Company") at an exercise price of
$.50 per share has this 1st day of May, 1996 been granted to you. This option
may be exercised only upon the terms and conditions set forth below:
1. Purpose of Option.
The purpose of this option is to further the growth and development of
the Company by encouraging employees of the Company to obtain a proprietary
interest in the Company through the ownership of stock, thereby providing such
employees with an added incentive to continue in the employ and to promote the
success of the Company, and affording the Company a means of attracting to its
service employees of outstanding ability.
2. Acceptance of Option Agreement.
Your execution of this option agreement will indicate your acceptance
of and your willingness to be bound by its terms; it imposes no obligation upon
you to purchase any of the shares subject to the option. Your obligation to
purchase shares can arise only upon your exercise of the option in the manner
set forth in paragraph 4 hereof.
3. When Option May be Exercised.
The option granted you hereunder may be exercised in whole or in part
at any time and from time to time until the close of business on March 7, 2003.
4. Adjustment for Issue or Sale of Common Stock at Less Than Purchase
Price.
In case, at any time or from time to time after the date hereof
("Issuance Date"), the Company shall issue or sell shares of its Common Stock
(other than any Common Stock issuable upon (i) conversion of the Company's
Amended and Restated 12% Convertible Subordinated Debentures dated as of July
14, 1995 ("1995 Debentures"), (ii) exercise of those certain Amended and
Restated Series A Warrants dated March 7, 1996 to purchase 600,000 shares of
Common Stock ("Series A Warrants"), (iii) exercise by each of Murray H.
Feigenbaum
<PAGE>
and Jerome Deutsch (the "Principals") of their right to purchase 100,000 shares
of Common Stock at a price of $.10 per share ("Principals' Options"), (iv)
exercise of those certain Amended and Restated Series B Warrants dated March 7,
1996 to purchase 1,500,000 shares of Common Stock ("Series B Warrants"), (v)
conversion of the Company's 12% Convertible Senior Subordinated Debentures dated
March 7, 1996 ("Senior Subordinated Debentures"), (vi) exercise of those certain
Series C Warrants dated March 7, 1996 to purchase an aggregate of 2,542,380
shares of Common Stock ("Series C Warrants"), (vii) exercise of those certain
Series D Warrants dated March 7, 1996 to purchase an aggregate of 2,830,200
shares of Common Stock ("Series D Warrants"), (viii) exercise of those certain
Stock Options, dated March 7, 1996 to purchase 225,000 shares of Common Stock
issued to Richard K. Laird ("Laird Options"), (ix) exercise of those certain
Series E Warrants dated March 7, 1996 to purchase an aggregate of 1,000,000
shares of Common Stock ("Series E Warrants") and (x) conversion of the Company's
30 shares of Series A 12% Cumulative Convertible Redeemable Preferred Stock
("Preferred Stock" and together with the 1995 Debentures, the Senior
Subordinated Debentures, the Series A, B, C, D and E Warrants (collectively, the
"Warrants"), the Laird Options, the Principals' Options and any shares of Common
Stock issuable upon conversion or exercise thereof, the "Subject Securities")),
for a consideration per share less than thirty cents ($.30) per share (the
"Trigger Price") (or, if a Pro Forma Trigger Price shall be in effect as
provided below in this Paragraph 3, then less than such Pro Forma Trigger Price
per share), then and in each such case, upon the exercise hereof as provided in
Paragraph 1 hereof, you shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the exercise of this Option, a number
of shares of Common Stock determined by (a) dividing the Trigger Price by a Pro
Forma Trigger Price per share to be computed as provided below in this Paragraph
4, and (b) multiplying the resulting quotient by the number of shares of Common
Stock provided called for by this Option. A Pro Forma Trigger Price per share
shall be the price computed (to the nearest cent, a fraction of half cent or
more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or
sale by the Trigger Price (or, if a Pro Forma Trigger
Price shall be in effect, by such Price), and (y) the
consideration, if any, received by the Company upon
such issue or sale, by (ii) the number of shares of
Common Stock of the Company outstanding immediately
after such issue or sale.
For the purpose of this Paragraph 4:
4.1. Stock Splits, Dividends, etc., in Common Stock or Convertible
Securities. In case the Company splits its Common Stock or shall declare any
dividend, or make any other distribution, upon any stock of the Company of any
class payable in Common Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock (any such stock or
other securities being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as of the
record date for such split, dividend or other distribution), without
consideration, of such Common Stock or such Convertible Securities, as the case
may be.
<PAGE>
4.2. Issuance or Sale of Convertible Securities. In case the Company
shall issue or sell any Convertible Securities other than the Subject
Securities, there shall be determined the price per share for which Common Stock
is issuable upon the conversion or exchange thereof, such determination to be
made by dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (b) the maximum number of
shares of Common Stock of the Company issuable upon the conversion or exchange
of all such Convertible Securities.
If the price per share so determined shall be less than the Trigger
Price (or, it a Pro Forma Trigger Price shall be in effect, less than such
Price) as of the date of such issue or sale, then such issue or sale shall be
deemed to be an issue or sale for cash (as of the date of issue or sale of such
Convertible Securities) of such maximum number of shares of Common Stock at the
price per share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration, if any, payable to the Company,
or in the rate of exchange, upon the conversion or exchange thereof, the Pro
Forma Trigger Price per share shall, forthwith upon any such increase becoming
effective, be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights of conversion or exchange of such Convertible
Securities, if any thereof shall not have been exercised, the Pro Forma Trigger
Price per share shall forthwith be readjusted and thereafter be the price which
it would have been had an adjustment been made on the basis that the only shares
of Common Stock so issued or sold were those issued or sold upon the conversion
or exchange of such Convertible Securities, and that they were issued or sold
for the consideration actually received by the Company upon such conversion or
exchange, plus the consideration, if any, actually received by the Company for
the issue or sale of all such Convertible Securities which shall have been
converted or exchanged.
4.3. Grant of Rights or Options for Common Stock. In case the Company
shall grant any rights or options to subscribe for, purchase or otherwise
acquire Common Stock of any class other than the Subject Securities, there shall
be determined the price per share for which Common Stock is issuable upon the
exercise of such rights or options, such determination to be made by dividing
(a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of such rights or options, by (b) the maximum number of shares
of Common Stock issuable upon the exercise of such rights or options.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Trigger Price shall be in effect, less than such
Price) as of the date of such issue or sale, then the granting of such rights or
options shall be deemed to be an issue or sale for cash (as of the date of the
granting of such rights or options) of such maximum number of shares of Common
Stock at the price per share so determined, provided that, if such rights or
options shall by their terms provide for an increase or increases, with the
passage of time, in the amount of
<PAGE>
additional consideration, if any, payable to the Company upon the exercise
thereof, the Pro Forma Trigger Price per share shall, forthwith upon any such
increase becoming effective, be readjusted to reflect the same, and provided,
further, that upon the expiration of such rights or options, if any thereof
shall not have been exercised, the Pro Forma Trigger Price per share shall
forthwith be readjusted and thereafter be the price which it would have been had
an adjustment been made on the basis that the only shares of Common Stock so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights or options,
whether or not exercised.
4.4. Grant of Rights or Options for Convertible Securities. In case
the Company shall grant any rights or options to subscribe for, purchase or
otherwise acquire Convertible Securities, such Convertible Securities shall be
deemed, for the purposes of subparagraph 4.2. above, to have been issued or sold
for the total amount received or receivable by the Company as consideration tor
the granting of such rights or options plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
such rights or options, provided that, upon the expiration of such rights or
options, if any thereof shall not have been exercised, the Pro Forma Trigger
Price per share shall forthwith be readjusted and thereafter be the price which
it would have been had an adjustment been made upon the basis that the only
Convertible Securities so issued or sold were those issued or sold upon the
exercise of such rights or options and that they were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights or options, whether or not exercised.
4.5. Dilution in Case of Other Stock or Securities. In case any shares
of stock or other securities, other than Common Stock of the Company, shall at
any time be receivable upon the exercise of this Option, and in case any
additional shares of such stock or any additional such securities (or any stock
or other securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such as to
dilute the purchase rights evidenced by this Option, then and in each such case
the Pro Forma Trigger Price per share shall forthwith be adjusted, substantially
in the manner provided for above in this Paragraph 4, so as to protect against
the effect of such dilution.
4.6. Expenses, etc., Deducted. In case any shares of Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor, after deducting any expenses incurred
and any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale.
4.7. Determination of Consideration. In case any shares of Common
Stock or Convertible Securities or any rights or options to subscribe for,
purchase or otherwise acquire any Common Stock or Convertible Securities shall
be issued or sold for a consideration other than cash (or a consideration which
includes cash, if any cash constitutes a part of the assets of a
<PAGE>
corporation or business substantially all of the assets of which are being
received a such consideration) then, for the purpose of this Paragraph 4, the
Board of Directors of the Company shall promptly determine the fair value of
such consideration, and such Common Stock, Convertible Securities, rights or
options shall be deemed to have been issued or sold on the date of such
determination in good faith. Such value shall not be more than the amount at
which such consideration is recorded in the books of the Company for accounting
purposes except in the case of an acquisition accounted for on a pooling of
interest basis. In case any Common Stock or Convertible Securities or any rights
or options to subscribe for, purchase or otherwise acquire any Common Stock or
Convertible Securities shall be issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
the Board of Directors of the Company shall promptly determine what part of the
consideration so received is to be deemed to be the consideration for the issue
or sale of such Common Stock or Convertible Securities or such rights or
options.
The Company covenants and agrees that, should any determination of
fair value of consideration or of allocation of consideration be made by the
Board of Directors of the Company, pursuant to this subparagraph 4.7, it will,
not less than seven (7) days after any and each such determination, deliver to
you a certificate signed by the President or a Vice President and the Treasurer
or an Assistant Treasurer of the Company reciting such value as thus determined
and setting forth the nature of the transaction for which such determination was
required to be made, the nature of any consideration, other than cash, for which
Common Stock, Convertible Securities, rights or options have been or are to be
issued, the basis for its valuation, the number of shares of Common Stock which
have been or are to be issued, and a description of any Convertible Securities,
rights or options which have been or are to be issued, including their number,
amount and terms.
4.8. Record Date Deemed Issue Date. In case the Company shall take a
record of the holders of shares of its stock of any class for the purpose of
entitling them (a) to receive a dividend or a distribution payable in Common
Stock or in Convertible Securities, or (b) to subscribe for, purchase or
otherwise acquire Common Stock or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the Common Stock issued
or sold or deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution, or the date of the granting
of such rights of subscription, purchase or other acquisition, as the case may
be.
4.9. Shares Considered Outstanding. The number of shares of Common
Stock outstanding at any given time shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock, but
shall exclude shares in the treasury of the Company.
4.10. Duration of Pro Forma Trigger Price. Following each computation
or readjustment of a Pro Forma Trigger Price as provided in this Paragraph 3,
the newly computed or adjusted Pro Forma Trigger Price shall remain in effect
until a further computation or readjustment thereof is required by this
Paragraph 4.
<PAGE>
5. Adjustment for Dividends in Other Stock, Property, Etc.;
Reclassifications, Etc.
In case at any time or from time to time after the Issuance Date the
holders of the Common Stock of the Company of any class (or any other shares of
stock or other securities at the time receivable upon the exercise of this
Option) shall have received, or, on or after the record date fixed for the
determination of eligible stockholders, shall have become entitled to receive:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend;
(b) any cash paid or payable out of capital or paid-in surplus or
surplus created as a result of a revaluation of property by way
of dividend; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares or
similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of Paragraph 3 hereof), then in each case, upon the
exercise of this Option as provided in Paragraph 3 hereof, you shall be entitled
to receive, in lieu of, or in addition to, as the case may be, the shares
theretofore receivable upon the exercise of this Option, the amount of stock or
other securities or property (including cash in the cases referred to in clauses
(b) and (c) above) which you would hold on the date of such exercise if, on the
Issuance Date, you had been the holder of record of the number of shares of
Common Stock of the Company called for on the face of this Option and had
thereafter, during the period from the Issuance Date to and including the date
of such exercise, retained such shares and/or all other or additional (or less)
stock or other securities or property (including cash in the cases referred to
in clauses (b) and (c) above) receivable by him as aforesaid during such period,
giving effect to all adjustments called for during such period by Paragraphs 4
and 6 hereof.
6. Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any reorganization of the Company (or any other corporation
the stock or other securities of which are at the time deliverable on the
exercise of this Option) after the date hereof, or in case, after such date, the
Company (or any such other corporation) shall consolidate with or merge into
another corporation or convey all or substantially all its assets to another
corporation, then and in each such case, upon the exercise hereof as provided in
Paragraph 3 hereof, at any time after the consummation of such reorganization,
consolidation, merger or conveyance, you shall be entitled to receive the stock
or other securities or property to which you would have been entitled upon such
consummation if you had exercised this Option immediately prior thereto, all
subject to further adjustments as provided in Paragraphs 4 and 6
<PAGE>
hereof; in each such case, the terms of this Option shall be applicable to the
shares of stock or other securities or property receivable upon the exercise of
this Option after such consummation.
7. No Dilution or Impairment.
The Company will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Option, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect against dilution or other
impairment. Without limiting the generality of the foregoing, the Company will
not increase the par value or any shares of stock receivable upon the exercise
of this Option above the amount payable therefor upon such exercise, and at all
times will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable stock
upon the exercise of this Option.
8. Accountants' Certificate as to Adjustments.
In each case of an adjustment in the number of shares of Common Stock
or other stock, securities or property receivable on the exercise of this
Option, at your request the Company at its expense shall promptly cause
independent public accountants of recognized standing, selected by the Company,
to compute such adjustment in accordance with the terms of this Option and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any additional
shares issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding and (c) the Pro
Forma Trigger Price. The Company will forthwith mail to you a copy of each such
certificate.
9. Notices of Record Date Etc.
In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon
the exercise of this Option) for the purpose of entitling or
enabling them to receive any dividend (other than a cash or stock
dividend at the same rate as the rate of the last cash or stock
dividend theretofore paid) or other distribution, or to exercise
any preemptive right pursuant to the Company's charter, or to
receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any
other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the
<PAGE>
Company with or into another corporation, or any conveyance of
all or substantially all of the assets of the Company to another
corporation; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to you
a notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (ii) the date
on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take place, and the
times, if any is to be fixed, as of which the holders of record of Common Stock
(or such other stock or securities at the time deliverable upon the exercise of
this Option) shall be entitled to exchange their shares of Common Stock of any
class (or such other stock or securities) for reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding up or (iii) the amount
and character of the stock or other securities proposed to be issued or granted,
the date of such proposed issuance or grant and the persons or class of persons
to whom such stock or other securities are to be offered, issued or granted.
Such notice shall be mailed at least thirty (30) days prior to the date therein
specified.
10. Reservation of Stock, Etc., Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely for
insurance and delivery upon the exercise of this Option, such shares of Common
Stock and other stock, securities and property as from time to time shall be
issuable upon the exercise of this Option.
11. Registration Rights.
a. Registration. As soon as reasonably practicable after the date
hereof, the Company will file a registration statement ("Registration
Statement") with the Securities and Exchange Commission ("SEC") covering the
shares of Common Stock issuable upon exercise of this Option ("Registrable
Securities"), and will use its best efforts to cause the Registration Statement
to become effective on or prior to the ninetieth day after such filing and to
keep the Registration Statement effective for a period of seven years from the
date it is declared effective by the SEC.
b. Additional Terms. Except as otherwise expressly stated herein, the
following provisions shall be applicable to the Registration Statement:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible, and if
any stop order shall be issued by the SEC in connection therewith to use
its reasonable efforts to obtain the removal of such order. Following the
effective date of the Registration Statement, the Company shall, upon your
request, forthwith supply such reasonable number of copies of the
Registration Statement, preliminary prospectus and prospectus meeting the
<PAGE>
requirements of the Act, and other documents necessary or incidental to a
public offering of the Registrable Securities, as shall be reasonably
requested by you to permit you to make a public distribution of your
Registrable Securities. The Company will use its reasonable efforts to
qualify the Registrable Securities for sale in such states as you shall
reasonably request, provided that no such qualification will be required in
any jurisdiction where, solely as a result thereof, the Company would be
subject to service of general process or to taxation or qualification as a
foreign corporation doing business in such jurisdiction. The obligations of
the Company hereunder with respect to your Registrable Securities are
expressly conditioned on your furnishing to the Company such appropriate
information concerning you, your Registrable Securities and the terms of
your offering of such Registrable Securities as the Company may reasonably
request.
(ii) The Company shall pay all expenses incurred in complying
with the provisions of this Paragraph 11, including, without limitation,
all registration and filing fees (including all expenses incident to filing
with the National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel to the Company, securities law
and blue sky fees and expenses and the expenses of any regular and special
audits incident to or required by any such registration. All underwriting
discounts and selling commissions applicable to the sales of the
Registrable Securities, and any state or federal transfer taxes payable
with respect to the sales of the Registrable Securities and all fees and
disbursements of your counsel, if any, in each case arising in connection
with registration of the Registrable Securities shall be payable by you.
(iii) In connection with the registration of the Registrable
Securities pursuant to this Paragraph 11, the Company shall indemnify and
hold harmless you, your affiliates, agents and representatives, each
person, if any, who controls the holder within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any
person claiming by or through any of them (collectively, the "Indemnified
Persons") from and against all losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arising out of or are based
upon any untrue statement of any material fact contained in the
Registration Statement or alleged untrue statement, under which such
securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
are made, not misleading, or any violation by the Company of the Securities
Act, the Exchange Act or state securities or blue sky laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration or qualification under such state
securities or blue sky laws; and will reimburse the Indemnified Persons for
any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to any Indemnified Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
omission made in the Registration Statement,
<PAGE>
said preliminary prospectus or said final prospectus or said amendment or
supplement or any document incident thereto in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of such Indemnified Person.
(iv) You will indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, each officer of the Company who signs
the Registration Statement and each director of the Company from and
against any and all such losses, claims, damages or liabilities arising
from any untrue statement in, or omission from, the Registration Statement,
any such preliminary or final prospectus, amendment, or supplement or
document incident thereto if the statement or omission in respect of which
such loss, claim, damage or liability is asserted was made in reliance upon
and in conformity with information furnished in writing to the Company by
you or on your behalf for use in connection with the preparation of the
Registration Statement or such prospectus or amendment or supplement
thereof.
(v) The reimbursements required by clauses (iii) and (iv) shall
be made by periodic payments during the course of the investigation or
defense as and when bills are received or expenses incurred; provided,
however, that to the extent that an Indemnified Person receives periodic
payments for legal or other expenses during the course of an investigation
or defense, and such person subsequently received payments for such
expenses from any other parties to the proceeding, such payments shall be
used by the Indemnified Person to reimburse the indemnifying party for such
periodic payments. Any party which proposes to assert the right to be
indemnified under clause (iii) or (iv) will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim is to be made against any Indemnified Person
hereunder, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served, but the
failure to so notify such indemnifying party of any such action, suit or
proceeding shall not relieve the indemnifying party from any obligation
which it may have to any Indemnified Person hereunder unless and only to
the extent that the indemnifying party is prejudiced by said lack of
notice. In case any such action, suit or proceeding shall be brought
against any Indemnified Person and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such Indemnified Person, and after notice from
the indemnifying party to such Indemnified Person of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such Indemnified Person for any legal or other expense, other than
reasonable costs of investigation subsequently incurred by such Indemnified
Person in connection with the defense thereof. The Indemnified Person shall
have the right to employ its own counsel in any such action, but the
reasonable fees and expenses of such counsel shall be at the expense of
such Indemnified Person, when and as incurred, unless (A) the employment of
counsel by such Indemnified Person has been authorized by the indemnifying
party, (B) the Indemnified Person has reasonably concluded (based on advice
of counsel), that there
<PAGE>
may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party, (C) the Indemnified
Person shall have reasonably concluded (based on advice of counsel) that
there may be a conflict of interest between the indemnifying party and the
Indemnified Person in the conduct of defense of such action (in which case
the indemnifying party shall not have the right to direct the defense of
such action on behalf of the Indemnified Person), or (D) the indemnifying
party shall not in fact have employed counsel to assume the defense of such
action within 15 days after receipt of notice of such action. An
indemnifying party shall not be liable for any settlement or any action or
claim effected without its consent.
(vi) If the indemnification provided for in this Paragraph 11 is
unavailable to any Indemnified Person hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such Indemnified Person, shall
contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and Indemnified Persons in connection with the actions
that resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and Indemnified Persons shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or Indemnified Persons,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth herein, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(vii) The Company and you agree that it would not be just and
equitable if contribution pursuant to clause (vi) were determined by pro
rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding any other provision hereof, in no
event shall your contribution obligation be greater in amount than the
excess of (A) the dollar amount of proceeds received by you upon the sale
of the securities giving rise to such contribution obligation over (B) the
dollar amount of any damages that you have otherwise been required to pay
by reason of the untrue or alleged untrue statement or omission or alleged
omission giving rise to such obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(viii) Neither the filing of the Registration Statement by the
Company pursuant to this Agreement nor the making of any request for
prospectuses by you shall impose upon you any obligation to sell his, her
or its Registrable Securities.
<PAGE>
(ix) Upon receipt of notice from the Company that an event has
occurred which requires a post-effective amendment to the Registration
Statement or a supplement to the prospectus included therein, you shall
promptly discontinue the sale of your Registrable Securities until you
receive a copy of a supplemented or amended prospectus from the Company,
which the Company shall provide as soon as practicable after such notice.
12. How Option May be Exercised.
This option is exercisable by a written notice signed by you and
delivered to the Company at 121-03 Dupont Street, Plainview, New York 11803,
attention of the Office of the President, signifying your election to exercise
the option. The notice must state the number of shares of Common Stock as to
which your option is being exercised, must contain a statement by you (in a form
acceptable to the Company) that such shares are being acquired by you for
investment and not with a view to their distribution or resale and must be
accompanied by cash or a check to the order of the Company for the full purchase
price of the shares being purchased.
If a notice of the exercise of this option is given by a person or
persons other than you, the Company may require as a condition to the exercise
of the option the submission to the company of appropriate proof of the right of
such person or persons to exercise the option.
Certificates for shares of the Common Stock so purchased will be
issued as soon as practicable. Except as otherwise provided herein, the Company,
however, shall not be required to register with the Securities and Exchange
Commission or any other applicable state authority any shares of Common Stock
issued upon exercise of this option and your right to sell, transfer, assign or
otherwise dispose of such shares shall be subject to your compliance with all
applicable federal and state securities laws.
13. Non-transferability of Option.
This option shall not be transferable except by Will or the laws of
descent and distribution, and, may be exercised during your lifetime only by
you.
Dated: May 1, 1996 LOGIMETRICS, INC.
By:/s/Norman M. Phipps
____________________________
Norman M. Phipps
Agreed:
/s/Russell J. Reardon
_________________________
Russell J. Reardon
EXHIBIT 10.23
LOGIMETRICS, INC.
1997 STOCK COMPENSATION PROGRAM
A. Purposes. This LogiMetrics, Inc. 1997 Stock Compensation Program (the
"Program") is intended to promote the interests of LogiMetrics, Inc. (the
"Company"), its direct and indirect present and future subsidiaries (the
"Subsidiaries"), and its stockholders, by providing eligible persons with the
opportunity to acquire a proprietary interest, or to increase their proprietary
interest, in the Company as an incentive to remain in the service of the
Company.
B. Elements of the Program. In order to maintain flexibility in the award
of benefits, the Program is comprised of six parts -- the Incentive Stock Option
Plan ("Incentive Plan"), the Supplemental Stock Option Plan ("Supplemental
Plan"), the Stock Appreciation Rights Plan ("SAR Plan"), the Performance Share
Plan ("Performance Share Plan"), the Stock Bonus Plan ("Stock Bonus Plan") and
the Independent Director Plan (the "Independent Director Plan"). Copies of the
Incentive Plan, Supplemental Plan, SAR Plan, Performance Share Plan, Stock Bonus
Plan and Independent Director Plan are attached hereto as Parts I, II, III, IV,
V, and VI, respectively, and are collectively referred to herein as the "Plans."
The grant of an option, stock appreciation right, performance share, or stock
bonus under one of the Plans shall not be construed to prohibit the grant of an
option, stock appreciation right, performance share, or stock bonus under any of
the other Plans.
C. Applicability of General Provisions. Unless any Plan specifically
indicates to the contrary, all Plans shall be subject to the General Provisions
of the Program set forth below under the heading "General Provisions of Stock
Compensation Program."
<PAGE>
GENERAL PROVISIONS OF STOCK COMPENSATION PROGRAM
Article 1. Administration. The Program shall be administered by the Board
of Directors of the Company (the "Board of Directors") or any duly created
committee appointed by the Board of Directors and charged with administration of
the Program. The Board of Directors, or any duly appointed committee, when
acting to administer the Program, is referred to as the "Program Administrator."
Any action of the Program Administrator shall be taken by majority vote at a
meeting or by unanimous written consent of all members without a meeting. No
Program Administrator or member of the Board of Directors shall be liable for
any action or determination made in good faith with respect to the Program or
with respect to any option, stock appreciation right, performance share, or
stock bonus granted thereunder. Notwithstanding any other provision of the
Program, administration of the Independent Director Plan, set forth as Part VI
of this Program, shall be self-executing in accordance with the terms of the
Independent Director Plan, and no Program Administrator shall exercise any
discretionary functions with respect to option grants made under such
Independent Director Plan.
Article 2. Authority of Program Administrator. Subject to the other
provisions of this Program, and with a view to effecting its purpose, the
Program Administrator shall have the authority: (a) to construe and interpret
the Program; (b) to define the terms used herein; (c) to prescribe, amend, and
rescind rules and regulations relating to the Program; (d) to determine to whom
options, stock appreciation rights, performance shares, and stock bonuses shall
be granted under the Program; (e) to determine the time or times at which
options, stock appreciation rights, performance shares, or stock bonuses shall
be granted under the Program; (f) to determine the number of shares subject to
any discretionary option or stock appreciation right under the Program and the
number of shares to be awarded as performance shares or stock bonuses under the
Program, as well as the option price and the duration of each option, stock
appreciation right, performance share and stock bonus, and any other terms and
conditions of options, stock appreciation rights, performance shares, and stock
bonuses; and (g) to make any other determinations necessary or advisable for the
administration of the Program and to do everything necessary or appropriate to
administer the Program. All decisions, determinations and interpretations made
by the Program Administrator shall be binding and conclusive on all participants
in the Program and on their legal representatives, heirs, and beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program. The maximum
aggregate number of shares of the Company's Common Stock, par value $.01 per
share ("Common Stock"), available pursuant to the Program, subject to adjustment
as provided in Article 6 hereof, shall be 4,000,000 shares of Common Stock. Up
to 3,850,000 of such shares may be issued under any Plan that is part of the
Program other than the Independent Director Plan. Up to 150,000 shares may be
issued under the Independent Director Plan. If any of the options or stock
appreciation rights granted under the Program expire or terminate for any reason
before they have been exercised in full, the unissued shares subject to those
expired or terminated options and/or stock appreciation rights shall again be
available for the purposes of the Program. If the performance objectives
associated with the grant of any performance shares are not
<PAGE>
achieved within the specified performance objective period, or if the
performance share grant terminates for any reason before the performance
objective date arrives, the shares of Common Stock associated with such
performance shares shall again be available for the purposes of the Program. If
any stock provided to a recipient as a stock bonus is forfeited, the shares of
Common Stock so forfeited shall again be available for purposes of the Program.
Any shares of Common Stock delivered pursuant to the Program may consist, in
whole or in part, of newly issued shares or treasury shares.
Article 4. Eligibility and Participation. All employees of the Company and
the Subsidiaries, whether or not officers or directors of the Company or the
Subsidiaries, all consultants of the Company and the Subsidiaries, whether or
not directors of the Company or the Subsidiaries, and all non-employee directors
of the Company shall be eligible to participate in the Program; provided,
however, that (i) only employees of the Company or the Subsidiaries may
participate in the Incentive Plan, and (ii) only Independent Directors (as
defined in the Independent Director Plan) may participate in the Independent
Director Plan. The term "employee" shall include any person who has agreed to
become an employee and the term "consultant" shall include any person who has
agreed to become a consultant.
Article 5. Effective Date and Term of Program. The Program shall become
effective upon its adoption by the Board of Directors and the stockholders of
the Company; provided, however, that awards may be granted under the Program
prior to obtaining stockholder approval of the Program so long as such awards
are contingent upon such stockholder approval being obtained and may not be
exercised prior to such approval. The Program shall continue in effect for a
term of ten years from the date the Program is adopted by the Board of Directors
unless sooner terminated by the Board of Directors.
Article 6. Adjustments. Subject to the provisions of Articles 18 and 19, in
the event that the outstanding shares of Common Stock of the Company are
hereafter increased, decreased, changed into, or exchanged for a different
number or kind of shares or securities through merger, consolidation,
combination, exchange of shares, other reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made by the Program
Administrator in the maximum number and kind of shares as to which options,
stock appreciation rights, and performance shares may be granted under the
Program. A corresponding adjustment changing the number or kind of shares
allocated to unexercised options, stock appreciation rights, performance shares
and stock bonuses or portions thereof, which shall have been granted prior to
any such change, shall likewise be made. Any such adjustment in outstanding
options and stock appreciation rights shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the option or
stock appreciation right but with a corresponding adjustment in the price for
each share or other unit of any security covered by the option or stock
appreciation right. In making any adjustment pursuant to this Article 6, any
fractional shares shall be disregarded.
Article 7. Termination and Amendment of Program. No options, stock
appreciation rights, performance shares or stock bonuses shall be granted under
the Program after the termination of the Program. The Program Administrator may
at any time amend or revise the
<PAGE>
terms of the Program or of any outstanding option, stock appreciation right,
performance share or stock bonus issued under the Program, provided, however,
that any stockholder approval necessary or desirable in order to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or with
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or
other applicable law or regulation shall be obtained prior to the effectiveness
of any such amendment or revision. No amendment, suspension or termination of
the Program or of any outstanding option, stock appreciation right, performance
share or stock bonus shall, without the consent of the person who has received
an option, stock appreciation right, performance share or stock bonus, impair
any of that person's rights or obligations under any option, stock appreciation
right, performance share or stock bonus granted under the Program prior to such
amendment, suspension or termination without that person's written consent.
Article 8. Privileges of Stock Ownership Notwithstanding the exercise of
any options granted pursuant to the terms of the Program or the achievement of
any performance objective specified in any performance share granted pursuant to
the terms of the Program, no person shall have any of the rights or privileges
of a stockholder of the Company in respect of any shares of stock issuable upon
the exercise of his or her option or achievement of his or her performance
objective until certificates representing the shares have been issued and
delivered. No adjustment shall be made for dividends or any other distributions
for which the record date is prior to the date on which any stock certificate is
issued pursuant to the Program.
Article 9. Reservation of Shares of Common Stock. The Company, during the
term of the Program, will at all times reserve and keep available such number of
shares of its Common Stock as shall be sufficient to satisfy the requirements of
the Program.
Article 10. Tax Withholding. The exercise of any option, stock appreciation
right or performance share, and the grant of any stock bonus under the Program,
are subject to the condition that, if at any time the Company shall determine,
in its discretion, that the satisfaction of withholding tax or other withholding
liabilities under any state or federal law is necessary or desirable as a
condition of, or in any connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then, in such event, the exercise of the
option, stock appreciation right or performance share or the grant of such stock
bonus or the elimination of the risk of forfeiture relating thereto shall not be
effective unless such withholding tax or other withholding liabilities shall
have been satisfied in a manner acceptable to the Company.
Article 11. Employment; Service as Director or Consultant. Nothing in the
Program gives to any person any right to continued employment by or service as a
director of or consultant to the Company or the Subsidiaries or limits in any
way the right of the Company, the Subsidiaries or the Company's stockholders at
any time to terminate or alter the terms of that employment or service.
Article 12. Investment Letter; Restrictions or Obligation of the Company to
Issue Securities; Restrictive Legend. Any person acquiring Common Stock or other
securities of the Company pursuant to the Program, as a condition precedent to
receiving the shares of Common Stock or other securities, may be required by the
Program Administrator to submit a
<PAGE>
letter to the Company stating that the shares of Common Stock or other
securities are being acquired for investment and not with a view to the
distribution thereof. The Company shall not be obligated to sell or issue any
shares of Common Stock or other securities pursuant to the Program unless, on
the date of sale and issuance thereof, the shares of Common Stock or other
securities are either registered under the Securities Act of 1933, as amended,
and all applicable state securities laws, or exempt from registration
thereunder. All shares of Common Stock and other securities issued pursuant to
the Program shall bear a restrictive legend summarizing the restrictions on
transferability applicable thereto, including those imposed by federal and state
securities laws.
Article 13. Covenant Against Competition. The Program Administrator shall
have the right to condition the award to an employee of any option, stock
appreciation right, performance share, or stock bonus under the Program upon the
recipient's execution and delivery to the Company of an agreement not to compete
with the Company during the recipient's employment and for such period
thereafter as shall be determined by the Program Administrator. Such covenant
against competition shall be in a form satisfactory to the Program
Administrator.
Article 14. Rights Upon Termination. If a recipient of an award under the
Program ceases to be a director of the Company or to be employed by or to
provide consulting services to the Company or any Subsidiary (or a corporation
or a parent or subsidiary of such corporation issuing or assuming a stock option
in a transaction to which Section 424(a) of the Code applies), as the case may
be, for any reason other than death or disability, then, unless any other
provision of the Program provides for earlier termination:
(a) subject to Article 21, all options or stock appreciation rights
(other than Naked Rights) shall terminate immediately in the event the
recipient's service or employment is terminated for cause and in all other
circumstances may be exercised, to the extent exercisable on the date of
termination, until (i) three months after the date of termination in the
case of grants under the Independent Director Plan, and (ii) 30 days after
the date of termination in all other cases; provided, however, that the
Program Administrator may, in its discretion, allow such options or stock
appreciation rights (other than Naked Rights) to be exercised (to the
extent exercisable on the date of termination) at any time within three
months after the date of termination;
(b) subject to Section 5(b) of the SAR Plan, all Naked Rights not
payable on the date of termination of employment shall terminate
immediately;
(c) all performance share awards shall terminate immediately unless
the performance objectives have been achieved and the performance objective
period has expired; and
(d) all stock bonuses which are subject to forfeiture shall be
forfeited as of the date of termination.
<PAGE>
Article 15. Rights Upon Disability. If a recipient becomes disabled, within
the meaning of Section 22(e)(3) of the Code, while serving as a director of the
Company or while employed by or rendering consulting services to the Company or
any Subsidiary (or a corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which Section 424(a) of
the Code applies), as the case may be, then, unless any other provision of the
Program provides for earlier termination:
(a) subject to Article 21, all options or stock appreciation rights
(other than Naked Rights) may be exercised, to the extent exercisable on
the date of termination, at any time within one year after the date of
termination due to disability;
(b) all Naked Rights shall be fully paid by the Company as of the date
of disability;
(c) all performance share awards for which all performance objectives
have been achieved (other than continued employment or service on the
Vesting Date) shall be paid in full by the Company; all other performance
shares shall terminate immediately; and
(d) all stock bonuses which are subject to forfeiture shall be
forfeited as of the date of disability.
Article 16. Rights Upon Death of Recipient. If a recipient dies while
serving as a director of the Company or while employed by or rendering
consulting services to the Company or any Subsidiary (or a corporation or a
parent or subsidiary of such corporation issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies), as the case may be,
then, unless any other provision of the Program provides for earlier
termination:
(a) subject to Article 21, all options or stock appreciation rights
(other than Naked Rights) may be exercised by the person or persons to whom
the recipient's rights shall pass by will or by the laws of descent and
distribution, to the extent exercisable on the date of death, at any time
within one year after the date of death, unless any other provision of the
Program provides for earlier termination;
(b) all Naked Rights shall be fully paid by the Company as of the date
of death;
(c) all performance share awards for which all performance objectives
have been achieved (other than continued employment or service on the
Vesting Date) shall be paid in full by the Company; all other performance
share awards shall terminate immediately; and
(d) all stock bonuses which are subject to forfeiture shall be
forfeited as of the date of death.
<PAGE>
Article 17. Transferability. Options and stock appreciation rights granted
under the Program may not be sold, pledged, assigned or transferred in any
manner by the recipient otherwise than by will or by the laws of descent and
distribution and shall be exercisable (a) during the recipient's lifetime only
by the recipient and (b) after the recipient's death only by the recipient's
executor, administrator or personal representative, provided, however that (i)
the Program Administrator may permit the recipient of a non-incentive stock
option under the Supplemental Plan to transfer the option to a family member or
a trust created for the benefit of family members and (ii) recipients of options
under the Independent Director Plan may transfer such options to a family member
or a trust created for the benefit of family members. In the case of such a
transfer, the transferee's rights and obligations with respect to the option
shall be determined by reference to the recipient and the recipient's rights and
obligations with respect to the option had no transfer been made. The recipient
shall remain obligated pursuant to Articles 10 and 12 hereunder if required by
applicable law. Common Stock which represents either performance shares prior to
the satisfaction of the stated performance objectives and the expiration of the
stated performance objective periods or stock bonus shares prior to the time
that they are no longer subject to risk of forfeiture may not be sold, pledged,
assigned or transferred in any manner.
Article 18. Change in Control. All options granted pursuant to the
Independent Director Plan shall become immediately exercisable upon the
occurrence of a Change in Control Event. With respect to other awards, the
Program Administrator shall have the authority to provide, either at the time
any option, stock appreciation right, performance share or stock bonus is
granted or thereafter, that an option or stock appreciation right shall become
fully exercisable upon the occurrence of a Change in Control Event or that all
restrictions, performance objectives, performance objective periods and risks of
forfeiture pertaining to a performance share or stock bonus award shall lapse
upon the occurrence of a Change in Control Event. As used in the Program, a
"Change in Control Event" shall be deemed to have occurred if:
(a) any person, firm or corporation (other than Charles S. Brand,
members of his immediate family, or any trust or other entity established
for the benefit of Mr. Brand and/or members of his immediate family)
acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any
voting security of the Company and, immediately after such acquisition, the
acquirer has Beneficial Ownership of voting securities representing 50% or
more of the total voting power of all the then-outstanding voting
securities of the Company;
(b) the individuals who (i) as of the effective date of the Program
constitute the Board of Directors (the "Original Directors"), (ii)
thereafter are elected to the Board of Directors and whose election or
nomination for election to the Board of Directors was approved by a vote of
at least 2/3 of the Original Directors then still in office (such Directors
being called "Additional Original Directors"), or (iii) are elected to the
Board of Directors and whose election or nomination for election to the
Board of Directors was approved by a vote of at least 2/3 of the Original
Directors and Additional Original
<PAGE>
Directors then still in office, cease for any reason to constitute a
majority of the members of the Board of Directors;
(c) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company or the
Company shall consummate any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which would result
in holders of outstanding voting securities of the Company immediately
prior to the transaction having Beneficial Ownership of at least 50% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction, with the voting
power of each such continuing holder relative to such other continuing
holders being not altered substantially in the transaction; or
(d) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or a substantial portion of the Company's assets (i.e.,
50% or more in value of the total assets of the Company).
Article 19. Mandatory Exercise. Upon the occurrence of or in anticipation
of a contemplated Change in Control Event, the Company may give a holder of an
option or stock appreciation right written notice requiring such person either
(a) to exercise within a period of time established by the Company after receipt
of the notice each option and stock appreciation right to the fullest extent
exercisable at the end of that period, or (b) to surrender such option or stock
appreciation right or any unexercised portion thereof. Any portion of such
option or stock appreciation right which shall not have been exercised in
accordance with the provisions of the Program by the end of such period shall
automatically lapse irrevocably and the holder shall have no further rights
thereunder.
Article 20. Method of Exercise. Any holder of an option may exercise his or
her option from time to time by giving written notice thereof to the Company at
its principal office, together with payment in full for the shares of Common
Stock to be purchased. The date of such exercise shall be the date on which the
Company receives such notice. Such notice shall state the number of shares to be
purchased. The purchase price of any shares purchased upon the exercise of any
option granted pursuant to the Program shall be paid in full at the time of
exercise of the option by certified or bank cashier's check payable to the order
of the Company or, if permitted by the Program Administrator, by shares of
Common Stock which have been held by the optionee for at least six months, or by
a combination of checks and such shares of Common Stock. The Program
Administrator may, in its sole discretion, permit an optionee to make "cashless
exercise" arrangements, to the extent permitted by applicable law, and may
require optionees to utilize the services of a single broker selected by the
Program Administrator in connection with any cashless exercise. No option may be
exercised for a fraction of a share of Common Stock. If any portion of the
purchase price is paid in shares of Common Stock, those shares shall be valued
at their then Fair Market Value as determined by the Program Administrator in
accordance with Section 4 of the Incentive Plan.
<PAGE>
Article 21. Limitation. Notwithstanding any other provision of the Program,
(a) no option may be granted pursuant to the Program more than ten years after
the date on which the Program was adopted by the Board of Directors, and (b) any
option granted under the Program shall, by its terms, not be exercisable more
than ten years after the date of grant; provided, however, that any option
granted under the Independent Director Plan shall, by its terms, not be
exercisable more than five years after the date of grant.
Article 22. Sunday or Holiday. In the event that the time for the
performance of any action or the giving of any notice is called for under the
Program within a period of time which ends or falls on a Sunday or legal
holiday, such period shall be deemed to end or fall on the next day following
such Sunday or legal holiday which is not a Sunday or legal holiday.
Article 23. Governing Law. The Program shall be governed by and construed
in accordance with the laws of the State of Delaware.
<PAGE>
PLAN I
LOGIMETRICS, INC.
INCENTIVE STOCK OPTION PLAN
Section 1. General. This LogiMetrics, Inc. Incentive Stock Option Plan
("Incentive Plan") is Part I of the Company's Program. The Company intends that
options granted pursuant to the provisions of the Incentive Plan will qualify
and will be identified as "incentive stock options" within the meaning of
Section 422 of the Code. Unless any provision herein indicates to the contrary,
the Incentive Plan shall be subject to the General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
incentive stock options to any person eligible under Article 4 of the General
Provisions. The terms and conditions of options granted under the Incentive Plan
may differ from one another as the Program Administrator shall, in its
discretion, determine, as long as all options granted under the Incentive Plan
satisfy the requirements of the Incentive Plan.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Incentive Plan shall expire on the date
determined by the Program Administrator, but in no event shall any option
granted under the Incentive Plan expire later than ten years from the date on
which the option is granted. Notwithstanding the foregoing, any option granted
under the Incentive Plan to any person who owns more than 10% of the combined
voting power of all classes of stock of the Company or a Subsidiary shall expire
no later than five years from the date on which the option is granted.
Section 4. Purchase Price. The option price with respect to any option
granted pursuant to the Incentive Plan shall not be less than the Fair Market
Value of the shares on the date of the grant of the option; except that the
option price with respect to any option granted pursuant to the Incentive Plan
to any person who owns more than 10% of the combined voting power of all classes
of stock of the Company shall not be less than 110% of the Fair Market Value of
the shares on the date the option is granted. "Fair Market Value" shall mean the
fair market value of the Common Stock on the date of grant or other relevant
date. If on such date the Common Stock is listed on a stock exchange or is
quoted on the automated quotation system of NASDAQ, the Fair Market Value shall
be the closing sale price (or if such price is unavailable, the average of the
high bid price and the low asked price) on such date. If no such closing sale
price or bid and asked prices are available, the Fair Market Value shall be
determined in good faith by the Program Administrator in accordance with
generally accepted valuation principles and such other factors as the Program
Administrator reasonably deems relevant.
Section 5. Maximum Amount of Options in Any Calendar Year. The aggregate
Fair Market Value of the Common Stock with respect to which incentive stock
options
<PAGE>
are exercisable for the first time by any employee during any calendar year
(under the terms of the Incentive Plan and all incentive stock option plans of
the Company and the Subsidiaries) shall not exceed $100,000.
Section 6. Exercise of Options. Unless otherwise provided by the Program
Administrator at the time of grant or unless the installment provisions set
forth herein are subsequently accelerated pursuant to Article 18 of the General
Provisions of the Program or otherwise by the Program Administrator with respect
to any one or more previously granted options, options may only be exercised to
the following extent during the following periods of employment:
<PAGE>
Maximum Percentage of
Shares Covered by
Period Following Option Which May be
Date of Grant Purchased
Less than 12 months 0%
12 months or more and less than 24 months 25%
24 months or more and less than 36 months 50%
36 months or more and less than 48 months 75%
48 months or more 100%
<PAGE>
PLAN II
LOGIMETRICS, INC.
SUPPLEMENTAL STOCK OPTION PLAN
Section 1. General. This LogiMetrics, Inc. Supplemental Stock Option Plan
("Supplemental Plan") is Part II of the Company's Program. Any option granted
pursuant to the Supplemental Plan shall not be an incentive stock option as
defined in Section 422 of the Code. Unless any provision herein indicates to the
contrary, this Supplemental Plan shall be subject to the General Provisions of
the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
supplemental stock options to any person eligible under Article 4 of the General
Provisions. The terms and conditions of options granted under the Supplemental
Plan may differ from one another as the Program Administrator shall, in its
discretion, determine, as long as all options granted under the Supplemental
Plan satisfy the requirements of the Supplemental Plan.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Supplemental Plan shall expire on the date
determined by the Program Administrator, but in no event shall any option
granted under the Supplemental Plan expire later than ten years from the date on
which the option is granted.
Section 4. Purchase Price. The option price with respect to any option
granted pursuant to the Supplemental Plan shall be determined by the Program
Administrator at the time of grant.
Section 5. Exercise of Options. Unless otherwise provided by the Program
Administrator at the time of grant, or unless the installment provisions set
forth herein are subsequently accelerated pursuant to Article 18 of the General
Provisions of the Program or otherwise by the Program Administrator, with
respect to any one or more previously granted options, options may only be
exercised to the following extent during the following periods of employment or
service:
<PAGE>
Maximum Percentage of
Shares Covered by
Period Following Option Which May be
Date of Grant Purchased
Less than 12 months 0%
12 months or more and less than 24 months 25%
24 months or more and less than 36 months 50%
36 months or more and less than 48 months 75%
48 months or more 100%
<PAGE>
PLAN III
LOGIMETRICS, INC.
STOCK APPRECIATION RIGHTS PLAN
Section 1. General. This LogiMetrics, Inc. Stock Appreciation Rights Plan
("SAR Plan") is Part III of the Company's Program.
Section 2. Terms and Conditions. The Program Administrator may grant stock
appreciation rights to any person eligible under Article 4 of the General
Provisions. Stock appreciation rights may be granted either in tandem with
incentive stock options or supplemental stock options as described in Section 4
of the SAR Plan, or as naked stock appreciation rights as described in Section 5
of the SAR Plan.
Section 3. Mode of Payment. At the discretion of the Program Administrator,
payments to recipients upon exercise of stock appreciation rights may be made in
(a) cash by bank check, (b) shares of Common Stock having a Fair Market Value
(determined in the manner provided in Section 4 of the Incentive Plan) equal to
the amount of the payment, (c) a note in the amount of the payment containing
such terms as are approved by the Program Administrator, or (d) any combination
of the foregoing in an aggregate amount equal to the amount of the payment.
Section 4. Stock Appreciation Rights in Tandem with Incentive or
Supplemental Stock Options. A SAR granted in tandem with an incentive stock
option or a supplemental stock option (each, an "Option") shall be on the
following terms and conditions:
(a) Each SAR shall relate to a specific Option or portion of an Option
granted under the Incentive Plan or the Supplemental Plan, as the case may
be, and may be granted by the Program Administrator at the same time that
the Option is granted or at any time thereafter prior to the last day on
which the Option may be exercised.
(b) A SAR shall entitle a recipient, upon surrender of the unexpired
related Option, or a portion thereof, to receive from the Company an amount
equal to the excess of (i) the Fair Market Value (determined in accordance
with Section 4 of the Incentive Plan) of the shares of Common Stock which
the recipient would have been entitled to purchase on that date pursuant to
the portion of the Option surrendered, over (ii) the amount which the
recipient would have been required to pay to purchase such shares upon
exercise of such Option.
(c) A SAR shall be exercisable only for the same number of shares of
Common Stock, and only at the same times, as the Option to which it
relates. SARs shall be subject to such other terms and conditions as the
Program Administrator may specify.
<PAGE>
(d) A SAR shall lapse at such time as the related Option is exercised
or lapses pursuant to the terms of the Program. On exercise of the SAR, the
related Option shall lapse as to the number of shares exercised.
Section 5. Naked Stock Appreciation Rights. SARs granted by the Program
Administrator as naked stock appreciation rights ("Naked Rights") shall be
subject to the following terms and conditions:
(a) The Program Administrator may award Naked Rights to recipients for
periods not exceeding ten years. Each Naked Right shall represent the right
to receive the excess of (i) the Fair Market Value of one share of Common
Stock (determined in accordance with Section 4 of the Incentive Plan) on
the date of exercise of the Naked Right, over (ii) the Fair Market Value of
one share of Common Stock (determined in accordance with Section 4 of the
Incentive Plan) on the date the Naked Right was awarded to the recipient.
(b) Unless otherwise provided by the Program Administrator at the time
of award or unless the installment provisions set forth herein are
subsequently accelerated pursuant to Article 18 of the General Provisions
of the Program or otherwise by the Program Administrator with respect to
any one or more previously granted Naked Rights, Naked Rights may only be
exercised to the following extent during the following periods of
employment or service:
Maximum Percentage of
Period Following Naked Rights Which
Date of Grant May be Purchased
Less than 12 months 0%
12 months or more and less than 24 months 25%
24 months or more and less than 36 months 50%
36 months or more and less than 48 months 75%
48 months or more 100%
(c) The Naked Rights solely measure and determine the amounts to be
paid to recipients upon exercise as provided in Section 5(a). Naked Rights
do not represent Common Stock or any right to receive Common Stock. The
Company shall not hold in trust or otherwise segregate amounts which may
become payable to recipients of Naked Rights; such funds shall be part of
the general funds of the Company. Naked Rights shall constitute an unfunded
contingent promise to make future payments to the recipient.
<PAGE>
PLAN IV
LOGIMETRICS, INC.
PERFORMANCE SHARE PLAN
Section 1. General. This LogiMetrics, Inc. Performance Share Plan
("Performance Share Plan") is Part IV of the Company's Program. Unless any
provision herein indicates to the contrary, the Performance Share Plan shall be
subject to the General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
performance shares to any person eligible under Article 4 of the General
Provisions. Each performance share grant shall confer upon the recipient thereof
the right to receive a specified number of shares of Common Stock of the Company
contingent upon the achievement of specified performance objectives within a
specified performance objective period including, but not limited to, the
recipient's continued employment or service as a consultant through the period
set forth in Section 5 of this Performance Share Plan. At the time of an award
of a performance share, the Program Administrator shall specify the performance
objectives, the performance objective period or periods and the period of
duration of the performance share grant. Any performance shares granted under
this Plan shall constitute an unfunded promise to make future payments to the
affected person upon the completion of specified conditions.
Section 3. Mode of Payment. At the discretion of the Program Administrator,
payments of performance shares may be made in (a) shares of Common Stock, (b) a
check in an amount equal to the Fair Market Value (determined in the manner
provided in Section 4 of the Incentive Plan) of the shares of Common Stock to
which the performance share award relates, (c) a note in the amount specified
above in Section 3(b) containing such terms as are approved by the Program
Administrator, or (d) any combination of the foregoing in the aggregate amount
equal to the amount specified above in Section 3(b).
Section 4. Performance Objective Period. The duration of the period within
which to achieve the performance objectives shall be determined by the Program
Administrator. The period may not be less than one year nor more than ten years
from the date that the performance share is granted. The Program Administrator
shall determine whether performance objectives have been met with respect to
each applicable performance objective period. Such determination shall be made
promptly after the end of each applicable performance objective period, but in
no event later than 90 days after the end of each applicable performance
objective period. All determinations by the Program Administrator with respect
to the achievement of performance objectives shall be final, binding on and
conclusive with respect to each recipient.
Section 5. Vesting of Performance Shares. Unless otherwise provided by the
Program Administrator at the time of grant, or unless the installment provisions
set forth herein are subsequently accelerated pursuant to Article 18 of the
General Provisions of the Program or otherwise by the Program Administrator,
with respect to any one or more previously granted
<PAGE>
performance shares, the Company shall pay to the recipient on the date set forth
in Column 1 below ("Vesting Date") the percentage of the recipient's performance
share award set forth in Column 2 below.
Column 1 Column 2
Vesting Date Percentage
1 year from Date of Grant 25%
2 years from Date of Grant 25%
3 years from Date of Grant 25%
4 years from Date of Grant 25%
<PAGE>
PLAN V
LOGIMETRICS, INC.
STOCK BONUS PLAN
Section 1. General. This LogiMetrics, Inc. Stock Bonus Plan ("Stock Bonus
Plan") is Part V of the Company's Program. Unless any provision herein indicates
to the contrary, the Stock Bonus Plan shall be subject to the General Provisions
of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
bonuses in the form of shares of Common Stock to any person eligible under
Article 4 of the General Provisions. Each such stock bonus shall be forfeited by
the recipient in the event that the recipient's employment by or service as a
director or consultant to the Company or any Subsidiary terminates within the
time periods specified in Section 3 of the Stock Bonus Plan or within such other
time period as the Program Administrator also may provide at the time of grant.
The Program Administrator also may provide at the time of grant that the Common
Stock subject to the stock bonus shall be forfeited by the recipient upon the
occurrence of other events.
Section 3. Forfeiture of Bonus Shares. Unless otherwise provided by the
Program Administrator at the time of grant, or unless the installment provisions
set forth herein are subsequently accelerated pursuant to Article 18 of the
General Provisions of the Program or otherwise by the Program Administrator with
respect to any one or more previously granted bonus shares, the percentage set
forth in Column 2 below of shares of Common Stock issued as a stock bonus shall
be forfeited and transferred back to the Company by the recipient without
payment of any consideration from the Company if the recipient's employment by
or service as a director or consultant to the Company or any Subsidiary is
terminated for any reason during the time periods specified in Column 1 below:
Column 1 Column 2
Employment or Service Percentage of Bonus
Terminated Within Shares Which are Forfeitable
First 12 months after grant 100%
First 24 months after grant 75%
First 36 months after grant 50%
First 48 months after grant 25%
Beyond 48 months after grant 0%
Section 4. Rights as a Stockholder; Stock Certificates. A recipient shall
have rights as a stockholder with respect to any shares of Common Stock received
as a stock bonus represented by a stock certificate issued in his name even
though all or a portion of such shares remains subject to a risk of forfeiture
hereunder, except that shares subject to forfeiture shall not
<PAGE>
be transferable. Stock certificates representing such shares which remain
subject to forfeiture together with a related stock power shall be held by the
Company, and shall be canceled and returned to the Company's treasury if
thereafter forfeited. Stock certificates representing such shares which are
vested and no longer subject to forfeiture shall be delivered to the recipient.
<PAGE>
PLAN VI
LOGIMETRICS, INC.
INDEPENDENT DIRECTOR PLAN
Section 1. General. This LogiMetrics, Inc. Independent Director Plan
("Independent Director Plan") is Part VI of the Company's Program. Any option
granted pursuant to this Independent Director Plan shall not be an incentive
stock option as defined in Section 422 of the Code. Unless any provision herein
indicates to the contrary, this Independent Director Plan shall be subject to
the General Provisions of the Program.
Section 2. Terms and Conditions. Every year on the earlier of (i) the date
of the Company's annual meeting of stockholders, and (ii) June 1, the Company
shall grant to each Independent Director (as defined below) elected as a
director at such annual meeting (or nominated for election as a director by the
Board of Directors or any nominating committee thereof in the event that such
annual meeting does not occur prior to June 1), or, in the event that the Board
of Directors is divided into two or more classes, continuing or expected to
continue to serve as a director of the Company following such annual meeting, an
option to purchase 5,000 shares of Common Stock. As used in the Independent
Director Plan, the term "Independent Director" means any member of the Board of
Directors who, as of the relevant date of determination, has not been a
full-time employee of the Company or any Subsidiary for at least twelve months
preceding such date.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Independent Director Plan shall expire five
years from the date on which the option is granted. In addition, each option
shall be subject to early termination as provided in the Independent Director
Plan.
Section 4. Purchase Price. The option price with respect to any option
granted pursuant to the Independent Director Plan shall be the Fair Market Value
(determined in accordance with Section 4 of the Incentive Plan) of the shares of
Common Stock to which the option relates.
Section 5. Exercise of Options.
(a) Options granted under the Independent Director Plan shall become fully
exercisable as to 100% of the shares of Common Stock covered thereby one year
after the date of grant, subject to acceleration as set forth in Article 18 of
the General Provisions of Stock Compensation Program.
(b) Except as provided in the General Provisions of Stock Compensation
Program, no option may be exercised unless the holder thereof is then a director
of the Company.
<PAGE>
(c) Other than as provided in the General Provisions of Stock Compensation
Program, options granted under the Independent Director Plan shall not be
affected by any change of duties or position so long as the holder continues to
be a director of the Company.
EXHIBIT 10.24
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT, dated as of March 7, 1996, is made by and
between LogiMetrics, Inc., a Delaware corporation (the "Company"), and
____________ (the "Indemnitee"), an "Agent" (as hereinafter defined) of the
Company.
RECITALS
A. The Company recognizes that competent and experienced persons are
increasingly reluctant to serve as directors and officers of corporations unless
they are protected by comprehensive liability insurance or indemnification, or
both, due to increased exposure to litigation costs and risks resulting from
their service to such corporations, and due to the fact that the exposure
frequently bears no reasonable relationship to the compensation of such
directors and officers;
B. The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous or conflicting,
and therefore fail to provide such directors and officers with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take;
C. The Company and Indemnitee recognize that plaintiffs often seek
damages in such large amounts and the costs of litigation may be so enormous
(whether or not the case is meritorious), that the defense and/or settlement of
such litigation is open beyond the personal resources of officers and directors;
D. The Company believes that it is unfair for its directors and
officers and those serving other entities at the request of the Company to
assume the risk of huge judgments and other expenses which may occur in cases in
which the director or officer received no personal profit and in cases where the
director or officer acted in good faith;
E. The Company, after reasonable investigation, has determined that
the liability insurance coverage presently available to the Company provides
only limited protection and may not continue to be available at acceptable
premium rates. The Company believes that the interests of the Company and its
stockholders would best be served by a combination of such insurance (to the
extent it remains reasonably available) and the indemnification by the Company
of the directors and of officers of the Company;
F. Section 145 of the General Corporation Law of Delaware
<PAGE>
("Section 145"), under which the Company is organized, empowers the Company to
indemnify its officers, directors, employees and agents by agreement and to
indemnify persons who serve, at the request of the Company, as the directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provisions of Section 145 are not
exclusive;
G. The Board of Directors has determined that contractual
indemnification as set forth herein is not only reasonable and prudent but
necessary to promote the best interests of the Company and its stockholders;
H. The Company desires and has requested the Indemnitee to serve or
continue to serve the Company free from undue concern for claims for damages
arising out of or related to such services to the Company; and
I. The Indemnitee is willing to serve, or to continue to serve, the
Company, provided that he or she is furnished the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions
(a) Agent. For purposes of this Agreement, "Agent" of the Company
means any person (in all capacities in which such person is acting, has acted
and will act) who is or was a director, officer, employee, fiduciary or other
agent of the Company or who is or was serving at the request of the Company as a
director, officer, employee, fiduciary, or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(b) Change in Control. For purposes of this Agreement, a "Change
in Control" shall be deemed to have occurred if (i) during any period of two
consecutive years after the date hereof, individuals who at the beginning of
such period constitute the board of directors of the Company and any new
director whose election by the board of directors or nomination for election by
the Company's stockholders was approved by a vote of a least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose
<PAGE>
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof or (ii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation and dissolution of the Company or
an agreement for the sale or disposition by the Company of all or substantially
all the Company's assets; provided, however, that a would-be Change in Control
under (ii) herein which is approved and recommended in advance by the Company
board of directors shall not be deemed a Change in Control.
(c) Expenses. For purposes of this Agreement, "Expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, attorneys' fees and related disbursements, other
out-of-pocket costs and compensation for time spent by the Indemnitee for which
he or she is not otherwise compensated by the Company or any third party),
incurred by the Indemnitee in connection with either (i) the investigation,
defense or appeal of or being a witness or otherwise participating in or
preparing for a Proceeding or (ii) the establishment or enforcement of
Indemnitee's right to indemnification under this Agreement, Section 145 or
otherwise, including judgments, fines and amounts paid in settlement by or on
behalf of Indemnitee
(d) Other Enterprise. For purposes of this Agreement, "other
enterprise" shall include employee benefit plans; references to "fines" shall
include any excise tax assessed with respect to any employee benefit plans, and
references to "serving at the request of the Company" shall include any service
as a director, officer, employee, fiduciary or agent of the Company which
imposes duties on, or involves services by, such director, officer, employee,
fiduciary or agent with respect to an employee benefit plan, its participants,
or beneficiaries.
(e) Proceedings. For the purposes of this Agreement, "Proceeding"
means any investigation or any threatened, pending or completed action, suit or
other proceeding, whether civil, criminal, administrative, investigative or any
other type whatsoever whether instituted by, or in the right of, the Company or
by any other person or entity to which an Agent was or is a party or a witness
or is otherwise involved or is threatened to
<PAGE>
be made a party or a witness or to be otherwise involved by reason of the fact
that he or she is or was an Agent of the Company.
(f) Reviewing Party. For purposes of this Agreement, "Reviewing
Party" shall mean any appropriate person or body consisting of a member or
members of the Company's board of directors or any other person or body selected
hereunder (including Special Independent Counsel defined below) who is not a
party to the particular Proceeding for which Indemnitee is seeking
indemnification. If there has not been a Change in Control, the Reviewing Party
shall he selected by the Company's board of directors. If there has been such a
Change in Control, the Reviewing Party shall be Special Dependent Counsel.
(g) Special Independent Counsel. For purposes of this Agreement,
"Special Independent Counsel" shall mean counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld) and
who has not, unless waived by the Company and Indemnitee, otherwise performed
services for the Company or Indemnitee within the last ten (10) years. The
Company agrees to pay the reasonable fees of the Special Independent Counsel
referred to above and to fully indemnify such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.
(h) Voting Securities. For purposes of this Agreement, "Voting
Securities" shall mean any securities of the Company which vote generally in the
election of directors.
2. Agreement to Serve. The Indemnitee has served and agrees to
continue to serve as an Agent of the Company, at its will (or under separate
agreement, if such agreement exists), in all capacities Indemnitee currently
serves or will serve as an Agent of the Company, so long as he or she is duly
appointed or elected and qualified as such or until such time as he or she
tenders his or her resignation in writing; provided, however, that nothing
contained in this Agreement is intended to create any right to continued
employment of Indemnitee.
3. Basic Indemnity.
(a) The Company shall indemnify the Indemnitee if the Indemnitee
is or was a witness or a party to or is threatened to be made a party to or is
otherwise involved in any Proceeding brought by any person or entity to the
fullest extent permitted by law as soon as practicable but in any event no later
than fifteen (15) days after written demand is presented to the Company, against
any and all Expenses, judgments, fees, penalties
<PAGE>
and amounts paid or owing in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such Proceeding.
(b) Notwithstanding anything in this Agreement to the contrary,
(i) prior to a Change in Control, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any Proceeding
(other than a claim for indemnification) initiated by Indemnitee against the
Company or any director or officer of the Company unless the Company has joined
in or consented to the initiation of such Proceeding, (ii) the obligations of
the Company under Section 3(a) shall be subject to the condition that the
Reviewing Party shall not have determined in a writing stating the reasons
therefor that Indemnitee would not be permitted to be indemnified under
applicable law, and (iii) the obligation of the Company to make an Expense
Advance pursuant to Section 6 shall be subject to the condition that, if, when
and to the extent that the Reviewing Party determines that Indemnitee would not
be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid, provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent jurisdiction
to secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or lapsed).
(c) If the Reviewing Panty determines that Indemnitee would not
be permitted to be indemnified in whole or in part under applicable law (such
determination to be made by the Reviewing Party independent of any position of
the Company on any aspect of the indemnification including but not limited to
the appropriateness of the amount of any settlement), Indemnitee shall have the
right to commence litigation in any court, in the States of Delaware or New York
or the State(s) of Indemnitee's residence or employment, having subject matter
jurisdiction thereof, and in which venue is proper, seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Indemnification at Option of the Company.
<PAGE>
Notwithstanding any other provision of this Agreement, the Company may, in
specific cases, provide Indemnitee with full or partial indemnification if the
Board of Directors finds it appropriate and such indemnification is not then
prohibited by law.
5. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Proceeding but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any Proceeding or in defense of any
issue or matter therein, including dismissal without prejudice, Indemnitee shall
be indemnified against all Expenses incurred in connection therewith. In
connection with any determination by the Reviewing Party as to whether
Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be
on the Company to establish that Indemnitee is not so entitled.
6. Advancement of Expenses. The Company shall advance all Expenses
incurred by the Indemnitee in connection with the investigation, defense,
settlement or appeal of any Proceeding for which the Indemnitee is entitled to
indemnification hereunder (each an "Expense Advance"). Expense Advances to be
made hereunder shall be paid by the Company to or on behalf of the Indemnitee
within fifteen (15) days following delivery of a written demand therefor by the
Indemnitee to the Company.
7. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement, or the threat of commencement, of any Proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof. The failure to so notify the
Company shall not affect the Company's obligation to indemnify the Indemnitee
otherwise than under this Agreement.
(b) The Company shall indemnify Indemnitee against any and all
expenses (including attorneys' fees) and, if requested by Indemnitee, shall
within fifteen (15) days of such request, advance such expenses to Indemnitee
which are incurred by Indemnitee in connection with any claim asserted against
or action brought by indemnity for (i) indemnification hereunder or advance
payment of Expenses by the Company under this Agreement
<PAGE>
(or any other agreement or the Company's Certificate of Incorporation or By-Laws
now or hereafter in effect) relating to Proceedings and/or (ii) recovery under
any director and officer liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
(c) For purposes of this Agreement, the termination of any claim,
action, suit or proceeding by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
8. Insurance. The Company may, but is not obligated to, obtain
directors' and officers' liability insurance ("D&O Insurances") as may be or
became available with respect to which the Indemnitee is named as an insured.
Notwithstanding any other provision of this Agreement, the Company shall not be
obligated to indemnify the Indemnitee for expenses, judgments, fines or
penalties which have been paid directly to the Indemnitee by D&O Insurance. If
the Company has D&O Insurance in effect at the time the Company receives from
the Indemnitee any notice of the commencement of a Proceeding, the Company shall
give prompt notice of the commencement of such Proceeding to the insurers in
accordance with the procedures set form in the policy. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Proceeding
in accordance with the terms of such policy.
9. Settlement. The Company shall have no obligation under this
Agreement to indemnify the Indemnitee for any amounts paid in settlement of any
Proceeding effected without the Company's prior written consent. The Company
shall not settle any claim in which it takes the position that the Indemnitee is
not entitled to indemnification in connection with such settlement without the
prior written consent of the Indemnitee, nor shall the Company settle any
Proceeding in any manner which would impose any fine or any obligation on the
Indemnitee, without the Indemnitee's prior written consent. Neither the Company
nor the Indemnitee shall unreasonably withhold such consent to any proposed
settlement; provided, however, that the Indemnitee shall not be obligated to
consent to any proposed settlement unless in connection with such settlement the
Indemnitee shall be fully released from all liability with respect to the
relevant Proceeding either because such Proceeding was settled without
<PAGE>
liability to the Indemnitee or, if the Indemnitee shall have any liability with
respect to such Proceeding, the Indemnitee shall be fully indemnified hereunder
from all Expenses resulting from such Proceeding and/or shall receive payment in
the amount of such Expenses pursuant to D&O Insurance.
10. Nonexclusivity. The provisions for indemnification and advance of
Expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which the Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation (as amended or restated from time to time) or
By-Laws, in any court in which a proceeding is brought, the vote of the
Company's stockholders or disinterested directors, other agreements or
otherwise, both as to action in his or her official capacity and to action in
another capacity while an Agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an Agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee. To the extent that a change in applicable law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently, it is the intent of the parties
hereto that the Indemnitee shall enjoy by this Agreement the greater benefits
afforded by such change.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
12. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted (including causes of action accruing prior to
the date of this Agreement) by or on behalf of the Company or any affiliate of
the Company against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause of action of the
Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period,
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.
13. Termination. This Agreement may be terminated by either party by
giving the other three months' written notice. The Indemnitee's discontinuance
to serve as a director of the
<PAGE>
Company shall work on automatic termination of this Agreement. No termination of
this Agreement, automatic or otherwise, shall nullify any of the rights and
obligations of either Indemnitee or the Company hereunder in respect of any
matter occurring prior to the effective date of termination.
14. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby.
15. Modification and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
16. Successors and Assigns. The terms of this Agreement shall bind,
and shall inure to the benefit of, the heirs, administrators, successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or assets of the
Company) and assigns of the parties hereto.
17. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date, or (iii) if by facsimile transmission, upon receipt of a
clear transmission report. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
18. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware.
19. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same Agreement.
<PAGE>
20. Exclusive Agreement. Except as expressly set forth herein, this
Agreement shall supersede and replace in its entirety any prior written or oral
agreement between the Company and the Indemnitee with regard to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
LOGIMETRICS, INC.
121-03 Dupont Street
Plainview, NY 11803
By:________________________
Name: _____________________
Title: ____________________
Name: _____________________
Title: ____________________
EXHIBIT 10.25
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of January 20, 1998, by and between
LogiMetrics, Inc. (the "Company"), a Delaware corporation, and Dr. Frank A.
Brand (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Consultant has had extensive experience as an executive
officer of companies involved in the manufacturing of telecommunications
products and systems; and
WHEREAS, the Company wishes to retain the Consultant's services and
the Consultant desires to provide his services to the Company upon the terms set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound, the parties hereto agree as follows:
Section 1. Consulting Services. During the term of this Agreement, the
Consultant shall render to the Company, its subsidiaries and affiliates, such
consulting services relating to the Company, its subsidiaries and affiliates as
may be reasonably requested by the Chief Executive Officer or the Chief
Operating Officer from time to time (the "Consulting Services"). Such Consulting
Services may include, but shall not be limited to, advice and assistance in
connection with strategy and business plan development, strategic and other
alliances, technology developments and trends, governmental relations, financial
planning and other matters relating to the conduct of the business of the
Company and its subsidiaries and affiliates. Consulting Services may be rendered
in person at the offices of the Company, or any of its subsidiaries or
affiliates, at some other mutually agreeable place, by telephone or by
correspondence. Except as otherwise agreed between the parties hereto, the
Consultant will not be obligated to render Consulting Services hereunder on more
than 90 days in any calendar year. Consulting Services will be provided by the
Consultant personally and, without the prior written consent of the Company, the
Consultant shall not subcontract or delegate to any other person or entity the
performance of any such Consulting Services.
Section 2. Consulting Fees. In consideration of the Consulting
Services previously provided by the Consultant hereunder and to be provided by
the Consultant hereunder, the Company shall issue to the Consultant on the date
hereof 109,090 duly authorized, validly issued, fully paid and non-assessable
shares of its Common Stock, par value $.01 per share (the "Common Stock") and
quarterly on the first business day of each February, May, August and November
during the term of this Agreement (commencing February 1, 1998), an additional
36,363 duly authorized, validly issued, fully paid and non-assessable shares of
its Common Stock (collectively, the "Consulting Fee"). In no event shall any
portion of the Consulting Fee be refundable in the event of the termination of
this Agreement for any reason, with or without cause, including, without
limitation, as a result of the Consultant's death, permanent disability; or
other inability to perform the Consulting Services.
<PAGE>
The Consultant acknowledges that the shares of Common Stock to be
issued to him hereunder in payment of the Consulting Fee (collectively, the
"Consulting Shares") have not been registered under the Securities Act of 1933,
as amended (the "Act"), or any State securities laws and, therefore, may not be
resold or transferred by the Consultant unless they are subsequently registered
under the Act and applicable State securities or "Blue Sky" laws or exemptions
from such registration are available. No sale or other transfer of the
Consulting Shares may be made without the Company's consent unless (i) the offer
and sale of the Consulting Shares has been registered under the Act and
applicable State securities or "Blue Sky" laws, or (ii) the offer and sale of
the Consulting Shares is exempt under the Act and such laws and the Company has
received an opinion of counsel (in form and substance reasonably satisfactory to
the Company) to that effect. Further, the Consultant acknowledges that a legend
summarizing the restrictions described above will be placed on the certificates
representing the Consulting Shares.
In addition to the payment of the Consulting Fee, the Company will
reimburse the Consultant for all out-of-pocket expenses reasonably and
necessarily incurred by the Consultant in connection with the provision of
Consulting Services hereunder; provided that the Company has approved such
expenses in advance. The Consultant's right to reimbursement of such expenses is
hereby expressly conditioned on the Company's receipt of appropriate
documentation of such expenses so as to preserve any claim of deductibility of
such expenses by the Company for Federal income tax purposes. Approved expenses
shall be reimbursed promptly upon receipt of all required documentation.
Section 3. Term; Termination. This Agreement shall be effective as of
April 25, 1997 and shall expire, unless earlier terminated as provided below, on
April 30, 1999. This Agreement shall terminate immediately upon the earliest to
occur of (i) death of the Consultant, or (ii) the Consultant's becoming
incapable, in the reasonable judgment of the Company, of performing the
Consulting Services to be provided by him hereunder.
Section 4. Status of Consultant. The Consultant shall be an
independent contractor with respect to the Consulting Services to be rendered
hereunder. The Consultant shall not be considered as having employee status with
the Company or its subsidiaries or affiliates and shall not be entitled to
participate in any of the employee benefit and/or welfare plans maintained by
the Company, its subsidiaries or its affiliates. Subject to the provisions of
Section 5 below, the Consultant's engagement hereunder shall not preclude the
Consultant's employment by another person or entity on either a part-time or
full-time basis.
Section 5. Confidentiality Covenant; Non-solicitation;
Non-competition.
(a) The Consultant recognizes that during the course of performing
Consulting Services hereunder the Consultant will have access to and will
acquire confidential and proprietary information relating to the Company, its
subsidiaries and affiliates (the "Proprietary Information"). The Consultant
acknowledges that the Proprietary Information has been and will continue to be
of critical importance to the business and operations of the Company, its
subsidiaries and affiliates. Accordingly, the Consultant shall use such
Proprietary Information only in connection with the provision of Consulting
Services hereunder and shall not, without the
<PAGE>
express prior written consent of the Company, directly or indirectly disclose
any Proprietary Information to any other person or use any such Proprietary
Information, either directly or indirectly, for his benefit or for the benefit
of any third party. Upon any termination or expiration of this Agreement, the
Consultant shall return to the Company all Proprietary Information provided to
the Consultant by the Company, its subsidiaries or affiliates and shall destroy
all other Proprietary Information then in his possession or subject to his
control and shall certify such destruction to the Company. Under no
circumstances shall the Consultant retain any copies of materials containing
Proprietary Information, or any documents, notes, memoranda, studies, analyses
or other material reduced to a tangible form containing Proprietary Information.
The Consultant's obligations under this Section 5(a) shall survive any
termination or expiration of this Agreement forever.
The term "Proprietary Information" does not include information which
(i) is or becomes generally available to the public (other than as a result of a
disclosure by the Consultant or a representative of the Consultant), (ii)
becomes available to the Consultant on a non-confidential basis from a source
other than the Company or one of its representatives which the Consultant
reasonably believes is entitled to disclose it, or (iii) was already in the
Consultant's possession on a non-confidential basis prior to its disclosure to
the Consultant by the Company or one of its representatives.
(b) During the term of this Agreement and for one year thereafter, the
Consultant shall not, without the express prior written consent of the Company,
directly or indirectly, (i) solicit or assist any third party in soliciting for
employment any technical, engineering or managerial employee employed by the
Company, its subsidiaries or affiliates (collectively, "Employees"), or (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee. The Consultant's obligations under this
Section 5(b) shall survive any termination or expiration of this Agreement.
(c) During the term of this Agreement and for one year thereafter, the
Consultant shall not, without the express prior written consent of the Company,
directly or indirectly, any where in the world (x) engage in the design,
manufacture, assembly, sale, maintenance or servicing of wireless
telecommunications transmitting and receiving equipment or components thereof
(collectively, a "Competing Business"), or (y) serve as an officer, director,
employee, partner, member, manager or consultant to or beneficially own any
equity interest (other than an interest of less than 2% of the outstanding
voting power of any publicly traded company) in any Competing Business. The
Consultant's obligations under this Section 5(c) shall survive any termination
or expiration of this Agreement.
(d) The Consultant acknowledges that, in the event of any breach of
this Section 5 by him, the Company would be irreparably and immediately harmed
and could not be made whole by monetary damages. Accordingly, the Company, in
addition to any other remedy to which it may be entitled, shall be entitled to
temporary, preliminary and permanent injunctive relief to prevent breaches of
the provisions of this Section 5 and to compel specific performance of the
provisions hereof. The Company shall not be required to post a bond or other
security in connection with the granting of any such relief. These remedies
shall not be deemed to be
<PAGE>
exclusive remedies for a violation of this Agreement but shall be in addition to
all other remedies available to the Company at law or in equity.
Section 6. Ownership of Works. The Consultant acknowledges and
confirms that all Works (as defined below) to be supplied by or on behalf of the
Consultant to the Company will be prepared or supplied by the Consultant for,
and at the instigation and under the direction of, the Company and that the
Works are, at all times are intended to be, and shall be deemed to be "works
made for hire" (as that term is used in the United States copyright laws) made
in the course of the services rendered by the Consultant to the Company. To the
extent that title to any such Works may not, by operation of law, vest in the
Company or may not be considered "works made for hire," the Consultant hereby
assigns, grants and delivers all of his right, title and interest of every kind
and nature whatsoever in and to the Works (and all copies and versions thereof)
to the Company. The Company shall have the exclusive right to apply for, obtain
and hold patent, copyright, trademark and/or service mark registrations
(including renewals and extensions thereof) or any other protection for the
Works. The Consultant will, without further consideration, at any time (during
or after the term of this Agreement), sign any documents or instruments that the
Company requests to (i) establish Company's ownership of the Works and (ii)
apply for and obtain patent, copyright, service mark and trademark registrations
in the U.S. and foreign countries. The Consultant will assist the Company,
without further consideration, in obtaining, defending and enforcing the
Company's rights in all of the Works. All Works provided or to be provided to
the Company by the Consultant or on his behalf shall bear an appropriate
copyright or other appropriate notice indicating ownership thereof by the
Company.
As used in this Agreement, "Works" means all copyrights, patents,
trade secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by or for the Consultant during the course of performing the Consulting
Services (including, but not limited to, design concepts, plans and schematics,
engineering drawings, manufacturing plans, models, demonstrators, business
plans, marketing and sales plans, customer lists, lists of potential contacts,
reports and notes prepared by or for the Consultant, all other documentation
developed for or specifically relating to the Consulting Services to be rendered
hereunder), all of the subject matter contained in any of the foregoing, and all
of the Company's source documents, stored data and other information relating
thereto.
The Consultant (i) acknowledges that the Consultant has or will have
no claim to any ownership or other interest in the Works, (ii) hereby waives any
"artist's rights" or "moral rights" he may have to the Works, and (iii)
acknowledges that the Company shall have the exclusive right (forever and
throughout the world) to use and exploit the Works throughout the world in
perpetuity as it sees fit (including the right to publish or broadcast the Works
in any media, or license others to do so) all without further obligation or
compensation to the Consultant
The Consultant represents and warrants that all Works created by or
for him will not contain or violate any intellectual property rights of any
other person or entity.
<PAGE>
Section 7. Representations. The Consultant represents and warrants to
the Company that (i) he has full power and authority to enter into this
Agreement and to perform the services provided for hereunder; (ii) the
performance of the services does not, and will not, violate any law, rule,
regulation, judgment or order of any court binding on him and does not, and will
not, in any way violate or conflict with any agreement, understanding or
arrangement to which he is a party or by which he may be bound; (iii) he is not
in any way precluded from performing the services provided for hereunder; (iv)
this Agreement is a valid and binding Agreement of the Consultant, enforceable
against him in accordance with its terms; and (v) he is acquiring the Consulting
Shares for his own account for investment only and not for or with a view to
resale or distribution thereof in violation of the Act; he has not entered into
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge to such person or anyone else the Consulting Shares; and he
has no present plans or intentions to enter into any such contract, undertaking,
agreement or arrangement.
Section 8. Severability. The invalidity of any portion hereof shall
not effect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each party agrees that a court of
competent jurisdiction may enforce such restriction to the maximum extent
permitted by law.
Section 9. Benefits of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
executors, administrators, successors and assigns. This Agreement is personal to
the Consultant and may not be assigned by the Consultant without the Company's
prior written consent. Any assignment or purported assignment by the Consultant
in violation of this Section 9 shall be null and void.
Section 10. Entire Agreement. This Agreement shall constitute the
entire agreement among the parties with respect to the matters covered hereby
and shall supersede all previous written, oral or implied agreements and
understandings among the parties with respect to such matters.
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
reference to the choice of law principles thereof.
Section 12. Amendment and Modifications. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 13. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given which so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to the Company: LogiMetrics, Inc.
<PAGE>
50 Orville Drive
Bohemia, New York 11716
Telephone: (516) 784-4110
Facsimile: (516) 784-4130
Attention: Mr. Norman M. Phipps
If to Consultant: Dr. Frank A. Brand
249 Alexander Palm Road
Boca Raton, Florida 33432
Telephone: (561) 392-4830
Facsimile (561) 392-7818
or at such other addresses as shall be furnished in writing to the other party
hereto.
Section 14. Titles and Headings. The headings in this Agreement are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original agreement, but all
of which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
____________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
/s/Frank A. Brand
_______________________________
Dr. Frank A. Brand
EXHIBIT 11.1
COMPUTATION OF NET LOSS PER SHARE
RESTATED
FISCAL YEAR ENDED JUNE 30, 1996
Number Number
of shares of days
Common shares outstanding - 7/1/95 2,860,614 366
Exercise of warrants
6/24/96 94,340 7
Pooling adjustment 19,247,800 366
-------------
Common shares outstanding - 6/30/96 22,202,754
-------------
Weighted average number of common
shares outstanding 22,110,218
Net loss $ (5,005,917)
Loss per common share: $ (0.23)
FISCAL YEAR ENDED JUNE 30, 1997 Number Number
of shares of days
Common shares outstanding - 7/1/96 22,202,754 365
Exercise of warrants
12/20/96 94,340 192
3/6/97 94,340 116
------------
Common shares outstanding - 6/30/97 22,391,434
-------------
Weighted average number of common
shares outstanding 22,282,361
Net loss $ (2,735,490)
Loss per common share: $ (0.12)
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Name Jurisdiction of Organization
LogiMetrics FSC, Inc. Virgin Islands
mmTech, Inc. New Jersey
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS WITH FISCAL YEAR ENDED JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<CIK> 0000060128
<NAME> LOGIMETRICS
<MULTIPLIER> 1,000
<CURRENCY> U.S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 368,327
<SECURITIES> 0
<RECEIVABLES> 2,306,464
<ALLOWANCES> (150,000)
<INVENTORY> 3,349,036
<CURRENT-ASSETS> 6,748,352
<PP&E> 2,754,948
<DEPRECIATION> 2,134,705
<TOTAL-ASSETS> 7,623,500
<CURRENT-LIABILITIES> 9,711,293
<BONDS> 0
0
990,564
<COMMON> 223,914
<OTHER-SE> 2,134,705
<TOTAL-LIABILITY-AND-EQUITY> 7,623,500
<SALES> 11,374,182
<TOTAL-REVENUES> 11,374,182
<CGS> 8,563,694
<TOTAL-COSTS> 12,731,707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 763,801
<INCOME-PRETAX> (2,121,326)
<INCOME-TAX> 380,000
<INCOME-CONTINUING> (2,501,326)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,501,326)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
