UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
LOGIMETRICS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
54141 01 06
- --------------------------------------------------------------------------------
(CUSIP Number)
Michael Marrone, c/o Cramer Rosenthal McGlynn, LLC, 707 Westchester Avenue,
White Plains, New York 10604 (212) 415-0474
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
October 21, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1 (b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Gerald B. Cramer
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
PF
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 3,242,098 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
3,242,098 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,242,098 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
10.29%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 2 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Fred M. Filoon
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
PF
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 324,206 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
324,206 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
324,206 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.13%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 3 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Eugene A. Trainor, III
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
PF
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 162,112 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
162,112 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
162,112 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
.57%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 4 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Richard S. Fuld, Jr.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
PF
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 486,314 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
486,314 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
486,314 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.7%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 5 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Cramer Rosenthal McGlynn, LLC
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares 429,924 Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 18,737,033 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
429,924 Shares
--------------------------------------------------------------
10 Shared Dispositive Power
18,737,033 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
19,166,955 Shares*
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
41.27%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* Cramer Rosenthal McGlynn, LLC has sole power to vote and dispose of all
429,924 shares directly held by it, and shares voting and dispositive
power with each other Reporting Person over all shares beneficially owned
by each such Reporting Person by virtue of its position as investment
advisor of each of the other Reporting Persons.
Page 6 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
McGlynn Family Partnership
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 324,206 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
324,206 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
324,206 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.13%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 7 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Edward J. Rosenthal Keogh
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 324,206 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
324,206 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
324,206 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.13%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 8 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
L.A.D. Equity Partners, L.P.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 693,299 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
693,299 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
693,299 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
2.44%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 9 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM 1997 Enterprises Fund, LLC
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 2,102,237 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
2,102,237 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,102,237 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
6.88%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 10 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM Partners, L.P.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 1,771,532 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
1,771,532 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,771,532 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
5.86%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 11 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM Retirement Partners, L.P.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 984,182 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
984,182 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
984,182 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
3.34%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 12 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM Madison Partners, L.P.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 984,182 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
984,182 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
984,182 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
3.34%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 13 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM U.S. Value fund, Ltd.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Bermuda
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 336,152 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
336,152 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
336,152 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.17%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 14 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM 1998 Enterprise Fund, LLC
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 2,722,897 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
2,722,897 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,722,897 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
8.9%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 15 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
A.C. Israel Enterprises, Inc.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 3,242,098 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
3,242,098 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,242,098 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
10.29%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 16 of 149
<PAGE>
CUSIP No. 54141 01 06
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CRM-EFO Partners, L.P.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares
Beneficially --------------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 810,523 Shares*
Person --------------------------------------------------------------
With 9 Sole Dispositive Power
--------------------------------------------------------------
10 Shared Dispositive Power
810,523 Shares*
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
810,523 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
2.77%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* The Reporting Person shares voting and dispositive power over all such
shares with Cramer Rosenthal McGlynn, LLC, its investment advisor with
respect to such shares.
Page 17 of 149
<PAGE>
This Amendment No. 1 is being filed pursuant to Rule 13-d-(2) promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act") and amends the
Schedule 13D previously filed as of November 20, 1997 (the "Schedule 13D"). At
the time that the Schedule 13D was filed, CRM Eurycleia Partner, L.P.
("Eurycleia") was included as a Reporting Person. However, Eurycleia was
dissolved in 1998, and all shares of Common Stock beneficially owned by
Eurycleia were distributed to its General Partner as well as to certain of the
Reporting Persons. Terms not otherwise defined herein shall have the meaning
ascribed to them in the Schedule 13D.
Item 1. Security and Issuer
Item 1 is hereby amended and restated to read as follows:
This statement is being filed to report the transactions by each of
Gerald B. Cramer, Fred M. Filoon, Eugene A. Trainor III, Richard S.
Fuld, Jr., Cramer Rosenthal McGlynn, LLC, McGlynn Family
Partnership, Edward J. Rosenthal KEOGH, L.A.D. Equity Partners,
L.P., CRM 1997 Enterprise Fund, LLC, CRM Partners, L.P., CRM
Retirement Partners, L.P., CRM Madison Partners, L.P., CRM U.S.
Value Fund, Ltd., CRM 1998 Enterprise Fund, LLC, A.C. Israel
Enterprises, Inc. and CRM-EFO Partners, L.P. (collectively, the
"Reporting Persons") in shares of Common Stock, par value of $.01
per share of the Company (the "Common Stock") as well as in the
following securities of the Company that are convertible into or
exercisable to purchase Common Stock: Class A 13% Convertible Senior
Subordinated Pay-In-Kind Debentures Due 1999 (the "Debentures"),
which Debentures are convertible into shares of Common Stock at a
conversion price of $.41667 per share; Class C 13% Convertible
Senior Subordinated Debentures Due 1999 (the "Class C Debentures");
Series G Warrants (the "G Warrants"), which G Warrants are
exercisable for a period of seven (7) years to purchase shares of
Common Stock at an exercise price of $.50 per share; Series H
Warrants (the "H Warrants"), which H Warrants are exercisable for a
period of seven (7) years to purchase shares of Common Stock at an
exercise price of $.60 per share; and Series I Warrants (the "I
Warrants"), which I Warrants are exercisable for a period of seven
(7) years to purchase shares of Common Stock at an exercise price of
$1.125 per share.
On July 29, 1997, certain investors, including the Reporting
Persons, entered into a Purchase Agreement (the "Initial Purchase
Agreement") relating to a proposed financing (the "Financing") of
the Company, consisting of up to $3,583,333 principal amount of
Debentures, up to 9,350,000 G Warrants at a purchase price of $.07
per G Warrant, up to 1,433,333 H Warrants at a purchase price of
$.06 per H Warrant and up to 716,667 I Warrants at a purchase price
of $.04 per I Warrant, for aggregate gross proceeds to the Company
of up to $4,352,500. On July 30, 1997, certain of the foregoing
investors, including certain of the Reporting Persons, consummated
the first closing of the initial purchase (the "Initial Purchase")
of such Financing, consisting of an aggregate of $2,535,942
principal amount of Debentures, 6,866,129 G Warrants, 1,074,114 H
Warrants and 537,057 I Warrants. One of the investors, not among the
Reporting Persons, had the right, in a second closing of the Initial
Purchase, to purchase $214,058 principal amount of Debentures,
483,871 G Warrants, 25,886 H Warrants and 12,943 I Warrants.
Page 18 of 149
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In May and August of 1998, certain investors, including certain of
the Reporting Persons, exercised an option to purchase (the
"Optional Purchase"), in the aggregate, $833,333 principal amount of
Debentures, 2,000,000 G Warrants, 333,333 H Warrants and 166,667 I
Warrants.
On October 21, 1998, certain investors, including certain of the
Reporting Persons, entered into a Purchase Agreement (the "Second
Purchase Agreement") with the Company, for the purchase (the "Class
C Purchase") by such investors of $2,666,667 in aggregate principal
amount of Class C Debentures for aggregate gross proceeds to the
Company of $2,000,000.
In addition, on October 21, 1998, certain investors, including
certain of the Reporting Persons, entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with an individual
stockholder of the Company, for the purchase (the "Common Purchase";
and together with the Class C Purchase, the "Second Financing") by
such investors of 2,000,000 shares of Common Stock for an aggregate
purchase price of $500,000.
The principal executive offices of the Company are located at 50
Orville Drive, Bohemia, New York 11716.
Item 2. Identity and Background
Item 2 is hereby amended and restated to read as follows:
(a) This Statement is being filed by Gerald B. Cramer, an
individual, Fred M. Filoon, an individual, Eugene A. Trainor, III,
an individual, Richard S. Fuld, Jr., an individual, Cramer Rosenthal
McGlynn, LLC, a Delaware limited liability company ("Cramer
Rosenthal"), McGlynn Family Partnership, a New York limited
partnership ("McGlynn Family"), Edward J. Rosenthal KEOGH, a
retirement plan ("Rosenthal KEOGH"), L.A.D. Equity Partners, L.P., a
Delaware limited partnership ("L.A.D Equity"), CRM 1997 Enterprise
Fund, LLC, a New York limited liability company ("CRM 1997"), CRM
Partners, L.P., a Delaware limited partnership ("CRM Partners"), CRM
Retirement Partners, L.P., a Delaware limited partnership ("CRM
Retirement"), CRM Madison Partners, L.P., a Delaware limited
partnership ("CRM Madison"), CRM U.S. Value Fund Ltd., a Bermuda
corporation ("CRM U.S. Value"), CRM 1998 Enterprise Fund, LLC ("CRM
1998"), a New York limited liability company, A. C. Israel
Enterprises, Inc., a Delaware corporation ("A.C. Israel"), and
CRM-EFO Partners, L.P., a Delaware limited partnership ("CRM-EFO").
Mr. Cramer, Mr. Filoon, Mr. Trainor, Mr. Fuld, Cramer Rosenthal,
McGlynn Family, Rosenthal KEOGH, L.A.D. Equity, CRM 1997, CRM 1998,
CRM Partners, CRM Retirement, CRM Madison, CRM U.S. Value, A.C.
Israel and CRM-EFO are making this single, joint filing because they
may be deemed to constitute a "group" within the meaning of Section
13(d) (3) of the Exchange Act. The Reporting Persons disclaim the
existence of a group with the other investors in the Financing or
the Second Financing.
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(b) - (c)
Gerald B. Cramer
Mr. Cramer is principally employed as the Chairman of Cramer
Rosenthal McGlynn, LLC, a firm that provides investment management
services, and as the Chairman of the Board of Cramer Rosenthal
McGlynn, Inc., which is the general partner of CRM Partners, CRM
Retirement and CRM Madison, and the investment advisor of CRM-EFO
Investments, LLC, the general partner of CRM-EFO and CRM U. S.
Value. The principal business address of Mr. Cramer is 707
Westchester Avenue, White Plains, New York 10604.
Fred M. Filoon
Mr. Filoon is principally employed as a Senior Vice President of
Cramer Rosenthal McGlynn, LLC, a firm that provides investment
management services, and as Senior Vice President of Cramer
Rosenthal McGlynn, Inc., which is the general partner of CRM
Partners, CRM Retirement and CRM Madison, and the Managing Member of
CRM-EFO Investments, LLC, the general partner of CRM-EFO and CRM U.
S. Value. The principal business address of Mr. Filoon is 707
Westchester, New York, New York 10604.
Eugene A. Trainor, III
Mr. Trainor is principally employed as the Chief Financial Officer
of Cramer Rosenthal McGlynn, LLC, a firm that provides investment
management services, and as Senior Vice President of Cramer
Rosenthal McGlynn, Inc., which is the general partner of CRM
Partners, CRM Retirement and CRM Madison, and the Managing Member of
CRM-EFO Investments, LLC, the general partner of CRM-EFO, and CRM U.
S. Value. The principal business address of Mr. Trainor is 707
Westchester, New York 10604.
Richard S. Fuld, Jr.
Mr. Fuld is a client of Cramer Rosenthal McGlynn, LLC. The principal
business address of Mr. Fuld is c/o Lehman Brothers, 3 World Trade
Center, New York, NY 10285.
Cramer Rosenthal McGlynn, LLC
Cramer Rosenthal McGlynn, LLC is a corporation that provides
investment management services, and is the Managing Member of CRM
1997 and CRM 1998. The principal business address of Cramer
Rosenthal McGlynn is 707 Westchester Avenue, White Plains, New York
10604.
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McGlynn Family Partnership
McGlynn Family is a limited partnership that consists of investments
of the family of Ronald H. McGlynn, the president and CEO of Cramer
Rosenthal McGlynn. The principal business address of McGlynn Family
is 520 Madison Avenue, New York, NY 10022.
Edward J. Rosenthal KEOGH
Rosenthal KEOGH is a retirement plan for Mr. Edward J. Rosenthal,
Vice Chairman of Cramer Rosenthal McGlynn, LLC. The principal
business address of Rosenthal KEOGH is 707 Westchester Avenue, White
Plains, New York 10604.
L.A.D. Equity Partners, L.P.
L.A.D. Equity is a limited partnership that consists of investments
for the Pergament family. Flint Investments, Inc. is the general
partner, of which Arthur J. Pergament, Senior Vice President and
Shareholder of CRM is Vice President and Secretary, and Robert M.
Pergament, a client of CRM is President and Treasurer. The principal
business address of L.A.D. Equity is 520 Madison Avenue, New York,
New York 10022.
CRM 1997 Enterprise Fund, LLC
CRM 1997 is a limited liability company that provides investments in
shares of small to medium sized, often value oriented companies with
potential for long-term capital appreciation, through investment
funds (venture capital and leveraged buyout funds). Cramer Rosenthal
is the Managing Member of which Mr. Cramer is Chairman, Mr. Filoon
is Senior Vice President and Mr. Trainor is Senior Vice President.
The principal business address of CRM 1997 Enterprises is 707
Westchester Avenue, White Plains, New York 10604.
CRM 1998 Enterprise Fund, LLC
CRM 1998 is a limited liability company that provides investments in
shares of small to medium sized, often value oriented companies with
potential for long-term capital appreciation, through investment
funds (venture capital and leveraged buyout funds). Cramer Rosenthal
is the Managing Member of which Mr. Cramer is Chairman, Mr. Filoon
is Senior Vice President and Mr. Trainor is Senior Vice President.
The principal business address of CRM 1998 Enterprises is 707
Westchester Avenue, White Plains, New York 10604.
CRM Partners, L.P.
CRM Partners is a limited partnership that invests in common and
preferred stocks, bonds, options and other money market instruments,
utilizing hedging techniques including short selling in an effort to
reduce market volatility. CRM, Inc. is the general partner of which
Mr. Cramer is Chairman, Mr. Filoon is Senior
Page 21 of 149
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Vice President, and Mr. Trainor is Senior Vice President. The
principal business address of CRM Partners, L.P. is 707 Westchester
Avenue, White Plains, New York 10604.
CRM Retirement Partners. L.P.
CRM Retirement is a limited partnership that invests in common and
preferred stocks, bonds, options and other money market instruments,
utilizing hedging techniques including short selling in an effort to
reduce market volatility. CRM, Inc. is the general partner of which
Mr. Cramer is Chairman, Mr. Filoon is Senior Vice President, and Mr.
Trainor is Senior Vice President. The principal business address of
CRM Retirement, L.P. is 707 Westchester Avenue, White Plains, New
York 10604.
CRM Madison Partners, L.P.
CRM Madison is a limited partnership that invests in common and
preferred stocks, bonds, options and other money market instruments,
utilizing hedging techniques including short selling in an effort to
reduce market volatility. CRM Management, Inc. is the general
partner of which Mr. Cramer is Chairman, Mr. Filoon is Senior Vice
President, and Mr. Trainor is Senior Vice President. The principal
business address of CRM Madison, L.P. is 707 Westchester Avenue,
White Plains, New York 10604.
CRM U.S. Value Fund Ltd.
CRM U.S. Value is a Bermuda corporation whose objective is long-term
capital appreciation through investments primarily in equity and
equity-related securities of U. S. companies with middle market
capitalizations. The principal business address of CRM Value Fund is
6 Front Street, Hamilton, HM 11, Bermuda.
A.C. Israel Enterprises, Inc.
A.C. Israel Enterprises, Inc. is a limited partnership that handles
the investments of the Israel family, clients of Cramer Rosenthal
McGlynn. The principal business address of A.C. Israel Enterprises,
Inc. is 707 Westchester Avenue, White Plains, New York 10604.
CRM-EFO Partners
CRM -EFO Partners is a limited partnership whose objective is
long-term capital appreciation through investments primarily in
equity and equity-related securities of U. S. companies with middle
market capitalizations. CRM-EFO LLC, a Delaware limited liability
company is the general partner of the partnership. CRM, Inc. is the
Managing Member of the general partner, of which Mr. Cramer is
Chairman, Mr. Filoon is Senior Vice President, and Mr. Trainor is
Senior Vice President. The principal business address of CRM-EFO is
707 Westchester Avenue, White Plains, New York 10604.
Page 22 of 149
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(d) To the best knowledge of the Reporting Persons, during the last
five years, none of the Reporting Persons has been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) To the best knowledge of the Reporting Persons, during the last
five years, none of the Reporting Persons has been a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and is subject to any judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or a finding
of any violation with respect to such laws.
(f) Each of the individual Reporting Persons is a citizen of the
United States of America. Cramer Rosenthal is a Delaware limited
liability company. McGlynn Family is a New York limited partnership.
Rosenthal KEOGH is a retirement plan. L.A.D. Equity is a New York
limited partnership. CRM 1997 is a New York limited liability
company. CRM 1998 is a NewYork limited liability company. CRM
Partners is a New York limited partnership. CRM Retirement is a
Delaware limited partnership. CRM Madison is a Delaware limited
partnership. CRM U.S. Value is a Bermuda corporation. A.C. Israel is
a Delaware corporation. CRM-EFO is a Delaware limited partnership.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and restated to read as follows:
The source of the $736,569 paid by Mr. Cramer, the $73,656 paid by
Mr. Filoon, the $36,830 paid by Mr. Trainor and the $110,486 paid by
Mr. Fuld for the Common Stock, Debentures, Class C Debentures, G
Warrants, H Warrants and I Warrants purchased by such individuals,
as set forth in Item 5 below, was personal funds of such
individuals.
The source of the $80,781 paid by Cramer Rosenthal, the $73,656 paid
by McGlynn Family, the $73,656 paid by Rosenthal KEOGH, the $163,775
paid by L.A.D. Equity, the $476,379 paid by CRM 1997, the $391,760
paid by CRM Partners, the $218,645 paid by CRM Retirement, the
$218,645 paid by CRM Madison, the $75,000 paid by CRM U.S. Value,
the $736,569 paid by A.C. Israel and the $184,142 paid by CRM-EFO
for the Common Stock, Debentures, the Class C Debentures, G
Warrants, H Warrants and I Warrants purchased by such entities, as
set forth in Item 5 below, was working capital of such entities.
Item 4. Purpose of Transaction.
Item 4 is hereby amended and restated to read as follows:
The Reporting Persons acquired the Common Stock, Debentures, Class C
Debentures, G Warrants, H Warrants and I Warrants of the Company
reported herein as being owned by each of them for investment
purposes. Depending upon market conditions and other factors that
each of the Reporting Persons may deem material to their respective
investment decisions, the Reporting Persons may
Page 23 of 149
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purchase shares of Common Stock of the Company in the open market or
in private transactions, or may dispose of all or a portion of the
Common Stock, Debentures, Class C Debentures, G Warrants, H Warrants
and/or I Warrants or other securities of the Company that each now
owns or hereafter may acquire, subject to restrictions on transfer
under the securities laws and under the documents pursuant to which
such securities were purchased.
Each of the Reporting Persons has entered into a stockholders'
agreement, the "Stockholders' Agreement"; a copy of which is
attached as Exhibit 2 to the Schedule 13D) with the Company and
Charles Brand, the Chairman of the Board and Chief Technical Officer
of the Company and the Company's largest shareholder, in which the
Reporting Persons agreed, among other things, to certain limitations
on their ability to dispose of their shares of the Common Stock,
grant and are granted certain "tag-along" rights with respect to
future sales of the Common Stock, and agree to vote their shares of
Common Stock for the appointment of certain nominees as members of
the Company's Board of Directors and for certain other matters as
set forth below. The Reporting Persons, except for Phineas Broadband
Systems, L.P., entered into a separate stockholders' agreement with
certain investors in the Initial Purchase (the "InterPurchaser
Agreement") pursuant to which the Reporting Persons granted and were
granted certain additional "tag-along" rights with respect to future
sales of Common Stock.
Among other things, the Stockholders' Agreement provides that a
majority of the Directors appointed by the Majority Investors can
recommend to the Board that the Company be sold and Mr. Brand and
any transferee of his securities have agreed to use their best
efforts to cause the Brand Directors to vote in favor of the sale
provided that such recommendation is consistent with their fiduciary
duties.
Certain amendments have been made to the by-laws of the Company to
implement the provisions of the Stockholders' Agreement.
Except as otherwise set forth above, the Reporting Persons have no
plans or proposals which relate to, or could result in, any of the
matters referred to in Paragraphs (b) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended and restated to read as follows:
(a) - (c)
Set forth below is a description of the number of shares of Common
Stock and the percentage of the aggregate shares of Common Stock
issued and outstanding, held by each Reporting Person. All of the
Class C Debentures reported below were purchased by the respective
Reporting Persons on October 21, 1998 pursuant to the Second
Purchase Agreement, at a purchase price equal to 75% of the
principal amount of Class C Debentures purchased by such Reporting
Person. All shares of outright Common Stock reported herein as being
held by Reporting Persons were
Page 24 of 149
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acquired on October 21, 1998 pursuant to the Stock Purchase
Agreement, at a price per share of $0.25.
Gerald B. Cramer
Mr. Cramer beneficially owns 3,242,098 shares of Common Stock,
comprised of 1,027,479 shares issuable upon conversion of $482,117
principal amount of Debentures and 168,154 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 967,742 shares issuable upon
exercise of 967,742 G Warrants, 51,772 shares issuable upon exercise
of 51,772 H Warrants, 25,886, shares issuable upon exercise of
25,886 I Warrants, 218,372 shares of Common Stock and 782,692 shares
issuable upon conversion of $242,635 principal amount of Class C
Debentures currently owned by Mr. Cramer.
For purposes of this Schedule 13D, such 3,242,098 shares of Common
Stock comprise 10.29% of the issued and outstanding shares of the
Common Stock, based on information received from the Company.
Mr. Cramer shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
Fred M. Filoon
Mr. Filoon beneficially owns 324,206 shares of Common Stock
comprised of 102,748 shares issuable upon conversion of $42,812
principal amount of Debentures and 16,814 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 96,774 shares issuable upon
exercise of 96,774 G Warrants, 5,177 shares issuable upon exercise
of 5,177 H Warrants, 2,589 shares issuable upon exercise of 2,589 I
Warrants, 21,837 shares of Common Stock and 78,267 shares issuable
upon conversion of $24,263 principal amount of Class C Debentures
currently owned by Mr. Filoon.
For purposes of this Schedule 13D, such 324,206 shares of Common
Stock comprise 1.13% of the issued and outstanding shares of the
Common Stock based on information provided by the Company.
Mr. Filoon shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
Eugene A. Trainor III
Mr. Trainor beneficially owns 162,112 shares of Common Stock
comprised of 51,374 shares issuable upon conversion of $21,406
principal amount of Debentures and 8,407shares issuable upon
conversion of the paid-in-kind interest payments received on such
Debentures as of October 15, 1998, 48,387 shares issuable upon
exercise of 48,387 G Warrants, 2,589 shares issuable upon exercise
Page 25 of 149
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of 2,589 H Warrants, 1,294 shares issuable upon exercise of 1,294 I
Warrants, 10,920 shares of Common Stock and 39,140 shares issuable
upon conversion of $12,133 principal amount of Class C Debentures
currently owned by Mr. Trainor.
For purposes of this Schedule 13D, such 162,112 shares of Common
Stock comprise .57% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
Mr. Trainor shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
Richard S. Fuld, Jr.
Mr. Fuld beneficially owns 486,314 shares of Common Stock comprised
of 154,120 shares issuable upon conversion of $64,217 principal
amount of Debentures and 25,222 shares issuable upon conversion of
the paid-in-kind interest payments accrued on such Debentures as of
October 15, 1998, 145,161 shares issuable upon exercise of 145,161 G
Warrants, 7,766 shares issuable upon exercise of 7,766 H Warrants,
3,883 shares issuable upon exercise of 3,883 I Warrants, 32,756
shares of Common Stock and 117,406 shares issuable upon conversion
of $36,396 principal amount of Class C Debentures currently owned by
Mr. Fuld.
For purposes of this Schedule 13D, such 486,314 shares of Common
Stock comprise 1.70% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
Mr. Fuld shares the power to vote and dispose of all such securities
with Cramer Rosenthal, its investment advisor with respect to such
shares.
Cramer Rosenthal McGlynn, LLC
Cramer Rosenthal beneficially owns 19,166,955 shares of Common Stock
comprised of (i) 105,311 shares issuable upon conversion of $43,883
principal amount of Debentures and 17,332 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 299,319 shares issuable upon
exercise of 299,319 G Warrants, 5,306 shares issuable upon exercise
of 5,306 H Warrants, and 2,654 shares issuable upon exercise of
2,654 I Warrants currently owned by Cramer Rosenthal and (ii)
18,737,033 shares of Common Stock currently held by the other
Reporting Persons, by virtue of Cramer Rosenthal's position as
investment advisor to each such Reporting Person with respect to
such shares.
For purposes of this Schedule 13D, such 19,166,955 shares of Common
Stock comprise 41.27% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
Page 26 of 149
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Cramer Rosenthal has the sole power to vote and dispose of 429,924
shares directly held by it and shared power to vote and dispose of
the 18,737,033 shares held by the other Reporting Persons.
McGlynn Family Partnership
McGlynn Family beneficially owns 324,206 shares of Common Stock
comprised of 102,748 shares issuable upon conversion of $42,452
principal amount of Debentures and 16,814 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 96,774 shares issuable upon
exercise of 96,774 G Warrants, 5,177 shares issuable upon exercise
of 5,177 H Warrants, and 2,589 shares issuable upon exercise of
2,589 I Warrants, 21,836 shares of Common Stock and 78,267 shares
issuable upon conversion of $24,263 principal amount of Class C
Debentures currently owned by McGlynn Family.
For purposes of this Schedule 13D, such 324,206 shares of Common
Stock comprise 1.13% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
McGlynn Family shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
Edward J. Rosenthal KEOGH
Rosenthal KEOGH beneficially owns 324,206 shares of Common Stock
comprised of 102,748 shares issuable upon conversion of $42,452
principal amount of Debentures and 16,814 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 96,775 shares issuable upon
exercise of 96,775 G Warrants, 5,177 shares issuable upon exercise
of 5,177 H Warrants, 2,589 shares issuable upon exercise of 2,589 I
Warrants, 21,836 shares of Common Stock and 78,267 shares issuable
upon conversion of $24,263 principal amount of Class C Debentures
currently owned by Rosenthal KEOGH.
For purposes of this Schedule 13D, such 324,206 shares of Common
Stock comprise 1.13% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
Rosenthal KEOGH shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
L.A.D. Equity Partners, L.P.
L.A.D. Equity beneficially owns 693,299 shares of Common Stock
comprised of 317,702 shares issuable upon conversion of $132,386
principal amount of Debentures and 52,354 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 299,231 shares issuable upon
exercise of 299,231 G Warrants, 16,008 shares issuable upon
Page 27 of 149
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exercise of 16,008 H Warrants and 8,004 shares issuable upon
exercise of 8,004 I Warrants.
For purposes of this Schedule 13D, such 693,299 shares of Common
Stock comprise 2.44% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
L.A.D. Equity shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
CRM 1997 Enterprise Fund, LLC
CRM 1997 beneficially owns 2,102,237 shares of Common Stock
comprised of 980,962 shares issuable upon conversion of $408,767
principal amount of Debentures and 123,204 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 923,930 shares issuable upon
exercise of 923,930 G Warrants, 49,428 shares issuable upon exercise
of 49,428 H Warrants, and 24,713 shares issuable upon exercise of
24,713 I Warrants currently owned by CRM 1997.
For purposes of this Schedule 13D, such 2,102,237 shares of Common
Stock comprise 6.88% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
CRM 1997 shares the power to vote and dispose of all such securities
with Cramer Rosenthal, its investment advisor with respect to such
shares.
CRM 1998 Enterprise Fund, LLC
CRM 1998 beneficially owns 2,722,897 shares of Common Stock
comprised of 593,972 shares of Common Stock and 2,128,925 shares
issuable upon conversion of $659,967 principal amount of Class C
Debentures currently owned by CRM 1998.
For purposes of this Schedule 13D, such 2,722,897 shares of Common
Stock comprise 8.9% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
CRM 1998 shares the power to vote and dispose of all such securities
with Cramer Rosenthal, its investment advisor with respect to such
shares.
CRM Partners, L.P.
CRM Partners beneficially owns 1,771,532 shares of Common Stock
comprised of 805,051 shares issuable upon conversion of $335,465
principal amount of Debentures and 147,389 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 758,245 shares issuable upon
exercise of 758,245 G warrants, 40,565 shares issuable upon
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exercise of 40,565 H Warrants, and 20,282 shares issuable upon
exercise of 20,282 I Warrants currently owned by CRM Partners.
For purposes of this Schedule 13D, such 1,771,532 shares of Common
stock comprise 5.86% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
CRM Partners shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
CRM Retirement Partners, L.P.
CRM Retirement beneficially owns 984,182 shares of Common stock
comprised of 447,250 issuable upon conversion of $186,369 principal
amount of Debentures and 81,880 shares issuable upon conversion of
the paid-in-kind interest payments accrued on such Debentures as of
October 15, 1998, 421,248 shares issuable upon exercise of 421,428 G
Warrants, 22,536 shares issuable upon exercise of 22,536 H Warrants,
and 11,268 shares issuable upon exercise of 11,268 I Warrants
currently owned by CRM Retirement.
For purposes of this Schedule 13D, such 984,182 shares of Common
stock comprise 3.34% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
CRM Retirement shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
CRM Madison Partners, L.P.
CRM Madison beneficially owns 984,182 shares of Common Stock
comprised of 447,250 shares issuable upon conversion of $43,858
principal amount of Debentures and 81,880 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 421,248 shares issuable upon
exercise of 421,248 G Warrants, 22,536 shares issuable upon exercise
of 22,536 H Warrants, and 11,268 shares issuable upon exercise of
11,268 I Warrants currently owned by CRM Madison.
For purposes of this Schedule 13D, such 984,182 shares of Common
Stock comprise 3.34% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
CRM Madison shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
CRM U.S. Value Fund, Ltd.
CRM U.S. Value beneficially owns 336,152 shares of Common Stock
comprised of 154,120 shares issuable upon conversion of $64,217
principal amount of
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Debentures and 25,222 shares issuable upon conversion of the
paid-in-kind interest payments accrued on such Debentures as of
October 15, 1998, 145,161 shares issuable upon exercise of 145,161 G
Warrants, 7,766 shares issuable upon exercise of 7,766 H Warrants,
and 3,883shares issuable upon exercise of 3,883 I Warrants currently
owned by CRM U.S. Value.
For purposes of this Schedule 13D, such 336,152 shares of Common
Stock comprise 1.17% of the issued and outstanding shares of the
Common Stock based on information received from the Company.
CRM U.S. Value shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
A.C. Israel Enterprise, Inc.
A.C. Israel beneficially owns 3,242,098 shares of Common Stock
comprised of 1,027,480 shares issuable upon conversion of $428,117
principal amount of Debentures and 168,154 shares issuable upon
conversion of the paid-in-kind interest payments accrued on such
Debentures as of October 15, 1998, 967,742 shares issuable upon
exercise of 967,742 G Warrants, 51,772 shares issuable upon exercise
of 51,772 H Warrants, 25,886 shares issuable upon exercise of 25,886
I Warrants, 218,372 shares of Common Stock and 782,692 shares
issuable upon conversion of $242,635 principal amount of Class C
Debentures currently owned by A.C. Israel.
For purposes of this Schedule 13D , such 3,242,098 shares of Common
Stock comprise 10.29% of the issued and outstanding shares of the
Common Stock, based on information received from the Company.
A.C. Israel shares the power to vote and dispose of all such
securities with Cramer Rosenthal, its investment advisor with
respect to such shares.
CRM-EFO Partners, L.P.
CRM-EFO beneficially owns 810,523 shares of Common Stock comprised
of 256,870 shares issuable upon conversion of $107,029 principal
amount of Debentures and 42,038 shares issuable upon conversion of
the paid-in-kind interest payments accrued on such Debentures as of
October 15, 1998, 241,936 shares issuable upon exercise of 241,936 G
Warrants, 12,943 shares issuable upon exercise of 12,943 H Warrants,
and 6,471 shares issuable upon exercise of 6,471 I Warrants, and
54,592 shares of Common Stock and 195,673 shares issuable upon
conversion of $60,659 principal amount of Class C Debentures
currently owned by CRM-EFO.
For purposes of this Schedule 13D, such 810,523 shares of Common
Stock comprise 2.77% of the issued and outstanding shares of the
Common Stock.
CRM-EFO shares the power to vote and dispose of all such securities
with Cramer Rosenthal, its investment advisor with respect to such
shares.
Page 30 of 149
<PAGE>
The Reporting Persons are making this single, joint filing because
they may be deemed to constitute a "group" within the meaning of
Section 13(d)(3) of the Exchange Act. In the event such a "group" is
deemed to exist between the Reporting Persons, the "group"
beneficially owns 19,166,965 shares of Common Stock, comprised of
6,185,426 shares issuable upon conversion of $2,577,467 principal
amount of Debentures and 1,012,279 shares issuable upon conversion
of the paid-in-kind interest payments accrued on such Debentures as
of October 15, 1998, 6,025,937 shares issuable upon exercise of
6,025,937 G Warrants, 311,638 shares issuable upon exercise of
311,638 H Warrants, 155,834 shares issuable upon conversion of
155,834 I Warrants, 1,194,492 shares of Common Stock and 4,281,329
shares issuable upon conversion of $1,400,000 principal amount of
Class C Debentures currently owned by the Reporting Persons. For
purposes of this Schedule 13D, such 19,166,965 shares of Common
Stock comprise 41.27% of the issued and outstanding shares of Common
Stock, based on information received from the Company. In the event
a "group" is deemed to exist between the Reporting Persons within
the meaning of 13(d)(3) of the Exchange Act, for purposes of this
Schedule 13D each Reporting Person (other than Cramer Rosenthal)
would be deemed to possess shared power to vote and dispose of the
Common Stock held by such Reporting Person directly, with Cramer
Rosenthal, the investment advisor to each such Reporting Person, and
shared power to vote and dispose of the remainder of Common Stock of
the Company beneficially owned by the "group". Cramer Rosenthal
would be deemed to possess sole power to vote and dispose of the
Common Stock directly held by it, and shared power to vote and
dispose of the remainder of Common Stock beneficially owned by the
"group".
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities of the Issuer.
Item 6 is hereby amended and restated to read as follows:
In accordance with the terms of the Class C Debentures, from and
after the earliest of (i) January 31, 1999, (ii) the consummation of
a Qualifying Offering (as defined therein), or (iii) the date of any
repayment notice given by the Company pursuant to Section 2(d)
thereof, any holder of the Class C Debentures has the right,
exercisable at his, her or its option at any time during which the
principal amount of such Class C Debenture is outstanding, to
convert the Class C Debenture, into a number of fully paid and
non-assessable shares equal to (i) the result obtained by dividing
the stated principal amount of the Class C Debenture by the
conversion rate established for any equity security issued in a
Qualifying Offering (as defined in the Class C Debenture), if the
Class C Debenture is converted on or after the consummation of a
Qualifying Offering, or (ii) if no Qualifying Offering has occurred
on or prior to such conversion, the result obtained by dividing the
stated principal amount of the Class C Debenture by (X) $0.52 per
share if the Class C Debenture is converted on or prior to January
31, 1999, (Y) $0.45 per share if the Class C Debenture is converted
on or after February 1, 1999 and on or prior to April 30, 1999, or
(Z) $0.31 per share if the Class C Debenture is converted on or
after May 1, 1999. The respective
Page 31 of 149
<PAGE>
conversion prices set forth above are subject to adjustment in
certain circumstances as provided in the Class C Debenture.
Pursuant to a Registration Rights Agreement (the "Registration
Rights Agreement"), dated as of October 1998, the Company has agreed
to provide certain registration rights to investors (including
certain Reporting Persons) in the Class C Debentures purchased
pursuant to the Second Purchase Agreement.
Reference is made to Item 1 above regarding the Debentures, the G
Warrants, the H Warrants and the I Warrants.
Reference is made to Item 4 above regarding certain arrangements
relating to transfer or voting of securities.
Except as set forth elsewhere in this Schedule 13D, the Reporting
Persons do not have any contract, arrangement, understanding or
relationship (legal or otherwise) with any person with respect to
any securities of the Company, including, but not limited to,
transfer or voting of any such securities, finders' fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or losses, or the giving or withholding
of proxies.
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended as follows:
4. Form of Debenture,
5. Form of Class C Debenture.
6. Form of G Warrant.
7. Form of H Warrant.
8. Form of I Warrant.
9. Registration Rights Agreement
Page 32 of 149
<PAGE>
SIGNATURE
After reasonable inquiry, and to the best of our knowledge and
belief, the undersigned certify that the information set forth in
this statement is true, complete and correct.
Date: November 2, 1998
CRAMER ROSENTHAL McGLYNN, LLC
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Principal Director of Operations
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
/s/ Gerald B. Cramer
- ---------------------------------------
Gerald B. Cramer
/s/ Edward. J. Rosenthal
- ---------------------------------------
Edward J. Rosenthal, Keogh
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, LLC
its Managing Member
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Principal Director of Operations
Page 33 of 149
<PAGE>
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, LLC,
its General Partner
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Principal Director of Operations
CRM PARTNERS, L.P.
By: CRM Management, Inc.
its General Partner
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Vice President
CRM RETIREMENT PARTNERS, L.P.
By: CRM Management, Inc.
its General Partner
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Vice President
CRM MADISON PARTNERS, L.P.
By: CRM Management, Inc.
its General Partner
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Vice President
Page 34 of 149
<PAGE>
CRM U.S. VALUE FUND, LTD.
By: CRM Management, Inc.
its General Partner
By: /s/ Eugene A. Trainor
- ------------------------------------
Name: Eugene A. Trainor
Title: Senior Vice President
A C. ISRAEL ENTERPRISES, INC.
By: /s/ Jay Howard
- ------------------------------------
Name: Jay Howard
Title:
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
its General Partner
By: CRM Management Inc.,
its Managing Member
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Vice President
RICHARD S. FULD, JR.
By: Cramer Rosenthal McGlynn, LLC,
Attorney-in-Fact
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Principal Director of Operations
Page 35 of 149
<PAGE>
McGLYNN FAMILY PARTNERSHIP
By: Cramer Rosenthal McGlynn, LLC,
Attorney-in-Fact
By: /s/ Michael Marrone
- ------------------------------------
Name: Michael Marrone
Title: Principal Director of Operations
Page 36 of 149
<PAGE>
Exhibit Index
Sequential
Exhibit No. Description Page No.
- ----------- ----------- --------
4. Form of Debenture,
5. Form of Class C Debenture.
6. Form of G Warrant.
7. Form of H Warrant.
8. Form of I Warrant.
9. Registration Rights Agreement
Page 37 of 149
EXHIBIT 4
FORM OF DEBENTURE
Page 38 of 149
<PAGE>
EXHIBIT 4
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
July 29, 1997
LOGIMETRICS, INC., a Delaware corporation (the "Company"), hereby promises to
pay to the order of ____________ (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 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
Page 39 of 149
<PAGE>
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 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.
Page 40 of 149
<PAGE>
(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.
(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);
Page 41 of 149
<PAGE>
(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 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.
Page 42 of 149
<PAGE>
(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 Written (Share) 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.
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(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 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.
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(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 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
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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.
(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
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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 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)
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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 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
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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 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
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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 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
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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 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
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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 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
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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 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
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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.
(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
Majority Holders said insurance to indicate the Agent (as defined in the
Security Agreement) as an additional insured;
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(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 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
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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 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");
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(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 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"
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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
(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;
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(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
(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)
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<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 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.
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<PAGE>
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
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 29th day of July,
1997.
LOGIMETRICS, INC.
By:
-------------------------------------
Name: Charles S. Brand
Title: Chief Executive Officer
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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
--------------- -
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EXHIBIT 5
FORM OF CLASS C DEBENTURE
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EXHIBIT 5
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 OCTOBER 21, 1998 AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN.
CLASS C 13% CONVERTIBLE SENIOR
SUBORDINATED DEBENTURE DUE 1999
October 21, 1998
LOGIMETRICS, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of (together with its, his or her successors and assigns,
the "Holder") the principal amount of 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 shall be limited to $2,666,667, and (iii) no Debenture shall
be issued in a principal amount of less than $5,000 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. 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
January 15, 1999 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
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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 September 30, 1999 ("Due Date").
(b) Optional Prepayment. 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.
(c) Mandatory Prepayment. The Company shall 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 prepayment within forty (40) days after the consummation of a Qualifying
Offering. As used herein, "Qualifying Offering" means the public or private sale
by the Company of debt or equity securities resulting in net proceeds to the
Company (after the deduction for all necessary and customary expenses payable by
the Company in connection therewith) of at least $15 million.
(d) 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 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 only the following (and no other indebtedness of any kind
or nature whatsoever): (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 Modified Revolving Credit
Note, dated April 30, 1998, 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;
provided, however, that the principal amount of the Senior Debt shall not exceed
$2.8 million.
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(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 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
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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 (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.
(k) Right to Convert Unaffected. Nothing contained in this Section 4
shall be construed so as to limit or restrict the ability of the Holder to
convert this Debenture in accordance with the terms hereof.
5. Intentionally Omitted.
6. Conversion Rights.
(a) From and after the earliest of (i) January 31, 1999, (ii) the
consummation of a Qualifying Offering, or (iii) the date of any repayment notice
given by the Company pursuant to Section 2(d) hereof, the Holder of this
Debenture shall have 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 a number of
fully paid and non-assessable shares equal to (i) the result obtained by
dividing the stated principal amount of this Debenture by the conversion rate
established for any equity
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security issued in a Qualifying Offering, if this Debenture is converted on or
after the consummation of a Qualifying Offering, or (ii) if no Qualifying
Offering has occurred on or prior to such conversion, the result obtained by
dividing the stated principal amount of this Debenture by (X) $0.52 per share if
this Debenture is converted on or prior to January 31, 1999, (Y) $0.45 per share
if this Debenture is converted on or after February 1, 1999 and on or prior to
April 30, 1999, or (Z) $0.31 per share if this Debenture is converted on or
after May 1, 1999. The respective conversion prices set forth above shall be
subject to adjustment in certain circumstances as provided herein. The
conversion price in effect at the time of the conversion of this Debenture is
hereinafter referred to as the "Conversion Price." No fractional shares shall be
issuable upon the conversion of this Debenture. In lieu of any such fractional
share interest, upon conversion the Holder shall be entitled to a cash payment
equal to such fractional interest multiplied by the Conversion Price in effect
at the time of such conversion.
(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.
(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) 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), (iii)
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), (iv) 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), (v) 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), (vi) securities
outstanding on the date hereof, (vii) awards made from and after the Issuance
Date pursuant to the Company's Stock Compensation Program (the "Plan"), or
(viii) awards made from and after the Issuance Date 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 subject to an
aggregate limit of 2,000,000 shares of Common Stock for issuances pursuant to
clauses (vii) and (viii) (subject to adjustment in the circumstances set forth
in the Plan or such arrangements) (such securities, collectively, the "Subject
Securities") for a consideration per share less than the Conversion Price (the
"Trigger Price"), or, if a Pro Forma
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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 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
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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 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
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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 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
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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;
(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
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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.
(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:
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(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 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.
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:
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(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;
(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; provided, however, that the Company shall have
until January 31, 1999 to deliver the financial statements for the
fiscal year ended June 30, 1998;
(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; provided, however, that the Company
shall have until January 31, 1999 to deliver the financial
statements for the fiscal quarter ended September 30, 1998;
(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
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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 Covenant: 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.
(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
Debentures (and any replacement Debenture or Debentures issued upon
transfer or exchange of the Debentures); (D) 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); (E)
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 (F) 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");
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(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 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"
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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) loans outstanding 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 (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
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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 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;
(vii) 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; or
(viii) any representation or warranty made by the Company in
the Purchase Agreement, dated October 21, 1998 between the Company and the
original Holder of this Debenture or any other certificate or instrument
delivered in connection therewith shall have been untrue in any material
respect when made.
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described in
subparagraph 8(a)(vi) 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)(vi) 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.
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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 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
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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 Class C
13% Convertible Senior Subordinated Debenture this 21st day of October, 1998.
LOGIMETRICS, INC.
By:
-------------------------------------
Name: Norman M. Phipps
Title: Chief Operating Officer
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EXHIBIT A
ELECTION TO CONVERT
(All capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the Class C 13% Convertible Senior
Subordinated Debentures)
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
TO WHOM IT MAY CONCERN:
The undersigned registered owner of the attached Class C 13% 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
--------------- -
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EXHIBIT 6
FORM OF G WARRANT
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EXHIBIT 6
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, Gerald B. Kramer, or assigns, is entitled,
subject to the terms set forth below, to purchase from the Company Seven Hundred
Seventeen Thousand Two Hundred Forty Seven (717,247) 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 current market value of one full share of Common
Stock or other securities to which such Holder shall be so entitled.
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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.
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,
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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 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
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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 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
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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 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 ProForma 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
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(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 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 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
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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 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.
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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.
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
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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
Holders 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 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
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<PAGE>
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 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
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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 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 1l(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.
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(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
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. 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: July 29, 1997
Attest:
- --------------------------------------
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<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:
- --------------------------------------------------------------------------------
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[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
- --------------------------------------
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EXHIBIT 7
FORM OF H WARRANT
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<PAGE>
EXHIBIT 7
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, Gerald B. Kramer, or assigns, is entitled,
subject to the terms set forth below, to purchase from the Company Thirty-Eight
Thousand Three Hundred Seventy One (38,371) fully paid and non-assessable shares
of Common Stock, par value $.0l per share, of the Company (the "Common Stock"),
at a purchase price, subject to the provisions of Paragraph 3 hereof, of sixty
cents ($.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 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
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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.
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,
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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 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
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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 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
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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 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 ProForma 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
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(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 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 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
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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 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.
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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.
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
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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
Holders 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 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
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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 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
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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 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 1l(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.
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<PAGE>
(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
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.
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: July 29,1997
Attest:
- -------------------------------
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<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:
- --------------------------------------------------------------------------------
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<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 112 of 149
EXHIBIT 8
FORM OF I WARRANT
Page 113 of 149
<PAGE>
EXHIBIT 8
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, Gerald B. Kramer, or assigns, is entitled,
subject to the terms set forth below, to purchase from the Company Nineteen
Thousand One Hundred Eighty Six (19,186) 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 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
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<PAGE>
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.
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.
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
(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 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
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<PAGE>
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 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 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 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.
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<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.
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
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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 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
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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 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
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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 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.
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(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
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.
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: July 29, 1997
Attest:
- --------------------------------
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[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:
- --------------------------------------------------------------------------------
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<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 127 of 149
EXHIBIT 9
REGISTRATION RIGHTS AGREEMENT
Page 128 of 149
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EXHIBIT 9
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October __,
1998, among LogiMetrics, Inc., a Delaware corporation (the "Company"), and the
parties whose names appear on the signature pages hereof.
W I T N E S S E T H:
WHEREAS, the Company and the parties hereto (the "Purchasers") have
entered into a Purchase Agreement of even date herewith (the "Purchase
Agreement") pursuant to which the Company has agreed to sell to such parties
$2,666,667 in aggregate principal amount of its Class C 13% Senior Subordinated
Debentures (the "Debentures"); and
WHEREAS, the Debentures are convertible into shares (the "Debenture
Shares") of the Company's common stock, par value $.01 per share; and
WHEREAS, the Company has agreed to effect the registration of Debenture
Shares on the terms and conditions set forth herein;
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. Certain Definitions.
For purposes of this Agreement, the following terms have the following
meanings when used herein:
(a) "Affiliate" means, with respect to any Person, means 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 "controlling" have meanings correlative thereto.
(b) "Business Day" means any day other than a Saturday or Sunday on which
banking institutions in New York, New York are open for the general conduct of
business.
(c) "Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
(d) "Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
(e) "Company" means LogiMetrics, Inc., a Delaware corporation, and its
successors and assigns.
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(f) "Demand Registration" means any registration of Registrable Securities
effected pursuant to Section 2.
(g) "Effective Date" means the earlier of (i) September 1, 1999 and (ii)
the termination of the engagement letter, dated August 7, 1998, by and between
the Company and Donaldson Lufkin Jenrette Securities Corporation.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
(or any similar successor federal statute), and the rules and regulations
thereunder, as in effect from time to time.
(i) "Holders" means the Purchasers party to the Purchase Agreement or any
permitted transferees thereof holding Registrable Securities.
(j) "Majority Registered Holders" means, in the case of any registration
statement, the Holders of a majority of the Registrable Securities proposed to
be covered in such registration statement (or that are actually so covered).
(k) "Person" means any individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture, or other entity, or a government or
any political subdivision or agency.
(l) "Piggyback Registration" means any registration of Registrable
Securities effected pursuant to Section 3.
(m) "Registrable Securities" means (i) the Debenture Shares, and (ii) any
securities issued or issuable in respect of or in exchange for any of the
Debenture Shares by way of stock dividend or other distribution on the Common
Stock, stock split or combination of shares, recapitalization, reclassification
merger, consolidation or exchange offer. For purposes hereof, a Registrable
Security ceases to be a Registrable Security when either (x) it has been
effectively registered under the Securities Act and sold or distributed to any
Person pursuant to an effective registration statement covering it or (y) it has
been sold or distributed to any Person pursuant to Rule 144 or Rule 145(d).
(n) "Registration" means any Demand Registration or Piggyback
Registration.
(o) "Rule 10b-6" means Rule 10b-6 promulgated by the Commission under the
Exchange Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
(p) "Rule 144," "Rule 145" and "Rule 424" mean, respectively, Rule 144,
Rule 145 and Rule 424, each promulgated by the Commission under the Securities
Act, in each case as amended from time to time, or any similar successor rule
thereto that may be promulgated by the Commission.
(q) "Securities Act" means the Securities Act of 1933, as amended (or any
similar successor federal statute), and the rules and regulations thereunder, as
the same are in effect from time to time.
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2. Demand Registrations.
(a) At any time after the Effective Date and until the earlier of (i) the
date that all of the Registrable Securities may be freely resold by the Holders
thereof pursuant to Rule 144(k) and (ii) two years from the conversion of all of
the Debentures (the "Registration Rights Period"), upon written notice to the
Company from one or more Holders of Registrable Securities who held on the
Effective Date (together with their Affiliates at such time) in the aggregate
not less than 50% of the Debenture Shares (the Holders furnishing such written
notice being hereinafter referred to as the "Initiating Holders") requesting
that the Company effect, pursuant to this Section 2, the registration of any or
all of such Initiating Holders' Registrable Securities under the Securities Act
(which notice shall specify (A) the Registrable Securities so requested to be
registered, (B) the proposed amounts thereof (which in the aggregate shall equal
at least (x) 50% of the Debenture Shares, or (y) if such Registrable Securities
are all of the remaining Registrable Securities held by the Initiating Holders,
25% of the Debenture Shares), and (C) the intended method of disposition by such
Initiating Holders, including whether or not the proposed offering is to be
underwritten), the Company shall promptly (but in any event within 20 days) give
written notice of such requested registration to all Holders, and thereupon the
Company shall, as expeditiously as possible, use its best efforts to effect the
registration under the Securities Act of:
(x) the Registrable Securities that the Initiating Holders have
requested the Company to register, for disposition in accordance with the
intended method of disposition stated in their notice to the Company; and
(y) all other Registrable Securities the Holders of which shall have
made a written request to the Company for registration thereof (which
request shall specify such Registrable Securities and the proposed amounts
thereof) within 30 days after the receipt of such written notice from the
Company,
all to the extent requisite to permit the disposition (in accordance with the
method of disposition specified in the notice given to the Company by the
Initiating Holders) by Holders of the securities then constituting Registrable
Securities so to be registered.
(b) Number of Demand Registrations: Duration: Sale of Registrable
Securities. Notwithstanding the provisions of Section 2(a), the Company shall
not be required to effect a Demand Registration pursuant to this Section 2: (i)
if a Demand Registration has previously been effected by the Company pursuant to
this Section 2 within one year of the date on which notice is given by the
Initiating Holders pursuant to Section 2(a); or (ii) if the Company shall
previously have effected two Demand Registrations; provided that a Demand
Registration shall not be deemed to have been effected for purposes of the
limitations of this Section 2(b) unless the applicable registration statement
was declared effective and kept effective until the earlier of (A) nine months
following the date on which it was declared effective and (B) the sale pursuant
thereto of all of the Registrable Securities covered thereby. A request from
Initiating Holders pursuant to Section 2(a) shall be deemed withdrawn upon
commencement of a Black-Out Period (as defined in Section 4(c)).
(c) Inclusion of Other Securities. The Company shall not include
securities in any Demand Registration other than (i) Registrable Securities, and
(ii) securities entitled to
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piggyback registration rights granted by the Company prior to the date hereof
without the prior written consent of the Majority Registered Holders which shall
not be unreasonably withheld or delayed.
3. Piggyback Registrations.
(a) Effective Registration. If prior to the end of the Registration Rights
Period the Company proposes to file a registration statement under the
Securities Act with respect to any class of equity securities (other than in
connection with the registration of equity securities issued or issuable
pursuant to a dividend reinvestment, employee stock option, stock purchase,
stock bonus or similar plan or pursuant to a merger, exchange offer or
transaction of the type specified in paragraph (a) of Rule 145) at any time,
then the Company shall give written notice of such proposed filing to the
Holders at least 20 days before the anticipated filing date, and such notice
shall offer the Holders the opportunity to register such amount of Registrable
Securities as each such Holder may request. The Company shall use its best
efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the inclusion therein of any Registrable
Securities the Holders of which request, within 15 days after receiving written
notice of the proposed filing from the Company, such inclusion, at the same
initial public offering price and subject to the same underwriting discount and
commissions as any similar securities of the Company so included. Any Holder's
request for such inclusion may be withdrawn, in whole or in part, at any time
prior to the effective date of the registration statement for such offering.
(b) Number of Piggyback Registrations: Duration: Sale of Registrable
Securities. Notwithstanding the provisions of Section 3(a) but subject to the
second proviso to Section 3(c), the Company shall not be required to effect a
Piggyback Registration pursuant to this Section 3 in response to a request made
pursuant to Section 3(a) if the Company shall previously have so effected three
Piggyback Registrations in response to such requests; provided that a Piggyback
Registration shall not be deemed to have been effected for purposes of this
limitation unless, in respect thereof, the following conditions (hereinafter,
the "Conditions") were satisfied: (i) the applicable registration statement
covered the full amount of Registrable Securities requested to be so covered by
each Holder, without any reductions in any such amount pursuant to Section 3(c)
or otherwise, except as a result of withdrawals pursuant to the last sentence of
Section 3(a); and (ii) the applicable registration statement was declared
effective and kept effective until the earlier of (A) nine months following the
date on which it was declared effective and (B) the sale pursuant thereto of all
of the Registrable Securities covered thereby, provided, that such non-month
period shall be tolled during a Black-Out Period (as defined in Section 4(b)).
(c) Cut-Backs. Notwithstanding the provisions of Section 3(a), if the
managing underwriter or underwriters of a proposed underwritten offering as
described in Section 3(a) deliver a written opinion to the Holders requesting
inclusion of their Registrable Securities, stating that the total amount or kind
of securities that they or any other Persons (other than the Company) seek to
include in such offering would materially and adversely affect the success of
such offering, then, in addition to the number of such securities being included
in the offering for the account of the Company, the Company shall be required to
include in the offering only that number of additional such securities,
including Registrable Securities (collectively, the "Additional Securities"),
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering, and the Additional Securities so included shall be
apportioned pro rata among the selling stockholders and the Holders of
Registrable Securities
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<PAGE>
according to the total amount of securities requested to be included therein by
each selling stockholder and the Holders or in such other proportions as shall
mutually be agreed to by such selling stockholders and the Holders.
(d) Control by the Company. The Company may withdraw any registration
statement and abandon any proposed offering initiated by the Company without the
consent of any Holder of Registrable Securities, notwithstanding the request of
any such Holder to participate therein in accordance with this Section 3, if the
Board of Directors of the Company determines in its sole discretion that such
action is in the best interests of the Company.
4. Holdback Agreements; Blackouts.
(a) Restrictions on Public Sales by Holders of Registrable Securities. To
the extent not inconsistent with applicable law, each Holder whose Registrable
Securities are included in a Registration that is timely notified in writing by
the managing underwriter or underwriters shall not effect any public sale or
distribution (including a sale pursuant to Rule 144) of any issue being
registered in an underwritten offering (other than pursuant to a dividend
reinvestment, employee stock option, stock purchase, stock bonus or similar
plan, pursuant to a merger, exchange offer or a transaction of the type
specified in Rule 145(a) or pursuant to a "shelf" registration), any securities
of the Company similar to any such issue or any securities of the Company
convertible into or exchangeable or exercisable for any such issue, during the
10-day period prior to, and during the 180-day period beginning on, the
effective date of the applicable registration statement (or, if later, the date
on which a bona fide offering of the securities covered thereby commences),
except as part of such Registration.
(b) Restrictions on Public Sales by the Company. The Company shall not
effect any public sale or distribution for its own account of any issue being
registered in an underwritten offering (other than pursuant to a dividend
reinvestment, employee stock option, stock purchase, stock bonus or similar
plan, pursuant to a merger, exchange offer or a transaction of the type
specified in Rule 145(a) under the Securities Act or pursuant to a "shelf"
registration), any securities of the Company similar to any such issue or any
securities of the Company convertible into or exchangeable or exercisable for
any such issue, during the 10-day period prior to, and during the 180-day period
beginning on, the effective date of the applicable registration statement (or,
if later, the date on which a bona fide offering of the securities covered
thereby commences), except as part of such Registration.
(c) Black-Outs. Notwithstanding the provisions of Sections 2 and 3, the
Company may, by giving written notice to the Holders at any time prior to the
effectiveness of the applicable registration statement, delay effecting a Demand
Registration or a Piggyback Registration for a reasonable period of time (the
"Black-Out Period") not to exceed:
(i) 90 days, if at the time the Company is otherwise engaged in an
issuer tender offer (within the meaning of Section 13(e) of the Exchange Act)
for securities of the same class (within the meaning of the Exchange Act) as the
Registrable Securities that are proposed to be registered and sold; provided
that the Board of Directors of the Company shall have determined in good faith,
based on advice of counsel to the Company, that such issuer tender offer may
not, under Rule 10b-6, be continued and consummated if offers or sales of
Registrable Securities were to be made pursuant to such Demand Registration or
Piggyback Registration; provided, further, that the Company, if requested by the
Majority Registered Holders, shall
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cooperate with the Holders to obtain from the staff of the Commission a
no-action letter to the effect that the staff would not recommend enforcement
action to the Commission with respect to Rule 10b-6, or would grant an exemption
from Rule 10b-6, in the event such offers and sales were to be so made; and
(ii) 90 days, if at the time the Company is otherwise engaged in a
financing, acquisition, corporate reorganization or other material transaction
whose disclosure in the good faith judgment of the Board of Directors of the
Company would (a) be detrimental to the interests of the Company and (b) based
on advice of counsel to the Company, be required in connection with such Demand
Registration or Piggyback Registration.
5. Registration Procedures.
(a) Company Procedures. Whenever the Company is required by this Agreement
to effect the registration of any Registrable Securities under the Securities
Act pursuant to a registration statement, the Company shall use its best efforts
to effect each such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall, as soon as practicable:
(i) prepare and file with the Commission the requisite registration
statement to effect such registration and thereafter use its best efforts to
cause such registration statement to be declared effective as soon as
practicable and to remain continuously effective for the time period required by
this Agreement to the extent permitted under the Securities Act, provided that
as soon as practicable but in no event later than three Business Days before
filing such registration statement, any related prospectus or any amendment or
supplement thereto, other than any amendment or supplement made solely as a
result of incorporation by reference of documents filed with the Commission
subsequent to the filing of such registration statement, the Company shall
furnish to the Holders of the Registrable Securities covered by such
registration statement and the underwriters, if any, copies of all such
documents proposed to be filed, which documents shall be subject to the review
of such Holders and underwriters; the Company shall not file any registration
statement or amendment thereto or any prospectus or any supplement thereto
(other than any amendment or supplement made solely as a result of incorporation
by reference of documents filed with the Commission subsequent to the filing of
such registration statement) to which the managing underwriters of the
applicable offering, if any, or the Majority Registered Holders shall have
reasonably objected in writing, within two Business Days after receipt of such
documents, to the effect that such registration statement or amendment thereto
or prospectus or supplement thereto does not comply in all material respects
with the requirements of the Securities Act and specifying in reasonable detail
the reasons therefor (provided that the foregoing shall not limit the right of
any Holder whose Registrable Securities are covered by a registration statement
to reasonably object, within two Business Days after receipt of such documents,
to any particular information that is to be contained in such registration
statement, amendment, prospectus or supplement and relates specifically to such
Holder, including without limitation any information describing the manner in
which such Holder acquired such Registrable Securities and the intended method
of distribution of such Registrable Securities), and if the Company is unable to
file any such document due to the objections of such underwriters or such
Holders, the Company shall use its best efforts to cooperate with such
underwriters and Holders to prepare, as soon as practicable, a document that is
responsive in all material respects to the reasonable objections of such
underwriters and Holders;
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(ii) prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be necessary to
keep such registration statement continuously effective and current for the
period required by this Agreement to the extent permitted under the Securities
Act; cause each related prospectus to be supplemented by any prospectus
supplement as may be required, and as so supplemented to be filed pursuant to
Rule 424, if required; and otherwise use its best efforts to comply with the
provisions of the Securities Act as may be necessary to facilitate the
disposition of all Registrable Securities covered by such registration statement
during the applicable period and in accordance with the intended method of
disposition by the selling Holders thereof set forth in such registration
statement or such prospectus or prospectus supplement;
(iii) notify the Holders and the managing underwriters, if any, of
the applicable offering (providing, if requested by any such Persons,
confirmation in writing) as soon as practicable after becoming aware of: (A) the
filing of any prospectus or prospectus supplement or the filing or effectiveness
(or anticipated date of effectiveness) of such registration statement or any
post-effective amendment thereto; (B) any request by the Commission for
amendments or supplements to such registration statement or the related
prospectus or for additional information; (C) the issuance by the Commission of
any stop order suspending the effectiveness of such registration statement or
the initiation of any proceedings for that purpose; (D) the receipt by the
Company of any notification with respect to the suspension of the qualification
or registration (or exemption therefrom) of any Registrable Securities for sale
in any jurisdiction in the United States or the initiation or threatening of any
proceeding for such purposes; or (B) the happening of any event that makes any
statement made in such registration statement or in any related prospectus,
prospectus supplement, amendment or document incorporated therein by reference
untrue in any material respect or that requires the making of any changes in
such registration statement or in any such prospectus, supplement, amendment or
other such document so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus or
supplement in the light of the circumstances under which they were made) not
misleading;
(iv) use its best efforts to obtain at the earliest possible moment
the withdrawal of any order or other action suspending the effectiveness of any
such registration statement or suspending the qualification or registration (or
exemption therefrom) of the Registrable Securities for sale in any jurisdiction;
(v) if reasonably requested by the managing underwriters, if any, of
the applicable offering, or by the Majority Registered Holders, as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as such underwriters or the Majority Registered Holders, as the
case may be, agree should be included therein relating to the sale and offering
of the applicable Registrable Securities, including without limitation
information with respect to the number of Registrable Securities being sold to
any underwriters, the purchase price being paid therefor by any such
underwriters and any other terms of the offering of the Registrable Securities;
and make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable following receipt of notice of the matters to
be incorporated therein;
(vi) as soon as practicable after filing such documents with the
Commission, furnish to the Holders and each of the underwriters, if any, without
charge, at least one manually
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signed or conformed copy of such registration statement and any post-effective
amendment thereto, including financial statements and schedules; and as soon as
practicable after the request of any Holder or underwriter, furnish to such
Holder or underwriter, as the case may be, at least one copy of any document
incorporated by reference in such registration statement or in any related
prospectus, prospectus supplement or amendment, together with all exhibits
thereto (including those previously furnished or incorporated by reference);
(vii) deliver to the Holders and to each of the underwriters, if
any, without charge, as many copies of the prospectus or prospectuses (including
each preliminary prospectus) and any amendment or supplement thereto as such
Persons may reasonably request; subject to Section 5(b)(i), the Company consents
to the use of any such prospectus or any amendment or supplement thereto by the
Holders and the underwriters, if any, in connection with the offering and sale
of the Registrable Securities covered by any such prospectus or any amendment or
supplement thereto;
(viii) prior to any public offering of Registrable Securities,
register or qualify, or obtain an exemption therefrom (with the cooperation of
the Holders, the underwriters, if any, and their respective counsel in
connection therewith to the extent necessary) of, such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
in the United States as the Holders or the underwriters, if any, shall
reasonably request in writing; use its best efforts to keep each such
registration or qualification (or exemption therefrom) effective during the
period during which such registration statement is required to be kept effective
pursuant to this Agreement, to the extent permitted under the Securities Act;
and do any and all other acts and things reasonably necessary or advisable to
facilitate the disposition in such jurisdictions of the Registrable Securities
covered by such registration statement; provided that the Company shall not be
required to qualify to do business in any jurisdiction where it would not be
required so to qualify but for this Section 5(a)(viii);
(ix) cooperate with Holders participating in such registration and
the underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be sold; and enable such
Registrable Securities to be in such denominations and registered in such names
as the underwriters, if any, may request at least two Business Days prior to any
sale of Registrable Securities to the underwriters;
(x) use its best efforts to cause the Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities in the United States as may be reasonably
necessary to enable the Holders or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(xi) as soon as practicable after the occurrence of any event
described in Section 5(a)(iii)(E), prepare a supplement or post-effective
amendment to such registration statement or to the related prospectus or any
document incorporated therein by reference, or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such prospectus shall not contain an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading; if any event described in Section
5(a)(iii)(B) occurs, use its best efforts to cooperate with the Commission to
prepare, as soon as practicable, any amendment or supplement to such
registration statement or such related prospectus and any other additional
information, or to take other action that may have been requested by the
Commission;
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(xii) use its best efforts to cause all Common Stock constituting
Registrable Securities covered by such registration statement to be listed on
each securities exchange (or quotation system operated by a national securities
association), if any, on which the Common Stock of the Company is then listed
(or included), if so requested by the Majority Registered Holders or the
underwriters, if any, and enter into customary agreements including, if
necessary, a listing application and indemnification agreement in customary
form, and provide a transfer agent for such Registrable Securities no later than
the effective date of such registration statement; use its best efforts to cause
any other Registrable Securities covered by such registration statement to be
listed (or included) on each securities exchange (or quotation system operated
by a national securities association) on which securities of the same class and
series, if any, are then listed (or included) (or on any exchange or quotation
system on which any Person other than a Holder shall have the right to have
securities of the same class and series, if any, listed or included), if so
requested by the Majority Registered Holders or the underwriters, if any, and
enter into customary agreements including, if necessary, a listing application
and indemnification agreement in customary form, and, if necessary, provide a
transfer agent for such securities no later than the effective date of such
registration statement;
(xiii) provide a CUSIP number for the Registrable Securities no
later than the effective date of such registration statement;
(xiv) enter into customary agreements (including, in the case of an
underwritten offering, an underwriting agreement in customary form for the
managing underwriters with respect to issuers of similar market capitalization
and reporting and financial histories) and take all such other appropriate
actions in connection therewith in order to expedite or facilitate the
disposition of the Registrable Securities included in such registration
statement and, in the case of an underwritten offering: (A) make representations
and warranties to each Holder of Registrable Securities participating in such
offering and to each of the underwriters, in such form, substance and scope as
are customarily made to the managing underwriters by issuers of similar market
capitalization and reporting and financial histories and confirm the same to the
extent customary if and when requested; (B) obtain opinions of counsel to the
Company addressed to each Holder of Registrable Securities participating in such
offering and to each of the underwriters, such opinions to be in customary form
and covering the matters customarily covered in opinions obtained in
underwritten offerings by the managing underwriters for issuers of similar
market capitalization and reporting and financial histories; (C) use its best
efforts to obtain "comfort" letters from the Company's independent certified
public accountants addressed to each Holder of Registrable Securities
participating in such offering and to each of the underwriters, such letters to
be in customary form and covering matters of the type customarily covered in
"comfort" letters to the managing underwriters in connection with underwritten
offerings by them for issuers of similar market capitalization and reporting and
financial histories; (D) provide, in the underwriting agreement or agency
agreement to be entered into in connection with such offering, indemnification
and contribution provisions and procedures no less favorable than those set
forth in Section 7 with respect to all parties to be indemnified pursuant to
Section 7; and (E) deliver such customary documents and certificates as may be
reasonably requested by the Majority Registered Holders and the managing
underwriters to evidence compliance with clause (A) of this paragraph (xiv) and
with any customary conditions contained in the underwriting agreement entered
into by the Company in connection with such offering;
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(xv) in the case of any nonunderwritten offering: (A) obtain an
opinion of counsel to the Company at the time of effectiveness of such
registration statement covering such offering and an update thereof at the time
of effectiveness of any post-effective amendment to such registration statement
(other than by reason of incorporation by reference of documents filed with the
Commission) addressed to each Holder of any Registrable Securities covered by
such registration statement, covering matters that are no more extensive in
scope than would be customarily covered in opinions obtained in underwritten
offerings by issuers with similar market capitalization and reporting and
financial histories; (B) use its best efforts to obtain a "comfort" letter from
the Company's independent certified public accountants at the time of
effectiveness of such registration statement and, upon the request of the
Majority Registered Holders, updates thereof, in each case addressed to each
Holder of Registrable Securities participating in such offering and covering
matters that are no more extensive in scope than would be customarily covered in
"comfort" letters and updates obtained in underwritten offerings by issuers with
similar market capitalization and reporting and financial histories; and (C)
deliver a certificate of a senior executive officer of the Company at the time
of effectiveness of such registration statement and, upon the request of the
Majority Registered Holders, updates thereof, such certificates to cover matters
no more extensive in scope than those matters customarily covered in officers'
certificates delivered in connection with underwritten offerings by issuers with
similar market capitalization and reporting and financial histories;
(xvi) make available, for inspection by the Holders of the
Registrable Securities included in such registration, any underwriter
participating in any disposition of Registrable Securities pursuant to such
registration statement, and any attorney, accountant or other representative
retained by such selling Holders or by any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such underwriter, attorney, accountant
or other representative in connection with such registration, provided that no
record, document or property that is subject to a claim of privilege need be
made available for inspection by any Person pursuant to this clause (xvi) if
inspection thereof by such Person could, in the opinion of the Company's
counsel, result in the waiver of such privilege;
(xvii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission relating to such registration and the
distribution of the securities being offered (including, without limitation,
Rule l0b-6, with respect to which the Company shall also use its best efforts
timely to apprise each Holder of any bids and purchases by the Company, and of
any known bids and purchases by each "affiliated purchaser" (as defined in Rule
l0b-6) of the Company, that would in the opinion of the Company be prohibited
under Rule l0b-6 in connection with a "distribution" (as so defined) by such
Holder of securities of the Company) and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act (including Rule 158 thereunder), not later than 60 days
after the end of any 12-month period (or 120 days, if such period is a fiscal
year) commencing at the end of any fiscal quarter in which the Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering, or, if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of such registration statement, which earning
statements shall cover such 12-month periods;
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(xviii) cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc. and in the performance of
any customary or required due diligence investigation by any underwriter,
provided that no record, document or property that is subject to a claim of
privilege need be made available for investigation by any underwriter pursuant
to this clause (xviii) if investigation thereof by such underwriter could, in
the opinion of the Company's counsel, result in the waiver of such privilege;
and
(xix) use its best efforts to effect such registration in the manner
contemplated by this Agreement.
(b) Holder Procedures.
(i) Each Holder agrees, by acquisition of the Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
described in Section 5(a)(iii) (B), 5(a) (iii) (C), 5(a)(iii)(D) or
5(a)(iii)(E), such Holder shall forthwith discontinue disposition of any
Registrable Securities (but, in the case of an event described in Section
5(a)(iii)(D), in the affected jurisdiction or jurisdictions only) covered by the
affected registration statement or prospectus until such Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
5(a)(iii) or 5(a)(xi) or until such Holder is (it being agreed by the Company
that the underwriters, if any, shall also be) advised in writing (the "Advice")
by the Company that the use of the applicable prospectus may be resumed. If the
Company shall have given any such notice during a period when a Demand
Registration or Piggyback Registration is in effect, the one-year period
mentioned in Section 2(b) or Section 3(b), as the case may be, shall be extended
by the number of days from and including the date of the giving of such notice
to and including the date when each Holder of Registrable Securities included in
such Registration shall have received the copies of the supplemented or amended
prospectus contemplated by Section 5(a)(iii) or 5(a)(xi) or the Advice, as the
case may be.
(ii) In connection with any underwritten public offering of
Registrable Securities, the managing underwriter of such offering shall be, (A)
in the case of a Demand Registration, a nationally recognized investment banking
firm selected by the Majority Registered Holders and reasonably acceptable to
the Company and (B) in the case of a Piggyback Registration, a nationally
recognized investment banking firm selected by the Company and reasonably
acceptable to the Majority Registered Holders.
6. Registration Expenses.
All expenses incident to the Company's performance of or compliance with
the provisions of this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel in connection with blue sky
qualifications or registrations (or the obtaining of exemptions therefrom) of
the Registrable Securities), printing expenses (including expenses of printing
prospectuses), messenger and delivery expenses, internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), fees and disbursements of its counsel
and its independent certified public accounts (including the expenses of any
special audit or "comfort" letters required by or incident to such performance
or compliance), securities acts liability insurance (if the Company elects to
obtain such insurance), fees and expenses of any special experts retained by the
Company in connection with such Registration, fees and expenses of other Persons
retained by the Company shall be
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borne by the Company. Each Holder shall bear the fees and expenses of its
counsel, the out-of-pocket expenses of the Holders incurred in connection
herewith and any underwriting discounts, commissions or fees attributable to the
sale of Registrable Securities included in any Registration.
7. Indemnification: Contribution.
(a) Indemnification by the Company. The Company shall indemnify, to the
full extent permitted by law, each Holder of Registrable Securities, its
officers, directors, employees and agents, each Person who controls such Holder
(within the meaning of the Securities Act) and any investment adviser thereof or
agent therefor, against all losses, claims, damages, liabilities and expenses
(including costs of investigation and legal expenses) arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
registration statement covering any Registrable Securities, any related
prospectus or preliminary prospectus, or any amendment or supplement thereto, or
any omission or alleged omission to state in any thereof a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus or prospectus supplement, in light of the circumstances
under which they were made) not misleading, except in each case insofar, but
only insofar, as the same arises out of or is based upon an untrue statement or
alleged untrue statement of a material fact or an omission or alleged omission
to state a material fact in such registration statement, prospectus, preliminary
prospectus, amendment or supplement, as the case may be, made or omitted, as the
case may be, in reliance upon and in conformity with written information
furnished to the Company by such Holder expressly for use therein. This
indemnity is in addition to any liability that the Company may otherwise have.
The Company shall also indemnify any underwriters of the Registrable Securities,
selling brokers, dealer managers and similar securities industries professionals
participating in the distribution and their officers and directors and each
Person who controls such underwriters or other Persons (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of Holders and other specified Persons.
(b) Indemnification by Holders of Registrable Securities. In connection
with any registration statement covering Registrable Securities, each Holder any
of whose Registrable Securities are covered thereby shall furnish to the Company
in writing such information and affidavits with respect to such Holder as the
Company reasonably requests for use in connection with such registration
statement, any related prospectus or preliminary prospectus, or any amendment or
supplement thereto, and shall indemnify, to the full extent permitted by law,
the Company, the Company's directors, officers, employees and agents, each
Person who controls the Company (within the meaning of the Securities Act) and
any investment adviser thereof or agent therefor, against all losses, claims,
damages, liabilities and expenses (including costs of investigation and legal
expenses) arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in any registration statement covering any Registrable
Securities, any related prospectus or preliminary prospectus, or any amendment
or supplement thereto, or any omission or alleged omission to state in any
thereof a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus or prospectus supplement, in
light of the circumstances under which they were made) not misleading, in each
case to the extent, but only to the extent, that the same arises out of or is
based upon an untrue statement or alleged untrue statement of a material fact or
an omission or alleged omission to state a material fact in such registration
statement or in such related prospectus, preliminary prospectus, amendment or
supplement, as the case may be, made or omitted, as the case may be, in reliance
upon and in conformity with written information
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furnished to the Company by such Holder expressly for use therein.
Notwithstanding any other provision hereof, in no event shall the
indemnification obligation of any Holder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification under this Section 7 agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim indemnification or contribution
pursuant to this Agreement and, unless in the judgment of such indemnified party
a conflict of interest may exist between such indemnified party and the
indemnifying party with respect to such claim, permit the indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to such
indemnified party (which may be regular counsel to the Company). If the
indemnifying party is not entitled to, or elects not to, assume the defense of a
claim, it shall not be obligated to pay the fees and expenses of more than one
counsel with respect to such claim, unless in the judgment of counsel to such
indemnified party, expressed in a writing delivered to the indemnifying party, a
conflict of interest may exist between such indemnified party and any other
indemnified party with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional counsel
or counsels (which shall be limited to one counsel per indemnified party). The
indemnifying party shall not be subject to any liability for any settlement made
without its consent, which consent shall not be unreasonably withheld or
delayed.
(d) Contribution.
(i) If the indemnification provided for in this Section 7 from the
indemnifying party is unavailable to an 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 in Section 7(c), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) 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 any Holder be greater in amount than the excess of
(A) the dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Securities
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giving rise to such contribution obligation over (B) the dollar amount of any
damages that such 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.
(iii) If any provision of an indemnification or contribution clause
in an underwriting agreement or agency agreement executed by or on behalf of a
Holder of Registrable Securities in accordance with Section 5(a)(xiv)(D) differs
from a provision in this Section 7, such provision in the underwriting agreement
shall determine such Holder's rights in respect thereof.
8. Participation in Underwritten Registrations
No Person may participate in any underwritten Registration unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements, (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and (c) agrees to pay
such Person's pro rata portion of all underwriting discounts and commissions.
9. Cooperation with the Company.
Each Holder by the acceptance of Registrable Securities agrees to use its
best efforts to cooperate with the Company in all reasonable respects in
connection with the preparation and filing of Registrations hereunder in which
such Registrable Securities are included or requested to be included.
10. Miscellaneous.
(a) Modifications in Connection with a Qualifying Offering. In connection
with the consummation of a Qualifying Offering (as such term is defined in the
Purchase Agreement), the registration rights provided hereunder shall be
modified to the extent determined in the reasonable judgment of the Company's
financial advisor to be reasonably necessary to permit consummation of the
Qualifying Offering on the terms most favorable to the Company; provided,
however, that the registration rights granted to the investors in the Qualifying
Offering shall not be more favorable than those granted to the Holders hereunder
(as so modified) without the approval of the Holders of at least a majority of
the Registrable Securities then outstanding. The Holders shall have the right to
participate in discussions with such financial advisor regarding any proposed
change in the terms of this Agreement. The Holders shall execute and deliver
appropriate amendments or supplements to this Agreement necessary to effect any
such modification.
(b) Remedies. Each Holder of Registrable Securities, in addition to being
entitled to exercise all rights in an action at law, including recovery of
damages, shall be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
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(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company shall have obtained the prior written consent of the Holders
of at least a majority of the securities then constituting Registrable
Securities.
(d) Notices. All notices, requests, waivers, releases, consents, and other
communications required or permitted by this Agreement (collectively, "Notices")
shall be in writing. Notices shall be deemed sufficiently given for all purposes
under this Agreement when delivered in person, when dispatched by telegram or
(upon written confirmation of receipt) by electronic facsimile transmission or
(upon written confirmation of receipt) when dispatched by a nationally
recognized overnight courier service. All Notices shall be delivered as follows:
(i) if to a Holder of Registrable Securities, at the address
indicated on Company's registrar relating to such securities or at such
other address as such Holder may have furnished to the Company in writing;
and
(ii) if to the Company, at:
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Attention: President
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
including any successors to the Company by merger.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings: Construction. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. Unless the context otherwise requires, all references to
Sections are to Sections of this Agreement, "or" is inclusively disjunctive, and
words in the singular include the plural and vice versa. In computing any period
of time specified in this Agreement or in any Notices, the date of the act or
event from which such period of time is to be measured shall be included, any
such period shall expire at 5:00 p.m., New York City time, on the last day of
such period, and any such period denominated in months shall expire on the date
in the last month of such period that has the same numerical designation as the
date of the act or event from which such period is to be measured; provided,
however, that if there is no date in the last month of such period that has the
same numerical designation as the date of such act or event, such period shall
expire on the last day of the last month of such period.
Page 143 of 149
<PAGE>
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of laws thereof.
(i) Severability. If one or more of the provisions hereof, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect, for any reason, the validity, legality and
enforceability of the remaining provisions hereof shall not be in any way
affected or impaired thereby, and the provision held to be invalid, illegal or
unenforceable shall be reformed to the minimum extent necessary, and in a manner
as consistent with the purposes thereof as is practicable, so as to render it
valid, legal and enforceable, it being intended that all of the rights and
privileges of the Holders hereunder shall be enforceable to the fullest extent
permitted by law.
(j) Entire Agreement. This Agreement is intended by the Company and the
Purchasers to be a final expression thereof and is intended to be a complete and
exclusive statement of the agreement and understanding of the Company and the
Purchasers in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the Company and any Holders with respect to such subject
matter.
[Remainder of page intentionally left blank]
Page 144 of 149
<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/
----------------------------------------
Name:
Title:
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/
----------------------------------------
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
By: /s/
----------------------------------------
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
Page 145 of 149
<PAGE>
By: /s/
----------------------------------------
Edward J. Rosenthal, Keogh
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/
----------------------------------------
Name: Eugene A. Trainor, III
Title: Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
A.C. ISRAEL ENTERPRISES, INC.
By: /s/
----------------------------------------
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
Page 146 of 149
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/
----------------------------------------
Name: Eugene A. Trainor, III
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
By: /s/
----------------------------------------
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/
----------------------------------------
Name: Eugene A. Trainor, III
Title: Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
Page 147 of 149
<PAGE>
PAMELA EQUITIES CORP.
By: /s/
----------------------------------------
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/
----------------------------------------
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/
----------------------------------------
Name:
Title: General Partner
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
Page 148 of 149
<PAGE>
McGLYNN FAMILY PARTNERSHIP
By: /s/
----------------------------------------
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
By: /s/
----------------------------------------
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
By: /s/
----------------------------------------
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
By: /s/
----------------------------------------
Charles S. Brand
20 Meridian Way
Eatontown, New Jersey 07724
Tel: (732) 935-7150
Fax: (732) 935-7151
Page 149 of 149
