SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 0-10696
LogiMetrics, Inc.
(Name of small business issuer in its charter)
Delaware 112171701
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Orville Drive, Bohemia, New York 11716
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (631) 784-4110
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant Section 12 (g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes: [ ] No:
[X]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ]
State issuer's revenues for its most recent fiscal year: $8,872,105
As of February 29, 2000, the aggregate market value of voting stock
held by non-affiliates of the issuer was $11,892,996 as computed by reference to
the last reported sale price of the stock ($ 0.95) multiplied by the number of
shares of voting stock outstanding on February 29, 2000 held by non-affiliates.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class of Common Stock Outstanding at February 29, 2000
Common Stock, par value 28,747,245 shares
$.01 per share
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
LOGIMETRICS, INC.
FORM 10-KSB
YEAR ENDED JUNE 30, 1998
INDEX
PART I
Page
Item 1. Description of Business............................. 3
Item 2. Description of Property............................. 16
Item 3. Legal Proceedings................................... 16
Item 4. Submission of Matters to a Vote of Security Holders.. 16
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.. 18
Item 6. Management's Discussion and Analysis or Plan of Operation.. 19
Item 7. Financial Statements....................................... 24
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure................................... 47
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act .............. 47
Item 10. Executive Compensation.......................................... 50
Item 11. Security Ownership of Certain Beneficial Owners and Management.. 53
Item 12. Certain Relationships and Related Transactions.................. 56
Item 13. Exhibits and Reports on Form 8-K................................ 57
<PAGE>
PART I
Item 1. Description of Business
General
LogiMetrics, Inc. ("LogiMetrics") and its wholly owned subsidiary,
mmTech, Inc. ("mmTech") (collectively, the "Company") designs, manufactures and
markets solid state, broadband wireless communications infrastructure equipment,
subsystems and devices used to provide point-to-multipoint ("PMP") terrestrial
and satellite-based distribution services in frequency bands from 24 gigahertz
("GHz") to 38 GHz. The Company's products enable telecommunications service
providers to establish reliable and cost-effective data, voice and video
communications links within their networks. The Company's infrastructure
equipment includes solid-state power amplifiers, hub transmitters, active
repeaters, cell-to-cell relays, Internet access systems and other millimeter
wave-based devices and subsystems. These products are used in various
applications, such as broadband communications, including Local Multipoint
Distribution Service ("LMDS"), local loop services and Ka-band satellite
communications.
In addition to the Company's broadband products, the Company designs,
manufactures and markets a wide range of high power amplifiers, including
traveling wave tube amplifiers ("TWTAs"), instrumentation amplifiers and other
peripheral transmission equipment used to transmit communication signals for
industrial, commercial and military applications. The Company's TWTAs operate in
frequency bands from 0.5 GHz to 45 GHz, with power levels up to 10 kiloWatts.
The Company was founded in December 1968. The Company's headquarters
are located at 50 Orville Drive, Bohemia, New York 11716. The Company's
telephone number is (631) 784-4110.
Recent Events
On February 17, 2000, the Company entered into a non-binding letter of
intent (the "Letter of Intent") with Signal Technology Corporation ("Signal")
pursuant to which Signal proposes to acquire the Company through the merger of a
wholly owned subsidiary of Signal with and into LogiMetrics (the "Merger"). In
connection with the proposed Merger, Signal currently intends to contribute the
assets of mmTech to Signal's recently formed Signal Wireless Group ("SWG").
Pursuant to the current terms of the proposed Merger, holders of the Company's
common stock, par value $0.01 per share (the "Common Stock") (including shares
issuable upon the exercise or conversion of outstanding options, warrants and
convertible securities), would receive, based on a formula to be finalized, a
certain percentage of a tracking security that would reflect the performance of
SWG ("SWG Equity"), which would be distributed upon completion of a public
offering of SWG Equity, and shares of Signal common stock. The proposed Merger
is intended to be tax-free to the stockholders of LogiMetrics for federal income
tax purposes.
In connection with the Letter of Intent, Signal has loaned $2,000,000
to the Company for working capital and other purposes (the "Signal Loan")
pursuant to the terms of a Negotiable Secured Senior Subordinated Promissory
Note (the "Signal Note"). The Signal Loan matures on December 31, 2000 and bears
interest at a rate of 10% per annum, payable at maturity. The Signal Loan may be
prepaid by the Company at any time and is subject to mandatory repayment in the
event that the Company completes an institutional financing generating gross
proceeds of $7,500,000 or more or the Company engages in certain extraordinary
transactions (other than with Signal) or executes a letter of intent or
agreement relating thereto. The Signal Loan is secured by liens on all of the
Company's assets. Signal has the right to accelerate the repayment of the Signal
Loan upon the occurrence of certain events of default, including the failure of
the Company to pay amounts owed under the Signal Note when due, a material
breach by the Company of certain covenants and representations and warranties
made to Signal or the occurrence of certain insolvency events.
Concurrently with the making of the Signal Loan, certain existing
investors in the Company also loaned the Company $1,000,000 (the "Investor
Loans"). The Investor Loans are evidenced by a Substitute Negotiable Secured
Senior Subordinated Promissory Note (the "Investor Notes") and are secured pari
passu with the Signal Loan. The Investor Loans bear interest at a rate of 13%
per annum (payable at maturity) and mature on July 1, 2000. The Signal Loan and
the Investor Loans are referred to collectively as the "Loan Transactions."
<PAGE>
Pursuant to the Letter of Intent, the Company granted to Signal the
option (the "Option") to purchase the Company's high-power amplifier business,
currently conducted at the Company's facility in Bohemia, New York (the "New
York Business"). The exercise price of the Option is $2,000,000 less the unpaid
amount of the Signal Loan less any funded indebtedness of the Company assumed by
Signal. The Option expires on the earlier of (i) 30 days after the payment in
full of the Signal Loan and (ii) December 31, 2000.
In addition, upon execution of the Letter of Intent, the Company and
Signal entered into a Management Agreement (the "Management Agreement") pursuant
to which, Signal, through its Keltec division, assumed the management and
operation of the New York Business and has assumed all current liabilities of
the New York Business. Pursuant to the Management Agreement, Signal intends to
relocate the assets of the New York Business (excluding real estate and
fixtures) to Signal's facility in Florida. Under the Management Agreement,
Signal is responsible for all expenses incurred and is entitled to retain all
revenues generated in connection with its operation of that business. Signal
also has agreed to make interest payments on the Company's outstanding bank
indebtedness during the period it is operating the New York Business. Pursuant
to the Management Agreement, if the Merger is not consummated and the Company
enters into an acquisition transaction with a third party prior to December 31,
2000, Signal has the right either to retain ownership of the assets of the New
York Business for no additional consideration or to return such assets to the
Company. In the event that Signal returns such assets to the Company, the
Company is obligated to reimburse Signal for the expenses of moving the assets
both to and from Signal's Florida facility and for any interest payments made by
Signal in respect of the Company's bank indebtedness.
Pursuant to the Letter of Intent, the Company is obligated under
certain circumstances to re-pay all loans made by Signal, together with a
prepayment penalty of $100,000, and to pay a termination fee of $800,000 in the
event that the Company enters into a letter of intent or similar agreement for
an acquisition transaction with a third party prior to June 16, 2000.
The transactions described above are collectively referred to as the
"Signal Transactions."
The consummation of the proposed Merger is subject to the satisfaction
or waiver of a number of customary conditions precedent, including the
satisfactory completion of the Company's and Signal's due diligence
investigation of the business and affairs of one another, the Company's
compliance with its reporting obligations under the Securities Exchange Act of
1934, as amended, the negotiation and execution of definitive agreements for the
Merger, the approval of the proposed Merger by the boards of directors and
shareholders of Signal and the Company and the receipt of any required consents,
authorization and approvals. No assurances can be given that such conditions
will be satisfied or as to the timing thereof. Further, no assurances can be
given that the Merger will be consummated on the terms summarized above or at
all. For further information regarding the Signal Transactions, see Note 16 to
the Notes to Consolidated Financial Statements.
It is a condition to the Signal Transactions that the holders of
approximately $10.7 million of the Company's indebtedness (excluding obligations
owed to North Fork Bank (the "Bank") and certain other indebtedness) must be
converted into shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"). Based on discussions with the holders of such
indebtedness, the Company believes that such holders will convert that
indebtedness to Common Stock, although no assurance can be given that the
Company will receive all of the consents required to effect such conversion or
as to the terms thereof. In addition, pursuant to the terms of the Signal
Transactions, all previously issued options, warrants and other convertible
securities will be required to be converted into Common Stock. Based on
discussions with the holders of such securities, the Company believes that such
holders will convert, exercise or exchange such securities for shares of Common
Stock, although no assurance can be given that the Company will receive all of
the consents required to effect such conversions, exercises and exchanges or as
to the terms thereof. Based on the discussions held to date, the Company
believes that it will be required to issue shares of Common Stock to the holders
of such indebtedness and securities in an amount substantially in excess of 50%
of the shares then-outstanding (after giving effect to such issuance).
The summary of the Signal Transactions contained herein is not
intended to be complete and is qualified in its entirety by reference to the
Letter of Intent, the loan documents for the Loan Transactions and the
Management Agreement, copies of which have been filed as exhibits to this Annual
Report on Form 10-KSB.
<PAGE>
Local Multipoint Distribution Services - LMDS
Introduction
The proliferation of the Internet, local area networks ("LANs") and
home computers has resulted in explosive demand for increased bandwidth to speed
the flow of information. While technology has adapted to needs of a new
marketplace by providing faster processors, video conferencing, data sharing and
distributed offices, communications technology companies continue to struggle to
provide high-speed access to the desktop. The Company believes that LMDS offers
the speed and capacity to provide a high-speed, reliable connection from a
workstation or LAN to existing fiber optic backbones at a cost that is
advantageous compared to existing alternatives. The traffic that LMDS can
support is not only computer data; LMDS will also have the bandwidth and
capacity to provide CATV, local telephony, and broadband access simultaneously
to users in each cell.
LMDS Auctions
The Federal Communications Commission's ("FCC") initial LMDS auction
was completed on March 25, 1998. In that auction, the FCC offered two LMDS
licenses in each of 493 Basic Trading Areas ("BTAs") throughout the United
States, for a total of 986 licenses. In each BTA, the FCC auctioned a Block A
license consisting of 1,150 megahertz ("MHz") of spectrum and a Block B license
consisting of 150 MHz of spectrum. The Block A licenses can carry the equivalent
of 16,000 telephone calls and 200 video channels simultaneously.
Of the 986 available licenses, 864 were awarded to 104 different
bidders for bids totaling approximately $576 million. The remaining 122
licenses, mostly in small and/or rural markets, went unclaimed.
The FCC prohibited local telephone companies (known as "local exchange
carriers" or "LECs") and cable companies from owning Block A LMDS licenses in
their service areas for a three year period ending June 30, 2000, in order to
allow smaller companies to compete for the licenses and to prevent LECs or cable
operators from bidding for LMDS spectrum in order to impede new competition.
Thus, many large communications companies were excluded from the auction, but
may acquire such licenses in the future. The FCC has reserved the right to
extend the restriction on LECs and cable operators beyond June 30, 2000 if the
FCC determines that an extension is necessary to further competition.
The FCC commenced a second LMDS auction on April 27, 1999. In this
auction, the FCC offered for sale a total of 161 LMDS licenses, including the
122 licenses unclaimed in the initial auction and 39 additional licenses on
which the winning bidder in the initial auction defaulted on its payment
obligation. The second LMDS auction was completed on May 12, 1999, with all 161
licenses claimed.
LMDS Services
LMDS is a broadband fixed wireless system that uses millimeter wave
signals in the 28 GHz spectrum to transmit voice, video and data signals in
1,300 MHz of licensed spectrum. LMDS offers line-of-sight coverage over a 3
kilometer ("km") to 5 km range and is capable of providing data and telephony
service for up to 80,000 customers. A 360-degree transmission pattern, divided
into four quadrants of alternating polarity, allows effective reuse of all
spectrum resources and an overlapping node pattern that significantly improves
coverage to a targeted customer base.
The Company believes that LMDS technology can bridge the access gap
between multigiga-bit-per-second fiber optic backbones and LANs and personal
computers. Currently, this gap is filled primarily by dial-up modems, ISDN
lines, or xDSL products, all of which are relatively slow compared to LMDS. LMDS
provides a flexible, economical and reliable source of broadband communications
capability in the "local loop." The Company believes that this technology, which
is scaleable and modular in nature, can provide significant cost advantages over
an incumbent provider's network.
Physically, a system consists of two primary functional layers:
transport and services. The transport layer comprises the customer premises
solid-state transceiver and the cell node or hub electronics, including
solid-state transmitters, receivers and other related elements located at the
transmit site. The services layer comprises a network interface unit ("NIU") at
the customer premises and the base electronics. The NIU provides
industry-standard interfaces to the customer, and the base electronics provide
control and transport functions from the hub site or central office/traffic
aggregation site.
The distances between cell sites for LMDS systems are typically 3 km
to 5 km. The close spacing of LMDS sites is necessary to maintain the
line-of-sight transmissions in the presence of signal attenuation caused by
rain, which can be a significant factor at millimeter wave frequencies. Through
the close proximity of cell sites and the use of transmission techniques such as
forward error correction and dynamic power adaptation, LMDS systems can be
engineered to provide enhanced system reliability.
Competition
There are a number of alternative technologies that are competing with
LMDS to fill the access gap. These technologies include asymmetric digital
subscriber line ("ADSL"), cable modems, fiber optic cable, 38 GHz radio and
satellite systems.
<PAGE>
ADSL: ADSL, the current xDSL standard, provides varying data rates,
both downstream and upstream, to customers using the existing telephone
company's twisted pair copper wires. It is estimated that 20 percent to 40
percent of U.S. access lines will be able to receive ADSL service with little or
no upgrade to existing infrastructure. ADSL solutions, however, are relatively
costly, and competing standards, a lack of interoperability between modems made
by different manufacturers, implementation costs and other factors have slowed
the implementation of ADSL. However, the introduction of lower cost application
specific integrated circuits may result in a reduction in the prices of second
and third generation ADSL modems.
Cable Modems: Cable modems can provide relatively significant data
rates downstream. However, cost per home passed is still relatively expensive,
excluding the additional cost of a modem to the subscriber.
Fiber-to-the-Curb: The installation of fiber optic cable to the home
or curb is another alternative. However, installation is expensive and currently
is cost-effective only for heavy business users. The Company believes that full
installation of fiber in the U.S. local loop would take decades to complete.
Other Wireless Solutions: 38 GHz radio, or "cable in the sky," is
operating successfully in several major metropolitan areas. To date, it has
primarily been used to provide other telecommunications carriers with additional
capacity.
In addition to currently available competing systems, the Company
believes that several satellite system operators plan to offer two-way data
services in the future. Expected data rates of the various satellite
constellations vary significantly for both downstream and upstream transmission,
as well as for residential and corporate users.
Basic Microwave Technology
Generally, microwaves are defined as radio waves with extremely high
frequencies of 1 GHz and above, and derive their name because the wavelength of
the actual radio waves is very small (see Table 1). Because microwaves have very
high frequencies, they are able to carry large amounts of information, making
them suitable for telecommunications applications. All radio waves, including
microwaves, carry information in proportion to their frequency. Simply stated,
microwave communications systems encode information and send it over the
airwaves to the desired destination where the information is decoded and used in
either audio, visual, or computerized form. Terrestrial microwave communications
systems transmit information, using analog or digitally modulated signals, to a
receiver and can either be point-to-point (linking one microwave site to
another) or, as is the case with LMDS, point-to-multipoint (linking one
microwave site to multiple microwave sites).
Table 1: Segments of the Microwave Frequency Spectrum
- --------------------------------------------------------------------------------
Segment Frequency Wavelength
- --------------------------------------------------------------------------------
Centimeter waves 1 gigahertz 30 centimeters
3 gigahertz 10 centimeters
30 gigahertz 1 centimeter
- --------------------------------------------------------------------------------
Millimeter waves 30 gigahertz 10 millimeters
300 gigahertz 1 millimeter
- --------------------------------------------------------------------------------
Sub-millimeter waves 300 gigahertz 1 millimeter
1,000 gigahertz 0.3 millimeter
- --------------------------------------------------------------------------------
Note: 1 gigahertz (GHz) = 1,000 megahertz (MHz) = 1 billion hertz (Hz)
- --------------------------------------------------------------------------------
Source: Reference Data For Radio Engineers, 4th Edition
Microwave propagation characteristics are not uniform. As microwaves
increase in frequency and become shorter in wavelength, they take on different
propagation characteristics (see Table 2). Lower frequency microwaves (such as 2
GHz and 6 GHz) have lower attenuation than higher frequency microwaves, meaning
that they can travel longer distances without as much resulting signal loss due
to atmospheric absorption and rain. Lower frequency microwaves are affected less
by rain, and are therefore better suited for long-haul applications that require
longer microwave path lengths. Useful path length depends on other factors as
well, such as antenna gain and power level.
Table 2: Microwave Frequency Propagation
-------------------------------------------------------------
Frequency Typical Range
2 GHz 50 miles (80 km)
6 GHz 50 miles (80 km)
11 GHz 15 miles (24 km)
18 GHz 7 miles (11 km)
23 GHz 5 miles (8 km)
38 GHz 3 miles (5 km)
60 GHz 1 mile (1.6 km)
- -------------------------------------------------------------------
Source: Reference Data For Radio Engineers, 4th Edition
<PAGE>
At higher microwave frequencies, practical path lengths begin to
decrease markedly. For example, as Table 2 indicates, at 18 GHz, path lengths
drop to about 7 miles (11 km), at 38 GHz about 3 miles (5 km) and at 60 GHz
about 1 mile (1.6 km). This is generally due to higher atmospheric absorption
and fading caused by rain. At these frequencies, line-of-sight propagation is
needed to assure error-free transmission. However, these higher frequency
microwaves generally require smaller antennas and less power to radiate and
propagate the microwave signal. Advancing microwave technology has also allowed
microwave systems to utilize frequencies over 30 GHz (millimeter-wave) for an
increasing number of communications applications. The shorter path lengths of
higher frequency microwaves can be a major advantage for some types of
applications. Because these higher frequencies can be "reused" many times within
a given area with less risk of interference, they can be used for applications
that are quite localized, such as building-to-building wireless computer links
and automobile radar and traffic signal control. In all of these instances,
interference from distant transmissions would cause significant problems.
Terrestrial microwave radio systems have large capacities . Capacity
refers to the data rate that can be transmitted at one time and for digital
microwave systems is usually measured in bits per second (bps or bit/s),
kilobits per second ("Kbps") or megabits per second ("Mbps"). Typically, a
digital microwave radio's capacity can range from 64 Kbps up to 155 Mbps.
Low-capacity to medium-capacity systems (up to 45 Mbps) are very common and are
used for a variety of applications, while high-capacity systems (140 Mbps to 155
Mbps) are primarily used by common carriers for long-haul, backbone network
applications. The capacity of a radio system is directly related to the
bandwidth of the system. Given that radio equipment operation is generally
limited to a bandwidth that is a certain percentage of its operating frequency,
the higher the operating frequency , the higher the percentage bandwidth and the
capacity of the overall system. The Company believes that as the demand for
higher data rates grows, it will drive the growth of millimeter wave equipment
for LMDS and other PMP systems.
Ka-Band Satellite Communications
Introduction
Ka-band satellite systems refer to a new generation of communications
satellites that will occupy the 20 GHz to 40 GHz frequency range and use
on-board processing and switching to provide full two-way services to and from
small earth stations comparable in size to today's satellite television dish. To
do this efficiently they will use multiple pencil-like spot beams. A number of
proposals also include use of inter-satellite links. Apart from the conventional
geosynchronous orbit ("GEO"), both low earth orbit ("LEO") and middle earth
orbit ("MEO") systems have been planned. Such Ka-band satellite systems have
also been described in other terms such as "multimedia satellites", "ATM
satellites", "broadband switched" and "broadband interactive satellites" and
will offer the ability to provide high-bandwidth access to places without
high-bandwidth infrastructure.
The basic elements of a satellite communication system begin at an
earth station - an installation designed to transmit and receive signals from a
satellite in orbit around the earth. Earth stations send information in the form
of high-powered, high-frequency signals to satellites which receive and
retransmit the signals back to earth were they are received by other earth
stations in the coverage area of the satellite. The transmission system from the
earth station to the satellite is called the uplink and the system from the
satellite to the earth station is called the downlink.
These satellites will be used for everything that a terrestrial line
would be used for: desktop-to-desktop videoconferencing, Internet access,
electronic messaging, faxing, telemedicine, direct-to-home video, electronic
transaction processing, distance learning and a wide variety of other
applications.
Ka-Band Satellite Services
The technologies that enable Ka-band satellites to be used with
point-to-multipoint communications applications are spot beam technology,
on-board processing and switching, inter-satellite links and all-digital
transmission capability.
<PAGE>
Spot beam technology enables a satellite to subdivide a single large
"footprint" (area of coverage) into many "subfootprints" (spot beams). The
satellite can then focus these subfootprints on particular areas. Subdivision
enables a high degree of frequency reuse. Rather than spreading the entire
frequency over the whole footprint, it spreads subsets of the frequency over
smaller footprints. Most importantly, it reuses these subsets in nonadjacent
footprints. This frequency reuse and multiple beams are a consequence of the use
of the millimeter wave frequency. The shorter the wavelength, the higher the
degree of focus a given size antenna can achieve.
On-board processing and switching allows the satellite to act
effectively as a sophisticated telephone switchboard. Most satellites are "bent
pipes" - a signal goes up and then comes back down immediately. On-board
processing and switching enables the caching of information until one or more
spot beams are aimed; this also enables inter-satellite links and switching.
Inter-satellite links and switching allow the transfer of signals and
information between satellites. Thus, instead of having to "hop" a signal off
the ground to another satellite and then to its destination, these proposed
Ka-band satellites are capable of communication with each other, thereby
minimizing transmission time and maximizing efficiency.
However, all of this is only possible with all-digital transmissions.
Due to the high frequency of Ka-band satellite transmissions, they also face the
same line-of-sight and rain fade issues faced by other high frequency wireless
communications systems, such as LMDS. In order to circumvent this problem,
all-digital transmissions are necessary in order to incorporate similar error
correction codes to those that are used in terrestrial cellular systems to
overcome similar problems.
These technologies are capable of making Ka-band satellite systems
operate like public telephone networks with the facility to offer digital
services with a wide variety of bit rates. Users will be offered "bit rate on
demand" - that is to say they will only pay for the time that they use a link.
This contrasts with conventional satellites where users usually have had to pay
for permanent leases, which is only economic if there are massive amounts of
information to be moved, such as television channels and trunk telephony links.
The Ka-band concept offers the equivalent of a local loop telephone circuit
where the user pays for temporary lease of time or for each bit of information
moved.
The development of Ka-band services is intimately bound up with the
development of the international marketplace for information technology and the
convergence of computing, broadcasting and telecommunications technology. The
Ka-band satellite concept offers the prospect of quick and scaleable (therefore,
economically realistic) rollouts of advanced infrastructure and services.
<PAGE>
The Market
The primary market for Ka-band satellite communications will be for
the provision of high-bandwidth access to places without a high-bandwidth
infrastructure. It is unlikely that a satellite system could compete with a
digital subscriber line ("DSL") to the home or fiber to the office - if those
services are available. However, in rural areas of the U.S. - or in low
population areas in any country - Ka-band satellites will be able provide an
effective alternative, enabling not only high-speed Internet browsing, but all
forms of high-speed networking and communication.
Satellite Frequency Bands
The three most commonly used satellite frequency bands are the C-band,
Ku-Band and Ka-band. C-band and Ku-band are the two most common frequency
spectrums used by today's satellites.
C-band satellite transmissions occupy the 4 GHz to 8 GHz frequency
range. The minimum size of an average C-band antenna is approximately 2 meters
to 3 meters in diameter.
Ku-band satellite transmissions occupy the 11 GHz to 17 GHz frequency
range. Ku-band antennas can be as small as 18 inches in diameter, as commonly
seen in the RCA DSS and Sony DSS systems.
Ka-band satellite transmissions occupy the 20 GHz to 40 GHz frequency
range. The typical size of a Ka-band antenna is approximately 12 inches in
diameter.
Products
Point-To-Multipoint Systems
PMP systems are wireless networks capable of providing fixed broadband
multimedia services, including high speed data, voice and video. These systems
are based on broadband millimeter wave radios and employ a variety of
architectures, including asynchronous transfer mode, depending on the specific
application of the system. The Company believes that PMP systems, which include
LMDS and Ka-band satellite applications, are capable of providing data rates and
capacity comparable to fiber optic networks at significantly lower installation
and maintenance costs.
The layout of a typical PMP system is similar to traditional cellular
telephone infrastructures with cell transmitters located at the center of a cell
surrounded by subscribers. The primary difference of an LMDS system is that the
subscribers are fixed; therefore, they typically receive and transmit with a
single cell transceiver, instead of undergoing "handoffs" between multiple
transceivers as mobile subscribers do when they pass from one cell to another.
This simplifies architectural considerations and the network management of the
system. The frequencies utilized, coupled with an efficient network design,
enable service providers to become increasingly "granular" in sizing their
cells, which expands their ability to reuse frequencies.
The basic segments of a typical system used in a cell include a hub
transmitter with connections to the public switched telephone networks, Internet
and video sources, and subscriber equipment that differs in terms of the
services used. The service differentiation is typically determined by the amount
of bandwidth required by the customer. The large commercial or industrial
subscriber with substantial requirements for telephony, data and/or video and
the small office-home office user both have access to bandwidth that is
appropriately sized to meet their specific needs. The flexibility afforded by
the technology gives the service provider the opportunity to differentiate
services based on the individual requirements of the user, and thus provide both
the service and customer premise equipment at a cost appropriate to the
situation.
The Company builds a wide variety of radio equipment at many of the
frequencies designated for PMP service. The Company also supplies subsystems and
devices to several large, multinational telecommunications equipment companies
that manufacture and integrate complete systems. Additionally, the Company has
installed and has the capability to supply complete systems for niche
opportunities.
<PAGE>
TWTAs
In addition to the Company's emerging PMP business, the Company is a
leading manufacturer of TWTAs and other peripheral transmission equipment. The
Company's TWTAs are used in industrial, commercial and military applications and
may be sold either as stand-alone units or as part of electromagnetic test
systems used to measure the electromagnetic compatibility ("EMC") and the
electromagnetic susceptibility ("EMS") of various equipment, including satellite
earth stations, wireless communication systems, automobiles and other
transportation equipment. These test systems typically incorporate multiple
TWTAs covering several frequency bands.
TWTAs sold by the Company have been used in LMDS and Very Small
Aperture Terminal transmitting devices for satellite communications, EM C/EMS
testing, microwave studies and general high-power component testing. In
addition, the Company sells complete radio-based specialty systems built to
customer specifications. These systems are typically designed to meet specific
end-user needs and range from automated EMC/EMS testing systems to electronic
ground-based or airborne electronic warfare equipment. These systems typically
incorporate one or more TWTAs and may also include software developed by the
Company or by third parties, as well as other ancillary equipment.
Sales, Marketing and Distribution
LogiMetrics markets its products to system integrators, service
providers and industrial and governmental entities, both domestically and
internationally, through direct and indirect sales organizations. At June 30,
1998, the Company had distribution agreements with 32 sales organizations.
Additionally, at June 30, 1998, the Company sold its products through a direct
sales organization from its facilities in New York and New Jersey. In addition,
the Company utilizes a network of independent sales representatives located in
North America, Asia and Europe. The Company selects its international sales
organizations based on their understanding of the technology, product offerings
and local markets and their awareness of the business and cultural climate of
the countries in which they operate. Representative organizations provide
primary coverage and are typically assigned to a specific geographic or vertical
industry segment, depending upon their capabilities. Key strategic accounts are
handled directly through the Company's internal sales organization. In all
cases, internal sales management personnel are closely involved in coordinating
the sales and marketing efforts. The Company or its independent sales
representatives generally target sales prospects, although the Company also
responds to requests for proposals. Many of the Company's specialty systems are
sold through competitive bidding after receipt of a request for proposal.
The Company's marketing strategy makes extensive use of its
representative network to disseminate materials and information. The Company
also demonstrates its products at exhibitions and trade shows that focus on the
communications and instrumentation marketplaces.
Customers
Point-To-Multipoint Systems
In June 1998, the Company began shipments of solid-state amplifiers
for use in Teligent Inc.'s ("Teligent") point-to-multipoint system in the United
States. The Company believes that the FCC's auction of licenses to provide LMDS
services, coupled with the Company's relationship as a supplier of equipment
used in Teligent's system, and direct sales to Newbridge Networks Corporation
will allow the Company to broaden its point-to-multipoint customer base. The
Company has also sold solid-state Ka-band satellite devices and subsystems to a
number of governmental entities and Fortune 100 companies. Prior to June 1998,
the Company's customers for its PMP products consisted primarily of
CellularVision Technology & Telecommunications, L.P. ("CT&T") and several of its
licensees, which included CellularVision of New York, L.P. ("CVNY"), and
entities operating in Canada, Brazil, Thailand, the Philippines and Russia.
TWTAs
The Company's TWTA customers include military and governmental
agencies, original equipment manufacturers, system integrators, manufacturing
organizations and testing laboratories. Both amplifier and EMC/EMS customers
primarily include Fortune 500 companies.
<PAGE>
Backlog
The Company measures its backlog as orders for which contracts or
purchase orders have been signed but that have not yet been shipped and for
which revenues have not yet been recognized. The Company includes in its backlog
only those customer orders that are scheduled for delivery within the next 18
months. The Company typically ships its products within six months of receiving
an order. At June 30, 1998, the Company had a $5.8 million backlog of orders for
its equipment. Substantially all of the Company's backlog at June 30, 1998 was
shipped during the fiscal year ended June 30, 1999. Any failure by the Company
to meet an agreed-upon schedule could lead to the cancellation of the related
order. All orders are subject to cancellation or delay by the customer and,
accordingly, there can be no assurance that such backlog will eventually result
in revenues.
Manufacturing and Assembly
The Company designs, assembles, manufactures, tests, performs quality
assurance, packs and ships its PMP transmitting equipment and related devices at
its facility in Eatontown, New Jersey. These same functions for the Company's
product line of TWTAs and other peripheral equipment are performed at its
facility in Bohemia, New York.
The Company purchases a majority of the components used in its PMP
products from third-party suppliers, and purchases all its traveling wave tubes
and certain other components from third parties. Where appropriate, the Company
purchases and utilizes common components to optimize design and build cycles and
enhance manufacturing flexibility. The Company inspects all direct materials
purchased for quality, groups the components into kits by production order and
then either releases these kits for internal manufacturing or ships the kits to
its subcontractors for assembly. It is the Company's intention to utilize its
internal manufacturing capabilities on all products that it sells. This enables
the Company to resolve design issues, fully characterize the manufacturing and
test processes and shorten design and build cycles. The Company uses secondary
manufacturing or assembly sources from time to time.
Although many of the basic components used in the Company's products,
such as circuit boards, resistors, capacitors and other similar components are
readily available from a number of sources, the Company typically purchases such
components from single suppliers to take advantage of available volume
discounts. However, to assure an adequate supply of wafers and traveling wave
tubes, two critical components in many of the Company's products, the Company
has established multiple supply sources. A limited number of components and
sub-assemblies are manufactured for the Company pursuant to the Company's
proprietary specifications, but the Company does not believe it is dependent on
any single source for these items. The Company does not have any long-term
supply arrangements.
The Company inspects and tests its products during the assembly and
manufacturing processes and tests finished products using internally developed
procedures. The Company typically works with its customers to develop its test
procedures to ensure that both the product attributes and methods used for
quantification are mutual. The Company's quality inspection and testing employs
"best practices" throughout the process to ensure the quality of the Company's
products. The Company utilizes customized testing equipment to facilitate its
assembly operations and quality programs, and believes that its practice of
conducting all testing and calibration internally has contributed to the
reliability of its products.
Research and Development
The Company has an ongoing development program to enhance its existing
products and to introduce new products. The Company invested $0.6 million in
each of the fiscal years ended June 30, 1998 and 1997, in development efforts.
The Company expects to substantially increase its investment in product
development. The Company's development activities focus on evolving its initial
development and production efforts for PMP and related satellite applications to
subsystems that are increasingly integrated. The Company's development efforts
are currently focused on developing a wide variety of solid state radios,
subsystems and amplifiers for PMP applications for the LMDS and Ka-band
satellite markets, as well as developing a new generation power supply for its
TWTA product line.
<PAGE>
Competition
PMP Markets
In the emerging PMP market, the Company's competitors fall into two
general categories: (i) larger entities seeking to build subsystems for system
integrators; and (ii) device manufacturers interested in producing and selling
"high value-added" devices, such as solid state amplifiers and peripheral
equipment. Subsystem and device manufacturers with whom the Company competes
include Telaxis Communications Corporation, Unique Broadband Systems, Inc., and
Quinstar Technology, Inc. The Company expects that it may compete with certain
major telecommunications equipment manufacturers seeking to build subsystems for
system integrators. A number of the Company's competitors have significantly
greater financial, marketing and other resources than the Company. The Company
does not believe that the large system integrators currently intend to
manufacture devices and subsystems; however, these entities may pursue the small
and medium-size LMDS auction winners with respect to small system sales.
Historically, the large system integrators have not manufactured at the device
level. The Company believes that principal competitive factors in the PMP
markets include performance, delivery, price and reliability. The Company
believes that its wide range of experience with equipment currently available
and in operation for over five years in six countries gives it a distinct
competitive advantage in manufacturing both subsystems and "high value added"
devices.
TWTA Markets
In the markets for TWTAs and other high-power amplifiers, the Company
competes with other manufacturers, including Communications and Power
Industries, Inc., Amplifier Research Corp. and Xicom Technology, Inc., a number
of which have significantly greater financial, marketing and other resources
than the Company. The Company believes that principal competitive factors in its
respective markets include performance, reliability, size, weight, delivery and
price. The Company believes that it competes effectively on all of these
factors.
Government Regulation
Growth in the Company's business is substantially dependent upon
government regulations implementing LMDS in the United States and other
countries. In March 1998, the FCC concluded an auction to award two licenses to
provide LMDS services in each of the 493 BTAs in the United States. Of the 986
available licenses, 864 were awarded in the auction. The remaining 122 licenses,
mostly in small and/or rural markets, went unclaimed. The FCC commenced a second
LMDS auction on April 27, 1999. In this auction, the FCC offered for sale a
total of 161 LMDS licenses, including the 122 licenses unclaimed in the initial
auction and 39 additional licenses on which the winning bidder in the initial
auction defaulted on its payment obligation. The second LMDS auction was
completed on May 12, 1999, with all 161 licenses claimed. Several foreign
countries, including Canada, the Philippines, Thailand and the Republic of
Korea, have also reserved spectrum for the provision of services substantially
similar to LMDS, and the Company expects other countries will do so in the near
future. However, no assurance can be given with respect to the existence or size
of any market for LMDS equipment that will develop as a result of any action by
the FCC or any other governmental authority. Nor can there be any assurance
given as to when any market will develop or that any developed market will be
sustained.
The FCC's current LMDS rules specify that LMDS licensees may take up
to ten years from the grant of their authorization to provide "substantial
service" to subscribers. Accordingly, there can be no assurance that winning
bidders in the FCC auctions will purchase LMDS equipment, such as equipment
manufactured by the Company, promptly following completion of the auctions. In
the event that winning bidders and other participants in the LMDS market fail to
purchase equipment from the Company, such failure could have a material adverse
effect on the Company's business, financial condition and results of operations.
Trademarks, Patents and Copyrights
The Company relies on technological innovations, trade secrets and
expertise to develop and maintain its competitive position, and upon
confidentiality procedures, common law remedies and contractual provisions to
protect its proprietary rights. At this time, the Company does not own any
patents or trademarks relating to the technology and expertise involved in the
assembly, calibration and testing of its products. The basic technology used in
the design and manufacture of these products is not proprietary to the Company
and is available in the public domain. However, the Company believes that the
knowledge it has developed with respect to such products is proprietary and
cannot be readily duplicated by its competitors. Further, the Company believes
that certain of the subsystem architectures it has developed may benefit from
some form of intellectual property protection. There can be no assurance,
however, that these activities will ultimately issue as patents or, if patents
do issue, that the claims allowed will be sufficiently broad to protect the
Company's proprietary rights or provide any competitive advantage. In addition,
there can be no assurance that issued patents or pending applications will not
be challenged or circumvented by competitors, or that rights granted will
provide any competitive advantage to the Company. Furthermore, it may be likely
that the Company's competitors can obtain samples of the Company's products and,
through reverse engineering, obtain access to proprietary knowledge regarding
the Company's product designs. The Company's agreements with its sales
representative organizations generally contain non-competition and
non-disclosure provisions prohibiting the organization from selling products
based on the Company's designs for the term of the agreement and for a short
period thereafter. In general, the Company has entered into non-competition
agreements with its management and other employees and into confidentiality and
non-disclosure agreements with system integrators or service providers.
The Company's success will depend in part on its ability to protect
its technology and preserve its trade secrets through common law and contractual
restrictions. There can be no assurance that the trade secrecy or other measures
taken by the Company will be adequate to prevent misappropriation of its
technology, or that competitors will not be able to independently develop
technologies having similar or better functions or performance characteristics.
In addition, the laws of some foreign countries do not protect the Company's
proprietary rights to the same extent as do the laws of the United States. There
can be no assurance that the Company will have adequate legal remedy to prevent
or seek redress for future unauthorized misappropriation of the Company's
technology.
Employees
As of June 30, 1998, the Company had 72 full-time and 14 part-time
employees, of whom 53 were engaged in manufacturing, 14 were engaged in product
development activities and 19 were engaged in sales, service and general
administration. None of the Company's employees is represented by a union, and
the Company considers its relationships with its employees to be satisfactory.
<PAGE>
Risk Factors
History of Losses; Cash Constraints; Ability to Continue as a Going
Concern
The Company sustained net losses of $4.8 million and $2.5 million for
the fiscal years ended June 30, 1998 and 1997, respectively, and had an
accumulated deficit of $11.9 million at June 30, 1998. In addition, the Company
used $3.6 million of cash in operations during the fiscal year ended June 30,
1998 as a result of the Company's net losses and the need for working capital,
and had $0.2 million in cash flow from operations during the fiscal year ended
June 30, 1997. At June 30, 1998, the Company had cash and cash equivalents of
$0.4 million. The Company's history of losses and its failure to generate
positive operating cash flow or to maintain other sources of working capital
have resulted in significant cash shortages from time to time.
As a result of the Company's history of losses and its significant
cash flow shortages, in connection with its audit of the Company's fiscal 1998
financial statements, the Company's independent auditors issued an opinion that
expressed substantial doubt about the Company's ability to continue as a going
concern.
There can be no assurance that the Company will ultimately be able to
achieve or sustain profitable operations. Accordingly, no assurance can be given
that the Company will not incur additional cash shortages in future periods. If
the Company is unable to generate sufficient cash from its operations or other
sources, the Company may not be able to achieve its growth objectives, may have
to curtail its marketing and development activities and may be unable to operate
as a going concern.
Dependence on Emerging PMP Markets
The Company has only recently entered the PMP marketplace, which is
characterized by rapid technological change and significant and frequently
unanticipated shifts in customer preferences. Much of the future growth in the
Company's business is expected to come from the sale of new and existing
products to customers for use in the PMP market and the Company's future
profitability is substantially dependent on the Company's ability to market such
equipment successfully. There can be no assurance that the PMP market will grow
as the Company anticipates or that the Company will be able to capitalize on any
market development that does occur. Similarly, there can be no assurance that
any markets that do develop will be sustained.
Risks Related to Change in Business Strategy
The Company has only recently shifted its business focus to PMP
products. In connection with this change in business strategy, the Company has
sustained losses as the Company has installed a new senior management team,
written off obsolete inventory, redirected its marketing efforts and shifted
management focus to these commercial markets. There can be no assurance that the
Company will be able to implement successfully its strategic and operational
objectives or that the attainment of those objectives will result in the
Company's achieving or sustaining a profitable level of operations. The
Company's failure to achieve its strategic and operational objectives could have
a material adverse effect on the Company's business, financial condition and
results of operations.
Dependence on and Effects of Government Regulation
Growth in the Company's business is substantially dependent upon
government regulations implementing LMDS and Ka-band satellite communications in
the United States and other countries. The FCC conducted an auction to award two
licenses to provide LMDS services in each of the 493 BTAs in the United States.
Of the 986 available licenses, 864 were awarded in the auction. The remaining
122 licenses, mostly in small and/or rural markets, went unclaimed. The FCC
commenced a second LMDS auction on April 27, 1999. In this auction, the FCC
offered for sale a total of 161 LMDS licenses, including the 122 licenses
unclaimed in the initial auction and 39 additional licenses on which the winning
bidder in the initial auction defaulted on its payment obligation. The second
LMDS auction was completed on May 12, 1999, with all 161 licenses claimed.
Several foreign countries, including Canada, the Philippines, Thailand and the
Republic of Korea, have also reserved spectrum for the provision of services
substantially similar to LMDS, and the Company expects other countries will do
so in the near future. However, no assurance can be given with respect to the
existence or size of any market for LMDS equipment that will develop as a result
of any action by the FCC or any other governmental authority. Nor can there be
any assurance given as to when any market will develop or that any developed
market will be sustained.
<PAGE>
The FCC's current LMDS rules specify that LMDS licensees may take up
to ten years from the grant of their authorization to provide "substantial
service" to subscribers. Accordingly, there can be no assurance that winning
bidders in the FCC auction will purchase LMDS equipment, such as equipment
manufactured by the Company, promptly following completion of the auction. In
the event that winning bidders and other participants in the LMDS market fail to
purchase equipment from the Company, such failure could have a material adverse
effect on the Company's business, financial condition and results of operations.
Consequences of Technological Change
The markets in which the Company intends to compete are characterized
by rapid and significant technological change. The ability of the Company to
compete successfully in such markets will depend, in large part, on its ability
to develop or obtain advanced technologies, maintain a technically competent
staff, and to adapt to future technological changes and advances. There can be
no assurance that the Company will be able to keep pace with the technological
demands of the marketplace. In the event that the Company is unable to keep pace
with the technological demands of the marketplace, the Company's business,
results of operations, and financial condition would be materially and adversely
affected.
Dependence on New Product Development; Technological Advancement
The Company's success is dependent upon its ability to continue to
enhance its existing products and to develop and introduce in a timely manner
new products that incorporate technological advances, keep pace with evolving
industry standards and respond to changing customer requirements. If the Company
is unable to develop and introduce new products or enhancements in a timely
manner in response to changing market conditions or customer requirements, the
Company's business, financial condition and results of operations would be
materially and adversely affected.
In addition, from time to time the Company or its present or potential
competitors may introduce new products, capabilities or technologies that have
the potential to replace, shorten the life spans of, or render obsolete the
Company's existing products. There can be no assurance that the Company will be
successful in convincing potential customers that its products are superior to
such other systems or products, that new products with comparable or greater
performance and lower prices will not be introduced, or that, if such products
are introduced, customers will not delay or cancel existing or future orders for
the Company's products. Announcements of currently planned or other new products
may cause customers to delay their purchasing decisions in anticipation of such
products. Such delays could have a material adverse effect on the Company's
business, financial condition and results of operations.
Dependence on Large Orders; Customer Concentrations
The Company's revenues have principally consisted, and the Company
believes its revenues in future periods may consist, of orders for equipment
from a limited number of customers. During fiscal 1998 and 1997, approximately
43% and 54%, respectively, of the Company's consolidated revenues came from
sales of transmitters and related equipment to CT&T and its licensees and
affiliates. The Company does not expect that CT&T will account for a significant
percentage of the Company's fiscal 1999 consolidated revenues. However, while
the number and identity of the Company's customers may vary from period to
period, large orders from customers will continue to account for a substantial
portion of the Company's revenues for the foreseeable future. There can be no
assurance that the Company will obtain such orders on a consistent basis. The
Company's inability to obtain sufficient large orders or to expand its customer
base could have a material adverse effect on the Company's business, financial
condition and results of operations.
<PAGE>
Dependence on Sales of Securities; Need for Additional Financing;
Liquidity Risks
Because of the Company's history of losses, the Company has not
generated sufficient cash to meet all of the Company's working capital
requirements. As a result, the Company has been dependent on private sales of
its debt and equity securities to finance its working capital requirements. To
the extent that the Company is unable to meet its working capital requirements
by generating positive cash flow from operations, the Company intends to
continue to fund a portion of its working capital requirements through the
public or private sale of its securities. There can be no assurance that the
Company can continue to finance its operations through the sale of securities or
as to the terms of any such sales that may occur in the future. Further, the
terms of any debt financing may contain restrictive covenants that significantly
restrict the Company's ability to take certain actions. If the Company is unable
to generate sufficient cash from its operations or other sources, the Company
may not be able to achieve its growth objectives, may have to curtail its
marketing and development activities and may be unable to operate as a going
concern.
As set forth in the financial statements included herein, the Company
had a significant amount of indebtedness outstanding at June 30, 1998, a
substantial portion of which was to become due and payable in calendar year
1999. The Company will not be able to repay all of such indebtedness as it
becomes due out of its existing working capital resources. In the event that the
holders of the Company's indebtedness do not agree to extend such indebtedness
or do not convert their debt into shares of the Company's Common Stock, to the
extent convertible, the Company will be required to obtain replacement financing
to repay such indebtedness or to take other actions to protect its business and
assets. There can be no assurance that the Company would be able to obtain
replacement financing on acceptable terms, if at all. See Note 16 to the Notes
to the Consolidated Financial Statements.
As a result of the Company's history of losses and inability to
generate sufficient cash flow to satisfy its need for working capital, the
Company's business has been subjected to certain additional risks, including
supply and manufacturing disruptions, limitations on its research and
development activities, and the inability to exploit fully market opportunities.
While the Company has attempted to address its liquidity needs through, among
other things, the procurement of additional financing and the negotiation of
credit terms with its suppliers, the Company has continued to record losses and
has failed to generate sufficient cash to fund its cash flow needs.
Fluctuations in Operating Results
The Company's past operating results have been, and its future
operating results will be, subject to fluctuations resulting from a number of
factors, including: the timing and size of orders from, and shipments to, major
customers; budgeting and purchasing cycles of its customers; delays in product
shipments caused by customer requirements or the inability of customers to
accept shipments; the timing of enhancements to the Company's products or new
<PAGE>
products introduced by the Company or its competitors; changes in pricing
policies by the Company, its competitors or suppliers, including possible
decreases in average selling prices of the Company's products in response to
competitive pressures; the proportion of revenues derived from competitive bid
processes; the mix between sales to domestic and international customers; market
acceptance of enhanced versions of the Company's products; the availability and
cost of key components; the availability of manufacturing capacity; and
fluctuations in general economic conditions. The Company also may choose to
reduce prices or to increase spending in response to competition or to pursue
new market opportunities, all of which may have a material adverse effect on the
Company's business, financial condition and results of operations. The Company's
revenues in any period are derived from sales of equipment and are generally
recognized upon shipment. As a result, variations in the number of orders or the
timing of shipments may cause the Company's quarterly and annual operating
results to vary substantially.
Competition
In the emerging PMP market, the Company's competitors fall into two
general categories: (i) larger entities seeking to build subsystems for system
integrators ; and (ii) device manufacturers interested in producing and selling
"high value-added" devices, such as solid state amplifiers and peripheral
equipment . Subsystem and device manufacturers with whom the Company competes
include Telaxis Communications Corporation, Unique Broadband Systems, Inc., and
Quinstar Technology, Inc. The Company expects that it may compete with certain
major telecommunications equipment manufacturers seeking to build subsystems for
system integrators. A number of the Company's competitors have significantly
greater financial, marketing and other resources than the Company. In the
markets for TWTAs and other high-power amplifiers, the Company competes with
other manufacturers, including Communications and Power Industries, Inc.,
Amplifier Research Corp. and Xicom Technology, Inc., a number of which have
significantly greater financial, marketing and other resources than the Company.
There can be no assurance that the Company will be able to compete successfully
with its competitors or be able to compete with new market entrants or in new
markets that may develop. The failure of the Company to successfully compete in
its markets would have a material adverse effect on the Company's business,
financial condition and results of operations.
Limited Proprietary Technology
The Company regards certain of its technology as proprietary and
relies on a combination of trade secret, copyright and trademark laws, license
agreements, nondisclosure and other contractual provisions, technical measures
and other methods to protect its proprietary rights in its products. There can
be no assurance that these protections will be adequate to protect its
proprietary rights or that the Company's competitors will not independently
develop products that are substantially equivalent or superior to the Company's
products. In addition, the laws of certain countries in which the Company's
products are or may be sold do not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States. Although the Company believes that its products, trademarks and other
proprietary rights do not infringe upon the proprietary rights of third parties,
there can be no assurance that third parties will not assert infringement claims
against the Company.
International Business; Risk of Change in Foreign Regulations;
Fluctuations in Exchange Rates
The Company markets its products to customers outside of the U.S. and,
accordingly, is exposed to the risks of international business operations,
including unexpected changes in foreign and domestic regulatory requirements,
possible foreign currency controls, uncertain ability to protect and utilize its
intellectual property in foreign jurisdictions, currency exchange rate
fluctuations or devaluations, tariffs or other barriers, difficulties in
obtaining and managing vendors and distributors and potentially negative tax
consequences. International sales are subject to certain inherent risks
including embargoes and other trade barriers, maintaining an international sales
distribution network and collecting accounts receivable. The Company is also
subject to risks associated with regulations relating to the import and export
of high technology products. The Company cannot predict whether quotas, duties,
taxes or other charges or restrictions upon the importation or exportation of
the Company's products in the future will be implemented by the U.S. or any
other country. There can be no assurance that any of these factors will not have
a material adverse effect on the Company's business, financial condition and
results of operations. Although the Company's sales are all denominated in U.S.
dollars, fluctuations in currency exchange rates could cause the Company's
products to become relatively more expensive to customers in a particular
country, leading to fewer sales or reduced selling prices in that country which
could adversely affect the Company's profitability. As a result, the Company is
exposed to a certain degree of exchange rate risk. There can be no assurance
that the Company will not experience material losses in the future as a result
of currency fluctuations or that any such losses will not have a material
adverse effect on the Company's business, financial condition and results of
operations.
Dependence on Independent Representatives
The Company markets and sells its products, in part, through a network
of independent sales representatives located in the U.S., Asia and Europe. As a
result, a substantial portion of the Company's revenues are dependent upon the
<PAGE>
sales efforts of those representatives. There can be no assurance that the
Company's representatives, certain of which operate relatively small businesses,
have the financial stability to assure their continuing presence in their
markets.
Dependence on Limited Number of Suppliers
Certain key components used in the Company's products have been
designed by the Company to its specifications and are currently purchased from a
limited number of suppliers. The Company currently does not have long-term
agreements with these suppliers. Moreover, in view of the high cost of many of
these components, the Company does not maintain significant inventories of some
necessary components. If the Company's suppliers were to experience financial,
operational, production or quality assurance difficulties, the supply of
components to the Company would be reduced or interrupted. In the event that a
supplier were to cease operations, discontinue production of a component or
withhold supply for any reason, the Company might be unable to acquire certain
components from alternative sources, to find alternative third-party
manufacturers or sub-assemblers, or obtain sufficient quantities of certain
components, which could result in delays or interruptions in product shipments,
and could have a material adverse effect on the Company's business, financial
condition and results of operations.
Retention of and Dependence on Key Personnel
The Company's success will depend, in part, on its ability to retain
the services of its key personnel, including management and technical employees,
who are and will continue to be instrumental in the development and management
of the Company's business. Although the Company has entered into employment
agreements with certain of its senior executives, the loss of the services of
one or more of the Company's key employees could have a material adverse effect
on the Company.
Warranty Claims
The Company generally provides a one-year parts and labor warranty on
its products. There can be no assurance that warranty claims will not increase
as the Company's sales increase, or as a result of other factors. Increased
warranty claims could have a material adverse effect on the Company's business,
financial condition and results of operations.
Potential Product Liability Insurance Limits
The Company currently maintains product liability insurance in the
amount of $3.0 million per occurrence. The Company's insurance policy covers
certain claims and the cost of legal fees involved in the defense of such
claims, which are either covered under the policy or alleged in such a manner so
as to invoke the insurer's duty to defend the Company. The Company believes
that, as it distributes more products into the marketplace and expands its
product lines, its exposure to potential product liability claims and litigation
may increase. While the Company periodically reviews all insurance coverage
limits, there can be no assurance that the Company's current level of insurance
will be sufficient to protect the business and assets of the Company from all
claims, nor can any assurance be given that the Company will be able to maintain
its existing coverage or obtain additional coverage at commercially reasonable
rates. Product liability losses in excess of insurance coverage could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Shares Eligible For Future Sale
The Company is currently obligated to register for resale a
substantial number of outstanding shares of Common Stock and shares of Common
Stock issuable upon the exercise or conversion of outstanding options, warrants
and convertible securities. Further, a significant number of shares of Common
Stock could become available for resale under Rule 144, assuming that the
conditions for use of such Rule are then met. The Company cannot predict the
effect, if any, that sales of additional shares of Common Stock or the
availability of shares for future sale will have on the market price of the
Common Stock. Sales in the public market of substantial amounts of Common Stock
(including shares issued upon the exercise or conversion of outstanding options,
warrants and convertible securities), or the perception that such sales might
occur, could adversely affect prevailing market prices for the Common Stock.
Such sales also may make it more difficult for the Company to sell equity
securities or equity related securities in the future at a time and price that
the Company deems appropriate.
<PAGE>
Item 2. Description of Property
At June 30, 1998, the Company did not own any real property and
conducted its operations at the following leased premises:
<TABLE>
<CAPTION>
Approximate
Square Annual Lease
Location Description of Facility Footage Lease Cost Expiration
<S> <C> <C>
50 Orville Drive Corporate headquarters, manufacturing 14,000 $130,000 7/31/04
Bohemia, New York 11716 and assembly, sales, customer support
and research and development
20 Meridian Way Manufacturing and assembly, 6,670 $ 55,100 3/31/00
Eatontown, New Jersey 07724 customer support, administration and
research and development
</TABLE>
In December 1998, the Company entered into a lease agreement (the
"Lease Agreement") covering approximately 36,500 square feet of manufacturing
and office space in Eatontown, New Jersey. The Lease Agreement has a five-year
initial term and two five-year renewal options. The average annual cost for the
initial five-year term is approximately $206,000.
The Company began to occupy this space in January 1999 and expects to
complete the move of its PMP business from 20 Meridian Way to 611 Industrial Way
during fiscal 2000. The Company expects to continue to occupy the 20 Meridian
Way location on a month-to-month basis until June 30, 2000.
As described under Item 1. Description of Business - Recent Events,
the Company expects that Signal will relocate the New York Business to its
Florida location.
The Company believes that its existing facilities will be sufficient
to meet the Company's needs for the foreseeable future.
Item 3. Legal Proceedings
From time to time, the Company is subject to routine claims incidental
to the operation of its business. In addition, as a result of the Company's lack
of cash resources, from time to time the Company has been subject to claims from
its creditors for non-payment of outstanding invoices. In addition to such
claims, in October 1999, Callari Enterprises, Inc., trading as Remedy
Intelligent Staffing, filed suit against mmTech in the New Jersey Superior Court
for Monmouth County, captioned Callari Enterprises, Inc., t/a Remedy Intelligent
Staffing v. mmTech, Inc. (Docket No. L-4913-99). The plaintiff alleges, among
other things, breach of contract and money due on a book account for services
rendered and seeks monetary damages and other relief from mmTech. The Company
expects to settle this matter and does not believe that any such settlement will
have a material adverse effect on its financial condition or results of
operations. In January 2000, SpeedUSNY.com, L.P. ("Speed USNY") filed an action
against the Company in the New Jersey Superior Court for Monmouth County,
captioned Speed USNY.com, L.P. v. LogiMetrics, Inc. (Docket No. L-537-00). In
this action, Speed USNY, the successor to CVNY, asserts claims against the
Company for fraudulent inducement, breach of contract and breach of warranty in
connection with the sale of certain equipment and seeks money damages. The
Company believes Speed USNY's claims are without merit and that the Company has
meritorious defenses and/or counterclaims against Speed USNY. The Company
intends to contest this action vigorously.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders, held April 9, 1998,
the Company's stockholders: (i) elected seven directors; (ii) approved a
proposal to amend the Company's Certificate of Incorporation to change the name
of the Company to "Broadband Wireless Communications, Inc."; (iii) approved a
proposal to amend the Certificate of Incorporation to effect a one-for-ten
reverse stock split of the Company's Common Stock (the "Reverse Split
Amendment"); (iv) approved a proposal to amend the Certificate of Incorporation
to increase the number of authorized shares of capital stock of the Company from
100,000,200 to 355,000,000 (or from 10,000,200 to 40,000,000 if the Reverse
Split Amendment is effected), to be comprised of 350,000,000 shares of Common
Stock (or 35,000,000 if the Reverse Split Amendment is effected) and 5,000,000
shares of Preferred Stock, par value $.01 per share; (v) approved a proposal to
amend the Certificate of Incorporation to amend the terms of the Company's
Series A 12% Cumulative Convertible Redeemable Preferred Stock, stated value
$50,000 per share (the "Preferred Stock"), to (a) limit the voting rights of the
holders thereof to those provided by Delaware law, and (b) permit the Company to
pay dividends on the Preferred Stock in shares of Common Stock at the discretion
of the Board of Directors; (vi) approved a proposal to amend the LogiMetrics,
Inc. 1997 Stock Compensation Program (the "Stock Compensation Program") to
<PAGE>
increase the number of shares of Common Stock available for grant thereunder
from 4,000,000 to 7,500,000 (or from 400,000 to 750,000 if the Reverse Split
Amendment is effected); and (vii) ratified the appointment of Deloitte & Touche
LLP as the Company's independent auditors. The votes cast by the stockholders on
each matter presented at the meeting were as follows:
<TABLE>
<CAPTION>
Election of Directors:
Nominee For Against Abstain Broker Non-Votes
<S> <C> <C> <C> <C>
Charles S. Brand 21,838,758 53,388 0 0
Frank A. Brand 21,840,746 51,400 0 0
Jean-Francois Carreras 21,840,746 51,400 0 0
Mark B. Fisher 21,840,746 51,400 0 0
Francisco A. Garcia 21,840,746 51,400 0 0
Norman M. Phipps 21,840,746 51,400 0 0
Kenneth C. Thompson 21,840,746 51,400 0 0
</TABLE>
To Change the Name of the Company to "Broadband Wireless
Communications, Inc.":
For Against Abstain Broker Non-Votes
21,839,662 51,432 1,052 0
To Effect a One-For-Ten Reverse Stock Split of the Company's Common
Stock:
For Against Abstain Broker Non-Votes
21,836,191 55,153 802 0
To Increase the Number of Authorized Shares of Capital Stock of the
Company:
For Against Abstain Broker
Non-Votes
Common Stockholders 21,836,199 54,988 959 0
Preferred Stockholders 27.5
To Amend the Terms of the Company's Preferred Stock:
<TABLE>
<CAPTION>
For Against Abstain Broker
Non-Votes
<S> <C> <C> <C> <C>
Common Stockholders 21,036,299 750,020 5,897 100,000
Preferred Stockholders 20.5 7
</TABLE>
To Increase the Number of Shares of Common Stock Available for Grant
in the Stock Compensation Program:
For Against Abstain Broker Non-Votes
21,882,443 3,713 5,990 0
Appointment of Deloitte & Touche LLP:
For Against Abstain Broker Non-Votes
21,839,287 51,525 1,334 0
As of February 29, 2000, the amendment to the Company's Certificate of
Incorporation relating to amending the terms of the Preferred Stock had been
effected. Pursuant to Delaware law, the Board of Directors has reserved the
right not to effect the other amendments if the Board of Directors, in its sole
discretion, determines that any or all of such amendments are no longer in the
best interests of the Company and its stockholders. Accordingly, no assurance
can be given as to whether any of the other amendments will be effected or as to
the timing thereof. The Company currently intends to sell additional securities
to fund its working capital needs. See Item 6. Management's Discussion and
Analysis or Plan of Operation - Financial Condition, Liquidity and Capital
Resources. In order to avoid any potential adverse impact on the Company's
ability to raise additional equity capital that might occur if the Reverse Split
Amendment is effected, the Board of Directors has determined not to effect the
Reverse Split Amendment at the present time. If the Reverse Split Amendment is
effected, the number of shares of Common Stock outstanding would be reduced
significantly which could adversely affect trading in the Common Stock. In
addition, although the price per share of the Common Stock should increase if
the Reverse Split Amendment is effected, there can be no assurance that such
price would increase proportionately or that any increase could be sustained for
any period of time.
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information:
At June 30, 1998, the Com mon Stock was traded in the over-the-counter
market under the symbol "LGMTA." There is no established trading market for any
of the Company's outstanding warrants. The following table sets forth, for the
periods indicated, the high and low bid quotations for the Common Stock as
reported on the OTC Bulletin Board. Such quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commissions and may not necessarily
represent actual transactions.
For the Quarter Ended High Low
Fiscal 1997
September 30, 1996 $1.250 $ .5000
December 31, 1996 1.250 .3750
March 31, 1997 .625 .4375
June 30, 1997 .875 .4375
Fiscal 1998
September 30, 1997 $1.3750 $ .8000
December 31, 1997 1.0000 .3750
March 31, 1998 1.0000 .3125
June 30, 1998 .8750 .5625
Effective in January 2000, the OTC Bulletin Board ceased reporting
quotations on the Common Stock.
Holders:
On February 29, 2000, there were approximately 450 holders of record
of the Common Stock.
Dividends:
The Company has never declared or paid cash dividends on its Common
Stock. The Board of Directors currently intends to retain future earnings to
support its business and does not anticipate paying dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Board of Directors after taking into account various factors, including the
Company's financial condition, results of operations, current and anticipated
cash needs and plans for expansion. Substantially all of the Company's
indebtedness prevents the payment of dividends by the Company.
Recent Sales of Unregistered Securities:
On July 22, 1997, the Company issued an aggregate of 1,250,000 shares
of Common Stock to two members of management for an aggregate purchase price of
$687,500 which was paid $12,500 in cash and the remainder in non-recourse
promissory notes secured by the shares of Common Stock. The shares of Common
Stock were not registered under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act. There were no
underwriters for these issuances.
On July 29, 1997, the Company issued $2,750,000 in aggregate principal
amount of its Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures
due July 29, 1999 (the "Class A Debentures"), Common Stock Purchase Warrants -
Series G (the "Series G Warrants") to purchase an aggregate of 7,350,000 shares
of Common Stock at $0.50 per share, Common Stock Purchase Warrants - Series H
(the "Series H Warrants") to purchase an aggregate of 1,100,000 shares of Common
Stock at $0.60 per share and Common Stock Purchase Warrants - Series I (the
"Series I Warrants") to purchase an aggregate of 550,000 shares of Common Stock
at $1.125 per share to private investors for an aggregate purchase price of
$3,352,500. Pursuant to the terms of the purchase agreement with those
investors, such investors had the right, at any time prior to August 15, 1998,
to purchase an additional $833,333 in aggregate principal amount of the Class A
Debentures, Series G Warrants to purchase an aggregate of 2,000,000 shares of
Common Stock, Series H Warrants to purchase an aggregate of 333,333 shares of
Common Stock and Series I Warrants to purchase an aggregate of 166,667 shares of
Common Stock for a total purchase price of $1,000,000 (the "Purchase Option").
The Class A Debentures, the Series G Warrants, the Series H Warrants, the Series
I Warrants, the Purchase Option or the shares of Common Stock issuable upon the
conversion of the Class A Debentures and the exercise of the Series G Warrants,
the Series H Warrants, the Series I Warrants or the securities issuable upon the
<PAGE>
exercise of the Purchase Option were not registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act.
There were no underwriters for this issuance. On May 1, 1998, the Purchase
Option was exercised in part. Accordingly, on that date, the Company issued
$416,668 of additional Class A Debentures, additional Series G Warrants to
purchase an aggregate of 1,000,000 shares of Common Stock, additional Series H
Warrants to purchase an aggregate of 166,667 shares of Common Stock and
additional Series I Warrants to purchase an aggregate of 83,333 shares of Common
Stock. On August 6, 1998, the remainder of the Purchase Option was exercised.
Also on July 29, 1997, the holder of the Company's 12% Convertible
Senior Subordinated Debentures (the "Old Class B Debentures") exchanged the Old
Class B Debentures for the Company's Amended and Restated 13% Senior
Subordinated Convertible Pay-in-Kind Debentures due July 29, 1999 (the "Class B
Debentures"). The Class B Debentures or the shares of Common Stock issuable upon
the conversion of the Class B Debentures were not registered under the
Securities Act in reliance upon the exemptions provided by Sections 3(a)(9) and
4(2) of the Securities Act. There were no underwriters for this issuance.
The Company entered into a consulting agreement, dated January 20,
1998, with one of its outside directors. In connection therewith, the Company
issued an aggregate of 109,090 shares of Common Stock to such director as
compensation for services rendered under the consulting agreement. The shares of
Common Stock were not registered under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act. There were no
underwriters for these issuances.
The Company entered into a consulting agreement, dated March 4, 1998,
with Kenneth C. Thompson. In connection therewith, the Company issued an
aggregate of 108,000 shares of Common Stock to Mr. Thompson as compensation for
services rendered under the consulting agreement. The shares of Common Stock
were not registered under the Securities Act in reliance upon the exemption
provided by Section 4(2) of the Securities Act. There were no underwriters for
this issuance.
On March 9, 1998, the Company issued an aggregate of 40,000 shares of
Common Stock to an officer of the Company for a cash purchase price of $20,000.
The shares of Common Stock were not registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act.
There were no underwriters for this issuance.
At various times between June 30, 1997 and June 30, 1998, the Company
granted stock options to certain directors, employees and consultants covering
an aggregate of 483,333 shares of Common Stock. These grants were exempt from
registration pursuant to Securities Act Release No. 33-6188 (Feb. 1, 1980). No
underwriter was involved in these grants. Each option grant was based on the
fair market value of the Common Stock on the date of grant, expire between one
to ten years and have an exercise price of $0.55 per share.
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Unless otherwise indicated, all references to the Company in the
Management's Discussion and Analysis or Plan of Operation include mmTech and all
references to LogiMetrics mean the Company excluding mmTech.
Fiscal Year Ended June 30, 1998 Compared to Fiscal Year Ended June 30, 1997
Net Revenues. For the fiscal year ended June 30, 1998, net revenues
decreased by $2.5 million, or 22.0%, to $8.9 million from $11.4 million for the
fiscal year ended June 30, 1997, primarily due to decreases in both PMP and
traditional product shipments. Shipments of these products decreased primarily
as a result of management's decision to focus on higher margin sales
opportunities as well as delays in shipment of certain orders.
Gross Profit. For the fiscal year ended June 30, 1998, gross profit
decreased by $1.1 million to $1.7 million from $2.8 million for the fiscal year
ended June 30, 1997. As a percentage of net revenues, gross profit decreased to
19.7% for the 1998 fiscal year from 24.7% for the 1997 fiscal year. The decrease
in gross profit percentage was primarily attributable to the write-off of $1.3
million of slow moving and obsolete inventory. The write-off resulted from the
Company's decision, which affected the fourth quarter, to streamline its product
line and eliminate certain slow moving and low margin TWTAs from its catalog.
Selling, General and Administrative. For the fiscal year ended June 30, 1998,
selling, general and administrative expenses increased by $1.7 million, or
49.1%, to $5.2 million from $3.5 million for the fiscal year ended June 30,
1997. Selling, general and administrative expenses increased during fiscal 1998
primarily as a result of other non-cash charges related to the satisfaction of
stock subscriptions receivable ($0.7 million), an increase in the allowance for
doubtful accounts ($0.4 million) and the addition of certain key personnel ($0.3
million).
Research and Development. For the fiscal year ended June 30, 1998,
research and development expenses decreased by $59,000, or 9.1%, to $589,000
from $648,000 for the fiscal year ended June 30, 1997. The decrease was due
primarily to a temporary shift in personnel from research and development
<PAGE>
activities to production. Research and development expenses for the fiscal year
ended June 30, 1998 related to both new product development as well as
enhancements of the Company's existing PMP product line. The Company expects to
substantially increase its investment in product development in fiscal 1999.
Interest Expense. For the fiscal year ended June 30, 1998, interest
expense increased by $0.3 million, or 41.5%, to $1.1 million from $0.8 million
for the fiscal year ended June 30, 1997. Interest expense increased primarily as
a result of increased borrowings used to finance the Company's working capital
requirements.
<PAGE>
Income Taxes. In the fiscal year ended June 30, 1998, the Company had
an income tax benefit of $0.4 million, compared to an income tax expense of $0.4
million for the fiscal year ended June 30, 1997. LogiMetrics and mmTech
currently file separate federal and state tax returns. The tax benefit recorded
in 1998 relates to pre-tax losses generated by mmTech.
Financial Condition, Liquidity and Capital Resources
At June 30, 1998, the Company had cash of $0.4 million. As of such
date, the Company had total current assets of $5.0 million and total current
liabilities of $4.6 million.
Net cash used for operating activities was $3.6 million for the 1998
fiscal year, compared to net cash provided by operating activities of $0.2
million in fiscal 1997. Net cash used for operating activities during fiscal
1998 resulted primarily from the Company's net loss of $4.8 million, offset in
part by decreases in costs and estimated earnings in excess of billings on
uncompleted contracts. Net cash provided by operating activities during fiscal
1997 resulted primarily from the Company's net loss of $2.5 million and a higher
level of inventory, which was more than offset by a significant increase in
accounts payable and accrued expenses as the Company sought to conserve cash.
Net cash used for investing activities was $0.1 million for the 1998
fiscal year and $0.2 million for the 1997 fiscal year. Net cash used for
investing activities in each fiscal year resulted from the purchase of equipment
to support the Company's operations. The Company anticipates that capital
expenditures during fiscal 1999 will increase, in part as a result of the
Company's lease of new facilities for its PMP business and increases in the
number of employees.
Net cash provided by financing activities was $3.7 million for the
1998 fiscal year and $46,000 for the 1997 fiscal year. Net cash provided by
financing activities during fiscal 1998 resulted primarily from the proceeds of
debt and warrant issuances by the Company, offset in part by the repayment of
outstanding indebtedness. Net cash provided by financing activities during
fiscal 1997 resulted primarily from the proceeds of debt issued by the Company,
offset in part by the repayment of outstanding indebtedness.
From July 1, 1996 to June 30, 1998, the Company raised $4.1 million
from private sales of convertible debentures and warrants to fund a portion of
its cash flow needs. However, to date, the Company has continued to record
losses and has failed to generate sufficient cash flow from operations to fund
working capital requirements. To the extent that the Company is unable to meet
its working capital requirements by generating positive cash flow from
operations, the Company intends to continue to fund a portion of its working
capital requirements through the sale of its securities. There can be no
assurance that the Company can continue to finance its operations through the
sale of securities or as to the terms of any such sales that may occur in the
future. If the Company is unable to attain profitable operations and to generate
sufficient cash flow or to obtain sufficient financing to fund its operations,
the Company may not be able to achieve its growth objectives, may have to
curtail its marketing, development or operations, and may be unable to continue
as a going concern.
In addition to the sale of securities described above, in December
1997, the Company sold without recourse a note receivable to an unrelated party
in the face amount of $2.6 million for $2.4 million. The proceeds of the note
sale were used for working capital purposes.
At June 30, 1998 the Company was a party to a Restated and Amended
Term Loan Note, dated as of April 25, 1997, and a Modified Revolving Credit
Note, dated as of April 30, 1998, pursuant to which North Fork Bank (the "Bank")
had provided the Company with a $640,000 term loan (the "Term Loan") maturing
December 31, 1998 and a revolving credit facility (the "Revolver") maturing on
July 1, 1999. Pursuant to the terms of the Revolver, the Company was entitled to
draw up to $2.2 million assuming sufficient eligible inventory and accounts
receivable exist (the Term Loan and the Revolver are referred to herein
collectively as the "Facility"). At June 30, 1998, $192,000 was outstanding
under the Term Loan and the Company had $27,000 available under the Revolver.
Outstanding amounts under the Facility bear interest at the rate of 2% per annum
in excess of the Bank's prime rate. At June 30, 1998, the Bank's prime rate was
8.5%. At June 30, 1998, the Company was in violation of two covenants contained
in the Facility that the Company report net income of at least $1.00 for each
fiscal quarter (the "Net Income Covenant") and that the Company file its Form
10-KSB for the fiscal year ended June 30, 1998 by September 30, 1998 (the
"Reporting Requirement Covenant"). As of June 30, 1998, the Bank had waived
compliance with the Net Income Covenant for each fiscal quarter commencing with
the fiscal quarter ended June 30, 1998 and ending on and including the fiscal
quarter ended March 31, 1999, and had waived compliance with the Reporting
Requirement Covenant until May 28, 1999.
In addition to the Facility, at June 30, 1998 the Company had issued
and outstanding $3.6 million of its Class A Debentures, $1.7 million of its
Class B Debentures and $45,000 of its Senior Subordinated Notes (together with
the Class A Debentures and the Class B Debentures, the "Senior Subordinated
Indebtedness"), which contained financial covenants identical to those contained
in the Facility. Accordingly, at June 30, 1998, the Company was in default of
the Net Income Covenant and the Reporting Requirement Covenant to the same
extent as under the Facility. As of June 30, 1998, the holders of the Senior
Subordinated Indebtedness had waived the Net Income Covenant default for each
quarter, commencing with the quarter ended June 30, 1998, through the quarter
ended June 30, 1999, and had waived the Reporting Requirement Covenant until
maturity. Pursuant to the terms of the Class A Debentures and the Class B
Debentures, the Company was required to file a registration statement covering,
among other things, the resale of the shares of Common Stock issuable upon the
conversion of the Class A Debentures and the Class B Debentures on or prior to
October 27, 1997 and to have the registration statement declared effective by
<PAGE>
the Securities and Exchange Commission (the "SEC") on or prior to January 25,
1998. Unless the Company completed the required registration, the interest rate
on the Class A Debentures and the Class B Debentures increased (subject to a
maximum interest rate of 17% per annum). At June 30, 1998, the interest rate was
16% per annum. The holders of the Class A Debentures and the Class B Debentures
had the right to declare all amounts thereunder due and payable if the
registration statement was not declared effective by the SEC on or prior to
April 25, 1998. The holders of the Class A Debentures and the Class B Debentures
have waived their respective rights until maturity to declare any default
arising as a result of the Company's failure to have the required registration
statement declared effective by the SEC.
As set forth in the Consolidated Financial Statements included herein,
the Company had a significant amount of indebtedness outstanding at June 30,
1998, a substantial portion of which was to become due and payable in calendar
year 1999. As described in Note 16 to the Notes to Consolidated Financial
Statements, subsequent to June 30, 1998, the holders of such indebtedness agreed
to extend the maturity date of such indebtedness to July 2000. In addition, the
Company continued to incur significant indebtedness subsequent to June 30, 1998.
Based on the Company's current working capital resources, the Company would not
be able to repay all of such indebtedness out of available working capital as it
becomes due. In the event that the holders of the Company's indebtedness do not
agree to extend such indebtedness or do not convert their debt into shares of
Common Stock (to the extent convertible), the Company will be required to obtain
additional financing to repay such indebtedness or to take other actions to
protect its business and assets.
As described under Item 1. Description of Business - Recent
Developments, on February 17, 2000, the Company entered into the Letter of
Intent with Signal pursuant to which Signal proposes to acquire the Company. It
is a condition to the Signal Transactions that the holders of approximately
$10.7 million of the Company's indebtedness (excluding obligations owed to the
Bank and certain other indebtedness) must be converted into shares of Common
Stock. Based on discussions with the holders of such indebtedness, the Company
believes that such holders will convert that indebtedness to Common Stock,
although no assurance can be given that the Company will receive all of the
consents required to effect such conversion or as to the terms thereof. In
addition, pursuant to the terms of the Signal Transactions, all previously
issued options, warrants and other convertible securities will be required to be
converted into Common Stock. Based on discussions with the holders of such
securities, the Company believes that such holders will convert, exercise or
exchange such securities for shares of Common Stock, although no assurance can
be given that the Company will receive all of the consents required to effect
such conversions, exercises and exchanges or as to the terms thereof. Based on
the discussions held to date, the Company believes that it will be required to
issue shares of Common Stock to the holders of such indebtedness and securities
in an amount substantially in excess of 50% of the shares then-outstanding
(after giving effect to such issuance). For further information regarding the
Signal Transactions, see Note 16 to the Notes to Consolidated Financial
Statements.
In connection with the Signal Transactions, the Company and the Bank
entered into a Consent Letter (the "Consent Letter") pursuant to which the Bank
consented to the Signal Transactions and agreed to waive any defaults under the
Facility resulting therefrom. In addition, in the Consent Letter, the Bank
agreed to modify and extend the maturity date of the Replacement Note from
December 31, 1999 to June 30, 2000 and to eliminate certain covenants contained
therein. In exchange, the Company agreed, among other things, (i) to reduce the
amount available under the Facility to $1.8 million (the amount outstanding
thereunder as of such date), (ii) that no further advances would be made under
the Facility, (iii) to pay all past due amounts outstanding under the Facility,
and to pay the Bank certain additional fees specified in the Consent Letter, and
(iv) to extend the expiration date of the Common Stock Purchase Warrants, Series
J (the "Series J Warrants") to June 30, 2000.
Net Operating Loss Carry Forward
LogiMetrics and mmTech currently file separate federal and state
income tax returns. As of June 30, 1998, LogiMetrics had net operating loss
carry-forwards of $8.6 million available to be used to offset future income.
Such loss carry-forwards expire between 2011 and 2013.
Inflation
Inflation was not a material factor in either the sales or the
operating expenses of the Company during the periods presented herein.
<PAGE>
Year 2000 Issue
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Certain
computer programs may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activity.
The Company established a team in February 1999 to assess risk,
identify and correct exposures when possible, and develop contingency plans for
Year 2000 compliance issues. The assessment was completed in April 1999. The
committee identified several areas of potential concern to the Company, most
particularly the software and hardware used as part of its own information
systems, the impact of Year 2000 problems on the operation of its products, both
current and discontinued, the impact of Year 2000 issues on its vendors, the
impact of Year 2000 issues as it affects the physical working environment in
which the Company operates, the potential impact of Year 2000 problems on the
markets that the Company sells into and finally, contingency planning.
The Company completed its review of the software and hardware systems
used by the Company's information systems in April 1999. Based on that review,
and certain modifications made to its existing software and hardware and
conversions to new software, the Company believes its internal systems and
hardware are Year 2000 compliant.
<PAGE>
The Company has completed a review of its products and believes that
Year 2000 issues will have no material impact on the performance of its product
line as its products' functionality is not dependent on date or time references.
The Company formally communicated with its significant suppliers,
customers, and critical business partners to determine the extent to which the
Company might be vulnerable in the event that those parties failed to properly
remediate their own Year 2000 issues. Based on those communications, the Company
believes that its significant suppliers, customers and critical business
partners are Year 2000 compliant.
The Company also reviewed the operating environment within which it
functions to assess the Year 2000 risks relating to, among other things, its
heating and air conditioning systems, security systems, communication systems
and related hardware and believes its operating environment will not be
materially impacted by Year 2000 issues. Based on the Company's current
assessments of its markets and customers, the Company does not believe that Year
2000 issues will significantly alter demand for the Company's products.
The Company has developed a contingency plan to deal with certain
critical Year 2000 "what if" situations should they arise. The Company currently
expects that it will shift supply orders to suppliers that can demonstrate Year
2000 compliance if disruptions occur. However, the Company continues to monitor
potential Year 2000 issues, and will seek to modify its plan to respond to any
Year 2000 issues that may arise.
The Company believes that it is currently Year 2000 compliant. There
can be no assurances, however, that the Company's internal systems and products
or those of third parties on which the Company relies will not suffer
disruptions relating to Year 2000 issues. The failure to achieve Year 2000
compliance or to have appropriate contingency plans in place to deal with any
noncompliance could result in a significant disruption of the Company's
operations and could have a material adverse effect on the Company's financial
condition or results of operations.
Based on the assessments described above, the Company estimates that
it expended less than $0.1 million to achieve Year 2000 compliance.
Currently, the Company has not experienced any significant system
problems relating to Year 2000.
Recent Pronouncements of the Financial Accounting Standards Board
("FASB")
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 requires that changes in comprehensive income be
shown in a financial statement that is displayed with equal prominence as other
financial statements. SFAS 130 is effective for all periods beginning after
December 15, 1997. The Company does not have any items of other comprehensive
income.
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which requires disclosure of reportable operating segments and
will be effective for financial statements issued for fiscal years beginning
after December 15, 1997. The Company will be reviewing this pronouncement to
determine its applicability to the Company, if any.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments. This standard is effective for all fiscal
quarters in fiscal years beginning after June 15, 1999. Accordingly, the Company
is not currently required to adopt this standard, however, the Company does not
expect this accounting standard to have an effect on the financial statements.
Forward-Looking Statements
This Annual Report on Form 10-KSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are based
on the beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in this
Annual Report, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect," "plan," "predict," "may," "should," "will," the negative
thereof and similar expressions are intended to identify forward-looking
statements. Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy and some of which
might not even be anticipated. Future events and actual results, financial and
otherwise, could differ materially from those set forth in or contemplated by
the forward-looking statements herein. Important factors that could contribute
to such differences include, but are not limited to, the following: general
economic and political conditions, as well as conditions in the markets for the
Company's products; the Company's history of losses, cash constraints and
ability to continue as a going concern; the shift in the Company's business
focus; the Company's dependence on and the effects of government regulation; the
<PAGE>
Company's dependence on the PMP market and uncertainties relating to the size
and timing of any such market that ultimately develops; the Company's dependence
on large orders and the effects of customer concentrations; the Company's
dependence on the private sale of securities to meet its working capital needs;
the Company's dependence on future product development and market acceptance of
the Company's products, particularly in the PMP market; the Company's limited
proprietary technology; possible fluctuations in quarterly results; the effects
of competition; risks related to international business operations; and the
Company's dependence on a limited number of suppliers. Certain of these factors
are described under Item 1. Description of Business - Risk Factors. Other
factors may be described from time to time in the Company's other filings with
the Securities and Exchange Commission, news releases and other communications.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company does not
undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements set forth above and contained elsewhere in
this Annual Report on Form 10-KSB.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Item 7. Financial Statements Page
Independent Auditors' Reports 25, 26
Balance Sheet - June 30, 1998 27
Statements of Operations 28
Years ended June 30, 1998 and 1997
Statements of Stockholders' Deficiency 29, 30
Years ended June 30, 1998 and 1997
Statements of Cash Flows 31
Years ended June 30, 1998 and 1997
Notes to Financial Statements 32-46
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
LogiMetrics, Inc. and Subsidiaries
Bohemia, New York
We have audited the accompanying consolidated balance sheet of
LogiMetrics, Inc. and Subsidiaries (the "Company") as of June 30, 1998 and the
related consolidated statements of operations, stockholders' deficiency and cash
flows for each of the two years in the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of the other
auditors, such consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 1998, and the
results of their operations and their cash flows for each of the two years in
the period ended June 30, 1998 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the consolidated financial statements, the Company's losses from operations
and the stockholders' deficiency raise substantial doubt about its ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
Jericho, New York
April 13, 1999
(March 31, 2000 as to Note 16)
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
mmTech, Inc.
We have audited the statements of income, accumulated deficit, and
cash flows of mmTech, Inc. for the year ended October 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first
paragraph present fairly, in all material respects, the results of operations
and cash flows of mmTech, Inc. for the year ended October 31, 1996 in conformity
with generally accepted accounting principles.
RYDEL, PERIER & NERAL, PA
Wall, New Jersey
February 7, 1997
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED BALANCE SHEET
June 30, 1998
ASSETS
Current Assets
<S> <C>
Cash $ 432,250
Accounts receivable, less allowance
for doubtful accounts of $325,070 1,662,114
Inventories (Note 4) 2,858,908
Prepaid expenses and other current assets 55,486
Total current assets 5,008,758
Equipment and fixtures, net (Note 6) 549,309
Deferred financing costs 59,251
Other assets 36,552
TOTAL ASSETS $5,653,870
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Accounts payable and other accrued expenses (Note 7) $3,632,104
Advance payments 617,205
Income taxes payable 19,697
Current portion of long-term debt (Note 8) 282,603
Total current liabilities 4,551,609
Long term debt (Note 8) 7,822,130
TOTAL LIABILITIES 12,373,739
Commitments (Note 12)
Stockholders' deficiency (Note 10)
Preferred Stock:
Series A, stated value $50,000 per share;
authorized, 200 shares; issued and
outstanding, 28 shares 924,525
Common Stock:
Par Value $.01; authorized,
100,000,000 shares; issued and
outstanding, 28,402,975 shares 284,029
Additional paid-in capital 4,142,943
Deficit (11,881,916)
Stock subscriptions receivable (Note 10) (189,450)
TOTAL STOCKHOLDERS' DEFICIENCY (6,719,869)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $5,653,870
=================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED JUNE 30,
---------------------------------------------------
1998 1997
<S> <C> <C>
Revenues $ 8,872,105 $11,374,182
Cost and expenses:
Cost of revenues 7,122,954 8,563,694
Selling, general and
administrative expenses 5,248,583 3,520,094
Research and development 588,743 647,919
Loss from operations (4,088,175) (1,357,525)
Interest expense 1,080,526 763,801
Loss before income taxes (5,168,701) (2,121,326)
(Benefit) provision for income taxes (Note 9) (396,867) 380,000
Net loss (4,771,834) (2,501,326)
Preferred stock dividends 218,575 234,164
Net loss attributable
to common stockholders $(4,990,409) $(2,735,490)
================= ==================
Basic and diluted loss per common
share (Note 11) $ (0.19) $ (0.12)
================= ==================
Basic and diluted weighted average number
of common shares (Note 11) 25,728,703 22,282,361
================= ==================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' DEFICIENCY
Common Additional Stock
Stock Preferred Paid-In Subscriptions Retained
(Par Value) Stock Capital Receivable Deficit Total
<S> <C> <C> <C> <C> <C> <C>
Balance July 1, 1996 $222,027 $990,564 $2,610,611 ($164,200) ($4,563,716) ($904,714)
Receipt of stock subscription payments 1,250 1,250
Exercise of Series D Warrants 1,887 1,887
Net loss (2,501,326) (2,501,326)
Change in year end of pooled company (45,040) (45,040)
Preferred stock dividends - - (234,164) - - (234,164)
Balance, June 30, 1997 223,914 990,564 2,376,447 (162,950) (7,110,082) (3,682,107)
Grants of common stock 3,272 133,475 136,747
Exercise of options 2,000 18,000 20,000
Issuance of Series G Warrants,
Series H Warrants and Series I Warrants 685,832 685,832
Sale of common stock 12,900 699,612 712,512
Exercise of Series A Warrants 4,000 96,000 100,000
Exercise of Series D Warrants 24,056 24,056
Conversion of preferred stock
to common stock 1,887 (66,039) 64,152 -
Conversion of subordinated debentures
to common stock 12,000 288,000 300,000
Receipt of stock
subscription payments 8,500 8,500
Stock subscriptions receivable (35,000) (35,000)
Preferred stock dividends (218,575) (218,575)
Net loss - - - - (4,771,834) (4,771,834)
Balance, June 30, 1998 $ 284,029 $924,525 $4,142,943 $189,450) ($11,881,916) ($6,719,869)
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' DEFICIENCY ( Continued )
Preferred
Common Stock Stock
Shares Outstanding
<S> <C> <C> <C>
Balance at July 1, 1996 22,202,754 30
Exercise of Series D Warrants 188,860 -
---------- ---
Balance at June 30, 1997 22,391,434 30
Grants of common stock 327,191 -
Exercise of options 200,000 -
Sale of common stock 1,290,000 -
Exercise of Series A Warrants 400,000 -
Exercise of Series D Warrants 2,405,670 -
Conversion of preferred stock to
common stock 188,680 (2)
Conversion of subordinated debentures to
common stock 1,200,000 -
Balance at June 30, 1998 28,402,975 28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOGIMETRICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED JUNE 30,
----------------------------------------------
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(4,771,834) $(2,501,326)
Adjustments to reconcile net loss
to net cash (used for) provided by operating
activities:
Depreciation and amortization 458,712 462,861
Allowance for doubtful accounts 472,568 75,000
Accrued interest expense 620,881 -
Stock compensation expense 182,201 -
Satisfaction of stock subscriptions receivable 675,000 -
Increase (decrease) in cash from:
Accounts receivable 21,782 443,865
Costs and estimated earnings
in excess of billings on
uncompleted contracts 785,013 216,750
Inventories 490,128 (929,883)
Customer advances (508,702) -
Prepaid expenses and other
current assets 22,026 134,485
Accounts payable and accrued expenses (1,607,729) 1,870,188
Other assets/liabilities (394,976) 440,282
Total adjustments 1,216,904 2,713,548
Net cash (used for) provided by operating activities (3,554,930) 212,222
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and fixtures (103,151) (159,301)
Net cash used for investing activities (103,151) (159,301)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt issuance 3,166,668 291,003
Proceeds from warrant issuance 650,832 -
Proceeds from sale of stock 37,511 -
Loans from stockholder 32,312 434,956
Repayment of loans from stockholder (210,000) (440,928)
Proceeds from exercise of options and warrants 144,056 1,887
Decrease in stock subscriptions receivable 8,500 1,250
Repayment of debt - net (107,875) (242,010)
Net cash provided by financing activities 3,722,004 46,158
NET INCREASE IN CASH 63,923 99,079
CASH and CASH EQUIVALENTS, beginning of period 368,327 269,248
CASH and CASH EQUIVALENTS, end of period $ 432,250 $ 368,327
=============== ================
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1998 AND 1997
1. Description of Business and Summary of Significant Accounting Policies
LogiMetrics, Inc. ("LogiMetrics") and its wholly owned subsidiary,
mmTech, Inc. ("mmTech") (collectively, the "Company") designs, manufactures and
markets solid state, broadband wireless communications infrastructure equipment,
subsystems and devices used to provide point-to-multipoint ("PMP") terrestrial
and satellite-based distribution services in frequency bands from 24 gigahertz
("GHz") to 38 GHz. The Company's products enable telecommunications service
providers to establish reliable and cost-effective data, voice and video
communications links within their networks. The Company's infrastructure
equipment includes solid-state power amplifiers, hub transmitters, active
repeaters, cell-to-cell relays, Internet access systems and other millimeter
wave-based devices and subsystems. These products are used in various
applications, such as broadband communications, including Local Multipoint
Distribution Service ("LMDS"), local loop services and Ka-band satellite
communications.
In addition to the Company's broadband products, the Company designs,
manufactures and markets a wide range of high power amplifiers, including
traveling wave tube amplifiers ("TWTAs"), instrumentation amplifiers and other
peripheral transmission equipment used to transmit communication signals for
industrial, commercial and military applications. The Company's TWTAs operate in
frequency bands from 0.5 GHz to 45 GHz, with power levels up to 10 kiloWatts.
a. Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of LogiMetrics, Inc. ("LogiMetrics") and its wholly owned subsidiaries,
mmTech, Inc. ("mmTech") and LogiMetrics FSC, Inc. (collectively, the "Company").
All intercompany balances and transactions have been eliminated.
b. Revenue Recognition
Revenues related to standard manufactured products are recognized when
such products are shipped. The Company reports revenues from the sale of
customized manufactured products related to long-term contracts on the
percentage-of-completion method for financial reporting purposes. Revenues under
these contracts are recognized based on the proportion of contract costs
incurred to total estimated contract costs. Contract costs include all direct
material and labor costs and those indirect costs related to contract
performance, such as indirect labor, supplies, tools, repairs, and depreciation
costs. Selling, general, and administrative costs are charged to expense as
incurred. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined. The net sales value of partially
completed contracts in excess of billings, if any, would be included in current
assets.
c. Inventories
Inventories are stated at the lower of cost (first-in, first-out
method) or market.
d. Equipment and Fixtures
Equipment and fixtures are recorded at cost and include equipment
under capital leases. Depreciation and amortization are provided by the
straight-line method over an estimated useful life of five or ten years and, in
the case of leasehold improvements, the remaining lease term.
e. Income Taxes
The Company accounts for income taxes pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes."
Under this method, deferred tax assets are determined based on differences
between the financial reporting and tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
g. Long-Lived Assets
Effective July 1, 1996, the Company adopted SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("Statement 121"). Statement 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used for long-lived assets and certain
identifiable intangibles to be disposed of. Statement 121 requires the review of
long-lived assets and certain identifiable intangibles whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The adoption of Statement 121 did not have a material effect on
the consolidated financial statements of the Company.
h. Fair Value of Financial Instruments
At June 30, 1998, the carrying amount of the Company's financial
instruments, including cash, accounts receivable, accounts payable, accrued
liabilities and notes payable, approximated fair value because of their
short-term maturities. Long-term borrowings bear interest at variable rates,
which approximate market.
i. Deferred Financing Costs
Deferred financing costs are amortized on a straight-line basis over
the lives of the related obligations.
j. Recent Pronouncements of the Financial Accounting Standards Board
("FASB")
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 requires that changes in comprehensive income be
shown in a financial statement that is displayed with equal prominence as other
financial statements. SFAS 130 is effective for all periods beginning after
December 15, 1997. The Company does not have any items of other comprehensive
income.
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which requires disclosure of reportable operating segments and
will be effective for financial statements issued for fiscal years beginning
after December 15, 1997. The Company will be reviewing this pronouncement to
determine its applicability to the Company, if any.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments. This standard is effective for all fiscal
quarters in fiscal years beginning after June 15, 1999. Accordingly, the Company
is not currently required to adopt this standard, however, the Company does not
expect this accounting standard to have an effect on the financial statements.
k. Reclassifications
Certain amounts in the 1997 financial statements have been
reclassified to conform with 1998 presentation.
2. Financial Condition and Liquidity
As shown in the financial statements, during the fiscal years ended
June 30, 1998 and 1997 the Company incurred net losses of $4.8 million and $2.5
million, respectively, and at June 30, 1998, the Company had total current
assets of $5.0 million and total current liabilities of $4.6 million.
The Company has not paid any dividends on its Series A 12% Cumulative
Convertible Redeemable Preferred Stock, stated value $50,000 per share (the
"Preferred Stock"), which have accumulated in the amount of $510,000 through
June 30, 1998.
From July 1, 1996 to June 30, 1998, the Company raised $4.1 million
from private sales of convertible debentures and warrants to fund a portion of
its cash flow needs. However, to date, the Company has continued to record
losses and has failed to generate sufficient cash flow from operations to fund
working capital requirements. To the extent that the Company is unable to meet
its working capital requirements by generating positive cash flow from
operations, the Company intends to continue to fund a portion of its working
capital requirements through the sale of its securities. There can be no
assurance that the Company can continue to finance its operations through the
sale of securities or as to the terms of any such sales that may occur in the
future. If the Company is unable to attain profitable operations and to generate
sufficient cash flow or to obtain sufficient financing to fund its operations,
the Company may not be able to achieve its growth objectives, may have to
curtail its marketing, development or operations, and may be unable to continue
as a going concern.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
In addition to the sale of securities described above, in December
1997, the Company sold without recourse a note receivable to an unrelated party
in the face amount of $2.6 million for $2.4 million. The proceeds of the note
sale were used for working capital purposes.
As set forth in the Consolidated Financial Statements included herein,
the Company had a significant amount of indebtedness outstanding at June 30,
1998, a substantial portion of which became due and payable in calendar year
1999. Based on the Company's working capital resources, the Company was not able
to repay all of such indebtedness out of available working capital as it became
due. The maturity dates of such indebtedness have been extended. In the event
that the holders of the Company's indebtedness do not agree to further extend
such indebtedness or do not convert their debt into shares of Common Stock (to
the extent convertible), the Company will be required to obtain additional
financing to repay such indebtedness or to take other actions to protect its
business and assets. See Note 16 for a discussion of the subsequent extension of
indebtedness.
3. Acquisition
On April 25, 1997, a wholly-owned subsidiary of LogiMetrics merged
into mmTech, pursuant to which LogiMetrics issued 19,247,800 shares of its
common stock, par value $0.01 per share (the "Common Stock") to Mr. Charles S.
Brand, the sole stockholder of mmTech. mmTech is primarily engaged in the
design, manufacture and marketing of solid state, broadband wireless
communications infrastructure equipment used to provide point-to-multipoint
("PMP") terrestrial and satellite-based distribution services in frequency bands
from 24 GHz to 38 GHz. The acquisition has been accounted for as a pooling of
interests. The accompanying consolidated financial statements for the year ended
June 30, 1997 include the operations of mmTech on a common fiscal year.
Accordingly, as a result of conforming fiscal years, mmTech's net income of
$45,040 for the period July 1, 1996 through October 31, 1996 is included in the
accompanying consolidated statement of operations for the fiscal year ended June
30, 1997 and has been included as an adjustment to consolidated accumulated
deficit. Additionally, revenues of $963,000 and expenses of $918,000 for the
period from July 1, 1996 through October 31, 1996 are included in the
accompanying consolidated statement of operations for the fiscal year ended June
30, 1997. Included in the operating results of the Company for the year ended
June 30, 1997 are $3,600,000 and $5,822,000 of revenues of mmTech and
LogiMetrics, respectively, and $400,000 of net income of mmTech prior to the
date of acquisition and $2,735,000 of net loss of LogiMetrics prior to the date
of acquisition. Because the acquisition was accounted for as a pooling of
interests, acquisition expenses of $135,000 have been charged against results of
operations in the year ended June 30, 1997.
4. Inventories
Inventory consists of the following at June 30, 1998:
Raw material and components $ 708,409
Work-in-progress 1,713,254
Finished goods 437,245
$ 2,858,908
==========
5. Supplementary Information - Statement of Cash Flows
Cash paid during the period for:
Year ended June 30,
1998 1997
Interest $570,820 $359,214
Income taxes $ -0- $ -0-
Non-cash investing and financing activities during the period for:
Year ended June 30,
1998 1997
Machinery and equipment
purchased under capital lease $ -0- $ 117,685
Conversion of subordinated
indebtedness to common stock $300,000 $ -0-
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Equipment and Fixtures
Equipment and fixtures, at cost, are summarized as follows at
June 30, 1998:
Machinery and equipment $ 2,530,424
Furniture and fixtures 143,863
Leasehold improvements 183,812
2,858,099
Less: accumulated depreciation and amortization (2,308,790)
------------
$ 549,309
============
7. Accounts Payable and Other Accrued Expenses
Accounts payable and other accrued expenses consists of the following
at June 30, 1998:
Accounts payable $ 1,797,141
Preferred stock dividends payable 509,945
Accrued professional fees 506,886
Accrued warranty expenses 250,000
Other accrued expenses 568,132
---------
$ 3,632,104
===========
(3) Long-Term Debt
Long-term debt consists of the following at June 30, 1998:
Notes payable to Bank $ 2,365,000
Class A Debentures 3,571,653
Class B Debentures 1,715,895
Less: Discount at issuance (457,628)
Plus: Amortization of discount 329,931
Notes payable - officer (Note 15) 445,398
Notes payable - other 45,000
Capital lease obligations 89,484
---------
8,104,733
Less: current portion (282,603)
----------
$ 7,822,130
===========
Subordinated Debentures and Series A and Series B Warrants
On July 14, 1995, the Company completed a private offering of 15 units
of its securities at a price of $20,800 per unit. Each unit consisted of one
$20,000 12% Convertible Subordinated Debenture and one Common Stock Purchase
Warrant, Series A. Of the per unit price of $20,800, the Company allocated
$20,000 to each 12% Convertible Subordinated Debenture and $800 to each Common
Stock Purchase Warrant, Series A, based upon their estimated fair value at the
date of issuance. Each 12% Convertible Subordinated Debenture was priced at
$20,000 (the allocated value) and had a conversion ratio of $0.25 per share. For
managing the financing, Common Stock Purchase Warrants, Series B, to purchase
1,500,000 shares of Common Stock were sold to SFM Group, Ltd. ("SFM") at a price
of $.02 per share, with an exercise price of $0.25 per share.
Subsequently, on March 7, 1996, LogiMetrics was recapitalized and in
connection therewith all of the holders of the 12% Convertible Subordinated
Debentures and Common Stock Purchase Warrants, Series A, and Common Stock
Purchase Warrants, Series B, exchanged such debentures and warrants for Amended
and Restated 12% Convertible Subordinated Debentures (the "Subordinated
Debentures") and Amended and Restated Series A Warrants and Series B Warrants of
like tenor (the "Series A Warrants" and "Series B Warrants", respectively).
Refer to Note 9(c) for a further discussion of the Series A Warrants and Series
B Warrants, including the method and significant assumptions used to value the
Series A Warrants and the Series B Warrants.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At June 30, 1997, accrued interest on the Subordinated Debentures
totaled $79,000. The principal was payable in one balloon payment on July 14,
1997. On that date, the holders of the Subordinated Debentures converted all of
the Subordinated Debentures into an aggregate of 1,200,000 shares of Common
Stock. All accrued interest on the Subordinated Debentures was paid on August
29, 1997.
North Fork Bank Credit Facilities
At June 30, 1998, the Company was a party to a Restated and Amended
Term Loan Note, dated as of April 25, 1997, and a Modified Revolving Credit
Note, dated as of April 30, 1998, pursuant to which North Fork Bank (the "Bank")
had provided the Company with a $640,000 term loan (the "Term Loan") maturing
December 31, 1998 and a revolving credit facility (the "Revolver") maturing on
July 1, 1999. Pursuant to the terms of the Revolver, the Company was entitled to
draw up to $2.2 million assuming sufficient eligible inventory and accounts
receivable (the Term Loan and the Revolver are referred to herein collectively
as the "Facility"). At June 30, 1998, $192,000 was outstanding under the Term
Loan and the Company had $27,000 available under the Revolver. Outstanding
amounts under the Facility bear interest at the rate of 2% per annum in excess
of the Bank's prime rate. At June 30, 1998, the Bank's prime rate was 8.5%. At
June 30, 1998, the Company was in violation of two covenants contained in the
Facility that the Company report net income of at least $1.00 for each fiscal
quarter (the "Net Income Covenant") and that the Company file its Form 10-KSB
for the fiscal year ended June 30, 1998 by September 30, 1998 (the "Reporting
Requirement Covenant"). As of June 30, 1998, the Bank had waived compliance with
the Net Income Covenant for each fiscal quarter commencing with the fiscal
quarter ended June 30, 1998 and ending on and including the fiscal quarter ended
March 31, 1999, and had waived compliance with the Reporting Requirement
Covenant until ---May 28, 1999. See Note 16 for a discussion of the subsequent
extension of indebtedness.
Senior Debentures
On July 29, 1997, the Company issued $2,750,000 in aggregate principal
amount of its Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures
due July 29, 1999 (the "Class A Debentures"), Common Stock Purchase Warrants -
Series G (the "Series G Warrants") to purchase an aggregate of 7,350,000 shares
of Common Stock at $0.50 per share, Common Stock Purchase Warrants - Series H
(the "Series H Warrants") to purchase an aggregate of 1,100,000 shares of Common
Stock at $0.60 per share and Common Stock Purchase Warrants - Series I (the
"Series I Warrants") to purchase an aggregate of 550,000 shares of Common Stock
at $1.125 per share to private investors for an aggregate purchase price of
$3,352,500. The Company allocated $2,750,000 of the $3,352,500 in proceeds to
the Class A Debentures, $514,500 to the Series G Warrants, $66,000 to the Series
H Warrants and $22,000 to the Series I Warrants, based upon their estimated fair
market value at the date of issuance. Each Class A Debenture has a stated value
of $50,000 (the face amount) and has a conversion ratio of $0.41666667 per
share. Pursuant to the terms of the purchase agreement with those investors,
such investors had the right, at any time prior to August 15, 1998, to purchase
an additional $833,333 in aggregate principal amount of the Class A Debentures,
Series G Warrants to purchase an aggregate of 2,000,000 shares of Common Stock,
Series H Warrants to purchase an aggregate of 333,333 shares of Common Stock and
Series I Warrants to purchase an aggregate of 166,667 shares of Common Stock for
a total purchase price of $1,000,000 (the "Purchase Option"). On May 1, 1998,
the Purchase Option was exercised in part. Accordingly, on that date, the
Company issued $416,668 of additional Class A Debentures, additional Series G
Warrants to purchase an aggregate of 1,000,000 shares of Common Stock,
additional Series H Warrants to purchase an aggregate of 166,667 shares of
Common Stock and additional Series I Warrants to purchase an aggregate of 83,333
shares of Common Stock. On August 6, 1998, the remainder of the Purchase Option
was exercised.
Also on July 29, 1997, the holder of the Company's 12% Convertible
Senior Subordinated Debentures (the "Old Class B Debentures") exchanged the Old
Class B Debentures for the Company's Amended and Restated 13% Senior
Subordinated Convertible Pay-in-Kind Debentures due July 29, 1999 (the "Class B
Debentures").
In addition to the Facility, at June 30, 1998 the Company had issued
and outstanding $3.6 million of its Class A Debentures, $1.7 million of its
Class B Debentures and $45,000 of its Senior Subordinated Notes (together with
the Class A Debentures and the Class B Debentures, the "Senior Subordinated
Indebtedness"), which contained financial covenants identical to those contained
in the Facility. Accordingly, at June 30, 1998, the Company was in default of
the Net Income Covenant and the Reporting Requirement Covenant to the same
extent as under the Facility. As of June 30,1998, the holders of the Senior
Subordinated Indebtedness had waived the Net Income Covenant default for each
quarter, commencing with the quarter ended June 30, 1998, through the quarter
ended June 30, 1999, and had waived the Reporting Requirement Covenant until
maturity. Pursuant to the terms of the Class A Debentures and the Class B
Debentures, the Company was required to file a registration statement covering,
among other things, the resale of the shares of Common Stock issuable upon the
conversion of the Class A Debentures and the Class B Debentures on or prior to
October 27, 1997 and to have the registration statement declared effective by
the Securities and Exchange Commission (the "SEC") on or prior to January 25,
1998. Unless the Company completed the required registration, the interest rate
on the Class A Debentures and the Class B Debentures increased (subject to a
maximum interest rate of 17% per annum). At June 30, 1998, the interest rate was
16% per annum. The holders of the
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Class A Debentures and the Class B Debentures had the right to declare all
amounts thereunder due and payable if the registration statement was not
declared effective by the SEC on or prior to April 25, 1998. The holders of the
Class A Debentures and the Class B Debentures have waived their respective
rights until maturity to declare any default arising as a result of the
Company's failure to have the required registration statement declared effective
by the SEC. See Note 16 for a discussion of the subsequent extension of
indebtedness.
The Class A Debentures and the Class B Debentures may be prepaid, at
the Company's option, upon the giving of 30 days prior written notice, so long
as (i) the average closing price of the Company's Common Stock is at least $5.00
per share (subject to adjustment in certain circumstances) during the 120-day
period immediately preceding the date of the notice of redemption; (ii) the
closing price of the Common Stock for each of the 30 trading days immediately
preceding the notice date was at least $5.00 per share (subject to adjustment in
certain circumstances); and (iii) provided that the Company has a registration
statement effective which covers the Common Stock underlying the Class A
Debentures and the Class B Debentures. If prepaid by the Company, the Class A
Debentures and the Class B Debentures each must be prepaid in whole, including
all accrued interest.
Principal payments due on all long-term debt consist of the following:
Fiscal year ending June 30, 1999 $ 282,603
Fiscal year ending June 30, 2000 2,613,179
Fiscal year ending June 30, 2001 5,336,648
-----------
$ 8,232,430
===========
(3) Income Taxes
The provision for (benefit from) income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended June 30, 1998 Federal State Total
<S> <C> <C> <C>
Current $ (272,000) $(125,000) $ (397,000)
Deferred 1,184,000 273,000 1,457,000
Valuation allowance (1,184,000) (273,000) (1,457,000)
$ (272,000) $(125,000) $ (397,000)
Year Ended June 30, 1997 Federal State Total
Current $ 272,000 $108,000 $ 380,000
Deferred (1,330,000) (307,000) (1,637,000)
Valuation allowance 1,330,000 307,000 1,637,000
$ 272,000 $108,000 $ 380,000
</TABLE>
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following is a summary of deferred tax assets as of June 30, 1998:
Current Deferred Taxes:
Inventory $ 710,719
Accounts receivable 303,369
Accrued expenses 219,598
677,719
Non-Current Deferred Taxes:
Depreciation 9,760
NOL carry-forward 3,601,587
Total non-current 3,611,347
Total deferred tax assets 4,845,034
Valuation allowance (4,845,034)
Net deferred tax assets $ -
A reconciliation of the federal statutory rate to the Company's effective
tax rate is as follows:
% of Pretax Earnings
Years Ended June 30,
1998 1997
Federal statutory tax rate (34.0)% (34.0)%
Permanent difference 4.0 1.3
Net operating loss not producing
a current tax benefit 20.3 32.7
Federal and state taxes
related to the earnings
of mmTech:
State - 3.4
Federal - 12.8
Other 2.1 1.7
Final provision (7.6)% 17.9%
===== ====
10. Stockholders' Deficiency
a. Common and Preferred Stock
In May 1997, the Company's Certificate of Incorporation was amended.
Among other things, the authorized Common Stock of the Company was increased
from 35,000,000 shares of Common Stock to 100,000,000 shares of Common Stock. At
June 30, 1998, the Company had outstanding 28,402,975 shares of Common Stock and
28 shares of Preferred Stock. In addition, as of June 30, 1998, the Company had
33,304,856 shares of Common Stock reserved for issuance pursuant to stock
options, warrants and convertible securities outstanding as of that date.
Dividends on the Preferred Stock are payable quarterly, beginning June
15, 1996. With respect to all the dividend payments due, the Board of Directors
has elected to defer payment. Pursuant to the terms of the Preferred Stock, the
Company is required to effect the registration for resale of, among other
things, the shares of Common Stock issuable upon the conversion of the Preferred
Stock. The Company has not yet effected such registration.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The accumulated amount of dividends due on the Preferred Stock as of
June 30, 1998 is $510,000. As a result of the Company's failure to effect the
registration rights of the holders of the Preferred Stock, the dividend rate on
the Preferred Stock increased to 17% per annum effective March 4, 1997. Until
the Company complies with its registration obligations, the dividend rate will
remain at 17% per annum.
The Preferred Stock is redeemable, at the Company's option, upon the
giving of 30 days prior written notice, unless (i) the average closing price of
the Company's Common Stock fell below $5.00 per share (subject to adjustment in
certain circumstances) during the 120-day period immediately preceding the date
of the notice; and (ii) the closing price of the Common Stock for each of the 30
trading days immediately preceding the notice date was less than $5.00 per share
(subject to adjustment in certain circumstances). If redeemed by the Company,
the Preferred Stock must be redeemed at stated value plus all accrued and unpaid
accumulated dividends.
b. Stock Options
The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock option plans. Accordingly, no compensation cost has
been recognized for the fixed portion of its stock option plans. Had
compensation cost for the Company's fixed stock options been determined based on
fair value at the grant dates consistent with Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation to Employees," the
Company's net loss attributable to common shareholders and net loss per share
would have increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1998 1997
As Pro As Pro
Reported Forma Reported Forma
<S> <C> <C> <C> <C>
Net loss attributable to
common shareholders $(4,990,409) $(5,226,588) $(2,735,490) $(3,321,825)
Net loss per share $ (0.19) $ (0.20) $ (0.12) $ (0.15)
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions used for grants. The weighted average fair value of options granted
using the Black-Scholes option pricing model during fiscal 1998 and 1997 was
$0.27 and $0.55 per share, respectively.
1998 1997
Dividend yield 0% 0%
Expected volatility 46.1% 100.0%
Risk-free interest rate 5.6% 6.2%
Expected option lives, in years 8.7 5.0
LogiMetrics, Inc. 1997 Stock Compensation Program
In May 1997, the Company adopted the LogiMetrics, Inc. 1997 Stock
Compensation Program (the "Stock Compensation Program") which authorizes the
granting of incentive stock options, non-qualified supplementary options, stock
appreciation rights, performance shares and stock bonus awards to employees and
consultants of the Company (the "Employee Plans"). The Stock Compensation
Program also authorizes automatic option grants to directors who are not
otherwise employed by the Company (the "Independent Director Plan"). A total of
7,500,000 shares of Common Stock are reserved for issuance in connection with
the Stock Compensation Program, of which up to 7,350,000 shares may be issued
under the Employee Plans and up to 150,000 shares may be issued under the
Independent Director Plan.
In the event that an option or award granted under the Stock
Compensation Program expires, is terminated or forfeited or certain performance
objectives with respect thereto are not met prior to exercise or vesting, then
the number of shares of Common Stock covered thereby will again become eligible
for grant under the Stock Compensation Program.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the status of the Stock Compensation Program at June 30,
1998 and June 30, 1997 is presented below:
<TABLE>
<CAPTION>
1998 1997
Weighted Weighted
Weighted Average Weighted Average
Shares Average Remaining Shares Average Remaining
Underlying Exercise Contractual Underlying Exercise Contractual
Options Price Life Options Price Life
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 2,798,800 $ 0.55 9 Years - - -
Granted 320,000 0.56 10 Years 2,798,800 $ 0.55 10 Years
Exercised - - - - - -
Forfeited 352,000 0.55 9 Years ________- - -
Outstanding at end of year 2,766,800 $ 0.55 2,798,800 $ 0.55
Exercisable at end of year 1,857,266 $ 0.55 9 Years 1,442,935 $ 0.55 10 Years
</TABLE>
Other Stock Option Grants
In February 1998, a former officer of the Company, as part of his
resignation agreement, was granted non-qualified stock options to purchase
103,333 shares of Common Stock at an exercise price of $.55 per share. These
options expired on February 27, 1999.
c. Warrants
As of June 30, 1998, the Company had outstanding several series of
warrants. The fair value of each warrant was estimated on the date of issuance
using the Black-Scholes option pricing model. The significant assumptions used
to value each warrant and the resulting fair value are set forth below.
The Series A Warrants were issued in July 1995 in connection with the
issuance of the Subordinated Debentures and as of June 30, 1998 were exercisable
for an aggregate of 140,000 shares of Common Stock at an exercise price of $.25
per share (subject to adjustment in certain circumstances). The Series A
Warrants expire on July 15, 2002. The significant assumptions used to value the
Series A Warrants included a risk free rate of 6.0%, an annualized variability
of daily return of 40.0% and a fair value of the Common Stock underlying the
Series A Warrants of $0.10. These assumptions resulted in an aggregate fair
value of $12,000 for the Series A Warrants.
The Series B Warrants were issued in July 1995 in connection with the
issuance of the Subordinated Debentures and as of June 30, 1998 were exercisable
for an aggregate of 1,500,000 shares of Common Stock at an exercise price of
$.25 per share (subject to adjustment in certain circumstances). The Series B
Warrants expire on July 15, 2002. The significant assumptions used to value the
Series B Warrants included a risk free rate of 6.0%, an annualized variability
of daily return of 40.0% and a fair value of the Common Stock underlying the
Series B Warrants of $0.10. These assumptions resulted in an aggregate fair
value of $30,000 for the Series B Warrants. The Company recorded compensation
expense of $30,000 upon the issuance of the Series B Warrants.
The Common Stock Purchase Warrants, Series C (the "Series C Warrants")
were issued in March 1996 in connection with the issuance of the Class B
Debentures and as of June 30, 1998 were exercisable for an aggregate of
2,542,380 shares of Common Stock at an exercise price of $.01 per share (subject
to adjustment in certain circumstances). The Series C Warrants expire on March
7, 2003. The significant assumptions used to value the Series C Warrants
included a risk free rate of 6.0%, an annualized variability of daily return of
40.0% and a fair value of the Common Stock underlying the Series C Warrants of
$0.20. These assumptions resulted in an aggregate fair value of $457,628 for the
Series C Warrants.
The Common Stock Purchase Warrants, Series D (the "Series D Warrants")
were issued in March 1996 in connection with the issuance of the Preferred Stock
and as of June 30, 1998 were exercisable for an aggregate of 141,510 shares of
Common Stock at an exercise price of $.01 per share (subject to adjustment in
certain circumstances). The Series D Warrants expire on March 7, 2003. The
significant assumptions used to value the Series D Warrants included a risk free
rate of
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.0%, an annualized variability of daily return of 40.0% and a fair value of the
Common Stock underlying the Series D Warrants of $0.20. These assumptions
resulted in an aggregate fair value of $509,436 for the Series D Warrants.
The Common Stock Purchase Warrants, Series E (the "Series E Warrants")
were issued in March 1996 in connection with a consulting agreement and as of
June 30, 1998 were exercisable for an aggregate of 1,000,000 shares of Common
Stock at an exercise pr ice of $.40 per share (subject to adjustment in certain
circumstances). The Series E Warrants expire on March 7, 2003. The significant
assumptions used to value the Series E Warrants included a risk free rate of
5.85%, an annualized variability of daily return of 40.0% and a fair value of
the Common Stock underlying the Series E Warrants of $0.10. These assumptions
resulted in an aggregate fair value of $10,000 for the Series E Warrants. The
Company recorded compensation expense of $10,000 upon the issuance of the Series
E Warrants.
The Common Stock Purchase Warrants, Series F (the "Series F Warrants")
were issued in May 1996 to certain directors, officers and other related parties
as compensation for services performed and as of June 30, 1998 were exercisable
for an aggregate of 667,040 shares of Common Stock at an exercise price of $.50
per share (subject to adjustment in certain circumstances). The Series F
Warrants expire on March 7, 2003. The significant assumptions used to value the
Series F Warrants included a risk free rate of 5.85%, an annualized variability
of daily return of 40.0% and a fair value of the Common Stock underlying the
Series F Warrants of $0.10. These assumptions resulted in an aggregate fair
value of $6,670 for the Series F Warrants. The Company recorded compensation
expense of $6,670 upon the issuance of the Series F Warrants.
The Series G Warrants were issued in July 1997 in connection with the
issuance of the Class A Debentures and as of June 30, 1998 were exercisable for
an aggregate of 8,350,000 shares of Common Stock at an exercise price of $.50
per share (subject to adjustment in certain circumstances). The Series G
Warrants expire on July 29, 2004.
The Series H Warrants were issued in July 1997 in connection with the
issuance of the Class A Debentures and as of June 30, 1998 were exercisable for
an aggregate of 1,266,667 shares of Common Stock at an exercise price of $.60
per share (subject to adjustment in certain circumstances). The Series H
Warrants expire on July 29, 2004.
The Series I Warrants were issued in July 1997 in connection with the
issuance of the Class A Debentures and as of June 30, 1998 were exercisable for
an aggregate of 633,334 shares of Common Stock at an exercise price of $1.125
per share (subject to adjustment in certain circumstances). The Series I
Warrants expire on July 29, 2004.
The significant assumptions used to value the Series G Warrants,
Series H Warrants and the Series I Warrants included a risk free rate of 6.3%,
an annualized variability of daily return of 40.0% and a fair value of the
Common Stock underlying each series of warrants of $0.24. These assumptions
resulted in an aggregate fair value of $514,500 for the Series G Warrants,
$66,000 for the Series H Warrants and $22,000 for the Series I Warrants.
The Series A Warrants, Series B Warrants, Series C Warrants, Series D
Warrants, Series E Warrants, Series F Warrants, Series G Warrants, Series H
Warrants and Series I Warrants are referred to herein collectively as the
"Warrants". Pursuant to the terms of the Warrants, the Company is required to
effect the registration for resale of, among other things, the shares of Common
Stock issuable upon the exercise of the Warrants. The Company has not yet
effected such registration.
d. Stock Subscriptions Receivable
As of June 30, 1998, two former officers of the Company owed the
Company $97,850 and $56,600 for Common Stock purchased from the Company. By
agreement, such amounts are payable at the rate of $.25 per common share as
shares are sold. Also, as of June 30, 1998, an entity controlled by a director
of the Company owed the Company $35,000 for Series G Warrants purchased from the
Company. By agreement, such amount is payable upon the occurrence of certain
events, including the disposition of the Series G Warrants.
e. Registration Rights
Under the terms of the Class A Debentures, the Class B Debentures, the
Preferred Stock, the Warrants, and the options granted to a former officer of
the Company, the Company was obligated to effect the respective holders'
registration rights within 90 days after issuance. The Company has not yet
complied with these obligations.
11. Loss Per Share
During the current fiscal year, the Company adopted SFAS No. 128,
"Earnings Per Share" which establishes standards for computing and presenting
earnings per share. SFAS 128 replaced the presentation of primary earnings per
share and fully diluted earnings per share with basic earnings per share and
diluted earnings per share, respectively. Basic earnings per share excludes
dilution and is computed by dividing income available to common stockholders by
the weighted average number of
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
common shares outstanding for the period. Diluted earnings per share is computed
similarly to fully diluted earnings per share.Loss per common share was computed
by dividing the net loss by the weighted average number of shares of Common
Stock outstanding during each of the years presented. The loss per share
calculations for 1998 and 1997 do not give effect to common stock equivalents
because they would have an antidilutive effect.
12. Commitments
a. Lease Agreements
The Company is obligated under several non-cancelable leases for
office space and equipment rentals. Annual minimum lease payments under
non-cancelable operating leases as of June 30, 1998 were as follows:
Fiscal year ended June 30, 1999 $303,107
Fiscal year ended June 30, 2000 230,696
Fiscal year ended June 30, 2001 175,987
Fiscal year ended June 30, 2002 167,193
Fiscal year ended June 30, 2003 154,505
Thereafter 152,885
b. Employment Agreements
In connection with the merger with mmTech in April 1997, the Company
entered into five-year employment agreements with two officers of the Company,
which provide for base compensation totaling $350,000, subject to periodic
increases at the discretion of the Company's Board of Directors. The agreements
also provide for certain life insurance and severance benefits.
c. Legal Proceedings
From time to time, the Company is subject to routine claims incidental
to the operation of its business. In addition, as a result of the Company's lack
of cash resources, from time to time the Company has been subject to claims from
its creditors for non-payment of outstanding invoices.
13. Major Customers
One customer accounted for 43% and 54% of revenues, for the years
ended June 30, 1998 and 1997, respectively.
Sales to foreign customers by geographic location, as a percentage of
net revenues, were as follows:
Years ended June 30, 1998 1997
Asia 7% 16%
Canada 5 11
Europe 4 9
16% 36%
=== ===
14. Pension Plan
The Company had two separate defined contribution plans covering
eligible full-time employees as of June 30, 1998. Participation in each plan is
voluntary and participants may contribute up to 15% of their compensation,
subject to federal limitations. The Company, at its discretion, can make
matching contributions to the LogiMetrics, Inc. Employees 401(k) Savings Plan
(the "LogiMetrics Plan"). For the years ended June 30, 1998 and 1997, the
Company has made no matching contribution to the LogiMetrics Plan. The mmTech,
Inc. 401(k) Plan and Trust (the "mmTech Plan") provides for a Company match of
5% of participant contributions, and a discretionary amount based on
profitability. Discretionary Company contributions are vested ratably over a
six-year period. Company contributions for the year ended June 30, 1998 totaled
$3,154 under the mmTech Plan. The Company made no discretionary contributions to
the mmTech Plan in the fiscal year ended June 30, 1998.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Certain Relationships and Related Party Transactions
Dr. Frank A. Brand, a director of the Company, and the uncle of
Charles S. Brand, the Company's Chairman, had a consulting agreement with the
Company which expired on April 30, 1999. The agreement called for quarterly
payments of 36,363 shares of Common Stock. During the fiscal year ended June 30,
1998, Dr. Brand was entitled to receive 254,542 shares of Common Stock with an
aggregate value of $110,226 for consulting services provided, representing the
fair market value of the shares on the date of issuance. Such amounts were
recorded as compensation expense in the accompanying Consolidated Statements of
Operations for the fiscal year ended June 30, 1998. The was no reduction to the
amounts recorded as compensation expense for lack of market liquidity and other
discount considerations.
Kenneth C. Thompson, a former director of the Company, had a
consulting agreement with the Company which expired effective November 15, 1999.
In connection with the consulting agreement, Mr. Thompson received 108,000
shares of Common Stock, with an aggregate value of $54,000 for consulting
services provided, representing the fair market value of the shares on the date
of issuance. Such amount was recorded as compensation expense in the
accompanying Consolidated Statements of Operations for the fiscal year ended
June 30, 1998.
In July 1997, Norman M. Phipps, a director of the Company purchased
850,000 shares of Common Stock from the Company for $467,500, or $0.55 per
share. In connection with the purchase, $8,500 was paid in cash from the
proceeds of a one-time bonus paid to Mr. Phipps and the remainder was paid in
the form of a non-recourse secured promissory note (the "Phipps Note"). Also in
July 1997, Michael L. Gaffney, an employee of the Company purchased 400,000
shares of Common Stock from the Company for $220,000, or $0.55 per share. In
connection with Mr. Gaffney's the purchase, $4,000 was paid in cash from the
proceeds of a one-time bonus paid to Mr. Gaffney and the remainder was paid in
the form of a non-recourse secured promissory note (the "Gaffney Note"). The
Phipps Note and the Gaffney Note do not bear interest, have no fixed maturity
date, and are each secured by a pledge of the shares of Common Stock purchased
by Messrs. Phipps and Gaffney, respectively. The sale of the Class C Debentures
as described in Note 16 below resulted in a "Change in Control Event" under the
terms of the Phipps Note and the Gaffney Note. The Phipps Note and the Gaffney
Note were each satisfied upon the occurrence of such "Change in Control Event."
The Company recorded a non-cash charge to account for these transactions in the
aggregate amount of $675,000 at June 30, 1998.
MBF Capital Corporation ("MBF"), an entity controlled by Mark B.
Fisher, a director of the Company, paid $35,000 of the purchase price payable by
it in connection with its July 1997 purchase of the Series G Warrants in the
form of a non-recourse secured promissory note (the "MBF Note"). The MBF Note
matures on July 29, 2000 and bears interest (compounded annually) at a rate of
6.07% per annum, which is payable at maturity. The MBF Note is secured by a
pledge of the Series G Warrants purchased by MBF. The MBF Note will become
immediately due and payable upon the occurrence of certain events, including a
sale or other disposition by MBF of the Series G Warrants purchased by it or the
consummation of a Company Sale (as defined in the Stockholders Agreement entered
into in connection with the issuance of the Class A Debentures).
Prior to its acquisition by the Company, Charles S. Brand, the
Company's Chairman and Chief Technical Officer, lent certain amounts to mmTech
on an as-needed basis to fund a portion of mmTech's working capital
requirements. The maximum amount advanced by Mr. Brand was $627,000, and
$445,000 in such advances were outstanding at June 30, 1998. Pursuant to an
agreement between Mr. Brand and the Company, the Company has agreed to pay
interest on the unpaid advances (which previously had been interest-free) at a
rate of seven percent per annum.
Mr. Brand owns 40% of the outstanding common stock of Advanced Control
Components, Inc. ("ACC"). ACC sublets space from the Company at its Eatontown,
New Jersey facility and pays to mmTech $34,228 in annual rent. Employees from
mmTech perform services for ACC and employees from ACC perform services for
mmTech from time to time. The company utilizing such services pays to the
company providing such services an amount equal to two times the base hourly
salary of the employees providing such services for the number of hours
involved. Pursuant to such arrangements, ACC paid to mmTech net amounts of
$268,883 during the fiscal year ended June 30, 1998 and $223,167 during the
fiscal year ended June 30, 1997.
Certain holders of the Company's securities, including directors,
officers and beneficial owners of more than 5% of the Common Stock are entitled
to certain registration rights with respect to securities of the Company held by
them.
16. Subsequent Events
Pursuant to the terms of a Stock Purchase Agreement, dated October 21,
1998 (the "Stock Purchase Agreement"), Mr. Brand sold 2,000,000 shares of Common
Stock to a group of institutional investors (the "Investors") for a cash
purchase price of $500,000, or $0.25 per share. The sale was made as a condition
to the transactions contemplated by a Purchase Agreement, dated October 21, 1998
(the "Purchase Agreement"), among the Company and the purchasers party thereto
(including the Investors). Pursuant to the Purchase Agreement, the Company
issued and sold $2.7 million in aggregate face amount of its
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Class C 13% Senior Subordinated Debentures due September 30, 1999 (the "Class C
Debentures") for an aggregate purchase price of $2.0 million. As required by the
Investors, Mr. Brand used the proceeds of the sale of Common Stock pursuant to
the Stock Purchase Agreement to acquire $667,000 in face amount of the Class C
Debentures pursuant to the Purchase Agreement for a cash purchase price of
$500,000. The Class C Debentures are currently convertible into shares of Common
Stock at a conversion price of $0.31 per share, subject to adjustment in certain
circumstances.
Pursuant to the terms of a Registration Rights Agreement, dated
October 21, 1998 (the "Registration Rights Agreement"), the purchasers of the
Class C Debentures, including Mr. Brand, have certain registration rights with
respect to the shares of Common Stock issuable upon conversion of the Class C
Debentures.
In connection with the renewal and extension of the Company's Revolver
with the Bank, the Company issued to the Bank in October, 1998 Common Stock
Purchase Warrants, Series J (the "Series J Warrants"). The Series J Warrants
were exercisable for an aggregate of 100,000 shares of Common Stock at an
exercise price of $0.55 per share (subject to adjustment in certain
circumstances). The Series J Warrants expired on July 1, 1999. The fair value of
the Series J Warrants was estimated using the Black-Scholes option pricing
model. The significant assumptions used to value the Series J Warrants included
a risk free rate of 6.48%, an annualized variability of daily return of 40.0%
and a fair value of the Common Stock underlying the Series J Warrants of $0.80.
These assumptions resulted in an aggregate fair value of $26,000 for the Series
J Warrants.
On December 31, 1998, the Term Loan was repaid in accordance with its
terms.
In contemplation of the Company's increased PMP business, in December
1998, the Company entered into a lease agreement (the "Lease Agreement")
covering approximately 36,500 square feet of manufacturing and office space in
Eatontown, New Jersey. The Lease Agreement has a five-year initial term and two
five-year renewal options. The average annual cost for the initial five-year
term is approximately $206,000. Pursuant to the terms of the Lease Agreement,
the Company has the ability to sublet a certain portion of the leased space. The
Company has moved its manufacturing operations into the new facility and expects
to complete moving its entire PMP business into the new space during fiscal
2000.
As of September 1, 1999, the Company entered into a Reduced and
Extended Revolving Credit Note (the "Replacement Note") and a Recognition and
Limited Forebearance Agreement (the "Forebearance Agreement"). Pursuant to the
terms of the Replacement Note, the amount available for borrowing under the
Revolver was reduced to $1.93 million (the amount outstanding as of such date)
and the maturity date of the Revolver was extended to December 31, 1999. Under
the terms of the Forebearance Agreement, the Bank agreed to forebear, until
December 31, 1999, from declaring any event of default or from exercising any
remedies under the Facility.
On September 7, 1999, the Company sold an aggregate of $1,000,000 of
its Negotiable Secured Senior Subordinated Promissory Notes due March 7, 2000
(the "Bridge Notes") to a group of institutional investors (the "Lenders") for
an aggregate cash purchase price of $1,000,000. The Bridge Notes bear interest
at a rate of 13% per annum. Pursuant to the terms of the Second Amended and
Restated Security Agreement, Intercreditor Agreement, Waiver and Consent (the
"Intercreditor Agreement"), the Bridge Notes are secured by a security interest
in all of the Company's assets which ranks junior to the Facility and senior to
the Class A Debentures, the Class B Debentures and the Class C Debentures.
Pursuant to the terms of the Intercreditor Agreement, each of the holders of the
Class A Debentures, the Class B Debentures and the Class C Debentures consented
to the issuance of the Bridge Notes and the granting of the security interest
described above. As consideration for the purchase of the Bridge Notes, Mr.
Brand transferred to the Lenders an aggregate of 3,000,000 shares of Common
Stock owned by him.
From time to time subsequent to September 1, 1999, the Company has
received advances from certain of the Company's other investors. Such advances
have been made on the same terms and conditions as the Bridge Notes, but rank
senior to the Bridge Notes.
In August 1998, the Company entered into a three-year employment
agreement with Mr. Kenneth C. Thompson, pursuant to which Mr. Thompson agreed to
serve as the Company's Chief Executive Officer. Effective November 15, 1999, Mr.
Thompson resigned as the Company's Chief Executive Officer. In connection with
his resignation, the Company and Mr. Thompson entered into a separation
agreement (the "Separation Agreement"). In the Separation Agreement, the Company
agreed to pay Mr. Thompson an aggregate of $137,097 in five monthly
installments, without interest, in repayment of certain amounts owed to him and
in lieu of any rights Mr. Thompson had under the employment agreement he entered
into with the Company in August 1998. In addition, the Company issued to Mr.
Thompson stock options exercisable for an aggregate of 500,000 shares of Common
Stock (the "Option Shares") at an exercise price of $0.60 per share (the
"Thompson Option"). The Thompson Option expires, as to one-half of the Option
Shares, on November 15, 2001, and as to the remainder of such Option Shares, on
November 15, 2002.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pursuant to the terms of the Separation Agreement, all prior
agreements between Mr. Thompson and the Company were terminated and the Company
and Mr. Thompson agreed to release certain claims against each other and certain
related parties. Under the Separation Agreement, Mr. Thompson is subject to
certain confidentiality obligations and agreed to non-competition and certain
other covenants for a period of one year.
Subsequent to June 30, 1998, the holders of the Class A Debentures,
the Class B Debentures and the Class C Debentures (collectively, the "Senior
Subordinated Indebtedness") agreed to extend the maturity date of the Senior
Subordinated Indebtedness to March 7, 2000. In connection with the Signal
Transactions as described below, the holders of the Senior Subordinated
Indebtedness and the holders of the Bridge Notes agreed to further extend the
maturity dates of the Senior Subordinated Indebtedness and the Bridge Notes to
July 1, 2000.
On February 17, 2000, the Company entered into a non-binding letter of
intent (the "Letter of Intent") with Signal Technology Corporation ("Signal")
pursuant to which Signal proposes to acquire the Company through the merger of a
wholly owned subsidiary of Signal with and into LogiMetrics (the "Merger"). In
connection with the proposed Merger, Signal currently intends to contribute the
assets of mmTech to Signal's recently formed Signal Wireless Group ("SWG").
Pursuant to the current terms of the proposed Merger, holders of the Company's
Common Stock (including shares issuable upon the exercise or conversion of
outstanding options, warrants and convertible securities) would receive, based
on a formula to be finalized, a certain percentage of a tracking security that
would reflect the performance of SWG ("SWG Equity"), which would be distributed
upon completion of a public offering of SWG Equity, and shares of Signal common
stock. The proposed Merger is intended to be tax-free to the stockholders of
LogiMetrics for federal income tax purposes.
In connection with the Letter of Intent, Signal has loaned $2,000,000
to the Company for working capital and other purposes (the "Signal Loan")
pursuant to the terms of a Negotiable Secured Senior Subordinated Promissory
Note (the "Signal Note"). The Signal Loan matures on December 31, 2000 and bears
interest at a rate of 10% per annum, payable at maturity. The Signal Loan may be
prepaid by the Company at any time and is subject to mandatory repayment in the
event that the Company completes an institutional financing generating gross
proceeds of $7,500,000 or more or the Company engages in certain extraordinary
transactions (other than with Signal) or executes a letter of intent or
agreement relating thereto. The Signal Loan is secured by liens on all of the
Company's assets. Signal has the right to accelerate the repayment of the Signal
Loan upon the occurrence of certain events of default, including the failure of
the Company to pay amounts owed under the Signal Note when due, a material
breach by the Company of certain covenants and representations and warranties
made to Signal or the occurrence of certain insolvency events.
Concurrently with the making of the Signal Loan, certain existing
investors in the Company also loaned the Company $1,000,000 (the "Investor
Loans"). The Investor Loans are evidenced by a Substitute Negotiable Secured
Senior Subordinated Promissory Note (the "Investor Notes") and are secured pari
passu with the Signal Loan. The terms of the Investor Notes are substantially
similar to the terms of the Signal Note. The Investor Loans bear interest at a
rate of 13% per annum (payable at maturity) and mature on July 1, 2000. The
Signal Loan and the Investor Loans are referred to collectively as the "Loan
Transactions."
Pursuant to the Letter of Intent, the Company granted to Signal the
option (the "Option") to purchase the Company's high-power amplifier business,
currently conducted at the Company's facility in Bohemia, New York (the "New
York Business"). The exercise price of the Option is $2,000,000 less the unpaid
amount of the Signal Loan less any funded indebtedness of the Company assumed by
Signal. The Option expires on the earlier of (i) 30 days after the payment in
full of the Signal Loan and (ii) December 31, 2000.
In addition, upon execution of the Letter of Intent, the Company and
Signal entered into a Management Agreement (the "Management Agreement") pursuant
to which, Signal, through its Keltec division, assumed the management and
operation of the New York Business and has assumed all current liabilities of
the New York Business. Pursuant to the Management Agreement, Signal intends to
relocate the assets of the New York Business (excluding real estate and
fixtures) to Signal's facility in Florida. Under the Management Agreement,
Signal is responsible for all expenses incurred and is entitled to retain all
revenues generated in connection with its operation of that business. Signal
also has agreed to make interest payments on the Company's outstanding bank
indebtedness during the period it is operating the New York Business. Pursuant
to the Management Agreement, if the Merger is not consummated and the Company
enters into an acquisition transaction with a third party prior to December 31,
2000, Signal has the right either to retain ownership of the assets of the New
York Business for no additional consideration or to return such assets to the
Company. In the event that Signal returns such assets to the Company, the
Company is obligated to reimburse Signal for the expenses of moving the assets
both to and from Signal's Florida facility and for any interest payments made by
Signal in respect of the Company's bank indebtedness.
<PAGE>
LOGIMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pursuant to the Letter of Intent, the Company is obligated under
certain circumstances to re-pay all loans made by Signal, together with a
prepayment penalty of $100,000, and to pay a termination fee of $800,000 in the
event that the Company enters into a letter of intent or similar agreement for
an acquisition transaction with a third party prior to June 16, 2000.
The transactions described above are collectively referred to as the
"Signal Transactions."
The consummation of the proposed Merger is subject to the satisfaction
or waiver of a number of customary conditions precedent, including the
satisfactory completion of the Company's and Signal's due diligence
investigation of the business and affairs of one another, the Company's
compliance with its reporting obligations under the Securities Exchange Act of
1934, as amended, the negotiation and execution of definitive agreements for the
Merger, the approval of the proposed Merger by the approvals. No assurances can
be given that such conditions will be satisfied or as to the timing thereof.
Further, no assurances can be given that the Merger will be consummated on the
terms summarized above or at all.
In connection with the Signal Transactions, the Company and the Bank
entered into a Consent Letter (the "Consent Letter") pursuant to which the Bank
consented to the Signal Transactions and agreed to waive any defaults under the
Facility resulting therefrom. In addition, in the Consent Letter, the Bank
agreed to modify and extend the maturity date of the Replacement Note from
December 31, 1999 to June 30, 2000 and to eliminate certain covenants contained
therein. In exchange, the Company agreed, among other things, (i) to reduce the
amount available under the Facility to $1.8 million (the amount outstanding
thereunder as of such date), (ii) that no further advances would be made under
the Facility, (iii) to pay all past due amounts outstanding under the Facility,
and to pay the Bank certain additional fees specified in the Consent Letter, and
(iv) to extend the expiration date of the Series J Warrants to June 30, 2000.
It is a condition to the Signal Transactions that the holders of
approximately $10.7 million of the Company's indebtedness (excluding obligations
owed to the Bank and certain other indebtedness) must be converted into shares
of Common Stock. Based on discussions with the holders of such indebtedness, the
Company believes that such holders will convert that indebtedness to Common
Stock, although no assurance can be given that the Company will receive all of
the consents required to effect such conversion or as to the terms thereof. In
addition, pursuant to the terms of the Signal Transactions, all previously
issued options, warrants and other convertible securities will be required to be
converted into Common Stock. Based on discussions with the holders of such
securities, the Company believes that such holders will convert, exercise or
exchange such securities for shares of Common Stock, although no assurance can
be given that the Company will receive all of the consents required to effect
such conversions, exercises and exchanges or as to the terms thereof. Based on
the discussions held to date, the Company believes that it will be required to
issue shares of Common Stock to the holders of such indebtedness and securities
in an amount substantially in excess of 50% of the shares then-outstanding
(after giving effect to such issuance).
The summary of the Signal Transactions contained herein is not
intended to be complete and is qualified in its entirety by reference to the
Letter of Intent, the loan documents for the Loan Transactions and the
Management Agreement, copies of which have been filed as exhibits to this Annual
Report on Form 10-KSB.
<PAGE>
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The following table sets forth certain information as of February 29, 2000
regarding the Company's executive officers and directors as of June 30, 1998.
Name Age Position
Charles S. Brand (1) 60 Chairman of the Board and Chief Technical
Officer
Kenneth C. Thompson (2) 53 Chief Executive Officer and Director
Norman M. Phipps (1) 39 President, Chief Operating Officer, Interim
Chief Financial Officer and Director
Erik S. Kruger 38 Vice President - Finance and Administration
and Secretary
Frank A. Brand (3)(4) 75 Director
Jean-Francois Carreras (3)(4) 50 Director
Mark B. Fisher 41 Director
Francisco A. Garcia (5) 48 Director
(3) Member of Executive Committee.
(4) Mr. Thompson resigned as the Company's Chief Executive Officer and as
a director in November 1999.
(5) Member of Audit Committee.
(6) Member of Compensation Committee.
(7) Mr. Garcia resigned as a director of the Company in November 1999.
Charles S. Brand. Mr. Brand has served as the Company's Chairman of
the Board and Chief Technical Officer since March 1998. From April 1997 to March
1998, Mr. Brand was the Chairman and Chief Executive Officer of the Company.
From February 1994 to April 1997, Mr. Brand was the President of mmTech, Inc.
Prior to founding mmTech, Mr. Brand was the founder and President of Trontech,
Inc., a manufacturer of solid state amplifiers used in military applications and
wireless equipment for the cellular and PCS markets, which was subsequently sold
in December 1986 to Dynatech Corporation. Mr. Brand has been involved in the
development of LMDS systems for over ten years. Mr. Brand is the nephew of Dr.
Frank A. Brand.
Kenneth C. Thompson. From March 1998 until November 1999, Mr. Thompson
was the Chief Executive Officer of the Company. From April 1997 until March
1998, Mr. Thompson was a private investor and consultant. Prior to April 1997,
Mr. Thompson held several senior management positions with Glenayre Electronics,
Inc., including Executive Vice President - Sales and Marketing (from February
1993 to February 1994), President of the Voice and Data Technologies Group (from
February 1994 to September 1996), and most recently, from September 1996 to
April 1997, Executive Vice President - Business Operations. In his last position
with Glenayre, Mr. Thompson was a member of a three-person management committee
responsible for the day-to-day operations of Glenayre.
Norman M. Phipps. Mr. Phipps has served as the President and Chief
Operating Officer of the Company since April 1997, and also as interim Chief
Financial Officer since March 1998. From May 1996 to April 1997, Mr. Phipps
served as Chairman of the Board and Acting President of the Company. Mr. Phipps
has served as a principal of two private investment firms, Phipps, Teman &
Company, L.L.C. (from January 1994 to December 1997) and CP Capital Partners
(from January 1991 to December 1993). Mr. Phipps is a director of Avery
Communications, Inc., a company primarily involved in the provision of software
and services addressing the customer relationship and billing/operational
support system needs of telecommunications and Internet service providers.
Erik S. Kruger. Mr. Kruger has served as Vice President - Finance and
Administration and Secretary of the Company since February 1998. From March 1996
to January 1998, Mr. Kruger was the Chief Financial Officer of CellularVision of
New York, L.P. From September 1990 to February 1996, Mr. Kruger was employed by
Coopers & Lybrand L.L.P., specializing in the telecommunications and
entertainment industries. Mr. Kruger is a Certified Public Accountant.
Dr. Frank A. Brand. Dr. Brand has been a director of the Company since
April 1997. Since 1991, Dr. Brand has been a private investor and consultant.
Prior to his retirement in 1991, Dr. Brand held several senior management
positions with M/A-COM, Inc., a major manufacturer of telecommunications
products and systems, including Chief Technical Officer, Chief Operating Officer
and Acting Chief Executive Officer. Dr. Brand is a Life-Fellow of the Institute
<PAGE>
of Electrical and Electronic Engineers, a Fellow of Polytechnic University and a
member of the Engineering Dean's Council at UCLA.
Jean-Francois Carreras. Mr. Carreras has been a director of the
Company since April 1997. Since October 1994, Mr. Carreras has been a partner in
the Paris law firm of Sokolow, Dunaud, Mercadier and Carreras. From October 1994
to July 1995, Mr. Carreras was also a partner in the law firm of Arent, Fox,
Kintner, Plotkin & Kahn. Prior thereto, until October 1994, Mr. Carreras was a
partner in the law firm of Coudert Brothers. Mr. Carreras is a French citizen.
Mark B. Fisher. Mr. Fisher is the President of MBF Capital
Corporation, Inc. ("MBF"), a firm that invests in and advises technology driven
companies. From 1990 to 1996, Mr. Fisher served as a Principal of Alex. Brown &
Sons, Inc.
Francisco A. Garcia. Mr. Garcia was a director of the Company from
July 1997 to November 1999. Since Janu ary 2000, Mr. Garcia has been associated
with the investment advisor to Easton Hunt Capital Partners, an investment fund.
From January 1999 to December 1999, Mr. Garcia was the Director of Corporate
Finance for Cramer Rosenthal McGlynn, LLC, an investment management firm. From
1987 to December 1997, Mr. Garcia served as Chairman of the Board of Neptune
Management Company, Inc., a manager of funds and accounts investing in
distressed securities, obligations and consumer receivables. From 1991 until
December 1998, Mr. Garcia served as President of Nethuns, Inc., a firm engaged
in financial advisory, consumer finance and investment activities. Mr. Garcia is
a Spanish citizen.
Each director serves until the next annual meeting of stockholders or
until his successor is duly elected and qualified.
The Company currently does not regularly compensate directors for
their service to the Company. However, directors are reimbursed for
out-of-pocket expenses incurred in their capacity as directors of the Company.
Dr. Brand and Mr. Fisher provide certain consulting services to the
Company. See "Employment Agreements and Compensation Arrangements."
Pursuant to the terms of the Stock Compensation Program, each director
who has not been a full-time employee of the Company or any subsidiary for at
least the prior 12 months receives an option to purchase 20,000 shares of Common
Stock each year on the earlier of (i) the date of the Company's annual meeting
of stockholders, or (ii) June 1. Options granted to such directors under the
Stock Compensation Program have an exercise price equal to the fair market value
of the underlying shares of Common Stock on the date of grant. See "Stock
Compensation Program."
Right to Designate Directors; Changes in Control
In July 1997, the Company entered into a Purchase Agreement (the
"Purchase Agreement") with a group of institutional investors (the
"Purchasers"), including certain entities affiliated with Mark B. Fisher, a
director of the Company. Pursuant to the terms of the Purchase Agreement, the
Company issued and sold to the Purchasers $2,750,000 in aggregate principal
amount of the Company's Class A Debentures, Series G Warrants to purchase an
aggregate of 7,350,000 shares of Common Stock at an exercise price of $0.50 per
share, Series H Warrants to purchase an aggregate of 1,100,000 shares of Common
Stock at an exercise price of $0.60 per share and Series I Warrants to purchase
an aggregate of 550,000 shares of Common Stock at an exercise price of $1.125
per share, for a total purchase price of $3,352,500. In connection with the
issuance by the Company of its Class A Debentures, the Company granted to the
Purchasers the right, at any time prior to August 15, 1998, to purchase an
additional $833,333 in aggregate principal amount of the Class A Debentures,
Series G Warrants to purchase an aggregate of 2,000,000 shares of Common Stock,
Series H Warrants to purchase an aggregate of 333,333 shares of Common Stock and
Series I Warrants to purchase an aggregate of 166,667 shares of Common Stock for
a total purchase price of $1,000,000 (the "Purchase Option"). On May 1, 1998,
the Purchasers exercised their respective rights to purchase $500,000 of the
Purchase Option. The related securities issued in connection therewith are set
forth in the consolidated financial statements contained herein. On August 6,
1998, the Purchasers exercised their respective rights to purchase the remaining
$500,000 of the Purchase Option.
In connection with the transactions contemplated by the Purchase
Agreement, the Purchasers, the Company and Charles S. Brand entered into a
Stockholders Agreement (the "Stockholders Agreement") pursuant to which, among
other things, Mr. Brand agreed to certain restrictions on his ability to sell
his shares of Common Stock. Pursuant to the terms of the Stockholders Agreement,
the size of the Board of Directors was increased to seven members and the
Purchasers received the right to appoint three directors. Because the Purchase
Option has been exercised in full, the number of directors will be increased to
eight, and the Purchasers have the right to appoint an additional director. At
any time that the Purchasers are entitled to appoint at least four directors, at
either the request of Mr. Brand or the Purchasers, the size of the Board will be
further increased by one and Mr. Brand and the Purchasers will have the right to
mutually select an independent director to fill the resulting vacancy. Further,
in the event that Cerberus Partners, L.P. (or any subsequent holder of the Class
B Debentures) exercises its right under the Unit Purchase Agreement dated March
7, 1996 to designate a member of the Board of Directors, the number of directors
will be increased by two, the holder of the Class B Debentures will have the
right to appoint one director and Mr. Brand and the Purchasers will have the
right to appoint an additional independent director.
Pursuant to the terms of the Stockholders Agreement, Mr. Brand
appointed himself, Dr. Brand, Mr. Carreras and Mr. Phipps and the Purchasers
appointed Messrs. Fisher, Francisco A. Garcia and Kenneth C. Thompson as
<PAGE>
directors of the Company. To facilitate the recomposition of the Board of
Directors, Mr. Alfred Mendelsohn resigned as a director of the Company effective
upon the closing of the transactions contemplated by the Purchase Agreement.
Messrs. Garcia and Thompson resigned as directors in November 1999.
Under the terms of the Stockholders Agreement, the parties agreed to
cause (i) the Executive Committee of the Board of Directors to be comprised of
two directors designated by Mr. Brand and one director designated by the
Purchasers, (ii) the Audit Committee of the Board of Directors to be comprised
of two directors designated by Mr. Brand and two directors designated by the
Purchasers, and (iii) the Compensation Committee of the Board of Directors to be
comprised of two directors designated by Mr. Brand and two directors designated
by the Purchasers. Because the Purchase Option has been exercised in full, the
Purchasers have the right to designate a second director to serve on the
Executive Committee of the Board of Directors. All directors have been
designated by either Mr. Brand or the Purchasers to serve on the respective
Board committees set forth in the table in Part III. In March 1998, Mr. Thompson
was appointed the Company's Chief Executive Officer. Under the terms of the
Stockholders Agreement, Mr. Thompson was treated as a director designated by Mr.
Brand and was entitled to serve as a member the Executive Committee of the Board
of Directors (which will be further increased in size to permit such
appointment). Mr. Thompson resigned as the Chief Executive Officer and as a
Director of the Company in November 1999.
Under the terms of the Stockholders Agreement, the holders of a
majority of the shares of Common Stock beneficially owned by the Purchasers have
the right, subject to certain limitations, to cause the Company to enter into a
"Company Sale". A Company Sale is defined to include (i) a sale of all or
substantially all of the assets of the Company (other than to certain
affiliates), (ii) a merger, consolidation, share exchange or other similar
transaction in which the holders of the Company's voting stock receive less than
50% of the voting power of the surviving entity, (iii) a sale, disposition or
issuance of shares of voting stock of the Company in which a person or entity
(other than a party to the Stockholder Agreement or its affiliates) acquires 50%
or more of the total voting power of the Company, and (iv) the formation of
certain partnerships, joint ventures and other strategic alliances involving the
sale or transfer of all or substantially all of the assets of the Company to a
third party.
The Stockholders Agreement terminates upon the earliest to occur of
(i) the written consent of the holders of a majority of the shares of Common
Stock beneficially owned by the Purchasers and the holders of a majority of the
shares of Common Stock then beneficially owned by Mr. Brand and certain
transferees, (ii) Mr. Brand and certain transferees, as a group, or the
Purchasers, as a group, becoming the beneficial owners of less than 10% of the
outstanding Common Stock (determined on a fully-diluted basis), or (iii) upon
the consummation of a Company Sale in accordance with the terms of the
Stockholders Agreement.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 1998, the Company's Compensation
Committee was comprised of Dr. Brand and Messrs. Carreras and Garcia. Mr. Garcia
resigned as a director in November 1999.
The Company has entered into a consulting agreement with Dr. Brand
pursuant to which Dr. Brand provides strategic, technological and other services
to the Company for up to 90 days in any calendar year. Under the consulting
agreement, which expired April 30, 1999, Dr. Brand received a quarterly payment
of 36,363 shares of Common Stock. In the consulting agreement, Dr. Brand agreed
to certain confidentiality, non-competition and intellectual property covenants.
No executive officer of the Company and no member of the Compensation
Committee is a member of any other business entity that has an executive officer
that sits on the Company's Board or on the Compensation Committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as
amended, the Company's directors and executive officers and persons holding more
than 10% of a registered class of the Company's equity securities are required
to file with the SEC and to provide the Company with initial reports of
ownership, reports of changes in ownership and annual reports of ownership of
common stock and other equity securities of the Company. Based solely upon a
review of such reports and any amendments thereto which have been furnished to
the Company, the Company believes that all of such reporting persons complied
with all applicable Section 16(a) filing requirements in respect of the fiscal
year ended June 30, 1998, except that Messrs. Thompson and Garcia inadvertently
failed to timely file their Form 3s upon becoming directors of the Company, Mr.
Fisher inadvertently failed to timely file his Form 3 upon becoming a director
of the Company and also inadvertently failed to timely file one Form 4 reporting
one transaction, and each of Gerald B. Cramer, Cramer Rosenthal McGlynn LLC and
AC Israel Enterprises, Inc. inadvertently failed to timely file their Form 3s
upon becoming beneficial owners of more than 10% of the Common Stock.
Item 10. Executive Compensation
The following table sets forth certain compensation paid to the
Company's Chief Executive Officer and each other executive officer of the
Company as of June 30, 1998 (collectively, the "Named Executive Officers"):
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table (1)
Annual Compensation Long-Term
-----------------------------------------------
Compensation
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options/SARs (#) Compensation ($)
<S> <C> <C> <C> <C>
Kenneth C. Thompson (2) 1998 $171,100 (3)(4) -- * --
Chief Executive Officer
Charles S. Brand (5) 1998 $200,000 -- * --
Chairman of the Board 1997 $162,500 -- * 20,000
and Chief Technical Officer 1996 $150,000 -- * --
Norman M. Phipps 1998 $150,000 -- * -- $ 1,775 (6)
President, Chief Operating 1997 $153,395 (7) -- * 825,000
Officer and Interim Chief 1996 -- -- -- --
Financial Officer
Erik S. Kruger 1998 $ 37,596 (8) -- * 200,000
Vice President -
Finance and Administration
</TABLE>
__________________
* Represents less than the lesser of $50,000 or 10% of salary and bonus for
each Named Executive Officer.
(1) The Company did not grant any stock appreciation rights or restricted stock
and did not make any long-term incentive payments during the period covered
by the Summary Compensation Table.
(2) Mr. Thompson resigned as the Company's Chief Executive Officer and as a
director in November 1999.
(3) Includes consulting fees paid to Mr. Thompson prior to his becoming Chief
Executive Officer of the Company in March 1998.
(4) Pursuant to the terms of his consulting agreement, a portion of Mr.
Thompson's consulting fee was paid in the form of 108,000 shares of Common
Stock with a fair market value of $54,000. See "Employment Agreements and
Compensation Arrangements."
(5) Mr. Brand served as the Company's Chief Executive Officer from April 1997
until March 1998.
(6) Represents life insurance premiums paid on behalf of Mr. Phipps.
(7) Includes consulting fees paid to Mr. Phipps prior to his employment by the
Company in April 1997.
(8) Mr. Kruger joined the Company in February 1998.
Option Grants
The following table summarizes certain information relating to the
grant of options to purchase Common Stock to each of the Named Executive
Officers during the fiscal year ended June 30, 1998:
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year (1)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
<S> <C> <C> <C> <C> <C> <C>
Erik S. Kruger 200,000 (2) 66.7% $0.55 2/23/08
</TABLE>
(1) The Company did not grant any stock appreciation rights during the fiscal
year ended June 30, 1998.
(2) The vesting period for the above grant was one-third six months after the
date of grant, one-third one year after the date of grant and the remaining
one-third two years after date of grant.
Fiscal Year-End Option Values
The following table sets forth information with respect to the Named
Executive Officers concerning unexercised options held by such Named Executive
<PAGE>
Officers as of June 30, 1998. No stock options were exercised during the fiscal
year ended June 30, 1998.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Options Value of Unexercised
at Fiscal Year End In-The-Money Options at
(#) Exercisable/Unexercisable Fiscal Year End ($) (1)
<S> <C> <C> <C> <C>
Charles S. Brand 6,666/13,334 $759/$1,517
Norman M. Phipps 686,666/138,334 $115,909/$23,351
Erik S. Kruger 0/200,000 $0/$33,760
</TABLE>
(1) Based on an estimated market value of $.7188 per share for the Common Stock
on June 30, 1998.
Stock Compensation Program
In May 1997, the Company adopted the Stock Compensation Program in
order to promote the interests of the Company, its direct and indirect present
and future subsidiaries and its stockholders by providing eligible persons with
the opportunity to acquire an ownership interest, or to increase their ownership
interest, in the Company as an incentive to remain in the service of the
Company. The Stock Compensation Program authorizes the granting of incentive
stock options, non-qualified stock options, stock appreciation rights,
performance shares and stock bonus awards to employees and consultants of the
Company and its subsidiaries, including those employees serving as officers or
directors of the Company (the "Employee Plans"). The Stock Compensation Program
also authorizes automatic option grants to directors who are not otherwise
employed by the Company (the "Independent Director Plan"). In connection with
the Stock Compensation Program, 7,500,000 shares of Common Stock are reserved
for issuance, of which up to 7,350,000 shares may be issued under the Employee
Plans and up to 150,000 shares may be issued under the Independent Director
Plan. The Stock Compensation Program is administered by the Compensation
Committee of the Board of Directors ("the Administrator").
Options and awards granted under the Stock Compensation Program may
have an exercise or payment price as established by the Compensation Committee,
provided that the exercise price of incentive stock options granted under the
Employee Plans may not be less than the fair market value of the underlying
shares on the date of grant. Options granted under the Independent Director Plan
must have an exercise price equal to the fair market value of the underlying
shares on the date of grant.
Unless otherwise provided at the date of grant, no option or award may
vest within one year of the date of grant and no option or award may be
exercised more than 10 years from the date of grant. Options granted under the
Independent Director Plan vest one year following the date of grant and expire
if not exercised on or before the fifth anniversary thereof. Unless otherwise
specified by the Compensation Committee, options and awards (other than pursuant
to the Independent Director Plan) vest in four equal installments on the first,
second, third and fourth anniversaries of the date of grant. Vesting of any
option or award granted under the Stock Compensation Program may be accelerated
in certain circumstances, including upon the occurrence of a "Change in Control
Event" (as defined in the Stock Compensation Program).
Options and awards granted under the Stock Compensation Program are
nontransferable, except by will or by the laws of descent and distribution.
However, the Compensation Committee may permit the recipient of a non-incentive
stock option granted under the Employee Plans and options granted under the
Independent Director Plan to transfer the option to a family member or a trust
created for the benefit of family members. During the lifetime of a participant,
an option may be exercised only by the participant or a permitted transferee. In
the event that a participant's employment or service terminates as a result of
death, all vested awards will be paid to the participant's estate by the Company
and the participant's estate or any permitted transferee will have the right to
exercise vested options for a period ending on the earlier of the expiration
dates of such options or one year from the date of death. If the participant's
employment or service terminates as a result of retirement or a "disability" (as
set forth in the Stock Compensation Program), all vested awards will be paid to
the participant by the Company and the participant or any permitted transferee
will have the right to exercise vested options for a period ending on the
earlier of the expiration dates of such options or one year from the date of
termination. If the participant's employment or service terminates for cause,
all options and awards will automatically expire upon termination. If the
participant's employment or service terminates other than as a result of death,
disability, retirement or termination for cause, the participant will have the
right to collect all vested awards immediately and the participant or any
permitted transferee will have the right to exercise vested options for a period
ending on the earlier of the expiration dates of such options or awards or 30
days from the date of termination, subject to extension at the discretion of the
Administrator, or three months from the date of termination in the case of
options granted pursuant to the Independent Director Plan. In all cases, any
unvested options or awards will terminate as of the date of termination of
employment or service.
The Stock Compensation Program will terminate on April 30, 2007,
unless earlier terminated by the Board of Directors. No options or awards may be
granted under the Stock Compensation Program after its termination; however,
<PAGE>
termination of the Stock Compensation Program will not affect the status of any
option or award outstanding on the date of termination.
Employment Agreements and Compensation Arrangements
In April 1997, Mr. Charles Brand and Mr. Phipps entered into five-year
employment agreements with the Company. Pursuant to such agreements, Mr. Brand
receives an annual base salary of $200,000 and Mr. Phipps receives an annual
base salary of $150,000, subject to periodic increases at the discretion of the
Board of Directors. Mr. Brand and Mr. Phipps are entitled to participate in all
compensation and employee benefit plans, including such bonuses as may be
authorized by the Board of Directors from time to time. The Company also agreed
to provide and maintain a $1,000,000 term-life insurance policy for the benefit
of each of Mr. Brand and Mr. Phipps. In the event of the termination of
employment by the Company (other than upon death, permanent disability or a
"termination for cause"), each of Mr. Brand and Mr. Phipps would be entitled to
receive his then-current base salary for a period equal to the greater of (i)
the remainder of the term of his employment agreement, or (ii) twelve months
from the effective date of termination.
In July 1997, the Company entered into a consulting agreement with
MBF, an entity which is controlled by Mr. Fisher, pursuant to which MBF agreed
to cause Mr. Fisher to provide certain financial consulting services to the
Company for up to 25% of Mr. Fisher's business time. Under the consulting
agreement, MBF is entitled to receive a monthly payment of $5,000. The
consulting agreement was terminated on September 30, 1997.
In August 1998, the Company entered into a three-year employment
agreement with Mr. Thompson, pursuant to which Mr. Thompson agreed to serve as
the Company's Chief Executive Officer. Effective November 15, 1999, Mr. Thompson
resigned as the Company's Chief Executive Officer. In connection with his
resignation, the Company and Mr. Thompson entered into a separation agreement
(the "Separation Agreement"). In the Separation Agreement, the Company agreed to
pay Mr. Thompson an aggregate of $137,097 in five monthly installments, without
interest, in repayment of certain amounts owed to him and in lieu of any rights
Mr. Thompson had under the employment agreement he entered into with the Company
in August 1998. In addition, the Company issued to Mr. Thompson stock options
exercisable for an aggregate of 500,000 shares of Common Stock (the "Option
Shares") at an exercise price of $0.60 per share (the "Thompson Option"). The
Thompson Option expires, as to one-half of the Option Shares, on November 15,
2001, and as to the remainder of such Option Shares, on November 15, 2002.
Pursuant to the terms of the Separation Agreement, all prior
agreements between Mr. Thompson and the Company were terminated and the Company
and Mr. Thompson agreed to release certain claims against each other and certain
related parties. Under the Separation Agreement, Mr. Thompson is subject to
certain confidentiality obligations and agreed to non-competition and certain
other covenants for a period of one year.
In addition, the Company has entered into a consulting agreement with
Dr. Brand. See "Compensation Committee Interlocks and Insider Participation."
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of February 29, 2000
with respect to beneficial ownership of the Common Stock by (i) each person
serving as a director on June 30, 1998, (ii) each Named Executive Officer, and
(iii) all executive officers and directors as a group. The mailing address of
each such person is c/o LogiMetrics, Inc., 50 Orville Drive, Bohemia, New York
11716.
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership (1) Class
Charles S. Brand 16,538,339 (2) 53.5%
Kenneth C. Thompson 699,667 (3) 2.4%
Norman M. Phipps 2,219,784 (4) 7.4%
Erik S. Kruger 240,000 (5) *
Frank A. Brand 330,905 (6) 1.2%
Jean-Francois Carreras 72,500 (7) *
Mark B. Fisher 5,167,806 (8) 15.3%
Francisco A. Garcia 106,667 (9) *
All Executive Officers 25,375,668 66.7%
and Directors as a (2,3,4,5,6,7,8,9)
group (8 persons)
* Less than 1%
(1) Each shareholder possesses sole voting and investment power with respect to
the shares listed, except as otherwise indicated. Includes shares of Common
Stock which the individual has the right to acquire within 60 days of
February 29, 2000.
(2) Includes (i) 2,150,539 shares of Common Stock issuable upon the conversion
of Class C Debentures held by Mr. Brand, and (ii) 20,000 shares of Common
Stock issuable upon the exercise of stock options exercisable within 60
days of February 29, 2000.
(3) Includes 500,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of February 29, 2000.
(4) Includes (i) 296,042 shares of Common Stock issuable upon the exercise of
Common Stock Purchase Warrants, Series E (the "Series E Warrants") held by
Mr. Phipps, (ii) 134,906 shares of Common Stock issuable upon the exercise
of Common Stock Purchase Warrants, Series F (the "Series F Warrants") held
by Mr. Phipps, (iii) 23,585 shares of Common Stock issuable upon the
conversion of one-quarter share of Preferred Stock held by Mr. Phipps, and
(iv) 825,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of February 29, 2000.
(5) Includes 200,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of February 29, 2000.
(6) Includes 40,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of February 29, 2000.
(7) Consists of (i) 20,000 shares of Common Stock issuable upon the exercise of
Series E Warrants held by Mr. Carreras, (ii) 12,500 shares of Common Stock
issuable upon the exercise of Series F Warrants held by Mr. Carreras, and
(iii) 40,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of February 29, 2000.
(8) Includes (i) 381,252 shares of Common Stock issuable upon the conversion of
Class A Debentures held by Mr. Fisher, (ii) 520,000 shares of Common Stock
issuable upon the exercise of Amended and Restated Common Stock Purchase
Warrants, Series B (the "Series B Warrants") held by Mr. Fisher, (iii)
241,935 shares of Common Stock issuable upon the exercise of Series G
Warrants held by Mr. Fisher, (iv) 12,943 shares of Common Stock issuable
upon the exercise of Series H Warrants held by Mr. Fisher, (v) 6,472 shares
of Common Stock issuable upon the exercise of Series I Warrants held by Mr.
Fisher, and (vi) 40,000 shares of Common Stock issuable upon the exercise
of stock options exercisable within 60 days of February 29, 2000. Also
includes (i) 500,000 shares of Common Stock issuable to MBF Capital
Corporation ("MBF") upon the exercise of Series G Warrants held by MBF,
(ii) 762,504 shares of Common Stock issuable upon the conversion of Class A
Debentures held by Broadband Systems, L.P. ("Broadband Systems"), (iii)
483,871 shares of Common Stock issuable upon the exercise of Series G
Warrants held by Broadband Systems, (iv) 25,886 shares of Common Stock
issuable upon the exercise of Series H Warrants held by Broadband Systems,
(v) 12,943 shares of Common Stock issuable upon the exercise of Series I
Warrants held by Broadband Systems, (vi) 500,000 shares of Common Stock
issuable upon the exercise of Series G Warrants held by Phineas Broadband
Systems, L.P. ("Phineas"), (vii) 1,000,000 shares of Common Stock issuable
upon the exercise of Series H Warrants held by Phineas and (viii) 500,000
shares of Common Stock issuable upon the exercise of Series I Warrants held
by Phineas. Mr. Fisher is the sole officer, director and shareholder of MBF
and MBF Broadband Systems, Inc., the general partner of both Broadband
Systems and Phineas. Accordingly, Mr. Fisher is deemed to be the beneficial
owner of all shares of Common Stock beneficially owned by each of MBF,
Broadband Systems and Phineas.
(9) Includes 40,000 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of February 29, 2000.
Other Beneficial Owners: The following table provides information, as
of February 29, 2000, regarding the beneficial ownership of more than five
percent (5%) of the Company's Common Stock held by persons who are not listed in
the preceding table. Certain information contained herein has been derived
solely from filings made by such persons with the SEC.
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership Class
Gregory Manocherian 7,620,207 (1) 21.9%
3 New York Plaza
18th Floor
New York, NY 10004
Stephen Feinberg 6,315,834 (2) 18.0%
450 Park Avenue
New York, NY 10022
Gerald B. Cramer 3,895,381 (3) 12.2%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
A.C. Israel
Enterprises, Inc. 3,895,381 (4) 12.2%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
<PAGE>
CRM 1998 Enterprise 2,722,897 (5) 8.8%
Fund, LLC
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
CRM 1997 Enterprise
Fund, LLC 2,703,998 (6) 8.7%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
CRM Partners, LP 2,313,069 (7) 7.5%
c/o Cramer Rosenthal
McGlynn, Inc.
520 Madison Avenue
New York, NY 10022
(1) Includes 47,170 shares of Common Stock issuable upon the conversion of
one-half share of Preferred Stock held by Mr. Manocherian. Also includes
(i) 152,502 shares of Common Stock issuable upon the conversion of Class A
Debentures held by Kabuki Partners ADP, GP ("Kabuki"), (ii) 96,774 shares
of Common Stock issuable upon the exercise of Series G Warrants held by
Kabuki, (iii) 5,177 shares of Common Stock issuable upon the exercise of
Series H Warrants held by Kabuki, (iv) 2,589 shares of Common Stock
issuable upon the exercise of Series I Warrants held by Kabuki, (v) 483,871
shares of Common Stock issuable upon the conversion of Class C Debentures
held by Kabuki, (vi) 738,454 shares of Common Stock issuable upon the
conversion of Class A Debentures held by Whitehall Properties LLC
("Whitehall"), (vii) 500,494 shares of Common Stock issuable upon the
exercise of Series G Warrants held by Whitehall, (viii) 25,886 shares of
Common Stock issuable upon the exercise of Series H Warrants held by
Whitehall, (ix) 12,943 shares of Common Stock issuable upon the exercise of
Series I Warrants held by Whitehall, (x) 596,774 shares of Common Stock
issuable upon the conversion of Class C Debentures held by Whitehall, (xi)
1,476,917 shares of Common Stock issuable upon the conversion of Class A
Debentures held by Pamela Equities Corp. ("PEC"), (xii) 1,000,988 shares of
Common Stock issuable upon the exercise of Series G Warrants held by PEC,
(xiii) 51,773 shares of Common Stock issuable upon the exercise of Series H
Warrants held by PEC, (xiv) 25,886 shares of Common Stock issuable upon the
exercise of Series I Warrants held by PEC, and (xv) 854,839 shares of
Common Stock issuable upon the conversion of Class C Debentures held by
PEC. Mr. Manocherian is (i) the controlling general partner of Kabuki, (ii)
a member of Whitehall, and (iii) an officer of PEC. Accordingly, Mr.
Manocherian may be deemed to be the beneficial owner of all shares of
Common Stock beneficially owned by each of Kabuki, Whitehall and PEC.
(2) Consists of (i) 3,773,454 shares of Common Stock issuable upon the
conversion of Class B Debentures held by Cerberus, and (ii) 2,542,380
shares of Common Stock issuable upon the exercise of Series C Warrants held
by Cerberus. Mr. Feinberg is the Managing Member of Cerberus Associates,
L.L.C., the general partner of Cerberus and, accordingly, is deemed to be
the beneficial owner of all shares of Common Stock beneficially owned by
Cerberus.
(3) Includes (i) 1,476,917 shares of Common Stock issuable upon the conversion
of Class A Debentures held by Mr. Cramer, (ii) 967,742 shares of Common
Stock issuable upon the exercise of Series G Warrants held by Mr. Cramer,
(iii) 51,772 shares of Common Stock issuable upon the exercise of Series H
Warrants held by Mr. Cramer, (iv) 25,886 shares of Common Stock issuable
upon the exercise of Series I Warrants held by Mr. Cramer and (v) 782,692
shares of Common Stock issuable upon the conversion of Class C Debentures
held by Mr. Cramer.
(4) Includes (i) 1,476,917 shares of Common Stock issuable upon the conversion
of Class A Debentures held by A.C. Israel Enterprises, Inc. ("ACIE"), (ii)
967,742 shares of Common Stock issuable upon the exercise of Series G
Warrants held by ACIE, (iii) 51,772 shares of Common Stock issuable upon
the exercise of Series H Warrants held by ACIE, (iv) 25,886 shares of
Common Stock issuable upon the exercise of Series I Warrants held by ACIE
and (v) 782,692 shares of Common Stock issuable upon the conversion of
Class C Debentures held by ACIE.
(5) Includes 2,128,925 shares of Common Stock issuable upon the conversion of
Class C Debentures held by CRM 1998 Enterprise Fund, L.L.C.
(6) Includes (i) 1,363,927 shares of Common Stock issuable upon the conversion
of Class A Debentures held by CRM 1997 Enterprise Fund, L.L.C. ("CRM
Enterprise Fund"), (ii) 923,930 shares of Common Stock issuable upon the
exercise of Series G Warrants held by CRM Enterprise Fund, (iii) 49,428
shares of Common Stock issuable upon the exercise of Series H Warrants held
by CRM Enterprise Fund, and (iv) 24,713 shares of Common Stock issuable
upon the exercise of Series I Warrants held by CRM Enterprise Fund.
<PAGE>
(7) Includes (i) 1,176,506 shares of Common Stock issuable upon the conversion
of Class A Debentures held by CRM 1997 Partners, L.P. ("CRM Partners"),
(ii) 758,245 shares of Common Stock issuable upon the exercise of Series G
Warrants held by CRM Partners, (iii) 40,565 shares of Common Stock issuable
upon the exercise of Series H Warrants held by CRM Partners, and (iv)
20,282 shares of Common Stock issuable upon the exercise of Series I
Warrants held by CRM Partners.
See Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange Act -- Right to Designate
Directors; Changes in Control.
Item 12. Certain Relationships and Related Transactions
In June 1997, the Company entered into a consulting agreement with
Orbitrex International, Inc. ("Orbitrex"), whose President is Alfred Mendelsohn,
a former director of the Company. Under the consulting agreement, Orbitrex
agreed to provide certain services in connection with product development and
international marketing opportunities. Under the consulting agreement, Orbitrex
was entitled to receive payments aggregating $60,000, payable in monthly
installments on or prior to April 30, 1998. In the consulting agreement,
Orbitrex agreed to certain confidentiality, non-competition and intellectual
property covenants.
In July 1997, Norman M. Phipps, a director of the Company purchased
850,000 shares of Common Stock from the Company for $467,500, or $0.55 per
share. In connection with the purchase, $8,500 was paid in cash from the
proceeds of a one-time bonus paid to Mr. Phipps and the remainder was paid in
the form of a non-recourse secured promissory note (the "Phipps Note"). Also in
July 1997, Michael L. Gaffney, an employee of the Company purchased 400,000
shares of Common Stock from the Company for $220,000, or $0.55 per share. In
connection with Mr. Gaffney's the purchase, $4,000 was paid in cash from the
proceeds of a one-time bonus paid to Mr. Gaffney and the remainder was paid in
the form of a non-recourse secured promissory note (the "Gaffney Note"). The
Phipps Note and the Gaffney Note do not bear interest, have no fixed maturity
date, and are each secured by a pledge of the shares of Common Stock purchased
by Messrs. Phipps and Gaffney, respectively. The sale of the Class C Debentures
as described below resulted in a "Change in Control Event" under the terms of
the Phipps Note and the Gaffney Note. The Phipps Note and the Gaffney Note were
each satisfied upon the occurrence of such "Change in Control Event." The
Company recorded a non-cash charge to account for these transactions in the
aggregate amount of $675,000 at June 30, 1998.
MBF, an entity controlled by Mark B. Fisher, a director of the
Company, paid $35,000 of the purchase price payable by it in connection with its
July 1997 purchase of Series G Warrants in the form of a non-recourse secured
promissory note (the "MBF Note"). The MBF Note matures on July 29, 2000 and
bears interest (compounded annually) at a rate of 6.07% per annum, which is
payable at maturity. The MBF Note is secured by a pledge of the Series G
Warrants purchased by MBF. The MBF Note will become immediately due and payable
upon the occurrence of certain events, including a sale or other disposition by
MBF of the Series G Warrants purchased by it or the consummation of a Company
Sale (as defined in the Stockholders Agreement).
Prior to its acquisition by the Company, Mr. Brand, the Company's
Chairman and Chief Executive Officer, lent certain amounts to mmTech on an
as-needed basis to fund a portion of mmTech's working capital requirements. The
amount advanced by Mr. Brand was $846,781 at February 29, 2000. Pursuant to an
agreement between Mr. Brand and the Company, the Company has agreed to pay
interest on the unpaid advances (which previously had been interest-free) at a
rate of seven percent per annum.
Mr. Brand owns 40% of the outstanding common stock of Advanced Control
Components, Inc. ("ACC"). ACC sublets space from the Company at its Eatontown,
New Jersey facility and pays to mmTech $34,228 in annual rent. Employees from
mmTech perform services for ACC and employees from ACC perform services for
mmTech from time to time. The company utilizing such services pays to the
company providing such services an amount equal to two times the base hourly
salary of the employees providing such services for the number of hours
involved. Pursuant to such arrangements, ACC paid to mmTech net amounts of
$268,883 during the fiscal year ended June 30, 1998 and $223,167 during the
fiscal year ended June 30, 1997.
Pursuant to the terms of a Stock Purchase Agreement, dated October 21,
1998 (the "Stock Purchase Agreement"), Mr. Brand sold 2,000,000 shares of Common
Stock to a group of institutional investors (the "Investors") for a cash
purchase price of $500,000, or $0.25 per share. The sale was made as a condition
to the transactions contemplated by a Purchase Agreement, dated October 21, 1998
(the "Purchase Agreement"), among the Company and the purchasers party thereto
(including the Investors). Pursuant to the Purchase Agreement, the Company
issued and sold $2.7 million in aggregate face amount of its Class C 13% Senior
Subordinated Debentures due September 30, 1999 (the "Class C Debentures") for an
aggregate purchase price of $2.0 million. As required by the Investors, Mr.
Brand used the proceeds of the sale of Common Stock pursuant to the Stock
Purchase Agreement to acquire $667,000 in face amount of the Class C Debentures
pursuant to the Purchase Agreement for a cash purchase price of $500,000. The
Class C Debentures are currently convertible into shares of Common Stock at a
conversion price of $0.31 per share, subject to adjustment in certain
circumstances.
<PAGE>
In connection with the issuance by the Company of its Class A
Debentures in July 1997 to a group of institutional investors (the
"Purchasers"), the Company granted to the Purchasers the right, at any time
prior to August 15, 1998, to purchase an additional $833,333 in aggregate
principal amount of the Class A Debentures, Series G Warrants to purchase an
aggregate of 2,000,000 shares of Common Stock, Series H Warrants to purchase an
aggregate of 333,333 shares of Common Stock and Series I Warrants to purchase an
aggregate of 166,667 shares of Common Stock for a total purchase price of
$1,000,000 (the "Purchase Option"). On May 1, 1998, the Purchasers exercised
their respective rights to purchase $500,000 of the Purchase Option. The related
securities issued in connection therewith are set forth in the consolidated
financial statements contained herein. On August 6, 1998, the Purchasers
exercised their respective rights to purchase the remaining $500,000 of the
Purchase Option.
Certain holders of the Company's securities, including directors,
officers and beneficial owners of more than 5% of the Common Stock are entitled
to certain registration rights with respect to securities of the Company held by
them.
For a description of certain other transactions between the Company
and certain of its directors, executive officers and major stockholders, see
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act -- Right to Designate Directors; Changes
in Control.
Item 13. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this Form 10-KSB:
Number Description
3.1 Certificate of Incorporation of the Company, as amended.
3.2 By-laws of the Company, as amended (previously filed as Exhibit 3.2 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
4.1 Form of Class A 13% Senior Subordinated Convertible Pay-in-Kind Debenture
due July 29, 1999 (previously filed as Exhibit 4.1 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1997 (file no.
0-10696) and incorporated herein by reference).
4.2 Form of Amended and Restated Class B 13% Senior Subordinated Convertible
Pay-in-Kind Debenture due July 29, 1999 (previously filed as Exhibit 4.2 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (file no. 0-10696) and incorporated herein by reference).
4.3 Form of Class C 13% Convertible Senior Subordinated Debenture due September
30, 1999.
4.4 Form of Amended and Restated Series A Warrant (previously filed as Exhibit
7 to the Company's Current Report on Form 8-K, dated March 7, 1996 (file
no. 0-10696) and incorporated herein by reference).
4.5 Form of Amended and Restated Series B Warrant (previously filed as Exhibit
8 to the Company's Current Report on Form 8-K, dated March 7, 1996 (file
no. 0-10696) and incorporated herein by reference).
4.6 Form of Series C Warrant (previously filed as Exhibit 2 to the Company's
Current Report on Form 8-K, dated March 7, 1996 (file no. 0-10696) and
incorporated herein by reference).
4.7 Form of Series D Warrant (previously filed as Exhibit 4 to the Company's
Current Report on Form 8-K, dated March 7, 1996 (file no. 0-10696) and
incorporated herein by reference).
4.8 Form of Series E Warrant (previously filed as Exhibit 5 to the Company's
Current Report on Form 8-K, dated March 7, 1996 (file no. 0-10696) and
incorporated herein by reference).
4.9 Form of Series F Warrant (previously filed as Exhibit 10.9 to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996 (file
no. 0-10696) and incorporated herein by reference).
4.10 Form of Series G Warrant (previously filed as part of Exhibit 10.4 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
4.11 Form of Series H Warrant (previously filed as part of Exhibit 10.4 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
<PAGE>
4.12 Form of Series I Warrant (previously filed as part of Exhibit 10.4 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
4.13 Form of Series J Warrant, as amended.
4.14 Form of Certificate of the Designations, Powers, Preferences and Rights of
the Company's Series A 12% Cumulative Convertible Redeemable Preferred
Stock, stated value $50,000 per share (previously filed as Exhibit 10.6 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1996 (file no. 0-10696) and incorporated herein by reference).
4.15 Form of Certificate of Amendment of Certificate of Designations, Powers,
Preferences and Rights of the Company's Series A 12% Cumulative Convertible
Redeemable Preferred Stock.
10.1 Letter of Intent, dated February 17, 2000, by and between the Company and
Signal Technology Corporation ("Signal").*
10.2 Loan Agreement, dated February 17, 2000, by and between the Company and
Signal.
10.3 Negotiable Secured Senior Subordinated Promissory Note, dated February 17,
2000, in favor of Signal.
10.4 Management Agreement, dated February 17, 2000, by and between the Company
and Signal.
10.5 Letter Agreement, dated February 17, 2000, by and between the Company and
Signal.
10.6 Consent Letter, dated February 16, 2000, by and between the Company and
North Fork Bank (the "Bank").
10.7 Second Amended and Restated Security Agreement, Intercreditor Agreement,
Waiver and Consent dated March 7, 1996, as amended and restated on July 29,
1997 and August 31, 1999 and as further amended by Amendments No. 1 and No.
2 dated December 2, 1999 and February 17, 2000, respectively, among the
Company, Cramer Rosenthal McGlynn, LLC, as agent, and the other parties
thereto.
10.8 Modified Revolving Credit Note, dated as of April 30, 1998, in favor of the
Bank.
10.9 Modified General Security Agreement, dated as of April 30, 1998, in favor
of the Bank.
10.10 Form of Substitute Negotiable Secured Senior Subordinated Promissory Note
due July 1, 2000.
10.11 Acknowledgment, Consent and Waiver, dated as of March 7, 2000, among the
Company and the other parties thereto.
10.12 Purchase Agreement, dated as of October 21, 1998, among the Company and
the purchasers party thereto.
10.13 Stock Purchase Agreement, dated as of October 21, 1998, among Charles S.
Brand and the purchasers party thereto.
10.14 Registration Rights Agreement, dated as of October 21, 1998, among the
Company and the holders party thereto.
10.15 Purchase Agreement, dated as of July 29, 1997, among the Company and the
purchasers party thereto (previously filed as Exhibit 10.4 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
10.16 Stockholders Agreement, dated as of July 29, 1997, among the Company,
Charles S. Brand and the purchasers party thereto (previously filed as
Exhibit 10.5 to the Company's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1997 (file no. 0-10696) and incorporated herein by
reference).
<PAGE>
10.17 Unit Purchase Agreement, dated as of March 7, 1996, by and between the
Company and Cerberus Partners, L.P. (previously filed as Exhibit 10.6 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (file no. 0-10696) and incorporated herein by reference).
10.18 Agreement to Purchase and Sell Equipment, dated as of June 30, 1994, by
and between mmTech and CellularVision Technology & Telecommunications,
L.P. ("CT&T") (previously filed as Exhibit 10.8 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1997 (file no.
0-10696) and incorporated herein by reference).*
10.19 Letter Agreement, dated as of October 23, 1996, by and between the
Company and CT&T (previously filed as Exhibit 10 to the Company's
Quarterly Report on Form 10-QSB for the fiscal quarter ended December 31,
1996 (file no. 0-10696) and incorporated herein by reference).
<PAGE>
10.20 Letter Agreement, dated December 1, 1997, by and between the Company and
CellularVision of New York, L.P. (previously filed as Exhibit 10.10 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (file no. 0-10696) and incorporated herein by reference).
10.21 Assignment Agreement, dated as of December 31, 1997, by and between the
Company and NewStart Factors, Inc. (previously filed as Exhibit 10.11 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (file no. 0-10696) and incorporated herein by reference).
10.22 Agreement of Lease, dated as of April 22, 1997, by and between the
Company and Reckson FS Limited Partnership (previously filed as Exhibit
10.12 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1997 (file no. 0-10696) and incorporated herein by
reference).
10.23 Lease, dated January 24, 1994, by and between Mid Atlantic Industrial Co.
and mmTech, as amended, (previously filed as Exhibit 10.13 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
10.24 Lease, dated November 30, 1998, by and between 611 Industrial Way, L.L.C.
and the Company.
10.25 Consulting Agreement, dated March 4, 1998, by and between the Company and
Kenneth C. Thompson.
10.26 Employment Agreement, dated August 6, 1998, by and between the Company
and Kenneth C. Thompson.
10.27 Stock Option Agreement, dated February 22, 2000, by and between the
Company and Kenneth C. Thompson
10.28 Separation Agreement, dated February 22, 2000, by and between the Company
and Kenneth C. Thompson.
10.29 Employment Agreement, dated as of April 25, 1997, by and between the
Company and Charles S. Brand (previously filed as Exhibit 10.14 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
<PAGE>
10.30 Employment Agreement, dated as of April 25, 1997, by and between the
Company and Norman M. Phipps (previously filed as Exhibit 10.15 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
10.31 Consulting Agreement, dated as of July 29, 1997, by and between the
Company and MBF Capital Corp. (previously filed as Exhibit 10.16 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
10.32 Letter Agreement, dated as of August 6, 1997, by and between the Company
and MBF Capital Corp. (previously filed as Exhibit 10.19 to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997
(file no. 0-10696) and incorporated herein by reference).
10.33 Non-Recourse Secured Promissory Note, dated July 29, 1997, made by MBF
Capital Corp. in favor of the Company (previously filed as Exhibit 10.20
to the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1997 (file no. 0-10696) and incorporated herein by reference).
10.34 Pledge Agreement, dated July 29, 1997, between the Company and MBF
Capital Corp. (previously filed as Exhibit 10.21 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1997 (file no.
0-10696) and incorporated herein by reference).
10.35 Non-Recourse Secured Promissory Note, dated July 22, 1997, made by Norman
M. Phipps in favor of the Company (previously filed as Exhibit 10.17 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (file no. 0-10696) and incorporated herein by reference).
10.36 Pledge Agreement, dated July 22, 1997, by and between the Company and
Norman M. Phipps (previously filed as Exhibit 10.18 to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1997
(file no. 0-10696) and incorporated herein by reference).
10.37 Consulting Agreement, dated January 20, 1998, by and between the Company
and Dr. Frank A. Brand (previously filed as Exhibit 10.25 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
10.38 Severance Agreement, dated March 10, 1998, by and between the Company and
Russell J. Reardon.
10.39 Stock Option Agreement, dated as of March 10, 1998, by and between the
Company and Russell J. Reardon.
10.40 Stock Option Agreement, dated as of May 1, 1996, by and between the
Company and Russell J. Reardon (previously filed as Exhibit 10.22 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997 (file no. 0-10696) and incorporated herein by reference).
10.41 LogiMetrics, Inc. 1997 Stock Compensation Program, as amended.
10.42 Form of Indemnification Agreement for Directors (previously filed as
Exhibit 10.24 to the Company's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1997 (file no. 0-10696) and incorporated
herein by reference).
21.1 List of the Company's Subsidiaries (previously filed as Exhibit 21.1 to
the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (file no. 0-10696) and incorporated herein by reference).
27.1 Financial Data Schedule.
* Certain portions of this exhibit have been omitted based upon a request for
confidential treatment. The omitted portions of this exhibit have been
separately filed with the Securities and Exchange Commission.
(b) Reports on Form 8-K: None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LOGIMETRICS, INC.
Date: April 10, 2000 By:/s/Norman M. Phipps
_______________________________
Norman M. Phipps
President, Chief Operating Officer
and Director (Principal Executive
Officer)
In accordance with the requirements of the Securities and Exchange Act
of 1934, as amended, this report has been signed below by the following persons
on behalf of the Company and in the capacities and on the dates indicated.
Date: April 10, 2000 By:/s/Charles S. Brand
_______________________________
Charles S. Brand
Chairman of the Board and
Chief Technical Officer
Date: April 10, 2000 By:/s/Kenneth C. Thompson
_______________________________
Kenneth C. Thompson *
Date: April 10, 2000 By:/s/Norman M. Phipps
_______________________________
Norman M. Phipps
President, Chief Operating Officer,
Interim Chief Financial Officer and
Director (Principal Financial
Officer)
Date: April 10, 2000 By:/s/Erik S. Kruger
_______________________________
Erik S. Kruger
Vice President - Finance and
Administration
(Principal Accounting Officer)
Date: April 10, 2000 By:/s/Frank A. Brand
_______________________________
Frank A. Brand, Director
Date: April 10, 2000 By:/s/Jean-Francois Carreras
_______________________________
Jean-Francois Carreras, Director
Date: April 10, 2000 By:/s/Mark B. Fisher
_______________________________
Mark B. Fisher, Director
Date: April 10, 2000 By:/s/Francisco A. Garcia
_______________________________
Francisco A. Garcia **
<PAGE>
* Mr. Thompson resigned effective as of November 6, 1999.
** Mr. Garcia resigned effective November 3, 1999.
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
THE UNDERSIGNED, a natural person, for the purpose of organizing a
corporation under the provisions and subject to the requirements of the General
Corporation Law of the State of Delaware, hereby certifies that:
FIRST: The name of the Corporation is LOGIMETRICS, INC.
SECOND: The registered office of the Corporation is to be located at
306 South State Street, in the City of Dover, in the County of Kent, in the
State of Delaware. The name of its registered agent at that address is the
United States Corporation Company.
THIRD: The purpose of the Corporation is to engage in any lawful act of
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: (a) The aggregate number of shares of stock which the
Corporation shall have authority to issue is one million (1,000,000) shares of
which eight hundred thousand (800,000) shares with a par value of ten cents
($.10) per share shall be designated "Class A Common Stock" and two hundred
thousand (200,000) shares with a par value of forty cents ($.40) per share shall
be designated "Class B Common Stock."
(b) The relative rights, preferences and limitations of the
shares of each class are as follows:
(i) the holders of the Class A Common Stock shall have one
vote per share for all purposes and the holders of the Class B Common Stock
shall have four votes per share for all purposes.
(ii) at any time after the Corporation first has net
earnings after all federal, state and local taxes in any fiscal year, of
the sum of two hundred and fifty thousand ($250,000) dollars as determined
by the Corporation's regularly employed independent Certified Public
Accountant in accordance with generally accepted accounting principles each
share of Class B Common Stock may, at the option of the holder thereof, be
converted into four shares of Class A Common Stock.
FIFTH: The name and address of the incorporator is:
NAME ADDRESS
Robert S. Persky 477 Madison Avenue
New York, New York 10022
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and shareholders:
(1) The number of directors of the Corporation shall be such as
from time to time shall be fixed by, or in the manner provided in the
by-laws. Election of directors need not be by ballot unless the by-laws so
provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders.
(a) to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation;
(b) to fix and vary the amount to be reserved for any
proper purpose;
(c) to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the Corporation;
(d) to determine the use and disposition of any surplus
or net profits;
<PAGE>
(e) to determine from time to time whether, and to what
extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the Corporation (other than the
stock ledger) or any of them, shall be open to the inspection of the
stockholders.
(3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or
at any meeting of the stockholders called for the purpose of considering
any such act or contract, and any contract or act that shall be approved or
be ratified by the vote of the holders of a majority of the stock of the
Corporation which is represented in person or by proxy at such meeting and
entitled to vote thereat (provided that a lawful quorum of stockholders be
there represented in person or by proxy) shall be as valid and as binding
upon the Corporation and upon all the stockholders as though it had been
approved or ratified by every stockholder of the Corporation, whether or
not the contract or act would otherwise be open to legal attack because of
directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any
by-laws from time to time made by the directors or stockholders; provided,
however, that no by-laws so made shall invalidate any prior act of the
directors which would have been valid if such by-law had not been made.
SEVENTH: The Corporation shall, to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended from time to time,
indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title B of the
Delaware Code order a meeting of the creditors or class or creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the 20th day
of December, 1968.
/s/Robert S. Persky
___________________(L.S.)
ROBERT S. PERSKY
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that personally appeared before me, on 20th day of
December, 1968, the undersigned, a Notary Public duly authorized to take
acknowledgment of deeds by the laws of the place where the foregoing certificate
of incorporation was signed, Robert S. Persky, the incorporator who signed the
foregoing certificate of incorporation, known to me personally to be such, and
who acknowledged the same to be his act and deed, and that the facts herein
stated are true. Given under my hand and seal of office the day and year
aforesaid.
/s/Stephen
----------------------
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
The undersigned corporation, in order to amend its Certificate of
Incorporation, hereby certifies as follows:
FIRST: The name of the corporation is LOGIMETRICS, INC.
SECOND: The amendment to the Certificate of Incorporation to be
effected hereby is as follows:
(a) The paragraph number "Fourth" of the Certificate of Incorporation,
relating to capitalization is amended to read as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is One Million (1,000,000),
of the par value of $.10 per share, of which Eight Hundred Thousand
(800,000) shares are designated as Class A Common Stock and Two
Hundred Thousand (200,000) shares are designated as Class B Common
Stock."
Except as otherwise provided by law or herein, the holders of Class A
Common Stock shall have the sole voting power for the election of directors of
the corporation and no holder of Class B Common Stock shall have any right to
vote for the election of directors of the corporation. At every meeting of the
shareholders (i) each holder of Class A Common Stock shall be entitled to one
vote per share, voting with the holders of any other class of stock entitled to
vote, without regard to class, on all matters to be voted on by the shareholders
of the corporation and (ii) each holder of Class B Common Stock shall be
entitled to one vote per share, voting with the holders of any other class of
stock entitled to vote, without regard to class, on all matters to be voted on
by shareholders of the corporation other than for the election of directors of
the corporation. Subject to and upon compliance with the provisions of this
Article FOURTH, each record holder of Class B Common Stock shall be entitled at
any time and from time to time to convert any or all of the shares of Class B
Common Stock held by him into the same number of shares of Class A Common Stock.
Each conversion of shares of Class B Common Stock into shares of Class
A Common Stock shall be effected by the surrender of the certificate or
certificates representing the shares of Class B Common Stock to be converted at
the office of the
<PAGE>
Secretary of the corporation (and at such additional place or places as may from
time to time be designated by the Secretary or an Assistant Secretary of the
corporation) together with written notice by the holder of such Class B Common
Stock stating that such holder desires to convert the shares, or a stated number
of the shares, of Class B Common Stock represented by such certificate, into
Class A Common Stock, which notice shall also state the name or names (with
addresses) and denominations in which the certificate or certificates for Class
A Common Stock shall be issued and shall include instructions for delivery
thereof. Promptly after such surrender and the receipt of such written notice,
the corporation shall issue and deliver in accordance with such instructions the
certificate or certificates for the Class A Common Stock issuable upon such
conversion. Such conversion shall be deemed to have been effected as of the
close of business on the date on which such certificate or certificates shall
have been surrendered and such notice shall have been received by the
corporation and at such time the rights of the holder of such Class B Common
Stock (or specified portion thereof) as such shareholder shall cease and the
person or persons in whose name or names any certificate or certificates for
shares of Class A Common Stock are to be issued upon such conversion shall be
deemed to have become the holder or holders of record of the shares of Class A
Common Stock represented thereby.
If the certificate or certificates for Class A Common Stock are to be
registered in a name other than the name of the registered holder of Class B
Common Stock surrendered for conversion, the corporation shall not be required
to issue or deliver any certificate unless and until the holder of the stock
surrendered has paid to the corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance or shall establish
to the satisfaction of the corporation that such tax has been paid.
The corporation shall at all times reserve and keep available, out of
its authorized but unissued Class A Common Stock, such number of shares of Class
A Common Stock as shall be sufficient to effect conversion of all shares of
Class B Common Stock then outstanding.
When and as dividends are declared, whether payable in cash, in
property or in shares of stock of the corporation, the holders of Class B Common
Stock and the holders of Class A Common Stock shall be entitled to share
equally, share for share, in such dividends, except that if dividends are
declared which are payable in shares of Class B Common Stock or Class A Common
Stock, dividends shall be declared which are payable at the same rate in both
classes of stock and the dividends payable in shares of Class B Common Stock
shall be payable to holders of that class of stock and the dividends payable in
shares of Class A Common Stock shall be payable to holders of that class of
stock.
If the corporation shall in any manner subdivide or combine the
outstanding shares of Class A Common Stock, the outstanding shares of Class B
Common Stock shall be proportionately subdivided or combined.
<PAGE>
Shares of Class B Common Stock which are converted into shares of
Class A Common Stock as provided in this Article FOURTH shall not be reissued.
Except as herein otherwise expressly provided, all shares of Class B
Common Stock and Class A Common Stock shall be identical and shall entitle the
holders thereof to the same rights and privileges.
(b) The capital of the corporation will not be reduced under or by
reason of this Amendment.
THIRD: The amendment effected herein was authorized by the affirmative
vote of the holders of a majority of the outstanding shares entitled to vote
thereon at a meeting of shareholders pursuant to Section 222 and 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the corporation has caused this certificate to be
executed under its corporate seal the 3rd day of July, 1970.
ATTEST: LOGIMETRICS, INC.
/s/Robert S. Persky /s/Melvin Dubin
_________________________ By: __________________________
Robert S. Persky, Secretary Melvin Dubin, President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Be it remembered that on this 3rd day of July, 1970, personally came
before me, a Notary Public in and for the County and State aforesaid, Melvin
Dubin, who stated that he is the President of Logimetrics, Inc., and who is
known personally to me to be such, and acknowledged the foregoing document to be
the act and deed of the signers thereof, and that the facts stated therein are
true.
Given under my hand and seal of office the day and year aforesaid.
/s/Donald S. Snider
--------------------------
Donald S. Snider
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
----------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
---------------------------------------------------
We, FRANK J. SPOSATO, President, and CARL J. BARONE, Secretary, of
LOGIMETRICS, INC., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article
FOURTH thereof as it now exists and inserting in lieu thereof a new first
paragraph of said Article FOURTH, reading as follows:
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is One Million Five Hundred Thousand
(1,500,000), of the par value of $.10 per share, of which One Million
Three Hundred Thousand (1,300,000) shares are designated as Class A
Common Stock and Two Hundred Thousand (200,000) shares are designated
as Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted in accordance with
the provisions of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of a majority of the stock entitled to vote at a
meeting of stockholders.
IN WITNESS WHEREOF, we have signed this certificate this 13th day of
March, 1975.
/s/Frank J. Sposato
-------------------------
Frank J. Sposato, President
/s/Carl Barone
-------------------------
Carl J. Barone, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
---------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
--------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and JOEL HASEN, Assistant
Secretary of LOGIMETRICS, Inc., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Three Million Two Hundred
Thousand (3,200,000), of the par value of $.10 per share, of which
Three Million (3,000,000) shares are designated as Class A Common
Stock and Two Hundred Thousand (200,000) shares are designated as
Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 228(a) of the General Corporation Law of the State of
Delaware by the written consent of the holders of a majority of the shares of
Common Stock of said corporation entitled to vote at a meeting of stockholders,
and that written notice of the taking of such action has been given to the
holders of all such Common Stock.
IN WITNESS WHEREOF, we have signed this certificate this 25th day of
June, 1982.
/s/Murray H. Feigenbaum
-------------------------------
Murray H. Feigenbaum, President
ATTEST:
/s/Joel Hasen
-------------------------------
Joel Hasen, Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
--------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
--------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and JOEL HASEN, Assistant
Secretary of LOGIMETRICS, Inc., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Six Million Two Hundred
Thousand (6,200,000), of the par value of $.10 per share, of which Six
Million (6,000,000) shares are designated as Class A Common Stock and
Two Hundred Thousand (200,000) shares are designated as Class B Common
Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 242(c) of the General Corporation Law of the State of
Delaware by the affirmative vote of a majority of the issued and outstanding
shares of stock entitled to vote thereon at the annual meeting of stockholders
of the corporation duly called and held November 23, 1983.
IN WITNESS WHEREOF, we have signed this certificate this 27th day of
November, 1983.
/s/Murray H. Feigenbaum
-------------------------------
Murray H. Feigenbaum, President
/s/Joel Hasen
-------------------------------
Joel Hasen, Assistant Secretary
<PAGE>
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
To: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is registered
agent, hereby certifies that:
1. The name of the agent is United States Corporation Company.
2. The address of the old registered office was 306 South State
Street, Dover, Delaware 19901.
3. The address to which the registered office is to be changed is 229
South State Street, Dover, Delaware 19901. The new address will be effective on
February 18th, 1986.
4. The names of the corporations represented by said agent are set
forth on the list annexed to this certificate and made a part hereof by
reference.
IN WITNESS WHEREOF, said agent has caused this certificate to be
signed on its behalf by its Vice President and Secretary this 13th day of
February, 1986.
UNITED STATES CORPORATION COMPANY
/s/Dennis E. Howarth
-----------------------------------
Dennis E. Howarth
Vice President
ATTEST:
/s/Grant Dawson
- -------------------------
Grant Dawson
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
------------------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
------------------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and JOEL HASEN, Assistant
Secretary, of LOGIMETRICS, INC., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Six Million Two Hundred
Fifty Thousand (6,250,000), of the par value of $.10 per share, of
which Six Million (6,000,000) shares are designated as Class A Common
Stock and Two Hundred Fifty Thousand (250,000) shares are designated
as Class B Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 242 and Section 228 of the General Corporation Law of the
State of Delaware by the written consent of a majority of the issued and
outstanding shares of each class of stock entitled to vote thereon.
IN WITNESS WHEREOF, we have signed this certificate this ______ day of
July, 1988.
/s/Murray H. Feigenbaum
------------------------------
Murray H. Feigenbaum, President
ATTEST:
/s/Joel Hasen
------------------------------
Joel Hasen, Assistant Secretary
<PAGE>
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is registered
agent, hereby certifies that:
1. The name of the agent is United States Corporation Company.
2. The address of the old registered office was 229 South State
Street, Dover, Kent County, Delaware 19901.
3. The address to which the registered office is to be changed is 32
Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19901. The new
address will be effective on October 27, 1989.
4. The names of the corporations represented by said agent are set
forth on the list annexed to this certificate and made a part hereof by
reference.
IN WITNESS WHEREOF, said agent has caused this certificate to be
signed on its behalf by its Vice President and Assistant Secretary this 10th day
of October 1989.
UNITED STATES CORPORATION COMPANY
/s/Alan Spiewak
-----------------------------------
Alan Spiewak, Vice President
ATTEST:
/s/Richard L. Kushay
- --------------------------------------
Richard L. Kushay, Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
------------------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
------------------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and BARBARA DIVACK, Secretary, of
LOGIMETRICS, INC., do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has
been amended as follows:
By striking out the whole of the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu thereof a new first paragraph of
said Article FOURTH, reading as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Seven Million
(7,250,000), of the par value of $.10 per share, of which Seven
Million (7,000,000) shares are designated as Class A Common Stock and
Two Hundred Fifty Thousand (250,000) shares are designated as Class B
Common Stock."
Except as amended hereby all other paragraphs and provisions of said
Article FOURTH shall remain as they presently read.
SECOND: That such amendment has been duly adopted pursuant to the
provisions of Section 242(c) of the General Corporation Law of the State of
Delaware by the resolution adopted on June 13, 1995 by stockholders holding a
majority of the issued and outstanding shares of stock entitled to vote thereon.
IN WITNESS WHEREOF, we signed this certificate this 15th day of June,
1995.
/s/Murray H. Feigenbaum
------------------------------
Murray H. Feigenbaum, President
/s/Barbara Divack
------------------------------
Barbara Divack, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LOGIMETRICS, INC.
------------------------------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
------------------------------------------------------------
We, MURRAY H. FEIGENBAUM, President, and BARBARA DIVACK, Secretary, of
LOGIMETRICS, INC., do hereby certify as follows:
FIRST: The amendments to the Certificate of Incorporation of said
corporation to be effected hereby as follows:
1. The whole of Article FOURTH thereof as it now exists shall be
deleted and, in lieu thereof, a new Article FOURTH shall be inserted, reading as
follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have the authority to issue is Thirty Five Million
Two Hundred (35,000,200) shares, of which Thirty Five Million
(35,000,000) shares are designated as Common Stock, $.01 par value per
share, and Two Hundred (200) shares are designated as Preferred Stock
$.01, par value per share."
The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series and the voting powers thereof, full or limited, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
<PAGE>
The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall by cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares
of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting
rights;
(d) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion privileges, including
provision for adjustment of the conversion rate in such events as the Board
of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date
or dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(h) Any other relative rights, preferences and limitations of
that series."
The capital of the Corporation will be reduced by reason of the above
amendment; however, assets of the Corporation remaining after such reduction are
sufficient to pay debts of the Corporation for which payment has not otherwise
been provided.
<PAGE>
2. The whole of Article SEVENTH thereof as it now exists shall be
deleted and in lieu thereof, a new Article SEVENTH shall be inserted, reading as
follows:
"SEVENTH: (a) Every person who is or was a director, officer,
employee or agent of the Corporation shall be indemnified by the
Corporation pursuant to the provisions of Section 145 of the General
Corporation Law of the State of Delaware (or any similar provision or
provisions of applicable law at the time in effect) to the fullest
extent permitted thereby against all liabilities and expenses imposed
upon or incurred by that person in connection with any proceeding in
which that person may be made, or threatened to be made, a party, or
in which that person may become involved by reason of that person
being or having been a director or officer or continues to serve in
any capacity with any other enterprise at the request of the
Corporation. The foregoing right of indemnification shall not be
deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise. No repeal or
amendment of this Article shall adversely affect any right or
protection of any person existing at the time of such repeal or
amendment."
(b) No director of the Corporation shall be personally
liable to the Corporation or its stockholders for any monetary damages
for breach of fiduciary duty as a director; provided, however, that
the foregoing clause shall not apply to any liability of a director
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the General Corporation
Law of the State of Delaware; or (iv) for any transaction from which
the director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware is amended to authorize
corporate action further eliminating or limiting the personal
liability of directors, then by virtue of this Article SEVENTH, the
liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted thereby, as so amended. Any
repeal or amendment of this Article shall not adversely affect any
right or protection of a director of the Corporation existing at the
time of such repeal or amendment."
SECOND: That such amendments have been duly adopted in accordance with
the provisions of Section 242(b) of the General Corporation Law of the State of
Delaware by the affirmative vote of a majority of the issued and outstanding
shares of the corporation at a Special Meeting of Stockholders duly called and
held on February 9, 1996. IN WITNESS WHEREOF, we have signed this certificate
this 7th day of March, 1996.
/s/Murray H. Feigenbaum
---------------------------------
Murray H. Feigenbaum, President
/s/Barbara Divack
------------------------------
Barbara Divack, Secretary
<PAGE>
CERTIFICATE OF DESIGNATION OF
SERIES A 12% CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
CERTIFICATE OF DESIGNATION
OF
12% CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
OF
LOGIMETRICS, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
LogiMetrics, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 151(g) thereof,
HEREBY CERTIFIES:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on March 6, 1996 adopted the following resolutions creating a series of 30
shares of preferred stock designated as Series A 12% Cumulative Convertible
Redeemable Preferred Stock:
WHEREAS, the Board of Directors is granted authority, subject to the
provisions of Article FOURTH of the Certificate of Incorporation, to authorize
the issue of one or more series of preferred stock and to fix and determine with
respect to each series:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the share of that series, whether
dividends shall be cumulative, and, if so, from which date
or dates, and the relative rights of priority, if any, of
payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion
privileges, including provision for adjustment of the
conversion rate in such events as the Board of Directors
shall determine;
<PAGE>
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or date upon or after which
they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the corporation, and the relative rights of priority,
if any, of payment of shares of that series; and
(h) Any other relative rights, preferences and limitations of
that series;
WHEREAS, the Corporation has made a private offering of a minimum of
15 and a maximum of 30 units, at a price of $50,000 per unit, each unit to be
composed of (a) one share of 12% Series A cumulative convertible redeemable
preferred stock, convertible at any time, but only in whole, into 94,340 shares
of Common Stock, par value $.01 per share, and (b) one seven-year series D
warrant to purchase 94,340 shares of Common Stock of the Corporation at a price
of $.01 per share, all pursuant to that certain Confidential Private Offering
Memorandum dated February 5, 1996 ("Memorandum");
NOW THEREFORE BE IT RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation by the provisions of Article FOURTH of
the Certificate of Incorporation to authorize the issuance of one or more series
of preferred stock and to fix and determine with respect to each series the
designation, powers, preferences and relative participating, optional,
conversion or other rights and qualifications, limitations and restrictions
thereof, the Corporation shall, and hereby does authorize issuance of a series
of thirty (30) shares of Series A cumulative convertible redeemable preferred
stock, having the following designation, powers, preferences and relative
participating, optional, conversion or other rights and qualifications,
limitations and restrictions:
1. Designation. Such series of cumulative convertible redeemable
preferred stock shall be designated and known as: "Series A 12% Cumulative
Convertible Redeemable Preferred Stock" ("Preferred Stock"). The stated value of
each share of Preferred Stock shall be $50,000 ("Stated Value").
2. Dividends. The holders of shares of Preferred Stock shall be
entitled to receive, but only when and as declared by the Board of Directors,
cash dividends in an amount equal to twelve percent (12%) of the Stated Value
per share per annum, payable quarterly on such dates in each year as shall be
fixed by the Board of Directors.
Such dividends on the Preferred Stock shall be cumulative from and
after such date or dates as shall be fixed by the Board of Directors for such
Series. No dividends shall be paid or
<PAGE>
set apart for payment on the Corporation's Common Stock, nor shall any
distribution be made on the Common Stock, other than a dividend payable in
Common Stock or in stock ranking junior to the Preferred Stock ("Junior Stock"),
nor shall any shares of Common Stock or Junior Stock be redeemed, retired or
otherwise acquired for a valuable consideration (except upon the conversion
thereof) unless full cumulative dividends on all Preferred Stock for all
dividend periods shall have been declared and the Corporation shall have paid
such dividends or shall have set aside a sum sufficient for the payment thereof.
Any accumulation of dividends on the Preferred stock shall not bear
interest. The holders of Preferred Stock shall not be entitled to receive any
dividends thereon other than the dividends provided for herein.
Dividends on Preferred Stock shall be declared if, when and as the
Board of Directors shall in its sole discretion deem advisable, and only from
the net profits or surplus of the Corporation as such shall be fixed and
determined by the said Board of Directors. The determination of the Board of
Directors at any time of the amount of net profits or surplus available for
dividend shall be binding and conclusive on the holders of all the stock of the
Corporation at the time outstanding.
3. No preemptive rights. No holder of the Preferred Stock shall be
entitled, as of right, to purchase or subscribe for any part of the unissued
stock of the Corporation or of any stock of the Corporation to be issued by
reason of any increase of the authorized capital stock of the Corporation, or to
purchase or subscribe for any bonds, certificates of indebtedness, debentures or
other securities convertible into or carrying options or warrants to purchase
stock or other securities of the Corporation or to purchase or subscribe for any
stock of the Corporation purchased by the Corporation or by its nominee or
nominees, or to have any preemptive rights now or hereafter defined by the laws
of the State of Delaware.
4. Preference on liquidation, etc. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, or any
reduction in its capital resulting in any distribution of assets to its
stockholders, holders of Preferred Stock shall be entitled to receive in cash
out of the assets of the Corporation, whether from capital or from earnings,
available for distribution to its stockholders, before any amount shall be paid
to the holders of Common Stock, a sum equal to Stated Value, plus an amount
equal to all accumulated and unpaid dividends thereon to the date fixed for
payment of such distributive amount. The purchase or redemption by the
Corporation of stock of any class, in any manner permitted by law, shall not for
the purpose of this paragraph be regarded as a liquidation, dissolution or
winding up of the Corporation or as a reduction of its capital. Neither the
consolidation nor merger of the Corporation with or into any other corporation
or corporations, nor the sale or transfer by the Corporation of all or any part
of its assets, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for the purposes of this paragraph. A dividend or distribution
to stockholders from net profits or surplus earned after the date of any
reduction of capital shall not be deemed to be a distribution resulting from
such reduction in capital. No holder of Preferred Stock shall be entitled to
receive any amounts with respect thereto upon any
<PAGE>
liquidation, dissolution or winding up of the Corporation other than the amounts
provided for in this paragraph.
5. Redemption. The Corporation, by action of its Board of Directors,
may redeem all (but not less than all) the Preferred Stock at any time after six
(6) months from the date of issuance of the Preferred Stock at a price equal to
the Stated Value of each share redeemed, plus a sum equal to all accumulated and
unpaid dividends thereon to the date fixed for redemption, but only if the
average closing price of the Corporation's Common Stock on the dates during the
120-day period immediately prior to the date notice of redemption is given (as
provided herein below) such Common Stock was traded shall have been not less
than $5.00 per share, and the closing price of the Corporation's Common Stock
for each of the thirty (30) trading days immediately preceding the date of such
notice shall have been not less than $5.00 per share, adjusted in each case for
stock splits, stock dividends or other similar transactions effecting the price
of the Common Stock.
Notice of the election of the Corporation to redeem any Preferred
Stock shall be given by the Corporation by mailing a copy of such notice in
person or by registered or certified mail, return receipt requested not less
than thirty (30) business days prior to the date designated therein as the date
for such redemption, to the holders of record of the Preferred Stock to be
redeemed, addressed to them at their respective address appearing on the books
of the Corporation.
The Board of Directors shall have full power and authority, subject to
the limitations and provisions herein contained, to prescribe the manner in
which and the terms and conditions upon which the Preferred Stock shall from
time to time be redeemable. On and after the date specified in such notice, each
holder of the Preferred Stock called for redemption as aforesaid, upon
presentation and surrender at the place designated in such notice of the
certificate or certificates for such Preferred Stock held by him, properly
endorsed in blank for transfer or accompanied by proper instruments of
assignment in blank (if required by the Corporation) and bearing all necessary
stock transfer tax stamps thereto affixed and cancelled, shall be entitled to
receive therefor the redemption price thereof.
From and after the date of redemption specified in such notice (unless
default shall be made by the Corporation in providing moneys for the payment of
the redemption price) all dividends upon the Preferred Stock so called for
redemption shall cease to accrue and, from and after said date (unless default
shall be made by the Corporation as aforesaid) or, if the Corporation shall so
elect, from and after the date specified therefor in the notice of redemption
(prior to the date of redemption so specified) on which the Corporation shall
provide the moneys for the payment of the redemption price by depositing the
amount thereof in trust for such purpose with a bank or trust company doing
business in the City, County and State of New York, and having a capital and
surplus of at least $500,000,000, all rights of the holders of the Preferred
Stock so called for redemption as stockholders of the Corporation, excepting
only the right to receive the redemption price of such shares on and after the
redemption date without interest thereon, shall cease and determine.
<PAGE>
In the event the rights of the holders of the Preferred Stock as
stockholders of the Corporation shall cease prior to the date of redemption as
aforesaid, the amount of dividends which would otherwise have accrued (if such
rights had not ceased) on such Preferred Stock from the time such rights cease
to the date of redemption, shall be deemed an additional premium. Any interest
accrued on funds so deposited shall be paid to the Corporation from time to
time. In case any holders of Preferred Stock so called for redemption shall not,
within six years after such deposit, claim the amounts deposited with respect to
the redemption thereof, any such bank or trust company shall, upon demand, pay
over to the Corporation such unclaimed amounts and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof to such
holders.
All Preferred Stock at any time redeemed shall be cancelled and shall
not be reissued.
The Corporation may also from time to time, to the extent now or
hereafter permitted by law, purchase Preferred Stock at a purchase price not
exceeding the redemption price thereof. Except in accordance with an offer made
to all holders of Preferred Stock, the Corporation shall not at any time
purchase less than the whole amount of its then outstanding Preferred Stock
unless full cumulative dividends to such date of purchase (if the same be a
dividend payment date, or to the next preceding dividend payment date if such
date of purchase is not a dividend payment date) upon all Preferred Stock
outstanding, and not then to be purchased, shall have been paid or declared and
set apart for payment.
6. Conversion. The holders of shares of Preferred Stock shall have the
right, at their option, to convert such shares into shares of Common Stock of
the Corporation ("Conversion Right") on the following terms and conditions:
(a) Each share of Preferred Stock shall be convertible, but only in
whole, at any time commencing ninety (90) days after its issuance (or, if such
share is called for redemption, at any time up to and including, but not after,
the close of business on the fifth full business day prior to the date fixed for
such redemption, unless default shall be made by the Corporation in providing
moneys for the payment of the redemption price), into ninety-four thousand,
three hundred forty (94,340) fully paid and non-assessable shares of Common
Stock of the Corporation as constituted at the time of such conversion. Every
reference herein to the Common Stock of the Corporation (unless a different
intention is expressed) shall be to the shares of the Common Stock of the
Corporation, par value $.01 per share, as such stock exists immediately after
the issuance of shares of Preferred Stock provided for hereunder, or to stock
into which said Common Stock may be changed from time to time thereafter.
(b) The Conversion Right is exercisable upon presentation and
surrender of the certificate of Preferred Stock, duly endorsed for transfer, at
the principal office to the Corporation or at any other office or agency
maintained by the Corporation for the transfer of the Preferred Stock, whereupon
the holder of such Preferred Stock, shall be entitled, subject to the
limitations herein contained, to receive in exchange therefor a certificate or
certificates for fully paid and nonassessable shares of Common Stock, as
provided above. The Preferred Stock shall be deemed to have been converted and
the person converting the same to have become the holder
<PAGE>
of record of Common Stock, for the purpose of receiving dividends and for all
other purposes whatever, as of the date when the certificate or certificates for
such Preferred Stock are surrendered to the Corporation as aforesaid. The
Corporation shall not be required to make any such conversion, and no surrender
of the Preferred Stock shall be effective for such purpose, while the books for
the transfer of either class of stock are closed for any purpose, but the
surrender of such shares of the Preferred Stock for conversion during any period
while such books are closed shall become effective for all purposes of
conversion immediately upon the reopening of such books, as if the conversion
had been made on the date such shares of Preferred Stock were surrendered.
7. Dilution.
(a) In case, at any time or from time to time after the date of
issuance of the Preferred Stock ("Issuance Date"), the Corporation shall issue
or sell shares of its Common Stock (other than any Common Stock issued upon (i)
conversion of the Corporation's (A) 12% Convertible Subordinated Debentures and
(B) 12% Convertible Senior Subordinated Debentures (together "Debentures"), (ii)
exercise of those certain Amended and Restated Series A Warrants dated March 7,
1996 to purchase 600,000 shares of Common Stock ("Series A Warrants"), (iii)
exercise by each of Murry H. Feigenbaum and Jerome Deutsch of his option to
purchase 100,000 shares of Common Stock at a price of $.10 per share
("Principals' Options"), (iv) exercise of those certain Amended and Restated
Series B Warrants dated March 7, 1996 to purchase 1,500,000 shares of Common
Stock ("Series B Warrants"), (v) exercise of those certain Series C Warrants
dated March 7, 1996 to purchase 2,542,380 shares of Common Stock ("Series C
Warrants"), (vi) exercise of those certain Series D Warrants dated March 7, 1996
to purchase 2,830,200 shares of Common Stock ("Series D Warrants"), (vii)
exercise of those certain Series E Warrants dated March 7, 1996 to purchase
1,000,000 shares of Common Stock ("Series E Warrants" and together with the
Series A, B, C and D Warrants, "Warrants") and (viii) exercise of those certain
Stock Options, dated March 7, 1996 to purchase 1,000,000 shares of Common Stock
issued to Richard K. Laird ("Laird Options" and together with the Debentures,
the Warrants, the Principals' Options and the Laird Options, the "Subject
Securities") for a consideration per share less than $.27 per share ("Trigger
Price"), or, if a Pro Forma Adjusted Trigger Price (hereinafter defined) shall
be in effect as provided below in this paragraph 7, then less than such Pro
Forma Adjusted Trigger Price per share, then and in each such case the holder of
Preferred Stock, upon the conversion hereof as provided in paragraph (a) hereof,
shall be entitled to receive, in lieu of the shares of Common Stock theretofore
receivable upon the conversion of the Preferred Stock, a number of shares of
Common Stock determined by (a) dividing the Trigger Price by a Pro Forma
Adjusted Trigger Price per share to be computed as provided below in this
paragraph 7, and (b) multiplying the resulting quotient by the number of shares
of Common Stock into which the Preferred Stock is convertible. A Pro Forma
Adjusted Trigger Price per share shall be the price computed (to the nearest
cent, a fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Corporation outstanding
immediately prior to such issue or sale by the Trigger Price (or, if a
Pro Forma Adjusted Trigger Price shall be in effect,
<PAGE>
by such Price), and (y) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the number of shares of
Common Stock of the Corporation outstanding immediately after such
issue or sale.
For the purpose of this paragraph 7:
(1) In case the Corporation splits its Common Stock or shall
declare any dividend, or make any other distribution, upon
any stock of the Corporation of any class payable in Common
Stock, or in any stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock
(any such stock or other securities being hereinafter called
"Convertible Securities"), such split, declaration or
distribution shall be deemed to be an issue or sale (as of
the record date for such split, dividend or other
distribution), without consideration, of such Common Stock
or such Convertible Securities, as the case may be.
(2) In case the Corporation shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be
determined the price per share for which Common Stock is
issuable upon the conversion or exchange thereof, such
determination to be made by dividing (a) the total amount
received or receivable by the Corporation as consideration
for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or
exchange thereof, by (b) the maximum number of shares of
Common Stock of the Corporation issuable upon the conversion
or exchange of all such Convertible Securities.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Pro Forma Adjusted Trigger Price) as of the date of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale for cash (as of
the date of issue or sale of such Convertible Securities) of such maximum number
of shares of Common Stock at the price per share so determined, provided that,
if such Convertible Securities shall by their terms provide for an increase or
increases, with the passage of time, in the amount of additional consideration,
if any, payable to the Corporation, or in the rate of exchange, upon the
conversion or exchange thereof, the Pro Forma Adjusted Trigger Price per share
shall, forthwith upon any such increase becoming effective, be readjusted to
reflect the same, and provided, further, that upon the expiration of such rights
of conversion or exchange of such Convertible Securities, if any thereof shall
not have been exercised, the Pro Forma Adjusted Trigger Price per share shall
forthwith be readjusted and thereafter be the price which it would have been had
an adjustment been made on the basis that the only shares of Common Stock so
<PAGE>
issued or sold were those issued or sold upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the consideration
actually received by the Corporation upon such conversion or exchange, plus the
consideration, if any, actually received by the Corporation for the issue or
sale of all such Convertible Securities which shall have been converted or
exchanged.
(b) In case the Corporation shall grant any rights or options to
subscribe for, purchase or otherwise acquire Common Stock of any class other
than the Subject Securities, there shall be determined the price per share for
which Common Stock is issuable upon the exercise of such rights or options, such
determination to be made by dividing (a) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the exercise of such rights or options, by
(b) the maximum number of shares of Common Stock issuable upon the exercise of
such rights or options.
If the price per share so determined shall be less than the Trigger
Price (or, if a Pro Forma Adjusted Trigger Price shall be in effect, less than
such Price) as of the date of such issue or sale, then the granting of such
rights or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number of shares
of Common Stock at the price per share so determined, provided that, if such
rights or options shall be their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration, if any,
payable to the Corporation upon the exercise thereof, the Pro Forma Adjusted
Trigger Price per share shall, forthwith upon any such increase becoming
effective, be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights or options, if any thereof shall not have been
exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock so issued
or sold were those issued or sold upon the exercise of such rights or options
and that they were issued or sold for the consideration actually received by the
Corporation upon such exercise, plus the consideration, if any, actually
received by the Corporation for the granting of all such rights and options,
whether or not exercised.
(c) In case the Corporation shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities, such
Convertible Securities shall be deemed, for the purposes of paragraph 7(a)(2)
above, to have been issued or sold for the total amount received or receivable
by the Corporation as consideration for the granting of such rights or options
plus the minimum aggregate amount of additional consideration, if any, payable
to the Corporation upon the exercise of such rights or options, provided that,
upon the expiration of such rights or options, if any thereof shall not have
been exercised, the Pro Forma Adjusted Trigger Price per share shall forthwith
be readjusted and thereafter be the price which it would have been had an
adjustment been made upon the basis that the only Convertible Securities so
issued or sold were those issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such rights or
options, whether or not exercised.
<PAGE>
(d) In case any shares of stock or other securities, other than Common
Stock of the Corporation, shall at any time be receivable upon the conversion of
Preferred Stock, and in case any additional shares of such stock or any
additional such securities (or any stock or other securities convertible into or
exchangeable for any such stock or securities) shall be issued or sold for a
consideration per share such as to dilute the purchase rights evidenced by
Preferred Stock, then and in each such case the Pro Forma Adjusted Trigger Price
per share shall forthwith be adjusted, substantially in the manner provided for
above in this paragraph 7, so as to protect the holder of Preferred Stock
against the effect of such dilution.
(e) In case any shares of Common Stock or Convertible Securities or
any rights or options to subscribe for, purchase or otherwise acquire any Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, after deducting any expenses incurred and any underwriting
or similar commissions, compensation or concessions paid or allowed by the
Corporation in connection with such issue or sale.
(f) In case any shares of Common Stock or Convertible Securities or
any rights or options to subscribe for, purchase or otherwise acquire any Common
Stock or Convertible Securities shall be issued or sold for a consideration
other than cash (or a consideration which includes cash, if any cash constitutes
a part of the assets of a corporation or business substantially all of the
assets of which are being received a such consideration) then, for the purpose
of this paragraph 7(f), the Board of Directors of the Corporation shall promptly
determine the fair value of such consideration, and such Common Stock,
Convertible Securities, rights or options shall be deemed to have been issued or
sold on the date of such determination in good faith. Such value shall not be
more than the amount at which such consideration is recorded in the books of the
Corporation for accounting purposes except in the case of an acquisition
accounted for on a pooling of interest basis. In case any Common Stock or
Convertible Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be issued or
sold together with other stock or securities or other assets of the Corporation
for a consideration which covers both, the Board of Directors of the Corporation
shall promptly determine what part of the consideration so received is to be
deemed to be the consideration for the issue or sale of such Common Stock or
Convertible Securities or such rights or options.
The Corporation covenants and agrees that, should any determination of
fair value of consideration or of allocation of consideration be made by the
Board of Directors of the Corporation, pursuant to this paragraph 7(f), it will,
not less than seven (7) days after any and each such determination, deliver to
the holder of the Preferred Stock a certificate signed by the President or a
Vice President and the Treasurer or an Assistant Treasurer of the Corporation
reciting such value as thus determined and setting forth the nature of the
transaction for which such determination was required to be made, the nature of
any consideration, other than cash, for which Common Stock, Convertible
Securities, rights or options have been or are to be issued, the basis for its
valuation, the number of shares of Common Stock which have been or are to be
<PAGE>
issued, and a description of any Convertible Securities, rights or options which
have been or are to be issued, including their number, amount and terms.
(g) In case the Corporation shall take a record of the holders of
shares of its stock of any class for the purpose of entitling them (a) to
receive a dividend or a distribution payable in Common Stock or in Convertible
Securities, or (b) to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities, then such record date shall be deemed to be the date
of the issue or sale of the Common Stock issued or sold or deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution, or the date of the granting of such rights of subscription,
purchase or other acquisition, as the case may be.
(h) The number of shares of Common Stock outstanding at any given time
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock, but shall exclude shares in the treasury of
the Corporation.
(i) Following each computation or readjustment of a Pro Forma Adjusted
Trigger Price as provided in this paragraph 7, the newly computed or adjusted
Pro Forma Adjusted Trigger Price shall remain in effect until a further
computation or readjustment thereof is required by this paragraph 7.
(j) In case at the time or from time to time after the Issuance Date
the holders of the Common Stock of the Corporation of any class (or other shares
of stock or other securities at the time receivable upon the conversion of
Preferred Stock) shall have received, or, on or after the record date fixed for
the determination of eligible stockholders, shall have become entitled to
receive:
(A) other or additional stock or other securities or property
(other than cash) by way of dividend:
(B) any cash or paid or payable out of capital or pain-in surplus
or surplus created as a result of a revaluation of property by way of
dividend; or
(C) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off, split-off,
split-up, reclassification, combination of shares or similar corporate
rearrangement;
(other than additional shares of Common Stock issued to holders of common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph 7), then in each case the holder of
the Preferred Stock, upon the conversion thereof as provided in paragraph 6,
shall be entitled to receive, in lieu of, or in addition to, as the case may be,
the shares theretofore receivable upon the conversion of the Preferred Stock,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Corporation into
which the Preferred Stock is convertible and had thereafter, during the period
from the Issuance Date to and including the date of such conversion, retained
such shares
<PAGE>
and/or all other or additional (or less) stock or other securities or property
(including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during the period from the Issuance Date and
including the date of such conversion, retained such period by paragraphs 7(a)
and 7(k) hereof.
(k) In case of any reorganization of the Corporation (or any other
corporation the stock or other securities of which are at the time deliverable
on the conversion of the Preferred Stock) after the date hereof, or in case,
after such date, the Corporation (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all its assets to another corporation, then and in each such case
the holder of the Preferred Stock, upon the conversion thereof as provided in
paragraph 6 hereof, at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive the stock or
other securities or property to which such holder would have been entitled upon
such consummation if such holder had converted the Preferred Stock immediately
prior thereto, all subject to further adjustments as provided for herein; in
each such case, the terms of the Preferred Stock shall be applicable to the
shares of stock or other securities or property receivable upon the conversion
of the Preferred Stock after such consummation.
(l) The Corporation will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Preferred Stock, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holder hereof
against dilution or other impairment. Without limiting the generality of the
foregoing, the Corporation will not increase the par value of any shares of
stock receivable upon the conversion of the Preferred Stock above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Corporation may validly and
legally issue fully paid and non-assessable stock upon the conversion of the
Preferred Stock.
(m) In each case of an adjustment in the number of shares of Common
Stock or other stock, securities or property receivable on the conversion of the
Preferred Stock, at the request of the holder of the Preferred Stock the
Corporation at its expense shall promptly cause independent public accountants
of recognized standing, selected by the Corporation, to compute such adjustment
in accordance with the terms of the Preferred Stock and prepare a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based, including a statement of (A) the consideration received or
to be received by the Corporation for any additional shares issued or sold or
deemed to have been issued or sold, (B) the number of shares of Common Stock
outstanding or deemed to be outstanding and (C) the Pro Forma Adjusted Trigger
Price. The Corporation will forthwith mail a copy of each such certificate to
the holder of the Preferred Stock.
(n) In case:
(A) The Corporation shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
conversion of the Preferred
<PAGE>
Stock) for the purpose of entitling or enabling them to receive any
dividend (other than a cash or stock dividend at the same rate as the rate
of the last cash or stock dividend theretofore paid) or other distribution,
or to exercise any preemptive right pursuant to the Corporation's charter,
or to receive any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right; or
(B) of any capital reorganization of the Corporation, any
reclassification of the capital stock of the Corporation, any consolidation
or merger of the Corporation with or into another corporation, or any
conveyance of all or substantially all of the assets of the Corporation to
another corporation; or
(C) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in each such case, the Corporation will mail or cause to be mailed to
the holder of the Preferred Stock a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up is to take place, and the times, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of the Preferred Stock) shall be entitled to
exchange their shares of Common Stock of any class (or such other stock or
securities) for reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up or (iii) the amount and character of the
stock or other securities proposed to be issued or granted, the date of such
proposed issuance or grant and the persons or class of persons to whom such
stock or other securities are to be offered, issued or granted. Such notice
shall be mailed at least thirty (30) days prior to the date therein specified.
(o) The Corporation shall, so long as any of the Preferred Stock is
outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the
Preferred Stock, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all shares of the Preferred
Stock, then outstanding. The Corporation shall from time to time increase its
authorized Common Stock and take such other action as may be necessary to permit
the issuance from time to time of the shares of Common Stock, as fully paid and
nonassessable shares, upon the conversion of the Preferred Stock, as herein
provided.
(p) The Corporation shall pay any and all taxes which may be imposed
upon it with respect to the issuance and delivery of Common Stock upon the
conversion of Preferred Stock as herein provided. The Corporation shall not be
required in any event to pay any transfer or other taxes by reason of the
issuance of such Common Stock in names other than those in which the Preferred
stock surrendered for conversion may stand, and no such conversion of issuance
of Common Stock shall be made unless and until the person requesting such
issuance has paid to the Corporation the amount of any such tax, or has
established to the satisfaction of the Corporation and its transfer agent, if
any, that such tax has been paid. Upon any conversion of
<PAGE>
Preferred Stock, as herein provided, no adjustment or allowance shall be made
for dividends on the Preferred Stock, so converted, and all rights to dividends,
if any, shall cease and be deemed satisfied, but nothing in this sentence shall
be deemed to relieve the Corporation from its obligation to pay any dividends
which shall have been declared and shall be payable to holders of Preferred
Stock, of record as of a date prior to such conversion even though the payment
date for such dividend is subsequent to the date of conversion.
(q) Preferred Stock surrendered upon conversion thereof shall not be
reissued and no Preferred Stock shall be issued in lieu thereof or in exchange
thereof.
8. Voting Rights of Preferred. Except as herein or by law expressly
provided, the Preferred Stock shall have no right or power to vote on any
questions or in any proceeding or to be represented at or to receive notice of
any meeting of the stockholders. Notwithstanding the provisions of the preceding
sentence, so long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote at a meeting (the notice of
which shall state the general character of the matters to be submitted thereat),
or the written consent with or without a meeting, of the holders of at least two
thirds (66 2/3%) of the then outstanding shares of Preferred Stock:
(a) increase the authorized amount of Preferred Stock, or authorize or
create; or increase the authorized amount of, any additional class of stock
ranking prior to or on a parity with the Preferred Stock as to dividends or
assets; or authorize or create, or increase the authorized amount of, any class
of stock or obligations convertible into or evidencing the right to purchase any
class of stock ranking prior to or on a parity with the Preferred Stock as to
dividends or assets; or
(b) amend, alter or repeal any of the provisions of the Certificate of
Incorporation or any of the rights, preferences or powers of the outstanding
Preferred Stock fixed herein or determined by the Board of Directors for any
series of Preferred Stock as herein authorized; so as adversely to affect the
rights, preferences or powers of the preferred stock or its holders; provided,
however, that if any such amendment, alteration or repeal would adversely affect
the rights, preferences or powers of outstanding shares of preferred stock of
any particular series without correspondingly affecting the rights, preferences
or powers of the outstanding shares of all series, then like vote or consent by
the holders of at least two thirds (66 2/3%) of the Preferred Stock of that
particular series at the time outstanding shall also be necessary for effecting
or validating any such amendment, alteration or repeal; or
(c) sell, lease or convey all, or substantially all, of its property
or business; or
(d) merge or consolidate with or into any other corporation or
corporations, unless the corporation surviving or resulting from such merger or
consolidation will have after such merger or consolidation no class of stock
either authorized or outstanding ranking prior to or on a parity with the
Preferred Stock as to dividends or assets except the same number of shares of
Preferred Stock with the same rights, preferences and powers as the preferred
stock of the Corporation authorized and outstanding immediately preceding such
merger or consolidation, and unless each
<PAGE>
holder of Preferred Stock at the time of such merger or consolidation and in
connection therewith shall continue to hold (in the case of a merger in which
the Corporation is the surviving corporation) his shares of Preferred Stock, or
(in the case of a consolidation or a merger of the Corporation into some other
corporation) shall receive the same number of shares of Preferred Stock, with
the same rights, preferences and powers, of such resulting Corporation; or
(e) amend or repeal any of the provisions of this paragraph 8.
9. Registration Rights. Within 90 days after the date of issuance of
the Preferred Stock, the Corporation shall prepare and file a registration
statement ("Registration Statement") with the Securities and Exchange Commission
("SEC") covering the shares of Common Stock issuable upon conversion of the
Preferred Stock ("Registrable Securities"), and will use its best efforts to
cause the Registration Statement to become effective within ninety (90) days
following the date of such filing. Once effective, the Corporation shall keep
the Registration Statement effective for a period of seven (7) years from the
date it is declared effective by the SEC.
In the event (i) the registration Statement is not filed by the
Corporation with the SEC on or prior to ninety (90) days after the date of
issuance of the Preferred Stock or (ii) the Registration Statement has not been
declared effective by the SEC on or prior to one hundred-eighty (180) days after
the date of issuance of the Preferred Stock, the annual dividend rate on the
Preferred Stock shall be increased to thirteen and one-half percent (13-1/2%)
per annum for the first three (3) months immediately following the expiration of
such ninety (90) day period or one hundred-eighty (180) day period, as the case
may be, and by an additional one-half percent (1/2%) per annum at the beginning
of each subsequent thirty (30) day period thereafter, until such time as the
requirements of clause (i) or (ii) above, as the case may be, have been
satisfied, at which time such dividend rate shall revert to the rate that
otherwise would be in effect but for the operation of this sentence; provided,
however, that in no event shall the dividend rate applicable to the Preferred
Stock exceed seventeen percent (17%) per annum pursuant to this sentence.
Except as otherwise expressly stated herein, the following provisions
shall be applicable to the Registration Statement:
(a) The Corporation will use its best efforts to cause the
Registration Statement to become effective as promptly as possible within the
time periods specified above, and if any stop order shall be issued by the SEC
in connection therewith to use its reasonable efforts to obtain the removal of
such order. Following the effective date of the Registration Statement, the
Corporation shall, upon the request of the holder, forthwith supply such
reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Securities Act, and
other documents necessary or incidental to a public offering of the Registrable
Securities, as shall be reasonably requested by the holder to permit the holder
to make a public distribution of its, his or her Registrable Securities. The
Corporation will use its reasonable efforts to qualify the Registrable
Securities for sale in such states as the holder of Registrable Securities shall
reaonsably request, provided that no such qualification will be required in any
jurisdiction where, solely as a result thereof, the Corporation would be subject
<PAGE>
to service of general process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction. The obligations of the
Corporation hereunder with respect to the holder's Registrable Securities are
expressly conditioned on the holder's furnishing to the Corporation such
appropriate information concerning the holder, the holder's Registrable
Securities and the terms of the holder's offering of such Registrable Securities
as the Corporation may reasonably request.
(b) The Corporation shall pay all expenses incurred in complying with
the provisions of this paragraph 9, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), printing expenses, fees and
disbursements of counsel to the Corporation, securities law and blue sky fees
and expenses and the expenses of any regular and special audits incident to or
required by any such registration. All underwriting discounts and selling
commissions applicable to the sales of the Registrable Securities, and any state
or federal transfer taxes payable with respect to the sales of the Registrable
Securities and all fees and disbursements of counsel for the holder, if any, in
each case arising in connection with registration of the Registrable Securities
shall be payable by the holder.
(c) In connection with the registration of the Registrable Securities
pursuant to this paragraph 9, the Corporation shall indemnify and hold harmless
the holder, its affiliates, officers, directors, partners, employees, agents and
representatives, each person, if any, who controls the holder within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any person
claiming by or through any of them (collectively, the "Indemnified Persons")
from and against all losses, claims, damages, expenses or liabilities (or
actions in respect thereof) which arise out of or are based upon any untrue
statement of any material fact contained in the Registration Statement or
alleged untrue statement, under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading, or any violation by the Corporation
of the Securities Act, the Exchange Act or state securities or blue sky laws
applicable to the Corporation and relating to action or inaction required of the
Corporation in connection with such registration or qualification under such
state securities or blue sky laws; and will reimburse the Indemnified Persons
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Corporation will not be liable in any such
case to any Indemnified Person to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or omission made
in the Registration Statement, said preliminary prospectus or said final
prospectus or said amendment or supplement or any document incident thereto in
reliance upon and in conformity with written information furnished to the
Corporation by or on behalf of the holder.
(d) The holder will indemnify and hold harmless the Corporation and
each person, if any, who controls the Corporation within the meaning of the
Securities Act or the Exchange Act,
<PAGE>
each officer of the Corporation who signs the Registration Statement and each
director of the Corporation from and against any and all such losses, claims,
damages or liabilities arising from any untrue statement in, or omission from,
the Registration Statement, any such preliminary or final prospectus, amendment,
or supplement or document incident thereto if the statement or omission in
respect of which such loss, claim, damage or liability is asserted was made in
reliance upon and in conformity with information furnished in writing to the
Corporation by or on behalf of the holder for use in connection with the
preparation of the Registration Statement or such prospectus or amendment or
supplement thereof.
(e) The reimbursements required by subparagraphs 9(c) and (d) shall be
made by periodic payments during the course of the investigation or defense as
and when bills are received or expenses incurred; provided, however, that to the
extent that an indemnified party receives periodic payments for legal or other
expenses during the course of an investigation or defense, and such party
subsequently received payments for such expenses from any other parties to the
proceeding, such payments shall be used by the indemnified party to reimburse
the indemnifying party for such periodic payments. Any party which proposes to
assert the right to be indemnified under subparagraphs 9(c) or (d) will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made against
any indemnified party hereunder, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served, but the failure to so notify such indemnifying party of any such action,
suit or proceeding shall not relieve the indemnifying party from any obligation
which it may have to any indemnified party hereunder unless and only to the
extent that the indemnifying party is prejudiced by said lack of notice. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expense, other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the reasonable fees and expenses of such counsel shall be at the
expense of such indemnified party, when and as incurred, unless (A) the
employment of counsel by such indemnified party has been authorized by the
indemnified party, (B) the indemnified party has reasonably concluded (based on
advice of counsel), that there may be legal defenses available to it that are
different from or in addition to those available to the indemnifying party, (C)
the indemnified party shall have reasonably concluded (based on advice of
counsel) that there may be a conflict of interest between the indemnifying party
and the indemnified party in the conduct of defense of such action (in which
case the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party), or (D) the indemnifying party
shall not in fact have employed counsel to assume the defense of such action
within 15 days after receipt of notice of such action. An indemnifying party
shall not be liable for any settlement or any action or claim effected without
its consent.
<PAGE>
(f) If the indemnification provided for in this paragraph 9 is
unavailable to any indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth herein,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(g) The Corporation has determined that it would not be just and
equitable if contribution pursuant to subparagraph 9(f) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations reeferred to in the immediately preceding
paragraph. Notwithstanding any other provisions hereof, in no event shall the
contribution obligation of the indemnifying party be greater in amount than the
excess of (A) the dollar amount of proceeds received by the indemnifying party
upon the sale of the securities giving rise to such contribution obligation over
(B) the dollar amount of any damages that the indemnifying party has otherwise
been required to pay by reason of the untrue or alleged untrue statement or
omission or alleged omission giving rise to such obligation. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(h) Neither the filing of the Registration Statement by the
Corporation nor the making of any request for prospectuses by the holder shall
impose upon the holder any obligation to sell his, her or its Registrable
Securities.
(i) The holder, upon receipt of notice from the Corporation that an
event has occurred which requires a post-effective amendment to the Registration
Statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of his, her or its Registrable Securities until the holder
receives a copy of a supplemented or amended prospectus from the Corporation,
which the Corporation shall provide as soon as practicable after such notice.
10. Replacement of certificates. Upon receipt of evidence reasonably
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
the certificate of Preferred Stock and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with surety if reasonably
required) in an amount reasonably satisfactory to it, or (in the case of
<PAGE>
mutilation) upon surrender and cancellation thereof, the Corporation will issue,
in lieu thereof, a new certificate of like tenor.
AND IT BE FURTHER RESOLVED, that the appropriate officers of the
corporation be, and they hereby are authorized and directed to execute and
deliver certificates evidencing such shares of Preferred Stock in exchange for
payment of the purchase price of $50,000 per share.
IN WITNESS WHEREOF, LogiMetrics, Inc. as caused this certificate to be
duly executed this 8th day of April, 1997.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
------------------------
Norman M. Phipps
Acting President
Attest:
/s/Russell Reardon
- --------------------------
Russell Reardon
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
of
LOGIMETRICS, INC.
LogiMetrics, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
The following amendment to the Corporation's Certificate of
Incorporation, approved by the Corporation's Board of Directors and
stockholders, was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware:
"The first paragraph of Article FOURTH of the Certificate of
Incorporation, as amended, of LogiMetrics, Inc. is hereby amended to read in its
entirety as follows:
FOURTH: The total number of shares of stock which the Corporation
shall have the authority to issue is One Hundred Million Two Hundred
(100,000,200) shares, of which One Hundred Million (100,000,000)
shares are designated as Common Stock, $.01 par value per share, and
Two Hundred (200) shares are designated as Preferred Stock, $.01 par
value per share."
IN WITNESS WHEREOF, LogiMetrics, Inc. has caused this Certificate to
be signed and attested by its duly authorized officers this 27th day of May,
1997.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
--------------------------------------
Norman M. Phipps
President and Chief Operating Officer
ATTEST:
/s/Russell J. Reardon
- ------------------------------
Russell J. Reardon, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
SERIES A 12% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF LOGIMETRICS, INC.
LogiMetrics, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
The following amendments to the Certificate of Designation of Series A
12% Cumulative Convertible Redeemable Preferred Stock ("Preferred Stock") of the
Corporation ("Certificate of Designation") were duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware:
1. Section 2 of the Certificate of Designation is hereby amended to
read in its entirety as follows:
"2. Dividends. The holders of shares of Preferred Stock shall be
entitled to receive, but only when and as declared by the Board of Directors,
dividends in an amount equal to twelve percent (12%) of the Stated Value per
share per annum, payable quarterly on such dates in each year as shall be fixed
by the Board of Directors. Such dividends shall be payable, at the option of the
Board of Directors, either in cash or in shares of Common Stock having a "Fair
Market Value" (as defined below) on the date of declaration equal to the cash
dividend otherwise payable. As used herein, "Fair Market Value" on any date of
determination means the average of the last sale price per share of the Common
Stock for ten trading days immediately preceding such date as reported by any
national securities exchange on which the Common Stock is then listed or
admitted for trading or as reported by the Nasdaq Stock Market if the Common
Stock is not then listed or admitted for trading on any national securities
exchange, or the average of the closing bid and asked prices per share of the
Common Stock for the ten trading days immediately preceding such date as
reported on the OTC Bulletin Board or any similar successor service then
publishing quotations on the Common Stock if the Common Stock is not then listed
or admitted for trading on any national securities exchange or included on the
Nasdaq Stock Market, or as determined in good faith by the Company's Board of
Directors in the event that the Common Stock is not then listed or admitted for
trading on any national securities exchange or included on the Nasdaq Stock
Market and quotations on the Common Stock are not then being regularly
published."
2. Section 8 of the Certificate of Designation is hereby amended to
read in its entirety as follows:
"8. Voting rights of preferred. Except as expressly provided by law,
the Preferred Stock shall have no right to vote on any question or in any
proceeding or to be represented at or to receive notice of any meeting of the
stockholders."
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed and attested by its duly authorized officers, this 30th day of
November, 1999.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
________________________________
Norman M. Phipps, President and
Chief Operating Officer
ATTEST:
/s/Erik S. Kruger
__________________________
Erik S. Kruger, Secretary
EXHIBIT 4.3
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).
<PAGE>
Interest will accrue at the greater of the Default Rate (hereinafter defined)
and the rate of fifteen percent (15%) per annum on any principal payment past
due under this Debenture and, unless prohibited under applicable law (and if so
prohibited then only to the extent not so prohibited), on any interest which has
not been paid on the date on which it is due and payable (without giving effect
to any applicable grace periods or paragraph 4 hereof) until such time as
payment therefor is actually delivered to the Holder.
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company will repay the principal
amount of this Debenture on 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
<PAGE>
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.
(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.
<PAGE>
(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.
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as
of the record date for such split, dividend or other distribution),
without consideration, of such Common Stock or such Convertible
Securities, as the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be
determined the price per share for which Common Stock is issuable upon
the conversion or exchange thereof, such determination to be made by
dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by (b)
the maximum number of shares of Common Stock of the Company issuable
upon the conversion or exchange of all such Convertible Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale for
cash (as of the date of issue or sale of such Convertible Securities)
of such maximum number of shares of Common Stock at the price per
share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the
passage of time, in the amount of additional consideration, if any,
payable to the Company, or in the rate of exchange, upon the
conversion or exchange thereof, the Pro Forma Adjusted Trigger Price
per share shall, forthwith upon any such increase becoming effective,
be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised,
the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock
so issued or sold were those issued or sold upon the conversion or
exchange of such Convertible Securities, and that they were issued or
sold for the consideration actually received by the Company upon such
conversion or exchange, plus the consideration, if any, actually
received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
(iii) In case the Company shall grant any rights or options
to subscribe for, purchase or otherwise acquire Common Stock of any
class other than the Subject Securities, there shall be determined the
price per share for which Common Stock is issuable upon the exercise
of such rights or options, such determination to be made by 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.
<PAGE>
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then the granting of such rights or options shall be deemed to be an
issue or sale for cash (as of the date of the granting of such rights
or options) of such maximum number of shares of Common Stock at the
price per share so determined, provided that, if such rights or
options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration,
if any, payable to the Company upon the exercise thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such
increase becoming effective, be readjusted to reflect the same, and
provided, further, that upon the expiration of such rights or options,
if any thereof shall not have been exercised, the Pro Forma Adjusted
Trigger Price per share shall forthwith be readjusted and thereafter
be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(iv) In case the Company shall grant any rights or options
to subscribe for, purchase or otherwise acquire Convertible Securities
other than the Subject Securities, such Convertible Securities shall
be deemed, for the purposes of subparagraph (iii) above, to have been
issued or sold for the total amount received or receivable by the
Company as consideration for the granting of such rights or options
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of such rights or options,
provided that, upon the expiration of such rights or options, if any
thereof shall not have been exercised, the Pro Forma Adjusted Trigger
Price per share shall forthwith be readjusted and thereafter be the
price which it would have been had an adjustment been made upon the
basis that the only Convertible Securities so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(v) In case any shares of stock or other securities, other
than Common Stock of the Company, shall at any time be receivable upon
the conversion of this Debenture, and in case any additional shares of
such stock or any additional such securities (or any stock or other
securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such
as to dilute the purchase rights evidenced by this Debenture, then and
in each such case the Pro Forma Adjusted Trigger Price per share shall
forthwith be adjusted, substantially in the manner provided for above
in this paragraph (c), so as to protect the Holder of this Debenture
against the effect of such dilution.
<PAGE>
(vi) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor, after
deducting any expenses incurred and any underwriting or similar
commissions, compensation or concessions paid or allowed by the
Company in connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash (or a consideration
which includes cash 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 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
<PAGE>
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 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.
<PAGE>
(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:
(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
<PAGE>
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:
<PAGE>
(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
<PAGE>
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute
such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day
after each such month, backlog reports and accounts receivable agings
of the Company;
(vii) permit the Holder to make or cause to be made, inspections
and audits of any books, records and papers of the Company and of any
parent or subsidiary thereof and to make extracts therefrom at all such
reasonable times and as often as the Holder may reasonably require;
(viii) immediately give notice to the Holder that an Event of
Default has occurred or that an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, has occurred
and specifying the action which the Company has taken and proposes to take
with respect thereto.
(b) Financial 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
<PAGE>
reasonably satisfactory to the Majority Holders subordinating the payment
of principal and interest thereon to the prior payment of principal and
interest on the Debentures, and (z) the incurrence of which will not cause
an Event of Default, or an event which with notice or the lapse of time or
both would constitute an Event of Default, hereunder (collectively,
"Permitted Indebtedness");
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in, any of its
property or assets now owned or hereafter acquired except (A) mortgages,
liens, pledges and security interests securing Permitted Indebtedness; (B)
other liens, charges and encumbrances incidental to the conduct of its
business or the ownership of its property and assets which are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit and which do not materially impair the use thereof in the operation
of its business; (C) liens for taxes or other governmental charges which
are not delinquent or which are being contested in good faith and for which
a reserve shall have been established in accordance with GAAP; (D) liens
granted to secure purchase money financing of equipment, provided such
liens are limited to the equipment financed; and (E) liens granted to
refinance unencumbered equipment provided such liens are limited to the
equipment refinanced and the incurrence of which will not cause a default
hereunder or in any Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (B) engage in or
permit any person to engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended) involving any pension plan which would subject the Company to
any material tax, penalty or other liability, (C) incur or suffer to 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
<PAGE>
an Event of Default shall have occurred and be continuing, or liquidate,
wind-up or dissolve itself or sell, transfer or lease or otherwise dispose
of all or any substantial part of its assets;
(vii) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except (A) investments in United States
Government obligations and certificates of deposit of any bank institution
with combined capital and surplus of at least $200,000,000, (B) trade
credit, (C) security deposits, or acquire or otherwise cause any other
entity to become a subsidiary of the Company (as used herein the term
"subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of which the Company or any other
subsidiary of the Company beneficially owns a majority of the voting or
economic interests), 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;
<PAGE>
(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 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.
<PAGE>
(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.
9. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Debenture may be a mended 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.
<PAGE>
12. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures
to exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right 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.
<PAGE>
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
<PAGE>
EXHIBIT A
ELECTION TO CONVERT
(All capitalized terms used and not otherwise
defined herein shall have the meanings
assigned to them in the Class 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__
EXHIBIT 4.13
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.
LOGIMETRICS, INC.
Common Stock Purchase Warrant - Series J
LOGIMETRICS, INC. (the "Company"), a Delaware corporation, hereby
certifies that, for value received, ______________________, or assigns, is
entitled, subject to the terms set forth below, to purchase from the Company
____________ __________ (___________) fully paid and non-assessable shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock"), at
a purchase price of fifty-five cents ($0.55) per share (the "Purchase Price") at
any time prior to July 1, 1999. 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).
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 DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATIONS, ETC. In case at any time or from time to time after the date
of issuance of this Warrant (the "Issuance Date") the holders of the Common
Stock of the Company of any class (or any other shares of stock or other
securities at the time receivable upon the exercise of this Warrant) shall have
received, or, on or after the record date fixed for the determination of
eligible stockholders, shall have become entitled to receive:
(a) other or additional stock or other securities or property
(other than cash) by way of dividend;
(b) any cash paid or payable out of capital or paid-in surplus
or surplus created as a result of a revaluation of property
by way of dividend; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off,
split-off, split-up, reclassification, combination of shares
or similar corporate rearrangement;
<PAGE>
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 the Holder as aforesaid during such period, giving
effect to all adjustments called for during such period by Paragraph 4 hereof.
4. 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 Paragraph 3 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.
5. 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.
6. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock or other stock, securities or
property receivable on the exercise of this Warrant, at the request of the
Holder of this Warrant the Company at its expense shall promptly cause
independent public accountants of recognized standing, selected by the Company,
to compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based.
7. 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
<PAGE>
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.
8. 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.
9. 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.
10. 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.
11. 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
<PAGE>
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.
12. 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.
13. 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.
14. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
15. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may
be changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
<PAGE>
16.GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with the laws of the State of New York.
LOGIMETRICS, INC.
By: _________________________________
Dated: October 9, 1998
Attest:
______________________________
<PAGE>
[To be signed only upon exercise of Warrant]
To LOGIMETRICS, INC.:
The undersigned, the Holder of the within Series J 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 addres is ______________________.
Dated:
_____________________________
________________________________________________________________________________
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
Address:
________________________________________________________________________________
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________ the right represented by the within
Series J Warrant to purchase the ________________ shares of the Common Stock of
LOGIMETRICS, INC. to which the within Series J 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>
_________
March 10, 2000
_____________
_____________
_____________
Attention:
Re.: Common Stock Purchase Warrant - Series J
Dear Holder:
Reference is hereby made to the Common Stock Purchase Warrant - Series J (the
"Series J Warrant") issued by LogiMetrics, Inc. (the "Company") to you. The
Company hereby agrees that the expiry date of July 1, 1999 set forth in the
first paragraph of the Series J Warrant is hereby extended to June 30, 2000.
All other terms, conditions and provisions of the Series J Warrant remain the
same.
Very truly yours,
_________________________________
Norman M. Phipps
President and
Chief Operating Officer
EXHIBIT 4.15
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
SERIES A 12% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF LOGIMETRICS, INC.
LogiMetrics, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
The following amendments to the Certificate of Designation of Series A
12% Cumulative Convertible Redeemable Preferred Stock ("Preferred Stock") of the
Corporation ("Certificate of Designation") were duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware:
1. Section 2 of the Certificate of Designation is hereby amended to
read in its entirety as follows:
"2. Dividends. The holders of shares of Preferred Stock shall be
entitled to receive, but only when and as declared by the Board of Directors,
dividends in an amount equal to twelve percent (12%) of the Stated Value per
share per annum, payable quarterly on such dates in each year as shall be fixed
by the Board of Directors. Such dividends shall be payable, at the option of the
Board of Directors, either in cash or in shares of Common Stock having a "Fair
Market Value" (as defined below) on the date of declaration equal to the cash
dividend otherwise payable. As used herein, "Fair Market Value" on any date of
determination means the average of the last sale price per share of the Common
Stock for ten trading days immediately preceding such date as reported by any
national securities exchange on which the Common Stock is then listed or
admitted for trading or as reported by the Nasdaq Stock Market if the Common
Stock is not then listed or admitted for trading on any national securities
exchange, or the average of the closing bid and asked prices per share of the
Common Stock for the ten trading days immediately preceding such date as
reported on the OTC Bulletin Board or any similar successor service then
publishing quotations on the Common Stock if the Common Stock is not then listed
or admitted for trading on any national securities exchange or included on the
Nasdaq Stock Market, or as determined in good faith by the Company's Board of
Directors in the event that the Common Stock is not then listed or admitted for
trading on any national securities exchange or included on the Nasdaq Stock
Market and quotations on the Common Stock are not then being regularly
published."
2. Section 8 of the Certificate of Designation is hereby amended to
read in its entirety as follows:
"8. Voting rights of preferred. Except as expressly provided by law,
the Preferred Stock shall have no right to vote on any question or in any
proceeding or to be represented at or to receive notice of any meeting of the
stockholders."
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed and attested by its duly authorized officers, this 30th day of
November, 1999.
LOGIMETRICS, INC.
By:______________________________
Norman M. Phipps, President and
Chief Operating Officer
ATTEST:
__________________________
Erik S. Kruger, Secretary
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS OF THIS EXHIBIT HAVE
BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.1
Signal Technology Corporation
222 Rosewood Drive
Danvers, MA 01923
February 17, 2000
LogiMetrics, Inc.
50 Orville Drive
Bohemia, NY 11716
Gentlemen:
Signal Technology Corporation, a Delaware corporation ("Signal"), is
interested in making an offer to LogiMetrics, Inc., a Delaware corporation (the
"Company"), of the following proposed transaction terms (the "Terms"), whereby
Signal would acquire the Company by the merger of a newly-formed wholly-owned
subsidiary of Signal into the Company in a transaction intended to be a tax-free
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code, as more
fully described below ("the Merger").
1. (a) Subject to the completion of the "due diligence" investigation
contemplated by Section 7 hereof, as the merger consideration, Signal would
issue (i) shares of Signal common stock, $.01 par value (the "Signal Common
Stock"), and (ii) shares of SWG Equity (as defined in paragraph (b) below). The
number of shares of Signal Common Stock to be issued would, immediately after
the issuance thereof, be equal to [confidential portion has been omitted and
filed separately with the Securities and Exchange Commission] of the aggregate
of the number of then issued and outstanding shares of Signal Common Stock and
the number of shares of Signal Common Stock then subject to vested stock
options. The number of shares of SWG Equity to be issued would be equal to
[confidential portion has been omitted and filed separately with the Securities
and Exchange Commission] of the SWG Equity, calculated prior to any distribution
to Signal stockholders and prior to the sale of SWG Equity to the public in an
initial public offering (the "SWG IPO"). (The Signal Common Stock and the SWG
Equity to be issued in connection with the Merger are hereinafter referred to as
the "Merger Consideration.") The parties understand that the certificates
representing the SWG Equity portion of the Merger Consideration would not be
issued and would not be tradable until the SWG IPO. In the event that, during
the period between the signing of this Letter of Intent and the closing of the
Merger, Signal grants options to purchase shares of Signal Common Stock which
vest immediately upon grant, or Signal issues any securities which are
convertible into shares of Signal Common Stock, the Company shall be entitled to
anti-dilution protection. The transaction would close as soon as practicable
after receipt of any required director, stockholder and bank approvals and
regulatory approvals, including Hart-Scott-Rodino approval (if applicable). The
transaction is contingent upon the conversion of the Company's indebtedness for
borrowed money (other than that owed to North Fork Bank and as may be set forth
on Schedule I hereto) into Company common stock at or prior to the acquisition.
(b) It is the mutual intention of Signal and the Company that the
assets owned by mmTech, Inc., a New Jersey corporation ("mmTech"), the Company's
wholly-owned subsidiary, shall become part of the Signal Wireless Group. It is
also the mutual intention of Signal and the Company that the Signal Wireless
Group shall be employed as a separate vehicle (such new company to be referred
to hereinafter as "SWG") to enhance the value of that business, through an
offering by Signal of a "tracking" security to reflect the SWG business (such
tracking security is herein referred to as "SWG Equity"). Signal would use its
commercially reasonable efforts to consummate the SWG IPO as soon as reasonably
practicable, given market conditions. It is Signal's intention to issue SWG
Equity only in such circumstances and to such parties as would benefit SWG
directly. The parties agree that if the SWG IPO has not occurred by the later of
December 31, 2001 or eighteen (18) months following the Merger, at the option of
either Signal or the holders of a majority of the SWG Equity issuable to the
Company's former shareholders (the "Majority Company Holders"), all of the SWG
Equity shall be exchanged for shares of Signal Common Stock. Such exchange shall
be based on the respective fair market values of both the Signal Common Stock
and the SWG Equity, as determined by an investment banking firm selected by
Signal (subject to approval by the Majority Company Holders, which approval
shall not be unreasonably withheld or delayed).
<PAGE>
(c) As conditions to the finalization of the percentages set forth in
paragraph (a) above prior to execution of the Agreement referred to in Section 5
below, both the Company and Signal shall have completed their respective "due
diligence" investigation and valuation of the other's assets that will be a part
of SWG and each shall have received from its respective financial advisor an
opinion that such transaction is fair to its stockholders from a financial point
of view. In the event that, based on such investigations and valuations, the
percentages are adjusted in a manner adverse to the Company and the Company
therefore terminates its discussions with Signal regarding the Merger,
thereafter the Company shall not be obligated to pay the Break-Up Fee referred
to in Section 10(b) hereof. The Company and Signal agree that, for purposes of
the valuation of the Company's assets referred to in the second preceding
sentence, the $2,000,000 loan from Signal to the Company referred to in Section
6(a) hereof shall be ignored. The parties will attempt to keep such $2,000,000
loan from being a liability of SWG or from otherwise burdening SWG.
2. The Merger Consideration would be reduced for all Company
liabilities assumed by Signal, other than current liabilities, indebtedness for
borrowed money owed to North Fork Bank, and other indebtedness and obligations
specifically assumed by it. The parties agree that the Merger Consideration
shall not be reduced by either (i) the aggregate amount, up to $1,000,000, of
loans from certain of the Company's existing lenders referred to in Section 6(a)
hereof or (ii) twenty-five percent (25%) of the indebtedness (not to exceed
$250,000) currently owed by the Company to Charles Brand, such loans to be
assumed and paid off by Signal at the closing of the Merger. To the extent that,
as of the closing date, the net assets of the Company, as determined in
accordance with Schedule II attached hereto, exceed or are less than the net
assets of the Company set forth on such Schedule II, there would be an increase
or decrease, as the case may be, in the Merger Consideration to be paid. At the
closing of the Merger, the Company's assets and mmTech's assets shall be free
and clear of all liens and encumbrances, except to the extent such liens and
encumbrances secure indebtedness assumed by Signal.
3. Signal will be required to register the Signal Common Stock and the
SWG Equity issued in connection with the transaction contemplated hereby under
the Securities Act of 1933, as amended. Signal shall apply for listing of such
Signal Common Stock on the American Stock Exchange (or on the National
Association of Securities Dealers, Inc. National Market System, if the Signal
Common Stock is then traded on that exchange). Signal and the Company shall use
commercially reasonable efforts to prepare and file with the Securities and
Exchange Commission a registration statement on Form S-4 within thirty (30) days
after signing the definitive agreements referred to in Section 5 below. During
the one hundred eight (180) day period following the closing date, the Company's
principal stockholders owning approximately 80% of the Company's equity shall
not be permitted to sell, in the aggregate, more than five percent (5%) of the
total number of shares of Signal Common Stock issued to such stockholders in the
transaction.
4. Prior to the closing of the Merger, Signal's Board of Directors
shall increase the size of the Board by one (1) director, for the purpose of
electing to the Board a nominee of Cramer Rosenthal McGlynn, LLC ("CRM"), such
nominee to be acceptable to Signal's Board. The parties agree that, so long as
CRM and its affiliates own in the aggregate at least five percent (5%) of the
Signal Common Stock issued in connection with the Merger, CRM shall be entitled
to have a nominee on Signal's Board.
5. The Company understands that Signal will instruct its counsel to
prepare an Agreement and Plan of Reorganization (the "Agreement") and such other
agreements and documentation as shall be necessary or appropriate to reflect the
Terms. Such definitive agreements shall contemplate and be contingent upon the
receipt by Signal of audited consolidated financial statements of the Company
for its fiscal years ended June 30, 1998 and June 30, 1999 and unaudited
financial statements for the fiscal quarters ended September 30 and December 31,
1999, and, if possible in light of the closing date, for the fiscal quarter
ended March 31, 2000, and shall contain terms, conditions, representations,
warranties and covenants as are customary in transactions of this type,
consistent with the Terms, including the following:
(a) an adjustment to the Merger Consideration to the extent to which
the net assets of the Company exceed or are less than the net assets shown on
Schedule II hereto;
(b) the Company shall make representations, warranties and covenants
reasonable to the transaction, which will expire one year after the closing date
(the "Survival Period");
<PAGE>
(c) the Company shall provide normal and customary indemnification
(through an escrow of a portion of the Merger Consideration) by the Company's
stockholders for any breach of representation, warranty or covenant by the
Company and for all liabilities not specifically assumed by Signal, provided
that, except for certain standard exceptions (the "Standard Exceptions"), such
as with respect to authority, capitalization, title, taxes, environmental
liabilities, ERISA liabilities and other identified claims and liabilities,
there will be no such indemnification for claims unless the total exceeds the
value of one and one-half percent (1-1/2%) of the Merger Consideration, and,
provided further, that there shall be no indemnification for amounts in excess
of seven and one-half percent (7-1/2%) of the value of the Merger Consideration
(unless Signal discovers something during its due diligence investigation that
causes it to reasonably believe that such amount is materially inadequate),
which indemnity shall be secured by a post-closing escrow of seven and one-half
percent (7-1/2%) of the Merger Consideration, which shall be released
immediately after the Survival Period except for shares necessary to provide
security for claims previously made (for purposes of the escrow, (i) with
respect to shares of Signal Common Stock taken from the escrow during the
Survival Period, the Signal Common Stock shall be deemed to have a value per
share equal to the average closing price of Signal Common Stock for the five
trading days immediately preceding the date that the shares are taken from the
escrow to satisfy such claim), and (ii) with respect to shares of Signal Common
Stock retained in the escrow at the end of the Survival Period to provide
security for claims previously made, the Signal Common Stock shall be deemed to
have a value per share equal to the average closing price of Signal Common Stock
for the five trading days immediately preceding the last day of the Survival
Period);
(d) mutually acceptable employment agreements between Signal and each
of Norman Phipps and Charles Brand;
(e) non-compete agreements from the following individuals, for the
specified durations commencing on the closing date, wherever the Company has
done business: Norm Phipps for two years; Charles Brand for five years; and
certain key engineers for two years, with each of such key engineers to be
granted, after the closing of the Merger, an option to purchase shares of Signal
Common Stock, in such form and for such number of shares of Signal Common Stock
as Signal customarily grants to similarly situated Signal employees; and
(f) an exclusivity agreement from the Company, in substantially the
form set forth in Section 10(a)(i) hereof, with a so-called "fiduciary out" in
the event that the Company receives from a third party a superior proposal with
respect to the Company and/or its subsidiaries, and the Company's Board of
Directors determines in good faith (based on the advice of outside counsel) that
its fiduciary duties require it to consider such proposal; provided that the
Company shall pay to Signal the amount of $800,000 as reimbursement of Signal's
expenses and as liquidated damages (a "Break-Up Fee") in the event that it shall
consummate an Acquisition Transaction (as defined below in Section 10(a)(i))
with a third party within twelve months thereafter, such Break-Up Fee to
supersede and extinguish the Company's obligations with respect to the Break-Up
Fee referred to in Section 10(b) hereof and to be paid within three (3) business
days after the consummation of the transaction with such third party. The
parties agree that in the event they do not consummate the transaction
contemplated hereby based on the fact that the conditions precedent to Signal's
obligations under the definitive agreements are not satisfied, through no fault
or failure on the part of the Company, Signal shall waive the Company's
obligation to pay the Break-Up Fee under this Section 5(f), and such obligation
shall terminate.
6. (a) In consideration of the parties entering into this Letter of
Intent, Signal is committing to loan to the Company $2,000,000. $1,000,000 of
the loan will be advanced forthwith upon completion of Signal's due diligence
examination of the Company's New York Business (as defined in Section 6(b)
below), and the balance of the loan will be advanced in accordance with the
schedule set forth on Schedule III hereto. In connection with the loan, the
parties agree to execute and deliver the forms of Loan Agreement and Promissory
Note attached hereto, as well as the other agreements and documents referred to
therein. The parties agree that the loan by Signal is contingent upon the
Company's borrowing from certain of its existing lenders amounts equal in the
aggregate to $1,000,000, of which $610,000 has been advanced since December 2,
1999. The remaining $390,000 of such loans shall be disbursed as follows:
$50,000 at the time Signal loans its first $1,000,000, and the balance
thereafter at the rate of $34,000 for every $100,000 loaned by Signal, with such
disbursements to be made simultaneously with Signal's disbursements.
(b) Upon execution of this Letter of Intent, as an accommodation to
the Company, Signal is agreeing that, upon disbursing the first $1,000,000 of
the Signal loans referred to in Section 6(a) hereof, it shall take over the
responsibility of running the Company's "New York Business," which shall be
defined for these purposes as the business located at 50 Orville Drive, Bohemia,
New York 11706, pursuant to a Management Agreement in the form attached hereto
and the other agreements and documents referred to therein.
<PAGE>
7. Signal anticipates being able to conduct the necessary "due
diligence" investigation and to execute and deliver definitive agreements by
such date as is 45 days from the date of this Letter of Intent. During this
period, the Company shall provide Signal with reasonable access to the books and
records of the Company and its subsidiaries and other information regarding the
Company and its subsidiaries.
8. Both Signal and the Company agree to maintain complete
confidentiality (except as may be necessary to disclose to their respective
Boards of Directors, advisors and bankers) of the proposed transaction and any
terms, conditions or other facts related to it, unless required by law to make
disclosure; provided that any press release or announcement made shall be
mutually agreed upon by the parties. Signal and the Company acknowledge and
agree that they are also bound by the obligations set forth in the
Confidentiality Agreement between Signal and the Company dated December 14,
1999.
9. Between now and the closing, the Company will conduct its business
in the normal and ordinary course and, among other things, will pay no cash
dividends and will not purchase or redeem any of its outstanding securities.
10. (a) In consideration of Signal's devotion of its resources in
conducting its due diligence investigation and having its counsel prepare
definitive agreements, and for other valid consideration, the receipt and
adequacy of which are hereby acknowledged, the Company agrees that from the date
hereof until such date as is 45 days from the date of this Letter of Intent (the
"Exclusivity Period"):
(i) neither it nor any of its officers, directors, employees,
representatives or agents, including without limitation investment bankers,
attorneys and accountants, shall directly or indirectly solicit or initiate or
participate in any discussions or negotiations with, or provide any information
to, any corporation, partnership, person, or other entity or group (other than
Signal and its designees) concerning any offer or proposal, with respect to the
Company or any of its subsidiaries, for any merger, tender offer, sale of
substantial assets, sale of shares of capital stock or debt securities, joint
venture, long term leasing of assets (other than in the ordinary course of
business) or any similar transaction related to the Company or any of its
subsidiaries (each such transaction, an "Acquisition Transaction"); and
(ii) it will promptly (and in no event later than 24 hours after
receipt) communicate to Signal the terms of any such proposal, discussion,
negotiation or inquiry relating to the Company or any of its subsidiaries and
the identity of the party making or having such proposal, discussion,
negotiation or inquiry that it may receive in respect of any such proposal.
<PAGE>
(b) The Company agrees that in the event the Company enters into a
letter of intent or similar agreement with a third party with respect to an
Acquisition Transaction at any time during the period commencing on the date
which is 46 days following the date of this Letter of Intent and continuing
through and including such date which is 120 days from the date of this Letter
of Intent, the Company will pay to Signal the amount of $800,000 as a Break-Up
Fee. The Company shall pay this Break-Up Fee within three (3) business days
after the execution of such letter of intent or agreement. As noted in Section
5(f) above, the Company's obligation to pay such Break-Up Fee shall terminate
upon the execution by Signal and the Company of definitive agreements which
include the exclusivity and Break-Up Fee provisions referred to in such Section
5(f).
(c) Notwithstanding any provision herein to the contrary, in the event
that (i) Signal informs the Company in writing, at any time during the 120-day
period following the date hereof, that Signal is no longer interested in
pursuing a transaction hereunder, or (ii) Signal informs the Company at any time
that Signal will not agree in the Agreement to assume and pay the loans referred
to in clauses (i) and (ii) of Section 2 hereof, and the Company therefore
terminates in writing its discussions with Signal regarding the Merger and three
(3) days shall have expired without Signal notifying the Company in writing of
its willingness to so assume and pay such loans, then the Exclusivity Period, if
not already expired, and the related obligations of the Company shall expire and
the Company shall not be obligated to pay to Signal the Break-Up Fee referred to
in paragraph (b) immediately above.
11. It is understood that this letter merely constitutes a statement
of mutual intentions with respect to the transactions contemplated herein, does
not contain a resolution of all matters upon which agreement must be reached for
the consummation of those transactions and, therefore, does not constitute a
binding agreement with respect thereto. A binding agreement with respect to the
transaction will result only from the execution of the definitive agreements
referred to in Section 5 above. Notwithstanding the two preceding sentences,
upon execution and delivery of this letter by both parties, Sections 6 through
12 of this letter shall be legally binding upon and enforceable against the
parties. Either of the parties shall be entitled to seek legal and equitable
relief for any breach of any legally binding provision.
12. This letter of intent shall be construed and enforced in
accordance with the laws of The Commonwealth of Massachusetts.
[Signatures on Following Page]
Please indicate your agreement with the terms hereof by executing and
delivering a copy of this letter to the undersigned.
Very truly yours,
Signal Technology Corporation
By:/s/George E. Lombard
________________________________
George E. Lombard, Chairman and
Chief Executive Officer
Agreed and Assented:
LogiMetrics, Inc.
By: /s/Norman M. Phipps
_______________________________
Norman M. Phipps, President
EXHIBIT 10.2
LOAN AGREEMENT
February 17, 2000
Signal Technology Corporation
222 Rosewood Drive
Danvers, MA 01923
Attention: George E. Lombard, Chairman and Chief Executive Officer
Dear Sirs:
This loan agreement (the "Loan Agreement") describes the terms and
conditions under which Signal Technology Corporation ("Signal") is herewith
lending to LogiMetrics, Inc. (the "Company") an aggregate of up to $2,000,000
(the "Loan") for working capital and other general corporate purposes.
$1,000,000 of the Loan will be advanced upon completion of Signal's due
diligence examination of the New York Business (as defined below), subject to
the simultaneous closing of the Legacy Loan (as defined below). All other
amounts to be advanced under the Loan shall be advanced in accordance with
Schedule II attached to the Promissory Note dated the date hereof by the Company
in favor of Signal.
As a condition to Signal's obligation to make the Loan, on or prior to
the date hereof, certain current institutional investors of the Company will
lend an aggregate of $1,000,000 to the Company for working capital and other
general corporate purposes (the "Legacy Loan"). Approximately $610,000 of the
Legacy Loan has been advanced since December 2, 1999. The remaining $390,000 of
the Legacy Loan will be advanced as follows: $50,000 on the date Signal advances
its first $1,000,000, and thereafter at the rate of $34,000 for every $100,000
Signal advances, at such times as Signal makes such advances.
To induce Signal to make the Loan, the Company is hereby granting to
Signal an exclusive option to purchase all of the assets of the New York
Business (as defined below). The option shall be exercisable by Signal solely
upon the failure of the Company and Signal, negotiating in good faith, to enter
into the definitive agreements referred to in the Letter of Intent (as defined
below) by the end of the Exclusivity Period (as defined in the Letter of
Intent). The option granted hereby shall expire upon the earlier to occur of (i)
thirty (30) days after the payment in full of all amounts owing to Signal under
the Promissory Note or (ii) December 31, 2000. The option purchase price is
$2,000,000, less (i) the amount of any indebtedness of the Company owed to
Signal, which shall be forgiven (except to the extent of the 5% indemnity escrow
referred to below), (ii) an amount which, in the aggregate, is equal to the bank
<PAGE>
and other funded indebtedness of the Company assumed by Signal (but Signal would
agree to assume other current liabilities incurred in the ordinary course of
business). In the event that the number of $2,000,000, less the deductions set
forth above, is a number that is less than zero, then the Company shall pay to
Signal such amount in order to bring the amount of the calculation to zero, so
that Signal's cost does not exceed $2,000,000. The sale of the New York Business
will be subject to, among other things, (i) the Company obtaining approval of
such sale from its shareholders, and (ii) the negotiation, preparation and
execution of an asset purchase agreement and such other relevant documentation
governing the terms and conditions of such sale (collectively, the "Definitive
Agreements"). For purposes of this letter agreement, the "New York Business"
shall mean the business located at 50 Orville Drive, Bohemia, New York 11716.
The Definitive Agreements will include, among other things, (a) customary
representations and warranties by the Company (which will expire on the first
anniversary of the closing (the "Survival Period") except for certain standard
exceptions, such as with respect to authority, title, taxes, environmental
liabilities, ERISA liabilities and other identified claims and liabilities
(collectively, the "Standard Exceptions")); (b) an escrow to secure the
representations, warranties and covenants of the Company until the first
anniversary of the closing (although Signal might consider a shorter survival
period based on its operation of the New York Business contemplated by the
Management Agreement referred to in the Letter of Intent), such escrow to be
accomplished by the forgiveness of 95% of the indebtedness outstanding under the
Promissory Note; (c) a non-competition agreement by the Company and its senior
management and normal and customary indemnification by the Company for any
breach of representation or warranty by it, provided that, except for the
Standard Exceptions, there will be no such indemnification for claims unless the
total exceeds two percent (2%) of the purchase price, and, provided further,
that except for the Standard Exceptions, there shall be no indemnification for
amounts in excess of five percent (5%) of the purchase price, unless Signal
discovers something during its due diligence investigation that causes it to
reasonably believe that such amount is inadequate, which indemnity shall be
secured by the post-closing escrow of five percent (5%) of the purchase price,
as noted above, which shall be released immediately after the Survival Period
except for amounts necessary to provide security for claims previously made.
To induce Signal to make the Loan, the Company and Signal are also
entering into a non-binding (except for certain specified provisions) letter of
intent of even date herewith (the "Letter of Intent"), which provides for the
merger of a wholly-owned subsidiary of Signal into the Company ("the Merger").
Between now and the closing of the Merger, the Company will conduct
its business in the normal and ordinary course. Pending such closing, the
Company will provide reasonable access to the Company's and its subsidiaries'
books and records to Signal and those of its employees, representatives and
advisors who need such access in order to enable Signal to complete its
financial and backlog due diligence investigation contemplated above. Signal
<PAGE>
hereby acknowledges and agrees that any information disclosed to Signal and such
employees, representatives and advisors in connection with such access to the
Company's and its subsidiaries books and records is subject to the
confidentiality provisions contained in Section 8 of the Letter of Intent and
the existing Confidentiality Agreement between Signal and the Company dated
December 14, 1999.
Simultaneously herewith, the Company is delivering to Signal (i) a
Negotiable Secured Senior Subordinated Promissory Note in the aggregate
principal amount of $2,000,000 (the "Note"), substantially in the form of
Exhibit A attached hereto, registered in the name of Signal, (ii) an executed
counterpart of an Amendment No. 2 to the Second Amended and Restated Security
Agreement, Intercreditor Agreement, Waiver and Consent (the "Security
Agreement"), substantially in the form of Exhibit B attached hereto, granting to
Signal the security interests in the collateral described therein, (iii) one or
more executed Financing Statements on Form UCC-1 or assignments of all existing
Financing Statements (the "Financing Statements") evidencing the grant of the
security interests pursuant to the Security Agreement, (iv) executed consents
from all lenders of the Company whose consent is required in connection with the
transactions contemplated hereby, (v) a copy of an executed extension letter
from North Fork Bank extending the maturity date of the $1,930,000 Reduced and
Extended Revolving Credit Note, dated as of September 1, 1999, to at least [June
30], 2000, and (vi) a secretary's certificate covering such matters as Signal
has requested. The Company hereby represents and warrants to Signal on the date
hereof that (i) it is duly incorporated, validly existing and in good standing
in the jurisdiction of its incorporation, (ii) it owns or holds all material
licenses and permits necessary for the conduct of its business as presently
conducted, (iii) it has the authority to enter into and perform its obligations
under this Agreement, the Note, the Security Agreement and the Financing
Statements, and (iv) each of this Agreement, the Note, the Security Agreement
and the Financing Statements (A) has been duly authorized by all necessary
corporate action on the part of the Company, (B) has been duly executed and
delivered by the Company, and (C) constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
The Company hereby agrees that it shall reimburse Signal for its
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
disbursements) incurred in connection with the negotiation and documentation of
the Loan upon presentation of a reasonably detailed invoice specifying the
amount of such expenses.
Together with the Note, the Security Agreement, the Financing
Statements and the Letter of Intent, this Loan Agreement comprises the entire
agreement among the Company and Signal regarding the subject matter hereof,
there being no other written, oral or other agreements or understandings between
them with respect to the subject matter hereof or thereof.
<PAGE>
This letter agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument. This letter agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without regard
to the choice of law provisions thereof.
This letter and the terms and provisions hereof will automatically
terminate upon the earlier to occur of (i) the closing of the Merger, (ii) the
closing of the purchase of the New York Business or (iii) the date which is
thirty (30) days after payment in full by the Company to Signal of all amounts
owed to Signal hereunder and under the Note. In addition, Signal and the Company
may terminate this letter by mutual written consent at any time.
[Rest of Page Intentionally Left Blank]
<PAGE>
If the foregoing accurately reflects our mutual understanding, please so
indicate by executing a counterpart of this letter agreement and returning it to
the undersigned.
Very truly yours,
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
___________________________
Norman M. Phipps, President
and Chief Operating Officer
ACCEPTED AND AGREED:
SIGNAL TECHNOLOGY CORPORATION
By: /s/George E. Lombard
______________________________
George E. Lombard, Chairman
and Chief Executive Officer
Dated: February 17, 2000
<PAGE>
Exhibit A
Form of Promissory Note
NEGOTIABLE SECURED SENIOR SUBORDINATED
PROMISSORY NOTE
$2,000,000 Final Maturity Date:
December 31, 2000
FOR VALUE RECEIVED, LogiMetrics, Inc., a Delaware corporation (the
"Maker"), hereby promises to pay to the order of Signal Technology Corporation
or its successors and assigns (the "Holder"), at its corporate offices at 222
Rosewood Drive, Danvers, MA 01923, or at such other location as the Holder may
designate from time to time, the aggregate unpaid amount of all loans (each, a
"Loan") made by the holder to the Maker hereunder. Each Loan shall mature and be
due and payable, together with all interest accrued thereon, in lawful money of
the United States of America on or before December 31, 2000, or on demand under
certain circumstances as specified herein.
The Maker promises to pay interest on the unpaid principal amount of
each Loan from the date such Loan is made until its maturity (whether by
acceleration or otherwise), at the rate of 10% per annum, such interest to be
paid on maturity.
1. If the Maker fails to pay any amount hereunder when due, interest
shall thereafter accrue on such overdue amount at a rate of interest equal to
the lesser of: (i) 18% per annum; or (ii) the highest rate permitted by law
until paid in full. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
2. The maximum aggregate principal amount of the Loans to be made
hereunder shall be $2,000,000. The Holder is authorized to record all Loans
evidenced hereby in its records (including, but not limited to, the grid
attached hereto as Schedule 1), and such entries shall be conclusive evidence of
amounts outstanding hereunder absent manifest error.
3. On the date hereof, the Holder is advancing to the Maker
$1,000,000. The remaining Loans hereunder shall be made in accordance with the
loan schedule set forth on Schedule II hereto.
4. The Maker may prepay any Loan made hereunder at any time, in whole
or in part, without premium or penalty. The Maker shall prepay all Loans in full
to the Maker within five (5) Business Days after: (i) the consummation of any
public or private offering by the Maker of its equity securities or securities
convertible into or exchangeable for its equity securities pursuant to which the
Maker receives gross proceeds (before the deduction of offering expenses,
discounts and commissions) of at least Seven Million Five Hundred Thousand
Dollars ($7,500,000); or (ii) the sale or transfer, in a single transaction or
in a series of related transactions, of all or substantially all of the Maker's
assets, or the merger, consolidation, reorganization or dissolution of the
Maker, or the sale, in a single transaction or in a series of related
transactions, of a majority of the Maker's voting capital stock (whether newly
issued or from treasury, or previously issued and then outstanding, or any
combination thereof), in each case other than in a transaction with Signal
contemplated by the Letter of Intent (the "Letter of Intent") of even date
herewith between Signal and the Company (any of such events, a "Disposal
Event"), or the execution by the Maker of any letter of intent or like agreement
with respect to the consummation of a Disposal Event. In addition, in the event
<PAGE>
the Maker executes a letter of intent or like agreement with respect to a
Disposal Event that is an Acquisition Transaction (as defined in the Letter of
Intent), or with respect to any other Acquisition Transaction, during the period
commencing on such date as is 46 days following date of Letter of Intent and
continuing through and including such date as is 120 days following date of
Letter of Intent, the Maker shall, on the date it prepays all Loans in full in
accordance herewith, pay to the Holder a prepayment penalty in the amount of
$100,000. As used herein, "Business Day" means a day, other than a Saturday or
Sunday, on which commercial banks in New York City are open for the general
transaction of business.
5. At any time while Loans are outstanding hereunder, the Holder shall
have the right during normal business hours to examine the books and records of
the Maker, to make copies, notes, and abstracts therefrom, to discuss the
Maker's affairs with the officers, directors, key employees, and accountants of
the Maker and, no more than once, to make or cause an independent examination
and/or audit (at its expense) of the books and records of the Maker.
6. The Maker shall pay to the Holder the reasonable attorneys' fees
and disbursements and all other out-of-pocket costs incurred by the Holder in
order to collect amounts due and owing under this Note. All payments received
shall be applied, first, to the costs of collection, second, to unpaid interest,
and third, to principal.
7. No delay or failure on the part of the Holder in exercising any
power, right or remedy hereunder shall operate as a waiver of any such power,
right or remedy; nor shall any single or partial exercise of any power, right or
remedy preclude any other or further exercise of such power, right or remedy, or
the exercise of any other power, right or remedy, and no waiver whatsoever shall
be valid unless in writing, signed by the Holder, and then only to the extent
expressly set forth therein. No remedy is exclusive of any other remedy and all
remedies shall be cumulative to the maximum extent permitted by applicable law.
The Maker hereby waives presentment, demand for payment, diligence, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
8. This Note is one of the Notes referred to in Amendment No. 2 to the
Second Amended and Restated Security Agreement, Intercreditor Agreement, Waiver
and Consent, dated the date hereof, among the Maker, Cramer Rosenthal McGlynn,
LLC, as Agent (the "Agent"), and the other parties thereto (the "Security
Agreement") and is secured by the Collateral (as defined in the Security
Agreement). The Security Agreement grants the Agent on behalf of the Holder and
the other parties thereto certain rights with respect to the Collateral upon
certain defaults specified therein and sets forth the related priorities of the
Holder and the other parties thereto with regard to such Collateral.
9. If any of the following events or circumstances (each an
"Acceleration Event") shall occur:
(a) the Maker shall fail to pay any amount of principal, interest or
other amount (if any) within ten (10) days of the date on which such amount is
due and payable hereunder; or
(b) an Event of Default under the Security Agreement shall have
occurred and be continuing or the Maker shall fail to cure any breach of its
other covenants, agreements or obligations hereunder within ten (10) days after
written notice by the Holder to the Maker specifying such breach; or
<PAGE>
(c) any representation or warranty made by the Maker herein or in the
Security Agreement shall have been false in any material respect when made; or
(d) the Maker shall make an assignment for the benefit of creditors,
or shall petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Maker or of any substantial part of its assets, or
shall commence any case or other proceeding relating to its assets under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, or shall take any
corporate action to authorize or in furtherance of any of the foregoing; or any
such petition or application shall be filed or any such case or other proceeding
shall be commenced against the Maker, and the same shall not have been dismissed
within 60 days of the filing or commencement thereof or the Maker shall indicate
its approval thereof, consent thereto or acquiescence therein; or a decree or
order shall be entered appointing any such trustee, custodian, liquidator or
receiver or adjudicating the Maker bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order for relief
shall be entered in respect of the Maker in an involuntary case under any such
bankruptcy or insolvency laws; or
(e) the Maker shall take any corporate action to liquidate its assets
or dissolve, or shall take any corporate action to consolidate or merge with or
into any other corporation or business entity unless the Maker shall be the
surviving legal entity of such consolidation or merger or the surviving legal
entity of such consolidation or merger shall have assumed in full by a written
instrument the obligations under and in respect of this Note, other than any
such corporate action in connection with the transaction with Signal
contemplated by the Letter of Intent; or
(f) without the prior written consent of the Holder, the Maker shall
have incurred indebtedness for borrowed money (other than indebtedness for
borrowed money, together with interest thereon, existing on the date hereof)
which is or will be senior or pari passu to its indebtedness hereunder, except
for indebtedness incurred by the Maker pursuant to the Legacy Loan referred to
in the Loan Agreement of even date herewith between the Maker and the Holder
(the "Loan Agreement");
then, the Holder at its option at any time thereafter during the continuance of
an Acceleration Event may declare the entire and unpaid principal of this Note
and all interest, fees and expenses (if any) payable on or in respect of this
Note and the obligations evidenced hereby due and payable, and the same shall
thereupon forthwith become and be due and payable to the Holder (an
"Acceleration") without presentment, demand, protest, notice of protest or any
other formalities of any kind, all of which are hereby expressly and irrevocably
waived by the Maker, provided that in the event of an Acceleration Event under
Section 9(d) hereof all such amounts shall become and be immediately due and
payable, and an Acceleration shall be deemed for all purposes hereof to have
occurred, automatically and without any requirement of notice from the Holder.
10. The Maker will not, by amendment of its Charter or through
reorganization, consolidation, merger, dissolution, issuance of capital stock or
sale of treasury stock (otherwise than upon exercise of conversion rights
hereunder) or sale of assets, or by any other voluntary act or deed, avoid or
seek to avoid the material performance or observance of any of the covenants,
stipulations or conditions in this Note to be observed or performed by the
<PAGE>
Maker. The Maker will at all times in good faith assist, insofar as it is able,
in the carrying out of all of the provisions of this Note in a reasonable manner
and in the taking of all other action which may be necessary in order to protect
and preserve the rights of the Holder set forth herein.
11. This Note shall be binding upon the Maker and its successors and
assigns. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York pursuant to Section 15-1402 of the
General Obligations Law of such state. The Maker irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Note. Service of process in connection with any such suit, action or proceeding
may be served on the Maker anywhere in the world by any method authorized by
law. The Maker irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding. The Maker irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
<PAGE>
12. No modification, alteration, waiver or change of any of the
provisions hereof shall be effective unless in writing and signed by the Maker
and the Holder and, then, only to the extent set forth in such writing.
ATTEST: LOGIMETRICS, INC.
_____________________ _____________________________
Name: By: Norman M. Phipps
Title: President
Dated: February 17, 2000
<PAGE>
Schedule 1
Date of Notation
Amount of Loan Advance Made By
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
<PAGE>
Schedule II
<PAGE>
Exhibit B
Form of Amendment No. 2 to Second Amended and Restated
Security Agreement, Intercreditor Agreement, Waiver and Consent
AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED SECURITY AGREEMENT,
INTERCREDITOR AGREEMENT, WAIVER AND CONSENT
Amendment No. 2, dated as of February 17, 2000 (this "Amendment") to
the Second Amended and Restated Security Agreement, Intercreditor Agreement,
Waiver And Consent dated March 7, 1996, as previously amended and restated as of
July 29, 1997 and on or about August 31, 1999, and as further amended by
Amendment No. 1 thereto, dated as of December 2, 1999 (the "Agreement"), among
LOGIMETRICS, INC., a Delaware corporation ("LogiMetrics"), and mmTech, Inc., a
New Jersey corporation ("mmTech" and, together with LogiMetrics, the
"Borrowers"), Cramer Rosenthal McGlynn, LLC, as Agent (in such capacity, the
"Agent") for itself and the other Holders listed on the signature pages hereto,
and any other persons becoming Holders from time to time. Pursuant to this
Amendment, SIGNAL TECHNOLOGY CORPORATION, a Delaware corporation ("Signal"), is
hereby added as a Holder party hereto, as hereinafter set forth, effective as of
the Effective Date, as hereinafter defined). Capitalized terms used but not
defined herein shall have the meaning set forth in the Agreement.
WHEREAS the Borrowers are presently indebted to the various Holders in
respect of certain Notes, Class A Debentures, Class B Debentures and/or Class C
Debentures as defined in, subject to and secured by the Agreement (collectively,
the "Junior Indebtedness");
WHEREAS, in addition, the certain Holders listed on Schedule A hereto
have made and, subject to this Amendment and certain related undertakings by the
Borrowers and Signal, intend to make additional loans from to time in the
aggregate principal amount of $1,000,000 (the "Legacy Loans", which are the same
as the "New Loans" as defined in Amendment No. 1 to the Agreement), in the
principal amounts set forth opposite each Holders name on such Schedule A, each
Legacy Loan being or to be evidenced by a Supplemental Negotiable Secured Senior
Subordinated Promissory Note substantially in the form attached hereto as
Exhibit A (the "Legacy Notes", which are the same as the "New Notes" as defined
in Amendment No. 1 to the Agreement) and secured by and subject to the terms of
the Agreement;
WHEREAS, simultaneously herewith, the LogiMetrics and Signal are
entering into (i) a Letter of Intent (the "Signal Letter of Intent") pursuant to
which the parties intend to consummate a reverse merger of LogiMetrics into a
wholly-owned subsidiary of Signal, (ii) a Loan Agreement (the "Signal Loan
Agreement") pursuant to which Signal will make loans to LogiMetrics up to the
aggregate principal amount of $2,000,000 (the "Signal Loans"), $1,000,000 of
which is to be advanced on or about the date hereof and the remainder is to be
advanced from time to time thereafter, pursuant to and evidenced by a single
Negotiable Secured Senior Subordinated Promissory Note in the aggregate
principal amount of $2,000,000, substantially in the form attached hereto as
Exhibit B (the "Signal Note"), with such Signal Loans and Signal Note to be
secured by the Agreement (as hereby amended) on terms senior to the Junior
Indebtedness and to the rights, preferences and priorities as are accorded to
any of the Junior Indebtedness under the Agreement, pari passu and pro rata with
the Legacy Loans and to the rights, preferences and priorities as are accorded
to the Legacy Loans under the Agreement, and junior to any amounts now or
<PAGE>
hereafter owing to the Agent, solely in its capacity as Agent and not as a
Holder, and to the rights, preferences and priorities as are accorded to such
indebtedness under the Agreement, and (iii) a Management Agreement (the "Signal
Management Agreement") pursuant to which Signal will immediately assume
management of substantially all of the business assets of LogiMetrics located in
Bohemia, New York (as set forth in the Signal Management Agreement, the "New
York Business Assets") and will relocate the New York Business Assets to
Florida, and Signal shall have rights under the Signal Management Agreement and
the Signal Loan Agreement to acquire the New York Business Assets under certain
circumstances if the above-referenced reverse merger is not consummated;
WHEREAS, subject to the terms and conditions of this Amendment, the
parties hereto wish to (i) waive all existing Events of Default under the Junior
Indebtedness and the Legacy Loans, (ii) consent to the Signal Loans and the
Signal Note, and agree that the Signal Loans and the Signal Notes shall be
subject to and secured by the Agreement (as amended hereby) on terms senior to
the Junior Indebtedness and to the rights, preferences and priorities as are
accorded to any of the Junior Indebtedness under the Agreement, pari passu and
pro rata with the Legacy Loans and to the rights, preferences and priorities as
are accorded to the Legacy Loans under the Agreement, and junior to any amounts
now or hereafter owing to the Agent, solely in its capacity as Agent and not as
a Holder, and to the rights, preferences and priorities as are accorded to the
such indebtedness under the Agreement, (iii) consent to the Signal Management
Agreement, including, without limitation, the provisions therein (or in the
Signal Loan Agreement) for the management, relocation and acquisition by Signal
of the New York Business Assets and, in connection therewith, agree to release
the Agent's lien and security interest in the New York Business Asset in the
event that Signal acquires the same pursuant to such provisions; and
WHEREAS the parties hereto wish to memorialize such waivers, consents
and agreements by this Amendment,
NOW, THEREFORE, in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereof, each of the
parties hereto, effective as of the Effective Date (defined below), hereby:
1. Waives all existing Events of Default under the Junior Indebtedness
and the Legacy Loans, including any occasioned by the entry by LogiMetrics into
the Signal Letter of Intent, the Signal Loan Agreement, the Signal Note and the
Signal Management Agreement, and the other documents referred to therein to be
entered into simultaneously therewith (the "Signal Transaction Documents");
2. Gives its consent to the Signal Loans to be issued pursuant to the
Signal Loan Agreement and to be evidenced by the Signal Note, provided that
Signal does becomes, and by its signature below Signal hereby agrees to and does
become, a party to the Agreement as a Holder with respect to the Signal Loans
and accepts and agrees to be bound by all of the terms and conditions of the
Agreement (as amended hereby) and, without limiting the foregoing, hereby
unconditionally appoints the Agent as its agent under and pursuant to the terms
of the Agreement for all purposes of thereof;
<PAGE>
3. Agrees that the Signal Loans and the Signal Note shall hereafter be
and shall be deemed to be subject to and secured by the Agreement, and with
respect to the Collateral shall rank (a) senior to all of the Junior
Indebtedness and to the rights, preferences and priorities as are accorded to
any of the Junior Indebtedness under the Agreement, (b) pari passu and pro rata
with the Legacy Loans and to the rights, preferences and priorities as are
accorded to any of the Legacy Loans under the Agreement, and (c) junior and
subject to any amounts now or hereafter owing by the Borrowers or any of them to
the Agent under the Agreement, solely in its capacity as Agent under the
Agreement and not as a Holder, and to the rights, preferences and priorities as
are accorded to such indebtedness under the Agreement ;
4. Gives its consent to management by Signal of the New York Business
Assets, the relocation by Signal of the New York Business Assets to Florida, and
the acquisition by signal of the New York Business Assets, all pursuant to the
terms of the Signal Management Agreement and/or the Signal Loan Agreement, and
hereby further agrees that the lien and security interest in the New York
Business Assets arising under the Agreement shall be and be deemed released
without further action upon the acquisition by Signal of the New York Business
Assets in accordance with the terms of the Signal Management Agreement or the
Signal Loan Agreement, provided that, until such time as Signal actually
acquires title to the New York Business Assets pursuant to the terms of the
Signal Management Agreement or the Signal Loan Agreement, LogiMetrics and Signal
shall take all actions necessary or reasonably requested by the Agent to ensure
the continued perfection at all times of the lien and security interest of the
Agent in the New York Business Assets, including the execution and filing of
appropriate UCC financing statements in Florida and the separate identification
and non-commingling with Signal's own assets of the New York Business Assets,
and (subject to Signal's rights under the Signal Management Agreement and Signal
Loan Agreement) Signal hereby agrees to hold and manage the New York Business
Assets in trust for the Agent and the Holders, and
5. Agrees that the Agreement is hereby amended to reflect the waivers,
consents and agreements set forth herein above, and that any conflicting
provisions of the Agreement are hereby superseded, but, solely to the extent
necessary to give effect to this Amendment, and without limiting the generality
of this Section 3, the following provisions shall be amended as follows:
(a) All references in the Agreement to the term "Agreement" shall
mean the Agreement as amended and supplemented through the date hereof,
including as amended and supplemented hereby, as the same may hereafter be
further amended, supplemented or otherwise modified in accordance with its
terms;
(b) All references in the Agreement to the words "Loans" and
"Notes" shall mean, respectively, only the Loans and Notes other than the
Legacy Loans and Legacy Notes, and the all references in the Agreement (by
virtue of Amendment No. 1 thereto) to the words "New Loans" and "New Notes"
shall mean, respectively, only the Legacy Loans and Legacy Notes, and the
parties further agree that, notwithstanding the statement in any Legacy
Note to the effect that such note is a "Note" or "New Note" referenced in
the Agreement or any amendment thereto, such Legacy Note is and shall be
deemed a Legacy Note (and not a "Note") under and for all purposes of the
Agreement;
<PAGE>
(c) All references in the Agreement to the term "Holders" shall
include, in addition and not in limitation, Signal, the registered holders
from time to time of the Notes, and the registered holders from time to
time of the Legacy Notes;
(d) All references in the Agreement to the term "Loan Documents"
shall include, in addition and not in limitation, the Signal Loan
Agreement, the Signal Note, the Notes and the Legacy Notes;
(e) All references in the Agreement to the term "Special
Majority" shall include, in addition and not in limitation, Signal, the
Majority Note Holders and the Majority Legacy Note Holders;
(f) "Majority Note Holders" shall mean the registered holders of
at least a majority in aggregate principal amount of the Notes outstanding
at the time of determination;
(g) "Majority Legacy Note Holders" shall mean the registered
holders of at least a majority in aggregate principal amount of the Legacy
Notes outstanding at the time of determination;
(h) Schedule 3(b) is deleted and replaced with Schedule 3(b)
attached hereto;
(i) Signal and the Majority Legacy Note Holders shall be included
in Section 4 as additional parties that are permitted to give direction to
the Agent following the occurrence of an event of default;
(h) "Event of Default" shall mean any event of default referred
to in Paragraph 5 of the Agreement and, unless the context clearly
indicates otherwise, each use of the term "event of default" in the
Agreement (including this Amendment) shall mean (i) if referring to an
event of default under the Agreement, an Event of Default and, (ii) if
referring to an event of default under any other agreement or instrument,
an Event of Default, event of default or such other term of similar import
used in such agreement or instrument to denote an event giving rise to a
right to accelerate or foreclose with or without notice;
(i) Signal and the Majority Legacy Note Holders shall be included
in Section 6 as additional parties that are permitted to give direction to
the Agent upon the occurrence of any Event of Default other than an Event
of Default relating to the bankruptcy or insolvency of any Borrower, and as
additional parties that may direct the Agent to exercise the rights and
remedies granted under the Agreement;
(j) Signal and the Majority Legacy Holders shall be included in
Section 6(c) as additional parties that are permitted to set off and apply
for the payment of any or all of the Obligations for the ratable benefit of
the Holders;
(k) With respect to Section 8:
(i) New "second" and "third" clauses are hereby added, to
read as follows:
<PAGE>
"second, to the ratable payment of accrued but
unpaid interest (including post-petition interest) and
fees constituting Obligations pursuant to the Signal
Note and the Legacy Loans;
third, to the ratable payment of unpaid principal
of the Signal Note and the Legacy Loans";
(ii) clauses "second" through "tenth" are hereby renumbered
clause "fourth" through "twelfth", respectively; and
(iii) as so renumbered, new clauses "fourth" and "fifth"
shall refer solely to interest, fees and principal pursuant to the
Notes (and not pursuant to the Legacy Notes); and
(l) Signal and the Majority legacy Note Holders shall be included
in Section 9.1 as additional parties are permitted to instruct the Agent to
take any action to foreclose or otherwise realize on the Collateral; and
6. Agrees that, as amended hereby, the Agreement is hereby affirmed or
reaffirmed and ratified by all signatories hereto and shall remain in full force
and effect and, without limiting the generality of the foregoing, each of the
Borrowers hereby affirms or reaffirms, ratifies and hereby grants anew to the
Agent, for the ratable benefit of the Agent and the Holders, the security
interest set forth in the Agreement to secure all of the Junior Indebtedness,
the Legacy Loans, the Signal Loans and any amounts now or hereafter owing by the
Borrowers, or any of them, to the Agent in its capacity as Agent under the
Agreement, all in accordance with and subject to the terms of the Agreement as
amended hereby, and each of the signatories hereby affirms or reaffirms,
ratifies and hereby renews its agreement to be bound by all terms and conditions
of the Agreement (as amended hereby), including, without limitation, the
relative rights, preferences and priorities afforded by the Agreement to each of
them, and each of the Holders hereby affirms or reaffirms, ratifies and hereby
authorizes anew Cramer, Rosenthal, McGlynn, LLC as its Agent under the
Agreement, for all purposes thereof and entitled to all the rights and benefits
accorded to the Agent thereunder.
THE BORROWERS AND SIGNAL hereby further covenant and agree, until such
time as Signal may have exercised its right under the Signal Management
Agreement or the Signal Loan Agreement to acquire the New York Business Assets,
to take all necessary or prudent actions as the Agent may request to ensure the
continued perfection of the security interest granted under the Agreement in and
to all assets of either Borrower that may be relocated to Florida or elsewhere
pursuant to the Signal Transaction Documents, including the identification of
all locations where assets and/or books and records may be kept, the filing of
additional UCC financing statements and, to the extent practicable, separately
identifying and/or tracking the assets of the Borrowers from those of Signal,
and not commingling the same, and (subject to its rights under the Signal
Management Agreement and Signal Loan Agreement) Signal shall hold and manage the
same in trust for the Agent and the Holders.
THE BORROWERS AND THE AGENT hereby covenant and agree, upon the due
exercise of Signal's right under the Signal Management Agreement or the Signal
Loan Agreement to acquire the New York Business Assets, to take all necessary or
<PAGE>
prudent actions as Signal may request to release and record the release of the
security interest granted under the Agreement in and to the New York Business
Assets, including the delivery of executed UCC termination statements prepared
by Signal.
This Amendment shall become effective upon the date (the "Effective
Date") that each of the following conditions precedent shall be true:
(a) Agent shall have received a counterpart hereof duly executed
and delivered by each intended party hereto;
(b) Agent shall have received a copy of each of the Signal
Transaction Documents, each in form and substance satisfactory to the
Agent, as duly executed and delivered by each of the intended parties
thereto;
(c) Agent shall have received a copy of each of the Legacy Notes
to be outstanding after giving effect to the Legacy Loans to be outstanding
as of the Effective Date hereof, each as duly executed and delivered to the
Holders of the Legacy Notes, and
(d) Agent shall have received a copy of a consent, waiver and
extension, in form and substance satisfactory to the Agent, duly executed
and delivered by North Fork Bank, (i) consenting to the Signal Transaction
Documents and the transactions contemplated thereunder; (ii) waiving any
existing default or Event of Default, including any occasioned by the entry
into this Amendment or the Signal Documents and the consummation of the
transactions contemplated thereunder, and (iii) extending to not sooner
than June 30, 2000, the maturity date of, and the requirement of any
principal payment under, the North Fork Bank facility (together with
evidence satisfactory to the Agent that all conditions to the effectiveness
thereof shall have been satisfied; and
This Amendment may be executed in counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above.
LOGIMETRICS, INC.
By:
_________________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
MMTECH, INC.
By: _________________________
Name:
Title:
CRAMER ROSENTHAL McGLYNN, LLC,
as Agent
By:
___________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
<PAGE>
CRAMER ROSENTHAL McGLYNN, INC.,
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By:
_________________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
______________________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
___________________________________
Edward J. Rosenthal Profit Sharing
Plan and Trust
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM RETIREMENT PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM MADISON PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM U.S. VALUE FUND, LTD.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
EURYCLEIA PARTNERS, L.P.
By: Marchessini & Dernisch, L.L.C.,
Its General Partner
By:
_________________________________
Name: Rona Trokie
Title: Vice President
745 Fifth Avenue, Suite 1400
New York, New York 10151
Tel: (212) 752-4300
Fax: (212) 752-4309
A.C. ISRAEL ENTERPRISES, INC.
By:
_________________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
______________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
PAMELA EQUITIES CORP.
By: _________________________________
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: ________________________
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: ________________________
Name:
Title: General Partner
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By:
__________________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
______________________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
McGLYNN FAMILY PARTNERSHIP
By:
_________________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
______________________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
______________________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C.,
Its General Partner
By:
_________________________________
Name: Stephen Feinberg
Title: Managing Member
450 Park Avenue
28th Floor
New York, New York 10022
Telephone: (212) 891-2100
Facsimile: (212) 421-2947
<PAGE>
______________________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By:
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
______________________________________
Charles S. Brand
611 Industrial Way West
Eatontown, New Jersey 07724
Tel: (732) 935-0853
Fax:(732) 935-7151
<PAGE>
______________________________________
Gregory Manocherian
135 Central Park West, Tower Southeast
New York, New York 10023
Tel: (212) 799-3500
Fax: (212) 873-2877
SIGNAL TECHNOLOGY CORPORATION
By:___________________________________
[Authorized Signatory]
<PAGE>
<TABLE>
<CAPTION>
Schedule A
- ---------------------------------------------- ------------------------------------ ------------------------------
<S> <C> <C>
Legacy Note Holder Existing Legacy Notes New Legacy Notes
- ---------------------------------------------- ------------------------------------ ------------------------------
Pamela Equities Corp.
- ---------------------------------------------- ------------------------------------ ------------------------------
A.C. Israel Enterprises, Inc.
- ---------------------------------------------- ------------------------------------ ------------------------------
Gerald B. Cramer
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM 1997 Enterprise Fund, LLC
- ---------------------------------------------- ------------------------------------ ------------------------------
Whitehall Properties, LLC
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Retirement Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Madison Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
L.A.D. Equity Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM-EFO Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
Gregory Manocherian
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM U.S. Value Fund, Ltd.
- ---------------------------------------------- ------------------------------------ ------------------------------
Edward J. Rosenthal, Keogh
- ---------------------------------------------- ------------------------------------ ------------------------------
Fred M. Filoon
- ---------------------------------------------- ------------------------------------ ------------------------------
McGlynn Family Partnership, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
Eugene A. Trainor, III
- ---------------------------------------------- ------------------------------------ ------------------------------
Cereberus Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
TOTAL $320,000 $680,000
- ---------------------------------------------- ------------------------------------ ------------------------------
</TABLE>
<PAGE>
EXHIBIT A
FORM OF
SUPPLEMENTAL NEGOTIABLE SECURED
SENIOR SUBORDINATED PROMISSORY NOTE
$_____________
Final Maturity Date:
________, 2000
FOR VALUE RECEIVED, LogiMetrics, Inc., a Delaware corporation, and mmTech, Inc.,
a New Jersey corporation (collectively, the "Makers"), hereby jointly and
severally promise to pay to the order of _____________, or its successors and
assigns (the "Holder"), at ______________ or at such other location as the
Holder may designate from time to time, the sum of ________________________
Dollars ($___________), or such lesser amount as may be advanced hereunder,
together with interest thereon at the rate of 13% per annum, in lawful money of
the United States of America on or before June 2, 2000, or on demand at any time
upon or during the continuance of an Event of Default as defined in the Security
Agreement (as defined below), with or without demand as provided in the Security
Agreement. The obligations of the Makers are joint and several and the Holder
may proceed to collect the full amount owed hereunder from either Maker whether
or not proceeding against the other.
If the Holder fails to pay any amount hereunder when due, interest
shall thereafter accrue on such overdue amount at the rate of 16% per annum
until paid in full. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
The Makers may prepay this Note at any time, in whole or in part,
without premium or penalty. The Makers shall prepay this Note in full within
five (5) Business Days after the consummation of (i) any public or private sale
by either Maker of its debt or equity securities or securities convertible into
or exchangeable for its debt or equity securities, (ii) any permanent loan or
other credit facility obtained by either Maker from a bank or other financial
institution, or (iii) any sale by either Maker of all or substantially all of
its assets to a third party which results, in each such case, in net proceeds to
the Makers (after all related fees and expenses) of at least Three Million
Dollars ($3,000,000). As used herein, "Business Day" means a day, other than a
Saturday or Sunday, on which commercial banks in New York City are open for the
general transaction of business.
The Makers shall pay to the Holder the reasonable attorneys' fees and
disbursements and all other out-of-pocket costs incurred by the Holder in order
to collect amounts due and owing under this Note. All payments received shall be
applied, first, to the costs of collection, second, to unpaid interest, and
third, to principal.
<PAGE>
No delay or failure on the part of the Holder in exercising any power,
right or remedy hereunder shall operate as a waiver of any such power, right or
remedy; nor shall any single or partial exercise of any power, right or remedy
preclude any other or further exercise of such power, right or remedy, or the
exercise of any other power, right or remedy, and no waiver whatsoever shall be
valid unless in writing, signed by the Holder, and then only to the extent
expressly set forth therein. No remedy is exclusive of any other remedy and all
remedies shall be cumulative to the maximum extent permitted by applicable law.
Each Maker hereby waives presentment, demand for payment, diligence, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
This Note is one of the Legacy Notes referred to in Amendment No. 2,
dated on or about the date hereof, to the Second Amended and Restated Security
Agreement, Intercreditor Agreement, Waiver and Consent, dated on or about August
31, 1999 and as further amended by Amendment No. 1 thereto, dated as of December
2, 1999, among the Makers, Cramer Rosenthal McGlynn, LLC, as Agent (the
"Agent"), and the other parties thereto, (as amended by such Amendment No. 2,
the "Security Agreement") and is secured by the Collateral (as defined in the
Security Agreement). The Security Agreement grants the Agent on behalf of the
Holder and the other parties thereto certain rights with respect to the
Collateral upon certain defaults specified therein and sets forth the related
priorities of the Holder and the other parties thereto with regard to such
Collateral.
This Note shall be binding upon each Maker and its successors and
assigns. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York pursuant to Section 15-1402 of the
General Obligations Law of such state. Each Maker irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Note. Service of process in connection with any such suit, action or proceeding
may be served on the Makers anywhere in the world by any method authorized by
law. Each Maker irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such court.
Each Maker irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
No modification, alteration, waiver or change of any of the provisions
hereof shall be effective unless in writing and signed by each Maker and the
Holder and, then, only to the extent set forth in such writing.
[Remainder of page intentionally left blank]
<PAGE>
ATTEST: LOGIMETRICS, INC.
_____________________ ____________________________________
Name: By: Norman M. Phipps
Title: President
ATTEST: MMTECH, INC.
_____________________ _____________________________
Name: By: Norman M. Phipps
Title: Assistant Secretary
Dated: _____, 2000
EXHIBIT 10.3
NEGOTIABLE SECURED SENIOR SUBORDINATED
PROMISSORY NOTE
$2,000,000 Final Maturity Date:
December 31, 2000
FOR VALUE RECEIVED, LogiMetrics, Inc., a Delaware corporation (the
"Maker"), hereby promises to pay to the order of Signal Technology Corporation
or its successors and assigns (the "Holder"), at its corporate offices at 222
Rosewood Drive, Danvers, MA 01923, or at such other location as the Holder may
designate from time to time, the aggregate unpaid amount of all loans (each, a
"Loan") made by the holder to the Maker hereunder. Each Loan shall mature and be
due and payable, together with all interest accrued thereon, in lawful money of
the United States of America on or before December 31, 2000, or on demand under
certain circumstances as specified herein.
The Maker promises to pay interest on the unpaid principal amount of
each Loan from the date such Loan is made until its maturity (whether by
acceleration or otherwise), at the rate of 10% per annum, such interest to be
paid on maturity.
1. If the Maker fails to pay any amount hereunder when due, interest
shall thereafter accrue on such overdue amount at a rate of interest equal to
the lesser of: (i) 18% per annum; or (ii) the highest rate permitted by law
until paid in full. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
2. The maximum aggregate principal amount of the Loans to be made
hereunder shall be $2,000,000. The Holder is authorized to record all Loans
evidenced hereby in its records (including, but not limited to, the grid
attached hereto as Schedule 1), and such entries shall be conclusive evidence of
amounts outstanding hereunder absent manifest error.
3. On the date hereof, the Holder is advancing to the Maker
$1,000,000. The remaining Loans hereunder shall be made in accordance with the
loan schedule set forth on Schedule II hereto.
4. The Maker may prepay any Loan made hereunder at any time, in whole
or in part, without premium or penalty. The Maker shall prepay all Loans in full
to the Maker within five (5) Business Days after: (i) the consummation of any
public or private offering by the Maker of its equity securities or securities
convertible into or exchangeable for its equity securities pursuant to which the
Maker receives gross proceeds (before the deduction of offering expenses,
discounts and commissions) of at least Seven Million Five Hundred Thousand
Dollars ($7,500,000); or (ii) the sale or transfer, in a single transaction or
in a series of related transactions, of all or substantially all of the Maker's
assets, or the merger, consolidation, reorganization or dissolution of the
Maker, or the sale, in a single transaction or in a series of related
transactions, of a majority of the Maker's voting capital stock (whether newly
issued or from treasury, or previously issued and then outstanding, or any
combination thereof), in each case other than in a transaction with Signal
contemplated by the Letter of Intent (the "Letter of Intent") of even date
herewith between Signal and the Company (any of such events, a "Disposal
Event"), or the execution by the Maker of any letter of intent or like agreement
with respect to the consummation of a Disposal Event. In addition, in the event
<PAGE>
the Maker executes a letter of intent or like agreement with respect to a
Disposal Event that is an Acquisition Transaction (as defined in the Letter of
Intent), or with respect to any other Acquisition Transaction, during the period
commencing on such date as is 46 days following date of Letter of Intent and
continuing through and including such date as is 120 days following date of
Letter of Intent, the Maker shall, on the date it prepays all Loans in full in
accordance herewith, pay to the Holder a prepayment penalty in the amount of
$100,000. As used herein, "Business Day" means a day, other than a Saturday or
Sunday, on which commercial banks in New York City are open for the general
transaction of business.
5. At any time while Loans are outstanding hereunder, the Holder shall
have the right during normal business hours to examine the books and records of
the Maker, to make copies, notes, and abstracts therefrom, to discuss the
Maker's affairs with the officers, directors, key employees, and accountants of
the Maker and, no more than once, to make or cause an independent examination
and/or audit (at its expense) of the books and records of the Maker.
6. The Maker shall pay to the Holder the reasonable attorneys' fees
and disbursements and all other out-of-pocket costs incurred by the Holder in
order to collect amounts due and owing under this Note. All payments received
shall be applied, first, to the costs of collection, second, to unpaid interest,
and third, to principal.
7. No delay or failure on the part of the Holder in exercising any
power, right or remedy hereunder shall operate as a waiver of any such power,
right or remedy; nor shall any single or partial exercise of any power, right or
remedy preclude any other or further exercise of such power, right or remedy, or
the exercise of any other power, right or remedy, and no waiver whatsoever shall
be valid unless in writing, signed by the Holder, and then only to the extent
expressly set forth therein. No remedy is exclusive of any other remedy and all
remedies shall be cumulative to the maximum extent permitted by applicable law.
The Maker hereby waives presentment, demand for payment, diligence, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
8. This Note is one of the Notes referred to in Amendment No. 2 to the
Second Amended and Restated Security Agreement, Intercreditor Agreement, Waiver
and Consent, dated the date hereof, among the Maker, Cramer Rosenthal McGlynn,
LLC, as Agent (the "Agent"), and the other parties thereto (the "Security
Agreement") and is secured by the Collateral (as defined in the Security
Agreement). The Security Agreement grants the Agent on behalf of the Holder and
the other parties thereto certain rights with respect to the Collateral upon
certain defaults specified therein and sets forth the related priorities of the
Holder and the other parties thereto with regard to such Collateral.
9. If any of the following events or circumstances (each an
"Acceleration Event") shall occur:
(a) the Maker shall fail to pay any amount of principal, interest or
other amount (if any) within ten (10) days of the date on which such amount is
due and payable hereunder; or
(b) an Event of Default under the Security Agreement shall have
occurred and be continuing or the Maker shall fail to cure any breach of its
other covenants, agreements or obligations hereunder within ten (10) days after
written notice by the Holder to the Maker specifying such breach; or
<PAGE>
(c) any representation or warranty made by the Maker herein or in the
Security Agreement shall have been false in any material respect when made; or
(d) the Maker shall make an assignment for the benefit of creditors,
or shall petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Maker or of any substantial part of its assets, or
shall commence any case or other proceeding relating to its assets under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, or shall take any
corporate action to authorize or in furtherance of any of the foregoing; or any
such petition or application shall be filed or any such case or other proceeding
shall be commenced against the Maker, and the same shall not have been dismissed
within 60 days of the filing or commencement thereof or the Maker shall indicate
its approval thereof, consent thereto or acquiescence therein; or a decree or
order shall be entered appointing any such trustee, custodian, liquidator or
receiver or adjudicating the Maker bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order for relief
shall be entered in respect of the Maker in an involuntary case under any such
bankruptcy or insolvency laws; or
(e) the Maker shall take any corporate action to liquidate its assets
or dissolve, or shall take any corporate action to consolidate or merge with or
into any other corporation or business entity unless the Maker shall be the
surviving legal entity of such consolidation or merger or the surviving legal
entity of such consolidation or merger shall have assumed in full by a written
instrument the obligations under and in respect of this Note, other than any
such corporate action in connection with the transaction with Signal
contemplated by the Letter of Intent; or
(f) without the prior written consent of the Holder, the Maker shall
have incurred indebtedness for borrowed money (other than indebtedness for
borrowed money, together with interest thereon, existing on the date hereof)
which is or will be senior or pari passu to its indebtedness hereunder, except
for indebtedness incurred by the Maker pursuant to the Legacy Loan referred to
in the Loan Agreement of even date herewith between the Maker and the Holder
(the "Loan Agreement");
then, the Holder at its option at any time thereafter during the continuance of
an Acceleration Event may declare the entire and unpaid principal of this Note
and all interest, fees and expenses (if any) payable on or in respect of this
Note and the obligations evidenced hereby due and payable, and the same shall
thereupon forthwith become and be due and payable to the Holder (an
"Acceleration") without presentment, demand, protest, notice of protest or any
other formalities of any kind, all of which are hereby expressly and irrevocably
waived by the Maker, provided that in the event of an Acceleration Event under
Section 9(d) hereof all such amounts shall become and be immediately due and
payable, and an Acceleration shall be deemed for all purposes hereof to have
occurred, automatically and without any requirement of notice from the Holder.
10. The Maker will not, by amendment of its Charter or through
reorganization, consolidation, merger, dissolution, issuance of capital stock or
sale of treasury stock (otherwise than upon exercise of conversion rights
hereunder) or sale of assets, or by any other voluntary act or deed, avoid or
seek to avoid the material performance or observance of any of the covenants,
stipulations or conditions in this Note to be observed or performed by the
<PAGE>
Maker. The Maker will at all times in good faith assist, insofar as it is able,
in the carrying out of all of the provisions of this Note in a reasonable manner
and in the taking of all other action which may be necessary in order to protect
and preserve the rights of the Holder set forth herein.
11. This Note shall be binding upon the Maker and its successors and
assigns. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York pursuant to Section 15-1402 of the
General Obligations Law of such state. The Maker irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Note. Service of process in connection with any such suit, action or proceeding
may be served on the Maker anywhere in the world by any method authorized by
law. The Maker irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding. The Maker irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
<PAGE>
12. No modification, alteration, waiver or change of any of the
provisions hereof shall be effective unless in writing and signed by the Maker
and the Holder and, then, only to the extent set forth in such writing.
ATTEST: LOGIMETRICS, INC.
_____________________ /s/Norman M. Phipps
Name: ___________________________
By: Norman M. Phipps
Title: President
Dated: February 17, 2000
<PAGE>
Schedule I
Date of Notation
Amount of Loan Advance Made By
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------------------------ ----------------------- ------------------------
<PAGE>
Schedule II
EXHIBIT 10.4
MANAGEMENT AGREEMENT
February 17, 2000
Signal Technology Corporation
222 Rosewood Drive
Danvers, MA 01923
Attention: George E. Lombard, Chairman and Chief Executive Officer
Dear Sirs:
This letter agreement describes the terms and conditions under which
Signal Technology Corporation ("Signal") is herewith taking over the management
and operation of the business of LogiMetrics, Inc. (the "Company") located at 50
Orville Drive, Bohemia, New York 11716 (the "NY Business").
In connection with a letter of intent between Signal and the Company,
dated as of the date hereof, regarding the potential merger (the "Merger") of a
wholly-owned subsidiary of Signal into the Company (the "Letter of Intent"), and
pursuant to the terms of a Loan Agreement between Signal and the Company (the
"Loan Agreement") and a Promissory Note (the "Note") by the Company in favor of
Signal, Signal is loaning to the Company an aggregate of up to $2,000,000, with
$1,000,000 of the loan to be advanced upon execution of the Letter of Intent,
the Loan Agreement and the Note. Signal and the Company have agreed that on the
date of the funding of such $1,000,000 (the "Funding Date"), as an accommodation
to the Company, Signal will take over the management and operation of the NY
Business. In connection with all of the foregoing, Signal and the Company hereby
agree as follows:
1. As of the Funding Date, Signal shall assume responsibility for the
management and operation of the NY Business. Signal and the Company shall
cooperate with each other to effect the relocation of the NY Business from the
Company's existing New York location to Signal's facility in Florida (the
"Florida Facility"). Such relocation shall include the relocation to the Florida
Facility of all of the assets (other than real property and fixtures) used by
the Company in its operation of the NY Business (the "Assets"). The Assets shall
include, but not be limited to, the Company's inventories, including raw
materials, work in process, supplies, samples, prototypes and finished goods,
held for use in the NY Business, and all machinery, equipment, tools, supplies,
booths, displays, materials, plans and schematics, intellectual property,
customer lists and other tangible and intangible personal property used in the
NY Business. A list of the Assets of the Company to be delivered to Signal under
this Agreement is set forth on the schedule attached hereto as Exhibit A.
2. For the period (the "Operating Period") commencing on the Funding
Date and continuing through and including the Termination Date (as defined in
Section 9 below), Signal shall have exclusive control over the Assets and the
operation of the NY Business. Signal shall integrate, to the extent practicable,
the NY Business into its existing business operations in Florida and shall
invest capital in the NY Business as it may deem appropriate in its sole
discretion. The parties' intent is that, notwithstanding the transfer of the
operation of the NY Business to Signal, to the extent practicable, the NY
<PAGE>
Business will continue uninterrupted in all material ways, and that the
activities of the NY Business will continue in accordance with all existing
commitments in effect as of the date hereof. Signal hereby agrees that it will
not, without the prior written consent of the Company, sell any of the Assets
during the Operating Period other than products in the ordinary course of
business.
3. On the Funding Date, Signal shall assume only known current
liabilities in respect of the NY Business incurred by the Company in the
ordinary course of business. Such assumed liabilities are set forth on the
schedule attached hereto as Exhibit B. Signal shall be responsible for all
liabilities relating to the Assets and the NY Business arising out of its
operation of the NY Business. In no event shall Signal be responsible for any
liabilities arising out of the operation of the NY Business (i) prior to the
Funding Date (other than those liabilities set forth on Exhibit B hereto) or
(ii) after Signal ceases operating the NY Business pursuant to Section 6(a) or
Section 7 hereof. Signal shall be entitled to all revenue generated from the
Assets and the NY Business during the Operating Period.
4. Signal and the Company agree that certain employees of the Company
shall be offered continued employment with respect to the NY Business during the
Operating Period and shall be offered an opportunity to relocate to the Florida
Facility. Any employees accepting such continued employment shall be employed
directly by Signal and shall be paid by Signal in accordance with its payroll
practices. Signal shall pay any and all relocation expenses incurred by such
employees in connection with the transition to the Florida Facility.
Notwithstanding anything herein to the contrary, Signal and the Company agree
that the Company shall bear any and all costs and expenses incurred in
connection with the Company's terminating any employees as a result of the
relocation of the NY Business. Without limiting the generality of the foregoing,
the Company shall be responsible for any and all severance payments and like
compensation for terminated employees. In addition, in the event the Company
determines to close its New York facility, the Company shall bear any and all
costs and expenses incurred in connection with such closing.
5. Signal and the Company agree that, during the Operating Period,
Signal shall pay any and all interest that becomes due and owing on a monthly
basis in respect of the Company's existing line of credit with North Fork Bank
(approximately $15,000 per month) evidenced by that certain Reduced and Extended
Revolving Credit Note, dated as of September 1, 1999, in the original principal
amount of $1,930,000. Signal and the Company further agree that Signal shall be
obligated during the Operating Period to pay such interest only and that Signal
is not hereby assuming the indebtedness of the Company under such line of credit
with North Fork Bank. In addition, the parties agree that it is a condition to
Signal's entering into this Agreement that the Company obtain the consent, in
form reasonably satisfactory to Signal, of North Fork Bank to the arrangements
contemplated hereby.
6. (a) In the event that the Company and Signal do not consummate the
Merger, and the Company enters into an Acquisition Transaction (as defined in
the Letter of Intent) with a third party with respect to mmTech, Inc., a New
Jersey corporation and a subsidiary of the Company ("mmTech"), prior to December
31, 2000, in addition to any rights Signal may have under the Letter of Intent
(including the right to a Break-Up Fee, as defined therein, pursuant to Section
10(b) thereof), the Loan Agreement and the Note (including the rights to payment
in full of principal, interest and a prepayment penalty), Signal shall have the
option, in its sole discretion, either to acquire title to the Assets for no
<PAGE>
additional consideration or to return the Assets to the Company, including all
accrued and outstanding liabilities relating thereto, pursuant to the provisions
of this Section 6.
(b) If Signal determines to acquire the Assets pursuant to Section
6(a) above, the Company will promptly execute and deliver to Signal a Bill of
Sale and Conveyance, in the form attached hereto as Exhibit C (the "Bill of
Sale"), conveying the Assets and transferring title thereto to Signal, and the
Company agrees that it will take such reasonable steps and execute such other
and further documents as may be necessary or appropriate to consummate such
conveyance and transfer. Without limiting the generality of any provision
hereof, the parties hereby agree that the Assets to be conveyed to Signal under
this Section 6 shall include all books and records relating to the NY Business
and an exclusive right to use the name "LogiMetrics, Inc." for commercial
purposes. The Company hereby covenants and agrees that, in the event of a
conveyance and transfer of Assets to Signal hereunder, the Company's Board of
Directors will propose and recommend to the Company's stockholders that the name
of the Company be changed and shall present such proposal and recommendation for
approval at the Company's next regularly held stockholders meeting, and, in the
event its stockholders vote to approve such name change at such meeting, the
Company will promptly thereafter transfer title to the name "LogiMetrics, Inc."
to Signal. In connection therewith, the Company agrees that it will take such
reasonable steps and execute such other and further documents as may be
necessary or appropriate to consummate such transfer of title.
(c) If Signal determines to return the Assets pursuant to Section 6(a)
above, (i) Signal will arrange with the Company for the Company's pick up of all
of the Assets originally delivered to Signal, to the extent they exist at the
time of the return, and any assets generated in respect of the Assets during the
Operating Period or purchased by Signal for the NY Business during the Operating
Period (collectively with the Assets, the "Returned Assets"), subject to any and
all accrued and outstanding liabilities relating thereto as of the time of such
pick up (the "Accrued Liabilities"); (ii) the Company will immediately deliver
to the Company in immediately available funds such amount of money (the
"Reimbursement Amount") as equals the aggregate amount expended by Signal in
connection with the operation of the NY Business, including (A) all reasonable
out-of-pocket expenses incurred in connection with the initial transfer of
Assets to the Florida Facility, (B) the aggregate amount of the interest
payments made by Signal to North Fork Bank pursuant to Section 5 above, and (C)
all reasonable out-of-pocket expenses incurred in connection with the delivery
of the Returned Assets to the Company, plus or minus, as the case may be, the
amount by which the value of the net Returned Assets exceeds or is less than the
value of the net Assets originally delivered by the Company to Signal (the
"Adjustment Amount"). Signal and the Company agree that for purposes of this
Agreement, the value of the net Assets deliverable to Signal on the Funding Date
is as set forth on the schedule attached hereto as Exhibit D.
7. In the event that Signal and the Company do not consummate the
Merger, and the Company does not enter into an Acquisition Transaction with a
third party with respect to mmTech prior to December 31, 2000, in addition to
any rights it may have under the Loan Agreement or the Note, Signal shall be
entitled to require the Company to pick up the Returned Assets, subject to the
Accrued Liabilities, on or immediately following December 31, 2000, and Signal
shall be entitled to receive the Reimbursement Amount, as adjusted by the
Adjustment Amount, if any.
8. The parties agree that Signal's management and operation of the NY
Business contemplated hereunder shall be solely for Signal's benefit and that
Signal shall have no obligations to the Company arising out of such management
<PAGE>
and operation except as expressly provided herein. In this connection, the
Company hereby waives any and all charges, complaints and claims it may have
against Signal arising out of Signal's management and operation of the NY
Business during the Operating Period, including, without limitation, those
relating to any and all losses, damages, liabilities, obligations, promises,
agreements, debts and expenses of any nature whatsoever, known or unknown,
suspected or unsuspected, relating to the NY Business and arising out Signal's
such management and operation, except for those charges, complaints and claims
arising out of Signal's gross negligence or willful misconduct in connection
with such management and operation. Signal shall be responsible for all charges,
complaints and claims made against Signal by third parties in connection with
Signal's management and operation of the NY Business during the Operating
Period.
9. This Agreement shall terminate upon the earliest to occur of
(i) the closing of the Merger, (ii) the closing of the acquisition of the Assets
in accordance with Section 6(b) hereof, (iii) the closing of the purchase by
Signal of the NY Business pursuant to the terms of the Loan Agreement, or (iv)
the delivery by Signal to the Company of the Returned Assets and the payment by
the Company to Signal of the Reimbursement Amount, as adjusted by the Adjustment
Amount, if any, each pursuant to Section 6 hereof (the date of such earliest
event is herein referred to as the "Termination Date").
10. This Agreement shall be construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts.
<PAGE>
If the foregoing accurately reflects our mutual understanding, please
so indicate by executing a counterpart of this letter agreement and returning it
to the undersigned.
Very truly yours,
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
_______________________________
Norman M. Phipps, President
and Chief Operating Officer
ACCEPTED AND AGREED:
SIGNAL TECHNOLOGY CORPORATION
By: /s/George Lombard
___________________________
George Lombard, Chairman
and Chief Executive Officer
Dated: February 17, 2000
<PAGE>
Exhibit A
<PAGE>
Exhibit B
<PAGE>
Exhibit C
BILL OF SALE AND CONVEYANCE
KNOW ALL MEN BY THESE PRESENTS:
That, pursuant to the terms of a Management Agreement, dated as of
February 17, 2000 (the "Management Agreement"), by and between LogiMetrics,
Inc., a Delaware corporation (the "Seller"), and Signal Technology Corporation,
a Delaware corporation (the "Buyer"), and in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Seller does hereby sell, transfer, assign and convey to the Buyer, effective as
of the date hereof, the Assets (as such term is defined in the Management
Agreement), including, without limitation, those listed on Schedule A attached
hereto, intending to convey all of the Seller's right, title and interest
therein. The Assets are hereby conveyed free and clear of all liens,
encumbrances, licenses and other interests of any nature whatsoever.
This Bill of Sale and Conveyance shall be subject to the terms and
conditions set forth in the Management Agreement, and nothing contained in this
Bill of Sale and Conveyance shall be construed to limit or terminate the
representations, warranties and covenants set forth in the Management Agreement.
And for consideration aforesaid, the Seller has covenanted and hereby
does covenant with the Buyer, its successors and assigns, that the Seller, its
successors and assigns will do, execute, acknowledge and deliver, or will cause
to be done, executed, acknowledged and delivered, all such further acts,
transfers, assignments and conveyances, powers of attorney and assurances for
the better selling, transferring, assigning, assuring, conveying and confirming
unto the Buyer, its successors and assigns, all and singular, the Assets or for
aiding and assisting in collecting or reducing to possession any or all of the
Assets, as the Buyer and its successors and assigns shall reasonably request.
From and after the execution and delivery of this Bill of Sale and
Conveyance to the Buyer, the Seller shall have no right, title and interest in
the Assets.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of the Buyer and the Seller.
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale and
Conveyance to be executed as of the ___ day of ____________ 2000.
LOGIMETRICS, INC.
By: _________________________________
Name: Norman M. Phipps, President
Title: President and Chief Operating
Officer
<PAGE>
Exhibit D
EXHIBIT 10.5
Signal Technology Corporation
222 Rosewood Drive
Danvers, MA 01923
February 17, 2000
LogiMetrics, Inc.
50 Orville Drive
Bohemia, NY 11716
Gentlemen:
Signal Technology Corporation, a Delaware corporation ("Signal"), and
LogiMetrics, Inc., a Delaware corporation (the "Company"), are simultaneously
executing and delivering a letter of intent (the "LOI"), providing certain terms
upon which Signal would acquire the Company.
Section 6 of the LOI provides that Signal is committing to loan to the
Company $2,000,000. The parties hereby agree that, notwithstanding the absence
of the following conditions from the LOI, the loan by Signal is also contingent
upon Signal's prior receipt of (i) the consent from its bank lender, Fleet Bank,
N.A. to the transactions contemplated by the LOI and (ii) the consent, in form
reasonably satisfactory to Signal, from the Company's bank lender, North Fork
Bank, to the transactions contemplated by the LOI and the Loan Agreement and the
Management Agreement referred to therein. Further, notwithstanding anything in
the LOI to the contrary, the parties agree that the Exclusivity Period referred
to in Section 10(a) of the LOI shall not commence until such time as clause (ii)
above is satisfied.
This letter shall be considered to be a part of the LOI and shall be
binding against both parties. Please indicate your agreement with the terms
hereof by executing and delivering a copy of this letter to the undersigned.
Very truly yours,
Signal Technology Corporation
By:/s/George E. Lombard
__________________________________
George E. Lombard, Chairman and
Chief Executive Officer
Agreed and Assented:
LogiMetrics, Inc.
By:/s/Norman M. Phipps
_______________________________
Norman M. Phipps, President
EXHIBIT 10.6
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
February 16, 2000
North Fork Bank
275 Broad Hollow Road
Melville, New York 11747
Attention: Joseph Walsh Senior Vice President
Dear Joe:
Reference is hereby made to the (i) $1,930,000 Reduced and Extended
Revolving Credit Note, dated as of September 1, 1999 (the "Revolver"), made by
LogiMetrics, Inc. (the "Company") and mmTech, Inc. in favor of North Fork Bank
(the "Bank"), (ii) Modified General Security Agreement, dated April 30, 1998,
made by the Company in favor of the Bank, (iii) General Security Agreement,
dated April 30, 1998, made by mmTech, Inc. in favor of the Bank, (iv) Blocked
Account Agreement, dated April 25, 1997, between the Company and the Bank, and
(v) Recognition and Limited Forbearance Agreement, dated as of September 1, 1999
made by and among the Company, mmTech, Inc. and the Bank (collectively, the
"Bank Documents").
As we have previously discussed, the Company has been negotiating the
terms and conditions of a proposed transaction pursuant to which the Company
intends to enter into a letter of intent (the "Letter of Intent") with Signal
Technology Corporation ("Signal") pursuant to which Signal intends to acquire
the Company in a tax-free merger (the "Merger"). In connection with the
execution of the Letter of Intent, Signal has agreed to loan to the Company up
to $2,000,000 pursuant to the terms of a proposed loan agreement (the "Loan
Agreement") and a Negotiable Secured Senior Subordinated Promissory Note (the
"Note"). Under the terms of the Loan Agreement, certain existing creditors of
the Company would also advance up to $1,000,000 to the Company and mmTech
($610,000 of which has been advanced since December 2, 1999) (the "Legacy
Loans"). The obligations of the Company and mmTech under the Loan Agreement and
the Legacy Loans would be secured by a security interest in all of the assets of
the Company and the subsidiaries that would rank junior to the Bank's security
interests and senior to the other indebtedness of the Company and mmTech. In
addition, the Company proposes to enter into a Management Agreement with Signal
(the "Management Agreement"), pursuant to which Signal would agree to manage the
Company's current business located in Bohemia, New York (the "New York
Business"). Pursuant to the Management Agreement, Signal would relocate all of
the assets of the New York Business, (excluding real estate and fixtures) and
consisting entirely of those assets listed on Exhibit A (the "New York Assets"),
to Signal's existing facility in Florida. Pursuant to the Loan Agreement and the
Management Agreement, Signal also would have the right to acquire the New York
Business on the terms and conditions set forth therein. Under the Management
Agreement, Signal also would pay the Company's ongoing debt service obligations
to the Bank during the period that Signal was operating the New York Business.
The transactions described above are hereinafter referred to as the "Signal
Transactions". In order to consummate the Signal Transactions, the Bank would be
required, among other things, to release its security interest in the New York
Assets upon the written notification by Signal that it is taking legal title to
those assets.
<PAGE>
By executing this letter in the space provided below, the Bank hereby
irrevocably consents to the consummation of the Merger and the other Signal
Transactions, including, without limitation, the grant of any subordinate
security interest securing the Legacy Loans and the Note and the relocation of
the assets of the New York Business to Signal's facility in Florida. Further,
the Bank hereby (i) subordinates its security interest in the assets
constituting the New York Assets to the security interest of Signal (ii) upon
written notification by Signal that it is taking legal title to the assets
constituting the New York Assets, shall promptly release without any additional
consideration its security interest in those assets upon confirmation that
Signal has advanced the full $2,000,000 under the Loan Agreement, (iii) agrees
to execute such documents or instruments as Signal may reasonably require to
effect the release of such security interest, (iv) agrees to the priority of
security interests in the New York Assets described above, and (v) irrevocably
waives any defaults under the Bank Documents, whether existing on the date
hereof or arising in connection with the Signal Transactions.
Finally, the Bank would agree to modify and extend the maturity date
of the Revolver from December 31, 1999 to June 30, 2000, all such consents,
agreements, waivers and modifications subject to the satisfaction of the
conditions set forth below:
(i) the Company must have received no less than $1,660,000 in
additional subordinated financing (including amounts
advanced by the Company's existing investors since December
2, 1999);
(ii) the modification and extension will be evidenced in part by
the execution of a further modified and extended note;
(iii)the amount available under the Revolver shall be reduced to
$1,785,576 and no additional advances will be made; and
(iv) all past due interest ($72,793.41 a/o 2/15/00), a waiver fee
in the amount of $10,000, and Bank attorney fees (not to
exceed $10,000) shall be paid in full.
(v) the Company agrees to pay a $10,000 exit fee at maturity;
(vi) the Company extends the expiration date of the warrants to
6/30/00 and prior to the modification and extension the
Company shall provide the Bank with an opinion of counsel
confirming the validity an enforceability of said warrants.
All other terms and conditions of the Revolver shall remain the same, except
that paragraph (h) as set forth in the Affirmative Covenant section and
paragraphs (a), (b) and (c) as set forth in the Financial Statements section
relating to certain financial covenants and reporting requirements,
respectively, required of the Company by the Bank are hereby deleted.
This consent shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to principles of conflicts of
law. It may be executed in one or more counterparts, each of which shall be an
original, but all of which together shall constitute a single agreement.
Very truly yours,
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
________________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
CONSENTED AND AGREED TO:
NORTH FORK BANK
By: /s/Joseph Walsh
____________________________
Name: Joseph Walsh
Title: Senior Vice President
<PAGE>
EXHIBIT A
Logimetrics, Inc.
New York Business
Accounts receivable, Net
Inventory
Prepaid and other current assets
Property, plant and equipment
Security deposits
Total Assets
The New York Assets as defined herein do not include or relate to the conduct of
the business of mmTech, Inc.
EXHIBIT 10.7
SECOND AMENDED AND RESTATED SECURITY AGREEMENT,
INTERCREDITOR AGREEMENT, WAIVER AND CONSENT
SECOND AMENDED AND RESTATED SECURITY AGREEMENT, INTERCREDITOR
AGREEMENT, WAIVER AND CONSENT ("Agreement"), dated March 7, 1996, as amended and
restated as of July 29, 1997 and as of August 31, 1999, among LOGIMETRICS, INC.,
a Delaware corporation ("LogiMetrics"), and mmTech, Inc., a New Jersey
corporation ("mmTech" and, together with LogiMetrics, the "Borrowers"), CERBERUS
PARTNERS, L.P., a Delaware limited partnership ("Cerberus"), as the agent under
the Amended and Restated Security Agreement and as a Holder (as defined below),
and Cramer Rosenthal McGlynn, LLC, as Agent (in such capacity, the "Agent") for
itself and the Holders listed on the signature page hereto, and any other
persons becoming Holders from time to time.
INTRODUCTION
Certain of the Holders listed on the signature page hereto are the
holders of all of the outstanding Class A 13% Convertible Senior Subordinated
Pay-In-Kind Debentures due July 29, 1999 in the principal amounts set forth
opposite their names on Schedule 3(b) hereto (together with any additional
debentures issued in lieu of cash interest thereon, the "Class A Debentures");
and
Cerberus is the Holder of all of the outstanding Amended and Restated
Class B 13% Convertible Senior Subordinated Pay-In-Kind Debentures due July 29,
1999 (together with any additional debentures issued in lieu of cash interest
thereon, the "Class B Debentures"); and
Certain of the Holders listed on the signature page hereto are the
holders of all of the outstanding Class C 13% Convertible Senior Subordinated
Debentures due September 30, 1999 in the principal amounts set forth opposite
their names on Schedule 3(b) hereto (together with any additional debentures
issued in lieu of cash interest thereon, the "Class C Debentures" and, together
with the Class A Debentures and the Class B Debentures, the "Debentures"); and
The obligations of the Company under the Class A Debentures and the
Class B Debentures are secured pursuant to the terms of an Amended and Restated
Security Agreement, dated March 7, 1996, as amended and restated as of July 29,
1997 (the "Amended and Restated Security Agreement"), among the Company and
Cerberus, as Agent; and
On the date hereof, certain of the Holders listed on the signature
page hereto are lending an aggregate of $775,000 and may, in their discretion,
advance an additional $225,000 to the Borrowers (the "Loans"); such Loans being
evidenced by Secured Promissory Notes (the "Notes") in the aggregate principal
amount of $1,000,000 and in the principal amounts set forth opposite their names
on Schedule 3(b) hereto; and
The parties hereto have agreed that Cerberus shall be relieved of any
obligations as agent under the Amended and Restated Security Agreement as of the
date hereof and that the Agent shall act as Agent hereunder and shall have the
rights and obligations expressly set forth herein.
<PAGE>
As an inducement for making the Loans and granting the consents and
waivers herein and as a condition precedent thereto, the parties hereto wish to
amend and restate the terms of the Amended and Restated Security Agreement as
provided herein to, among other things, (i) grant to the Agent for the benefit
of the Holders (as defined below) security interests in certain collateral of
mmTech, (ii) extend the security interests created by the Amended and Restated
Security Agreement to secure the obligations of the Company under the Class C
Debentures and the obligations of the Borrowers under the Notes as set forth
herein, (iii) provide for the relative rights and priorities of payment and
security among the Debentures and the Notes, and (iv) evidence the waivers and
consents of the Holders of the Debentures permitting the Loans and the security
interests herein extended;
NOW, THEREFORE, in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
1. Definitions.
1.1 Defined Terms. Capitalized terms in this Agreement shall
be defined as follows (and as defined elsewhere in this Agreement):
"Agent" means Cramer Rosenthal McGlynn, LLC as agent for the Holders
pursuant to this Agreement, or such other Person as shall have been subsequently
appointed as a successor agent pursuant to this Agreement.
"Bridge Holders" means the Holders, from time to time, of the Notes.
"Bridge Majority Holders" means the Holders of at least a majority in
aggregate principal amount of the Notes outstanding at the time of determination
of such majority.
"Class A Holders" means the registered holders, from time to time, of
the Class A Debentures.
"Class A Majority Holders" means the registered holders of at least a
majority in aggregate principal amount of the Class A Debentures outstanding at
the time of determination of such majority.
"Class B Holders" means the registered holders, from time to time, of
the Class B Debentures.
"Class B Majority Holders" means the registered holders of at least a
majority in aggregate principal amount of the Class B Debentures outstanding at
the time of determination of such majority.
"Class C Holders" means the registered holders, from time to time, of
the Class C Debentures.
<PAGE>
"Class C Majority Holders" means the registered holders of at least a
majority in aggregate principal amount of the Class C Debentures outstanding at
the time of determination of such majority; provided, however, that Charles S.
Brand and any subsequent Holder of the Brand Debentures (as defined below) shall
not have the right to consent or withhold consent to any action taken by the
Class C Holders and provided, further, that, for purposes of determining the
amount of Class C Debentures outstanding at any time, all Class C Debentures
held by Charles S. Brand or any subsequent Holder of such Debentures (including
any replacements thereof or substitutions therefor) (the "Brand Debentures")
shall be excluded.
"Collateral" means all personal property and fixtures in which any
Borrower has or shall have an interest, now or hereafter existing, created or
acquired, and wherever located, tangible or intangible, including but not
limited to all present and hereafter existing or acquired "accounts", "general
intangibles", "equipment", "goods", "inventory" (including raw materials,
components, work-in process, finished merchandise and packing and shipping
materials), "chattel paper", "documents", "instruments" and "investment
securities" (as those terms are defined in the UCC), and money, documents,
securities, deposits, books and records pertaining to intangible Collateral
regardless of the form in which records are maintained, patents and patent
rights, trademarks, copyrights, credits, claims and demands, including any
credits, claims and demands against the Agent or any Holder, and all proceeds,
products, returns, additions, accessions and substitutions of and to any of the
foregoing.
"Holders" means, collectively, the Class A Holders, the Class B
Holders, the Class C Holders, the Bridge Holders, and any subsequent transferees
thereof.
"Loan Documents" means, collectively, the Letter Agreement, dated of
even date herewith, among the Borrowers, Charles S. Brand and the Agent, the
Class A Debentures, the Class B Debentures, the Class C Debentures, the Notes,
this Agreement and any other agreement, assignment or document executed in
connection therewith.
"Obligations" means all indebtedness, obligations, liabilities, and
guarantees of any kind of the Borrowers to the Agent or any Holders arising
under, or in connection with the Loan Documents, now existing or hereafter
arising, and whether direct or indirect, acquired outright, conditionally or as
collateral security from another, absolute or contingent, joint or several,
secured or unsecured, due or not due, contractual or tortious, liquidated or
unliquidated, arising by operation of law or otherwise, whether or not of a
nature presently contemplated by the parties or subsequently agreed to by them
including, without limitation, all principal, interest, expenses, other sums,
duties and obligations owing from time to time under the Loan Documents.
"Priority Amount" means the $1,500,000 aggregate amount actually
advanced to LogiMetrics by the original Holders of the Class C Debentures (other
than Charles S. Brand).
"Senior Debt" means only the following (and no other indebtedness of
any kind or nature whatsoever): (i) the Company's indebtedness to the Senior
Lender under that certain the $2,000,000 Reduced and Extended Revolving Credit
Note, dated as of July 2, 1999, together with interest thereon (the "Facility")
and (ii) renewals, extensions, refinancings, deferrals, restructurings,
<PAGE>
amendments, modifications and waivers of the Facility; provided, however, that
the principal amount of the Senior Debt shall not exceed the amount authorized
in the Debentures.
"Senior Lender" means North Fork Bank and any successor lender
permitted under the Debentures.
"Special Majority" means, collectively, the Bridge Majority Holders,
the Class A Majority Holders, the Class B Majority Holders and the Class C
Majority Holders, each acting as a separate class.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York from time to time.
1.2 Rules of Construction. In this Agreement, unless specified
otherwise:
a. "Any" means "any one or more"; "including" means "including
without limitation"; "or" means "and/or".
b. Singular words include plural, and vice versa.
c. Headings are for convenience only, and do not affect the
meaning of any provision;
d. Reference to an agreement includes reference to its permitted
supplements, restatements, amendments and other modifications.
e. Reference to a law includes reference to any amendment or
modification of the law and to any rules or regulations issued thereunder.
f. Reference to a person includes reference to its permitted
successors and assigns in the applicable capacity.
g. Reference to a Section, Exhibit, or Schedule signifies
reference to a Section, Exhibit, or Schedule of this Agreement, unless the
context clearly indicates otherwise.
h. "Hereunder," "hereto," "hereof," "herein," and like words,
refer to the whole of this Agreement rather than to a particular part
hereof, unless the context clearly indicates otherwise.
1.3 No Strict Construction. The parties acknowledge that this
Agreement and the other Loan Documents have been prepared jointly, and shall not
be strictly construed against any party.
<PAGE>
2. Grant of Security Interest.
Each of the Borrowers hereby grants to the Agent, for its benefit
and the ratable benefit of the Holders, a valid and binding second security
interest (subject to that pre-existing first priority security interest in the
Collateral held by the Senior Lender and the security interests listed in
Schedule 3(c) attached hereto) in, and assigns and pledges to the Agent, for
its benefit and the benefit of the Holders, the Collateral as security for the
full payment, performance, and observance by the Borrowers of the Obligations.
Each Borrower hereby agrees to transfer and deliver to the Agent all Collateral
which the Agent is required or entitled to take possession of in order to
perfect the security interests, assignments and pledges therein.
3. Warranties and Agreements. Each Borrower warrants and agrees that:
(a) Collateral location and use; no conflicts; no existing
defaults; outstanding indebtedness. Its chief executive offices and place of
business, its financial books and records relating to the Collateral, and the
Collateral, are located at its address for notices contained in Section 17 of
this Agreement, except for certain Collateral and/or records maintained at the
locations specified in Schedule 3(a) attached hereto as described in such
Schedule 3(a). It will not relocate any of the Collateral from said location
without the proper written consent of the Agent. The Collateral was or will be
acquired by it solely for use in its business at said location, and the
Collateral is not and shall not be used for any other use.
The execution, delivery and performance in accordance with their
respective terms by it of this Agreement, the Notes and the other Loan Documents
do not and (absent any change in any applicable law or applicable agreement,
understanding or instrument to which it is a party or by which it or any of its
properties is bound) will not (a) require any consent, approval, registration or
notice to or with any governmental agency or any other consent or approval,
including any consent or approval of its stockholders, other than those that
have been obtained and are in full force and effect, copies of which have been
provided to the Agent or (b) violate or conflict with, result in a breach of,
constitute a default under, or result in or require the creation of any lien
upon any of its assets under, (i) any contract, agreement, understanding or
instrument to which it is a party or by which it or any of its properties is
bound or (ii) any applicable law, rule or regulation, other than violations,
conflicts and defaults which (A) have been irrevocably waived, which waivers are
in full force and effect and copies of which have been provided to the Agent, or
(B) would not have a material adverse effect upon its ability to perform its
obligations hereunder or result in the imposition of any material lien upon the
Collateral.
No event or circumstance has occurred and is continuing as of the
date hereof that constitutes, or with notice or passage of time or both would
constitute, an event of default under any of the Senior Debt, the Debentures or
any of its other material indebtedness, either before or after giving effect to
this Agreement, the Notes and the other Loan Documents, and the transactions
contemplated hereby and thereby, other than other than defaults or events of
default which have been irrevocably waived, which waivers are in full force and
effect and copies of which have been provided to the Agent, and other than
defaults which would not have a material adverse effect upon its ability to
perform its obligations hereunder or result in the imposition of any material
lien upon the Collateral.
<PAGE>
Set forth in Schedule 3(b) are the amounts, classes and holders
of all of its indebtedness for borrowed money, together with the classes and
holders of all outstanding warrants to acquire its capital stock; all of its
outstanding capital stock has been duly authorized and validly issued and is
fully paid and non-assessable.
(b) Existing liens, security interests, and encumbrances. It is
the legal owner of all interest in its Collateral and shall keep such Collateral
free and clear of liens, security interests, or encumbrances, and will not
assign, sell, mortgage, lease, transfer, pledge, grant a security interest in,
encumber or otherwise dispose of or abandon any part or all of the Collateral
without the prior written consent of the Agent, except for (i) the sale from
time to time in the ordinary course of its business of such items of Collateral
as may constitute all or part of its business inventory, (ii) the security
interests granted herein (iii) that certain senior security interest granted by
it to the Senior Lender to secure the Senior Debt in an amount not to exceed
$3,000,000 and (iv) any other liens expressly permitted under section 7(c)(ii)
of the Debentures, including those contained in the official search reports
attached hereto as Schedule 3(c), which, to its best knowledge, are the only
existing liens on the Collateral.
(c) Taxes, compliance with laws. It will make due and timely
payment or deposit of all taxes, assessments, or contributions required by law
which may be lawfully levied or assessed with respect to any of the Collateral
and will execute and deliver to the Agent, on demand, appropriate certificates
attesting to the timely payment or deposit of all such taxes, assessments or
contributions. It will use the Collateral for lawful purposes only, and with all
reasonable care and caution, and in conformity with all applicable laws,
ordinances and regulations. At its own cost and expense it will keep the
Collateral in proper order, repair, and condition.
(d) Inspection. The Agent (and its designees) shall at all times
have free access to and the right of inspection of any part or all of the
Collateral and any of its records (and the right to make extracts from such
records), and it shall deliver to the Agent the originals or true copies of such
papers and instruments relating to any or all of the Collateral as the Agent,
may request at any time.
(e) Collateral to remain personal property. The Collateral is now
and shall be and remain personal property, notwithstanding the manner in which
the Collateral or any part thereof shall be now or hereafter affixed, attached
or annexed to real property. It will obtain and deliver to the Agent such
instruments as may be requested by the Agent pursuant to which any person with
an interest in any real estate upon which any part of all of the tangible
Collateral is now or may hereafter be located consents to the security interest
granted herein, disclaims any interest in the tangible Collateral as fixtures,
waives in favor of the Agent (as agent and the Holders) all right to distrain or
levy upon the Collateral for rent due or to become due from it.
(f) Insurance. It, at its own cost and expense, will insure the
Collateral in the name of the Agent (as agent for the Holders) and, if required
under the documents evidencing the Senior Debt, the Senior Lender, as their
respective interests may appear, against loss or damage by fire and extended
coverage, theft, burglary, pilferage, bodily injury and such other risks as the
Agent may require, with such companies and in such amounts, but not less than
the replacement value of tangible collateral, as may be required by the Agent at
<PAGE>
any time in its sole discretion. All such policies shall (a) name the Agent (as
agent for the Holders) and, if required under the documents evidencing the
Senior Debt, the Senior Lender as the sole loss payees as to any casualty
insurance and provide that no claim for loss or damage may be settled, adjusted
or comprised without the prior written consent of the Agent and (b) name the
Agent (as agent for the Holders) as an "additional insured" as to any liability
insurance. All such policies shall further provide for 30 days' minimum written
notice of modification or cancellation to the Agent, together with duplicate
premium notices to the Agent, and it shall deliver to the Agent the original or
duplicate policies, or certificates or other evidence satisfactory to the Agent,
of compliance with the foregoing insurance provisions. It assumes all
responsibility and liability arising from the use of the Collateral, either for
negligence or otherwise, by whomsoever used, employed or operated, and will
defend, indemnify and save the Agent and the Holders (and their respective
officers, directors, employees, and agents) harmless from any and all claim,
loss or damage to persons or property caused by the Collateral or by its use and
operation. The Agent may, but shall not be obligated, to pay any premium with
respect to any such insurance which it shall fail to timely pay.
(g) Maintain security interests, reports. In addition to all
other provisions hereof, it will from time to time at its sole expense, perform
any and all steps and/or procedures requested by the Agent at any time to
perfect and maintain the Agent's (and the Holders') security interest in the
Collateral, including but not limited to transferring any part or all of the
Collateral to the Agent or any nominee of the Agent including delivering the
collateral to warehouses, placing and maintaining signs, appointing custodians,
executing and filing financing statements and notices of lien, delivering to the
Agent documents of title representing the Collateral or evidencing the Agent's
security interest in any other manner acceptable to and requested by the Agent.
If requested by the Agent, it will from time to time execute and deliver to the
Agent assignments of accounts in form satisfactory to the Agent, but should it
fail in any one or more instances to execute and deliver any such assignments of
accounts, such failure shall not constitute a waiver or limitation of the within
security interest in all of the Collateral (including said accounts) which shall
remain in full force and effect.
At the request of the Agent, it shall deliver to the Agent all
original documents evidencing the sale and delivery of merchandise or the
performance of labor or services which created any account, including but not
limited to all original contracts, orders, invoices, bills of lading, warehouse
receipts and shipping receipts, together with all collateral security and/or
guarantees or other contracts of suretyship held by it in respect of the
accounts, together with assignments of any of the foregoing where requested by
the Agent.
If at any time any part or all of the Collateral shall be in the
possession or control of any of its bailees, agents, or processors, it will
notify such persons of the Agent's and Holders' security interest therein and
upon the Agent's request, it will instruct such persons to hold all such
Collateral for the Agent's and Holders' account and subject to the Agent's
instructions and it will obtain and deliver to the Agent such instruments
requested by the Agent pursuant to which such persons consent to the security
interest granted herein, disclaim any interest in the Collateral, waive in favor
<PAGE>
of the Agent and the Holders all liens upon and claims to the Collateral or any
part thereof, and authorize the Agent at any time to enter upon and remove the
Collateral from any premises upon which the same may be located.
(h) Further documentation. It shall, at its sole cost and
expense, simultaneously herewith and upon the request of the Agent, at any time
and from time to time, execute and deliver to the Agent one or more financing
statements pursuant to the UCC, and any other papers, documents or instruments
required by the Agent in connection herewith. It hereby authorizes the Agent to
execute and file, at any time and from time to time, on its behalf, one or more
financing statements with respect to all or any part of the Collateral, the
filing of which is advisable, in the sole judgment of the Agent and a Special
Majority, pursuant to the law of the State of New York or New Jersey, as
applicable, although the same may have been executed only by the Agent as
secured party. It also irrevocably appoints the Agent, its agents,
representatives and designees, as its agent and attorney-in-fact, to execute and
file, from time to time, on its behalf, one or more financing statements with
respect to all or any part of the Collateral, and to take such other steps as
the Agent and a Special Majority reasonably determine are necessary or desirable
to perfect its or the Holders' liens in any Collateral and exercise their rights
and remedies under this Agreement and the other Loan Documents, including any
filings deemed necessary or advisable under federal patent, trademark or
copyright laws.
(i) Bona fide accounts. It warrants to the Agent and the Holders
that each of the account debtors obligated on any account has legal capacity to
contract and is indebted to it in the full amount indicated in its books and
records and in any assignments executed and delivered to the Agent; that each
account is bona fide and arises out of the sale and delivery of merchandise
and/or the performance of labor or services.
(j) Collection of accounts. Upon and following the occurrence of
an event of default as hereinafter defined, all bills and statements sent to any
customer or any account shall state that said account has been assigned to the
Agent (as agent for the Holders) and is to be paid directly to the Agent at such
address as the Agent may designate. The Agent may endorse its name on all notes,
checks, drafts, bill of exchange, money orders, commercial paper of any kind
whatsoever, and any other document or general intangible received in payment of
or in connection with accounts or otherwise, and the Agent or any officer or
employee thereof, is hereby irrevocably constituted and appointed its agent and
attorney-in-fact for the foregoing purpose, and to receive, open and dispose of
all mail addressed to it, and to notify the Post Office authorities to change
the address for the delivery of mail addressed to it to such address(es) as the
Agent may designate. Any bank or trust company is hereby irrevocably authorized
to permit the Agent to deposit the proceeds of accounts so endorsed and to
withdraw the same without inquiry as to the circumstances of endorsement or as
to the purpose of withdrawal, and without being required to answer for the
application by the Agent of the monies so withdrawn. The proceeds of accounts,
received by the Agent, shall be applied to the Obligations but shall not
constitute payment thereof until so applied, it being agreed that the order and
method of such application shall be in the discretion of the Agent. From and
after the occurrence of an event of default, any proceeds of an account or
general intangible received by it shall be held in trust and paid over to the
Agent in the exact form received, duly endorsed to the order of the Agent if
payable to it.
<PAGE>
(k) Settlement of accounts. The Agent is authorized and empowered
to compromise or extend the time for payment of any of the Collateral, for such
amounts and upon such terms as the Agent may determine, and to accept the return
of goods represented by any of the Collateral, all without notice to or consent
by it and without discharging or affecting its obligations hereunder.
(l) Payment of debtor's obligations, reimbursement. The Agent may
in its discretion or at the direction of either the Bridge Majority Holders, the
Class A Majority Holders, the Class B Majority Holders or the Class C Majority
Holders (but the Agent shall have no obligation to), for its account and expense
(i) pay any amount or do any act which is required to be paid or done by it
under this Agreement (including but not limited to the repair and insuring of
Collateral and payment of taxes) and which it fails to do or pay as herein
required, (ii) pay any sums due and owing by it to the landlord of any premises
where any Collateral is located, and (iii) pay or discharge any lien, security
interest or encumbrance in favor of anyone other than the Agent (or any Holders)
which covers or affects the Collateral or any part thereof. It will promptly
reimburse and pay the Agent (or any Holders) for any and all sums, costs, fees,
and expenses which the Agent (or any Holders) may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
priority thereof or in enforcing payment of the Obligations or in discharging
any lien or claim against the Collateral or any part thereof or in the exchange,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof or for the care of the Collateral, by litigation or otherwise,
and with respect to either it, its account debtors, its guarantors and other
persons, including but not limited to all court costs, collection charges,
travel, and reasonable attorneys' fees and all reasonable expenses (including
reasonable counsel fees) incident to the enforcement of payment of any of its
obligations by any action or participation in, or in connection with, a case or
proceeding under chapters 7, 11 or 13 of the Bankruptcy Code, or any successor
statute thereto. All sums paid and all costs, expenses and liabilities incurred
by the Agent (or any Holders) pursuant to the foregoing provisions, together
with interest thereon at any default rate in effect under the Loan Documents,
shall be added to and become part of the Obligations secured hereby.
(m) Comply with Loan Documents. It shall comply with all terms
and conditions of the Loan Documents.
(n) Stock Powers, Endorsements, Etc. It shall, from time to time,
upon request of the Agent, promptly execute such endorsements and deliver to the
Agent such stock powers and similar documents, satisfactory in form and
substance to the Agent, with respect to any Collateral constituting investment
securities under the UCC as the Agent may reasonably request and shall, from
time to time, upon request of the Agent, promptly transfer any investment
securities which are part of the Collateral into the name of any nominee
designated by the Agent on the books of the entity issuing such securities;
provided, however, that the Agent shall not be entitled to effect or demand a
transfer of such Collateral into the name of the Agent or the Agent's nominee
without the consent of the record owner thereof unless and until an event of
default shall have occurred.
Upon and following the occurrence of an event of default as
hereinafter defined, promptly upon receipt thereof by the Borrowers and without
<PAGE>
any request therefor by the Agent, all dividends and distributions, and other
proceeds of any Collateral constituting investment securities under the UCC
shall be paid to and held by the Agent as additional Collateral.
Upon and following the occurrence of an event of default as
hereinafter defined, promptly upon request of the Agent, the Borrowers shall
execute and deliver such consents or proxies and other documents as may be
necessary to allow the Agent to exercise any voting power or other right with
respect to any investment securities included in the Collateral; provided,
however, that unless an event of default shall have occurred and be continuing,
the Borrowers shall be entitled:
(i) to exercise, as the Borrowers shall deem appropriate, all
voting or other powers with respect to securities pledged hereunder;
and
(ii) to receive and retain for the Borrowers' own account any and
all cash dividends paid in respect thereof.
4. Transfer of Collateral.
Upon and following the occurrence of an event of default as
hereinafter defined, the Agent may, at the direction of either the Bridge
Majority Holders, the Class A Majority Holders, the Class B Majority Holders or
the Class C Majority Holders, whether or not any of the Obligations be due, in
its name or in the name of the Borrowers or otherwise, notify any account debtor
or the obligor on any instrument to make payment to the Agent, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable by the Agent with respect to, any of the Collateral, but shall be
under no obligation to do so, and/or the Agent, acting at the direction of a
Special Majority, may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Borrowers. If at any time any Holder
should transfer its interest in any Debentures or the Notes, or the Agent should
resign and that resignation becomes effective as permitted under this Agreement,
that Holder or the Agent, as the case may be, shall be fully discharged from all
responsibility to the Borrowers with respect to their interest in the
Collateral.
5. Defaults.
The occurrence of any one or more of the following events shall
constitute an event of default by the Borrowers under this Agreement:
(a) any "Event of Default" shall occur and be continuing under any
of the Debentures or any other Loan Documents;
(b) the Facility, or any renewal, extension, refinancing, deferral,
restructuring, amendment or modification thereof, shall have expired in
accordance with its terms or shall be terminated, whether at maturity, upon
acceleration of the obligations thereunder or otherwise, and all amounts
<PAGE>
outstanding thereunder shall not have been paid by the Borrowers at the time of
such expiration or termination;
(c) if any warranty, representation or statement of fact made
herein or furnished to the Agent (or any Holders) at any time by or on behalf
of the Borrowers proves to have been false in any material respect when
made or furnished;
(d) in the event of loss, theft, substantial damage or destruction
of any of the Collateral or the making of any levy on, seizure or attachment of
any of the Collateral;
(e) if any Borrower fails to observe or perform any of its
covenants contained herein, and such failure continues for 30 days after
receipt by such Borrower of notice thereof; or
(f) if any Borrower shall execute or file a certificate or other
instrument evidencing the legal change of its name or commence using a tradename
or change the address of its chief executive offices or any address where any
Collateral is located or books and records are maintained without furnishing the
Agent at least 15 business days' prior written notice thereof.
6. Remedies on Default.
Upon the occurrence of an event of default relating to the bankruptcy
or insolvency of any Borrower shall occur, all Obligations shall automatically,
without notice or demand, be immediately due and payable; upon the occurrence of
any other event of default or at any time thereafter, the Agent may, at the
direction of either the Bridge Majority Holders, the Class A Majority Holders,
the Class B Majority Holders or the Class C Majority Holders without notice to
or demand upon the Borrowers, declare the Obligations owed to the Holders, as
applicable, immediately due and payable and the Agent (for the benefit of the
Holders) shall have the following rights and remedies in addition to all rights
and remedies of a secured party under the Uniform Commercial Code or other
applicable statute or rule, in any jurisdiction in which enforcement is sought
and all other rights and remedies under any other Loan Document or other
agreement involving the Agent and any Borrower, all such rights and remedies
being cumulative and not exclusive, and exercisable in any order and in any
combination, at the direction of the Bridge Majority Holders, the Class A
Majority Holders, the Class B Majority Holders or the Class C Majority Holders:
(a) The Agent may institute proceedings to collect all Obligations
from the Borrowers or anyone else who may be responsible for the payment of any
Obligations.
(b) The Agent may, at any time and from time to time, with or without
process of law and with or without the aid and assistance of others, enter upon
any premises in which the Collateral or any part thereof may be located and,
without resistance or interference by the Borrowers, take possession of the
Collateral; and/or dispose of all or any part of the Collateral on any premises
of the Borrowers; and/or require the Borrowers to assemble and make available to
the Agent all or any part of the Collateral at any place and time designated by
the Agent which is reasonably convenient to the Agent and the Borrowers; and/or
<PAGE>
remove all or any part of the Collateral from any premises on which any part
thereof may be located for the purpose of effecting preservation or sale or
other disposition thereof; and/or sell, resell, lease, assign and deliver, or
otherwise dispose of, the Collateral or any part thereof in its existing
condition or following any commercially reasonable preparation or processing, at
public or private proceedings, in one or more parcels at the same or different
times with or without having the Collateral at the place of sale or other
disposition for cash, upon credit or for future delivery, and in connection
therewith the Agent may grant options, at such place or places and time or times
and to such persons, firms or corporations as the Agent deems best, and without
demand for performance or any notice or advertisement to the Borrowers of the
place and time of any public sale or of the place and time after which any
private sale or other disposition may be made, and/or liquidate or dispose of
the Collateral or any part thereof in any other commercially reasonable manner.
If any of the Collateral is sold by the Agent upon credit or for
future delivery, the Agent shall not be liable for the failure of the purchaser
to purchase or pay for the same and, in the event of any such failure, the Agent
may resell such Collateral. The Borrowers hereby waive all equity and right of
redemption. The Agent may buy any part or all of the Collateral at any public
sale and if any part of all of the Collateral is of a type which is the subject
of widely distributed standard price quotations the Agent may buy at private
sale, all free from any equity or right of redemption which is hereby waived and
released by the Borrowers, and the Agent may make payment therefor (by
endorsement without recourse) in notes of any Borrower to the order of the Agent
in lieu of cash to the amount then due thereon which each Borrower hereby agrees
to accept.
(c) The Agent (and any Holder acting at the direction of the Bridge
Majority Holders, the Class A Majority Holders, the Class B Majority Holders or
the Class C Majority Holders) may appropriate, set off and apply for the payment
of any or all of the Obligations for the ratable benefit of the Holders, any and
all balances, sums, property, claims, credits, deposits, accounts, reserves,
collections, drafts, notes, or other items or proceeds of the Collateral in or
coming into the possession of the Agent or its agents and belonging or owing to
the Borrowers, without notice to the Borrowers, and in such manner as the Agent
may in its sole discretion determine.
(d) Collect accounts receivable and any other sums owing to the
Borrowers directly, or through an agent or designee, or in the name of the
Borrowers.
(e) Any of the proceeds of the Collateral received by the Borrowers
shall not be commingled with other property of the Borrowers, but shall be
segregated, held by the Borrowers in trust for the Agent (as agent for the
Holders) as the exclusive property of the Agent (as agent for the Holders), and
the Borrowers will immediately deliver to the Agent the identical checks, moneys
or other proceeds of Collateral received, and the Agent shall have the right to
endorse the name of the Borrowers on any and all checks, or other forms of
remittance received, where such endorsement is required to effect collection.
Each Borrower hereby designates, constitutes and appoints the Agent and any
designee or agent of the Agent as attorney-in-fact of such Borrower, irrevocably
<PAGE>
and with power of substitution, with authority to receive, open and dispose of
all mail addressed to such Borrower, to notify the Post Office authorities to
change the address for delivery of mail addressed to such Borrower, to such
address as the Agent may designate; to endorse the name of such Borrower on any
notes, acceptances, checks, drafts, money orders or other evidences of payment
or proceeds of the Collateral that may come into the Agent's possession; to sign
the name of such Borrower on any invoices, documents, drafts against account
debtors of such Borrower, assignments, requests for verification of accounts and
notices to debtors of such Borrower; to execute any endorsements, assignments,
or other instruments of conveyance or transfer; and to do all other acts and
things necessary and advisable in the sole discretion of the Agent to carry out
and enforce this Agreement. All acts of said attorney or designee shall not be
liable for any acts of commission or omission nor for any error of judgment or
mistake of fact or law. This power of attorney being coupled with an interest is
irrevocable while any of the Obligations shall remain unpaid.
(f) The Borrowers understand that compliance with the Federal
securities laws, applicable blue sky or other state securities laws or similar
laws analogous in purpose or effect may strictly limit the course of conduct of
the Agent if the Agent were to attempt to dispose of all or any part of the
Collateral constituting unregistered investment securities and may also limit
the extent to which or the manner in which any subsequent transferee of such
Collateral may dispose of the same. Accordingly, each Borrower agrees that IF
ANY COLLATERAL CONSTITUTING UNREGISTERED INVESTMENT SECURITIES IS SOLD AT ANY
PUBLIC OR PRIVATE SALE, THE AGENT MAY ELECT TO SELL ONLY TO A BUYER WHO WILL
GIVE FURTHER ASSURANCES, SATISFACTORY IN FORM AND SUBSTANCE TO THE AGENT,
RESPECTING COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY AND ALL APPLICABLE STATE SECURITIES LAWS; AND A SALE SUBJECT TO
SUCH CONDITION SHALL BE DEEMED COMMERCIALLY REASONABLE.
7. Liability Disclaimer.
Under no circumstances whatsoever shall the Agent or any Holder be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Collateral, of any nature or kind whatsoever, or any
matter or proceedings arising out of or relating thereto. The Agent (and the
Holders) shall not be required to take any action of any kind to collect or
protect any interest in the Collateral, including but not limited to any action
necessary to preserve their, or the Borrowers' rights against prior parties to
any of the Collateral. The Agent (and the Holders) shall not be liable or
responsible in any way for the safekeeping, care or custody of any of the
Collateral, or for any loss or damage thereto, or for any diminution in the
value thereof, or for any act or default of any agent or bailee of the Agent or
the Borrowers, or of any carrier, forwarding agency or other person whomsoever,
or for the collection of any proceeds, but the same shall be at the Borrowers'
sole risk at all times. Each Borrower hereby releases the Agent and the Holders
from any claims, causes of action and demands at any time arising out of or with
respect to this Agreement or the Obligations, and any actions taken or omitted
to be taken by the Agent or any Holders with respect thereto, and such Borrower
agrees to defend and hold the Agent and the Holders harmless from and with
respect to any and all such claims, causes of action and demands. The Agent's
and the Holder's prior recourse to any part of all of the Collateral shall not
constitute a condition of any demand for payment of the Obligations or of any
suit or other proceeding for the collection of the Obligations. This provision
is not intended to limit the Agent's responsibility to the Holders as provided
in Section 9.
<PAGE>
8. Application of Proceeds. Upon the occurrence and during the
continuance of an event or default (as described above), the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied by the Agent in the following order of priorities, (subject to the prior
right, if any, of the holders of the Senior Debt to those proceeds):
first, to payment of the reasonable out-of-pocket expenses of such
sale or other realization, including reasonable compensation to agents and
counsel for the Agent, and all reasonable out-of-pocket expenses,
liabilities and advances incurred or made by the Agent in connection
therewith, and any other unreimbursed expenses for which the Agent or any
Holder is to be reimbursed pursuant to this Agreement or any provision of
any of the other Loan Documents;
second, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Obligations
pursuant to the Notes (but only in respect of the amounts actually advanced
to the Borrowers by the Bridge Holders);
third, to the ratable payment of unpaid principal of the Notes (but
only up to the amounts actually advanced to the Borrowers by the Bridge
Holders);
fourth, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Obligations
pursuant to the Class A Debentures and Class B Debentures;
fifth, to the ratable payment of unpaid principal of the Class A
Debentures and Class B Debentures;
sixth, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Obligations
pursuant to the Class C Debentures (other than the Brand Debentures);
seventh, to the ratable payment of unpaid principal of the Class C
Debentures (other than the Brand Debentures);
eighth, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Obligations
pursuant to the Brand Debentures;
ninth, to the ratable payment of unpaid principal of the Brand
Debentures;
tenth, to the ratable payment of all other Obligations, until all such
Secured Obligations shall have been paid in full; and
finally, to payment to the Borrowers or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
9. The Agent.
9.1 Actions. Unless a specific provision of this Agreement provides
that the Agent shall act only upon written directions or instructions from a
specific percentage thereof, the Agent shall be deemed to be authorized on
behalf of each Holder to act on behalf of such Holder under this Agreement and
any other Loan Document and, in the absence of written instructions from a
Special Majority received from time to time by the Agent (with respect to which
the Agent agrees that it will, subject to the last two sentences of this section
9.1, comply, except as otherwise advised by counsel, to exercise such powers
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. The Agent shall have no duty to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement or any other Loan Document by the Borrower. By accepting their
Debentures or Notes, as applicable, each Holder shall be deemed to have agreed
to indemnify the Agent (which agreement shall survive any termination of such
Holder's percentage), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement, the Debentures, the Notes or any other Loan Document,
including the reimbursement of the Agent for all out-of-pocket expenses
(including attorneys' fees) incurred by the Agent hereunder or in connection
herewith or in enforcing the Obligations of the Borrowers under this Agreement
or any other Loan Document, in all cases as to which the Agent is not reimbursed
by the Borrowers; provided that no Holder shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or willful misconduct. The Agent shall not be required
to take any action hereunder or under any other Loan Document, or to prosecute
or defend any suit in respect of this Agreement or any other Loan Document,
unless the Agent is indemnified to its reasonable satisfaction by the Holders
against loss, costs, liability and expense. If any indemnity in favor of the
Agent shall become impaired, it may call for additional indemnity and cease to
do the acts indemnified against until such additional indemnity is given.
In the event that the Agent following the occurrence of an event of
default hereunder receives instructions from either the Bridge Majority Holders,
the Class A Majority Holders, the Class B Majority Holders or the Class C
Majority Holders, as the case may be, to take any action to foreclose on or
otherwise realize on the Collateral, the other Majority Holders shall not give
any contrary instruction to the Agent and, if any such instruction is given, it
shall have no force and effect.
9.2 Exculpation. Neither the Agent nor any of its directors, officers,
partners, employees or agents shall be liable to any Holder for any action taken
or omitted to be taken by it under this Agreement, the Debentures, the Notes or
any other Loan Document, or in connection herewith or therewith, except for its
own willful misconduct or gross negligence. The Agent shall not be responsible
<PAGE>
to any Holder for any recitals, statements, representations or warranties herein
or in any certificate or other document delivered in connection herewith or for
the authorization, execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, or sufficiency of any of the Loan
Documents, the financial condition of the Borrowers or the condition or value of
any of the Collateral, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of any
of the Loan Documents, the financial condition of the Borrowers or the existence
or possible existence of any default or event of default. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which it believes to be
genuine and to have presented by a proper person.
9.3 Resignation of Agent. The Agent may resign as such at any time
upon at least thirty (30) days' prior notice to the Borrowers and all Holders,
such resignation not to be effective until a successor Agent is in place. If the
Agent at any time shall resign, a Special Majority may jointly appoint another
Holder as a successor Agent which shall thereupon become the Agent hereunder. If
within 30 days after the retiring Agent's giving notice of resignation, no
successor Agent shall have been so appointed by a Special Majority, and shall
have accepted such appointment, then the retiring Agent may, on behalf of the
Holders appoint as successor Agent hereunder a financial institution organized
under the laws of the United States and having a combined capital and surplus of
at least $500,000,000. Should the successor Agent be a financial institution
that, in the ordinary course of its business, serves as agent for lending
facilities, the Borrowers shall pay that successor Agent's reasonable fees for
serving as successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall be entitled to
receive from the retiring Agent such documents of transfer and assignment as
such successor Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents.
9.4 Replacement of Agent. A Special Majority may at any time and for
any reason replace the Agent with a successor Agent jointly selected by them,
upon at least ten days written notice to the Borrowers and the other Holders.
Should the successor Agent be a financial institution that, in the ordinary
course of its business, serves as agent for lending facilities, the Borrowers
shall pay that successor Agent's reasonable fees serving as an agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall be entitled to receive from the terminated Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges, and duties of the retiring Agent, and the terminated Agent
shall be discharged from its duties and obligations under this Agreement and the
other Loan Documents.
9.5 Obligations Held by the Agent. The Agent shall have the same
rights and powers with respect to any Debentures or Notes held by it or any of
its affiliates, as any Holder and may exercise the same as if it were not the
Agent. Each of the Borrowers and the Holders hereby waives, and each successor
to any Holder shall be deemed to waive, any right to disqualify any Holder
(including Cerberus) from serving as the Agent or any claim against that Holder
for serving as Agent.
<PAGE>
9.6 Copies, etc. The Agent shall give prompt notice to each Holder of
each notice or request required or permitted to be given to the Agent by the
Borrower pursuant to the terms of this Agreement. The Agent will distribute to
each Holder each instrument and other Loan Document received for its account and
copies of all other communications received by the Agent from a Borrower for
distribution to the Holders by the Agent in accordance with the terms of this
Agreement. Notwithstanding anything herein contained to the contrary, all
notices to and communications with the Borrowers under this Agreement and the
other Loan Documents shall be effected by the Holders through the Agent.
9A. Cerberus.
Cerberus is herewith delivering to the Agent executed Form UCC-3s
assigning to the Agent for the benefit of Cerberus and the other Holders all of
Cerberus's right, title and interest in and to the financing statements
previously filed on behalf of Cerberus in respect of LogiMetrics with the State
of New York and the County of Suffolk (the "Assignments"). Upon the delivery of
the Assignments, Cerberus shall be relieved of any further responsibility or
obligation as Agent under the Amended and Restated Security Agreement. For
purposes of Article 9 hereof, Cerberus shall be deemed to have resigned as Agent
pursuant to Section 9.3 and to have been replaced as agent by the Agent, all
effective as of the date hereof. Notwithstanding the foregoing, the provisions
of Article 9 hereof shall be deemed to apply to any actions taken by Cerberus as
agent under the Amended and Restated Security Agreement on or prior to the date
hereof. Each of the parties hereto hereby releases Cerberus and its partners and
their respective officers, directors, managers, employees, agents,
representatives and equity interest holders (collectively, "Cerberus Parties")
from any and all claims, damages, liabilities, losses, actions, causes of action
or other claims of whatever kind or nature whatsoever, whether known or unknown,
contingent or liquidated, arising on or prior to the date hereof as a result of
or out of Cerberus's service as predecessor Agent ("Claims"). The Borrowers,
jointly and severally, shall indemnify and hold harmless each of the Cerberus
Parties from any Claims that may be asserted against any of them.
10. Release of Collateral. Upon the indefeasible payment in full of
the Obligations, the Agent shall, upon the request of the Borrowers, promptly
reassign and redeliver to the Borrowers the Collateral which has not been sold,
disposed of, retained or applied by the Agent in accordance with the terms
hereof, together with such endorsements, stock powers and similar documents as
the Borrowers may reasonably request. Such reassignment and redelivery shall be
without warranty by or recourse to the Agent, except as to the absence of any
prior assignments by the Agent of its interest in the Collateral.
In the event that LogiMetrics seeks to effect a sale of certain of the
Collateral, and such sale would qualify as a sale described in clause (iii) of
the third paragraph of the Notes (a "Qualifying Sale"), LogiMetrics shall have
the right to cause the Agent to release from the security interests granted
hereby and to deliver to LogiMetrics such portion of the Collateral as is being
disposed of pursuant to the Qualifying Sale upon compliance with the procedures
contained in the remainder of this paragraph. In the event that LogiMetrics
wishes to effect the release and delivery of such Collateral, LogiMetrics shall,
not less than five business days prior to the expected closing date of the
Qualifying Sale (the "Closing Date") deliver to the Agent and the Holders a
<PAGE>
written request setting forth the expected Closing Date and describing in
reasonable detail the Collateral to be sold in connection with the Qualifying
Sale and the expected net proceeds to be obtained as a result thereof. Such
request shall be accompanied by certified resolutions of LogiMetrics' Board of
Directors authorizing the Qualifying Sale and authorizing the application of the
proceeds therefrom as herein provided. The Agent shall release from the security
interests granted hereby and deliver to LogiMetrics or upon its order on the
Closing Date the Collateral to be conveyed in the Qualifying Sale upon receipt
by the Agent of evidence reasonably satisfactory to it that (i) the holder of
any security interest in or lien on the Collateral ranking prior to the security
interests granted to the Holders hereby has released its security interest or
lien to the extent necessary to effect the Qualifying Sale and has consented to
the application of the net proceeds of the Qualifying Sale as contemplated
herein, and (ii) the Company has, out of the net proceeds thereof, indefensibly
paid or provided for the indefeasible payment in full of all Obligations
outstanding under the Notes. In the event that the net proceeds of the
Qualifying Sale exceed the Obligations outstanding under the Notes, such excess
shall be applied to the other Obligations secured hereby in accordance with the
priorities established in Section 8. In order to evidence the release of such
Collateral, at the request of LogiMetrics and at its sole expense, the Agent
shall execute and deliver to LogiMetrics or upon its order such instruments,
agreements, certificates or other documentation as LogiMetrics may request.
11. Nonwaiver.
No failure or delay on the part of the Agent in exercising any of
its rights and remedies hereunder or otherwise shall constitute a waiver
thereof, and no single or partial waiver by the Agent of any default or other
right or remedy which it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy on a future
occasion.
12. Waivers by Borrowers.
Each Borrower hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all other notices and demands whatsoever (except as
expressly provided herein) whether or not relating to such instruments. In the
event of any litigation at any time arising with respect to any matter connected
with this Agreement or the Obligations, each Borrower hereby waives any and all
defenses, rights of setoff and rights to interpose counterclaims of any nature.
Each Borrower also waives any right to assert that the Agent or any Holder has
the duty to marshal any assets in favor of such Borrower or any other party or
against or in payment of any Obligations.
13. Consent of the Holders. The Class A Holders, the Class B Holders
and the Class C Holders hereby irrevocably consent to the Loans and the
extension of the security interests to the Notes and the Class C Debentures as
provided herein and to the transactions contemplated by the Loan Documents and
hereby irrevocably waive any provisions of the Debentures to the extent they
would prohibit or conflict with the terms and conditions of the Loan Documents
or would result in a default or an event of default under the Debentures in the
event that the Loans are made and the other transactions contemplated by the
Loan Documents are consummated.
<PAGE>
14. Modification.
No provision hereof shall be modified, altered or limited except
by a written instrument expressly referring to this Agreement and to the
provision so modified or limited, and executed by the party to be charged.
15. Binding Effect.
This Agreement and all Obligations of the Borrowers hereunder
shall be binding upon the successors or assigns of each Borrower, and shall,
together with the rights and remedies of the Agent and the Holders hereunder,
inure to the benefit of the Agent and the Holders and their respective
successors and assigns.
16. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by the internal laws of the State of New York, pursuant to Section
15-1401 of the General Obligations Law of such state. Each Borrower irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York and
the United States District Court for the Southern District of New York for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Agreement and the transactions contemplated hereby. Service of process
in connection with any such suit, action or proceeding may be served on each
Borrower anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. Each Borrower irrevocably consents to
the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. Each Borrower irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
17. Notices. All notices, consents, requests, and other communications
under this Agreement shall be in writing and shall be effective: (a) upon
delivery by hand; (b) one day after being deposited with a recognized overnight
delivery service; or (c) three days after being deposited in the United States
mail, first-class, postage prepaid, registered or certified, return receipt
requested in each case addressed to any Holder at the address of such Holder
indicated on the signature page hereof or, in the case of any subsequent Holder,
as otherwise notified to the Borrowers, and to the other parties hereto as
follows (or to such other address as hereafter may be designated in writing by
such party to the other party):
If to LogiMetrics:
LogiMetrics, Inc.
50 Orville Drive
Bohemia, NY 11716
Attn: President
If to mmTech:
mmTech, Inc.
611 Industrial Way West
Eatontown, NJ 07724
Attn: President
<PAGE>
If to the Agent:
Cramer Rosenthal McGlynn, LLC
520 Madison Avenue
New York, NY 10022
18. Severability.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
19. No Jury Trial.
Each of the parties hereto hereby waives any right to request a trial
by jury in any litigation with respect to any aspect of this Agreement and
represents that it has consulted with counsel specifically with respect to this
waiver.
20. Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
_________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
MMTECH, INC.
By: /s/Charles S. Brand
_________________________
Name: Charles S. Brand
Title: President
CRAMER ROSENTHAL McGLYNN, LLC,
as Agent
By:/s/Sam Beritela
___________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial
Officer
<PAGE>
CRAMER ROSENTHAL McGLYNN, INC.,
By: /s/Sam Beritela
__________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/Arthur J. Pergament
__________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Gerald B. Cramer
_______________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Edward J. Rosenthal
_______________________________
Edward J. Rosenthal Profit
Sharing Plan and Trust
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM RETIREMENT PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM MADISON PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM U.S. VALUE FUND, LTD.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
EURYCLEIA PARTNERS, L.P.
By: Marchessini & Dernisch, L.L.C.,
Its General Partner
By: /s/Rona Trokie
_______________________________
Name: Rona Trokie
Title: Vice President
745 Fifth Avenue, Suite 1400
New York, New York 10151
Tel: (212) 752-4300
Fax: (212) 752-4309
A.C. ISRAEL ENTERPRISES, INC.
By: /s/Jay Howard
_______________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
__________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
_______________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
_______________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
/s/Mark B. Fisher
_____________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
_______________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Fred M. Filoon
_____________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor, III
_____________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C.,
Its General Partner
By: /s/Stephen Feinberg
________________________
Name: Stephen Feinberg
Title: Managing Member
450 Park Avenue
28th Floor
New York, New York 10022
Telephone: (212) 891-2100
Facsimile: (212) 421-2947
<PAGE>
/s/Steven Dinetz
__________________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Charles B. Brand
_____________________________
Charles S. Brand
611 Industrial Way West
Eatontown, New Jersey 07724
Tel: (732) 935-0853
Fax:(732) 935-7151
<PAGE>
/s/Gregory Manocherian
_____________________________
Gregory Manocherian
135 Central Park West,
Tower Southeast
New York, New York 10023
Tel: (212) 799-3500
Fax: (212) 873-2877
<PAGE>
SCHEDULE 3(a)
1. 20 Meridian Road
Eatontown, NJ 07724
2. Mr. Dee's Long Term Storage
911 Lincoln Avenue
Holbrook, NY 11741
<PAGE>
AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED SECURITY AGREEMENT,
INTERCREDITOR AGREEMENT, WAIVER AND CONSENT
Amendment No. 1, dated as of December 2, 1999 (this "Amendment") to
the Second Amended and Restated Security Agreement, Intercreditor Agreement,
Waiver And Consent dated March 7, 1996, as amended and restated as of July 29,
1997 and on or about August 31, 1999 (the "Agreement"), among LOGIMETRICS, INC.,
a Delaware corporation ("LogiMetrics"), and mmTech, Inc., a New Jersey
corporation ("mmTech" and, together with LogiMetrics, the "Borrowers"), Cramer
Rosenthal McGlynn, LLC, as Agent (in such capacity, the "Agent") for itself and
the Holders listed on the signature pages hereto, and any other persons becoming
Holders from time to time. Capitalized terms used but not defined herein shall
have the meaning set forth in the Agreement.
WHEREAS the Borrowers are presently indebted to the various Holders in
respect of certain Notes, Class A Debentures, Class B Debentures and/or Class C
Debentures as defined in, subject to and secured by the Agreement (collectively,
the "Existing Indebtedness").
WHEREAS the certain Holders listed on Schedule A hereto (i) have made
additional loans to the Borrowers in the initial aggregate principal amount of
$175,000 (the "Initial New Loans"), each in the amount set forth opposite such
Holder's name on such revised Schedule A and (ii) wish to make from time to time
hereafter, at each such Holder's individual discretion, further loans in the
collective aggregate principal amount not to exceed $825,000 (together with the
Initial New Loans, the "New Loans"), with each New Loan evidenced or to be
evidenced by a Supplemental Negotiable Secured Senior Subordinated Promissory
Note substantially in the form attached hereto as Exhibit A (the "New Notes"),
and to be subject to and secured by the Agreement on terms senior to all of the
Existing Indebtedness and senior to the rights, preferences and priorities as
are accorded to any of the Existing Indebtedness under the Agreement, but,
subject to the prior rights, preferences and priorities accorded thereunder to
the Agent, solely in its capacity as Agent and not as a Holder;
WHEREAS the parties hereto wish to consent to the New Loans and the
New Notes, agree that the New Loans and the New Notes shall be subject to and
secured by the Agreement, senior to all of the Existing Indebtedness and senior
to the rights, preferences and priorities as are accorded to any of the Existing
Indebtedness under the Agreement, but, subject to the prior rights, preferences
and priorities accorded thereunder to the Agent, solely in its capacity as Agent
and not as a Holder ; and
WHEREAS the parties hereto wish to memorialize such consent and
agreement by this Amendment,
NOW, THEREFORE, in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto:
1. Give their consent to the New Loans to be evidenced by the New
Notes;
2. Agree that the New Loans and the New Notes shall hereafter be and
shall be deemed to be subject to and secured by the Agreement, ratably ranking
senior to all of the Existing Indebtedness and senior to the rights, preferences
and priorities as are accorded to any of the Existing Indebtedness under the
Agreement, but, subject to the prior rights, preferences and priorities accorded
thereunder to the Agent, solely in its capacity as Agent and not as a Holder;
3. Agree that the Agreement is hereby amended to reflect the consent
and agreements set forth herein above, and that any conflicting provisions of
the Agreement are hereby superceded, but, solely to the extent necessary to give
effect to this Amendment; and.
4. Further agree that, as amended hereby, the Agreement is reaffirmed
and ratified and shall remain in full force and effect and, without limiting the
generality of the foregoing, each of the Borrowers hereby ratifies, restates and
reaffirms, and hereby grants anew, the security interest set forth in the
Agreement to secure all of the Existing Indebtedness and the New Loans and New
Notes, in accordance with the terms of the Agreement as amended hereby.
This Amendment may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above.
LOGIMETRICS, INC.
By: /s/ Norman M. Phipps
________________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
MMTECH, INC.
By: /s/Charles S. Brand
________________________________
Name: Charles S. Brand
Title:President
CRAMER ROSENTHAL McGLYNN, LLC,
as Agent
By:/s/Sam Beritela
__________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
<PAGE>
CRAMER ROSENTHAL McGLYNN, INC.,
By: /s/Sam Beritela
________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/Arthur J. Pergament
________________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Gerald B. Cramer
___________________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Edward J. Rosenthal
___________________________________
Edward J. Rosenthal Profit Sharing
Plan and Trust
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM RETIREMENT PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM MADISON PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM U.S. VALUE FUND, LTD.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
EURYCLEIA PARTNERS, L.P.
By: Marchessini & Dernisch, L.L.C.,
Its General Partner
By: /s/Rona Trokie
________________________________
Name: Rona Trokie
Title: Vice President
745 Fifth Avenue, Suite 1400
New York, New York 10151
Tel: (212) 752-4300
Fax: (212) 752-4309
A.C. ISRAEL ENTERPRISES, INC.
By: /s/Jay Howard
_______________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
____________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
______________________________
Name:Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
______________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
_________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
_______________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
/s/Mark B. Fisher
____________________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
_______________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Fred M. Filoon
____________________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor, III
____________________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C.,
Its General Partner
By: /s/Stephen Feinberg
_______________________________
Name: Stephen Feinberg
Title: Managing Member
450 Park Avenue
28th Floor
New York, New York 10022
Telephone: (212) 891-2100
Facsimile: (212) 421-2947
<PAGE>
/s/Steven Dinetz
____________________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Charles S. Brand
____________________________________
Charles S. Brand
611 Industrial Way West
Eatontown, New Jersey 07724
Tel: (732) 935-0853
Fax:(732) 935-7151
<PAGE>
/s/Gregory Manocherian
____________________________________
Gregory Manocherian
135 Central Park West,
Tower Southeast
New York, New York 10023
Tel: (212) 799-3500
Fax: (212) 873-2877
<PAGE>
<TABLE>
<CAPTION>
Schedule A
- ---------------------------------------------- ------------------------------------ ------------------------------
<S> <C> <C> <C>
Note Holder New Initial Notes Additional New Notes*
- ---------------------------------------------- ------------------------------------ ------------------------------
Pamela Equities Corp. $ 26,250
- ---------------------------------------------- ------------------------------------ ------------------------------
A.C. Israel Enterprises, Inc. 18,600
- ---------------------------------------------- ------------------------------------ ------------------------------
Gerald B. Cramer 18,600
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM 1997 Enterprise Fund, LLC 17,100
- ---------------------------------------------- ------------------------------------ ------------------------------
Whitehall Properties, LLC 15,000
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Partners, L.P. 20,400
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Retirement Partners, L.P. 8,250
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Madison Partners, L.P. 8,250
- ---------------------------------------------- ------------------------------------ ------------------------------
L.A.D. Equity Partners, L.P. 0
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM-EFO Partners, L.P. 4,650
- ---------------------------------------------- ------------------------------------ ------------------------------
Gregory Manocherian 3,750
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM U.S. Value Fund, Ltd. 2,850
- ---------------------------------------------- ------------------------------------ ------------------------------
Edward J. Rosenthal, Keogh 1,800
- ---------------------------------------------- ------------------------------------ ------------------------------
Fred M. Filoon 1,800
- ---------------------------------------------- ------------------------------------ ------------------------------
McGlynn Family Partnership, L.P. 1,800
- ---------------------------------------------- ------------------------------------ ------------------------------
Eugene A. Trainor, III 900
- ---------------------------------------------- ------------------------------------ ------------------------------
Cereberus Partners, L.P. 25,000
- ---------------------------------------------- ------------------------------------ ------------------------------
TOTAL $175,000 $825,000
- ---------------------------------------------- ------------------------------------ ------------------------------
</TABLE>
- --------
* To be advanced from time to time at each Holder's discretion.
<PAGE>
EXHIBIT A
FORM OF
SUPPLEMENTAL NEGOTIABLE SECURED
SENIOR SUBORDINATED PROMISSORY NOTE
$_____________
Final Maturity Date:
March 7, 2000
FOR VALUE RECEIVED, LogiMetrics, Inc., a Delaware corporation, and mmTech, Inc.,
a New Jersey corporation (collectively, the "Makers"), hereby jointly and
severally promise to pay to the order of _____________, or its successors and
assigns (the "Holder"), at ______________ or at such other location as the
Holder may designate from time to time, the sum of ________________________
Dollars ($___________), or such lesser amount as may be advanced hereunder,
together with interest thereon at the rate of 13% per annum, in lawful money of
the United States of America on or before June 2, 2000, or on demand at any time
upon or during the continuance of an Event of Default as defined in the Security
Agreement (as defined below), with or without demand as provided in the Security
Agreement. The obligations of the Makers are joint and several and the Holder
may proceed to collect the full amount owed hereunder from either Maker whether
or not proceeding against the other.
If the Holder fails to pay any amount hereunder when due, interest
shall thereafter accrue on such overdue amount at the rate of 16% per annum
until paid in full. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
The Makers may prepay this Note at any time, in whole or in part,
without premium or penalty. The Makers shall prepay this Note in full within
five (5) Business Days after the consummation of (i) any public or private sale
by either Maker of its debt or equity securities or securities convertible into
or exchangeable for its debt or equity securities, (ii) any permanent loan or
other credit facility obtained by either Maker from a bank or other financial
institution, or (iii) any sale by either Maker of all or substantially all of
its assets to a third party which results, in each such case, in net proceeds to
the Makers (after all related fees and expenses) of at least Three Million
Dollars ($3,000,000). As used herein, "Business Day" means a day, other than a
Saturday or Sunday, on which commercial banks in New York City are open for the
general transaction of business.
The Makers shall pay to the Holder the reasonable attorneys' fees and
disbursements and all other out-of-pocket costs incurred by the Holder in order
to collect amounts due and owing under this Note. All payments received shall be
applied, first, to the costs of collection, second, to unpaid interest, and
third, to principal.
<PAGE>
No delay or failure on the part of the Holder in exercising any power,
right or remedy hereunder shall operate as a waiver of any such power, right or
remedy; nor shall any single or partial exercise of any power, right or remedy
preclude any other or further exercise of such power, right or remedy, or the
exercise of any other power, right or remedy, and no waiver whatsoever shall be
valid unless in writing, signed by the Holder, and then only to the extent
expressly set forth therein. No remedy is exclusive of any other remedy and all
remedies shall be cumulative to the maximum extent permitted by applicable law.
Each Maker hereby waives presentment, demand for payment, diligence, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
This Note is one of the new New Notes referred to in Amendment No. 1,
dated on or about the date hereof, to the Second Amended and Restated Security
Agreement, Intercreditor Agreement, Waiver and Consent, dated March 7, 1996, as
amended and restated as of July 29, 1997 and on or about August 31, 1999, among
the Makers, Cramer Rosenthal McGlynn, LLC, as Agent (the "Agent"), and the other
parties thereto, (as amended by such Amendment No. 1, the "Security Agreement")
and is secured by the Collateral (as defined in the Security Agreement). The
Security Agreement grants the Agent on behalf of the Holder and the other
parties thereto certain rights with respect to the Collateral upon certain
defaults specified therein and sets forth the related priorities of the Holder
and the other parties thereto with regard to such Collateral.
This Note shall be binding upon each Maker and its successors and
assigns. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York pursuant to Section 15-1402 of the
General Obligations Law of such state. Each Maker irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Note. Service of process in connection with any such suit, action or proceeding
may be served on the Makers anywhere in the world by any method authorized by
law. Each Maker irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such court.
Each Maker irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
No modification, alteration, waiver or change of any of the provisions
hereof shall be effective unless in writing and signed by each Maker and the
Holder and, then, only to the extent set forth in such writing.
[Remainder of page intentionally left blank]
<PAGE>
ATTEST: LOGIMETRICS, INC.
_____________________ ____________________________________
Name: By: Norman M. Phipps
Title: President
ATTEST: MMTECH, INC.
_____________________ ____________________________________
Name: By: Norman M. Phipps
Title: Assistant Secretary
Dated: December __, 1999
<PAGE>
AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED SECURITY AGREEMENT,
INTERCREDITOR AGREEMENT, WAIVER AND CONSENT
Amendment No. 2, dated as of February 17, 2000 (this "Amendment") to
the Second Amended and Restated Security Agreement, Intercreditor Agreement,
Waiver And Consent dated March 7, 1996, as previously amended and restated as of
July 29, 1997 and on or about August 31, 1999, and as further amended by
Amendment No. 1 thereto, dated as of December 2, 1999 (the "Agreement"), among
LOGIMETRICS, INC., a Delaware corporation ("LogiMetrics"), and mmTech, Inc., a
New Jersey corporation ("mmTech" and, together with LogiMetrics, the
"Borrowers"), Cramer Rosenthal McGlynn, LLC, as Agent (in such capacity, the
"Agent") for itself and the other Holders listed on the signature pages hereto,
and any other persons becoming Holders from time to time. Pursuant to this
Amendment, SIGNAL TECHNOLOGY CORPORATION, a Delaware corporation ("Signal"), is
hereby added as a Holder party hereto, as hereinafter set forth, effective as of
the Effective Date, as hereinafter defined). Capitalized terms used but not
defined herein shall have the meaning set forth in the Agreement.
WHEREAS the Borrowers are presently indebted to the various Holders in
respect of certain Notes, Class A Debentures, Class B Debentures and/or Class C
Debentures as defined in, subject to and secured by the Agreement (collectively,
the "Junior Indebtedness");
WHEREAS, in addition, the certain Holders listed on Schedule A hereto
have made and, subject to this Amendment and certain related undertakings by the
Borrowers and Signal, intend to make additional loans from to time in the
aggregate principal amount of $1,000,000 (the "Legacy Loans", which are the same
as the "New Loans" as defined in Amendment No. 1 to the Agreement), in the
principal amounts set forth opposite each Holders name on such Schedule A, each
Legacy Loan being or to be evidenced by a Supplemental Negotiable Secured Senior
Subordinated Promissory Note substantially in the form attached hereto as
Exhibit A (the "Legacy Notes", which are the same as the "New Notes" as defined
in Amendment No. 1 to the Agreement) and secured by and subject to the terms of
the Agreement;
WHEREAS, simultaneously herewith, the LogiMetrics and Signal are
entering into (i) a Letter of Intent (the "Signal Letter of Intent") pursuant to
which the parties intend to consummate a reverse merger of LogiMetrics into a
wholly-owned subsidiary of Signal, (ii) a Loan Agreement (the "Signal Loan
Agreement") pursuant to which Signal will make loans to LogiMetrics up to the
aggregate principal amount of $2,000,000 (the "Signal Loans"), $1,000,000 of
which is to be advanced on or about the date hereof and the remainder is to be
advanced from time to time thereafter, pursuant to and evidenced by a single
Negotiable Secured Senior Subordinated Promissory Note in the aggregate
principal amount of $2,000,000, substantially in the form attached hereto as
Exhibit B (the "Signal Note"), with such Signal Loans and Signal Note to be
secured by the Agreement (as hereby amended) on terms senior to the Junior
Indebtedness and to the rights, preferences and priorities as are accorded to
any of the Junior Indebtedness under the Agreement, pari passu and pro rata with
the Legacy Loans and to the rights, preferences and priorities as are accorded
to the Legacy Loans under the Agreement, and junior to any amounts now or
<PAGE>
hereafter owing to the Agent, solely in its capacity as Agent and not as a
Holder, and to the rights, preferences and priorities as are accorded to such
indebtedness under the Agreement, and (iii) a Management Agreement (the "Signal
Management Agreement") pursuant to which Signal will immediately assume
management of substantially all of the business assets of LogiMetrics located in
Bohemia, New York (as set forth in the Signal Management Agreement, the "New
York Business Assets") and will relocate the New York Business Assets to
Florida, and Signal shall have rights under the Signal Management Agreement and
the Signal Loan Agreement to acquire the New York Business Assets under certain
circumstances if the above-referenced reverse merger is not consummated;
WHEREAS, subject to the terms and conditions of this Amendment, the
parties hereto wish to (i) waive all existing Events of Default under the Junior
Indebtedness and the Legacy Loans, (ii) consent to the Signal Loans and the
Signal Note, and agree that the Signal Loans and the Signal Notes shall be
subject to and secured by the Agreement (as amended hereby) on terms senior to
the Junior Indebtedness and to the rights, preferences and priorities as are
accorded to any of the Junior Indebtedness under the Agreement, pari passu and
pro rata with the Legacy Loans and to the rights, preferences and priorities as
are accorded to the Legacy Loans under the Agreement, and junior to any amounts
now or hereafter owing to the Agent, solely in its capacity as Agent and not as
a Holder, and to the rights, preferences and priorities as are accorded to the
such indebtedness under the Agreement, (iii) consent to the Signal Management
Agreement, including, without limitation, the provisions therein (or in the
Signal Loan Agreement) for the management, relocation and acquisition by Signal
of the New York Business Assets and, in connection therewith, agree to release
the Agent's lien and security interest in the New York Business Asset in the
event that Signal acquires the same pursuant to such provisions; and
WHEREAS the parties hereto wish to memorialize such waivers, consents
and agreements by this Amendment,
NOW, THEREFORE, in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereof, each of the
parties hereto, effective as of the Effective Date (defined below), hereby:
1. Waives all existing Events of Default under the Junior Indebtedness
and the Legacy Loans, including any occasioned by the entry by LogiMetrics into
the Signal Letter of Intent, the Signal Loan Agreement, the Signal Note and the
Signal Management Agreement, and the other documents referred to therein to be
entered into simultaneously therewith (the "Signal Transaction Documents");
2. Gives its consent to the Signal Loans to be issued pursuant to the
Signal Loan Agreement and to be evidenced by the Signal Note, provided that
Signal does becomes, and by its signature below Signal hereby agrees to and does
become, a party to the Agreement as a Holder with respect to the Signal Loans
and accepts and agrees to be bound by all of the terms and conditions of the
Agreement (as amended hereby) and, without limiting the foregoing, hereby
unconditionally appoints the Agent as its agent under and pursuant to the terms
of the Agreement for all purposes of thereof;
<PAGE>
3. Agrees that the Signal Loans and the Signal Note shall hereafter be
and shall be deemed to be subject to and secured by the Agreement, and with
respect to the Collateral shall rank (a) senior to all of the Junior
Indebtedness and to the rights, preferences and priorities as are accorded to
any of the Junior Indebtedness under the Agreement, (b) pari passu and pro rata
with the Legacy Loans and to the rights, preferences and priorities as are
accorded to any of the Legacy Loans under the Agreement, and (c) junior and
subject to any amounts now or hereafter owing by the Borrowers or any of them to
the Agent under the Agreement, solely in its capacity as Agent under the
Agreement and not as a Holder, and to the rights, preferences and priorities as
are accorded to such indebtedness under the Agreement ;
4. Gives its consent to management by Signal of the New York Business
Assets, the relocation by Signal of the New York Business Assets to Florida, and
the acquisition by signal of the New York Business Assets, all pursuant to the
terms of the Signal Management Agreement and/or the Signal Loan Agreement, and
hereby further agrees that the lien and security interest in the New York
Business Assets arising under the Agreement shall be and be deemed released
without further action upon the acquisition by Signal of the New York Business
Assets in accordance with the terms of the Signal Management Agreement or the
Signal Loan Agreement, provided that, until such time as Signal actually
acquires title to the New York Business Assets pursuant to the terms of the
Signal Management Agreement or the Signal Loan Agreement, LogiMetrics and Signal
shall take all actions necessary or reasonably requested by the Agent to ensure
the continued perfection at all times of the lien and security interest of the
Agent in the New York Business Assets, including the execution and filing of
appropriate UCC financing statements in Florida and the separate identification
and non-commingling with Signal's own assets of the New York Business Assets,
and (subject to Signal's rights under the Signal Management Agreement and Signal
Loan Agreement) Signal hereby agrees to hold and manage the New York Business
Assets in trust for the Agent and the Holders, and
5. Agrees that the Agreement is hereby amended to reflect the waivers,
consents and agreements set forth herein above, and that any conflicting
provisions of the Agreement are hereby superseded, but, solely to the extent
necessary to give effect to this Amendment, and without limiting the generality
of this Section 3, the following provisions shall be amended as follows:
(a) All references in the Agreement to the term "Agreement" shall
mean the Agreement as amended and supplemented through the date hereof,
including as amended and supplemented hereby, as the same may hereafter be
further amended, supplemented or otherwise modified in accordance with its
terms;
(b) All references in the Agreement to the words "Loans" and
"Notes" shall mean, respectively, only the Loans and Notes other than the
Legacy Loans and Legacy Notes, and the all references in the Agreement (by
virtue of Amendment No. 1 thereto) to the words "New Loans" and "New Notes"
shall mean, respectively, only the Legacy Loans and Legacy Notes, and the
parties further agree that, notwithstanding the statement in any Legacy
Note to the effect that such note is a "Note" or "New Note" referenced in
the Agreement or any amendment thereto, such Legacy Note is and shall be
deemed a Legacy Note (and not a "Note") under and for all purposes of the
Agreement;
<PAGE>
(c) All references in the Agreement to the term "Holders" shall
include, in addition and not in limitation, Signal, the registered holders
from time to time of the Notes, and the registered holders from time to
time of the Legacy Notes;
(d) All references in the Agreement to the term "Loan Documents"
shall include, in addition and not in limitation, the Signal Loan
Agreement, the Signal Note, the Notes and the Legacy Notes;
(e) All references in the Agreement to the term "Special
Majority" shall include, in addition and not in limitation, Signal, the
Majority Note Holders and the Majority Legacy Note Holders;
(f) "Majority Note Holders" shall mean the registered holders of
at least a majority in aggregate principal amount of the Notes outstanding
at the time of determination;
(g) "Majority Legacy Note Holders" shall mean the registered
holders of at least a majority in aggregate principal amount of the Legacy
Notes outstanding at the time of determination;
(h) Schedule 3(b) is deleted and replaced with Schedule 3(b)
attached hereto;
(i) Signal and the Majority Legacy Note Holders shall be included
in Section 4 as additional parties that are permitted to give direction to
the Agent following the occurrence of an event of default;
(h) "Event of Default" shall mean any event of default referred
to in Paragraph 5 of the Agreement and, unless the context clearly
indicates otherwise, each use of the term "event of default" in the
Agreement (including this Amendment) shall mean (i) if referring to an
event of default under the Agreement, an Event of Default and, (ii) if
referring to an event of default under any other agreement or instrument,
an Event of Default, event of default or such other term of similar import
used in such agreement or instrument to denote an event giving rise to a
right to accelerate or foreclose with or without notice;
(i) Signal and the Majority Legacy Note Holders shall be included
in Section 6 as additional parties that are permitted to give direction to
the Agent upon the occurrence of any Event of Default other than an Event
of Default relating to the bankruptcy or insolvency of any Borrower, and as
additional parties that may direct the Agent to exercise the rights and
remedies granted under the Agreement;
(j) Signal and the Majority Legacy Holders shall be included in
Section 6(c) as additional parties that are permitted to set off and apply
for the payment of any or all of the Obligations for the ratable benefit of
the Holders;
(k) With respect to Section 8:
(i) New "second" and "third" clauses are hereby added, to
read as follows:
<PAGE>
"second, to the ratable payment of accrued but
unpaid interest (including post-petition interest) and
fees constituting Obligations pursuant to the Signal
Note and the Legacy Loans;
third, to the ratable payment of unpaid principal
of the Signal Note and the Legacy Loans";
(ii) clauses "second" through "tenth" are hereby renumbered
clause "fourth" through "twelfth", respectively; and
(iii) as so renumbered, new clauses "fourth" and "fifth"
shall refer solely to interest, fees and principal pursuant to the
Notes (and not pursuant to the Legacy Notes); and
(l) Signal and the Majority legacy Note Holders shall be included
in Section 9.1 as additional parties are permitted to instruct the Agent to
take any action to foreclose or otherwise realize on the Collateral; and
6. Agrees that, as amended hereby, the Agreement is hereby affirmed or
reaffirmed and ratified by all signatories hereto and shall remain in full force
and effect and, without limiting the generality of the foregoing, each of the
Borrowers hereby affirms or reaffirms, ratifies and hereby grants anew to the
Agent, for the ratable benefit of the Agent and the Holders, the security
interest set forth in the Agreement to secure all of the Junior Indebtedness,
the Legacy Loans, the Signal Loans and any amounts now or hereafter owing by the
Borrowers, or any of them, to the Agent in its capacity as Agent under the
Agreement, all in accordance with and subject to the terms of the Agreement as
amended hereby, and each of the signatories hereby affirms or reaffirms,
ratifies and hereby renews its agreement to be bound by all terms and conditions
of the Agreement (as amended hereby), including, without limitation, the
relative rights, preferences and priorities afforded by the Agreement to each of
them, and each of the Holders hereby affirms or reaffirms, ratifies and hereby
authorizes anew Cramer, Rosenthal, McGlynn, LLC as its Agent under the
Agreement, for all purposes thereof and entitled to all the rights and benefits
accorded to the Agent thereunder.
THE BORROWERS AND SIGNAL hereby further covenant and agree, until such
time as Signal may have exercised its right under the Signal Management
Agreement or the Signal Loan Agreement to acquire the New York Business Assets,
to take all necessary or prudent actions as the Agent may request to ensure the
continued perfection of the security interest granted under the Agreement in and
to all assets of either Borrower that may be relocated to Florida or elsewhere
pursuant to the Signal Transaction Documents, including the identification of
all locations where assets and/or books and records may be kept, the filing of
additional UCC financing statements and, to the extent practicable, separately
identifying and/or tracking the assets of the Borrowers from those of Signal,
and not commingling the same, and (subject to its rights under the Signal
Management Agreement and Signal Loan Agreement) Signal shall hold and manage the
same in trust for the Agent and the Holders.
THE BORROWERS AND THE AGENT hereby covenant and agree, upon the due
exercise of Signal's right under the Signal Management Agreement or the Signal
Loan Agreement to acquire the New York Business Assets, to take all necessary or
<PAGE>
prudent actions as Signal may request to release and record the release of the
security interest granted under the Agreement in and to the New York Business
Assets, including the delivery of executed UCC termination statements prepared
by Signal.
This Amendment shall become effective upon the date (the "Effective
Date") that each of the following conditions precedent shall be true:
(a) Agent shall have received a counterpart hereof duly executed
and delivered by each intended party hereto;
(b) Agent shall have received a copy of each of the Signal
Transaction Documents, each in form and substance satisfactory to the
Agent, as duly executed and delivered by each of the intended parties
thereto;
(c) Agent shall have received a copy of each of the Legacy Notes
to be outstanding after giving effect to the Legacy Loans to be outstanding
as of the Effective Date hereof, each as duly executed and delivered to the
Holders of the Legacy Notes, and
(d) Agent shall have received a copy of a consent, waiver and
extension, in form and substance satisfactory to the Agent, duly executed
and delivered by North Fork Bank, (i) consenting to the Signal Transaction
Documents and the transactions contemplated thereunder; (ii) waiving any
existing default or Event of Default, including any occasioned by the entry
into this Amendment or the Signal Documents and the consummation of the
transactions contemplated thereunder, and (iii) extending to not sooner
than June 30, 2000, the maturity date of, and the requirement of any
principal payment under, the North Fork Bank facility (together with
evidence satisfactory to the Agent that all conditions to the effectiveness
thereof shall have been satisfied; and
This Amendment may be executed in counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
_________________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
MMTECH, INC.
By: /s/Charles S. Brand
_________________________
Name: Charles S. Brand
Title: President
CRAMER ROSENTHAL McGLYNN, LLC,
as Agent
By:/s/Sam Beritela
___________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
<PAGE>
CRAMER ROSENTHAL McGLYNN, INC.,
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/Arthur J. Pergament
_________________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Gerald B. Cramer
______________________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Edward J. Rosenthal
___________________________________
Edward J. Rosenthal Profit Sharing
Plan and Trust
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM RETIREMENT PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM MADISON PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM U.S. VALUE FUND, LTD.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
EURYCLEIA PARTNERS, L.P.
By: Marchessini & Dernisch, L.L.C.,
Its General Partner
By: /s/Rona Trokie
_________________________________
Name: Rona Trokie
Title: Vice President
745 Fifth Avenue, Suite 1400
New York, New York 10151
Tel: (212) 752-4300
Fax: (212) 752-4309
A.C. ISRAEL ENTERPRISES, INC.
By: /s/Jay Howard
_________________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
______________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
_________________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
_________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
__________________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
/s/Mark B. Fisher
______________________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
_________________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Fred M. Filoon
______________________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor, III
______________________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C.,
Its General Partner
By: /s/Stephen Feinberg
_________________________________
Name: Stephen Feinberg
Title: Managing Member
450 Park Avenue
28th Floor
New York, New York 10022
Telephone: (212) 891-2100
Facsimile: (212) 421-2947
<PAGE>
/s/Steven Dinetz
______________________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_________________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
Charles S. Brand
______________________________________
Charles S. Brand
611 Industrial Way West
Eatontown, New Jersey 07724
Tel: (732) 935-0853
Fax:(732) 935-7151
<PAGE>
Gregory Manocherian
______________________________________
Gregory Manocherian
135 Central Park West, Tower Southeast
New York, New York 10023
Tel: (212) 799-3500
Fax: (212) 873-2877
SIGNAL TECHNOLOGY CORPORATION
By:/s/George Lombard
___________________________________
Name: George Lombard
Title:Chairman and Chief Executive
Officer
<PAGE>
<TABLE>
<CAPTION>
Schedule A
- ---------------------------------------------- ------------------------------------ ------------------------------
<S> <C> <C>
Legacy Note Holder Existing Legacy Notes New Legacy Notes
- ---------------------------------------------- ------------------------------------ ------------------------------
Pamela Equities Corp.
- ---------------------------------------------- ------------------------------------ ------------------------------
A.C. Israel Enterprises, Inc.
- ---------------------------------------------- ------------------------------------ ------------------------------
Gerald B. Cramer
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM 1997 Enterprise Fund, LLC
- ---------------------------------------------- ------------------------------------ ------------------------------
Whitehall Properties, LLC
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Retirement Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM Madison Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
L.A.D. Equity Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM-EFO Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
Gregory Manocherian
- ---------------------------------------------- ------------------------------------ ------------------------------
CRM U.S. Value Fund, Ltd.
- ---------------------------------------------- ------------------------------------ ------------------------------
Edward J. Rosenthal, Keogh
- ---------------------------------------------- ------------------------------------ ------------------------------
Fred M. Filoon
- ---------------------------------------------- ------------------------------------ ------------------------------
McGlynn Family Partnership, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
Eugene A. Trainor, III
- ---------------------------------------------- ------------------------------------ ------------------------------
Cereberus Partners, L.P.
- ---------------------------------------------- ------------------------------------ ------------------------------
TOTAL $320,000 $680,000
- ---------------------------------------------- ------------------------------------ ------------------------------
</TABLE>
<PAGE>
EXHIBIT A
FORM OF
SUPPLEMENTAL NEGOTIABLE SECURED
SENIOR SUBORDINATED PROMISSORY NOTE
$_____________
Final Maturity Date:
________, 2000
FOR VALUE RECEIVED, LogiMetrics, Inc., a Delaware corporation, and mmTech, Inc.,
a New Jersey corporation (collectively, the "Makers"), hereby jointly and
severally promise to pay to the order of _____________, or its successors and
assigns (the "Holder"), at ______________ or at such other location as the
Holder may designate from time to time, the sum of ________________________
Dollars ($___________), or such lesser amount as may be advanced hereunder,
together with interest thereon at the rate of 13% per annum, in lawful money of
the United States of America on or before June 2, 2000, or on demand at any time
upon or during the continuance of an Event of Default as defined in the Security
Agreement (as defined below), with or without demand as provided in the Security
Agreement. The obligations of the Makers are joint and several and the Holder
may proceed to collect the full amount owed hereunder from either Maker whether
or not proceeding against the other.
If the Holder fails to pay any amount hereunder when due, interest
shall thereafter accrue on such overdue amount at the rate of 16% per annum
until paid in full. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
The Makers may prepay this Note at any time, in whole or in part,
without premium or penalty. The Makers shall prepay this Note in full within
five (5) Business Days after the consummation of (i) any public or private sale
by either Maker of its debt or equity securities or securities convertible into
or exchangeable for its debt or equity securities, (ii) any permanent loan or
other credit facility obtained by either Maker from a bank or other financial
institution, or (iii) any sale by either Maker of all or substantially all of
its assets to a third party which results, in each such case, in net proceeds to
the Makers (after all related fees and expenses) of at least Three Million
Dollars ($3,000,000). As used herein, "Business Day" means a day, other than a
Saturday or Sunday, on which commercial banks in New York City are open for the
general transaction of business.
The Makers shall pay to the Holder the reasonable attorneys' fees and
disbursements and all other out-of-pocket costs incurred by the Holder in order
to collect amounts due and owing under this Note. All payments received shall be
applied, first, to the costs of collection, second, to unpaid interest, and
third, to principal.
<PAGE>
No delay or failure on the part of the Holder in exercising any power,
right or remedy hereunder shall operate as a waiver of any such power, right or
remedy; nor shall any single or partial exercise of any power, right or remedy
preclude any other or further exercise of such power, right or remedy, or the
exercise of any other power, right or remedy, and no waiver whatsoever shall be
valid unless in writing, signed by the Holder, and then only to the extent
expressly set forth therein. No remedy is exclusive of any other remedy and all
remedies shall be cumulative to the maximum extent permitted by applicable law.
Each Maker hereby waives presentment, demand for payment, diligence, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
This Note is one of the Legacy Notes referred to in Amendment No. 2,
dated on or about the date hereof, to the Second Amended and Restated Security
Agreement, Intercreditor Agreement, Waiver and Consent, dated on or about August
31, 1999 and as further amended by Amendment No. 1 thereto, dated as of December
2, 1999, among the Makers, Cramer Rosenthal McGlynn, LLC, as Agent (the
"Agent"), and the other parties thereto, (as amended by such Amendment No. 2,
the "Security Agreement") and is secured by the Collateral (as defined in the
Security Agreement). The Security Agreement grants the Agent on behalf of the
Holder and the other parties thereto certain rights with respect to the
Collateral upon certain defaults specified therein and sets forth the related
priorities of the Holder and the other parties thereto with regard to such
Collateral.
This Note shall be binding upon each Maker and its successors and
assigns. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York pursuant to Section 15-1402 of the
General Obligations Law of such state. Each Maker irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Note. Service of process in connection with any such suit, action or proceeding
may be served on the Makers anywhere in the world by any method authorized by
law. Each Maker irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such court.
Each Maker irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
No modification, alteration, waiver or change of any of the provisions
hereof shall be effective unless in writing and signed by each Maker and the
Holder and, then, only to the extent set forth in such writing.
[Remainder of page intentionally left blank]
<PAGE>
ATTEST: LOGIMETRICS, INC.
_____________________ ____________________________________
Name: By: Norman M. Phipps
Title: President
ATTEST: MMTECH, INC.
_____________________ _____________________________
Name: By: Norman M. Phipps
Title: Assistant Secretary
Dated: _____, 2000
EXHIBIT 10.8
NORTH FORK BANK
MODIFIED
REVOLVING CREDIT NOTE
BORROWER: LOGIMETRICS, INC. and mmTech, Inc.
PRINCIPAL: $2,200,000 Date: As of April 30,1998
PROMISE TO PAY: The undersigned (the "Borrower"), for value received, does
hereby promise to pay to the order of NORTH FORK BANK (the "Bank") at its
offices at 245 Love Lane, Mattituck, New York 11952, or at any of its branches,
the sum of TWO MILLION TWO HUNDRED THOUSAND ($2,200,000) DOLLARS plus interest
thereon from the date hereof as set forth herein.
RATE AND PAYMENT: The Borrower shall pay said sum, or such lesser amount as may
then be the aggregate unpaid principal balance of all loans made by the Bank to
the Borrower hereunder, (each a "Loan" and collectively the "Loans") on or
before January 2, 1999 (the "Maturity Date").
Notwithstanding the foregoing, the Borrower may, at its option, extend the
Maturity Date to July 1, 1999, provided that (a) the Borrower shall provide the
Bank with written notice of said election no later than ten (10) days prior to
January 2, 1999, (b) no event of default shall have occurred hereunder and (c)
the Borrower shall have received net cash proceeds of not less than Ten Million
($10,000,000) Dollars from the private or public sale of securities prior to
January 2,1999.
The Borrower also promises to pay interest (computed on the basis of a 360 day
year for actual days elapsed) at said office on the unpaid principal amount
hereof from time to time outstanding at the rate of two (2%) percent per annum
in excess of that rate stated by the Bank to be its Prime Rate from time to time
in effect, payable monthly in arrears on the first day of each month. Prime Rate
as referred to herein shall refer to the rate of interest determined or
announced by the Bank from time to time as its Prime Rate and the Prime Rate is
not necessarily the lowest rate of interest charged by the Bank on loans and
other credit relationships. Each change in the Prime Rate shall effect a
simultaneous and corresponding change in the interest rate hereunder without
notice to the Borrower. Interest shall be payable monthly on the first day of
each month commencing on the first such day to occur after the date hereof and
upon payment in full of the unpaid principal amount hereof.
In addition to the foregoing, there shall be due and payable from the Borrower
to the Bank a quarterly fee equal to one-fourth of one (1/4%) percent of the
average unused amount of the Commitment during each such quarter, said fee to be
paid to the Bank not later than ten (10) days after the end of each fiscal
quarter.
<PAGE>
Wherever any payment to be made under this Note is required to be paid on a date
that is a Saturday, Sunday or public holiday, or the equivalent for banks under
the laws of the State of New York, such payment may be made on the next
succeeding business day, and such extension of time shall in such case be
included in the computation of interest due.
All payments due under the Note shall be made by automatic debit from an account
maintained by the Borrower for such purpose at the Bank in which the Borrower
shall maintain balances sufficient to pay each monthly payment due to the Bank
under the Loan. In the event that the money maintained in such account is
insufficient for any payment due under this Note, the Bank may charge any
account of the Borrower for any payment due to the Bank under this Note.
The Bank may charge any account of the Borrower for any payment due to the Bank
hereunder.
DEFAULT INTEREST RATE: The unpaid principal sum due under this Note shall bear
interest at a rate equal to five (5%) percent above the Rate set forth above on
and after the occurrence of any event of default and until the entire principal
sum hereof has been fully paid, both before and after the entry of any judgment
with respect to such event, but in no event shall the rate either before or
after the occurrence of any event of default exceed the highest rate of
interest, if any, permitted under applicable New York or Federal Law. Such rate
of interest shall continue until such time as any event of default that may be
cured by the Borrower is cured to the satisfaction of the Bank, at which time
the previously stated interest rate shall re-commence. In no event shall the
rate either before or after the occurrence of any such default exceed the
highest rate of interest, if any, permitted under applicable New York or Federal
law.
RIGHT OF OFFSET: If any payment is not made on time, or if the entire balance
becomes due and payable and is not paid, all or part of the amount due may be
offset out of any account or other property which the Borrower has at the Bank
or any affiliate of the Bank without prior notice or demand.
LATE CHARGES: The Borrower will pay a charge of five (5%) percent of the amount
of any payment which is not made within ten (10) days of its respective due
date, or, if applicable, which cannot be debited from its account due to
insufficient balance on the debit date.
SECURITY: This Note is secured by:
(1) a security interest in and assignment and pledge of all monies,
deposits, or other sums now or hereafter held by the Bank on deposit, in
safekeeping, transit or otherwise, at any time credited by or due from Bank to
the Borrower, or in which the Borrower shall have an interest; and
(2) a continuing first lien against all assets of the Borrower as set
forth, in part, in that certain Restated and Amended General Security Agreement
dated of even date herewith.
In consideration of the granting of the Loans evidenced by this Note, the
Borrower hereby agrees as follows:
<PAGE>
REVOLVING CREDIT COMMITMENT:
(a) The Loans evidenced by this Note are available in one or more
advances during the period which commences on the date hereof and ends on the
Maturity Date (the "Credit Period") in an aggregate principal amount up to, but
not exceeding at any time the outstanding principal sum of Two Million Two
Hundred Thousand ($2,200,000) Dollars (the "Commitment"). During the Credit
Period, the Borrower may use the Commitment by borrowing, prepaying in whole or
in part and reborrowing, on a revolving basis, all in accordance with the terms
and conditions hereof; provided, however, that each Loan or prepayment be in a
minimum amount of $10,000;
(b) Notwithstanding anything to the contrary set forth herein, the
outstanding principal balance of the Loans shall at no time exceed the lesser of
the Commitment or the aggregate amount available to the Borrower under the
following Borrowing Base (as such amount shall fluctuate from time to time):
(i) an amount equal to eighty (80%) percent of the
Borrower's "Eligible Accounts Receivable", which shall be defined as
all accounts receivable due to the Borrower from persons or entities
less (A) uncollectible accounts and/or accounts remaining unpaid after
a date which is ninety (90) days after the invoice date of said
account receivable and (B) accounts receivable due from any account
debtor who has had one-half (1/2) or more of their accounts receivable
outstanding for more than ninety (90) days (C) amounts due from the
Borrower to any account receivable debtor; plus
(ii) an amount equal to fifty (50%) percent of the
Borrower's "Eligible Inventory" on hand. Eligible Inventory shall (A)
include only raw materials, unfinished inventory, components and
finished goods (B) exclude work-in-process on existing "systems". The
outstanding principal balance of the Loans attributable to fifty (50%)
percent of the Borrower's Eligible Inventory as descried herein shall
not exceed sixty (60%) percent of the total outstanding principal
balance of the Loans thereafter.
(c) The Borrower shall submit to the Bank at the time of each request
for a Loan, but not less than one time per month, a Borrowing Base Certificate
confirming the calculation of the Borrower's Eligible Accounts Receivable and
Eligible Inventory and calculating the amount available to the Borrower
hereunder. Said Borrowing Base Certificate shall be signed by an authorized
representative of the Borrower;
(d) The date and amount of each Loan and of each payment of principal
shall be maintained by the Bank in its books and records at the time of each
Loan or payment. Absent manifest error on the part of the Bank, all such
<PAGE>
notations shall be presumed to be correct and the aggregate net unpaid amount of
Loans set forth therein shall be presumed to be the principal balance hereof;
(e) Each request for a Loan shall be subject to the satisfaction of
the following conditions precedent:
(i) The Borrower shall have given the Bank notice of such
request, setting forth the amount of the Loan requested and the date
thereof. In addition to the aforementioned, the Borrower shall submit
to the Bank at the time of each request, but in any event not less
than one time per month, a completed Borrowing Base Certificate in the
form annexed hereto as Exhibit "A" satisfactory in form and substance
to the Bank. Such notice may be written or oral and shall be
sufficient if received by 1 p.m. of the date the Loan is requested. If
the request is oral, it shall be thereafter confirmed in writing
delivered by the Borrower to the Bank;
(ii) No Event of Default, or event which would be an Event
of Default but for the giving of notice or the passage of time or
both, has occurred and is continuing; and all of the representations
and warranties made by the Borrower herein shall be true and correct
in all material respects on and as of the date of such request as if
made on and as of such date;
(f) The outstanding principal balance of the Loans shall at no time
exceed the amount of the Commitment;
(g) The Borrower acknowledges and represents that the principal amount
of $1,872,383.85 together with interest thereon is outstanding under the terms
hereof as of April 30, 1998 without offset' defense or counterclaim.
CONDITIONS PRECEDENT:
The Borrower shall satisfy the following conditions precedent
including delivery to the Bank of the following:
(a) An executed copy of this Note;
(b) The Bank shall continue to maintain its first perfected security
interest in certain assets of the Borrower (the "Collateral") pursuant to the
general security agreement (the "Security Agreement") as reaffirmed of even date
herewith;
<PAGE>
(c) A copy of the resolutions passed by the Borrower's Board of
Directors certified by its Secretary or Assistant Secretary as being in full
force and effect on the date of this Agreement, authorizing the loan herein
provided for, the execution, delivery and performance of this Note and any other
instrument or agreement required hereunder and containing a certificate of
incumbency as to the person or persons authorized to execute and deliver the
same; and
(d) All other documents reasonably required by the Bank and/or its
counsel in order to evidence and/or secure the Bank's position as set forth
herein.
REPRESENTATIONS AND WARRANTIES: The Borrower hereby represents and warrants to
the Bank that:
(a) The Borrower is duly organized, validly existing and in good
standing under the laws of the State of its formation and is qualified to do
business and in good standing under the laws of each state where its failure to
so qualify would have a material adverse effect on its business, operations or
properties;
(b) This Note, the Security Agreement and all other documents executed
and delivered herewith have been duly authorized, executed and delivered and
constitute the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terms, including the granting to
the Bank of a first perfected security interest in the Collateral;
(c) The execution and delivery of this Note, the Security Agreement
and all other documents executed and delivered herewith and performance
hereunder and thereunder, will not violate any provision of law;
(d) Except as set forth in the annexed Disclosure Schedule, there are
no actions or proceedings pending before any court or governmental authority,
bureau or agency, with respect to or threatened against or affecting the
Borrower, or any Subsidiary, which if determined adversely would have a material
adverse effect on the business, the assets or the financial condition of the
Borrower or any Subsidiary. As used herein, the term "Subsidiary" or
"Subsidiaries" means any corporation or corporations of which the Borrower
alone, or the Borrower and/or one or more of its Subsidiaries, owns, directly or
indirectly, at least a majority of the securities having ordinary voting power
for the election of directors;
(e) Except as set forth in the annexed Disclosure Schedule, the
Borrower is not in default under, or in violation of, any term of any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to which
it is a party or by which it is bound, or by which any of the properties or
assets owned by or used in the conduct of its business is affected, which
default or violation may have a material adverse effect on its business, assets
or financial condition. The operations of the Borrower comply in all material
respects with all laws, ordinances and regulations applicable to it;
(f) The Borrower is not a party to or bound by, nor are any of the
properties or assets owned by it or used in the conduct of its business affected
<PAGE>
by any agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment, or subject to any charter or other corporate restriction, which
materially and adversely affects its business, assets or financial condition;
(g) All balance sheets, profit and loss statements and other financial
information heretofore furnished to the Bank are complete and present fairly the
financial condition of the Borrower and its Subsidiaries as at the dates thereof
and for the periods covered thereby, including contingent liabilities of every
kind, which financial conditions have not materially adversely changed since the
date of the most recently dated balance sheet of the Borrower heretofore
furnished to the Bank;
(h) No part of the proceeds of the loan which is evidenced by this
Note will be used directly or indirectly for the purpose of purchasing or
carrying, or for payment in full or in part of indebtedness which was incurred
for the purpose of purchasing or carrying, any margin stock as such term is
defined in Sec. 221.3 of Regulation U of the Board of Governors of the Federal
Reserve System;
(i) The Borrower and its Subsidiaries are in compliance in all
material respects with the Employees Retirement Income Security Act of 1974
("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any
of its Subsidiaries has any unfunded vested liability under any type of plan
described in Section 4021(a) of ERISA ("Pension Plan") and no reportable event,
as set forth in Section 4043(b) of ERISA, has occurred or is continuing with
respect to any Plan.
FINANCIAL STATEMENTS: The Borrower shall deliver to the Bank:
(a) Annually, as soon as available, but in any event within one
hundred twenty (120) days after the last day of each fiscal year, audited
financial statements, including balance sheets as of the last day of the fiscal
year and statements of income and retained earnings and changes in financial
condition for such fiscal year each prepared in accordance with generally
accepted accounting principles, consistently applied ("GAAP") for the period and
prior periods by Deloitte and Touche, LLP, or other independent Certified Public
Accountants satisfactory to the Bank and a complete signed copy of the
Borrower's Federal Tax Return (and all schedules annexed thereto);
(b) As soon as available, but in any event within twenty (20) days
after the end of each month (but forty-five (45) days after the end of each
fiscal quarter), internally prepared financial statements of the Borrower each
prepared in accordance with GAAP and jobs-in-progress reports for said period
and prior periods;
(c) 10K and 10Q reports and documentation within the prescribed
reporting period;
(d) Within a reasonable time after a written request therefor, such
other financial data or information as the Bank may reasonably request from time
to time;
<PAGE>
(e) At the same time as it delivers the financial statements required
under the provisions of subsections (a) and (b) hereof, a certificate signed by
the President or the chief financial, or accounting, officer of the Borrower, to
the effect that no Event of Default hereunder or material default under any
other agreement to which the Borrower or any Subsidiary is a party or by which
it is bound, or by which any of its properties or assets may be affected, and no
event which, with the giving of notice or the lapse of time, or both, would
constitute such an Event of Default, has occurred, except as set forth in the
annexed Disclosure Schedule;
(f) On a monthly basis, no later than the twentieth (20th) day after
each such month, the Borrowing Base Certificate referenced herein and backlog
reports and accounts receivable agings of the Borrower;
(g) Annual budget at closing and semi-annual budget thereafter on each
January 20 and July 20.
AFFIRMATIVE COVENANTS: The Borrower will, and with respect to the agreements
set forth in subsections (a) through (f) hereof, will cause each Subsidiary to:
(a) With respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies similarly
situated and operating like properties, assets or businesses with responsible
insurance companies satisfactory to the Bank, said insurance to indicate the
Bank as an additional insured and loss payee;
(b) Duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such items
are being in good faith appropriately contested;
(c) Maintain, preserve and keep its properties in good repair, working
order and condition, and make all reasonable repairs, replacements, additions,
betterments and improvements thereto;
(d) Conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and conducted;
(e) Comply with all statutes, rules and regulations and maintain its
corporate existence;
(f) Permit the Bank to make or cause to be made, inspections and
audits of any books, records and papers of the Borrower and of any Subsidiary
and each endorser hereof and to make extracts therefrom at all such reasonable
times and as often as the Bank may reasonably require;
<PAGE>
(g) Immediately give notice to the Bank that an Event of Default has
occurred or that an event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and specifying the
action which the Borrower has taken and proposes to take with respect thereto;
(h) In addition to the aforementioned, the Borrower agrees that the
following financial covenants are covenants upon which the Bank relies in the
extension of the obligation evidenced hereby and that any violation or default
under same shall constitute an Event of Default under the terms hereof:
(1) at the end of each fiscal quarter during the term
hereof, the Borrower shall maintain a Tangible New Worth of $846,471
or greater (as calculated in accordance with GAAP). For purposes
hereof "Tangible Net Worth" shall mean, at any date, (i) the net book
value of assets (other than patents, patent rights, trademarks, trade
names, franchises, copyrights, licenses, permits, goodwill and other
intangible assets classified as such in accordance with GAAP) after
all appropriate adjustments in accordance with GAAP (including,
without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization) plus (ii) subordinated indebtedness, in
each case computed in accordance with GAAP;
(2) at the end of each fiscal quarter during the term
hereof, the Borrower shall report a net income (gross income less
taxes an extraordinary items) of not less than $1.00.
COMPENSATING BALANCE AND DEFICIENCY FEE AGREEMENT: If at any time during the
term hereof, the aggregate average monthly ledger balance maintained in the
non-interest deposit accounts of the Borrower at the Bank are less than
$220,000, the Borrower shall pay to the Bank an additional fee equal to (a) the
difference between $220,00 and the aggregate average monthly ledger balance
maintained in the non-interest bearing deposit accounts of the Borrower at the
Bank, multiplied by (b) a fixed rate (the "Deficiency Rate") equal to four (4%)
percent in excess of the Bank's Prime Rate, based on a 360 day year and actual
number of days elapsed. The $220,000 Compensating Balance requirement set forth
herein is intended as an aggregate requirement for all obligations of the
Borrower to the Bank. The Deficiency Rate shall be established on the first day
of each January and July and shall be applicable for the immediately ensuing six
(6) moth period.
The fee defined herein shall be due and payable within fifteen (15) days
following the end of each calendar quarter and shall be debited by the Bank from
any account maintained by the Borrower at the Bank. The Borrower shall maintain
sufficient funds in said accounts to permit such debit.
<PAGE>
Nothing contained herein shall be deemed to require the undersigned to maintain
Demand Deposit Balances at the Bank. The aforementioned is intended as a fee
only and is neither intended, nor to be construed as, an imposition of interest
or other charge.
NEGATIVE COVENANTS:The Borrower will not, and will not permit any Subsidiary to:
(a) Create, incur, assume or suffer to exist any liability for
borrowed money, except (i) amounts outstanding under the Borrower's twelve (12%)
percent Convertible Senior Subordinated Debentures, (ii) amounts outstanding
under the Borrower's Amended and Restated twelve (12%) percent Convertible
Subordinated Debentures the aforementioned are collectively referred to herein
as the "Debentures") (iii) indebtedness to the Bank; (iv) existing debt as
reflected on the most recent balance sheet provided to the Bank and further
incurred through the date of this Agreement, which further incurred debt has
been acknowledged by the Borrower to the Bank in writing prior to the execution
hereof; and (v) other indebtedness for borrowed money (whether or not
constituting a refinancing of existing indebtedness) so long as such
indebtedness is not secured by collateral securing repayment of this Loan and
the incurrence of which will not cause a default hereunder. The Borrower agrees
to provide the Bank an opportunity to finance any additional borrowing needs in
excess of $100,000 during the term of this Note;
(b) enter into any merger or consolidation (where the Borrower is not
the surviving entity) or liquidate, wind-up or dissolve itself or sell, transfer
or lease or otherwise dispose of all or any substantial part of its assets;
(c) lend or advance money, credit or property to or invest in (by
capital contribution, loan, purchase or otherwise) any firm, corporation, or
other person where any event of default has occurred and is continuing or where
such transaction would cause an event of default hereunder;
(d) create, assume or permit to exist, any mortgage, pledge, lien or
encumbrance of or upon or security interest in, any of its property or assets
now owned or hereafter acquired except (i) mortgages, liens, pledges and
security interests in favor of the Bank; (ii) subordinate liens incidental to
the Debentures or to be granted to MBF Capital Corp. as set forth in subsection
(a) hereof; (iii) other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property and assets which were
not incurred in connection with the borrowing of money or the obtaining of
advances or credit and which do not materially impair the use thereof in the
operation of its business; (iv) liens for taxes or other governmental charges
which are not delinquent or which are being contested in good faith and for
which a reserve shall have been established in accordance with generally
accepted accounting principles; (v) liens granted to secure purchase money
financing of equipment, provided such liens are limited to the equipment
financed; and (vi) liens granted to refinance unencumbered equipment provided
such liens are limited to the equipment refinanced and the incurrence of which
will not cause a default hereunder or in any other loan agreements or notes with
the Bank;
<PAGE>
(e) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(f) declare or pay any preferred dividends where any Event of Default
has occurred and is continuing;
(g) (i) terminate any Pension Plan so as to result in any material
liability to The Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (the "PBCG"), (ii) engage in or permit any
person to engage in any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended)
involving any Pension Plan which would subject the Borrower to any material tax,
penalty or other liability, (iii) incur or suffer to exist any material
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, involving any Pension Plan, or (iv) allow or suffer to exist any
event or condition, which presents a material risk of incurring a material
liability to the PBCG by reason of termination of any Pension Plan.
COLLATERAL SECURITY:
(a) As collateral security for the payment of any and all sums owing
under this Note and all other obligations, direct or contingent, joint, several
or independent, of the Borrower and of any Subsidiary and each endorser hereof
now or hereafter existing, due or to become due to, or held, or to be held by,
the Bank, whether created directly or acquired by assignment or otherwise (all
of such obligations, including this Note, are hereinafter called the
"Obligations"), the Borrower hereby grants to the Bank a lien on and security
interest in any and all deposits or other sums at any time credited by or due
from the Bank to the Borrower, whether in regular or special depository accounts
or otherwise, and any and all monies, securities and other property of the
Borrower, and the proceeds thereof, now or hereafter held or received by or in
transit to the Bank from or for the Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and any such deposits, sums,
monies, securities and other property, may at any time after the occurrence of
any Event of Default be set-off, appropriated and applied by the Bank against
any of the Obligations whether or not such Obligations are then due or are
secured by any collateral, or, if they are so secured, whether or not such
collateral held by the Bank is considered to be adequate and with respect to all
collateral security the Bank shall have all the rights and remedies available to
it under the Uniform Commercial Code of New York and other applicable law;
(b) This Note is also secured by the Collateral.
EVENTS OF DEFAULT: If any one or more of the following events ("Events of
Default") shall occur the Borrower shall be in default hereunder and, at the
option of the Bank, the entire unpaid balance of the principal of and interest
on the Obligations shall immediately become due and payable:
<PAGE>
(a) Failure to pay any amount required by this Note within ten (10)
days of its respective due date, or any other obligation owed to the Bank by
Borrower, or, if applicable, failure to have sufficient funds in its account for
loan payments to be debited on the due date;
(b) Failure to perform or keep or abide by any negative or financial
covenant set forth herein contained in this Note, or any other document or
instrument given to the Bank in connection with this loan;
(c) Failure to perform or keep or abide by any other term, covenant,
or condition contained in this Note, or any other document or instrument given
to the Bank in connection with this Loan, said failure continuing for a period
of thirty (30) days after written notice thereof;
(d) Payment Default by the Borrower or any declared default pursuant
to the Debentures;
(e) The Borrower makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become due;
or an order, judgment or decree is entered adjudicating the Borrower as bankrupt
or insolvent; or any order for relief with respect to the Borrower is entered
under the United States Bankruptcy Code; or the Borrower petitions or applies to
any tribunal for the appointment of a custodian, trustee, receiver or liquidator
of the Borrower or of any substantial part of the assets of the Borrower, or
commences any proceeding relating to the Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced, against the Borrower and either (i)
the Borrower by any act indicates its approval thereof, consents thereto, or
acquiesces therein or (ii) such petition, application or proceeding is not
dismissed within sixty (60) days;
(f) The happening of any event which, in the reasonable judgment of
the Bank, adversely affects the Borrower's ability to repay or the value of any
collateral;
(g) If any material written representation or material statement made
to the Bank by the Borrower is untrue when made;
(h) The occurrence of a default under any other document or instrument
given to the Bank in connection with this loan;
(i) Failure to provide any financial information on request or permit
an examination of books and records;
(j) In the event that any person or "group" (as defined in Rule 13d-S
promulgated under the Exchange Act), acquires or otherwise obtains the right
(whether by contract, through the ownership of securities or pursuant to any
proxy or consent arrangement, voting trust or otherwise) to appoint, elect or
cause the election of a majority of the Board of Directors of the Company;
<PAGE>
(k) if any order is entered by any court or tribunal, at law or in
equity, by or against any of the Obligors for the appointment of any receiver or
any trustee for any of the Obligors and said Order is not discharged within
sixty (60) days from the entry thereof.
ATTORNEYS FEES: In the event the Bank retains counsel with respect to
enforcement of this Note or any other document or instrument given to the Bank,
the Borrower agrees to pay the Bank's reasonable attorneys fees (whether or not
an action is commenced and whether or not in the court of original jurisdiction,
appellate court, bankruptcy court, or otherwise).
SUBSEQUENT AGREEMENTS: The Borrower shall be bound by any agreement extending
the time or modifying the above terms of payment made by the Bank without notice
to the Borrower, and the Borrower shall continue to be liable to pay all amounts
due hereunder, but at an interest rate not exceeding the rate set forth herein,
according to the terms of any such agreement of extension or modification.
MISCELLANEOUS:
(a) Only those agreements, representations and warranties made
expressly herein shall survive the delivery of this Note. The Borrower waives
trial by jury, set-off and counterclaim of any nature or description in any
litigation in any court with respect to, in connection with, or arising out of,
this Note or any instrument or document delivered pursuant hereto or the
validity, protection, interpretation, collection or enforcement hereof;
(b) No modification or waiver of or with respect to any provision of
this Note, or consent to any departure by the Borrower from any of the terms or
conditions hereof, shall in any event be effective unless it shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or
demand on the Borrower in any case shall, of itself, entitle it to any other or
further notice or demand in similar or other circumstances;
(c) Each and every right granted to the Bank hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Bank or the holder of this Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right;
(d) In the event that this Note is placed in the hands of an attorney
for collection by reason of any default hereunder, the Borrower agrees to pay
reasonable attorney's fees so incurred. The Borrower promises to pay all
reasonable out-of-pocket expenses of any nature as soon as incurred whether in
or out of court and whether incurred before or after this Note shall become due
at its maturity date or otherwise and Costs which the Bank may deem necessary or
proper in connection with the satisfaction of the indebtedness or the
<PAGE>
administration, supervision, preservation, protection (including but not limited
to maintenance of adequate insurance) of or the realization upon the collateral;
(e) The Borrower hereby waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, and any or all other notices or
demands except as otherwise expressly provided for herein;
(f) All accounting terms not otherwise defined in this Note shall have
the meanings ascribed thereto under generally accepted accounting principles;
(g) Delay or failure of the Bank to exercise any of its rights under
this Note shall not be deemed a waiver thereof. No waiver of any condition or
requirement shall operate as a waiver of any other or subsequent condition or
requirement. The Bank or any other holder of this Note need not present it
before requiring payment. The Borrower waives trial by jury, offset, and
counterclaim with respect to any action arising out of or relating to this Note.
This Note may not be modified or terminated orally. This Note shall be governed
by the laws of the State of New York without regard to its conflicts of laws
rules. The Borrower irrevocably consents to the jurisdiction and venue of the
New York State Supreme Court, Suffolk County in any action concerning this Note.
This Note is binding upon the Borrower, its heirs, successors and assigns;
(h) The Borrower expressly warrants and represents that no statements,
agreements or representations, whether oral or written, have been made by the
Bank, or by any employee, agent or broker of the Bank with respect to the
obligation or debt evidenced by this Note. The Borrower further expressly
warrants and represents that (i) no oral commitment has been made by the Bank to
extend or continue any credit to the Borrower or any party other than as
expressly stated herein or in those certain documents executed in connection
herewith, (ii) no representation or agreement has been made by or with the Bank,
or any employee, agent or broker of the Bank, to forebear or refrain in any way
from exercising any right or remedy in its favor hereunder or otherwise unless
expressly set forth herein, and (iii) the Borrower has not and will not rely on
any commitment to extend or continue any credit, nor on any agreement to
forebear or refrain from exercising rights or remedies unless such commitment or
agreement shall be in writing and duly executed by an authorized officer of the
Bank.
NOTICES: All notices, requests and other communications pursuant to this Note
shall be in writing, either by letter (delivered by hand or sent by certified
mail, return receipt requested) or telegram, addressed as follows:
(a) if to the Borrower:
c/o Logimetrics , Inc.
50 Orville Drive
Bohemia, New York 11716
Attention: Norman Phipps, President
<PAGE>
(b) if to the Bank:
North Fork Bank
275 Broad Hollow Road
Melville, New York 11747
Attention Joseph Walsh, Senior Vice President
Any notice, request or communication hereunder shall be deemed to have
been given when deposited in the mails, postage prepaid, or in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
aforesaid. Any party may change the person or address to whom or which the
notices are to be given hereunder, but any such notice shall be effective only
when actually received by the party to whom it is addressed.
IN WITNESS WHEREOF, the Borrower has signed this Note as of the 30th
day of April, 1998.
LOGIMETRICS, INC.
By:/s/Norman Phipps
_______________________________
Norman Phipps
President
mmTech, Inc.
By:/s/Charles S. Brand
_______________________________
Charles S. Brand
President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this day of March, 1997, before me personally came Norman Phipps,
to me known, who, being by me duly sworn, did depose and say that he has an
address at c/o LOGIMETRICS, INC., 121-03 Dupont Street, Plainview, New York
11803, that he is the President of LOGIMETRICS, INC., the corporation described
in, and which executed, the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
_________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this day of March, 1997, before me personally came Charles S.
Brand, to me known, who, being by me duly sworn, did depose and say that he has
an address at c/o LOGIMETRICS, INC., 121-03 Dupont Street, Plainview, New York
11803, that he is the President of mmTech, Inc. the corporation described in,
and which executed, the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
_________________________________
NOTARY PUBLIC
<PAGE>
EXHIBIT "A"
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that:
1. The undersigned has performed and complied in all respects with the
agreements, covenants and conditions of those certain loan agreements dated
April 30, 1998 between North Fork Bank and the undersigned; and
2. On the date hereof, there exists no event of default or default as
defined in the aforementioned agreements, and no material adverse change has
occurred to the financial condition of the Borrower between April 30, 1998 and
the date hereof; and
3. The following information relating to the Borrowing Base as defined
in the agreement is true and accurate and represents fairly and completely the
status of the stated information as of the date hereof.
Eligible Inventory _______x 50% ______
Eligible Accounts Receivable _______x 80% ______
Total Eligible Inventory and Accounts Receivable
Less Outstanding Loan (A) __________
Remaining Eligibility (B) ==========
(A + B not to exceed the sum of $2,200,000 or such maximum
available as is defined herein)
LOGIMETRICS, INC.
By:
_______________________________
Norman Phipps
President
EXHIBIT 10.9
MODIFIED
GENERAL SECURITY AGREEMENT
AGREEMENT made as of this 30th day of April, 1998 by the undersigned
to NORTH FORK BANK, having an office at 245 Love Lane, Mattituck, New York 11952
(the "Bank").
1. Definitions.
The term "Obligations" shall include all indebtedness, obligations,
liabilities, and guarantees of any kind of the undersigned to the Bank (and also
to others to the extent of participations or interests therein of the Bank), now
existing or hereafter arising, and whether direct or indirect, acquired
outright, conditionally or as collateral security from another, absolute or
contingent, joint or several, secured or unsecured, due or not due, contractual
or tortious, liquidated or unliquidated, arising by operation of law or
otherwise, whether or not of a nature presently contemplated by the parties or
subsequently agreed to by them.
The term "Collateral" shall include all personal property and fixtures
in which the undersigned has or shall have an interest (including, but not
limited to, all personal property and fixtures as described herein to be
acquired by the undersigned in connection with the acquisition of mmTech, Inc.),
now or hereafter existing or acquired, and wherever located, tangible or
intangible, including but not limited to all present and hereafter existing or
acquired accounts, accounts receivable, contract rights, general intangibles,
equipment, goods, inventory (raw materials, components, work-in process,
finished merchandise and packing and shipping materials), personal property made
available to the undersigned by the Bank (or its agent or bailee) pursuant to a
trust receipt or other security agreement the effect of which is to continue the
Bank's security interest therein, money, instruments, documents, chattel paper,
securities, deposits, patents and patent rights, credits, claims and demands
against the Bank, and all proceeds, products, returns, additions, accessions and
substitutions of and to any of the foregoing.
All other terms used herein which are defined in the Uniform
Commercial Code of the State of New York shall have the meanings therein stated.
2. Grant of Security Interest.
In consideration of the loan of (a) Two Million Two Hundred Thousand
($2,200,000) Dollars pursuant to a Restated and Amended Revolving Credit Note
dated of even date herewith and (b) $256,000 pursuant to a Restated and Amended
Term Note extended by the Bank to the undersigned and of one or more loans,
advances, or other financial accommodations at any time made or extended by the
Bank to the undersigned, or to any person, firm, or corporation whose
obligations or liabilities are guaranteed at any time by the undersigned to the
<PAGE>
Bank, the undersigned hereby grants to the Bank a valid and binding first
security interest in the Collateral, as security for the payment, performance,
and observance by the undersigned of the Obligations. The undersigned hereby
transfers and delivers to the Bank all Collateral which the Bank is required to
take possession of in order to perfect its security interest, and agrees to
transfer and deliver to the Bank all Collateral which the Bank is required to
take possession of in order to perfect its security interest therein, promptly
upon the acquisition by the undersigned after the date hereof of any interest in
such Collateral. The undersigned agrees that the Bank has sole discretion with
regard to the making of any loans, advances, or other financial accommodations
to the undersigned or any such other person, firm, or corporation, and that
nothing herein shall obligate the Bank with respect thereto.
3. Warranties and Agreements. The undersigned warrants and agrees
that:
(a) Collateral location and use. The undersigned's chief place of
business, its financial books and records relating to the Collateral, and the
Collateral, are located and/or based at the address set forth at the foot of
this Agreement. The undersigned will not relocate any of the Collateral from
said location without the prior written consent of the Bank. The Collateral was
and/or will be acquired by the undersigned solely for use in its business at
said location, and the Collateral is not and shall not be used for any other
use.
(b) Existing liens, security interests, and encumbrances. Except for
the security interest granted herein, the undersigned is the legal owner of all
interest in the Collateral and shall keep the Collateral free and clear of
liens, security interests, or encumbrances, and will not assign, sell, mortgage,
lease, transfer, pledge, grant a security interest in, encumber or otherwise
dispose of or abandon any part or all of the Collateral without the prior
written consent of the Bank, except for (i) the sale from time to time in the
ordinary course of business of the undersigned of such items of Collateral as
may constitute all or part of the business inventory of the undersigned and (ii)
that certain subordinate security interests granted by the undersigned to the
holder(s) of (i) the Borrower's twelve (12%) percent Convertible Senior
Subordinated Debentures (the "Debentures"). Any default by the undersigned under
or with respect to any such security instrument or obligations secured thereby
shall constitute an event of default under this Agreement.
(c) Taxes, compliance with laws. The undersigned will make due and
timely payment or deposit of all taxes, assessments, or contributions required
by law which may be lawfully levied or assessed with respect to any of the
Collateral and will execute and deliver to the Bank, on demand, appropriate
certificates attesting to the timely payment or deposit of all such taxes,
assessments or contributions. The undersigned will use the Collateral for lawful
<PAGE>
purposes only, and with all reasonable care and caution, and in conformity with
all applicable laws, ordinances and regulations. At its own cost and expense the
undersigned will keep the Collateral in proper order, repair, and condition.
(d) Inspection. The Bank shall at all times have free access to and
the right of inspection of any part or all of the Collateral and any records of
the undersigned (and the right to make extracts from such records), and the
undersigned shall deliver to the Bank the originals or true copies of such
papers and instruments relating to any or all of the Collateral as the Bank may
request at any time.
(e) Collateral to remain personal property. The Collateral is now and
shall be and remain personal property, notwithstanding the manner in which the
Collateral or any part thereof shall be now or hereafter affixed, attached or
annexed to real property. The undersigned will obtain and deliver to the Bank
such instruments as may be requested by the Bank pursuant to which any person
with an interest in any real estate upon which any part of all of the tangible
Collateral is now or may hereafter be located consents to the security interest
granted herein, disclaims any interest in the tangible Collateral as fixtures,
waives in favor of the Bank all right to distrain or levy upon the Collateral
for rent due or to become due from the undersigned, and authorizes the Bank to
enter upon any premises of the undersigned at any time and to remove the
Collateral.
(f) Insurance. The undersigned, at its own cost and expense, will
insure the Collateral in the name of and with loss or damage payable to the
undersigned and the Bank, as their interests may appear, against loss or damage
by fire and extended coverage, theft, burglary, pilferage, bodily injury and
such other risks as the Bank may require, with such companies and in such
amounts as may be required by the Bank at any time in its sole discretion. All
such policies shall provide for ten days' minimum written notice of cancellation
to the Bank, and the undersigned shall deliver to the Bank the original or
duplicate policies, or certificates or other evidence satisfactory to the Bank,
of compliance with the foregoing insurance provisions. The undersigned assumes
all responsibility and liability arising from the use of the Collateral, either
for negligence or otherwise, by whomsoever used, employed or operated, and will
defend, indemnify and save the Bank harmless from any and all claim, loss or
damage to persons or property caused by the Collateral or by its use and
operation.
(g) Maintain security interests, reports. In addition to all other
provisions hereof, the undersigned will from time to time at the sole expense of
the undersigned, perform any and all steps and/or procedures requested by the
Bank at any time to perfect and maintain the Bank's security interest in the
Collateral, including but not limited to transferring any part or all of the
<PAGE>
Collateral to the Bank or any nominee of the Bank (including warehouses),
placing and maintaining signs, appointing custodians, executing and filing
financing statements and notices of lien, delivering to the Bank documents of
title representing the Collateral or evidencing the Bank's security interest in
any other manner acceptable to and requested by the Bank. If requested by the
Bank, the undersigned will from time to time execute and deliver to the Bank
assignments of accounts in form satisfactory to the Bank, but should the
undersigned fail in any one or more instances to execute and deliver any such
assignments of accounts, such failure shall not constitute a waiver or
limitation of the within security interest in all of the Collateral (including
said accounts) which shall remain in full force and effect.
At the request of the Bank, the undersigned shall deliver to the Bank
all original documents evidencing the sale and delivery of merchandise or the
performance of labor or services which created any account, including but not
limited to all original contracts, orders, invoices, bills of lading, warehouse
receipts and shipping receipts, together with all collateral security and/or
guarantees or other contracts of suretyship held by the undersigned in respect
of the accounts, together with assignments of any of the foregoing where
requested by the Bank.
If at any time any part or all of the Collateral shall be in the
possession or control of any of the undersigned's bailees, agents, or
processors, the undersigned will notify such persons of the Bank's security
interest therein and upon the Bank's request, the undersigned will instruct such
persons to hold all such Collateral for the Bank's account and subject to the
Bank's instructions and the undersigned will obtain and deliver to the Bank such
instrument(s) requested by the Bank pursuant to which such persons consent to
the security interest granted herein, disclaim any interest in the Collateral,
waive in favor of the Bank all liens upon and claims to the Collateral or any
part thereof, and authorize the Bank at any time to enter upon and remove the
Collateral from any premises upon which the same may be located.
(h) Further documentation. The undersigned shall, at its sole cost and
expense, simultaneously herewith and upon the request of the Bank, at any time
and from time to time, execute and deliver to the Bank one or more financing
statements pursuant to the Uniform Commercial Code, and any other papers,
documents or instruments required by the Bank in connection herewith. The
undersigned hereby authorizes the Bank to execute and file, at any time and from
time to time, on behalf of the undersigned, one or more financing statements
with respect to all or any part of the Collateral, the filing of which is
advisable, in the sole judgment of the Bank, pursuant to the law of the State of
New York, although the same may have been executed only by the Bank as secured
party. The undersigned also irrevocably appoints the Bank, its agents,
representatives and designees, as the undersigned's agent and attorney-in-fact,
to execute and file, from time to time, on behalf of the undersigned, one or
more financing statements with respect to all or any part of the Collateral.
<PAGE>
(i) Bona fide accounts. The undersigned warrants to the Bank that each
of the debtors named in any account has legal capacity to contract and is
indebted to the undersigned in the amount indicated in the books and records of
the undersigned and in any assignments executed and delivered to the Bank; that
each account is bona fide and arises out of the sale and delivery of merchandise
and/or the performance of labor or services.
(j) Collection of accounts. Upon an event of default as hereinafter
defined, where the Bank so requests, all bills and statements sent to any
customer or any account shall state that said account has been assigned to the
Bank and is payable only to the Bank. The Bank may endorse the name of the
undersigned on all notes, checks, drafts, bill of exchange, money orders,
commercial paper of any kind whatsoever, and any other document received in
payment of or in connection with accounts or otherwise, and the Bank or any
officer or employee thereof, is hereby irrevocably constituted and appointed the
agent and attorney-in-fact for the undersigned for the foregoing purpose, and to
receive, open and dispose of all mail addressed to the undersigned, and to
notify the Post Office authorities to change the address for the delivery of
mail addressed to the undersigned to such address(es) as the Bank may designate.
Any bank or trust company is hereby irrevocably authorized to permit the Bank to
deposit the proceeds of accounts so endorsed and to withdraw the same without
inquiry as to the circumstances of endorsement or as to the purpose of
withdrawal, and without being required to answer for the application by the Bank
of the monies so withdrawn. The proceeds of accounts, received by the Bank,
shall be applied to the Obligations but shall not constitute payment thereof
until so applied, it being agreed that the order and method of such application
shall be in the discretion of the Bank.
(k) Settlement of accounts. The Bank is authorized and empowered to
compromise or extend the time for payment of any of the Collateral, for such
amounts and upon such terms as the Bank may determine, and to accept the return
of goods represented by any of the Collateral, all without notice to or consent
by the undersigned and without discharging or affecting the obligations of the
undersigned hereunder.
(l) Payment of debtor's obligations, reimbursement. The Bank may in
its discretion, for the account and expense of the undersigned (i) pay any
amount or do any act which is required to be paid or done by the undersigned
under this Agreement (including but not limited to the repair and insuring of
Collateral and payment of taxes) and which the undersigned fails to do or pay as
herein required, (ii) pay any sums due and owing by the undersigned to the
landlord(s) of any premises where any Collateral is located, and (iii) pay or
discharge any lien, security interest or encumbrance in favor of anyone other
than the Bank which covers or affects the Collateral or any part thereof. The
undersigned will promptly reimburse and pay the Bank for any and all sums,
costs, fees, and expenses which the Bank may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
<PAGE>
priority thereof or in enforcing payment of the Obligations or in discharging
any lien or claim against the Collateral or any part thereof or in the exchange,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof or for the care of the Collateral, by litigation or otherwise,
and with respect to either the undersigned, account debtors, guarantors of the
undersigned and other persons, including but not limited to all court costs,
collection charges, travel, and reasonable attorneys' fees (not less than 15
percent of the outstanding Obligations where permitted by applicable law) and
all reasonable expenses (including reasonable counsel fees) incident to the
enforcement of payment of any obligations of the undersigned by any action or
participation in, or in connection with, a case or proceeding under chapters 7,
11 or 13 of the Bankruptcy Code, or any successor statute thereto. All sums paid
and all costs, expenses and liabilities incurred by the Bank pursuant to the
foregoing provisions, together with interest thereon at the rate of twelve (12%)
percent per annum, shall be added to and become part of the Obligations secured
hereby.
4. Transfer of Collateral.
Upon an event of default as hereinafter defined, at its discretion the
Bank may, whether or not any of the Obligations be due, in its name or in the
name of the undersigned or otherwise, notify any account debtor or the obligor
on any instrument to make payment to the Bank, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for, or make any compromise or settlement deemed desirable by the
Bank with respect to, any of the Collateral, but shall be under no obligation to
do so, and/or the Bank may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the undersigned. At any time the Bank may
assign, transfer and/or deliver to any transferee of any of the Obligations any
or all of the Collateral, and thereafter the Bank shall be fully discharged from
all responsibility with respect to the Collateral so assigned, transferred
and/or delivered. Such transferee shall be vested with all the powers and rights
of the Bank hereunder, with respect to such Collateral, but the Bank shall
retain all rights and powers hereby given with respect to any of the Collateral
not so assigned, transferred or delivered.
5. Defaults.
The occurrence of any one or more of the following events shall
constitute an event of default by the undersigned under this Agreement:
<PAGE>
(a) if at any time the Bank shall, in its reasonable discretion,
consider the Collateral or any part thereof unsatisfactory or insufficient, and
the undersigned shall fail on demand furnish other Collateral or make payment on
account, satisfactory to the Bank;
(b) if the undersigned or any obligor, maker, endorser, acceptor,
surety or guarantor of, or any other party to any of the Obligations or the
Collateral (the same, including the undersigned, being collectively referred to
herein as "Obligors") shall default in any way under the Obligations (or of any
instruments evidencing the same) or of any terms or conditions of this Agreement
or the Collateral;
(c) if any warranty, representation or statement of fact made herein
or furnished to the Bank at any time by or on behalf of the undersigned proves
to have been false in any material respect when made or furnished;
(d) in the event of loss, theft, substantial damage or destruction of
any of the Collateral, or the making of any levy on, seizure or attachment of
any of the Collateral;
(e) if the undersigned shall execute or file a certificate or other
instrument evidencing the legal change of name of the undersigned without
furnishing the Bank at least ten days' prior written notice thereof;
(f) in the event any of the Obligors shall be dissolved;
(g) if any of the Obligors shall be party to a merger or consolidation
where said Obligor is not the surviving entity without the prior written consent
of the Bank;
(h) if any of the Obligors shall fail to maintain its corporate
existence in good standing;
(i) if any of the Obligors shall default in the observance or
performance of any term, covenant or agreement contained herein or in any
instrument, document or agreement delivered by any of the Obligors to the Bank;
(j) if any of the Obligors shall make or send notice of an intended
bulk transfer, or fail, after demand, to furnish any financial information or to
permit the inspection of books or records of account;
(k) The Obligor makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become due;
or an order, judgment or decree is entered adjudicating the Obligor as bankrupt
<PAGE>
or insolvent; or any order for relief with respect to the Obligor is entered
under the United States Bankruptcy Code; or the Obligor petitions or applies to
any tribunal for the appointment of a custodian, trustee, receiver or liquidator
of the Obligor or of any substantial part of the assets of the Obligor, or
commences any proceeding relating to the Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced, against the Obligor and either (i)
the Obligor by any act indicates its approval thereof, consents thereto, or
acquiesces therein or (ii) such petition, application or proceeding is not
dismissed within sixty (60) days;
(1) if any of the Obligors shall voluntarily or otherwise suspend or
interrupt the transaction of its usual business;
(m) if any Order is entered by any court or tribunal, at law or in
equity, by or against any of the Obligors for the appointment of any receiver or
any trustee for any of the Obligors and said Order is not discharged within
sixty (60) days from the entry thereof;
(n) if any governmental authority or any court or other tribunal shall
take possession or jurisdiction of any substantial part of the property of, or
assume control over the affairs or operations of, or a receiver shall be
appointed of, any substantial part of the property of any of the Obligors and
said action is not discharged within sixty (60) days.
6. Remedies on Default.
Upon the occurrence of any one or more of the aforementioned events of
default or at any time thereafter, the Bank may, without notice to or demand
upon the undersigned, declare any or all of the Obligations immediately due and
payable and the Bank shall have the following rights and remedies in addition to
all rights and remedies of a secured party under the Uniform Commercial Code or
other applicable statute or rule, in any jurisdiction in which enforcement is
sought, all such rights and remedies being cumulative and not exclusive:
(a) Collateral. The Bank may, at any time and from time to time, with
or without process of law and with or without the aid and assistance of others,
enter upon any premises in which the Collateral or any part thereof may be
located and, without resistance or interference by the undersigned, take
possession of the Collateral; and/or dispose of all or any part of the
Collateral on any premises of the undersigned; and/or require the undersigned to
assemble and make available to the Bank all or any part of the Collateral at any
place and time designated by the Bank which is reasonably convenient to the Bank
<PAGE>
and the undersigned; and/or remove all or any part of the Collateral from any
premises on which any part thereof may be located for the purpose of effecting
preservation or sale or other disposition thereof; and/or sell, resell, lease,
assign and deliver, or otherwise dispose of, the Collateral or any part thereof
in its existing condition or following any commercially reasonable preparation
or processing, at public or private proceedings, in one or more parcels at the
same or different times with or without having the Collateral at the place of
sale or other disposition for cash, upon credit or for future delivery, and in
connection therewith the Bank may grant options, at such place or places and
time or times and to such persons, firms or corporations as the Bank deems best,
and without demand for performance or any notice or advertisement to the
undersigned of the place and time of any public sale or of the place and time
after which any private sale or other disposition may be made, and/or liquidate
or dispose of the Collateral or any part thereof in any other commercially
reasonable manner.
If any of the Collateral is sold by the Bank upon credit or for future
delivery, the Bank shall not be liable for the failure of the purchaser to
purchase or pay for the same and, in the event of any such failure, the Bank may
resell such Collateral. The undersigned hereby waives all equity and right of
redemption. The Bank may buy any part or all of the Collateral at any public
sale and if any part of all of the Collateral is of a type which is the subject
of widely distributed standard price quotations the Bank may buy at private
sale, all free from any equity or right of redemption which is hereby waived and
released by the undersigned, and the Bank may make payment therefor (by
endorsement without recourse) in notes of the undersigned to the order of the
Bank in lieu of cash to the amount then due thereon which the undersigned hereby
agrees to accept.
The Bank may apply the cash proceeds actually received from any sale
or other disposition to the reasonable expenses of retaking, holding, preparing
for sale, selling, leasing and the like, to reasonable attorney's fees (not less
than 15 percent of the outstanding Obligations where permitted by law) if this
Agreement or any of the Obligations is referred to an attorney for enforcement,
to all legal expenses, court costs, collection charges, travel and other
expenses which may be incurred by the Bank in attempting to collect the
Obligations or to enforce this Agreement and realize upon the Collateral, or in
the prosecution or defense of any action or proceeding related to the subject
matter of this Agreement; and then to the Obligations in such order and as to
principal or interest as the Bank may in its sole discretion determine; and the
undersigned shall at all times be and remain liable and, after crediting the net
proceeds of sale or other disposition as aforesaid, will pay the Bank on demand
any deficiency remaining, including interest thereon and the balance of any
expenses at any time unpaid, with any surplus to be paid to the undersigned,
subject to any duty of the Bank imposed by law to the holder of any subordinate
security interest in the Collateral known to the Bank.
<PAGE>
(b) Bank deposits, balances, etc. The Bank may appropriate, set off
and apply for the payment of any or all of the Obligations, any and all
balances, sums, property, claims, credits, deposits, accounts, reserves,
collections, drafts, notes, or other items or proceeds of the Collateral in or
coming into the possession of the Bank or its agents and belonging or owing to
the undersigned, without notice to the undersigned, and in such manner as the
Bank may in its sole discretion determine.
(c) Proceeds. Any of the proceeds of the Collateral received by the
undersigned shall not be commingled with other property of the undersigned, but
shall be segregated, held by the undersigned in trust for the Bank as the
exclusive property of the Bank, and the undersigned will immediately deliver to
the Bank the identical checks, moneys or other proceeds of Collateral received,
and the Bank shall have the right to endorse the name of the undersigned on any
and all checks, or other forms of remittance received, where such endorsement is
required to effect collection. The undersigned hereby designates, constitutes
and appoints the Bank and any designee or agent of the Bank as attorney-in-fact
of the undersigned, irrevocably and with power of substitution, with authority
to receive, open and dispose of all mail addressed to the undersigned, to notify
the Post Office authorities to change the address for delivery of mail addressed
to the undersigned, to such address as the Bank may designate; to endorse the
name of the undersigned on any notes, acceptances, checks, drafts, money orders
or other evidences of payment or proceeds of the Collateral that may come into
the Bank's possession; to sign the name of the undersigned on any invoices,
documents, drafts against account debtors of the undersigned, assignments,
requests for verification of accounts and notices to debtors of the undersigned;
to execute any endorsements, assignments, or other instruments of conveyance or
transfer; and to do all other acts and things necessary and advisable in the
sole discretion of the Bank to carry out and enforce this Agreement. All acts of
said attorney or designee shall not be liable for any acts of commission or
omission nor for any error of judgment or mistake of fact or law. This power of
attorney being coupled with an interest is irrevocable while any of the
Obligations shall remain unpaid.
7. Liability Disclaimer.
Under no circumstances whatsoever shall the Bank be deemed to assume
any responsibility for or obligation or duty with respect to any part or all of
the Collateral, of any nature or kind whatsoever, or any matter or proceedings
arising out of or relating thereto. The Bank shall not be required to take any
action of any kind to collect or protect any interest in the Collateral,
including but not limited to any action necessary to preserve its or the
undersigned's rights against prior parties to any of the Collateral. The Bank
shall not be liable or responsible in any way for the safekeeping, care or
custody of any of the Collateral, or for any loss or damage thereto, or for any
diminution in the value thereof, or for any act or default of any agent or
bailee of the Bank or the undersigned, or of any carrier, forwarding agency or
<PAGE>
other person whomsoever, or for the collection of any proceeds, but the same
shall be at the undersigned's sole risk at all times. The undersigned hereby
releases the Bank from any claims, causes of action and demands at any time
arising out of or with respect to this Agreement or the Obligations, and any
actions taken or omitted to be taken by the Bank with respect thereto, and the
undersigned agrees to defend and hold the Bank harmless from and with respect to
any and all such claims, causes of action and demands. The Bank's prior recourse
to any part of all of the Collateral shall not constitute a condition of any
demand for payment of the Obligations or of any suit or other proceeding for the
collection of the Obligations.
8. Nonwaiver.
No failure or delay on the part of the Bank in exercising any of its
rights and remedies hereunder or otherwise shall constitute a waiver thereof,
and no single or partial waiver by the Bank of any default or other right or
remedy which it may have shall operate as a waiver of any other default, right
or remedy or of the same default, right or remedy on a future occasion.
9. Waivers by Debtor.
The undersigned hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all other notices and demands whatsoever (except as
expressly provided herein) whether or not relating to such instruments. In the
event of any litigation at any time arising with respect to any matter connected
with this Agreement or the Obligations, the undersigned hereby waives the right
to a trial by jury and the undersigned hereby waives any and all defenses,
rights of setoff and rights to interpose counterclaims of any nature.
10. Modification.
No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Agreement and to the provision so
modified or limited, and executed by the party to be charged.
11. Authorization.
The execution and delivery of this Agreement has been authorized by
the Board of Directors of the undersigned and by any necessary vote or consent
of stockholders of the undersigned.
<PAGE>
12. Binding Effect.
This Agreement and all Obligations of the undersigned hereunder shall
be binding upon the successors or assigns of the undersigned, and shall,
together with the rights and remedies of the Bank hereunder, inure to the
benefit of the Bank and its successors, endorsees and assigns.
13. Severability.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed or caused this
Agreement to be executed in the State of New York as of April 30, 1998.
LOGIMETRICS, INC.
By:/s/Norman Phipps
__________________________
Norman Phipps
President
The chief place of business, the location of the books and records
pertaining to the Collateral and the location of the Collateral of LogiMetrics,
Inc. is 50 Orville Drive, Bohemia, New York 11716 and 20 Meridian Road,
Eatontown, New Jersey 07724.
EXHIBIT 10.10
SUBSTITUTE NEGOTIABLE SECURED
SENIOR SUBORDINATED PROMISSORY NOTE
$____________
Final Maturity Date:
July 1, 2000
FOR VALUE RECEIVED, LogiMetrics, Inc., a Delaware corporation, and mmTech, Inc.,
a New Jersey corporation (collectively, the "Makers"), hereby jointly and
severally promise to pay to the order of [NAME OF HOLDER], or his successors and
assigns (the "Holder"), at [ADDRESS], or at such other location as the Holder
may designate from time to time, the sum of [DOLLAR AMOUNT] ($________),
together with interest thereon from September 7, 1999 to and including the date
of repayment at the rate of 13% per annum, in lawful money of the United States
of America on or before July 1, 2000, or on demand at any time upon or during
the continuance of an Event of Default as defined in the Security Agreement (as
defined below), with or without demand as provided in the Security Agreement.
The obligations of the Makers are joint and several and the Holder may proceed
to collect the full amount owed hereunder from either Maker whether or not
proceeding against the other.
If the Holder fails to pay any amount hereunder when due, interest
shall thereafter accrue on such overdue amount at the rate of 16% per annum
until paid in full. Interest hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed.
The Makers may prepay this Note at any time, in whole or in part,
without premium or penalty. The Makers shall prepay this Note in full within
five (5) Business Days after the consummation of (i) any public or private sale
by either Maker of its debt or equity securities or securities convertible into
or exchangeable for its debt or equity securities, (ii) any permanent loan or
other credit facility obtained by either Maker from a bank or other financial
institution, or (iii) any sale by either Maker of all or substantially all of
its assets to a third party which results, in each such case, in net proceeds to
the Makers (after all related fees and expenses) of at least Three Million
Dollars ($3,000,000). As used herein, "Business Day" means a day, other than a
Saturday or Sunday, on which commercial banks in New York City are open for the
general transaction of business.
The Makers shall pay to the Holder the reasonable attorneys' fees and
disbursements and all other out-of-pocket costs incurred by the Holder in order
to collect amounts due and owing under this Note. All payments received shall be
applied, first, to the costs of collection, second, to unpaid interest, and
third, to principal.
No delay or failure on the part of the Holder in exercising any power,
right or remedy hereunder shall operate as a waiver of any such power, right or
remedy; nor shall any single or partial exercise of any power, right or remedy
preclude any other or further exercise of such power, right or remedy, or the
exercise of any other power, right or remedy, and no waiver whatsoever shall be
valid unless in writing, signed by the Holder, and then only to the extent
expressly set forth therein. No remedy is exclusive of any other remedy and all
remedies shall be cumulative to the maximum extent permitted by applicable law.
Each Maker hereby waives presentment, demand for payment, diligence, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
<PAGE>
This Note is a replacement and substitute Note for the several
Negotiable Secured Senior Subordinated Promissory Notes (the "Original Notes")
made payable by Makers to Holder, evidencing loans advanced by Holder to Makers,
made between August 27, 1999 and September 23, 1999, in the aggregate principal
amount of this Note, which loans are and shall remain secured by and pursuant to
the Second Amended and Restated Security Agreement, Intercreditor Agreement,
Waiver and Consent dated on or about August 31, 1999, as amended on December 2,
1999 and February 17, 2000, and as the same may hereafter be further amended,
restated, supplemented or modified (the "Security Agreement") among the makers,
Cramer Rosenthal McGlynn, LLC, as Agent, and the other parties thereto, as
amended from time to time. This Note is issued in connection with the extension
by the Holder of the maturity date of the loans from the original maturity date
of March 7, 2000 to the new maturity date set forth above. The Makers hereby
acknowledge that the Original Notes have been delivered to Makers and have been
cancelled and, by its acceptance of this Note in substitution for the Original
Notes, the Holder agrees to the extension of the maturity date of the loans to
July 1, 2000.
This Note shall be binding upon each Maker and its successors and
assigns. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York pursuant to Section 15-1402 of the
General Obligations Law of such state. Each Maker irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Note. Service of process in connection with any such suit, action or proceeding
may be served on the Makers anywhere in the world by any method authorized by
law. Each Maker irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such court.
Each Maker irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
No modification, alteration, waiver or change of any of the provisions
hereof shall be effective unless in writing and signed by each Maker and the
Holder and, then, only to the extent set forth in such writing.
ATTEST: LOGIMETRICS, INC.
_____________________ _____________________________
Name: By: Norman M. Phipps
Title: President
ATTEST: MMTECH, INC.
_____________________ _____________________________
Name: By: Charles S. Brand
Title: President
Dated as of: March 7, 2000
EXHIBIT 10.11
ACKNOWLEDGMENT, CONSENT AND WAIVER
Dated as of March 7, 2000
REFERENCE is made to:
(a) the several Negotiable Secured Senior Subordinated Promissory
Notes made payable by LogiMetrics, Inc. and mmTech, Inc., jointly and severally
(the "Borrowers"), to the persons listed as Legacy Group I Lenders on Schedule A
hereto (the "Legacy Group I Lenders"), in the aggregate original principal
amounts set forth opposite their names on such Schedule A, evidencing loans made
by the Legacy Group I Lenders to the Borrowers in such aggregate principal
amounts (the "Legacy Group I Loans"), originally due March 7, 2000, but
contemporaneously herewith being collectively replaced and substituted for by a
single Substitute Negotiable Secured Senior Subordinated Promissory Note due
July 1, 2000, one per each Legacy Group I Lender in the aggregate principal
amount of such lender's Legacy Group Loans (as so substituted, each a "Legacy
Group I Note");
(b) the several Negotiable Secured Senior Subordinated Promissory
Notes made payable by the Borrowers, jointly and severally, to the persons
listed as Legacy Group II Lenders on Schedule A hereto (the "Legacy Group II
Lenders"), in the aggregate original principal amounts set forth opposite their
names on such Schedule A, evidencing additional loans (which additional loans
are referred to as the "Legacy Loans" in the unamended Second Amended and
Restated Security Agreement, Intercreditor Agreement, Waiver and Consent ) made
by the Legacy Group II Lenders to the Borrowers in such aggregate principal
amounts (the "Legacy Group II Loans"), originally due March 7, 2000, but
contemporaneously herewith being collectively replaced and substituted for by a
single Substitute Negotiable Secured Senior Subordinated Promissory Note due
July 1, 2000, one per each Legacy Group II Lender in the aggregate principal
amount of such lender's Legacy Group II Loans (as so substituted, each a "Legacy
Group II Note");
(c) the Class A 13% Convertible Senior Subordinated Pay-In-Kind
Debentures, issued by the Borrowers to the persons listed as Class A Debenture
Holders on Schedule A (the "Class A Debenture Holders") hereto in the aggregate
original face amount set forth opposite such holder's name on such Schedule A,
each originally due July 29, 1999, with the maturity date thereof having been
previously extended to March 8, 2000 pursuant to that certain letter agreement
dated on or about August 15, 1999, among the Borrowers and such holders (each, a
"Class A Debenture");
(d) the Amended and Restated Class B 13% Convertible Senior
Subordinated Pay-In-Kind Debenture, issued by the Borrowers to Cerberus
Partners, L.P. (the "Class B Debenture Holder"), in the original face amount set
forth opposite its name on Schedule A, originally due July 29, 1999, with the
maturity date thereof having been previously extended to March 8, 2000 pursuant
to that certain letter agreement, dated on or about August 15, 1999, among the
Borrowers and such holder (the "Class B Debenture");
(e) the Class C 13% Convertible Senior Subordinated Debentures, issued
by the Borrowers to the persons listed as Class C Debenture Holders on Schedule
A (the "Class C Debenture Holders") hereto in the original face amount set forth
opposite such holder's name on such Schedule A, each originally due September
30, 1999, with the maturity date thereof having been previously extended to
March 8, 2000 pursuant to that certain letter agreement, dated on or about
August 15, 1999, among the Borrowers and such holders (each, a "Class C
Debenture"); and
(f) the Second Amended and Restated Security Agreement, Intercreditor
Agreement, Waiver and Consent dated on or about August 31, 1999, among the
<PAGE>
Legacy Group I Holders, the Legacy Group II Holders, the Class A Debenture
Holders, the Class B Debenture Holder and the Class C Debenture Holders, Signal
Technology Corporation ("Signal" and together with each the foregoing,
collectively, "Lenders" and, individually, each a "Lender"), Cramer Rosenthal
McGlynn, LLC, as agent of the Lenders (the "Agent") and the Borrowers, as
amended on December 2, 1999 and February 17, 2000, and as the same may hereafter
be further amended, restated, supplemented or modified from time to time (the
"Security Agreement").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged:
1. Legacy Note Extensions. Each of the undersigned hereby acknowledges
and consents to the Legacy Group I Notes and the Legacy Group II Notes and,
without limitation, the extension of the maturity dates of the loans evidenced
thereby to July 1, 2000.
2. Debenture Extensions. Each of the undersigned Class A Debenture
Holders, Class B Debenture Holder and Class C Debenture Holders hereby agrees to
extend the maturity date of the Class A, B and/or C Debentures held by it, and
of the loans evidenced thereby, to July 2, 2000, and each of the other parties
hereto acknowledges and consents to such extensions.
3. Waiver of Defaults. Each of the undersigned hereby waives any
default or cross-default under the Legacy Group I and II Notes, Class A, B and C
Debentures and/or Signal Note held by it and/or any other agreements,
instruments or documents governing, evidencing, securing or otherwise relating
to any of the foregoing (collectively, the "Covered Documents"), occasioned
solely by (a) the substitutions of the Legacy Group I and II Notes, the
extensions of the maturity dates of the Legacy Group I and II Notes and of the
loans or other obligations evidenced thereby, the extension of the maturity
dates of the Class A, B and C Debentures and the loans or other obligations
evidenced thereby and/or the failure of the Borrowers to pay the loans or other
obligations evidenced by any of the foregoing instruments when such payment was
due prior to the effectiveness of the maturity date extensions referenced
herein, (b) the past, present or future failure of the Borrowers or either of
them to satisfy any financial covenant presently contained in the Covered
Documents, each of which requirements are hereby waived, (c) the continuing
failure of the Borrowers to have filed SEC Forms 10K and 10Q that were to have
been filed previously, provided that the Borrowers use their best efforts to
file the same as soon a practicable, or (d) the continuing failure of the
Borrowers to comply with their obligations under various of the Covered
Documents with respect to the filing of registration statements with the SEC,
and causing the same to become effective, covering the shares of common stock of
Logimetrics, Inc., into or for which such Covered Documents are or will be
convertible or exercisable, provided that each of the respective holders of such
Covered Documents fully reserves the right to at any time require the Borrowers
to promptly prepare and file a registration statement and to use their best
efforts to cause the same to become effective and, in any event, the Borrowers
shall use their best efforts to cause such shares to be registered in connection
with any public offering that the Borrowers or either of them may contemplate in
the future. It is understood, and by their respective signatures below each of
the Borrowers hereby acknowledges and agrees, that, except as specifically
stated in this Paragraph 3, no further waivers of any default, or of the failure
of performance or representation by either of the Borrowers, under any of the
Covered Documents is hereby or otherwise intended, given or implied, nor may any
such waiver be implied by any course of conduct, including the past, present or
future failure of any of the undersigned to enforce its rights to payment or any
other rights under the Covered Documents.
4. Ratification of Subordination. Without limiting any of the
foregoing, each of the undersigned, being parties to the Security Agreement,
hereby ratifies and reaffirms all terms and provisions of the Security Agreement
with respect to all of instruments and obligations referred to in Paragraphs (a)
through (f) hereof, giving effect to the substitutions, extensions and waivers
<PAGE>
referenced in Paragraphs 1 through 3 hereof and, without limiting the generality
of the foregoing, ratifies and reaffirms the terms of subordination contained in
the Security Agreement with respect to such instruments and obligations as so
substituted and extended.
This Acknowledgement, Consent and Waiver may be executed and delivered
by facsimile and in counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same instrument, and shall
become effective upon the execution hereof by each person whose name appears on
the signature pages hereof and the delivery of the same to the Agent.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Acknowledgement, Consent and Waiver to be executed as of the date first written
above.
LOGIMETRICS, INC.
By: /s/ Norman M. Phipps
_____________________________
Name:Norman M. Phipps
Title:President and Chief
Operating Officer
MMTECH, INC.
By: /s/Charles S. Brand
_________________________
Name: Charles S. Brand
Title:President
CRAMER ROSENTHAL McGLYNN, INC.
By: /s/Sam Beritela
__________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial
Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
L.A.D. EQUITY PARTNERS, L.P.
By: Flint Investments, Inc.
Its General Partner
By: /s/Arthur J. Pergament
___________________________
Name: Arthur J. Pergament
Title: Vice President
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Gerald B. Cramer
__________________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
Edward J. Rosenthal Profit Sharing
Plan and Trust
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
By:_______________________________
Name: Edward J. Rosenthal
Title:
CRM 1997 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_____________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial
Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM RETIREMENT PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
______________________________
Name: Sam Beritela
Title: Vice President and
Chief Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM MADISON PARTNERS, L.P.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
______________________________
Name: Sam Beritela
Title:Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM U.S. VALUE FUND, LTD.
By: Cramer Rosenthal McGlynn, Inc.,
Its General Partner
By: /s/Sam Beritela
______________________________
Name: Sam Beritela
Title:Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
EURYCLEIA PARTNERS, L.P.
By: Marchessini & Company,
Its General Partner
By: /s/Rona Trokie
_____________________________
Name: Rona Trokie
Title: Vice President
745 Fifth Avenue, Suite 1400
New York, New York 10151
Tel: (212) 752-4300
Fax: (212) 752-4309
A.C. ISRAEL ENTERPRISES, INC.
By: /s/Jay Howard
_____________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_____________________________
Name: Sam Beritela
Title: Vice President/ Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
__________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Sam Beritela
______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
______________________________
Name:Gregory Manocherian
Title:President
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
________________________
Name:Gregory Manocherian
Title: Manager
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS, ADP, GP
By: /s/Gregory Manocherian
_________________________
Name:Gregory Manocherian
Title: General Partner
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
MBF BROADBAND SYSTEMS, L.P.
By: MBF Broadband Systems, Inc.,
Its General Partner
By: /s/Mark B. Fisher
________________________
Name: Mark B. Fisher
Title: President
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
/s/Mark B. Fisher
______________________________
Mark B. Fisher
12 East 49th Street
35th Floor
New York, New York 10017
Telephone: (212) 339-2861
Facsimile: (212) 339-2834
McGLYNN FAMILY PARTNERSHIP L.P.
By: /s/Ronald H. McGlynn
___________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Fred M. Filoon
_______________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor
___________________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C.,
Its General Partner
By: /s/Stephen Feinberg
______________________________
Name: Stephen Feinberg
Title: Managing Member
450 Park Avenue
28th Floor
New York, New York 10022
Telephone: (212) 891-2100
Facsimile: (212) 421-2947
/s/Steven Dinetz
___________________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Sam Beritela
_______________________________
Name: Sam Beritela
Title: Vice President and Chief
Financial Officer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Charles B. Brand
_____________________________
Charles S. Brand
611 Industrial Way West
Eatontown, New Jersey 07724
Tel: (732) 935-0853
Fax:(732) 935-7151
/s/Gregory Manocherian
_____________________________
Gregory Manocherian
135 Central Park West,
Tower Southeast
New York, New York 10023
Tel: (212) 799-3500
Fax: (212) 873-2877
<PAGE>
Schedule A to Acknowledgment, Consent and Waiver
Dated as of March 7, 2000
- -------------------------------- -----------------
Legacy Group I Note Holders Principal
Amount*
- -------------------------------- -----------------
Gerald B. Cramer $128,712
- -------------------------------- -----------------
A.C. Israel Enterprises, Inc. 128,712
- -------------------------------- -----------------
CRM 1997 Enterprise Fund, LLC 118,332
- -------------------------------- -----------------
CRM Partners, L.P. 101,724
- -------------------------------- -----------------
CRM Retirement Partners, L.P. 57,090
- -------------------------------- -----------------
CRM Madison Partners, L.P. 57,090
- -------------------------------- -----------------
CRM-EFO Partners, L.P. 33,622
- -------------------------------- -----------------
CRM U.S. Value Fund, Ltd. 19,722
- -------------------------------- -----------------
McGlynn Family Partnership L.P. 12,456
- -------------------------------- -----------------
Fred M. Filoon 12,456
- -------------------------------- -----------------
Edward J. Rosenthal Profit 12,456
Sharing Plan and Trust
- -------------------------------- -----------------
Eugene A. Trainor III 6,228
- -------------------------------- -----------------
Gregory Manocherian 25,950
- -------------------------------- -----------------
Pamela Equities Corp. 181,650
- -------------------------------- -----------------
Whitehall Properties, LLC 103,800
- -------------------------------- -----------------
TOTAL $1,000,000
- -------------------------------- -----------------
Legacy Group II Note Holders Principal
Amount*
- -------------------------------- -----------------
Gerald B. Cramer $105,400
- -------------------------------- -----------------
A.C. Israel Enterprises, Inc. 105,400
- -------------------------------- -----------------
CRM 1997 Enterprise Fund, LLC 96,900
- -------------------------------- -----------------
CRM Partners, L.P. 89,950
- -------------------------------- -----------------
CRM Retirement Partners, L.P. 60,050
- -------------------------------- -----------------
CRM Madison Partners, L.P. 53,400
- -------------------------------- -----------------
CRM-EFO Partners, L.P. 32,050
- -------------------------------- -----------------
CRM U.S. Value Fund, Ltd. 16,150
- -------------------------------- -----------------
McGlynn Family Partnership L.P. 10,200
- -------------------------------- -----------------
Fred M. Filoon 10,200
- -------------------------------- -----------------
Edward J. Rosenthal Profit 10,200
Sharing Plan and Trust
- -------------------------------- -----------------
Eugene A. Trainor III 5,100
- -------------------------------- -----------------
Gregory Manocherian 21,250
- -------------------------------- -----------------
Pamela Equities Corp. 148,750
- -------------------------------- -----------------
Whitehall Properties, LLC 85,000
- -------------------------------- -----------------
Cerberus Partners, L.P. 150,000
- -------------------------------- -----------------
TOTAL $1,000,000
- -------------------------------- -----------------
*Includes all advances.
<PAGE>
- -------------------------------- -----------------
Class A Debenture Holders Aggregate
Original Face
Amount**
- -------------------------------- -----------------
Gerald B. Cramer 428,117
- -------------------------------- -----------------
A.C. Israel Enterprises, Inc. 428,117
- -------------------------------- -----------------
CRM Partners, L.P. 335,438
- -------------------------------- -----------------
CRM 1997 Enterprise Fund, LLC 408,734
- -------------------------------- -----------------
CRM Retirement Partners, L.P. 186,354
- -------------------------------- -----------------
CRM Madison Partners, L.P. 186,354
- -------------------------------- -----------------
L.A.D. Equity Partners L.P. 132,376
- -------------------------------- -----------------
CRM-EFO Partners L.P. 107,029
- -------------------------------- -----------------
CRM U.S. Value Fund, Ltd. 64,217
- -------------------------------- -----------------
Richard S. Fuld, Jr. 64,217
- -------------------------------- -----------------
Cramer Rosenthal McGlynn, Inc. 43,880
- -------------------------------- -----------------
McGlynn Family Partnership L.P. 42,812
- -------------------------------- -----------------
Edward J. Rosenthal Profit 42,812
Sharing Plan and Trust
- -------------------------------- -----------------
Fred M. Filoon 42,812
- -------------------------------- -----------------
Eugene A. Trainor, III 21,406
- -------------------------------- -----------------
Eurycleia Partners, LP 42,586
- -------------------------------- -----------------
Pamela Equities Corporation 428,117
- -------------------------------- -----------------
Whitehall Properties, LLC 214,058
- -------------------------------- -----------------
Kabuki Partners, ADP, GP 42,812
- -------------------------------- -----------------
Mark B. Fisher 107,029
- -------------------------------- -----------------
MBF Broadband Systems, L.P. 214,058
- -------------------------------- -----------------
TOTAL 3,583,335
- -------------------------------- -----------------
Class B Debenture Holder Original Face
Amount
- -------------------------------- -----------------
Cerberus Partners, L.P. 1,500,000
- -------------------------------- -----------------
<PAGE>
Class C Debenture Holders Aggregate
Original Face
Amount**
- -------------------------------- -----------------
CRM 1998 Enterprise Fund, LLC 659,967
- -------------------------------- -----------------
Gerald B. Cramer 242,634
- -------------------------------- -----------------
A.C. Israel Enterprises, Inc. 242,634
- -------------------------------- -----------------
CRM-EFO Partners L.P. 60,659
- -------------------------------- -----------------
Richard S. Fuld, Jr. 36,396
- -------------------------------- -----------------
McGlynn Family Partnership L.P. 24,263
- -------------------------------- -----------------
Edward J Rosenthal Profit 24,263
Sharing Plan and Trust
- -------------------------------- -----------------
Fred M. Filoon 24,263
- -------------------------------- -----------------
Eugene A. Trainor, III 12,133
- -------------------------------- -----------------
Pamela Equities Corporation 265,000
- -------------------------------- -----------------
Whitehall Properties, LLCO 185,000
- -------------------------------- -----------------
Kabuki Partners, ADP, GP 150,000
- -------------------------------- -----------------
Steven Dinetz 72,788
- -------------------------------- -----------------
Charles S. Brand 666,667
- -------------------------------- -----------------
TOTAL 2,666,667
- -------------------------------- -----------------
**Includes original and optional advances, but, does not include PIK.
EXHIBIT 10.12
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated October 21, 1998, by and among LogiMetrics,
Inc., a Delaware corporation (the "Company"), and the purchasers listed on the
signature pages hereto (collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, on the terms and subject to the conditions set forth herein,
the Company desires to sell to the Purchasers, and the Purchasers desire to
purchase from the Company, $2,666,667 in aggregate principal amount of the
Company's Class C 13% Convertible Senior Subordinated Debentures due September
30, 1999 (the "Debentures") convertible into an aggregate of up to 8,602,151
shares of Common Stock, par value $.01 per share (the "Common Stock" and,
together with the Debentures, the "Securities"), of the Company, subject to
adjustment in certain circumstances (the Debentures to be in substantially the
form of Exhibit A hereto);
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and intending to be legally bound, the parties hereto agree as follow:
Article I
Purchase and Sale of Securities
Section 1.1. Purchase and Sale of Securities. Upon the terms and
subject to the conditions of this Agreement, on the date hereof the Company
shall issue and sell to the Purchasers, and such Purchasers shall purchase from
the Company, $2,666,667 in aggregate principal amount of the Debentures at an
aggregate purchase price of $2,000,000 (the "Purchase Price"). The amount of
Debentures to be purchased by each Purchaser pursuant to this Section 1.1 and
the aggregate Purchase Price allocable to each Purchaser is set forth on Exhibit
B attached hereto.
Section 1.2. Closing. The closing of the transactions contemplated by
Section 1.1 above (the "Closing") shall take place at the offices of the Company
at 10:00 a.m. on the date hereof, or at such other time and place as the parties
hereto may mutually agree. The time and date of the Closing is hereinafter
referred to as the "Closing Date." At the Closing, the Purchasers shall pay the
Purchase Price in immediately available funds by wire transfer to an account
previously designated by the Company. In exchange for the payment of the
Purchase Price, the Company shall execute, issue and deliver to the Purchasers
the Debentures registered in the name of the respective Purchasers as specified
in Exhibit B attached hereto.
<PAGE>
Article II
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
Section 2.1. Organization and Qualification. Each of the Company and
mmTech, Inc. ("mmTech") is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to own or lease its property and assets and to
carry on its business as presently conducted, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified and in good standing would result in a
material adverse change in the business, financial condition, results of
operations or prospects (financial and other) of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Change"). The Company has
previously provided to the Purchasers true and complete copies of (i) its
Certificate of Incorporation of and all amendments thereto and (ii) its by-laws
as currently in effect. Other than mmTech and LogiMetrics FSB, Inc., the Company
does not own any material amount of any shares of stock of any corporation or
any equity interest in a partnership, joint venture or other business entity,
and the Company does not control or have the right (whether or not presently
exercisable) to control any other corporation, partnership, joint venture or
other business entity by means of ownership, management contract or otherwise.
Section 2.2. Authorization. (a) The Company has the corporate power
and authority to execute and deliver this Agreement, the Registration Rights
Agreement, dated of even date herewith (the "Registration Rights Agreement"),
among the Company and the Purchasers and the Debentures (collectively, the
"Transaction Documents") and to perform its obligations hereunder and
thereunder, all of which have been duly authorized by all requisite corporate
action. Each of this Agreement and the Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(b) The Debentures have been duly authorized and, when issued in
accordance with the terms hereof, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The Company has sufficient authorized and unissued shares of
Common Stock reserved for issuance upon the conversion of the Debentures in
accordance with their terms. The shares of Common Stock issuable upon the
conversion of the Debentures will, when issued in accordance with the terms of
the Debentures, be duly authorized, validly issued, fully paid and
non-assessable.
(c) Except as described in Schedule 2.2, the issuance or conversion of
the Debentures will not (i) require the Company to issue any shares of its
capital stock or any security exercisable for or convertible or exchangeable
into shares of its capital stock to any person, or (ii) require any adjustment
<PAGE>
in the exercise price or number of shares of the Company's capital stock
issuable upon the exercise of the Company's outstanding securities.
Section 2.3. Non-contravention. Except as set forth in Schedule 2.3,
neither the execution and delivery of this Agreement and the other Transaction
Documents by the Company nor the performance by the Company of its obligations
hereunder and thereunder will (i) contravene any provision contained in the
Company's Certificate of Incorporation or by-laws, (ii) violate or result in a
breach (with or without the lapse of time, the giving of notice or both) of or
constitute a default under (A) any contract, agreement, commitment, indenture,
mortgage, lease, pledge, note, license, permit or other instrument or obligation
or (B) any judgment, order, decree, law, rule or regulation or other restriction
of any governmental authority, in each case to which the Company is a party or
by which it is bound or to which any of its assets or properties are subject,
(iii) result in the creation or imposition of any lien, claim, charge, mortgage,
pledge, security interest, equity, restriction or other encumbrance
(collectively, "Encumbrances") on any of the Company's assets or properties, or
(iv) result in the acceleration of, or permit any person to accelerate or
declare due and payable prior to its stated maturity, any material obligation of
the Company.
Section 2.4. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or the
other Transaction Documents by the Company or the consummation of the
transactions contemplated hereby or thereby by the Company, except (i) for such
consents and approvals as have previously been obtained and are in full force
and effect, and (ii) for such filings and registrations as may be required under
applicable securities laws. Assuming that the representations and warranties
contained in Article III hereof are true and correct in all respects, the offer
and sale of the Securities as contemplated hereby does not require registration
under the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities or "blue sky" laws.
Section 2.5. Capitalization of the Company. The Company's authorized
capital stock consists solely of 100,000,000 authorized shares of Common Stock,
of which 28,470,430 shares were issued and outstanding as of the date hereof;
and 200 shares of Preferred Stock, par value $.01 per share, of which, 28
shares, designated as Series A 12% Cumulative Convertible Redeemable Preferred
Stock, stated value $50,000 per share, were issued and outstanding as of the
date hereof. No shares of the Company's capital stock are held as treasury
shares. In addition, as of the date hereof 39,428,429 shares of Common Stock
were reserved for issuance upon the exercise or conversion of outstanding
securities of the Company. Except as set forth on Schedule 2.5, the Company does
not have (i) any shares of Common Stock or Preferred Stock reserved for
issuance, or (ii) any outstanding option, warrant, right, call or commitment
relating to its capital stock or any outstanding securities or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire from it, any shares of its capital stock (collectively,
"Company Securities"). There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Company Securities. There are no
pre-emptive or other subscription rights with respect to any shares of the
Company's capital stock or any securities convertible into or exchangeable for
<PAGE>
shares of the Company's capital stock and all of the issued and outstanding
shares of capital stock of the Company have been duly authorized, validly
issued, are fully paid and are nonassessable. All of the Company's outstanding
securities were offered, issued, sold and delivered by the Company in compliance
with all applicable state and federal securities laws. None of such securities
were issued in violation of any pre-emptive or subscription rights of any
person.
Section 2.6. SEC Reports. (a) The Company has made available to the
Purchasers true and complete copies of each report, schedule and registration
statement, including the exhibits thereto (but excluding exhibits incorporated
therein by reference), filed by the Company with the Securities and Exchange
Commission (the "Commission") since January 1, 1997, which, except for the
filing of an Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998, are all the documents that the Company was required to file with the
Commission since that date and through the date hereof (all of such documents as
amended as of the date hereof collectively, the "SEC Documents"). Schedule 2.6
sets forth a true and complete list of the SEC Documents as of the date hereof.
As of their respective dates, the SEC Documents (as amended as of the date
hereof) complied as to form in all material respects with the requirements of
the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, and the rules and regulations of the
Commission thereunder. As of their respective dates, except to the extent that
information contained therein has been revised or superseded by a later filed
SEC Document, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the financial position of the Company as of the dates thereof and
the results of its operations and cash flows for the periods then ended.
Section 2.7. [reserved]
Section 2.8. Absence of Certain Developments. Except as disclosed in
Amendment No. 1 to the Company's Registration Statement on Form SB-2 (File No.
333-51459) filed with the SEC on July 10, 1998 or as disclosed in Schedule 2.8,
since March 31, 1998, there has not been any Material Adverse Change. Except for
this Agreement and the transactions contemplated hereby, since March 31, 1998
the Company has conducted its business in the ordinary and usual course
consistent with past practices.
Section 2.9. Governmental Authorizations; Licenses; Etc. Except as
disclosed in Schedule 2.9, the business of each of the Company and mmTech has
been operated in compliance with applicable laws, rules, regulations, codes,
ordinances, orders, policies and guidelines of all governmental authorities
(excluding Environmental Laws which are specifically covered in Section 2.13
hereof), except for violations which, individually or in the aggregate, would
not result in a Material Adverse Change. Except as disclosed in Schedule 2.9,
<PAGE>
each of the Company and mmTech has all permits, licenses, approvals,
certificates and other authorizations, and has made all notifications,
registrations, certifications and filings with all governmental authorities,
necessary or advisable for the operation of their respective businesses as
currently conducted. Except as disclosed in Schedule 2.9, to the Company's best
knowledge there is no action, case or proceeding pending or overtly threatened
by any governmental authority with respect to (i) any alleged violation by the
Company, mmTech or their respective affiliates of any law, rule, regulation,
code, ordinance, order, policy or guideline of any governmental authority, or
(ii) any alleged failure by the Company, mmTech or their respective affiliates
to have any permit, license, approval, certification or other authorization
required in connection with the operation of its business.
Section 2.10. Litigation. Except as disclosed in Schedule 2.10, there
are no lawsuits, actions, proceedings, claims, orders or investigations pending
or, to the Company's best knowledge, overtly threatened against the Company or
mmTech (i) relating to the Company, mmTech, their respective businesses or any
product alleged to have been manufactured or sold by either of them, (ii)
seeking to enjoin the transactions contemplated hereby, or (iii) which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.
Section 2.11. Undisclosed Liabilities. Other than those reflected in
the financial statements included in (i) the Company's Annual Report on Form
10-KSB (as amended as of the date hereof), and (ii) the Company's Quarterly
Reports on Form 10-QSB for the fiscal quarters ended September 30, 1997,
December 31, 1997 and March 31, 1998 (each as amended as of the date hereof),
there are no material liabilities of the Company or mmTech of any kind or nature
whatsoever, whether known or unknown, absolute, accrued, contingent or
otherwise, or whether due or to become due, which are required to be disclosed
on financial statements prepared in accordance with generally accepted
accounting principles, other than liabilities incurred in the ordinary course of
business consistent with past practices since March 31, 1998.
Section 2.12. Taxes. Except as disclosed in Schedule 2.12, all
federal, state, county, local and foreign tax returns and reports of the Company
and mmTech required to be filed have been duly filed. Except as disclosed in
Schedule 2.12, all federal, state, county, local, foreign and any other taxes
(including all income, withholding and employment taxes), assessments (including
interest and penalties), fees and other governmental charges with respect to the
employees, properties, assets, income or franchises of the Company and mmTech
have been paid or duly provided for, or are being contested in good faith by
appropriate proceedings as previously disclosed to the Purchaser in writing and
adequate reserves therefor have been established pursuant to generally accepted
accounting principles, or have arisen after the date hereof in the ordinary
course of business.
Section 2.13. Environmental Matters. Except as disclosed in Schedule
2.13, to the Company's best knowledge (i) the business of each of the Company
and mmTech is being conducted in compliance with all applicable Environmental
Laws, (ii) the real property currently owned or operated by the Company or
mmTech (including, without limitation, soil, groundwater or surface water on or
under the properties and buildings thereon) (the "Affected Property") does not
<PAGE>
contain any Regulated Substance other than as permitted under applicable
Environmental Laws, (iii) neither the Company nor mmTech has received any notice
from any governmental authority that the Company or mmTech may be a "potentially
responsible party" (as such term is defined under the Comprehensive
Environmental Response, Compensation and Control Act, 42 U.S.C. Section 9601, et
seq.) in connection with any waste disposal site or facility used by the Company
or mmTech, and (iv) the Company, mmTech and the Affected Property are not
presently subject to a suit or judgment arising under any Environmental Law.
As used herein, "Environmental Laws" means any federal, state and
local law, statute, ordinance, rule, regulation, license, permit, authorization,
approval, consent, court order, judgment, decree, injunction, code, requirement
or agreement with any governmental authority, (x) relating to pollution (or the
cleanup thereof or the filing of information with respect thereto), human health
or the protection of air, surface water, ground water, drinking water supply,
land (including land surface or subsurface), plant and animal life or any other
natural resource, or (y) concerning exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production or disposal of Regulated Substances, in each case as amended and as
now or hereafter in effect. The term Environmental Law includes, without
limitation, (i) the Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Water Pollution Control Act, the Clean Air Act, the
Clean Water Act, the Solid Waste Disposal Act (including the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984), the Toxic Substances Control Act, the Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act of 1970,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to or threatened as
a result of the presence of, exposure to, or ingestion of, any Regulated
Substance.
As used herein, "Regulated Substances" means pollutants, contaminants,
hazardous or toxic substances, compounds or related materials or chemicals,
hazardous materials, hazardous waste, flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products (including, but not limited to,
waste petroleum and petroleum products) as regulated under applicable
Environmental Laws.
Section 2.14. Proprietary Rights. Except as disclosed in Schedule
2.14, each of the Company and mmTech owns and possesses all right, title and
interest in the patents, patent registrations, patent applications, trademarks,
service marks, trademark and service mark registrations and applications
therefor, copyrights, copyright registrations, copyrights applications, trade
names, corporate names, technology, inventions, computer software, data and
documentation (including electronic media), product drawings, trade secrets,
know-how, customer lists, processes, other intellectual property and proprietary
information or rights used in their respective businesses as presently
conducted; or owns or possesses permits, licenses or other agreements to or from
third parties regarding the foregoing (collectively, the "Proprietary Rights").
<PAGE>
Except as disclosed in Schedule 2.14, to the Company's best knowledge, there is
not pending or overtly threatened against the Company or mmTech any claim by any
third party contesting the validity, enforceability, use or ownership of any
Proprietary Right. Except as disclosed in Schedule 2.14, to the Company's best
knowledge, neither the Company nor mmTech has received any notice of any
infringement or misappropriation by, or conflict with, any third party with
respect to any of the Proprietary Rights.
Section 2.15. Books and Records. The stock records of the Company
fairly and accurately reflect in all material respects the record ownership of
all of the outstanding shares of the Company's capital stock. The other books
and records of the Company and mmTech, including financial records and books of
account, are complete and accurate in all material respects and have been
maintained in accordance with sound business practices.
Section 2.16. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Company in connection with this Agreement or any of the transactions
contemplated hereby.
Section 2.17. Use of Proceeds. The Company will use the net proceeds
of the sale of the Securities for working capital and general corporate
purposes.
Section 2.18. Absence of Questionable Payments. Neither the Company,
mmTech nor any affiliate, director, officer, employee, agent, representative or
other person acting on behalf of the Company or mmTech has: (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political
activities to government officials or others, or (ii) accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 2.19. Accuracy of Representations. No representation or
warranty made by the Company in this Agreement or any document delivered, or to
be delivered, by or on behalf of the Company pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading. Except as disclosed
in the SEC Documents or in the Schedules to this Agreement, there is no fact or
circumstance that the Company has not disclosed to the Purchasers in writing
that the Company presently believes has resulted, or could reasonably be
expected to result, in a Material Adverse Change or could reasonably be expected
to have a material adverse effect on the ability of the Company to perform its
obligations under this Agreement.
Article III
Representations and Warranties of the Purchasers
The Purchasers hereby, severally and not jointly, represent and
warrant to the Company as follows:
<PAGE>
Section 3.1. Organization. Each Purchaser that is not an individual is
either a corporation, limited liability company, general partnership or limited
partnership, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Schedule 3.1 hereto sets forth the
type of entity and the jurisdiction of organization for each Purchaser that is
not an individual.
Except as set forth in Schedule 3.1, each of the Purchasers is a "U.S.
person" as such term is defined in Section 7701(a)(30) of the Code. Each
Purchaser that is a U.S. person has previously provided the Company with a
completed Form W-9 certifying that such Purchaser is not subject to back-up
withholding with respect to amounts payable to such Purchaser by the Company.
Each Purchaser that is not a U.S. person has previously provided the Company
with a completed Form W-8 certifying that such Purchaser is not subject to
certain U.S. information return reporting or back-up withholding with respect to
amounts payable to such Purchaser by the Company.
Section 3.2. Authorization. Each Purchaser that is not an individual
has the power and authority (corporate, limited liability company, partnership
and other) to execute and deliver this Agreement and to perform its obligations
hereunder, all of which have been duly authorized by all requisite corporate,
limited liability company or partnership action. Each Purchaser that is an
individual has the capacity to execute and deliver this Agreement and to perform
his or her obligations hereunder. Each such individual Purchaser is under no
impairment or other disability, legal, physical, mental or otherwise, that would
preclude or limit the ability of such Purchaser to perform his or her
obligations under this Agreement. This Agreement has been duly authorized,
executed and delivered by each Purchaser and constitutes a valid and binding
agreement of such Purchaser, enforceable against such Purchaser in accordance
with its terms.
Section 3.3. Access to Information. The Purchasers have received
copies of the SEC Documents or have otherwise examined copies of such SEC
Documents to the extent they deemed necessary or advisable to evaluate the risks
and merits of an investment in the Company. Any Purchaser formed for the purpose
of investing in the Securities or the Additional Securities (a "New Purchaser")
has provided access to such SEC Documents to each investor in such Purchaser
(the "Investors"). In addition, the Purchasers and their respective purchaser
representatives, if any, have had an opportunity to ask questions of and receive
answers from representatives of the Company concerning the business of the
Company, its condition and prospects (financial and other) and the terms and
conditions of the offering of the Securities.
Section 3.4. Accredited Investor. Each Purchaser is an "Accredited
Investor" as such term is defined in Rule 501 of the rules and regulations of
the Commission promulgated under the Securities Act. No offering or sale of
interests in any Purchaser or any other security of such Purchaser was made to
any person, other than such "Accredited Investors." Schedule 3.4 hereto sets
forth a list of the New Purchasers. Other than such New Purchasers, no Purchaser
was formed for the purpose of investing in the Securities.
Section 3.5. Investment Intent. (a) Each Purchaser is acquiring the
Securities for its own account for investment only and not for or with a view to
resale or distribution. No Purchaser has entered into any contract, undertaking,
<PAGE>
agreement or arrangement with any person to sell, transfer or pledge to such
person or anyone else the Securities and no Purchaser has any present plans or
intentions to enter into any such contract, undertaking, agreement or
arrangement.
(b) Each Purchaser has the financial ability to bear the economic risk
of losing its entire investment in the Securities, is prepared to bear the
economic risk of its investment therein for an indefinite time and can afford to
sustain a complete loss of its investment therein.
(c) The overall commitment of each Purchaser to investments which are
not readily marketable is not disproportionate to its net worth, and an
investment in the Securities will not cause such overall commitment to become
excessive. Each Purchaser's need for diversification in its investment portfolio
will not be impaired by an investment in the Company.
(d) Each Purchaser has adequate means of satisfying its short term
needs for cash and has no present need for liquidity which would require it to
sell its Securities or any interest therein.
(e) Each Purchaser has substantial experience in making investment
decisions of this type and/or is relying on its own advisors in making this
investment decision and, therefore, either alone or together with its advisors,
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Company.
(f) Each Purchaser understands that the Securities constitute
restricted securities within the meaning of Rule 144 promulgated under the
Securities Act, and that none of the Securities, or any interest therein, may be
sold except pursuant to an effective registration statement under the Securities
Act or in a transaction exempt from registration under the Securities Act, and
understands the meaning and effect of such restriction.
(g) Each Purchaser has considered and, to the extent such Purchaser
believed such discussion was necessary, discussed with its professional legal,
tax and financial advisers the suitability of an investment in the Company for
such Purchaser's particular tax and financial situation and each Purchaser has
determined that the Securities are a suitable investment for it.
(H) EACH PURCHASER UNDERSTANDS THAT AN INVESTMENT IN THE SECURITIES
BEING PURCHASED BY IT INVOLVES A HIGH DEGREE OF RISK, INCLUDING WITHOUT
LIMITATION, RISKS RELATING TO THE COMPANY'S HISTORY OF LOSSES, RISKS RELATING TO
THE RECENT CHANGE IN THE COMPANY'S BUSINESS FOCUS, RISKS RELATING TO THE
COMPANY'S DEPENDENCE UPON THE DEVELOPMENT OF NEW MARKETS OF UNCERTAIN SIZE AND
GROWTH PROSPECTS, THE COMPANY'S DEFAULTS UNDER SUBSTANTIALLY ALL OF ITS
INDEBTEDNESS AND OUTSTANDING PREFERRED STOCK, THE COMPANY'S CONTINUING NEED FOR
ADDITIONAL CAPITAL, THE COMPANY'S NEED FOR LIQUIDITY, THE EFFECTS OF
COMPETITION, THE COMPANY'S RELIANCE ON KEY PERSONNEL, THE COMPANY'S DEPENDENCE
<PAGE>
ON TECHNOLOGY AND TECHNOLOGICAL INNOVATION, THE EFFECTS OF GOVERNMENT REGULATION
OF THE TELECOMMUNICATIONS INDUSTRY, THE RESTRICTIONS ON TRANSFER OF THE
SECURITIES, THE SUBORDINATION PROVISIONS OF THE DEBENTURES, POTENTIAL CONFLICTS
OF INTEREST AND RELATED PARTY TRANSACTIONS INVOLVING THE COMPANY AND THE
DIRECTORS AND OFFICERS OF THE COMPANY, AND RISKS RELATING TO THE SUCCESSFUL
EXECUTION OF THE COMPANY'S BUSINESS AND OPERATING STRATEGY.
(i) Each New Purchaser has received representations and warranties
from each Investor in such New Purchaser similar to those contained in this
Section 3.5, and such representations and warranties specifically authorize the
Company to rely thereon.
(j) The offer and sale of interests in each New Purchaser to the
Investors therein did not require registration under the provisions of the
Securities Act or any applicable state securities or "blue sky" laws. Each New
Purchaser complied in all material respects with the requirements of applicable
state securities or "blue sky" laws with respect to such offer and sale.
(k) The placement materials used by each New Purchaser or its agents
in connection with the offer and sale of interests in such New Purchaser did not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that no representation or warranty is made with respect to information regarding
the Company and mmTech provided to any such New Purchaser by the Company
expressly for use in such placement materials.
Section 3.6. Financial Resources. Each Purchaser has cash or credit
facilities presently available to meet all of its payment obligations hereunder.
Section 3.7. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from any
Purchaser in connection with this Agreement or any of the transactions
contemplated hereby.
Section 3.8. Accuracy of Representations. No representation or
warranty made by the Purchaser in this Agreement or any document delivered, or
to be delivered, by it or on its behalf pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading.
<PAGE>
Article IV
Restrictions on Transfer; Other Covenants
Section 4.1. Limited Transferability. The Securities, including,
without limitation, the shares of Common Stock issuable upon the conversion of
the Debentures (the "Issuable Shares") shall not be transferable except in
accordance with the provisions of this Article IV, which provisions are intended
to insure compliance with the provisions of the Securities Act in respect of the
transfer of any of such securities.
Section 4.2. Restrictive Legend. The Debentures and any certificates
representing the Issuable Shares shall (unless otherwise permitted by the
provisions of Section 4.4 below) be stamped or otherwise imprinted with the
following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN
EXEMPTION UNDER SUCH ACT OR LAWS IS AVAILABLE. THE
TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT
TO THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF
OCTOBER 21, 1998 AMONG THE COMPANY AND THE PURCHASERS
NAMED THEREIN.
For purposes of this Article IV, any references to "Debentures" or
"Issuable Shares" shall include any other securities issued in respect of any of
such securities.
Section 4.3. Restrictions on Transfer. (a) Subject to the provisions
of Section 4.4, the Debentures and the Issuable Shares shall not be transferred,
and the Company shall not be required to register any transfer thereof on the
books of the Company, unless such transfer is made pursuant to an effective
registration statement, in compliance with Rule 144, or pursuant to another
exemption under the Securities Act; provided, however, that the Company shall
not be required to register any transfer in the event any securities are offered
or sold otherwise than pursuant to an effective registration statement or
pursuant to Rule 144 unless the Company shall have received an opinion of
counsel to the Purchaser wishing to effect such transfer, reasonably
satisfactory to the Company, that such transfer does not require registration
under the Securities Act or applicable state securities laws. Notwithstanding
the foregoing, any Purchaser may freely transfer at any time or from time to
time the Debentures and/or the Issuable Shares, or any interest therein, to any
other Purchaser or any general partner of such Purchaser, any limited partner of
such Purchaser, any other fund, account or other entity managed, directly or
indirectly, by any general partner of such Purchaser and the respective
subsidiaries and affiliates of any of the foregoing (each, a "Permitted
Transferee") without complying with the provisions of this Article IV (a
"Permitted Transfer") and the Company shall, or shall cause any registrar or
<PAGE>
transfer agent to, promptly register any such Permitted Transfer on the books of
the Company; provided, however, that in connection with any such Permitted
Transfer, the Permitted Transferees shall acknowledge the restrictions on
transferability under applicable law and agree in writing to be bound by the
provisions of this Article IV.
(b) In addition to the restrictions set forth in paragraph (a) above,
for a period of 90 days after purchase (the "Restrictive Period"), no Purchaser
shall sell, assign, transfer or otherwise dispose of the Securities, or any
interest therein (a "Transfer") (other than a Permitted Transfer), without the
prior written consent of the Company which may be withheld by the Company in its
sole discretion; provided, however, that nothing contained herein shall prohibit
any Purchaser from converting a Debenture in accordance with the terms thereof.
Subject to the restrictions set forth in paragraph (a) above, from and after the
end of the Restrictive Period, a Purchaser may Transfer all or a portion of its
Securities, or any interest therein, without the consent of the Company.
Section 4.4. Registration Rights. The Purchasers shall be entitled to
registration rights with respect to the Debenture Shares as set forth in the
Registration Rights Agreement.
Article V
Right of First Refusal
Section 5.1. Right of First Refusal. (a) If the Company proposes to
obtain additional financing (a "Financing") prior to September 30, 1999 from a
third party, the Company shall first give to the Purchasers a notice (an "Offer
Notice") setting forth in reasonable detail the amount, structure and other
terms of the proposed Financing. The Purchasers shall thereafter have the
exclusive right (the "Refusal Right"), upon written notice given to the Company
by the holders of a majority of the outstanding principal amount of the
Debentures (the "Majority Holders") no later than ten business days after
receipt of the Offer Notice, to provide the Financing to the Company on the
terms set forth in the Offer Notice (an "Acceptance Notice"). An Acceptance
Notice shall constitute an irrevocable joint and several commitment by the
Purchasers executing such Acceptance Notice (the "Accepting Purchasers") to
provide the Company with the Financing on the terms specified in the Offer
Notice. The obligation to provide the Financing may be allocated among the
Accepting Purchasers, or any one or more of them, as the Accepting Purchasers
may determine in their sole discretion. The closing of the Financing shall take
place on such date, no less than ten and no more than thirty days after the date
of the Acceptance Notice, as the Company and the Accepting Holders may agree.
(b) If the Purchasers do not provide an Acceptance Notice within the
ten business-day period set forth in clause (a) above, the Company shall have
the right for up to 90 days thereafter to obtain a Financing on the terms
specified in the Offer Notice from one or more third parties (including on or
more of the Purchasers).
Section 5.2. Exceptions. The Refusal Right granted to the Purchasers
in Section 5.1 hereof shall not apply to (i) a Qualifying Offering, (ii) any
replacement, renewal, extension, modification or amendment of the Company's
<PAGE>
current lending facility with North Fork Bank provided, however, that the
principal amount of such facility after giving effect thereto shall not exceed
$2.8 million, (iii) any trade credit (whether or not evidenced by a note or
other instruments), (iv) any receivables financing arrangements, (v) the
issuance of securities in connection with the acquisition of the assets or stock
of any other business, (vi) the exercise or conversion of any security
outstanding on the issuance date of the Debentures, (vii) the issuance and
exercise of awards made from and after the date hereof pursuant to the Company's
1997 Stock Compensation Program (the "Plan"), or (viii) pursuant to any other
plan or arrangement approved by the Company's Board of Directors or the
Compensation Committee thereof 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).
Article VI
Deliveries at Closing
Section 6.1. Deliveries by the Company. At the Closing, the Company
shall deliver to the Purchasers the following in form and substance reasonably
satisfactory to the Purchasers' counsel:
(a) a certificate of the President or a Vice President of the Company,
dated the Closing Date, to the effect that (i) the person signing such
certificate is familiar with this Agreement, (ii) all representations and
warranties made by the Company in this Agreement are true, correct and complete
in all material respects as of the Closing, (iii) the Company has duly performed
or complied with, in all material respects, all of the covenants, obligations
and agreements to be performed or complied with by it under the terms of this
Agreement on or prior to or at the Closing, and (iv) except as disclosed
pursuant to this Agreement, there has been no Material Adverse Change or
prospective change which could reasonably be expected to result in a Material
Adverse Change since March 31, 1998;
(b) a certificate of the Secretary or Assistant Secretary of the
Company, dated the Closing Date, as to the incumbency of any officer of the
Company executing this Agreement or any document related thereto and covering
such other matters as the Purchasers may reasonably request;
(c) a certified copy of the resolutions of the Company's Board of
Directors authorizing the execution, delivery and consummation of this Agreement
and the transactions contemplated hereby;
(d) an executed counterpart of the Registration Rights Agreement;
(e) the Debentures, duly executed, issued and delivered by the Company
and registered in the names of the Purchasers as they may specify;
<PAGE>
(f) an executed counterpart of the Stock Purchase Agreement, dated of
even date herewith (the "Stock Purchase Agreement") among Charles S. Brand and
the Purchaser;
(g) executed undertaking letters from each of Francisco A. Garcia,
Norman M. Phipps and Kenneth C. Thompson; and
(h) such other documents or instruments as the Purchasers reasonably
request to effect the transactions contemplated hereby.
Section 6.2. Deliveries by the Purchasers. At the Closing, the
Purchasers shall deliver to the Company the following in form and substance
reasonably satisfactory to the Company's counsel:
(a) evidence that the Purchase Price has been paid in full;
(b) an executed counterpart of the Registration Rights Agreement;
(c) an executed counterpart of the Stock Purchase Agreement; and
(d) such other documents or instruments as the Company reasonably
requests to effect the transactions contemplated hereby.
ARTICLE VII
Survival, Amendment and Waiver
Section 7.1. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or any certificate
delivered in connection herewith shall survive the Closing, and shall apply with
respect to claims asserted in writing within one year thereof. The provisions of
this Section 7.1 shall not limit any covenant or agreement of the parties hereto
which, by its terms, contemplates performance after the applicable Closing.
Section 7.2. Amendments. This Agreement (including the provisions of
this Section 7.2) may not be amended or modified except by an instrument in
writing signed on behalf of all of the parties affected by such amendment or
modification.
Section 7.3. Extension; Waiver. The parties hereto may (i) extend the
time for performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
of the other parties hereto or satisfaction of any of the conditions to such
party's obligations contained herein. Any agreement on the part of a party
<PAGE>
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of a party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE VIII
Miscellaneous
Section 8.1. Notices. All notices, requests, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, when delivered by courier, three
days after being deposited in the mail (registered or certified mail, postage
prepaid, return receipt requested), or when received by facsimile transmission
upon receipt of a confirmed transmission report, as follows:
If to the Company: 50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
Attention: Chief Executive Officer
and if to the other parties at the address or facsimile transmission number
specified below its name on the signature pages hereto (or, in the case of
Persons who become parties hereto subsequently, at their last addresses or
facsimile transmission numbers shown on the record books of the Company). Any
party hereto, by notice given to the other parties hereto in accordance with
this Section 8.1 may change the address or facsimile transmission number to
which such notice or other communications are to be sent to such party.
Section 8.2. Expenses. The Company shall pay its own expenses incident
to this Agreement and the transactions contemplated herein. The Company shall be
responsible for and shall pay at the Closing the fees and disbursements of
counsel to the Purchasers incurred in connection with the negotiation, execution
and delivery of this Agreement and the other Transaction Documents and the
closing of the transactions contemplated hereby and thereby.
Section 8.3. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
<PAGE>
Section 8.4. Assignment; Successors and Assigns; No Third Party
Rights. This Agreement may not be assigned by operation of law or otherwise, and
any attempted assignment shall be null and void; provided, however, that any
Purchaser may assign this Agreement (or any interest herein) to one or more
Permitted Transferees so long as such Purchaser also assigns to such Permitted
Transferees its rights and obligations under the other Transaction Documents to
which it is a party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, permitted
assigns and legal representatives. This Agreement shall be for the sole benefit
of the parties to this Agreement and their respective heirs, successors,
permitted assigns and legal representatives and is not intended, nor shall be
construed, to give any Person, other than the parties hereto and their
respective heirs, successors, assigns and legal representatives, any legal or
equitable right, remedy or claim hereunder.
Section 8.5. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 8.6. Titles and Headings. The titles and headings in this
Agreement are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 8.7. Entire Agreement. This Agreement and the other
Transaction Documents constitute the entire agreement among the parties with
respect to the matters covered hereby and thereby and supersede all previous
written, oral or implied understandings among them with respect to such matters,
including, without limitation, the term sheet, dated October 16, 1998.
Section 8.8. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 8.9. No Strict Construction. Each of the parties hereto
acknowledge that this Agreement has been prepared jointly by the parties hereto,
and shall not be strictly construed against either party.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
__________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
/s/Steven Dinetz
_______________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
/s/Gerald B. Cramer
_______________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Edward J. Rosenthal
__________________________
Edward J. Rosenthal, Keogh
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor, III
______________________________
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/Jay Howard
______________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor, III
______________________________
Name: Eugene A. Trainor, III
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
_______________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Eugene A. Trainor, III
______________________________
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>
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
______________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Fred M. Filoon
___________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor, III
____________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Charles S. Brand
_____________________________
Charles S. Brand
20 Meridian Way
Eatontown, New Jersey 07724
Tel: (732) 935-7150
Fax: (732) 935-7151
<PAGE>
Exhibit A
Form of Debenture
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND CANNOT BE SOLD OR TRANSFERRED
UNLESS AND UNTIL THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION UNDER SUCH ACT OR
LAWS IS AVAILABLE. THE TRANSFERABILITY OF THESE SECURITIES IS FURTHER SUBJECT TO
THE PROVISIONS OF A PURCHASE AGREEMENT DATED AS OF 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).
<PAGE>
Interest will accrue at the greater of the Default Rate (hereinafter defined)
and the rate of fifteen percent (15%) per annum on any principal payment past
due under this Debenture and, unless prohibited under applicable law (and if so
prohibited then only to the extent not so prohibited), on any interest which has
not been paid on the date on which it is due and payable (without giving effect
to any applicable grace periods or paragraph 4 hereof) until such time as
payment therefor is actually delivered to the Holder.
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company will repay the principal
amount of this Debenture on 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
<PAGE>
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.
(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.
<PAGE>
(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.
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as
of the record date for such split, dividend or other distribution),
without consideration, of such Common Stock or such Convertible
Securities, as the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be
determined the price per share for which Common Stock is issuable upon
the conversion or exchange thereof, such determination to be made by
dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by (b)
the maximum number of shares of Common Stock of the Company issuable
upon the conversion or exchange of all such Convertible Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale for
cash (as of the date of issue or sale of such Convertible Securities)
of such maximum number of shares of Common Stock at the price per
share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the
passage of time, in the amount of additional consideration, if any,
payable to the Company, or in the rate of exchange, upon the
conversion or exchange thereof, the Pro Forma Adjusted Trigger Price
per share shall, forthwith upon any such increase becoming effective,
be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised,
the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock
so issued or sold were those issued or sold upon the conversion or
exchange of such Convertible Securities, and that they were issued or
sold for the consideration actually received by the Company upon such
conversion or exchange, plus the consideration, if any, actually
received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
(iii) In case the Company shall grant any rights or options
to subscribe for, purchase or otherwise acquire Common Stock of any
class other than the Subject Securities, there shall be determined the
price per share for which Common Stock is issuable upon the exercise
of such rights or options, such determination to be made by 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.
<PAGE>
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then the granting of such rights or options shall be deemed to be an
issue or sale for cash (as of the date of the granting of such rights
or options) of such maximum number of shares of Common Stock at the
price per share so determined, provided that, if such rights or
options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration,
if any, payable to the Company upon the exercise thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such
increase becoming effective, be readjusted to reflect the same, and
provided, further, that upon the expiration of such rights or options,
if any thereof shall not have been exercised, the Pro Forma Adjusted
Trigger Price per share shall forthwith be readjusted and thereafter
be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(iv) In case the Company shall grant any rights or options
to subscribe for, purchase or otherwise acquire Convertible Securities
other than the Subject Securities, such Convertible Securities shall
be deemed, for the purposes of subparagraph (iii) above, to have been
issued or sold for the total amount received or receivable by the
Company as consideration for the granting of such rights or options
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of such rights or options,
provided that, upon the expiration of such rights or options, if any
thereof shall not have been exercised, the Pro Forma Adjusted Trigger
Price per share shall forthwith be readjusted and thereafter be the
price which it would have been had an adjustment been made upon the
basis that the only Convertible Securities so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(v) In case any shares of stock or other securities, other
than Common Stock of the Company, shall at any time be receivable upon
the conversion of this Debenture, and in case any additional shares of
such stock or any additional such securities (or any stock or other
securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such
as to dilute the purchase rights evidenced by this Debenture, then and
in each such case the Pro Forma Adjusted Trigger Price per share shall
forthwith be adjusted, substantially in the manner provided for above
in this paragraph (c), so as to protect the Holder of this Debenture
against the effect of such dilution.
<PAGE>
(vi) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor, after
deducting any expenses incurred and any underwriting or similar
commissions, compensation or concessions paid or allowed by the
Company in connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash (or a consideration
which includes cash 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 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
<PAGE>
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 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.
<PAGE>
(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:
(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
<PAGE>
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:
<PAGE>
(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
<PAGE>
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute
such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day
after each such month, backlog reports and accounts receivable agings
of the Company;
(vii) permit the Holder to make or cause to be made, inspections
and audits of any books, records and papers of the Company and of any
parent or subsidiary thereof and to make extracts therefrom at all such
reasonable times and as often as the Holder may reasonably require;
(viii) immediately give notice to the Holder that an Event of
Default has occurred or that an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, has occurred
and specifying the action which the Company has taken and proposes to take
with respect thereto.
(b) Financial 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
<PAGE>
reasonably satisfactory to the Majority Holders subordinating the payment
of principal and interest thereon to the prior payment of principal and
interest on the Debentures, and (z) the incurrence of which will not cause
an Event of Default, or an event which with notice or the lapse of time or
both would constitute an Event of Default, hereunder (collectively,
"Permitted Indebtedness");
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in, any of its
property or assets now owned or hereafter acquired except (A) mortgages,
liens, pledges and security interests securing Permitted Indebtedness; (B)
other liens, charges and encumbrances incidental to the conduct of its
business or the ownership of its property and assets which are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit and which do not materially impair the use thereof in the operation
of its business; (C) liens for taxes or other governmental charges which
are not delinquent or which are being contested in good faith and for which
a reserve shall have been established in accordance with GAAP; (D) liens
granted to secure purchase money financing of equipment, provided such
liens are limited to the equipment financed; and (E) liens granted to
refinance unencumbered equipment provided such liens are limited to the
equipment refinanced and the incurrence of which will not cause a default
hereunder or in any Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (B) engage in or
permit any person to engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended) involving any pension plan which would subject the Company to
any material tax, penalty or other liability, (C) incur or suffer to 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
<PAGE>
an Event of Default shall have occurred and be continuing, or liquidate,
wind-up or dissolve itself or sell, transfer or lease or otherwise dispose
of all or any substantial part of its assets;
(vii) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except (A) investments in United States
Government obligations and certificates of deposit of any bank institution
with combined capital and surplus of at least $200,000,000, (B) trade
credit, (C) security deposits, or acquire or otherwise cause any other
entity to become a subsidiary of the Company (as used herein the term
"subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of which the Company or any other
subsidiary of the Company beneficially owns a majority of the voting or
economic interests), 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;
<PAGE>
(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 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.
<PAGE>
(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.
9. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Debenture may be a mended 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.
<PAGE>
12. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures
to exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right 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.
<PAGE>
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
<PAGE>
<TABLE>
Exhibit B
List of Purchasers and Allocation of Purchase
<CAPTION>
Name of Purchaser Purchase Price Principal Amount of Debentures
<S> <C> <C>
Gerald B. Cramer $181,976.00 $242,634.66
A.C. Israel Enterprises, Inc. 181,976.00 242,634.66
CRM 1998 Enterprise Fund, LLC 494,975.00 659,966.66
Steven Dinetz 54,591.00 72,788.00
CRM-EFO Partners, L.P. 45,494.00 60,658.67
Richard S. Fuld, Jr. 27,297.00 36,396.00
McGlynn Family Partnership 18,197.00 24,262.67
Edward J. Rosenthal, Keogh 18,197.00 24,262.67
Fred M. Filoon 18,197.00 24,262.67
Eugene A. Trainor, III 9,100.00 12,133.34
Kabuki Partners ADP, GP 112,500.00 150,000.00
Pamela Equities Corp. 198,750.00 265,000.00
Whitehall Properties, LLC 138,750.00 185,000.00
Charles S. Brand 500,000.00 666,667.00
Total $2,000,000.00 $2,666,667.00
</TABLE>
EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated October 21, 1998, among Charles S.
Brand (the "Seller") and the purchasers listed on the signature pages hereto
(collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Seller is the legal and beneficial owner of 19,367,800 of
the issued and outstanding common stock, par value $.01 per share (the "Common
Stock"), of LogiMetrics, Inc. (the "Company"); and
WHEREAS, the Seller desires to sell and transfer to the Purchasers,
and the Purchasers desire to purchase from the Seller, 2,000,000 shares of
Common Stock (the "Brand Shares"), all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Brand Shares
Section 1.1. Purchase and Sale of Brand Shares. Upon the terms and
subject to the conditions of this Agreement and on the basis of the
representations, warranties and agreements contained herein, the Seller hereby
sells, assigns, transfers, conveys and delivers to the Purchasers the Brand
Shares for a cash purchase price of $0.25 per share or an aggregate of $500,000
(the "Purchase Price"). The number of Brand Shares being purchased by each
Purchaser and the aggregate Purchase Price allocable to each Purchaser is set
forth on Exhibit A attached hereto. The Purchase Price shall be payable in cash
by wire transfer to an account or accounts specified in writing by the Seller
simultaneously with the delivery to the Purchasers of the Brand Shares, in
proper form for transfer or otherwise accompanied by blank stock powers executed
by the Seller (with signature guaranteed).
ARTICLE II
Representations and Warranties Regarding the Seller
The Seller hereby represents and warrants to the Purchasers as
follows:
Section 2.1. Authorization. The Seller has the capacity to execute and
deliver this Agreement and to perform his obligations hereunder. The Seller is
under no impairment or other disability, legal, physical, mental or otherwise,
that would preclude or limit the ability of such Seller to perform his
obligations hereunder. This Agreement constitutes a valid and binding obligation
<PAGE>
of the Seller, enforceable against such Seller in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 2.2. Non-contravention. Neither the execution and delivery of
this Agreement nor the performance by the Seller of his obligations hereunder
will (i) violate or result in a breach (with or without the lapse of time, the
giving of notice or both) of or constitute a default under (A) any contract,
agreement, commitment, indenture, mortgage, lease, pledge, note, license, permit
or other instrument or obligation, other than Section 2.3 of the Stockholders
Agreement, dated as of July 29, 1997 (the "Stockholders Agreement"), among the
Seller, the Company and the other parties thereto, or (B) any judgment, order,
decree, law, rule or regulation or other restriction of any national, federal,
state, provincial, county, municipal or local government, foreign or domestic,
or the government of any political subdivision of any of the foregoing, or any
entity, authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental
entity established to perform any of such functions (each, a "Governmental
Authority"), in each case to which the Seller is a party or by which the Seller
is bound or to which any of his assets or properties are subject, or (ii) result
in the creation or imposition of any lien, claim, charge, mortgage, pledge,
security interest, equity, restriction or other encumbrance (collectively,
"Encumbrances") on the Brand Shares.
Section 2.3. No Consents. Except for compliance with the provisions of
Section 2.3 of the Stockholders Agreement, no notice to, filing with, or
authorization, registration, consent or approval of any Governmental Authority
or other individual, partnership, corporation, joint stock company,
unincorporated organization or association, trust or joint venture, or a
governmental agency or political subdivision thereof (each, a "Person") is
necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Seller. The approval
set forth in Section 5.1 hereof is sufficient to authorize the sale of the Brand
Shares pursuant to the provisions of the Stockholders Agreement.
Section 2.4. Ownership of the Shares. The Seller owns the Brand Shares
beneficially and of record, free and clear of any Encumbrances, other than
Encumbrances created pursuant to the terms of the Stockholders Agreement and
those arising under applicable federal and state securities laws. Except for the
Stockholders Agreement, there are no voting trust arrangements, shareholder
agreements or other agreements (i) granting any option, warrant or right of
first refusal with respect to the Brand Shares to any Person, (ii) restricting
the right of the Seller to sell the Brand Shares to the Purchasers, or (iii)
restricting any other right of the Seller with respect to the Brand Shares.
Subject to compliance with Section 2.3 of the Stockholders Agreement, the Seller
has the absolute and unrestricted right, power and capacity to sell, assign and
transfer the Brand Shares to the Purchasers free and clear of any Encumbrances
(except for Encumbrances created pursuant to the Stockholders Agreement and
those arising under applicable federal and state securities laws). Upon delivery
to the Purchasers of the certificates representing the Brand Shares in exchange
for the Purchase Price, the Purchasers will acquire good, valid and marketable
title to the Brand Shares, free and clear of any Encumbrances created by the
Seller.
<PAGE>
Section 2.5. Brokers. No Person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Seller in connection with this Agreement or any of the transactions contemplated
hereby.
ARTICLE III
Representations and Warranties Regarding the Purchasers
The Purchasers hereby, severally and not jointly, represent and
warrant to the Seller as follows:
Section 3.1. Organization. Each Purchaser that is not an individual is
either a corporation, limited liability company, general partnership or limited
partnership, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization.
Section 3.2. Authorization. Each Purchaser that is not an individual
has the power and authority (corporate, limited liability company, partnership
and other) to execute and deliver this Agreement and to perform its obligations
hereunder, all of which have been duly authorized by all requisite corporate,
limited liability company or partnership action. Each Purchaser that is an
individual has the capacity to execute and deliver this Agreement and to perform
his or her obligations hereunder. Each such individual Purchaser is under no
impairment or other disability, legal, physical, mental or otherwise, that would
preclude or limit the ability of such Purchaser to perform his or her
obligations under this Agreement. This Agreement has been duly authorized,
executed and delivered by each Purchaser and constitutes a valid and binding
agreement of such Purchaser, enforceable against such Purchaser in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 3.3. Access to Information. The Purchasers have received all
information regarding the Company that they deemed necessary or advisable to
evaluate the risks and merits of an investment in the Brand Shares. In addition,
the Purchasers and their respective purchaser representatives, if any, have had
an opportunity to ask questions of and receive answers from the Seller and
representatives of the Company concerning the business of the Company, its
condition and prospects (financial and other) and the terms and conditions of
the offering of the Brand Shares.
Section 3.4. Accredited Investor. Each Purchaser is an "Accredited
Investor" as such term is defined in Rule 501 of the rules and regulations of
the Commission promulgated under the Securities Act. No Purchaser was formed for
the purpose of investing in the Brand Shares.
Section 3.5. Investment Intent. (a) Each Purchaser is acquiring the
Brand Shares to be purchased for it for its own account for investment only and
not for or with a view to resale or distribution (except for the disposition by
certain of the Purchasers of up to 200,000 of the Brand Shares to certain
executive officers and directors of the Company). Except as described in the
<PAGE>
prior sentence, no Purchaser has entered into any contract, undertaking,
agreement or arrangement with any person to sell, transfer or pledge to such
person or anyone else the Brand Shares and no Purchaser has any present plans or
intentions to enter into any such contract, undertaking, agreement or
arrangement.
(b) Each Purchaser has the financial ability to bear the economic risk
of losing its entire investment in the Brand Shares, is prepared to bear the
economic risk of its investment therein for an indefinite time and can afford to
sustain a complete loss of its investment therein.
(c) The overall commitment of each Purchaser to investments which are
not readily marketable is not disproportionate to its net worth, and an
investment in the Brand Shares will not cause such overall commitment to become
excessive. Each Purchaser's need for diversification in its investment portfolio
will not be impaired by an investment in the Brand Shares.
(d) Each Purchaser has adequate means of satisfying its short term
needs for cash and has no present need for liquidity which would require it to
sell its Brand Shares or any interest therein.
(e) Each Purchaser has substantial experience in making investment
decisions of this type and/or is relying on its own advisors in making this
investment decision and, therefore, either alone or together with its advisors,
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Brand Shares.
(f) Each Purchaser understands that the Brand Shares constitute
restricted securities within the meaning of Rule 144 promulgated under the
Securities Act, and that none of the Brand Shares, or any interest therein, may
be sold except pursuant to an effective registration statement under the
Securities Act or in a transaction exempt from registration under the Securities
Act, and understands the meaning and effect of such restriction.
(g) Each Purchaser has considered and, to the extent such Purchaser
believed such discussion was necessary, discussed with its professional legal,
tax and financial advisers the suitability of an investment in the Brand Shares
for such Purchaser's particular tax and financial situation and each Purchaser
has determined that the Brand Shares are a suitable investment for it.
(H) EACH PURCHASER UNDERSTANDS THAT AN INVESTMENT IN THE BRAND SHARES
BEING PURCHASED BY IT INVOLVES A HIGH DEGREE OF RISK, INCLUDING WITHOUT
LIMITATION, RISKS RELATING TO THE COMPANY'S HISTORY OF LOSSES, RISKS RELATING TO
THE RECENT CHANGE IN THE COMPANY'S BUSINESS FOCUS, RISKS RELATING TO THE
COMPANY'S DEPENDENCE UPON THE DEVELOPMENT OF NEW MARKETS OF UNCERTAIN SIZE AND
GROWTH PROSPECTS, THE COMPANY'S DEFAULTS UNDER SUBSTANTIALLY ALL OF ITS
INDEBTEDNESS AND OUTSTANDING PREFERRED STOCK, THE COMPANY'S CONTINUING NEED FOR
ADDITIONAL CAPITAL, THE COMPANY'S NEED FOR LIQUIDITY, THE EFFECTS OF
<PAGE>
COMPETITION, THE COMPANY'S RELIANCE ON KEY PERSONNEL, THE COMPANY'S DEPENDENCE
ON TECHNOLOGY AND TECHNOLOGICAL INNOVATION, THE EFFECTS OF GOVERNMENT REGULATION
OF THE TELECOMMUNICATIONS INDUSTRY, THE RESTRICTIONS ON TRANSFER OF THE
SECURITIES, THE SUBORDINATION PROVISIONS OF THE DEBENTURES, POTENTIAL CONFLICTS
OF INTEREST AND RELATED PARTY TRANSACTIONS INVOLVING THE COMPANY AND THE
DIRECTORS AND OFFICERS OF THE COMPANY, AND RISKS RELATING TO THE SUCCESSFUL
EXECUTION OF THE COMPANY'S BUSINESS AND OPERATING STRATEGY.
Section 3.6. Financial Resources. Each Purchaser has cash or credit
facilities presently available to meet all of its payment obligations hereunder.
Section 3.7. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from any
Purchaser in connection with this Agreement or any of the transactions
contemplated hereby.
ARTICLE IV
Survival, Amendment and Waiver
Section 4.1. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or any certificate
delivered in connection herewith shall survive the sale of the Brand Shares as
contemplated hereby, and shall apply with respect to claims asserted in writing
within one year thereof. The provisions of this Section 4.1 shall not limit any
covenant or agreement of the parties hereto which, by its terms, contemplates
performance after the sale of the Brand Shares.
Section 4.2. Amendments. This Agreement (including the provisions of
this Section 4.2) may not be amended or modified except by an instrument in
writing signed on behalf of all of the parties affected by such amendment or
modification.
Section 4.3. Extension; Waiver. The parties hereto may (i) extend the
time for performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
of the other parties hereto or satisfaction of any of the conditions to such
party's obligations contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of a party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
<PAGE>
ARTICLE V
Miscellaneous
Section 5.1. Approval of Sale. Each Purchaser who is a party to the
Stockholders Agreement hereby irrevocably approves, pursuant to Section 2.3 of
the Stockholders Agreement, the sale of the Brand Shares as contemplated hereby.
Such Purchasers constitute the Majority Holders (as such term is defined in the
Stockholders Agreement).
Section 5.2. Notices. All notices, requests, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, when delivered by courier, three
days after being deposited in the mail (registered or certified mail, postage
prepaid, return receipt requested), or when received by facsimile transmission
upon receipt of a confirmed transmission report, as follows:
If to the Seller: c/o LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Tel: (516) 784-4110
Fax: (516) 784-4132
and if to the other parties at the address or facsimile transmission number
specified below its name on the signature pages hereto (or, in the case of
Persons who become parties hereto subsequently, at their last addresses or
facsimile transmission numbers shown on the record books of the Company). Any
party hereto, by notice given to the other parties hereto in accordance with
this Section 5.2 may change the address or facsimile transmission number to
which such notice or other communications are to be sent to such party.
Section 5.3. Expenses. Each of the parties hereto shall pay its own
expenses incident to this Agreement and the transactions contemplated herein.
Section 5.4. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
<PAGE>
Section 5.5. Assignment; Successors and Assigns; No Third Party
Rights. This Agreement may not be assigned by operation of law or otherwise, and
any attempted assignment shall be null and void. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors, permitted assigns and legal representatives. This Agreement shall be
for the sole benefit of the parties to this Agreement and their respective
heirs, successors, permitted assigns and legal representatives and is not
intended, nor shall be construed, to give any Person, other than the parties
hereto and their respective heirs, successors, assigns and legal
representatives, any legal or equitable right, remedy or claim hereunder.
Section 5.6. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 5.7. Titles and Headings. The titles and headings in this
Agreement are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 5.8. Entire Agreement. This Agreement constitute the entire
agreement among the parties with respect to the matters covered hereby and
thereby and supersede all previous written, oral or implied understandings among
them with respect to such matters.
Section 5.9. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 5.10. Interpretation. Unless otherwise indicated to the
contrary herein by the context or use thereof: (i) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (ii) words
importing the masculine gender shall also include the feminine and neutral
genders, and vice versa; and (iii) words importing the singular shall also
include the plural, and vice versa.
Section 5.11. No Strict Construction. Each of the parties hereto
acknowledge that this Agreement has been prepared jointly by the parties hereto,
and shall not be strictly construed against either party.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/Charles S. Brand
___________________________
Charles S. Brand
20 Meridian Way
Eatontown, New Jersey 07724
Tel: (732) 935-7150
Fax: (732) 935-7151
/s/Steven Dinetz
__________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
/s/Gerald B. Cramer
__________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Edward J. Rosenthal
____________________________
Edward J. Rosenthal, Keogh
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor, III
__________________________________
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/Jay Howard
__________________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: Eugene A. Trainor, III
__________________________________
Name: Eugene A. Trainor, III
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
__________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Eugene A. Trainor, III
__________________________________
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>
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
_______________________________
Name:Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
_________________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Fred M. Filoon
__________________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor, III
__________________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRAMER ROSENTHAL McGLYNN, LLC
By: /s/Eugene A. Trainor, III
_________________________________
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>
<TABLE>
Exhibit A
List of Purchasers and Allocation of Purchase
<CAPTION>
Name of Purchaser Purchase Price Number of Shares
<S> <C> <C>
Gerald B. Cramer $54,593.00 218,372
A.C. Israel Enterprises, Inc. 54,593.00 218,372
CRM 1998 Enterprise Fund, LLC 148,493.00 593,972
Steven Dinetz 16,377.00 65,508
CRM-EFO Partners, L.P. 13,648.00 54,592
Richard S. Fuld, Jr. 8,189.00 32,756
Cramer Rosenthal McGlynn, LLC 33,333.50 133,334
McGlynn Family Partnership 5,459.00 21,836
Edward J. Rosenthal, Keogh 5,459.00 21,836
Fred M. Filoon 5,459.00 21,836
Eugene A. Trainor, III 2,730.00 10,920
Kabuki Partners ADP, GP 33,750.00 135,000
Pamela Equities Corp. 76,291.50 305,166
Whitehall Properties, LLC 41,625.00 166,500
Total $500,000.00 2,000,000
</TABLE>
EXHIBIT 10.14
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October
21, 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.
<PAGE>
(e) "Company" means LogiMetrics, Inc., a Delaware corporation, and its
successors and assigns.
(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
<PAGE>
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.
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
<PAGE>
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 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)).
<PAGE>
(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 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
<PAGE>
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 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
<PAGE>
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;
(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
<PAGE>
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 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
<PAGE>
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;
(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
<PAGE>
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;
(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
<PAGE>
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;
(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
<PAGE>
(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 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.
<PAGE>
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
<PAGE>
written information 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.
<PAGE>
(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 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
<PAGE>
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.
(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
<PAGE>
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.
(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>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/Norman M. Phipps
__________________________________
Name:Norman M. Phipps
Title: President and Chief
Operating Officer
/s/Steven Dinetz
__________________________________
Steven Dinetz
1034 Skyland Drive
Zephyr Cove, Nevada 89448
Tel: (702) 588-0343
Fax: (702) 588-1433
/s/Gerald B. Cramer
__________________________________
Gerald B. Cramer
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
/s/Edward J. Rosenthal
__________________________________
Edward J. Rosenthal, Keogh
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
CRM 1998 ENTERPRISE FUND, LLC
By: Cramer Rosenthal McGlynn, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor, III
__________________________________
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/Jay Howard
__________________________________
Name: Jay Howard
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
<PAGE>
CRM-EFO PARTNERS, L.P.
By: CRM-EFO Investments, LLC,
Its General Partner
By: CRM Management, Inc.,
Its Managing Member
By: /s/Eugene A. Trainor, III
__________________________________
Name: Eugene A. Trainor, III
Title:
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Richard S. Fuld, Jr.
__________________________________
Richard S. Fuld, Jr.
By: Cramer Rosenthal McGlynn, Inc.,
Attorney-in-Fact
By: /s/Eugene A. Trainor, III
__________________________________
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>
PAMELA EQUITIES CORP.
By: /s/Gregory Manocherian
_______________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
WHITEHALL PROPERTIES, LLC
By: /s/Gregory Manocherian
_______________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
KABUKI PARTNERS ADP, GP
By: /s/Gregory Manocherian
_______________________________
Name: Gregory Manocherian
Title:
3 New York Plaza
18th Floor
New York, New York 10004
Tel: (212) 837-4829
Fax: (212) 837-4938
<PAGE>
McGLYNN FAMILY PARTNERSHIP
By: /s/Ronald H. McGlynn
__________________________________
Name: Ronald H. McGlynn
Title: General Partner
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Fred M. Filoon
__________________________________
Fred M. Filoon
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Eugene A. Trainor, III
__________________________________
Eugene A. Trainor, III
520 Madison Avenue
New York, New York 10022
Tel: (212) 838-3830
Fax: (212) 644-8291
/s/Charles S. Brand
__________________________________
Charles S. Brand
20 Meridian Way
Eatontown, New Jersey 07724
Tel: (732) 935-7150
Fax: (732) 935-7151
LEASE AGREEMENT
BY AND BETWEEN
611 Industrial Way, L.L.C.
AND
Logimetrics, Inc.
Dated: November 30, 1998
<PAGE>
THIS LEASE, made the 30th day of November, 1998 between 611 Industrial
Way, L.L.C. with an office at c/o G. Shulman, 465 Lewellen Circle, Englewood,
New Jersey 07631 (hereinafter called "Lessor") and Logimetrics, Inc., a Delaware
corporation, whose address is 50 Orville Drive, Bohemia, New York 11716
(hereinafter called "Lessee").
REFERENCE PAGE
BASIC LEASE PROVISIONS AND DEFINITIONS
In addition to other terms elsewhere defined in this Lease, the
following terms whenever used in this Lease should have only the meanings set
forth in this section, unless such meanings are expressly modified, limited or
expanded elsewhere herein.
. Additional Rent shall mean all sums in addition to Basic Rent payable
by Lessee to Lessor pursuant to the provisions of this Lease.
. Broker shall mean: Marketing Associates Corporate Realty, Inc.
. Building shall mean: 611 Industrial Way West, Eatontown, New Jersey.
. Commencement Date is January 1, 1999 and shall for purposes hereof be
subject to Paragraph 42 hereof.
. Demised Premises or Premises: Approximately 36,500 rentable square
feet of space as shown on "Exhibit A" attached hereto.
. Basic Rent shall mean the minimum amount payable as follows:
A. First Lease Year:
(i) Yearly Rate: $182,750.00
(ii) Monthly Installment: $ 15,229.17
B. Second Lease Year:
(i) Yearly Rate: $184,000.00
(ii) Monthly Installment: $ 15,333.33
C. Third Lease Year:
(i) Yearly Rate: $203,750.00
(Ii) Monthly Installment: $ 16,979.17
D. Fourth and Fifth Lease Year:
(i) Yearly Rate: $230,750.00
(ii) Monthly Installment: $ 19,229.17
. Permitted Use shall be manufacture and assembly of electronic
components and office and administrative use only.
. Security Deposit shall be $24,125.
. Term shall mean five (5) years from the Commencement Date.
. Termination Date shall be the day before the fifth (5th) anniversary
of the Commencement Date unless extended as provided herein.
. Building Area shall mean the Building and surrounding land and
improvements.
. Lessee's Percentage: 26.98% subject to adjustment as set forth in
Paragraph 41A.
<PAGE>
For and in consideration of the covenants herein contained, and upon
the terms and conditions herein set forth, Lessor and Lessee agree as follows:
. DESCRIPTION. Lessor hereby leases to Lessee, and Lessee hereby hires
from Lessor, the Demised Premises as defined on the Reference Page
(hereinafter called "Demised Premises" or "Premises") as shown on the
plan or plans, initialed by the parties hereto, marked "Exhibit A"
attached hereto and made part of this Lease in the Building as defined
on the Reference Page which is situated on that certain parcel of land
(hereinafter called "Building Area") as described on the Reference
Page, together with the right to use the Building Area in common with
other lessees of the Building, their invitees, customers and
employees.
. TERM. The Premises are leased for the Term to commence on the
Commencement Date and to end at 12:00 midnight on the Termination
Date, all as defined on the Reference Page.
. BASIC RENT. The Lessee shall pay to the Lessor during the Term basic
rent as defined on the Reference Page (herein "Basic Rent") payable in
such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private
debts. The Basic Rent shall accrue at the Yearly Rate as defined on
the Reference Page and shall be payable in advance on the first day of
each calendar month during the Term at the Monthly Installments as
defined on the Reference Page, each, except that a proportionately
lesser sum may be paid for the first and last months of the Term of
this Lease if the Term commences on a day other than the first day of
the month, in accordance with the provisions of this Lease herein set
forth. Lessor acknowledges receipt from Lessee of the first Monthly
Installment by check, subject to collection, for Basic Rent for the
first month of the Lease Term. Lessee shall pay Basic Rent, and any
Additional Rent as hereinafter provided, to Lessor at Lessor's above
stated address, or at such other place as Lessor may designate in
writing, without demand and without counterclaim, deduction or setoff.
. USE AND OCCUPANCY. Lessee shall use and occupy the Premises for the
Permitted Use as defined on the Reference Page.
. CARE AND REPAIR OF PREMISES. Lessee shall commit no act of waste and
shall take good care of the Premises and the fixtures and
appurtenances therein, and shall, in the use and occupancy of the
Premises, conform at Lessee's expense to all laws, orders and
regulations of the federal, state and municipal governments or any of
their departments regarding the Demised Premises. Lessee at Lessee's
sole cost and expense shall make all repairs, including painting and
decorating and shall maintain the Premises and all of its systems in
good condition and state of repair; however, this obligation shall not
include making replacements unless caused by Lessee's neglect or
abuse. All improvements made by Lessee to the Premises, which are so
attached to the Premises that they cannot be removed without material
injury to the Premises, shall become the property of Lessor upon
expiration or sooner termination including, but not limited to those
items set forth in Paragraph 20 herein. Not later than the last day of
the Term, Lessee shall, at Lessee's expense, remove all Lessee's
personal property and those improvements made by Lessee which have not
become the property of Lessor, including trade fixtures, cabinet work,
movable paneling, partitions and the like; repair all injury done by
<PAGE>
or in connection with the installation or removal of said property and
improvements; and surrender the Premises in as good condition as they
were at the beginning of the Term, reasonable wear and damage by fire,
the elements, casualty, or other cause not due to the misuse or
neglect by Lessee, Lessee's agent, servants, visitors or licensees
excepted. All other property of Lessee remaining on the Premises after
the last day of the Term of this Lease shall be conclusively deemed
abandoned and may be removed by Lessor, and Lessee shall reimburse
Lessor for the cost of such removal. Lessor may have any such property
stored at Lessee's risk and expense.
. ALTERATIONS, ADDITIONS OR IMPROVEMENTS. Except as may be provided in
Paragraph 20, no alterations, additions or improvements shall be made,
and no climate regulating, air conditioning, cooling, heating or
sprinkler systems, television or radio antennas, heavy equipment,
apparatus and fixtures, shall be installed in or attached to the
Premises, without the written consent of the Lessor. Lessee shall not
remove any of Lessee's improvements referenced in Exhibit "C"
("Lessee's Work Done at Lessee's Expense") or improvements of a
similar nature made by Lessee.
. ACTIVITIES INCREASING FIRE INSURANCE RATES. Lessee shall not do or
suffer anything to be done on the Premises which will increase the
rate of fire insurance on the Building.
. ASSIGNMENT AND SUBLEASE.
A. Lessee shall not assign this Lease to or sublet to or permit the
occupancy of all or any part of the Premises by any other party nor sublet a
portion of the Premises without the prior written consent of Lessor in each
instance. Subject to the terms and conditions set forth below, Lessee shall have
the privilege, without the consent of Lessor, to assign its interest in the
Lease (i) to any entity which is a successor to Lessee either by merger or
consolidation, (ii) to a purchaser or all or substantially all of Lessee's
assets or (iii) to any parent, subsidiaries or affiliates of Lessee. Lessee
shall, within ten (10) business days after execution thereof, deliver to Lessor
(a) a duplicate original instrument of assignment in form and substance
reasonably satisfactory to Lessor, duly executed by Lessee, and (b) an
instrument in form and substance reasonably satisfactory to Lessor, duly
executed by the assignee, in which such assignee shall assume observance and
performance of, and agree to be bound by, all of the terms, covenants and
conditions of this Lease on Lessee's part to be observed and performed.
B. If Lessee wishes to assign this Lease, or sublet of the Premises
other than as provided in Article 8(A) above, Lessee first shall so notify
Lessor ("Lessee's Notice"), specifying the name of the proposed assignee or
subtenant, the name of and character of its business and current information as
to the financial responsibility and standing of the proposed assignee or
sublessee and shall provide Lessor with such other information as it reasonably
requests. A complete copy of the proposed assignment or sublease to be executed
by Lessee and the assignee or subtenant shall accompany Lessee's Notice.
<PAGE>
C. Lessor may, within fifteen (15) days after its receipt of Lessee's
Notice, by notice to Lessee ("Lessor's Notice"), (i) require Lessee to assign
the Lease or sublease the Premises to Lessor or (ii) terminate this Lease as of
the proposed commencement date for such assignment or sublease as though such
date was the original expiration date set forth in this Lease, but, in either
event, Lessee shall be able to withdraw its Lessee's Notice thereby nullifying
Lessor's right to recapture all or part of the Premises or terminate Lease
pursuant to this Article. If Lessor fails to so exercise either of such options
within the time period specified above, it shall not unreasonably withhold or
delay its consent to the proposed assignment or sublease by Lessee, but such
consent shall be deemed of no effect if assignee or subtenant, as the case may
be, executing and delivering the assignment or sublease which accompanied in
Lessee's Notice within forty-five (45) days after such consent is given. If
Lessor does exercise its option to recapture all or any part of the Premises,
then (i) the Basic Rent shall be proportionately reduced during such recapture
period, and (ii) Lessor shall not Lease such recaptured space to any assignee or
subtenant proposed by Lessee for a period of 12 months from the date of Lessor's
Notice.
D. No assignment of this Lease shall be effective unless and until
Lessee delivers to Lessor duplicate originals of the instrument of assignment to
Lessor duplicate originals of the instrument of assignment (wherein the assignee
assumes the performance of Lessee's obligations under this Lease) and any
accompanying documents.
E. No sublease of all or any part of the Demised Premises shall be
effective unless and until Lessee delivers to Lessor duplicate originals of the
instrument of sublease (containing the provision requirement by subdivision (F)
and any accompanying documents. Any such sublease shall be subject and
subordinate to this Lease.
F. Any such sublease shall contain substantially the following
provision:
"In the event of a default under any underlying lease
of all or any portion of the premises demised hereby
which results in the termination of such lease, the
subtenant hereunder shall, at the option of the lessor
under any such lease, attorn to and recognize such
lessor as landlord hereunder and shall promptly upon
such lessor's request, execute and deliver all
instruments necessary or appropriate to confirm such
attornment and recognition. The subtenant hereunder
hereby waives all rights under any present or future
law to elect, by reason of the termination of such
underlying lease, to terminate this sublease or
surrender possession of the premises demised hereby."
G. Lessor's consent to any assignment or sublease shall neither
release Lessee from its liability for the performance of Lessee's obligations
hereunder during the balance of the Term nor constitute its consent to any
further assignment or sublease.
H. If Lessor shall give its consent to any assignment of this Lease or
any sublease, Lessee and any assignee shall, in consideration therefor, pay to
<PAGE>
Lessor, 50% of all consideration received for any assignment and 50% of the
rent, as and when received, in excess of the rent required to be paid by Lessee
for the area sublet computed on the basis of an average square foot rent for the
gross square footage Lessee has leased.
I. (1) If Lessor shall decline to give it consent to any proposed
assignment or sublease, or if Lessor exercises any option under Subparagraph
8(C) above, Lessee shall indemnify, defend and hold harmless Lessor against and
from any and all loss, liability, damages, costs and expenses (including
reasonable counsel fees) resulting from any claims that may be made against
Lessor by the proposed assignee or sublessee or by any broker or other persons
claiming a commission or similar compensation in connection with the proposed
assignment or sublease.
(2) Lessee agrees that its sole remedy with respect to any assertion
that Lessor's failure to consent to any sublet or assignment violates the term
of this Lease shall be the remedy of specific performance and Lessee shall have
no other claim or cause of action against Lessor as a result of Lessor's actions
in refusing to consent thereto.
. COMPLIANCE WITH LAW.
A. The Lessee covenants and agrees, at its own cost and expense, to
comply with such regulations or requests as may be required by the fire or
liability insurance carriers providing insurance for the Premises, and will
further comply with such other requirements that may be promulgated by the Board
of Fire Underwriters, in connection with the use and occupancy by the Lessee of
the Premises in the conduct of its business.
B. The Lessee covenants and agrees that it will not commit any
nuisance, nor permit the emission of any objectionable sound, noise or odors
which would be violative of any applicable governmental rule or regulation or
would per se create a nuisance. The Lessee further covenants and agrees that it
will handle and dispose of all rubbish, garbage and waste in connection with the
Lessee's operations in the Premises in accordance with reasonable regulations
established by the Lessor from time to time in order to keep the Premises in an
orderly condition and in order to avoid unreasonable emission of dirt, fumes,
odors or debris which may constitute a nuisance or induce pests or vermin. The
Lessee may maintain a trash receptacle(s) of an appropriate size considering the
size of the Premises in the rear of the Premises.
C. In case the Lessee shall fail or neglect to comply with the
aforesaid statutes, ordinances, rules, orders, regulations and requirements or
any of them, or in case the Lessee shall neglect or fail to make any necessary
repairs which are hereunder Lessee's responsibility, then the Lessor or the
Lessor's agents may after ten (10) days' notice (except for emergency repairs,
which may be made immediately) enter the Premises and make said repairs and
comply with any and all of the said statutes, ordinances, rules, orders,
regulations or requirements, at the cost and expense of the Lessee and in case
of the Lessee's failure to pay therefor, the said cost and expense shall be
added to the next month's rent and be due and payable as such. This provision is
in addition to the right of the Lessor to terminate this Lease by reason of any
default on the part of Lessee, subject to the rights of the Lessee as
hereinabove mentioned in the manner as in this Lease otherwise provided.
<PAGE>
. DAMAGES TO BUILDING.
A. In case of any damage to or destruction of any portion of the
Building of which the Premises is a part by fire or other insured casualty
occurring during the Term (or previous thereto), which shall render the Premises
untenantable or unfit for occupancy, which damage cannot be repaired within one
hundred twenty (120) days from the happening of such casualty, using reasonable
diligence (the foregoing shall be called "Total Destruction") then, and in such
event, the Term hereby created shall, at the option of the Lessor or the Lessee,
upon written notice to the other party by certified mail, return receipt
requested, within twenty (20) days of such fire or casualty, cease and become
null and void from the date of such Total Destruction. In such event the Lessee
shall immediately surrender the Premises and the Lessee's interest in said
Lease, to the Lessor, and the Lessee shall only pay rent to the time of such
Total Destruction in which event, the Lessor may re-enter and re-possess the
Premises thus discharged from this Lease and may remove all parties therefrom.
However, in the event of Total Destruction as hereinbefore defined, if the
Lessor and Lessee shall elect not to cancel this Lease within the twenty (20)
days period hereinabove provided, the Lessor shall thereupon repair and restore
the same with reasonable speed and dispatch, and the rent shall be
proportionally abated after said damage and while the repairs and restorations
are being made.
B. In the event of any other insured casualty which shall not be
tantamount to Total Destruction the Lessor shall repair and restore the Premises
with reasonable speed and dispatch, and the rent shall not be abated.
C. In the event of any uninsured casualty, the Lessor may elect to
treat the casualty as though it had insurance or it may terminate the Lease. If
it treats the casualty as though it had insurance then the provisions of
Paragraphs 10A and 10B shall apply. The Lessor shall serve a written notice upon
the Lessee by certified mail, return receipt requested, within twenty (20) days
of the casualty specifying the election which it chooses to make.
D. In the event of such fire or casualty as above provided wherein the
Lessor shall rebuild, the Lessee agrees at its cost and expense, to forthwith
remove any and all of its equipment, fixtures, stock and personal property as
the same may be required to permit Lessor to expedite rebuilding and/or repair.
In any event, the Lessee shall assume at its sole risk the responsibility for
damage or security with respect to any such removed fixtures and equipment.
E. The Lessee agrees that the said Lessor's agents, and other
representatives, shall have the right to enter into and upon the Premises, or
any part thereof, at all reasonable hours for the purpose of examining the same
upon reasonable advance written notice of not less than twenty-four (24) hours
(except in the event of emergency), or making such repairs or alterations
therein as may be necessary for the safety and preservation thereof, or to
repair and maintain the common utilities without unduly or unreasonably
disturbing the operations of the Lessee (except in the event of emergency).
<PAGE>
F. The provisions of this paragraph 10 shall in all respects be
subject to the provisions of paragraph 49 hereof.
. EMINENT DOMAIN. If Lessee's use of the Premises is materially affected
due to the taking of eminent domain of (a) the Premises or any part
thereof or any estate therein; or (b) any other part of the Building;
then, in either event, this Lease shall terminate on the date when
title vests pursuant to such taking. The Basic Rent, and any
Additional Rent, shall be apportioned as of said termination date and
any Basic or Additional Rent paid for any period beyond said date
shall be repair to Lessee. Lessee shall not be entitled to any part of
the award for such taking or any payment in lieu thereof, but Lessee
may file a separate claim for any taking of fixtures and improvements
owned by Lessee which have not become the Lessor's property, and for
moving expense, provided the same shall in no way affect or diminish
Lessor's award. In the event of a partial taking which does not effect
a termination of this Lease but does deprive Lessee of the use of a
portion of the Premises which does not materially affect the Lessee's
use and operation, there shall either be an abatement or an equitable
reduction of the Basic Rent, and an equitable adjustment reducing the
Lessee's Percentage as herein defined depending on the period for
which and the extent to which the Premises so taken are not reasonably
usable for the purpose for which they are leased hereunder.
. INSOLVENCY OF LESSEE. Either (a) the appointment of a receiver to take
possession of all or substantially all of the assets of Lessee not
discharged within sixty (60) days from the date of such appointment,
or (b) a general assignment by Lessee for the benefit of creditors not
discharged within sixty (60) days from the date of such assignment, or
(c) any action taken or suffered by Lessee under any insolvency or
bankruptcy act, shall constitute a default of this Lease by Lessee,
and Lessor may terminate this Lease forthwith and upon notice of such
termination Lessee's right to possession of the Premises shall cease,
and Lessee shall then quit and surrender the Premises to Lessor but
Lessee shall remain liable as hereinafter provided in Paragraph 14
hereof.
. LESSOR'S REMEDIES ON DEFAULT.
A. Each of the following shall be deemed a default by Lessee and a
breach of this Lease:
(i) Default in the payment of the Basic Rent or Additional Rent
herein reserved or any part thereof for more than ten (10) days after same is
due and payable as in this Lease required.
(ii) A default in the performance of any other covenant or
condition (other than as set forth above) of this Lease on the part of the
Lessee to be performed for a period of thirty (30) days after written notice.
(iii) A breach of Paragraph 12 hereof.
<PAGE>
B. In case of any such default under subparagraph 13A, at any time
following the expiration of the respective grace periods above mentioned, Lessor
may serve a notice upon the Lessee electing to terminate this Lease upon a
specified date not less than ten (10) working days after the date of serving
such notice and this Lease shall then expire on the date so specified as if that
date had been originally fixed as the expiration date of the term herein
granted.
C. In case this Lease shall be terminated as hereinbefore provided, or
by summary proceedings or otherwise, Lessor or its agents may, immediately or
any time thereafter, reenter and resume possession of the Premises or such part
thereof, and remove all persons and property therefrom, either by summary
proceedings or by a suitable action or proceeding at law, without being liable
for any damages therefor and all at the cost and expense of Lessee including but
not limited to the attorney's fees of Lessor. No re-entry by Lessor shall be
deemed an acceptance of a surrender of this Lease.
D. In case this Lease shall be terminated as herein provided, or by
summary proceedings or otherwise, Lessor may, in its own name and in its own
behalf, relet the whole or any portion of the Premises, for any period equal to
or greater or less than the remainder of the Term, for any sum which it may deem
reasonable, to any tenant which it may deem suitable and satisfactory, and for
any use and purpose which it may deem appropriate, and in connection with any
such lease Lessor may make such changes in the character of the improvements on
the Premises as Lessor may determine to be appropriate or helpful in effecting
such lease and may grant concessions or free rent. Lessor shall not in any event
be required to pay Lessee any surplus of any sums received by Lessor on a
reletting of the Premises in excess of the rent reserved in this Lease.
. DEFICIENCY. In any case where Lessor has recovered possession of the
Premises by reason of Lessee's default, Lessor may, at Lessor's
option, occupy the Premises or cause the Premises to be redecorated,
altered, divided, consolidated with other adjoining premises, or
otherwise changed or prepared for reletting, and may relet the
Premises or any part thereof as agent of Lessee or otherwise, for a
term or terms to expire prior to, at the same time as, or subsequent
to, the original expiration date of this Lease, at Lessor's option,
and receive the rent therefor. Rent so received shall be applied first
to the payment of such expenses as Lessor may have incurred in
connection with the recovery of possession; redecorating, altering,
dividing, consolidating with other adjoining premises, or otherwise
changing or preparing for reletting, and the reletting, including
brokerage and reasonable attorneys' fees, and then to the payment of
damages in amounts equal to the rent hereunder and to the costs and
expenses of performance of the other covenants of Lessee as herein
provided. Lessee agrees, in any such case, whether or not Lessor has
relet, to pay to Lessor damages equal to the Basic Rent and other sums
herein agreed to be paid by Lessee, less the net proceeds of the
reletting, if any, as ascertained from time to time, and the same
shall be payable by Lessee on the several rent days above specified.
<PAGE>
Lessee shall not be entitled to any surplus accruing as a result of
any such reletting. In reletting the Premises as aforesaid, Lessor may
grant rent concessions, and Lessee shall not be credited therewith. No
such reletting shall constitute a surrender and acceptance or be
deemed evidence thereof. If Lessor elects, pursuant hereto, actually
to occupy and use the Premises or any part thereof during any part of
the balance of the Term as originally fixed or since extended, there
shall be allowed against Lessee's obligation for rent or damages as
herein defined, during the period of Lessor's occupancy, the
reasonable value of such occupancy, not to exceed in any event the
Basic Rent herein reserved and such occupancy shall not be construed
as a release of Lessee's liability hereunder.
Alternately, in any case where Lessor has recovered possession of the
Premises by reason of Lessee's default, Lessor may, at Lessor's option, and at
any time thereafter, and without notice or other action by Lessor, and without
prejudice to any other rights or remedies it might have hereunder or at law or
equity, become entitled to recover from Lessee, as damages for such breach, in
addition to such other sums herein agreed to be paid by Lessee, to the date of
re-entry, expiration and/or dispossession, an amount equal to the difference
between the Base Rent and Additional Rent reserved in this Lease from the date
of such default to the date of expiration of the original Term demised and the
then fair and reasonable rental value of the Premises for the same period. Said
damages shall become due and payable to Lessor immediately upon such breach of
this Lease and without regard to whether this Lease be terminated or not, and if
this Lease be terminated, without regard to the manner in which it is
terminated. In the computation of such damages, the difference between any
installments of Base Rent and Additional Rent thereafter to become due and the
fair and reasonable rental value of the Premises for the period for which sum
installment was payable shall be discounted to the date of such default at the
rate of six (6%) percent per annum.
Lessee hereby waives all right of redemption to which Lessee or any
person under Lessee might be entitled by any law nor or hereafter in force.
Lessor's remedies hereunder are in addition to any remedy allowed by
law.
. SUBORDINATION OF LEASE. This Lease shall be subject and subordinate to
any underlying leases and to any mortgage and/or trust deed which may
now or hereafter affect the real property of which the Premises forms
a part, and also to all renewals, modifications, consolidations and
replacements of said underlying leases and said mortgage and/or trust
deed. Although no instrument or act on the part of Lessee shall be
necessary to effectuate such subordination, Lessee will, nevertheless,
execute and deliver such further instruments confirming such
subordination of this Lease as may be desired by the holders of said
first mortgage and trust deeds or by any of the lessors under such
underlying leases.
. PARKING
Subject to intervening laws, ordinances, regulations and executive
orders, while Lessee is not in default under any of the provisions of this
Lease, Lessor agrees to allow Lessee the use of one hundred (100) parking spaces
for Lessee's use at the Building. Lessee shall have the exclusive use of the
entire east lot for parking only. The east lot is shown and designated on
Exhibit "A". The balance of parking spaces for Lessee shall be in the center
parking lot and shall not be reserved or designated. Lessee shall have the right
to install signs upon Lessor's prior approval not to be unreasonably withheld
indicated the parking in the east lot is reserved exclusively for Lessee's
parking.
<PAGE>
. RIGHT TO CURE LESSEE'S BREACH. If Lessee breaches any covenant or
condition of this Lease, Lessor may, on reasonable written notice to
Lessee (except that no notice need be given in case of emergency),
cure such breach at the expense of Lessee and the reasonable amount of
all expenses, including attorney's fees, incurred by Lessor in so
doing (whether paid by Lessor or not) shall be deemed Additional Rent
payable on demand; provided, however, that this provision shall not
impose any obligation upon Lessor to cure such default.
. CONSTRUCTION LIENS. Lessee shall, within ten (10) days after notice
from Lessor, discharge or satisfy by bonding or otherwise any
construction liens for materials or labor claimed to have been
furnished to the Premises on Lessee's behalf.
. RIGHT TO INSPECT AND REPAIR. Lessor may enter the Premises but shall
not be obligated to do so (except as required by any specific
provision of this Lease) at any reasonable time on reasonable written
notice to Lessee (except that no notice need be given in case of
emergency) for the purpose of inspection or the making of such
repairs, replacement or additions, in, to, on and about the Premises
or the Building, as Lessor deems necessary or desirable. Lessee shall
have no claims or cause of action against Lessor by reason thereof. In
no event shall Lessee have any claim against Lessor for interruption
to Lessee's business, however occurring. 20. LESSOR AND LESSEE WORK.
A. Lessor's Work in the Demised Premises. Lessor shall deliver the
Demised Premises substantially "vanilla box" condition in accordance with the
requirements set forth in Exhibit "B" "Lessor's Work Done at Lessor's Expense",
annexed hereto ("Lessor's Work"). Lessor shall commence and complete Lessor's
Work as soon as may practically be done which shall be as close as possible to
January 1, 1999, but Lessor shall not be liable in any manner whatsoever for its
failure to do so. Any of Lessor's Work to be done on the exterior may be done
either contemporaneous with Lessee's Work or promptly after Lessee's completion
of its work.
B. Lessee's Work. Commencement of work.
1. Promptly after Lessor notifies Lessee that the shell of the Demised
Premises is ready for commencement of Lessee's Work (as defined below), Lessee
shall commence and thereafter complete with due diligence its construction work
and installation of fixtures in accordance with its construction obligations set
forth in Exhibit "C" "Lessee's Work Done at Lessee's Expense", annexed hereto
and in accordance with its Working Plans and Specifications attached hereto as
Exhibit "D" ("Lessee's Work"). If Lessee shall neglect, fail or refuse to
commence its work as aforesaid and thereafter neglects, fails or refuses to
diligently proceed with and complete its work, Lessor, in addition to its other
rights and remedies and after thirty (30) days' written notice given to Lessee,
may (a) complete Lessee's work at Lessee's expense, (b) commence the Term and
all of Lessee's payment obligations hereunder, notwithstanding the incompletion
of Lessee's Work, or (c) declare this Lease cancelled and of no further force
and effect.
<PAGE>
2. Preliminary Work. Lessee may, with Lessor's consent, enter the
Demised Premises for preliminary work before Lessor completes Lessor's Work,
provided that Lessee's Work is done in a manner that does not interfere with
either the completion of Lessor's Work or any of its labor agreements.
3. Certificates; Entry by Lessee. Lessee shall furnish Lessor with
copies of all certificates, permits and approvals with respect to work done by
Lessee or on its behalf that may be required by any governmental authority for
the issuance of a certificate of occupancy. Lessor shall not be responsible for
any loss or damage to any fixtures or equipment installed or left in the Demised
Premises. Lessee's entry on and occupancy of the Premises before the
commencement of this Lease shall be governed by and subject to all of its
provisions, covenants, and conditions, other than those requiring the payment of
Basic Rent and Additional Rent.
4. Preliminary Plans. Lessee shall furnish preliminary plans and
specifications incorporating its construction obligations under Exhibit "C" for
Lessor's prior approval within 15 days after Lessor's architects provide Lessee
with outline plans for the Demised Premises. Lessor has three (3) business days
to review the preliminary plans. If Lessor fails to object to the plans in
writing within the specified time period, Lessor shall be deemed to have
approved the plans. Within 20 days after Lessor approves the Lessee's
preliminary plans and specifications, Lessee shall submit working plans and
specifications for Lessor's review and prior approval. The Lessor's approval of
the preliminary plans and specifications and the working plans and
specifications shall not constitute its assumption of any liability for their
compliance or conformity with applicable building codes and the requirements of
this Lease or for their accuracy, and Lessee shall be solely responsible for
such plans and specifications. The working plans and specifications shall be for
a modern, first class, fully air conditioned office for high tech use. The
Demised Premises shall be a complete, self-sustaining, operating unit and be of
a design and character, and appearance appropriate and in keeping with the rent
of the Building and the neighborhood.
5. Approval of Contractors. Any contractor used by the Lessee to
perform its work under Exhibit "C" "Lessee's Work Done at Lessee's Expense",
must first be approved in writing by Lessor. Lessor approves of American
Building Group as the Lessee's contractor.
6. Construction. After the Eatontown Construction Offices issues a
permit based upon approved plans and specifications, Lessor, at its expense,
shall with diligence and continuity, construct the improvements in accordance
with the working plans and specifications approved by Lessor. All construction
required hereunder shall be performed diligently, in conformity with all legal
safety requirements, in a good and workmanlike manner, and in accordance with
the standards required by the municipal construction official. No construction
shall be commenced however, until Lessee shall deliver to Lessor the following:
(A) Completion bond. A contractors' completion bond of a surety
company or surety companies (or other assurances that are satisfactory to the
Lessor) running to the Lessor as obligee, conditioned on completion of the
building in accordance with approved Plans and Specifications and the provisions
<PAGE>
of this Lease, free and clear of all mechanics' or other liens and security
agreements. If the Working Plans or Specifications are subsequently amplified or
modified, the bond shall immediately be modified to include such change. The
bond shall be in any form and written by any company which Lessor may approve,
but such approval shall not be unreasonably withheld.
7. Time Limitation. Notwithstanding any provision to the contrary
herein contained, Lessee shall comply with all the provisions of this paragraph
and be prepared to commence construction, by no later than the second
anniversary of the first day of the Term.
8. Delay. Such construction shall proceed with diligence and
continuity until completion, subject, however to fire, strikes, embargoes,
governmental restrictions, unavailability of construction materials or other
similar contingencies beyond the Lessee's control.
9. Compliance with the Law. The Lessee shall procure all the required
permits for the construction of the improvements and shall, during construction,
comply with all applicable legal requirements. Lessee's Work shall comply with
all applicable state, municipal, and other governmental laws, ordinances,
regulations and orders, and with all requirements of the local Fire Insurance
Rating Organization or similar body and of any liability for accidents in or
connected with the leased property. Before the Demised Premises is used for its
designed purpose the Lessee shall obtain and deliver to the Lessor a certificate
of occupancy, or a temporary certificate of occupancy if such is provided for by
law. If a certificate of occupancy is issued for any part of the Premises, the
part of the Premises so certified may be occupied. On Lessee's demand, Lessor
shall promptly execute all documents that require its signature in order to
obtain such certificate, but only if, in the opinion of its counsel, it incurs
no expense or liability thereby.
10. Inspection. During the construction of the Lessee's Work the
Lessor and its architects or engineers, or both, any, from time to time, inspect
the Premises and require that they be furnished with copies of all plans, shop
drawings, and specifications relating to construction. If, during construction
or at any time before a final certificate of occupancy is issued, Lessor or it
architects or engineers determine that the Premises is not being constructed in
accordance with the plans and specifications, prompt written notice shall be
given to Lessee specifying in detail the particular deficiency, omission or
other act of nonconformance. Upon receiving such notice, Lessee shall take all
necessary steps to make the proper corrections.
11. Changes and Additions. If after construction is begun the Lessee
desires substantial changes in the plans and specifications or substantial
additions thereto, it shall serve upon the Lessor a statement thereof, together
with appropriate plans and specifications showing in detail the nature of the
proposed changes or additions. Any change or addition proposed by Lessee shall
be deemed part of the plans and specifications approved by both parties unless,
within 20 days after receipt thereof, Lessor notifies Lessee that it refuses to
accept the proposed change or addition and the reason(s) why. Lessor, however,
shall not unreasonably withhold its consent. Minor changes in work or materials
that do not affect the general character of the alteration may be made in the
plans and specifications at any time without Lessor's approval.
<PAGE>
21. INTERRUPTION OR SERVICES OR USE. Interruption or curtailment of
any service maintained in the Building or use of the Premises shall not entitle
Lessee to any claim against Lessor or to any abatement in rent, and shall not
constitute a constructive or partial eviction unless caused by Lessor's
negligence.
22. UTILITIES.
A. The Lessee shall pay when due all the rents or charges for
utilities used by the Lessee which are or may be assessed or imposed upon the
Premises or which are or may be charged to the Lessor by the suppliers thereof
during the term hereof. The Premises shall have separate meters to measure
utility consumption, except for water. Lessee shall share a water meter with all
other tenants in the Building except for Lermer (or their replacement in the
west side of the building). Lessee shall pay its proportionate share of the
water charge to Lessor within thirty (30) days of a bill therefor. Lessee's
charge shall be based on its relative square frontage compared to the other
tenants sharing the water meter, i.e., 74.84%. The water charge shall be deemed
additional rent.
B. Lessee covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing feeders to the Building or
the risers or wiring installation.
C. Lessor shall not be liable in any way to Lessee for any loss,
damage or expense which Lessee may sustain or incur as a result of any failure,
defect or change in the quantity or character of electrical energy, or other
utility, nor for any interruption in supply and Lessee agrees that such supply
may be interrupted for repairs and replacement and in emergencies.
23. ADDITIONAL RENT
A. Lessee shall promptly pay to Lessor any increase over the standard
cost of the fire and casualty insurance for the Building caused by Lessee's use
and operations. In addition, Lessee shall pay to Lessor Lessee's Percentage of
the cost of Lessor's casualty and liability insurance premium on the Building in
excess over the cost of same for the policy in effect as the date of this lease.
Such amounts shall be due within fifteen (15) days of a bill therefor. Lessor
shall provide Lessee with reasonable documentation upon request of Lessee.
B. Lessee shall maintain at its sole cost and expense during the term
hereof:
1. rental value insurance against loss of rental or other income
derived from the operation due to the risks referred to in the standard fire and
casualty insurance policy on the Building (including those embraced by "extended
coverage") in an amount equal to the aggregate amount of the Basic Rent for the
period of one (1) year.
C. Lessee shall pay annually Lessee's Percentage of the real estate
taxes assessed against the Building Area in excess over the real estate taxes
<PAGE>
assessed against the Building Area for 1999 (the "Base Year"). For the final
year of the lease term, the Lessee shall pay only a pro rata share of such
proportion of any real estate taxes. The Lessor shall furnish the Lessee with a
statement of the real estate taxes assessed for each calendar year during the
Term. Such amounts shall be due by Lessee to Lessor within thirty (30) days of a
bill therefor.
24. LESSEE'S ESTOPPEL. Lessee shall, from time to time, on not less
than ten (10) days' prior written request by Lessor, execute, acknowledge and
deliver to Lessor a written statement certifying that the Lease is unmodified
and in full force and effect, or that the Lease is in full force and effect as
modified and listing the instruments of modification; the dates to which the
rents and charges have been paid; and, to the best of Lessee's knowledge,
whether or not Lessor is in default hereunder, and if so, specifying the nature
of the default. It is intended that any such statement delivered pursuant to
this Paragraph 24 may be relied on by a prospective purchaser of Lessor's
interest or mortgagee of Lessor's interest or assignee of any mortgage of
Lessor's interest.
25. CONDITION OF PREMISES. Neither the Lessor nor its agent have made
any representations with respect to the Building, the Premises, or the land upon
which the land is erected, except as expressly set forth herein and no rights,
easements or licenses are required by the Lessee by implication or otherwise,
except as expressly set forth in the provisions of this Lease. The Lessee shall
accept the Building, the Premises and the Building Area in their existing
condition and as provided in Paragraph 20A. In no event shall the Lessor be
liable for any defect in such property or for any limitation on its use, except
as expressly set forth herein.
26. SECURITY DEPOSIT. Lessee shall deposit with Lessor on the signing
of this Lease one half of the Security Deposit as defined on the Reference Page
and the other one half of the security deposit by January 1, 1999 as security
for the performance of Lessee's obligations under this Lease, including without
limitation, the surrender of possession of the Premises to Lessor as herein
provided or, alternatively, Lessee may deliver to Lessor an unconditional. If
Lessor applies any part of said deposit to cure any default of Lessee, Lessee
shall on demand deposit with Lessor the amount so applied so that Lessor shall
have the full deposit on hand at all times during the term of this Lease.
Lessor, in the event that the Demised Premises are sold, shall transfer and
deliver the security, as such, to the purchaser of the Demised Premises and
shall notify Lessee thereof and thereupon Lessor shall be discharged from any
further liability in reference thereto.
The Security Deposit (less any portions thereof used, applied, or
retained by Lessor in accordance with the provisions of this Paragraph 26),
shall be returned without interest to Lessee after the expiration or sooner
termination of this Lease without the fault of the Lessee and after delivery of
the entire Premises to Lessor in accordance with the provisions of this Lease.
Lessee covenants that it will not assign or encumber or attempt to assign or
encumber the Security Deposit and Lessor shall not be bound by any such
assignment, encumbrance or attempt thereof. In the event of the insolvency of
Lessee or in the event of the entry of a judgment declaring Lessee insolvent or
bankrupt in any court which is not discharged within sixty (60) days after
entry, or in the event a petition is filed by or against Lessee under any
chapter of the bankruptcy laws of the State of New Jersey or the United States
<PAGE>
of America, then and in such event Lessor may require the Lessee to deposit
additional security (herein called the "Additional Security Deposit") in an
amount which in Lessor's sole reasonable judgment would be sufficient to
adequately assure Lessee's performance of all of its obligations under this
Lease including all payments subsequently accruing. Failure of Lessee to deposit
the Additional Security Deposit pursuant thereto within ten (10) days after
Lessor's written demand shall constitute a default by Lessee.
27. WAIVER OF TRIAL BY JURY. To the extent such waiver is permitted by
law, the parties waive trial by jury in any action or proceeding brought in
connection with this Lease or the Premises.
28. LATE CHARGE. Lessee recognizes that late payment of any rent or
other sum due hereunder will result in administrative expenses to Lessor, the
extent of which additional expense is extremely difficult and economically
impractical to ascertain. Lessee therefore agrees that if rent or any other sum
is due and payable pursuant to this Lease, and such amount remains due and
unpaid five (5) work days after said amount is due, such amount shall be
increased by a late charge in an amount equal to five (5%) percent per month.
The amount of the late charge to be paid by Lessee shall be reassessed and added
to Lessee's obligation for each successive monthly period until paid. The
provisions of this Paragraph 28 in no way relieve Lessee of the obligation to
pay rent or other payments on or before the date on which they are due, nor do
the terms of this Paragraph 28 in any way affect Lessor's remedies pursuant to
Paragraph 13 in the event said rent or other payment is unpaid after date due.
29. A. LESSEE'S LIABILITY INSURANCE. Lessee covenants to provide on or
before the Commencement Date a comprehensive policy of general liability
insurance naming the Lessor as an additional named insured, insuring Lessee and
Lessor against any liability commonly insured against and occasioned by accident
resulting from any act or omission on or about the Premises and any
appurtenances thereto. Such policy is to be written by an insurance company
qualified to do business in the State of New Jersey reasonably satisfactory to
Lessor. Such policy or program shall in no way limit the Lessee's liability to
Lessor pursuant to Paragraph 32 hereof. The policy shall be with limits not less
than Three Million and 00/100 ($3,000,000.00) Dollars in respect of any one
person, in respect of any one accident, and in respect of property damage. Said
limits shall be subject to periodic review and Lessor reserves the right to
increase said coverage limits, if in the reasonable opinion of Lessor, said
coverage becomes inadequate and is less than that commonly maintained by tenants
in similar buildings in the area by tenants making similar uses. At least thirty
(30) days prior to the expiration or termination date of any policy, the Lessee
shall deliver a renewal or replacement policy with proof of the payment of the
premium therefor.
B. LESSOR'S FIRE INSURANCE. Lessor shall keep the Building insured
against loss or damage by fire with extended coverage endorsement in amounts and
with deductibles similar to the policy Lessor currently has in place.
<PAGE>
30. NO OTHER REPRESENTATIONS. No representations or promises shall be
binding on the parties hereto except those representations and promises
contained herein or in some future writing signed by the party making such
representation(s) or promise(s).
31. QUIET ENJOYMENT. Lessor covenants that if, and so long as, Lessee
pays the Basic Rent, and any Additional Rent as herein provided, and performs
the covenants hereof, Lessor shall do nothing to affect Lessee's right to
peaceably and quietly have, hold and enjoy the Premises for the term herein
mentioned, subject to the provisions of this Lease.
32. INDEMNITY. Lessee and Lessor shall indemnify and save harmless the
other and their agents against and from (a) any and all claims arising from any
negligent or otherwise wrongful act or omission of either or any of their
subtenants or licensees or its or their employees, agents or contractors, and
(b) all costs, expenses and liabilities incurred in or in connection with each
such claim or action or proceeding brought thereon. In case any action or
proceeding be brought against Lessor or Lessee by reason of any such claim,
Lessee or Lessor, as the case may be, upon notice from the other, shall resist
and defend such action or proceeding.
33. PARAGRAPH HEADINGS. The paragraph headings in this Lease and
position of its provisions are intended for convenience only and shall not be
taken into consideration in any construction or interpretation of this Lease or
any of its provisions.
34. APPLICABILITY TO HEIRS AND ASSIGNS. The provisions of this Lease
shall apply to, bind and inure to the benefit of Lessor and Lessee, and their
respective heirs, successors, legal representatives and assigns. It is
understood that the term "Lessor" as used in this Lease means only the owner, a
mortgagee in possession or a term lessee of the Building, so that in the event
of any sale of the Building or of any lease thereof, or if a mortgagee shall
take possession of the Premises, the Lessor named herein shall be and hereby is
entirely freed and relieved of all covenants and obligations of Lessor hereunder
accruing thereafter, and it shall be deemed without further agreement that the
purchaser, the term lessee of the Building, or the mortgagee in possession has
assumed and agreed to carry out any and all covenants and obligations of Lessor
hereunder.
35. INTENTIONALLY OMITTED.
36. LESSOR'S LIABILITY FOR LOSS OF PROPERTY. Lessor shall not be
liable for any loss of property from any cause whatsoever except for Lessor's
gross negligence or wilful misconduct, including, but not limited to, theft or
burglary from the Premises, and Lessee covenants and agrees to make no claim for
any such loss at any time.
37. PARTIAL INVALIDITY. If any of the provisions of this Lease, or the
application hereof to any person or circumstances, shall to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
<PAGE>
38. BROKER. The parties represent and warrant to one another that the
Broker as defined on the Reference Page is the sole broker(s) with whom the
parties have negotiated in bringing about this Lease and the parties agree to
indemnify and hold one another harmless from any and all claims of other brokers
and expenses in connection therewith arising out of or in connection with the
negotiation of or the entering into this Lease by Lessor and Lessee. Lessor
shall pay a brokerage commission to Broker pursuant to a separate agreement.
39. PERSONAL LIABILITY. Notwithstanding anything to the contrary
provided in this Lease, it is specifically understood and agreed, such agreement
being a primary consideration for the execution of this Lease by Lessor, that
there shall be absolutely no personal liability on the part of Lessor, its
successors, assigns or any mortgagee in possession (for the purposes of this
paragraph, collectively referred to as "Lessor"), with respect to any of the
terms, covenants and conditions of this Lease, and that Lessee shall look solely
to the equity of Lessor in the Building for the satisfaction of each and every
remedy of Lessee in the event of any breach by Lessor of any of the terms,
covenants and conditions of this Lease to be performed by Lessor, such
exculpation of liability to be absolute and without any exceptions whatsoever.
40. NO OPTION. The submission of this Lease Agreement for examination
does not constitute a reservation of or offer to lease or option for the
Premises, and this Lease Agreement becomes effective as a Lease Agreement only
upon execution and delivery thereof by Lessor and Lessee.
41. DEFINITIONS.
A. Lessee's Percentage. Lessee's Percentage wherever that phrase
is used, shall be as defined on the Reference Page, which the parties agree
reflects and will be continually adjusted to reflect the ratio of the gross
square feet of the area rented to Lessee as compared
<PAGE>
with the total number of gross square feet of the entire Building, measured
outside wall to outside wall.
B. Force Majeure. Force Majeure shall mean and include those
situations beyond Lessor's control, including by way of example and not by way
of limitation, failure of federal, state or municipal officials to issue
necessary permits or licenses, acts of God, accidents, repairs, strikes,
shortages of labor, supplies or materials, inclement weather, or where
applicable, the passage of time while waiting for an adjustment of insurance
proceeds.
C. Lease Year. Lease Year shall mean each 12 month period
beginning with the Commencement Date of the Lease, and each anniversary thereof.
42. LEASE COMMENCEMENT. Notwithstanding anything contained herein to
the contrary, if Lessor, for any reason whatsoever cannot deliver possession of
the Premises as provided for herein to Lessee at the commencement of the agreed
term as set forth in Paragraph 2, this Lease shall not be void or voidable, nor
shall Lessor be liable to Lessee for any loss or damage resulting therefrom, but
in that event, the Lease Term shall be for the full term as specified above to
commence from and after the date Lessor shall have delivered possession of the
Premises to Lessee and to terminate midnight of the day immediately preceding
the Termination Date and if requested by Lessor, Lessor and Lessee shall, by a
writing signed by the parties, ratify and confirm said commencement and
termination dates.
43. NOTICES. Any notice by either party to the other shall be in
writing and shall be deemed to have been duly given only if delivered personally
or sent by overnight courier service providing a receipt for delivery in a
postpaid envelope addressed, if to Lessee, at the Building; if to Lessor, at
Lessor's address as set forth above; or, to either at such other address as
Lessee or Lessor, respectively, may designate in writing. Notice shall be deemed
to have been duly given, if delivered personally, in delivery thereof, and if
sent by overnight courier, upon the next day after the delivery thereof to such
courier service. Copies of all notices shall also be sent to the following:
If to Lessee: If to Lessor:
Lowenstein Sandler, P.C. Sokol, Behot & Fiorenzo
65 Livingston Avenue 433 Hackensack Avenue
Roseland, NJ 07068-1791 Hackensack, NJ 07601
Att: John D. Hogoboom, Esq. Att: Jeffrey A. Zenn, Esq.
Fax: (973) 992-5820 Fax: (201) 488-6541
44. ACCORD AND SATISFACTION. No payment by Lessee or receipt by Lessor
of a lesser amount than the Basic Rent and Additional Rent payable hereunder
shall be deemed to be other than a payment on account of the earliest stipulated
Basic Rent and Additional Rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment for Basic Rent or
Additional Rent be deemed an accord and satisfaction, and Lessor may accept such
<PAGE>
check or payment without prejudice to Lessor's right to recover the balance of
such Basic Rent and Additional Rent or pursue any other remedy provided herein
or by law.
45. EFFECT OF WAIVERS. No failure by Lessor to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease, or to
exercise any right or remedy consequent upon a breach thereof, and no acceptance
of full or partial rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement, term or
condition. No consent or waiver, express or implied, by Lessor to or of any
breach of any covenant, condition or duty of Lessee shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant,
condition or duty, unless in writing signed by Lessor.
46. LESSOR'S RESERVED RIGHT. Lessor and Lessee acknowledge that the
Premises are in a Building which is not open to the general public. Access to
the Building is restricted to Lessor, Lessee, their agents, employees and
contractors and to their invited visitors. In the event of a labor dispute
including a strike, picketing, informational or associational activities
directed at Lessee or any other tenant, Lessor reserves the right unilaterally
to alter Lessee's ingress and egress to the Building or make any other change in
operating conditions to restrict pedestrian, vehicular or delivery ingress and
egress to particular location.
47. RIGHT TO EXHIBIT. Lessee agrees to permit the Lessor and the
Lessor's agents, employees or other representatives to show the Premises to
persons wishing to rent or purchase the same and Lessee agrees that on and after
nine (9) months next proceeding the expiration of the Term hereof the Lessor or
the Lessor's agents, employees or other representatives shall have the right to
place notices on the front of the Premises or any part thereof offering the
Premises for rent or for sale and the Lessor hereby agrees to permit the same to
remain there without hindrance or molestation provided same does not
unreasonably interfere with the conduct of Lessee's business.
48. CORPORATE AUTHORITY. The undersigned officers and representatives
of the corporation executing this Lease on behalf of the corporation represent
and warrant that they are officers of the corporation with authority to execute
this Lease on behalf of the corporation.
49. DAMAGE. In case of the destruction of or any damage of any kind
whatsoever to the Premises, the Building or the Building Area caused by the
carelessness, negligence or improper conduct on the part of the Lessee or the
Lessee's agents, employees, guests, licensees, invitees, subtenants, assignees,
or successors, the Lessee shall repair the said damage or replace or restore any
destroyed parts of the Premises as speedily as possible at Lessee's own cost and
expense.
50. SIGNS. The Lessee shall not place nor allow to be placed any signs
of any kind whatsoever, upon, or in about the said Premises or Building or other
Building Area, except of a design and structure and in or at such places as may
be indicated and consented to by the Lessor in writing. In case the Lessor or
the Lessor's agents, employees or representatives shall deem it necessary to
remove any such signs in order to paint or make any repairs, alterations or
improvements in or upon said premises or any part thereof, they may be so
<PAGE>
removed, but shall be replaced at the Lessor's expense when the said repairs,
alterations, or improvements shall have been completed. Any signs permitted by
the Lessor shall at all times conform with all municipal ordinances or other
laws and regulations applicable thereto, which approval shall be the
responsibility of the Lessee. Lessor intends to install a monument type sign on
the front lawn of the Building Area. Lessor agrees to place Lessee's name on
such sign. The size of the Lessee's name shall be equal to the others on the
sign and shall be second from the top.
51. MISCELLANEOUS.
A. Lessee shall not be entitled to exercise any other option
granted to it by this Lease at any time when Lessee is in default in the
performance or observance of any of the covenants, agreements, terms, provisions
or conditions on its part to be performed or observed beyond the applicable
grace period provided in this Lease.
B. This Lease shall be governed by and construed under the Laws of
the State of New Jersey.
C. This Lease is an amended and restated Lease and shall supersede
and take priority over all agreements, written or otherwise, between Lessor and
Lessee.
52. NEW JERSEY INDUSTRIAL SITE RECOVERY ACT
A. Lessee shall, on or before the date which is four (4) months
prior to the Termination Date, deliver to Lessor evidence of its compliance with
the New Jersey Industrial Site Recover Act (N.J.S.A. 13:1K-6 et seq.) (ISRA). In
the event that the Lessee fails to deliver such evidence to the Lessor on or
before the Termination Date, then, and in such event and for every month or
portion of month thereafter, the obligation of the Lessee to pay rent and
other charges pursuant to this Lease shall be extended one (1) month beyond the
Termination Date.
B. The Lessee agrees to defend, indemnify and hold harmless the
Lessor from and against any and all losses and costs and expenses of
litigation incurred by the Lessor arising out of Lessee's use of the Premises
and which are in any way connected with the application of the New Jersey Spill
Compensation and Control Act (N.J.S.A. 58:10-23 et seq.), the New Jersey
Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.), the Comprehensive
Environmental Response Compensation Liability Act of 1980 (Pub. L. No. 96-510,
94th Stat. 2767, 1980), the New Jersey Air Pollution Control Act (N.J.S.A.
26:2C-1 et seq.), the Resource Conservation Recovery Act (42 U.S.C. 6901 et
seq.), the Clean Air Act (42 U.S.C. 7401 et seq.) and any similar state or
federal statutes (collectively, "Environmental Laws") to the Demised Premises
or any part thereof. The Lessee covenants and agrees to take all necessary
steps in order to prevent any liens pursuant to the Environmental Laws from
attaching to the Demised Premises. Lessor acknowledges the presence, now or
<PAGE>
formerly, of certain hazardous materials at the Building Area which are
currently under investigation under ECRA case #87920 with the N.J. Department of
Environmental Protection.
C. Lessee shall not cause or permit to exist as a result of an
intentional or unintentional action or omission on its part a releasing,
spilling, leaking, pumping, emitting, pouring, emptying or dumping of a
"hazardous substance", as such term is defined in N.J.S.A. 58:10-23.11(b)(k)
into the waters of the State of New Jersey or onto the lands from which it might
flow or drain into said waters or into waters outside the jurisdiction of the
State of New Jersey or damage may result to the lands, waters, fish, shellfish,
wildlife, biota, air or other resources owned, managed, held in trust or
otherwise controlled by the State of New Jersey, unless such release, spill,
leak, etc. is pursuant to and in compliance with conditions of a permit issued
by the appropriate federal or state governmental authorities.
D. In the event there should be filed a lien against the
Demised Premises by the New Jersey Department of Environmental Protection
pursuant to and in accordance with the provisions of N.J.S.A. 58:10-23.11(f)(f)
as a result of the Chief Executive to the New Jersey Spill compensation Fund
having expended monies from said Fund to pay for "damages", as said term is
defined in N.J.S.A. 58:10-23.11(g) and/or "cleanup and removal costs", as said
term is defined in N.J.S.A. 58:1-23.11(b)(d), or in the event a lien is filed
against the Demised Premises by the United States Environmental Protection
Agency pursuant to the Comprehensive and Environmental Response Compensation and
Liability Act of 1980, arising from an intentional or unintentional action or
omission of Lessee of Lessee's sublessee resulting in the releasing, spilling,
pumping, pouring, emitting, emptying or dumping of "hazardous substances", as
such term is defined in N.J.S.A. 58:10-23-11(b)(k) into the waters of the State
of New Jersey or onto lands from which it might flow or drain into said waters,
then Lessee shall be in default of this Lease and shall, within thirty (30) days
from the day Lessee is given notice that the lien has been placed against the
Demised Premises or within such shorter period of time in the event the State
of New Jersey or the United States Government has commenced steps to cause the
Demised Premises to be sold pursuant to the lien, either (1) pay the claim and
remove the lien from the Demised Premises; or (2) furnish (or lay) (i) a bond
satisfactory to the Lessor in the amount of the claim out of which the lien
arises; or (ii) other security reasonably satisfactory to the Lessor in an
amount sufficient to discharge the claim out of which the lien arises.
E. Lessee's use and any sublessee's use of the Demised Premises
during the Term will not involve the generation, manufacture, refining,
transport, treatment, storage, handling or disposing of "hazardous waste" or
"hazardous substances", as those terms are defined in the New Jersey Spill
Compensation and Control Act which shall be in violation of the New Jersey Spill
Compensation and Control Act. In the event the Lessee or any sublessee shall
breach this provision or in any way conduct its operation on the Demised
Premises or permit the Demised Premises to be used and maintained so as to
subject to the Lessee or any sublessee of the Demised Premises to a claim or
violation, the Lessee shall immediately remedy and fully cure such condition, at
its own cost and expense, or cause such condition to be cured and shall defend,
indemnify and save harmless the Lessor from any and all damages, remedial
orders, judgments or decrees and all costs and expenses related thereto or
arising therefrom, including, but not limited to, attorneys' and consultants'
fees, cleanup, removal and restoration costs and loss rentals.
<PAGE>
F. Lessee hereby agrees to execute such documents as Lessor
reasonably deems necessary to make such applications as Lessor reasonably
requires to assure compliance with ISRA. Lessee shall bear all costs and
expenses incurred with any required ISRA compliance resulting from Lessee's use
of the Demised Premises, including, but not limited to, state agency fees,
engineering fees, cleanup costs, filing fees and suretyship expenses. As used in
this Lease, ISRA compliance shall include applications for determinations of
non-applicability by appropriate governmental authority. The foregoing
undertaking shall survive the termination or sooner expiration of the Lease and
the surrender of the Demised Premises, and also shall survive the sale or lease
or assignment of the Demised Premises by Lessor. Lessee agrees to indemnify and
hold Lessor harmless from any violation of ISRA occasioned by the Lessee's use
of the Demised Premises.
G. In the event Lessee fails to comply with ISRA as stated in
this Section as of the termination or sooner expiration of the Lease, the Lessee
shall be responsible to pay all rents and other charges as provided in this
Lease, together with any and all other charges incurred in obtaining compliance
with ISRA and all regulations promulgated thereunder from the date of
termination of the Lease until such time as evidence of full compliance with
ISRA has been delivered to the Lessor.
53. RESERVATION OF EASEMENT. The Lessor reserves the right, easement
and privilege to enter on the Premises in order to install, at its own cost and
expense, any storm drains and sewers and/or utility lines in connection
therewith or borings or monitoring wells as may required by the Lessor. It is
understood and agreed that if such work as may be required by Lessor requires an
installation which may displace any paving, lawn, seeded area or shrubs the
Lessor shall, at its own cost and expense, restore said paving, lawn, seeded
area or shrubs. The Lessor covenants that the foregoing work shall not
unreasonably interfere with the normal operation of Lessee's business, and the
Lessor shall indemnify and save the Lessee harmless in connection with such
installations.
54. AIR, WATER AND GROUND POLLUTION.
A. The Lessee expressly covenants and agrees to indemnify,
defend, and save the Lessor harmless against any claim, damage, liability,
costs, penalties, or fines which the Lessor may suffer as a result of Air, Water
or Ground Pollution caused by the Lessee in its use of the Premises. The Lessee
covenants and agrees to notify the Lessor immediately of any claim or notice
served upon it with respect to any such claim the Lessee is causing Water, Air
or Ground Pollution; and the Lessee, in any event, will take immediate steps to
halt, remedy or cure any pollution of Air, Water or Ground caused by Lessee by
its use of the Premises. The within covenant on the part of the Lessee shall
survive the expiration or earlier termination of this Lease.
B. The Lessor expressly covenants and agrees to indemnify,
defend, and save the Lessee harmless against any claim, damage, liability,
costs, penalties, or fines which the Lessee may suffer as a result of Air, Water
or Ground Pollution caused by the Lessor or prior owners or occupants of the
<PAGE>
Building prior to the date of this Lease. The Lessor covenants and agrees to
notify the Lessee immediately of any claim regarding prior pollution and will
take immediate steps to remedy or cure any pollution of Air, Water or Ground
which is the Lessor's responsibility pursuant to this paragraph. The within
covenant on the part of the Lessor shall survive the expiration or earlier
termination of this Lease.
55. AMENDMENTS REQUIRED BY LENDER. If in connection with obtaining
financing for the Building, or any other land or any other improvements on land
owned by Lessor or its related entities, a bank, insurance company, or other
recognized institutional lender shall request reasonable modifications (other
than modifications which effect Lessee's financial obligations hereunder) in
this Lease as a condition to such financing, Lessee will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Lessee hereunder or materially decrease the
obligations of Lessor hereunder. In addition thereto, Lessee shall furnish to
any such mortgagee or proposed mortgagee, copies of Lessee's latest financial
statements, if any, duly certified by an independent certified public
accountant, or if no such certified statement is available, then such statements
shall be certified by the president of Lessee. If Lessee has no such statements,
Lessee shall provide such alternate financial information as may reasonably be
required by the mortgagee or proposed mortgagee.
56. RENEWAL OPTION.
A. Subject to the provisions of paragraph 56(B) below, Lessee
shall have the option to renew ("Renewal option") this Lease for two (2)
additional terms of Five (5) years (the "Renewal Terms") which Renewal Terms
shall commence upon the next day following the Termination Date. The terms,
covenants and conditions during the Term shall be carried over into the Renewal
Terms, except as specifically set forth below.
(1) The Basic Rent during the first Renewal Term shall be
$1,545,882.00 dollars payable in monthly installments of $25,764.71 dollars.
(2) The Basic Rent during the second Renewal Term shall be
$1,776,691.00 payable in monthly installments of $29,611.52.
B. Lessee's Renewal Option shall be conditioned upon and subject
to each of the following:
(1) Lessee shall notify Lessor in writing of its exercise of
its Renewal Option at least six (6) months, but not more than twelve (12)
months, prior to the Termination Date and/or the termination of the First
Renewal Term.
(2) At the time Lessor receives Lessee's notice as provided
for in B(1) above and at the Termination Date and/or the termination of the
First Renewal Term, Lessee shall not be in default under the terms or provisions
of this Lease and Lessee shall not have subleased any portion of the Demised
Premises.
<PAGE>
(3) Lessee shall have no further renewal option other than
the Renewal Option.
(4) This Renewal Option shall be deemed personal to the
Lessee and may not be assigned without the express written consent of Lessor.
(5) Lessor shall have no obligation as to any work or
perform any services for the Renewal Terms with respect to the Demised Premises
which Lessee agrees to accept them in "as is" condition.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year first above written.
611 Industrial Way, L.L.C., Lessor
By: /s/Gerald Shulman
_______________________________
Gerald Shulman, MANAGER
Logimetrics, Inc., Lessee
By: /s/Norman M. Phipps
_______________________________
Norman M. Phipps, President
<PAGE>
EXHIBIT "B"
LESSOR'S WORK DONE AT LESSOR'S EXPENSE
1. New concrete floors in the Non-Land Tech space
2. Sewer hook up to future bathroom areas
3. Roof mounted HVAC - distribution by Lessee
4. Point of attachment and meter for Lessee's electrical service @ 1,200 amps
5. One drive-in door at rear of building
6. One dock height door at rear of building
7. Installation of exterior dri-vit, windows and doors as provided in the Land
Tech space. Dri-vit to be extended in front to include Premium Coffee
space.
8. Landscaping consistent with neighborhood
9. Resurface parking area on eastern side of building including striping
<PAGE>
EXHIBIT "C"
LESSEE'S WORK DONE AT LESSEE'S EXPENSE
<PAGE>
EXHIBIT "D"
Working Plans and Specifications for Lessee's Work
<PAGE>
TABLE OF CONTENTS
Page No.
Paragraph
REFERENCE PAGE
1. DESCRIPTION -1-
2. TERM -1-
3. BASIC RENT -1-
4. USE AND OCCUPANCY -1-
5. CARE AND REPAIR OF PREMISES -1-
6. ALTERATIONS, ADDITIONS OR IMPROVEMENTS -2-
7. ACTIVITIES INCREASING FIRE INSURANCE RATES -2-
8. ASSIGNMENT AND SUBLEASE -2-
9. COMPLIANCE WITH LAW -3-
10. DAMAGES TO BUILDING -4-
11. EMINENT DOMAIN -5-
12. INSOLVENCY OF LESSEE -6-
13. LESSOR'S REMEDIES ON DEFAULT -6-
14. DEFICIENCY -7-
15. SUBORDINATION OF LEASE -8-
<PAGE>
TABLE OF CONTENTS
(Continued)
16. PARKING -9-
17. RIGHT TO CURE LESSEE'S BREACH -9-
18. CONSTRUCTION LIENS -9-
19. RIGHT TO INSPECT AND REPAIR -9-
20. LESSOR AND LESSEE WORK -9-
21. INTERRUPTION OR SERVICES OR USE -9-
22. UTILITIES -10-
23. ADDITIONAL RENT -10-
24. LESSEE'S ESTOPPEL -10-
25. CONDITION OF PREMISES -11-
26. SECURITY DEPOSIT -11-
27. WAIVER OF TRIAL BY JURY -12-
28. LATE CHARGE -12-
29. LESSEE'S LIABILITY INSURANCE -12-
30. NO OTHER REPRESENTATIONS -13-
31. QUIET ENJOYMENT -13-
32. INDEMNITY -13-
33. PARAGRAPH HEADINGS -13-
<PAGE>
TABLE OF CONTENTS
(continued)
34. APPLICABILITY TO HEIRS AND ASSIGNS -13-
35. INTENTIONALLY OMITTED -13-
36. LESSOR'S LIABILITY FOR LOSS OF PROPERTY -13-
37. PARTIAL INVALIDITY -14-
38. BROKER -14-
39. PERSONAL LIABILITY -14-
40. NO OPTION -14-
41. DEFINITIONS -14-
42. LEASE COMMENCEMENT -15-
43. NOTICES -15-
44. ACCORD AND SATISFACTION -15-
45. EFFECT OF WAIVERS -16-
46. LESSOR'S RESERVED RIGHT -16-
47. RIGHT TO EXHIBIT -16-
48. CORPORATE AUTHORITY -16-
49. DAMAGE -16-
50. SIGNS -17-
51. MISCELLANEOUS -17-
<PAGE>
TABLE OF CONTENTS
(Continued)
52. NEW JERSEY INDUSTRIAL SITE RECOVERY ACT -17-
53. RESERVATION OF EASEMENT -19-
54. AIR, WATER AND GROUND POLLUTION -20-
55. AMENDMENTS REQUIRED BY LENDER -20-
EXHIBIT "A"
EXHIBIT "B"
EXHIBIT "C"
EXHIBIT "D"
<PAGE>
RIDER TO LEASE
DATED NOVEMBER 30, 1998,
BETWEEN LOGIMETRICS, INC., AS LESSEE,
AND 611 INDUSTRIAL WAY, L.L.C., AS LESSOR
_______________________________________
References to "Premises" shall mean the premises leased by Lessee;
references to "Building" shall mean the building of which the Premises form a
part; references to "Real Property" shall mean the entire tax lot and all the
improvements thereon of which the Building and Premises form a part; references
to "Lease" shall mean the lease to which this rider is attached; references to
"Lease Documents" shall mean the Lease, this rider, any Rules and Regulations
issued by Lessor and any other applicable documents, exhibits, or schedules
which may be part of the Lease; reference to "Lease Term" shall mean the
duration of the initial term and all renewal or extension periods provided for
in the Lease; and reference to "Business Day" shall mean all days other than
Saturdays, Sundays, and legal holidays.
Any term or provision contained in the Lease to the contrary
notwithstanding:
1. In the event of any inconsistency among the Lease Documents, the
terms and conditions of this rider shall prevail over the Lease,
including any other riders, exhibits or schedules, and the terms
and conditions of the Lease, including any exhibits or schedules,
shall prevail over the Rules and Regulations established by
Lessor.
2. Intentionally Omitted.
3. Lessor represents that, during the Lease Term, it will maintain
and operate the Building in a manner consistent with the office
buildings in the vicinity of the Real Property.
4. Lessor represents that the HVAC systems serving the Premises will
be sufficient to maintain temperatures within the Premises below
75 degrees Fahrenheit and above 70 degrees Fahrenheit.
5. Lessee shall have 24 hour / 7 day a week access to the Premises
and during all such times HVAC service shall be available to
Lessee.
6. Lessor shall be responsible for maintenance, repairs and
replacements to the Premises (except those necessitated by
Lessee's negligence) associated with (a) correcting all defects
in construction of the work specified in Exhibit B; (b)
correcting defects in construction to the Premises and the
Building (except for the construction set forth in Exhibit C);
(c) maintaining (including snow, ice and debris removal),
repairing, replacing and repainting/re-striping, paving, curbs,
walkways, parking areas, and driveways; (d) real estate taxes
(except as set forth herein as to increases in real estate taxes)
<PAGE>
assessments and other governmental charges levied or assessed on
the Building; (e) maintaining, repairing and replacing the
landscaping on or about the Real Property; and (f) the Building
not otherwise specifically assumed by Lessee in this Lease.
7. Lessor shall use its reasonable good faith efforts to perform all
maintenance, repairs and replacements which Lessor is obligated
to perform pursuant to the terms of this Lease (i) in a good and
workman like manner and (ii) as promptly as practically possible.
In the event that Lessor shall fail to provide any essential
service required in the Lease Documents to be provided by Lessor,
which failure results in Lessee's use of the Premises being
materially impaired for thirty (30) days after Lessee provides
Lessor of written notice of same (provided, however, that
conditions which reasonably require more than thirty (30) days to
cure, Lessor shall be required to commence and reasonably proceed
with curing same and Lessee may not exercise the remedy set forth
below if Lessor commences and proceeds to cure such condition
during such thirty (30) day time period) Lessee shall have the
right to take any one or more of the following actions: to
terminate the Lease, upon five (5) days advance notice to Lessor,
to make essential repairs itself and deduct the cost thereof from
rent due, to sue for damages, or to sue Lessor for specific
performance of its obligations.
8. During the twelve (12) month period commencing on the
Commencement Date (the "Lessor HVAC Period"), Lessor shall
procure and maintain a service contract for the inspection,
service, maintenance and repair of the HVAC (the inspection
pursuant to such contract shall be made at least quarterly). The
identity of the contractor and the terms and conditions of the
contract shall be subject to Lessee's reasonable approval. Copies
of reports and inspections made thereunder shall be promptly
supplied to Lessee.
Upon the conclusion of the Lessor HVAC Period through the
termination of the Lease Term, Lessee shall procure and maintain
a service contract for the inspection, service, maintenance and
repair of the HVAC (the inspection pursuant to such contract
shall be made at least quarterly). The identity of the contractor
and the terms and conditions of the contract shall be subject to
Lessor's reasonable approval. Copies of reports and inspections
made thereunder shall be promptly supplied to Lessor.
9. Upon termination of the Lease, Lessee shall be entitled to remove
all of its personal property and trade fixtures (including, but
not limited to, the four unit Task U.S.A., Inc. air handling
system installed by Lessee consisting of two TSCO43-OD blower
units, one TSEO53FJ heating/cooling/humidity control unit and one
SRCF48-UO3D condensing unit), provided that it restores the
Premises to its condition at the Commencement Date (as defined
below), reasonable wear and tear and subsequent alterations
approved by Lessor excepted. In no event shall Lessee be required
to paint, paper or resurface any wall, floor, ceiling or other
finishes.
<PAGE>
10. Any right of Lessor to incur any expense or obligation for which
it may charge Lessee or to exercise any right to store, remove or
sell Lessee's personal property may be exercised only upon ten
(10) days' advance written notice to Lessee, such notice giving
Lessee the opportunity to undertake the work or otherwise take
such actions as will eliminate the necessity for Lessor to incur
such expense or obligation or exercise such right.
11. Lessee shall have the right to make non-structural alterations to
the Premises costing up to $30,000 in any instance without
Lessor's prior consent; provided, however, Lessee must obtain
Lessor's consent, which shall not be unreasonably withheld, if
Lessee desires to excavate any part of the floor of the Premises
or cut open or make any exterior alterations to the roof of the
Premises. Notwithstanding the foregoing, Lessee shall provide
Lessor notice of all such alterations and such notice shall
include a brief description of any such alterations. Alterations
costing in excess of $30,000 in any instance will require
Lessor's consent, which will not be unreasonably withheld or
delayed.
12. Intentionally omitted.
13. Any right of Lessor to make alterations or improvements to the
Premises shall be exercised only if the making of such
alterations or improvements will not unreasonably disturb
Lessee's use and occupancy of the Premises.
14. Any right of entry into the Premises granted to Lessor for
repairs, alterations or other purposes shall be exercised with
prior written notice to Lessee (except in the case of emergency)
and in a reasonable manner.
15. In the event of a taking by public authority or otherwise which
permanently reduces the area of the Premises so that it is
rendered unfit, in Lessee's reasonable opinion, for Lessee's
purposes, Lessee shall have the right to terminate the Lease.
Lessee and anyone claiming under it at its and their expense may,
jointly with Lessor, claim and prove, if so allowed, in the
proceedings related to any condemnation awards, and may receive
therefrom such portion thereof as represents the value of the
alterations, additions, installations and improvements made by or
for the account of Lessee (except any such alterations,
additions, installations and improvements set forth on Exhibit
"C" to the Lease) and anyone claiming under it in the Premises,
but not more than the total expenditures for such alterations,
additions, installations and improvements less depreciation from
the respective date of the making of such alterations, additions,
installations or improvements to the date of the taking, computed
<PAGE>
on a straight line basis over the term of the Lease or the useful
life of such item, which ever is shorter. Furthermore,
notwithstanding the foregoing provisions, Lessee and anyone
claiming under it shall be entitled to appear, claim, prove and
receive, if allowed, an award for personal property, relocation
and moving expenses.
16. Lessor shall have the right to exercise the remedies provided in
the Lease only if (a) any default by Lessee in the payment of
rent shall not be cured within ten (10) days of the date such
payments is due, or (b) a default by Lessee in the performance of
any other obligation under the Lease, or the existence of a
condition considered to be an event of default by Lessee under
the Lease, which shall not be cured within thirty (30) days of
written notice thereof by Lessor to Lessee, provided, however,
that for defaults or conditions which reasonably require more
than thirty (30) days to cure, Lessee shall be required to
commence and reasonably proceed with curing same and Lessor may
not exercise such remedies if Lessee commences and proceeds to
cure such defaults or conditions.
The term "default" or "event of default" as used in the Lease
Documents shall refer either (a) to Lessee's wrongful failure to
pay rent when due or (b) any material failure of Lessee to
perform its obligations or cure a condition deemed to be an event
of default under the Lease Documents.
17. Lessor shall have the obligation to reasonably mitigate its
damages in the event of any default by Lessee in its obligations
under the Lease Documents.
18. Any subordination provision contained in the Lease, relating
either to ground leases or mortgages, is subject to the express
condition that so long as Lessee is not in material default under
the Lease Documents (a) Lessee will not be made a party in any
action or proceeding brought by any person having rights superior
to Lessee to recover possession of the Premises or to foreclose
any mortgage or for any other relief sought, and (b) Lessee's
possession hereunder shall not be disturbed. Lessor agrees to
deliver to Lessee letters or agreements from any holder of rights
superior to Lessee, including mortgagees and ground lessors,
recognizing Lessee's rights hereunder, such delivery to take
place prior to the Commencement Date. Such letters or agreements
shall be in the form regularly used by any such mortgagee or
ground lessor for the purpose of providing tenants the
non-disturbance protections set forth above.
19. The parties contemplate that the Term shall commence on January
1, 1999; provided, however, the Lease Term shall only commence
upon the substantial completion of Lessor's Work (excluding (i)
Lessor's obligation to repave and restripe the paving areas
identified in Exhibit "B" which repaving and restriping will be
completed on or before May 15, 1999 and (ii) Lessor's obligation
to install exterior dri-vit on and around the exterior of the
Premises and the exterior portion of the Building now occupied by
Premium Coffee which will be completed on or before May 15, 1999;
provided, however, Lessor shall, prior to January 1, 1999, apply
a skim coat of concrete on all exterior portions of the Building
where dri-vit does not currently exist (excluding the roof and
the rear (south side) of the Building) and paint same a color
<PAGE>
consistent with the color of the existing dri-vit. It is
understood that Lessor has no obligation to install exterior
dri-vit or a skim coat of concrete on the rear (south side) of
the Building, however, Lessor shall be obligated to (i) paint the
rear (south side) of the Building prior to January 1, 1999 (such
paint to be of a color consistent with the other exterior
portions of the Building) and (ii) repaint the rear (south side)
of the Building when same is in need of repainting. Lessor shall
notify Lessee in writing when Lessor's Work is substantially
completed. The Lease Term shall commence on the tenth (10th)
Business Day following Lessee's receipt of such notice (the
"Commencement Date"). In the event Lessor's Work is not
substantially complete by February 1, 1999, subject to extensions
for delays caused by Lessee, Lessee shall have the right to
terminate the Lease by written notice to Lessor, whereupon the
Lease shall be null and void and all moneys paid by Lessee shall
be refunded by Lessor. Lessor shall perform Lessor's Work in a
first class, workmanlike manner. If there are any latent defects
or "punch list" items, Lessor agrees to correct them within
thirty (30) days following notice from Lessee after Lessee
occupies the Premises. In no event shall Lessee be obligated to
pay any amounts of Base Rent or Additional Rent until such time
as Lessor's Work is substantially complete. During all such times
while Lessee is performing fix-up, furnishing and other
preparations for occupancy, all of the terms and conditions of
this Lease shall be effective except for those calling for the
payment of Rent or Additional Rent.
20. Lessee should be permitted to, and will not be deemed in
occupancy by virtue of, performing Lessee fit-up, furnishing and
other preparations for occupancy prior to the Commencement Date.
During all such times while Lessee is performing fit-up,
furnishing and other preparations for occupancy, all of the terms
and conditions of this Lease shall be effective except for those
which call for the payment of Rent or Additional Rent. After the
execution of this Lease, Lessee shall be permitted to occupy and
operate its business out of the approximately seven thousand
(7,000) square feet of the Premises (the "Land Tech Space") which
is identified as the "Demised Premises" or "Premises" under that
certain Lease, dated January 15, 1998, by and between Lessor and
Land Tech Remedial, Inc. (the "Land Tech Lease"). During all such
times while Lessee is occupying the Land Tech Space, all of the
terms and conditions of this Lease shall be effective except for
those which call for the payment of Rent or Additional Rent,
provided however, during all such times that Lessee is in
occupancy of the Land Tech Space, Lessee shall pay to Lessor that
"Basic Rent" due under the Land Tech Lease (the "Land Tech
Rent"), provided, further, however, Lessee's obligation to pay
the Land Tech Rent shall cease on the earlier of (i) the date on
which this Lease terminates or (ii) the date on which Lessee
begins making payments of Rent and/or Additional Rent under this
Lease.
21. "Additional Rent" as referred to in the Lease shall not include
the following: (a) the cost of construction of any improvements
on the Real Property, including any addition, alteration or
refurbishing of space leased to other lessees in the Building;
<PAGE>
(b) expenses for repairs or other work occasioned by fire,
windstorm or other casualty in excess of a reasonable deductible
amount provided in Lessor's insurance policy; (c) expenses
incurred in leasing or procuring new lessees for the Building
(e.g. commissions, advertising, renovation and legal); (d) legal
expenses in enforcing the terms of any lease other than this
Lease; (e) interest or principal amortization payments on any
mortgage; (f) any corporate franchise or net worth taxes, income
taxes (state and federal), personal property taxes, excess profit
taxes, license, inspection and permit fees; (g) any expenses
incurred for which Lessor has a right of reimbursement from a
lessee in the Building; (h) claims paid by Lessor in satisfaction
or settlement of liability in tort; (i) any payments to the
ground lessor; and (j) depreciation of the Building or other
improvements located on the Real Property.
22. All policies of insurance shall be issued by insurers authorized
to conduct that type of insurance business in New Jersey, which
shall at all times, have policy holders rating of "A", or better,
and financial rating of "VII", or better, in the then current
edition of Best's Insurance Guide.
Lessor represents and warrants that the real estate taxes
assessed against the Building and Real Property in both the
current and prior year were based upon the Real Property being
fully assessed and taxed without special arrangements,
preferences, abatements or similar treatment. Upon Lessee's
request, Lessor agrees promptly to provide such reasonable
substantiation of any payments beyond the fixed monthly rent
claimed to be due from Lessee resulting from claimed increases in
real estate taxes and insurance. In no event shall Lessee be
responsible for payments beyond the fixed monthly rent resulting
from an assessment for improvements on the Real Property which
are not of general benefit to the Lessees in the Building.
23. Intentionally Omitted.
24. Nothing contained in the Lease Documents shall be construed to
absolve Lessor from responsibility for acts of negligence, gross
negligence or willful misconduct of its agents, employees,
servants or others acting on its behalf.
25. Lessee shall not be liable to Lessor with respect to any damages
suffered by Lessor which are actually covered by insurance
carried by Lessors. The parties agree that each hereby waives any
claim it might have against the other for loss, damage or
destruction with respect to its property, by fire or other
casualty that is actually generally insured against under the
terms of standard fire and extended coverage insurance policies.
The parties agree to obtain waiver of subrogation clauses in
their respective insurance policies, such clauses extending to
the other party and its employees and agents.
<PAGE>
26. Lessor shall defend, indemnify and save harmless Lessee and
Lessee's owners, principals, directors, officers,
representatives, agents and employees ("Indemnified Persons")
against and from any losses, liabilities, obligations, damages,
penalties, claims, costs, charges and expenses (including
reasonable attorney's fees) which may be suffered by any
Indemnified Person or asserted by third persons against any
Indemnified Person and which arise directly or indirectly
relating to the presence of any Existing Environmental Conditions
(as defined below) within any portion of the Real Property.
27. Intentionally Omitted.
28. Subject to all applicable municipal ordinances, Lessee shall be
entitled to place a sign on the door to the Premises indicating
Lessee's name. Subject to all applicable municipal ordinances and
Lessor's prior written consent, which consent will not be
unreasonably withheld, Lessee shall be entitled to place a sign
indicating Lessee's name located on the exterior of the Building.
Lessee shall also be entitled to have its name appear on the
monument sign located on the Real Property. Lessee's name shall
appear second from the top on such monument sign and be of a size
and color reasonably consistent with the names of the other
lessees on the monument sign.
29. Intentionally Omitted.
30. Notwithstanding any provision in the Lease Documents to the
contrary (a) Lessor shall indemnify and hold Lessee harmless for
any environmental conditions now existing in or around the
Premises and for such conditions arising during the Lease Term to
the extent not resulting from any act or omission of Lessee
("Existing Environmental Conditions") and (b) Lessee shall have
no responsibility for Existing Environmental Conditions. Lessor
assumes all responsibility for Existing Environmental Conditions
and for compliance with all requirements of governmental agencies
in connection therewith. Lessor shall hold Lessee harmless from
any losses, costs, expenses, remediation orders, fines,
assessments or penalties of any kind which might be incurred by
or imposed against Lessee by governmental agencies as a result of
Existing Environmental Conditions. To the extent applicable or
required relating to Existing Environmental Conditions, Lessor
shall indemnify and hold Lessee harmless all costs and expenses
relating to compliance with ISRA (except in those instances when
ISRA Compliance is necessitated as a result of Lessee's actions),
including (i) obtaining from NJDEP a "Letter of
"Non-Applicability", (ii) submitting to and obtaining the
approval by NJDEP of a "Negative Declaration," or (iii) obtaining
the issuance by NJDEP of a "No Further Action Letter" pursuant to
ISRA and applicable regulations, guidance and guidelines
implementing ISRA ("ISRA Requirements") and other environmental
requirements.
<PAGE>
31. Any and all approvals and consents required to be obtained by
Lessee from Lessor as provided in the Lease Documents shall not
be unreasonably withheld by Lessor.
32. Lessee shall comply with all Rules and Regulations of uniform
applicability and application.
33. Any payment required by the Lease to be made by Lessee to Lessor
for legal expenses, attorney's fees or similar purposes shall
only be required in the event that Lessor brings an action or
proceeding against Lessee to enforce Lessor's rights under the
Lease and then only as follows:
In the event that either party should bring suit
against the other because of the breach of any
provision of the Lease or for any other relief
against the other, then all costs and expenses,
including reasonable attorneys' fees, incurred by
the prevailing party therein shall be paid by the
other party.
34. Lessor acknowledges that, at Lessee's option, Lessee may cause
mm-Tech, Inc. a wholly-owned subsidiary of Lessee ("mm-Tech"), to
occupy the Premises on behalf of Lessee and, in such case, any
all signs or other indicia of occupancy shall evidence the
occupation of the Premises by mm-Tech. Lessor hereby waives any
breach of this Lease that may be caused by mm-Tech's occupation
of the Premises.
35. Lessee's sole obligation with respect to the commencement and
completion of Lessee's Work shall be that, provided the Lease
remains in full force and effect from the Commencement Date
through December 31, 2003, Lessee shall complete on or before
December 31, 2003 (i) all Lessor's Work contemplated to occur on
or about the approximate 7,000 square feet of space identified as
the "Land Tech" space on Exhibit A and (ii) complete a fit-out of
at least fifty percent (50%) of the remaining portion of the
Premises consisting of the work described in Exhibit C.
SIGNATURE PAGE TO FOLLOW
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
611 INDUSTRIAL WAY WEST, L.L.C.
By:/s/Gerald Shulman
__________________________________
Gerald Shulman, Manager
LOGIMETRICS, , INC.
By:/s/Norman Phipps
__________________________________
Norman Phipps, President &
Chief Operating Officer
EXHIBIT 10.25
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of March 4, 1998, by and between
LogiMetrics, Inc. (the "Company"), a Delaware corporation, and Kenneth C.
Thompson (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Consultant has had extensive experience as an executive
officer of companies involved in the manufacturing of telecommunications
products and systems; and
WHEREAS, the Company wishes to retain the Consultant's services and
the Consultant desires to provide his services to the Company upon the terms set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound, the parties hereto agree as follows:
Section 1. Consulting Services. During the term of this Agreement
(which commenced August 1, 1997), the Consultant shall render to the Company,
its subsidiaries and affiliates, such consulting services relating to the
Company, its subsidiaries and affiliates as may be reasonably requested by the
Chief Executive Officer or the Chief Operating Officer from time to time (the
"Consulting Services"). Such Consulting Services may include, but shall not be
limited to, advice and assistance in connection with strategy and business plan
development, strategic and other alliances, technology developments and trends,
governmental relations, financial planning and other matters relating to the
conduct of the business of the Company and its subsidiaries and affiliates.
Consulting Services may be rendered in person at the offices of the Company, or
any of its subsidiaries or affiliates, at some other mutually agreeable place,
by telephone or by correspondence. Except as otherwise agreed between the
parties hereto, the Consultant will not be obligated to render Consulting
Services hereunder on more than 10 days in any month. Consulting Services will
be provided by the Consultant personally and, without the prior written consent
of the Company, the Consultant shall not subcontract or delegate to any other
person or entity the performance of any such Consulting Services.
Section 2. Consulting Fees. In consideration of the Consulting
Services previously provided by the Consultant hereunder through December 31,
1997, the Company has previously paid the Consultant a total of $47,100 in cash,
receipt of which is hereby acknowledged. In addition, the Consultant shall be
entitled to receive monthly payments of up to $12,000 per month for Consulting
Services to be rendered through April 30, 1998. In addition to such cash
payments, the Company also shall issue to the Consultant on the date hereof
108,000 duly authorized, validly issued, fully paid and non-assessable shares of
its Common Stock, par value $.01 per share (the "Common Stock") (together with
such cash fees, the "Consulting Fee"). In no event shall any portion of the
Consulting Fee be refundable in the event of the termination of this Agreement
for any reason, with or without cause, including, without limitation, as a
result of the Consultant's death, permanent disability; or other inability to
perform the Consulting Services.
<PAGE>
The Consultant acknowledges that the shares of Common Stock to be
issued to him hereunder (collectively, the "Consulting Shares") have not been
registered under the Securities Act of 1933, as amended (the "Act"), or any
State securities laws and, therefore, may not be resold or transferred by the
Consultant unless they are subsequently registered under the Act and applicable
State securities or "Blue Sky" laws or exemptions from such registration are
available. No sale or other transfer of the Consulting Shares may be made
without the Company's consent unless (i) the offer and sale of the Consulting
Shares has been registered under the Act and applicable State securities or
"Blue Sky" laws, or (ii) the offer and sale of the Consulting Shares is exempt
under the Act and such laws and the Company has received an opinion of counsel
(in form and substance reasonably satisfactory to the Company) to that effect.
Further, the Consultant acknowledges that a legend summarizing the restrictions
described above will be placed on the certificates representing the Consulting
Shares.
In addition to the payment of the Consulting Fee, the Company will
reimburse the Consultant for all out-of-pocket expenses reasonably and
necessarily incurred by the Consultant in connection with the provision of
Consulting Services hereunder; provided that the Company has approved such
expenses in advance. The Consultant's right to reimbursement of such expenses is
hereby expressly conditioned on the Company's receipt of appropriate
documentation of such expenses so as to preserve any claim of deductibility of
such expenses by the Company for Federal income tax purposes. Approved expenses
shall be reimbursed promptly upon receipt of all required documentation.
Section 3. Termination. This Agreement may be terminated by either
party hereto upon not less than 30 days' prior written notice to the other
party. In addition, this Agreement shall terminate immediately upon the earlier
to occur of (i) death of the Consultant, or (ii) the Consultant's becoming
incapable, in the reasonable judgment of the Company, of performing the
Consulting Services to be provided by him hereunder. This Agreement will expire
on March 31, 1998, unless otherwise extended in writing by mutual agreement of
the parties hereto.
Section 4. Status of Consultant. The Consultant shall be an
independent contractor with respect to the Consulting Services to be rendered
hereunder. The Consultant shall not be considered as having employee status with
the Company or its subsidiaries or affiliates and shall not be entitled to
participate in any of the employee benefit and/or welfare plans maintained by
the Company, its subsidiaries or its affiliates. Subject to the provisions of
Section 5 below, the Consultant's engagement hereunder shall not preclude the
Consultant's employment by another person or entity on either a part-time or
full-time basis.
Section 5. Confidentiality Covenant; Non-solicitation;
Non-competition.
(a) The Consultant recognizes that during the course of performing
Consulting Services hereunder the Consultant will have access to and will
acquire confidential and proprietary information relating to the Company, its
subsidiaries and affiliates (the "Proprietary Information"). The Consultant
acknowledges that the Proprietary Information has been and will continue to be
of critical importance to the business and operations of the Company, its
subsidiaries and affiliates. Accordingly, the Consultant shall use such
<PAGE>
Proprietary Information only in connection with the provision of Consulting
Services hereunder and shall not, without the express prior written consent of
the Company, directly or indirectly disclose any Proprietary Information to any
other person or use any such Proprietary Information, either directly or
indirectly, for his benefit or for the benefit of any third party. Upon any
termination or expiration of this Agreement, the Consultant shall return to the
Company all Proprietary Information provided to the Consultant by the Company,
its subsidiaries or affiliates and shall destroy all other Proprietary
Information then in his possession or subject to his control and shall certify
such destruction to the Company. Under no circumstances shall the Consultant
retain any copies of materials containing Proprietary Information, or any
documents, notes, memoranda, studies, analyses or other material reduced to a
tangible form containing Proprietary Information. The Consultant's obligations
under this Section 5(a) shall survive any termination or expiration of this
Agreement forever.
The term "Proprietary Information" does not include information which
(i) is or becomes generally available to the public (other than as a result of a
disclosure by the Consultant or a representative of the Consultant), (ii)
becomes available to the Consultant on a non-confidential basis from a source
other than the Company or one of its representatives which the Consultant
reasonably believes is entitled to disclose it, or (iii) was already in the
Consultant's possession on a non-confidential basis prior to its disclosure to
the Consultant by the Company or one of its representatives.
(b) During the term of this Agreement and for one year thereafter, the
Consultant shall not, without the express prior written consent of the Company,
directly or indirectly, (i) solicit or assist any third party in soliciting for
employment any technical, engineering or managerial employee employed by the
Company, its subsidiaries or affiliates (collectively, "Employees"), or (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee. The Consultant's obligations under this
Section 5(b) shall survive any termination or expiration of this Agreement.
(c) During the term of this Agreement, the Consultant shall not,
without the express prior written consent of the Company, directly or
indirectly, any where in the world (x) engage in the design, manufacture,
assembly, sale, maintenance or servicing of wireless telecommunications
transmitting and receiving equipment or components thereof (collectively, a
"Competing Business"), or (y) serve as an officer, director, employee, partner,
member, manager or consultant to or beneficially own any equity interest (other
than an interest of less than 2% of the outstanding voting power of any publicly
traded company) in any Competing Business. The Consultant's obligations under
this Section 5(c) shall survive any termination or expiration of this Agreement.
(d) The Consultant acknowledges that, in the event of any breach of
this Section 5 by him, the Company would be irreparably and immediately harmed
and could not be made whole by monetary damages. Accordingly, the Company, in
addition to any other remedy to which it may be entitled, shall be entitled to
temporary, preliminary and permanent injunctive relief to prevent breaches of
the provisions of this Section 5 and to compel specific performance of the
provisions hereof. The Company shall not be required to post a bond or other
security in connection with the granting of any such relief. These remedies
<PAGE>
shall not be deemed to be exclusive remedies for a violation of this Agreement
but shall be in addition to all other remedies available to the Company at law
or in equity.
Section 6. Ownership of Works. The Consultant acknowledges and
confirms that all Works (as defined below) to be supplied by or on behalf of the
Consultant to the Company will be prepared or supplied by the Consultant for,
and at the instigation and under the direction of, the Company and that the
Works are, at all times are intended to be, and shall be deemed to be "works
made for hire" (as that term is used in the United States copyright laws) made
in the course of the services rendered by the Consultant to the Company. To the
extent that title to any such Works may not, by operation of law, vest in the
Company or may not be considered "works made for hire," the Consultant hereby
assigns, grants and delivers all of his right, title and interest of every kind
and nature whatsoever in and to the Works (and all copies and versions thereof)
to the Company. The Company shall have the exclusive right to apply for, obtain
and hold patent, copyright, trademark and/or service mark registrations
(including renewals and extensions thereof) or any other protection for the
Works. The Consultant will, without further consideration, at any time (during
or after the term of this Agreement), sign any documents or instruments that the
Company requests to (i) establish the Company's ownership of the Works and (ii)
apply for and obtain patent, copyright, service mark and trademark registrations
in the U.S. and foreign countries. The Consultant will assist the Company,
without further consideration, in obtaining, defending and enforcing the
Company's rights in all of the Works. All Works provided or to be provided to
the Company by the Consultant or on his behalf shall bear an appropriate
copyright or other appropriate notice indicating ownership thereof by the
Company.
As used in this Agreement, "Works" means all copyrights, patents,
trade secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by or for the Consultant during the course of performing the Consulting
Services (including, but not limited to, design concepts, plans and schematics,
engineering drawings, manufacturing plans, models, demonstrators, business
plans, marketing and sales plans, customer lists, lists of potential contacts,
reports and notes prepared by or for the Consultant, all other documentation
developed for or specifically relating to the Consulting Services to be rendered
hereunder), all of the subject matter contained in any of the foregoing, and all
of the Company's source documents, stored data and other information relating
thereto.
The Consultant (i) acknowledges that the Consultant has or will have
no claim to any ownership or other interest in the Works, (ii) hereby waives any
"artist's rights" or "moral rights" he may have to the Works, and (iii)
acknowledges that the Company shall have the exclusive right (forever and
throughout the world) to use and exploit the Works throughout the world in
perpetuity as it sees fit (including the right to publish or broadcast the Works
in any media, or license others to do so) all without further obligation or
compensation to the Consultant.
The Consultant represents and warrants that all Works created by or
for him will not contain or violate any intellectual property rights of any
other person or entity.
<PAGE>
Section 7. Representations. The Consultant represents and warrants to
the Company that (i) he has full power and authority to enter into this
Agreement and to perform the services provided for hereunder; (ii) the
performance of the services does not, and will not, violate any law, rule,
regulation, judgment or order of any court binding on him and does not, and will
not, in any way violate or conflict with any agreement, understanding or
arrangement to which he is a party or by which he may be bound; (iii) he is not
in any way precluded from performing the services provided for hereunder; (iv)
this Agreement is a valid and binding Agreement of the Consultant, enforceable
against him in accordance with its terms; and (v) he is acquiring the Consulting
Shares for his own account for investment only and not for or with a view to
resale or distribution thereof in violation of the Act; he has not entered into
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge to such person or anyone else the Consulting Shares; and he
has no present plans or intentions to enter into any such contract, undertaking,
agreement or arrangement.
Section 8. Severability. The invalidity of any portion hereof shall
not effect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each party agrees that a court of
competent jurisdiction may enforce such restriction to the maximum extent
permitted by law.
Section 9. Benefits of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
executors, administrators, successors and assigns. This Agreement is personal to
the Consultant and may not be assigned by the Consultant without the Company's
prior written consent. Any assignment or purported assignment by the Consultant
in violation of this Section 9 shall be null and void.
Section 10. Entire Agreement. This Agreement shall constitute the
entire agreement among the parties with respect to the matters covered hereby
and shall supersede all previous written, oral or implied agreements and
understandings among the parties with respect to such matters.
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
reference to the choice of law principles thereof.
Section 12. Amendment and Modifications. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 13. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given which so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
<PAGE>
If to the Company: LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11803
Telephone: (516) 784-4110
Facsimile: (516) 784-4130
Attention: Mr. Norman M. Phipps
If to Consultant: Kenneth C. Thompson
10114 Waterbrook Lane
Charlotte, North Carolina 28277
Telephone: (704) 844-0947
Facsimile (704) 844-0947
or at such other addresses as shall be furnished in writing to the other party
hereto.
Section 14. Titles and Headings. The headings in this Agreement are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original agreement, but all
of which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By: /s/Norman M.Phipps
_________________________________
Name: Norman M. Phipps
Title: President and Chief
Operating Officer
/s/Kenneth C. Thompson
_________________________________
Kenneth C. Thompson
EXHIBIT 10.26
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated August 6, 1998, by and
between LogiMetrics, Inc. (the "Company") and Kenneth C. Thompson (the
"Executive"), residing at 10114 Waterbrook Lane, Charlotte, North Carolina
28277.
W I T N E S S E T H:
WHEREAS, the Company wishes to continue to employ the Executive as the
Chief Executive Officer of the Company and the Executive desires to continue
such employment, all as more fully set forth herein; and
WHEREAS, the Executive and the Company are currently parties to a
consulting agreement, dated March 4, 1998 (the "Consulting Agreement"), pursuant
to which the Executive provides the Company with Consulting Services (as defined
in the Consulting Agreement);
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
Section 1. Term of Employment; Position and Duties.
(a) Effective as of August 6, 1998 (the "Commencement Date"), the
Executive shall continue to serve as the Chief Executive Officer of the Company
and shall have such powers and duties as are commensurate with such position and
as may be conferred upon him from time to time by the Board of Directors of the
Company (the "Board"). Except as specifically set forth in this Section 1(a),
the terms of the Executive's employment shall, for the period commencing on the
Effective Date and continuing until the date upon which a Qualifying Offering
(as defined in Section 1(e)(i) below) is consummated (the "Initial Period"), be
governed by the Consulting Agreement. For all services rendered by the Executive
in any capacity required hereunder during the Initial Period, including, without
limitation, services as an executive officer, director, or member of any
committee of the Company or any subsidiary, affiliate or division thereof, the
Executive shall be compensated at a rate of $12,000 per month. Notwithstanding
anything set forth in this Agreement to the contrary, if the Company does not
consummate a Qualifying Offering on or before January 31, 1999, then the
Executive shall no longer be required to provide services hereunder and this
Agreement shall terminate; provided, however, that the Executive and the Company
may agree in writing to extend the Initial Period for additional monthly terms,
which shall be terminable by either party on not less than 30 days prior written
notice. Except as otherwise set forth herein, all terms and conditions of the
Consulting Agreement shall remain in full force and effect.
(b) Effective as of the date upon which a Qualifying Offering is
consummated and continuing (subject to earlier termination pursuant to Section
4) until the third anniversary of the Commencement Date (the "Employment
Period"), and except for illness or incapacity and reasonable vacation periods
consistent with Section 2 below, the Executive shall devote all of his business
time, attention, skill and efforts exclusively to the business and affairs of
the Company and its subsidiaries and affiliates; provided, however, that the
<PAGE>
Executive may engage in charitable, educational, religious, civic and similar
types of activities (all of which shall be deemed to benefit the Company),
speaking engagements, membership on the board of directors of other
organizations (to the extent approved in advance by the Board), and similar
activities to the extent that such activities do not inhibit or prohibit the
performance of his duties hereunder or inhibit or conflict with the business of
the Company, its subsidiaries and affiliates.
(c) During the Term (as defined in Section 1(e)(ii) below), the
Executive shall be permitted to provide the services required hereunder from his
office in North Carolina; provided, however, that at the request of the Board,
the Executive shall travel to the Company's headquarters (or such other location
specified by the Board) to attend meetings of the Board (or committees thereof),
shareholders' meetings or other meetings or events on behalf of the Company.
(d) The Executive hereby represents and warrants that (i) he has the
legal capacity to execute and perform this Agreement, (ii) this Agreement is a
valid and binding obligation of the Executive enforceable against him in
accordance with its terms, (iii) the Executive's service hereunder will not
conflict with, or result in a breach of, any agreement, understanding, order,
judgment or other obligation to which the Executive is presently a party or by
which he may be bound, and (iv) the Executive is not subject to, or bound by,
any covenant against competition, confidentiality obligation or any other
agreement, order, judgment or other obligation which would conflict with,
restrict or limit the performance of the services to be provided by him
hereunder. The Executive knows of no reason why he would not be insurable at
regular rates.
(e) For purposes of this Agreement, the following terms shall have the
meanings set forth below:
(i) "Qualifying Offering" means a private or public sale of the
securities of the Company which results in net proceeds to the Company of at
least $10,000,000 (prior to the payment of costs and expenses incurred in
connection therewith).
(ii) "Term" means the Initial Period and the Employment Period,
collectively.
Section 2. Compensation. For all services rendered by the Executive in
any capacity required hereunder during the Employment Period, including, without
limitation, services as an executive officer, director, or member of any
committee of the Company or any subsidiary, affiliate or division thereof, the
Executive shall be compensated as follows:
(a) The Company shall pay the Executive a fixed salary at the rate of
$250,000 per annum or such higher annual amount as is being paid from time to
time pursuant to the terms hereof ("Base Salary"). The Base Salary shall be
subject to such periodic review and such periodic increases as the Board shall
deem appropriate in accordance with the Company's customary procedures and
<PAGE>
practices. Base Salary shall be payable in accordance with the customary payroll
practices of the Company, but in no event less frequently than bi-weekly.
(b) Within ten days of the date of the commencement of the Employment
Period, the Company shall pay to the Executive a one-time cash bonus equal to
the sum of (i) $50,000 and (ii) the product obtained by multiplying (x)
$8,333.33 by (y) the number of whole months in the Initial Period (the "Bonus").
(c) Effective as of the date of the commencement of the Employment
Period, the Company shall grant to the Executive a non-qualified option (the
"Option") to purchase 3,000,000 shares of common stock, $.01 par value per share
(the "Common Stock"), of the Company at an exercise price of $0.60 per share.
The Option shall be immediately exercisable upon grant. The number of shares
covered by the Option and the per share exercise price shall be subject to
adjustment for any increase, decrease or exchange of the number or kind of
outstanding shares of the Common Stock, including without limitation as the
result of the Company's proposed one-for-ten reverse stock split. As a condition
to grant of the Option, the Executive shall be required to execute a stock
option agreement prepared by the Company regarding the terms and conditions
governing such Option (the "Option Agreement").
(d) During the Employment Period, the Company shall maintain a term
insurance policy (the "Term Policy") insuring the life of the Executive in an
amount of not less than $1,000,000 at no cost to the Executive (except any
associated tax liability) with the beneficiary to be designated by the
Executive. In the event that the Executive's employment is terminated pursuant
to the terms hereof, the Company shall assign the Term Policy to the Executive
for no additional consideration and the Executive shall have the right to assume
the Company's obligations thereunder. Upon such assignment, the Company shall
have no further obligation with respect to the Term Policy.
(e) The Executive shall be entitled to four weeks of vacation in each
calendar year during the Employment Period (which shall be appropriately pro
rated for any partial year during the Employment Period); provided, however,
that the Executive shall not be entitled to carryover vacation from one year to
any other year or to any payment in respect of any unused or accrued vacation.
(f) During the Employment Period, the Company shall reimburse the
Executive for the Executive's actual out-of-pocket expenses of leasing a car of
the Executive's choice and all related maintenance, repairs, insurance and other
expenses, subject to a monthly cap of $700.
(g) During the Employment Period, the Company shall furnish the
Executive, without cost to him except any associated tax liability, with
perquisites consistent with those afforded other senior executives holding
positions with the Company comparable to the position held by Executive.
<PAGE>
(h) During the Employment Period, the Executive shall be entitled to
participate in all compensation and employee benefit plans or programs, and to
receive all benefits, perquisites and emoluments, for which any salaried
employees of the Company are eligible under any plan or program now or hereafter
established and maintained by the Company, to the fullest extent permissible
under the general terms and provisions of such plans or programs and in
accordance with the provisions thereof. Notwithstanding the foregoing, nothing
in this Agreement shall preclude the amendment or termination of any such plan
or program; provided, that, such amendment or termination is applicable
generally to the senior officers of the Company or any subsidiary or affiliate.
Section 3. Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable travel or other expenses incurred by the Executive
in connection with the performance of his duties and obligations under this
Agreement, including, without limitation, the maintenance of an office in the
Charlotte, North Carolina area, subject to the Executive's presentation of
appropriate vouchers in accordance with such procedures as the Company may from
time to time establish for senior officers and to preserve any deductions for
federal income taxation purposes to which the Company may be entitled.
Section 4. Termination of Employment; Effects Thereof.
(a) The Company shall have the right, upon delivery of written notice
to the Executive, to terminate the Executive's employment hereunder prior to the
expiration of the Employment Period (or any subsequent term of full-time
employment) (i) pursuant to a Termination for Cause, (ii) upon the Executive's
becoming Permanent Disabled, or (iii) pursuant to a Without Cause Termination;
provided, however, that, without the Executive's written consent, no Without
Cause Termination shall be effective until 30 days after receipt by the
Executive of written notice of termination from the Company. The Executive shall
have the right, upon delivery of written notice to the Company, to terminate the
Executive's employment hereunder prior to the expiration of the Employment
Period (or any subsequent term of full-time employment) (i) pursuant to a
termination for Good Reason, (ii) following the occurrence of Change in Control
Event upon compliance with the procedures set forth in Section 4(f), or (iii) in
the Executive's sole discretion; provided, however, that, without the Company's
written consent, no termination of the Executive's employment pursuant to this
sentence shall be effective without the Company's consent until 90 days after
receipt by the Company of written notice of termination from the Executive. The
Executive's employment during the Employment Period (or any subsequent term)
shall terminate automatically without action by any party hereto upon the
Executive's death.
(b) In the event that the Company terminates the Executive's
employment during the Employment Period (or any subsequent term of full-time
employment) pursuant to a Without Cause Termination, or the Executive terminates
his employment for Good Reason, the Company shall, as liquidated damages or
severance pay, or both, continue, subject to the provisions of Section 5 below,
to pay the Executive's Base Salary as in effect at the time of such termination
for the greater of (i) the remainder of the then-current employment term, or
(ii) a period of twelve months from the effective date of such termination.
<PAGE>
(c) In the event that the Company terminates the Executive's
employment during the Employment Period (or any subsequent term of full-time
employment) pursuant to a Permanent Disability, the Company shall continue to
pay to the Executive his then-current Base Salary for a period of twelve months
from the date of termination less any amounts payable to the Executive pursuant
to any long term disability plan of the Company then in place. No other payments
shall be made, or benefits provided, by the Company under this Agreement except
as otherwise required by law.
(d) In the event that the Company terminates the Executive's
employment hereunder during the Employment Period (or any subsequent term of
full-time employment) due to a Termination for Cause or the Executive terminates
his employment with the Company other than for Good Reason (including, without
limitation, pursuant to any retirement plan or policy then maintained by the
Company), the Company shall pay the Executive any earned but unpaid Base Salary
as of the date of termination of employment. No other payments shall be made, or
benefits provided, by the Company whether under this Agreement or otherwise
except to the extent required by law.
(e) In the event that the Executive's employment hereunder is
terminated during the Employment Period (or any subsequent term of full-time
employment) due to the Executive's death, the Company shall pay the Executive's
executor or other legal representative (the "Representative") any earned but
unpaid Base Salary as of the date of termination of employment. No other
payments shall be made, or benefits provided, by the Company under this
Agreement except as otherwise required by law.
(f) If a Change in Control Event occurs during the Employment Period
(or any subsequent term of full-time employment), the Executive shall have the
right, in his sole discretion, to elect to terminate his employment by providing
written notice of his election to the Company within 180 days after the
occurrence of such Change in Control Event. Any termination of employment by the
Executive pursuant to this Section 4(f) shall be deemed to be a termination for
Good Reason and shall have the effects set forth in Section 4(b) hereof.
(g) For purposes of this Agreement, the following terms have the
following meanings:
(i) The term "Termination for Cause" means, to the maximum extent
permitted by applicable law, a termination of the Executive's
employment by the Company because the Executive has (a) materially
breached or materially failed to perform his duties under applicable
law and such breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness, (b) committed an act of dishonesty
in the performance of his duties hereunder or engaged in conduct
materially detrimental to the business of the Company, (c) been
convicted of a felony involving moral turpitude, (d) materially
breached or materially failed to perform his obligations and duties
hereunder, which breach or failure the Executive shall fail to remedy
<PAGE>
within 30 days after written demand from the Company, or (e) violated
in any material respect the representations made in Section 1(d) above
or the provisions of Section 5 below.
(ii) The term "Good Reason" means a termination of the
Executive's employment by the Executive due to a failure of the
Company or its successors without the prior consent of the Executive
to fulfill its obligations under this Agreement in any material
respect, including (a) any failure to elect or re-elect or to appoint
or reappoint the Executive to the office of Chief Executive Officer
(or any equivalent title with substantially similar duties), (b) in
the event that the Company requires the Executive to relocate to an
area more than 50 miles in any direction from the outer city limits of
Charlotte, North Carolina or (c) any other material change by the
Company in the functions, duties or responsibilities of the
Executive's position with the Company which would materially reduce
the ranking or level, dignity, responsibility, importance or scope of
such position.
(iii) The term "Without Cause Termination" means a termination
during the Employment Period (or any subsequent term) of the
Executive's employment by the Company other than due to (i) a
Termination for Cause, (ii) Permanent Disability, (iii) the
Executive's death, or (iv) the expiration of this Agreement.
(iv) The term "Permanent Disability" means permanently disabled
so as to qualify for full benefits under any long-term disability
policy then maintained by the Company; provided, however, that if no
such disability policy is in effect on the date of determination,
"Permanent Disability" shall mean the inability of the Executive to
perform his duties hereunder on a full-time basis for a period of six
full calendar months during any twelve consecutive calendar months due
to illness or injury of a physical or mental nature, supported by the
completion by the Executive's attending physician (or a physician
selected by the Company and reasonably satisfactory to the Executive
or his legal representative if the Executive's physician is unable or
unwilling to provide the necessary certification) of a medical
certification form outlining the disability and treatment.
(v) The term "Change in Control Event" means any of the following
events:
(A) any person, firm or corporation (other than Charles S.
Brand, members of his immediate family, or any trust or other entity
established for the benefit of Mr. Brand and/or members of his
immediate family) acquires directly or indirectly the beneficial
ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company and,
immediately after such acquisition, the acquirer has beneficial
ownership of voting securities representing 50% or more of the total
voting power of all the then-outstanding voting securities of the
Company;
<PAGE>
(B) The individuals who (i) as of the date of this Agreement
constitute the Board of Directors (the "Original Directors"), (ii)
thereafter are elected to the Board of Directors and whose election or
nomination for election to the Board of Directors was approved by a
vote of at least 2/3 of the Original Directors then still in office
(such Directors being called "Additional Original Directors"), or
(iii) are elected to the Board of Directors and whose election or
nomination for election to the Board of Directors was approved by a
vote of at least 2/3 of the Original Directors and Additional Original
Directors then still in office, cease for any reason to constitute a
majority of the members of the Board of Directors;
(C) The Company shall consummate a merger, consolidation,
re-capitalization, or reorganization of the Company, other than any
such transaction which results in holders of outstanding voting
securities of the Company immediately prior to the transaction having
beneficial ownership of at least 50% of the total voting power
represented by the voting securities of the surviving entity
outstanding immediately after such transaction, with the voting power
of each such continuing holder relative to such other continuing
holders being not altered substantially in the transaction; or
(D) The Company shall consummate a plan of complete
liquidation of the Company or an agreement for the sale, assignment,
conveyance, transfer, lease or other disposition by the Company of all
or substantially all of its assets to any person, or group of related
persons, in one or a series of related transactions.
(h) Any payments to be made or benefits to be provided by the Company
pursuant to Section 4(b) or (f) hereof are subject to the receipt by the Company
of an effective general release and agreement not to sue in a form reasonably
satisfactory to the Company (the "Release") pursuant to which the Executive
agrees (i) to release all claims against the Company and certain related parties
(excluding claims for any severance benefits payable hereunder), (ii) not to
maintain any action, suit, claim or proceeding against the Company and certain
related parties, and (iii) to be bound by certain confidentiality and mutual
non-disparagement covenants specified therein. Notwithstanding the due date of
any post-employment payment, the Company shall not be obligated to make any
payments under Section 4(b) or (f) until after the expiration of any revocation
period applicable to the Release.
Section 5. Other Duties of Executive During and After the Employment
Period.
(a) The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, or customers of the Company or any
of its subsidiaries or affiliates (any or all of such entities being hereinafter
referred to as the "Business"), as such information may exist from time to time,
other than information that the Company has previously made publicly available,
is confidential information and is a unique and valuable asset of the Business,
access to and knowledge of which are essential to the performance of the
<PAGE>
Executive's duties under this Agreement. In consideration of the payments made
to him pursuant hereunder, the Executive shall not, except to the extent
reasonably necessary in the performance of his duties under this Agreement,
divulge to any person, firm, association, corporation, or governmental agency,
any information concerning the affairs, businesses, clients, or customers of the
Business (except such information as is required by law to be divulged to a
government agency or pursuant to lawful process), or make use of any such
information for his own purposes or for the benefit of any person, firm,
association or corporation (except the Business) and shall use his reasonable
best efforts to prevent the disclosure of any such information by others. All
records, memoranda, letters, books, papers, reports, accountings, experience or
other data, and other records and documents relating to the Business, whether
made by the Executive or otherwise coming into his possession, are confidential
information and are, shall be, and shall remain the property of the Business. No
copies thereof shall be made which are not retained by the Business, and the
Executive agrees, on demand of the Company, to deliver the same to the Company.
(b) The Executive recognizes and acknowledges that the Company shall
own all Work Product created by the Executive during the Term. As used herein,
"Work Product" includes, but is not limited to, all intellectual property
rights, U.S. and international copyrights, patentable inventions, creations,
discoveries and improvements, works of authorship and ideas, whether or not
patentable or copyrightable and regardless of their form or state of
development. All Work Product shall be considered work made for hire by the
Executive and shall be owned by the Company.
If any of the Work Product may not, by operation of law, be considered
a work made for hire by the Executive for the Company, or if ownership of all
right, title and interest of the intellectual property rights therein shall not
otherwise vest exclusively in the Company, the Executive shall assign, and upon
creation thereof shall be deemed to have automatically assigned, without further
consideration, the ownership of all such Work Product to the Company and its
successors and assigns. The Company, its successors and assigns shall have the
right to obtain and hold in its or their own name copyrights, patents,
registrations and other protections available to the Work Product. The Executive
shall assist the Company in obtaining and maintaining patent, copyright,
trademark and other appropriate protection for all Work Product in all
countries, at the Company's expense. The Executive hereby irrevocably
relinquishes for the benefit of the Company, its successors and assigns any
moral rights in the Work Product recognized under applicable law.
The Executive shall disclose all Work Product promptly to the Company
and shall not disclose the Work Product to anyone other than authorized Company
personnel without the Company's prior written consent. The Executive shall not
disclose to the Company or induce the Company to use any secret or confidential
information or material belonging to others.
The provisions of this Section 5(b) cover Work Product of any kind
that is conceived or made by the Executive that (i) relates to the business of
the Company, its subsidiaries and affiliates, (ii) results from tasks assigned
<PAGE>
to the Executive by the Company, its subsidiaries and affiliates, or (iii) are
conceived or made with the use of facilities or materials provided by the
Company, its subsidiaries and affiliates.
(c) In consideration of the payments made to him hereunder, during the
one-year period commencing on the effective date of termination of his
employment during the Employment Period (or any subsequent term of full-time
employment) for any reason, the Executive shall not, without express prior
written approval of the Board, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration from, any
corporation, limited liability company, business trust, partnership, sole
proprietorship or other entity engaged in competition with the Company or any of
its affiliates (a "Competitor"), other than severance-type or retirement-type
benefits from entities constituting prior employers of the Executive. The
Executive also shall not, during such one-year period, solicit for the account
of any Competitor, any customer or client of the Company or its affiliates, or
any entity or individual that was such a customer or client during the
twelve-month period immediately preceding the termination of the Executive's
employment. The Executive also shall not, during such one-year period, act on
behalf of any Competitor to interfere with the relationship between the Company
or its subsidiaries and affiliates and their respective employees.
For purposes of the preceding paragraph, (i) the term "proprietary
interest" means legal or equitable ownership, whether through stockholding or
otherwise, of an equity interest in a business, firm or entity other than
ownership of less than two percent of any class of equity interest in a publicly
held business, firm or entity and (ii) an entity shall be considered to be
"engaged in competition" if such entity is, or is a holding company for, a
company engaged in the design, manufacture, assembly, sale, maintenance or
servicing of high-power amplifiers, satellite communications equipment or
transmitting and receiving equipment (or related components) used in connection
with the provision of local multi-point distribution services anywhere in the
world.
(d) The Executive acknowledges that the restrictions contained in this
Section 5 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 5 will result in irreparable injury to the Company. The Executive
further acknowledges that, in addition to all remedies available at law, the
Company shall be entitled to equitable relief, including temporary, preliminary
and permanent injunctive relief, and an equitable accounting of all earnings,
profits or other benefits arising from any such breach and shall be entitled to
receive such other damages, direct or consequential, as may be appropriate. The
Company shall not be required to post any bond or other security in connection
with any proceeding to enforce the provisions of this Section 5.
(e) The Company's obligation to make payments, or provide for any
benefits under this Agreement (except to the extent vested or exercisable) shall
cease upon a violation by the Executive of the provisions of this Section 5. The
provisions of this Section 5 shall survive any termination of the Executive's
employment with the Company; provided however that in the event that the Company
fails to consummate a Qualifying Offering prior to January 31, 1999, the
provisions of this Section 5 shall not be applicable and shall become null and
void.
<PAGE>
Section 6. Withholdings. The Company may directly or indirectly
withhold from any payments made under this Agreement all federal, state, city or
other taxes and all other deductions as shall be required pursuant to any law or
governmental regulation or ruling or pursuant to any contributory benefit plan
maintained by or on behalf of the Company.
Section 7. Consolidation, Merger, or Sale of Assets. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially all of its assets to, or engaging in any
other business combination with, any other person or entity which assumes this
Agreement and all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger, transfer of assets or other business combination
and assumption, the term "Company" as used herein shall mean such other person
or entity and this Agreement shall continue in full force and effect.
Section 8. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by same day or overnight mail (i) if to the Executive, at the address set forth
above, or (ii) if to the Company, as follows:
LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Attention: Norman M. Phipps
or to such other address as either party shall have previously specified in
writing to the other.
Section 9. No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect; provided, however,
that nothing in this Section 9 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or his
estate and their assigning any rights hereunder to the person or persons
entitled thereto.
Section 10. Expenses. Except as set forth herein, each party hereto
shall pay its own expenses incident to the preparation, negotiation,
administration and enforcement of this Agreement and the transactions
contemplated herein.
Section 11. Source of Payment. All payments provided for under this
Agreement shall be paid in cash from the general funds of the Company. The
Company shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
<PAGE>
relating to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Company and the Executive
or any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right, without prejudice to rights
which employees may have, shall be no greater than the right of an unsecured
creditor of the Company.
Section 12. Binding Agreement; No Assignment. This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive and the Company
and their respective permitted successors, assigns, heirs, beneficiaries and
representatives. This Agreement is personal to the Executive and may not be
assigned by him without the prior written consent of the Company. Any attempted
assignment in violation of this Section 12 shall be null and void.
Section 13. Dispute Resolution. At the option of either the Company or
the Executive, any dispute, controversy or question arising under, out of or
relating to the Consulting Agreement, this Agreement or the respective breach
thereof, other than pursuant to Section 5 hereof, shall be referred for decision
by arbitration in the State of New York by a neutral arbitrator mutually
selected by the parties hereto. Any arbitration proceeding shall be governed by
the Rules of the American Arbitration Association then in effect or such rules
last in effect (in the event such Association is in existence). If the parties
are unable to agree upon such a neutral arbitrator within 30 days after either
party has given the other written notice of the desire to submit the dispute,
controversy or question for decision as aforesaid, then either party may apply
to the American Arbitration Association for an appointment of a neutral
arbitrator, or if such Association is not then in existence or does not act in
the matter within 30 days of any such application, either party may apply to the
Presiding Judge of the Superior Court of any county in New York for an
appointment of a neutral arbitrator to hear the parties and settle the dispute,
controversy or question, and such Judge is hereby authorized to make such
appointment. In the event that either party exercises the right to submit a
dispute, controversy or question arising hereunder to arbitration, the decision
of the neutral arbitrator shall be final, conclusive and binding on all
interested persons and no action at law or in equity shall be instituted or, if
instituted, further prosecuted by either party other than to enforce the award
of the neutral arbitrator. The award of the neutral arbitrator may be entered in
any court that has jurisdiction. The Executive and the Company shall each bear
all their own costs (including the fees and disbursements of counsel) incurred
in connection with any such arbitration and shall each pay one-half of the costs
of any arbitrator appointed hereunder.
Section 14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law principles thereof.
Section 15. Entire Agreement. This Agreement and the Option Agreement
shall constitute the entire agreement among the parties with respect to the
matters covered hereby and shall supersede all previous written, oral or implied
understandings among them with respect to such matters.
<PAGE>
Section 16. Amendments. This Agreement may only be amended or
otherwise modified, and compliance with any provision hereof may only be waived,
by a writing executed by all of the parties hereto. The provisions of this
Section 16 may only be amended or otherwise modified by such a writing.
Section 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
________________________________
Norman M. Phipps, President
/s/ Kenneth C. Thompson
______________________________
Kenneth C. Thompson
EXHIBIT 10.27
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated February 22, 2000, by
and between LOGIMETRICS, INC., a Delaware corporation (the "Company"), and
KENNETH C. THOMPSON (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has agreed to grant to the Optionee an option to
purchase common stock of the Company in recognition of the Optionee's
performance of past services;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the
option (the "Option") to purchase Five Hundred Thousand (500,000) shares (the
"Option Shares") of the common stock, par value $.01 per share (the "Common
Stock"), of the Company at an exercise price of $0.60 per share (the "Exercise
Price").
2. Terms Governing Exercise of Option. The Option becomes exercisable
on the Release Date (as such term is defined in the Agreement, dated February
22, 2000, by and between the Company and the Optionee (the "Separation
Agreement")) and, subject to the provisions of Section 3, shall expire and cease
to be exercisable as follows: as to one-half of the Option Shares, on the second
anniversary of the Effective Date (as such term is defined in the Separation
Agreement), and as to the remainder of such Option Shares, on the third
anniversary of the Effective Date. The Option may be exercised from time to time
as to all or part of the Option Shares. In order to exercise the Option, the
Optionee must provide written notice to the Company of his election (the
"Exercise Notice") , setting forth the number of whole Option Shares with
respect to which the Option is being exercised, and accompanied by payment of
the full Exercise Price for the number of Option Shares being purchased or in
lieu of such cash payment by surrendering Option Shares to the Company (a
"cashless exercise"), to the extent permitted by applicable law. Upon receipt by
the Company of a written notice from the Optionee electing to pay for all or a
portion of the Option Shares by cashless exercise, the Company shall issue to
the Optionee a number of Option Shares (not to exceed the maximum number of
Option Shares set forth in Section 1) equal to the quotient obtained by dividing
(A) the product obtained when (i) the number of Option Shares being exercised is
multiplied by (ii) the difference between the Fair Market Value (as defined
below) of one Option Share on the date of exercise and the Exercise Price of one
Option Share on the date of exercise, by (B) the Fair Market Value for one
Option Share on the date of exercise. For purposes of this Agreement, the date
of exercise with respect to the Fair Market Value or the Exercise Price of an
Option Share shall mean the date the Company receives a completed Exercise
Notice from the Optionee. For purposes of this Agreement, "Fair Market Value" of
an Option Share on a particular day shall mean the last reported sales price on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading (or in case no such reported sales price is quoted on
such day, the last reported sales price for which such quotation is available),
<PAGE>
or, if it is not listed or admitted to trading on any national securities
exchange, the average of the last high closing bid price and the low closing
asked price as reported on an inter-dealer quotation system. In the absence of
any available public quotations for the Common Stock, the Company's board of
directors, in its sole discretion. shall determine in good faith the fair market
value of an Option Share.
3. Termination of Option. In the event that the Company terminates the
Separation Agreement as the result of a material breach of the terms thereof by
the Optionee, the Option shall immediately terminate and be of no further force
and effect.
4. Non-Assignability. No rights granted to the Optionee hereunder are
assignable or transferable (whether by operation of law or otherwise and whether
voluntarily or involuntarily) other than pursuant to the laws of descent and
distribution. During the life of the Optionee, all rights granted to the
Optionee hereunder may be exercised only by the Optionee.
5. Effect on Optionee's Status. Nothing contained herein shall confer
upon the Optionee the right to continue in the service of the Company, its
subsidiaries or their respective affiliates, or affect any right that the
Company, its subsidiaries or their respective affiliates may have to terminate
the Optionee's services.
6. Conditions of Purchase. The Option is granted on the condition that
the purchase of the Option Shares upon the exercise of the Option shall be for
investment purposes and not with a view to resale or distribution. The foregoing
condition shall be inoperative if the Option Shares are registered for sale
under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws or if in the opinion of counsel for the
Company, the Option Shares may be resold without such registration. At the time
of exercise of the Option or any part thereof, the Optionee shall execute such
further agreements as the Company may require to implement the foregoing
condition and to acknowledge the Optionee's familiarity with restrictions on
resale of the Option Shares under then applicable securities laws. Upon the
Optionee's request, the Company shall furnish copies of such publicly available
financial and other information concerning the Company and its business and
prospects as may be reasonably requested by the Optionee in connection with the
exercise of this Option.
7. Withholding. The Optionee agrees that the exercise of the Option in
whole or in part will not be effective, and no Option Shares will become
transferable to the Optionee, until the Optionee makes appropriate arrangements
with the Company for such income and other payroll tax withholding as may be
required of the Company under federal, state, or local law on account of such
exercise.
8. Capital Structure Adjustments. The number of Option Shares and the
Exercise Price covered by the unexercised portion of the Option shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock. Any
such adjustment shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the Option and shall be made by the
Company's board of directors whose determination in that respect shall be final,
<PAGE>
binding and conclusive. In making any adjustment pursuant to this Section 8,
fractional shares shall be disregarded. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class shall effect, and no adjustment by
reason thereof shall be made, with respect to the number or price of shares of
Common Stock covered by the Option.
9. Dissolution; Merger; Sale of Assets. In the event of the proposed
dissolution or liquidation of the Company, the Company shall notify the Optionee
at least fifteen days prior to such proposed action. To the extent that it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action. In the event of a merger of the
Company with or into another corporation or the sale of all or substantially all
of the assets of the Company, the Option shall be assumed or an equivalent
option shall be substituted by a successor corporation or a parent or a
subsidiary of such successor corporation. In the event that such successor
corporation does not agree to assume the option or to substitute an equivalent
option, the Company's board of directors shall notify the Optionee that the
Option shall be fully exercisable for a period of at least fifteen (15) days
from the date of such notice and the Option will terminate upon the later of the
expiration of such period or the consummation of the merger.
10. No Rights as a Stockholder. The Optionee shall not have any rights
as a stockholder or any claim to dividends with respect to any Option Shares
until the proper exercise of the Option as required hereby, the payment of the
purchase price for the applicable number of Option Shares and the issuance by
the Company of a stock certificate for the Option Shares so purchased.
11. Optionee Acknowledgments. The Optionee agrees and acknowledges
that (i) no member of the board of directors of the Company or any other person
or entity shall be liable for any action or determination made in good faith
with respect to the Option, (ii) the Option granted hereby is not intended to
qualify as an incentive stock option under section 422A of the Internal Revenue
Code of 1986, as amended, and (iii) the Company makes no representation as to
the tax treatment to the Optionee upon receipt or exercise of the option or sale
or other disposition of the shares covered by the Option.
12. Notices. Any notice given to the Company hereunder shall be in
writing and shall be addressed to the Secretary of the Company at its principal
executive office, or at such other address as the Company may hereafter
designate to the Optionee by notice as provided herein. Any notice given to the
Optionee hereunder shall be in writing and shall be addressed to the Optionee at
the address set forth in the employee records of the Company, or at such other
address as the Optionee may hereafter designate to the Company by notice as
provided herein. Notices shall be deemed to have been duly given when personally
delivered or three (3) days after being mailed by registered or certified mail
to the party entitled to receive the same.
13. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all other prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. Other than the Separation
<PAGE>
Agreement, there are no other agreements between the parties in connection with
the subject matter hereof. In the event that the terms of this Agreement are
inconsistent with the terms of the Separation Agreement regarding the subject
matter hereof, then the terms of this Agreement shall govern.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without
reference to the choice of law principals thereof.
15. Assignment; Successors and Assigns; No Third Party Rights. This
Agreement may not be assigned by the Optionee and any attempt at assignment by
the Optionee shall be null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
permitted assigns and legal representatives. This Agreement shall be for the
sole benefit of the parties hereto and their respective successors, permitted
assigns and legal representatives and is not intended, nor shall it be
construed, to give any person other than the parties hereto and their respective
successors, permitted assigns and legal representatives any legal or equitable
right, remedy or claim.
<PAGE>
16. Amendment and Modification; Waiver. This Agreement may only be
amended or modified in a writing signed by the party against whom enforcement of
such amendment or modification is sought. Any of the terms or conditions of this
Agreement may be waived at any time by the party entitled to the benefit
thereof, but only by a writing signed by the party waiving such terms or
conditions.
17. No Strict Construction. Each of the parties hereto acknowledge
that this Agreement has been prepared jointly by the parties hereto and their
respective counsel, and this Agreement shall not be strictly construed against
either party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
_____________________________________
Norman M. Phipps, President and Chief
Operating Officer
/s/Kenneth C. Thompson
__________________________________
Kenneth C. Thompson
EXHIBIT 10.28
AGREEMENT
THIS SEPARATION AGREEMENT (the "Agreement"), dated February 22, 2000,
by and between LOGIMETRICS, INC., a Delaware corporation (the "Company"), and
Kenneth C. Thompson (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and the Company wish to resolve and discharge
any disputes and claims between them including, without limitation, any disputes
and claims arising (i) prior to the date of Executive's employment with the
Company and (ii) as a result of the Executive's employment with the Company and
the resulting termination of such employment;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and intending to be legally bound, the parties hereto agree as follows:
1. Termination of Current Employment; Resignation.
(a) The Executive hereby ratifies and confirms his resignation, as
of November 15, 1999 (the "Effective Date"), of all positions he may have held
as an officer or director of the Company or any of its subsidiaries. The
Executive acknowledges that from and after the Effective Date, the Executive no
longer had the status of an employee of the Company or any of its subsidiaries
and, except as required by applicable law, shall have no right to participate in
any benefit plans maintained for such employees. The Executive hereby waives
any and all rights he may have under his employment contract including, without
limitation, any rights to receive payments and exercise options granted pursuant
to such employment contract.
(b) Except as otherwise set forth in this Agreement, all duties and
obligations of the Executive in respect of his employment with the Company are
ended as of the Effective Date, and all duties and obligations of the Company in
respect to the Executive's employment with the Company are terminated as of the
Effective Date.
2. Payment; Options.
(a) The Company shall pay to the Executive an aggregate of
$137,096.56 in lieu of any amounts to which the Executive may otherwise be
entitled by virtue of (i) any loans advanced to the Company by the Executive,
(ii) any out-of-pocket expenses incurred by the Executive in his capacity as a
consultant or employee of the Company, (iii) the consulting services provided
for or on behalf of the Company by the Executive, and (iv) his employment
and the resulting termination of such employment with the Company (the
"Payment"). The Payment shall be paid in five equal monthly installments,
without interest, with the first such payment being due and payable on April 22,
2000.
<PAGE>
(b) In addition to the Payment, the Company shall grant to the
Executive a non-qualified stock option (the "Option") to purchase 500,000 shares
of common stock, $0.01 par value per share (the "Common Stock"), of the Company
at an exercise price of $0.60 per share. The Option shall be exercisable as
specified in and shall be governed by the other terms and conditions set forth
in a stock option agreement (the "Stock Option Agreement"), substantially in the
form of Exhibit A attached hereto. As a condition to the grant of the Option,
the Executive shall be required to execute the Stock Option Agreement.
(c) The Executive acknowledges that, during the course of his
employment with the Company, he was not covered under the Company's benefits
plans, and therefore he has no rights under the Comprehensive Omnibus Budget
Reconciliation Act of 1985, as amended, with respect to such benefits.
(d) All other options granted to the Executive prior to the date
hereof are hereby terminated as of the Effective Date. Any agreement relating to
such options shall be null and void and of no further force and effect.
(e) The Executive acknowledges and agrees that the Payment, the
Options and the other consideration to be received by him hereunder is in lieu
of all amounts to which he would otherwise be paid or entitled to by virtue of
his employment with the Company and the resulting termination of such employment
with the Company. The Executive shall not make or maintain any claim for
unemployment benefits as a result of the termination of his employment with the
Company or any of its subsidiaries.
3. Confidentiality Covenant; Non-solicitation; Non-competition.
(a) The Executive recognizes that both during the course of
his employment with the Company and during the period prior to his employment
when the Executive served as a consultant of the Company, the Executive has
had access to and has acquired confidential and proprietary information relating
to the Company and its subsidiaries (the "Proprietary Information"). The
Executive acknowledges that the Proprietary Information has been and will
continue to be of critical importance to the business and operations of the
Company and its subsidiaries. Accordingly, the Executive shall not, without the
express prior written consent of the Company, directly or indirectly, disclose
any Proprietary Information to any other person or use any such Proprietary
Information, either directly or indirectly, for his benefit or for the benefit
of any third party. Furthermore, the Executive represents and warrants to the
Company that prior to or simultaneously with the execution of this Agreement,
the Executive has surrendered to the Company all Proprietary Information
provided to the Executive by or on behalf of the Company or any of its
subsidiaries, including, without limitation, all materials containing
Proprietary Information, or any documents, notes, memoranda, studies, analyses
or other material reduced to a tangible form containing Proprietary Information.
The term "Proprietary Information" does not include information which
(i) is or becomes generally available to the public (other than as a result of a
<PAGE>
disclosure by the Executive or a representative of the Executive) or (ii)
becomes available to the Executive on a non-confidential basis from a source
other than the Company or one of its representatives which the Executive
reasonably believes is entitled to disclose it.
(b) In consideration of the Payment, the Options and other valuable
consideration to be provided hereunder, during the one-year period commencing on
the Effective Date, the Executive shall not, without the express prior written
consent of the Company, directly or indirectly, (i) solicit or assist any third
party in soliciting for employment any employee employed by the Company or any
of its subsidiaries during the one-year period immediately preceding the
Effective Date ("Employees"), or (ii) employ, attempt to employ or materially
assist any third party in employing or attempting to employ any Employee.
(c) In consideration of the Payment, the Options and other valuable
consideration to be provided hereunder, during the one-year period commencing on
the Effective Date, the Executive shall not, without the express prior written
consent of the Company, directly or indirectly, any where in the world (x)
engage in the design, manufacture, assembly, sale, maintenance or servicing of
high-power amplifiers, satellite communications equipment or transmitting and
receiving equipment (or related components) used in connection with the
provision of local multi-point distribution services (collectively, a "Competing
Business"), or (y) serve as an officer, director, employee, partner, member,
manager or consultant to or beneficially own any equity interest (other than an
interest of less than 2% of the outstanding voting power of any publicly traded
company) in any Competing Business.
(d) The Executive acknowledges that, in the event of any breach of
this Section 3 by him, the Company and its subsidiaries would be irreparably and
immediately harmed and could not be made whole by monetary damages. Accordingly,
the Company, in addition to any other remedy to which it may be entitled, shall
be entitled to temporary, preliminary and permanent injunctive relief to prevent
breaches of the provisions of this Section 3 and to compel specific performance
of the provisions hereof. The Company shall not be required to post a bond or
other security in connection with the granting of any such relief. These
remedies shall not be deemed to be exclusive remedies for a violation of this
Agreement but shall be in addition to all other remedies available to the
Company at law or in equity.
4. Release.
(a) The parties hereto confirm and warrant that they have not
caused or permitted to be filed any pending charge, complaint or action against
each other or, in the case of the Executive, any Released Party (as defined
in Section 4(g) below).
(b) The parties hereto hereby expressly warrant that they have
not assigned any claim that they have or may have against the other or, in the
case of the Executive, any Released Party, to any person or entity.
<PAGE>
(c) Subject to Section 4(f) hereof and except as set forth below,
the Executive hereby releases and forever discharges each Released Party from
any and all actions, demands, causes of action and claims whatsoever, known or
unknown, suspected or unsuspected, the Executive ever had, now has, or shall
have (whether in law, equity, or otherwise) against any Released Party with
respect to any matter, event or condition occurring or arising on or prior to
the date of the Executive's execution of this Agreement, including, but not
limited to, claims for breach of an implied or expressed employment or
consulting contract (including, but not limited to, the Employment Agreement,
dated August 6, 1998, between the Company and the Executive, and the Consulting
Agreement, dated March 4, 1998, between the Company and the Executive), claims
for unlawful discharge, claims alleging a violation of Title VII of the Civil
Rights Act of 1964, The Age Discrimination in Employment Act of 1967, The Civil
Rights Act of 1866, The Americans with Disabilities Act, The Occupational Safety
and Health Act, The Employee Retirement Income Security Act, The Fair Labor
Standards Act, The Equal Pay Act, The Family and Medical Leave Act, the New York
State Human Rights Laws, the New York City Human Rights Laws, the North Carolina
Equal Employment Practices Act, the North Carolina Handicapped Persons
Protection Act, claims pursuant to federal, state or local law regarding
discrimination based on race, age, sex, religion, marital status, disability,
sexual preference or national origin, claims for alleged violation of any other
local, state, or federal law, regulations, ordinance or public policy having any
bearing whatsoever on the terms or conditions of the Executive's employment with
the Company or any of its subsidiaries or the termination thereof, claims
pursuant to federal or state whistleblower laws, claims pursuant to common law,
claims arising directly or indirectly out of the Executive's employment by or
separation from employment with the Company or any of its subsidiaries, or
claims arising directly or indirectly out of any independent contractor
relationship between the Executive and the Company or any of its subsidiaries
and the resulting termination of such relationship. Notwithstanding the
foregoing, nothing herein shall be deemed to (i) release the Company from its
breach of any provision of this Agreement, and (ii) preclude the Executive from
filing with or participating in any manner in an investigation, hearing or
proceeding conducted by the Equal Employment Opportunity Commission, but the
Executive hereby waives any and all rights to recover under, or by virtue of,
any such investigation, hearing or proceeding against the Company. The Executive
acknowledges that, as of the date of this Agreement, he is not aware of any such
actions, demands, causes of action or claims that may be brought by him or on
his behalf against any Released Party.
Subject to Section 4(f) hereof, the Company (on its own behalf and on
behalf of its subsidiaries) hereby releases and forever discharges the Executive
from any and all actions, demands, causes of action and claims whatsoever, known
or unknown, suspected or unsuspected, the Company or any of its subsidiaries
ever had, now has, or shall have (whether in law, equity, or otherwise) against
the Executive with respect to any matter, event or condition occurring or
arising on or prior to the date of the Executive's execution of this Agreement,
including, but not limited to, claims arising directly or indirectly out of the
Executive's employment by or separation from employment with the Company or any
of its subsidiaries. Notwithstanding the foregoing, nothing herein shall be
deemed to release the Executive from the breach by the Executive of any
provision of this Agreement. The Company acknowledges that, as of the date of
<PAGE>
this Agreement, it is not aware of any such actions, demands, causes of action
or claims that may be brought by it or on its behalf against the Executive.
(d) Subject to Section 4(f) hereof, the parties hereto covenant and
agree never to file any suit, action, cause of action, or other claim against
the other party or, in the case of the Executive, any Released Party with
respect to any matter, event or condition occurring or arising on or prior to
the date hereof.
(e) Subject to Section 4(f) hereof, each of the Company and the
Executive hereby releases and discharges the other party and, in the case of the
Executive, each Released Party not only from any and all claims which such party
could have made on its own behalf but also from those which may or could be
brought by any person, governmental authority or organization on its behalf, and
each of the Company and the Executive specifically waives any right to become,
and promises not to become, a member of any class in any proceeding or case in
which any claim or claims against the other or, in the case of the Executive,
any Released Party may arise, in whole or in part, from any event which occurred
on or before the date of this Agreement.
(f) Each of the Company and the Executive agree that the releases
given pursuant to this Section 4 shall not be applicable to any criminal acts,
knowing violations of law, breaches of fiduciary duty or acts of intentional and
willful misconduct on the part of the other party. Each of the Company and the
Executive acknowledges that nothing in this Section 4 precludes either party
from taking any legal action against the other for the breach by either party of
any provision of this Agreement. In addition to any other remedies available at
law or by agreement, in the event of any such breach by the Executive, the
Company shall be entitled to recover any and all amounts paid to the Executive
pursuant to Section 2 above and shall be released from its obligation to make
any future payments pursuant to Section 2. The right of the Company, in the
event the Executive breaches any provision of this Agreement, to recover all
amounts paid to the Executive pursuant to Section 2 and to be released from its
obligation to make future payments shall not impair the enforceability of this
Agreement.
(g) For purposes of this Agreement, the term "Released Party"
shall include the Company, its parents, subsidiaries and affiliates, the
officers, directors, shareholders, agents and employees of any of them and
their respective heirs, successors, assigns and legal representatives.
5. Confidentiality; Cooperation.
(a) The Executive shall not disclose either directly or indirectly
to any person in any manner whatsoever any information of any kind regarding
the terms of this Agreement, except the Executive may disclose the existence and
terms of this Agreement to his attorneys, family members, tax and financial
advisors and prospective employers and to others to the extent required by law;
provided, however, that each such person receiving such information shall be
<PAGE>
required to maintain the confidentiality of such information (other than in the
event of a disclosure as required by law).
(b) The exclusive statements which shall be made to any person
concerning the termination of the Executive's employment are (i) statements set
forth in a press release that the Company may issue; provided, however, that the
form of such press release shall be subject to the Executive's approval, which
approval shall not be unreasonably withheld or delayed, and (ii) a statement to
indicate that the Executive and the Company have come to an amicable resolution
regarding the Executive's resignation; provided, however, that this Section 5(b)
shall not preclude the Company from making such disclosures as are necessary on
a confidential basis to its Board of Directors, provided that such directors
shall maintain the confidentiality of such information (other than in the event
of a disclosure as required by law), and such other disclosures as are required
by law.
(c) The Executive shall not for any reason whatsoever, directly or
indirectly, either alone or jointly with any person and whether as principal,
servant or agent, in any way comment (in writing or otherwise) negatively about
the Company, any of its subsidiaries or affiliates or their respective officers,
directors, shareholders or employees to any person or entity, disparage its
products, plans or management to any supplier, vendor, contractor, creditor,
shareholder or potential shareholder, media, subcontractor, competitor, customer
or potential customer or any other person or entity, or do anything else to
affect adversely the good will of the Company or any of its subsidiaries and
affiliates. The Company hereby covenants with the Executive that it will not for
any reason whatsoever, directly or indirectly in any way comment (in writing or
otherwise) negatively about the Executive to any person.
(d) The Executive shall cooperate fully with the Company in
connection with any and all existing and future investigations or litigation
brought by, against or involving the Company or any of its subsidiaries,
officers or directors, whether administrative, civil or criminal in nature, in
which and to the extent the Company, in its reasonable discretion, deems
necessary. The Company shall reimburse the Executive for all reasonable out-of-
pocket expenses incurred by the Executive in connection with his cooperation
provided such expenses are approved in advance by the Company.
6. Withholding. The Company shall withhold from payments due to the
Executive such amounts as the Company shall reasonably determine it is required
by law to withhold.
7. Severable Provisions. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provision to the extent enforceable in any jurisdiction,
shall nevertheless be binding and enforceable.
8. Binding Agreement; Assignment. The rights and obligations of the
parties hereto under this Agreement shall inure to the benefit of and shall be
binding upon the parties' respective successors and assigns. This Agreement is
personal to the Executive and may not be assigned by the Executive without the
<PAGE>
Company's prior written consent. Any assignment or purported assignment by the
Executive in violation of this Section 8 shall be null and void.
9. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile or
sent by certified, registered or express air mail, postage prepaid, and shall be
deemed given when so delivered personally, or by facsimile, or if mailed, five
days after the date of mailing, as follows:
If to the Company: LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Telephone: (516) 784-4110
Facsimile: (516) 784-4130
Attention: Mr. Norman M. Phipps
If to the Executive: Kenneth C. Thompson
10114 Waterbrook Lane
Charlotte, North Carolina 28277
Telephone: (704) 844-9848
Facsimile: (704) 844-0947
or a t such other addresses as shall be furnished in writing to the other party
hereto.
10. Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver by a party of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to such party under
the circumstances.
11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
choice of law principles thereof.
12. Captions and Paragraph Headings. Captions and paragraph headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in construing this Agreement.
13. Entire Agreement. This Agreement shall constitute the entire
agreement among the parties with respect to the subject matter hereof and shall
supersede all previous written, oral or implied understandings or agreements
among them with respect to such matters. No modification, termination or
attempted waiver of this Agreement shall be valid unless in writing and signed
by the party against whom the same is sought to be enforced.
<PAGE>
14. ATTORNEY REVIEW. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS
BEEN GIVEN AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER THIS AGREEMENT
AND THAT, PRIOR TO THE EXECUTIVE'S EXECUTING THIS AGREEMENT, THE COMPANY HAS
ADVISED THE EXECUTIVE TO AND HAS GIVEN HIM THE OPPORTUNITY TO HAVE HIS OWN
INDEPENDENT ATTORNEY REVIEW THIS AGREEMENT.
15. AGREEMENT EFFECTIVE. THIS AGREEMENT SHALL BE EFFECTIVE AND
ENFORCEABLE ON THE EIGHTH (8TH) DAY AFTER EXECUTION BY THE EXECUTIVE (THE
"RELEASE DATE"). THE PARTIES UNDERSTAND AND AGREE THAT THE EXECUTIVE, IN HIS
INDIVIDUAL CAPACITY, MAY REVOKE THIS AGREEMENT AFTER HAVING EXECUTED IT BY SO
ADVISING THE COMPANY IN WRITING, PROVIDED SUCH WRITING IS RECEIVED BY THE
COMPANY AT THE ADDRESS SET FORTH IN SECTION 9 ABOVE NO LATER THAN 11:59 P.M. ON
THE SEVENTH (7TH) DAY AFTER HIS EXECUTION OF THIS AGREEMENT. IF THE EXECUTIVE
REVOKES THIS AGREEMENT, IT SHALL NOT BE EFFECTIVE OR ENFORCEABLE, AND THE
EXECUTIVE SHALL NOT BE ENTITLED TO RECEIVE OR RETAIN THE PAYMENTS AND OTHER
BENEFITS OF THE AGREEMENT.
16. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
_________________________________
Norman M. Phipps, President and
Chief Operating Officer
/s/Kenneth C. Thompson
____________________________________
Kenneth C. Thompson
EXHIBIT 10.38
AGREEMENT
THIS AGREEMENT (the "Agreement"), dated March 10, 1998, by and between
LOGIMETRICS, INC., a Delaware corporation (the "Company"), and Russell J.
Reardon II (the "Executive"),
W I T N E S S E T H:
WHEREAS, the Executive is currently serving as the Senior Vice
President of Finance and Administration of the Company;
WHEREAS, the Executive and the Company have agreed that, effective as
of February 27, 1998 (the "Effective Date"), the Executive will cease to be
employed by the Company;
WHEREAS, the Company desires to have the right to obtain certain
consulting services from the Executive following the termination of his
employment and the Executive has agreed to provide such consulting services if
requested by the Company;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and intending to be legally bound, the parties hereto agree as follows:
1. Termination of Current Employment; Resignation. The Executive
hereby resigns, as of the Effective Date, all positions he may hold as an
officer or director of the Company or any of its subsidiaries. From and after
the Effective Date, the Executive shall no longer have the status of an employee
of the Company or any of its subsidiaries and, except as required by applicable
law, shall have no right to participate in any benefit plans maintained for such
employees.
2. Severance Payments; Options.
(a) The Company shall pay to the Executive an aggregate of $42,500
as severance wages and, except as expressly provided herein, in lieu of any
payment to which the Executive may otherwise be entitled as a result of the
termination of his employment (the "Severance Payment"). The Severance
Payment shall be payable in 17 weekly installments of $2,500 commencing on
March 12, 1998 and continuing thereafter in accordance with the Company's
current payroll practices.
(b) The Company shall pay to the Executive an aggregate of $6,000
in payment in full of his accrued vacation benefits (the "Vacation Payment").
The Vacation Payment shall be made in two equal installments of $3,000 on each
of March 12, 1998 and March 19, 1998.
(c) In addition to the Severance Payment and the Vacation Payment,
the Company will reimburse the Executive for all remaining out-of-pocket
expenses reasonably and necessarily incurred by the Executive during his
employment by the Company. The Executive's right to reimbursement of such
<PAGE>
expenses is hereby expressly conditioned on the Company's receipt of appropriate
documentation of such expenses so as to preserve any claim of deductibility of
suchM expenses by the Company for Federal income tax purposes. Such expenses
shall be reimbursed promptly upon receipt of all required documentation in
accordance with the Company's customary expense reimbursement policy.
(d) The Company and the Executive acknowledge that the Executive
is entitled to elect to receive continuation of medical coverage pursuant
to Comprehensive Omnibus Budget Reconciliation Act ("COBRA"), and the
Executive hereby elects, effective as of the Effective Date, such continuation
of coverage. From the Effective Date through June 30, 1998, the Company shall
pay on behalf of the Executive the monthly premiums payable by the Executive
in connection therewith. The Executive shall be responsible for all monthly
premiums payable thereafter for so long as the Company is required to provide
coverage and the Executive wishes to remain covered under COBRA. Notwithstanding
the foregoing, in the event that the Executive commences full-time employment
with another person or entity prior to June 30, 1998, then beginning on the
effective date of coverage under such successor employer's medical insurance,
the Company shall no longer be responsible for payment of any such monthly
premiums.
(e) All options granted to the Executive pursuant to the Company's
1997 Stock Compensation Program are hereby terminated as of the Effective Date.
Any agreement relating to such options shall be null and void and of no further
force and effect.
(f) The Option Agreement, dated May 5 1996, between the Executive and
the Company shall remain in full force and effect notwithstanding the
termination of the Executive's employment hereunder.
(g) Pursuant to a separate stock option agreement, a copy of which is
attached hereto as Exhibit A (the "Option Agreement"), the Company shall grant
to the Executive an option covering One Hundred Three Thousand Three Hundred
Thirty Three (103,333) shares of the common stock of the Company at an exercise
price of $0.55 per share (the "New Option"). The New Option shall be exercisable
commencing on the Effective Date, shall terminate twelve months from the
Effective Date and shall otherwise be subject to the terms of the Option
Agreement.
3. Consulting Relationship.
(a) During the period commencing on the Effective Date and
terminating on June 30, 1998 (the "Consulting Period"), upon the request of
either the Chief Executive Officer or the President of the Company, the
Executive will provide advice to the Company and its subsidiaries regarding
matters within his area of expertise applicable to the Company or its
subsidiaries (the "Consulting Services"). Such Consulting Services may be
rendered in person at the offices of the Company, at some other mutually
agreeable place, by telephone or by correspondence; provided, however, that
the Executive shall not be obligated to provide Consulting Services on a
particular day if the provision of such Consulting Services on such date
would interfere with the Executive's full-time employment by another employer.
<PAGE>
Except as otherwise agreed between the parties hereto, the Executive will not
be obligated to render Consulting Services hereunder on more than five days
in any month.
(b) The Company shall pay to the Executive a consulting fee of $65
per hour for each hour (or portion thereof) during which the Executive provides
Consulting Services to the Company and its subsidiaries (the "Consulting Fee").
Payment of Consulting Fees shall be made monthly in arrears no later than the
first business day of each calendar month following a month in which Consulting
Services have been provided.
(c) In addition to the payment of the Consulting Fee, the Company
will reimburse the Executive for all out-of-pocket expenses reasonably
and necessarily incurred by the Executive in connection with the provision
of Consulting Services hereunder; provided that the Company has approved
such expenses in advance. The Executive's right to reimbursement of such
expenses is hereby expressly conditioned on the Company's receipt of
appropriate documentation of such expenses so as to preserve any claim of
deductibility of such expenses by the Company for Federal income tax purposes.
Approved expenses shall be reimbursed promptly upon receipt of all required
documentation.
4. Confidentiality Covenant; Non-solicitation; Non-competition.
(a) The Executive recognizes that both during the course of his
employment with the Company and during the Consulting Period, the Executive has
had access to and has acquired and will continue to have access to and acquire
confidential and proprietary information relating to the Company and its
subsidiaries (the "Proprietary Information"). The Executive acknowledges that
the Proprietary Information has been and will continue to be of critical
importance to the business and operations of the Company and its subsidiaries.
Accordingly, the Executive shall use such Proprietary Information only in
connection with the provision of Consulting Services hereunder and shall not,
without the express prior written consent of the Company, directly or
indirectly, disclose any Proprietary Information to any other person or use any
such Proprietary Information, either directly or indirectly, for his benefit or
for the benefit of any third party. At the request of the Company, the Executive
shall immediately return to the Company all Proprietary Information provided to
the Executive by or on behalf of the Company or any of its subsidiaries and
shall destroy all other Proprietary Information then in his possession or
subject to his control and shall certify such destruction to the Company. Under
no circumstances shall the Executive retain any copies of materials containing
Proprietary Information, or any documents, notes, memoranda, studies, analyses
or other material reduced to a tangible form containing Proprietary Information.
The Executive's obligations under this Section 4(a) shall survive any
termination or expiration of this Agreement forever.
The term "Proprietary Information" does not include information which
(i) is or becomes generally available to the public (other than as a result of a
disclosure by the Executive or a representative of the Executive) or (ii)
becomes available to the Executive on a non-confidential basis from a source
other than the Company or one of its representatives which the Executive
reasonably believes is entitled to disclose it.
<PAGE>
(b) Commencing on the date hereof and continuing until the first
anniversary of the end of the Consulting Period, the Executive shall not,
without the express prior written consent of the Company, directly or
indirectly, (i) solicit or assist any third party in soliciting for employment
any employee employed by the Company or any of its subsidiaries or any employee
who has voluntarily terminated his or her employment with the Company or any of
its subsidiaries during the period of this restriction ("Employees"), or (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee. The Executive's obligations under this
Section 4(b) shall survive any termination or expiration of this Agreement.
(c) Commencing on the date hereof and continuing until the first
anniversary of the end of the Consulting Period, the Executive shall not,
without the express prior written consent of the Company, directly or
indirectly, any where in the world (x) engage in the design, manufacture,
assembly, sale, maintenance or servicing of high-power amplifiers, satellite
communications equipment or transmitting and receiving equipment (or related
components) used in connection with the provision of local multi-point
distribution services (collectively, a "Competing Business"), or (y) serve as an
officer, director, employee, partner, member, manager or consultant to or
beneficially own any equity interest (other than an interest of less than 2% of
the outstanding voting power of any publicly traded company) in any Competing
Business. The Executive's obligations under this Section 4(c) shall survive any
termination or expiration of this Agreement.
(d) The Executive acknowledges that, in the event of any breach
of this Section 4 by him, the Company and its subsidiaries would be irreparably
and immediately harmed and could not be made whole by monetary damages.
Accordingly, the Company, in addition to any other remedy to which it may be
entitled, shall be entitled to temporary, preliminary and permanent injunctive
relief to prevent breaches of the provisions of this Section 4 and to compel
specific performance of the provisions hereof. The Company shall not be
required to post a bond or other security in connection with the granting of
any such relief. These remedies shall not be deemed to be exclusive remedies
for a violation of this Agreement but shall be in addition to all other remedies
available to the Company at law or in equity.
(e) The provisions of this Section 4 shall supersede the provisions
of any other similar covenants to which the Executive may be a party or by which
he may be bound, all of which shall be null and void and of no further force and
effect.
5. Release.
(a) The parties hereto confirm and warrant that they have not
caused or permitted to be filed any pending charge, complaint or action against
each other or, in the case of the Executive, any Released Party (as defined
in Section 5(h) below).
(b) The parties hereto hereby expressly warrant that they have not
assigned any claim that they have or may have against the other or, in the case
of the Executive, any Released Party, to any person or entity.
<PAGE>
(c) The Executive understands that there are various state and
federal laws that prohibit employment discrimination on the basis of age, sex,
race, color, national origin, religion, disability and other categories, and
that these laws are enforced by the courts and various government agencies.
The Executive intends and does give up any rights he may have under these laws
or any other laws with respect to his employment with the Company or any of
its subsidiaries, or the termination of that employment.
(d) Subject to Section 5(g) hereof, the Executive hereby releases
and forever discharges each Released Party from any and all actions, demands,
causes of action and claims whatsoever, known or unknown, suspected or
unsuspected, the Executive ever had, now has, or shall have (whether in
law, equity, or otherwise) against any Released Party with respect to any
matter, event or condition occurring or arising on or prior to the date
of the Executive's execution of this Agreement, including, but not limited to,
claims for breach of an implied or expressed employment contract, claims for
unlawful discharge, claims alleging a violation of Title VII of the Civil Rights
Act of 1964, The Age Discrimination in Employment Act of 1967, The Civil
Rights Act of 1866, The Americans with Disabilities Act, The Occupational
Safety and Health Act, The Employee Retirement Income Security Act, The Fair
Labor Standards Act, The Equal Pay Act, The Family and Medical Leave Act, the
New York State Human Rights Law, the New York City Human Rights Law, claims
pursuant to federal, state or local law regarding discrimination based on race,
age, sex, religion, marital status, disability, sexual preference or national
origin, claims for alleged violation of any other local, state, or federal
law, regulations, ordinance or public policy having any bearing whatsoever
on the terms or conditions of the Executive's employment with the Company
or any of its subsidiaries or the termination thereof, claims pursuant to
common law, or claims arising directly or indirectly out of the Executive's
employment by or separation from employment with the Company or any of its
subsidiaries. The Executive acknowledges that, as of the date of this Agreement,
he is not aware of any such actions, demands, causes of action or claims that
may be brought by him or on his behalf against any Released Party.
Subject to Section 5(g) hereof, the Company (on its own behalf and on
behalf of its subsidiaries) hereby releases and forever discharges the Executive
from any and all actions, demands, causes of action and claims whatsoever, known
or unknown, suspected or unsuspected, the Company or any of its subsidiaries
ever had, now has, or shall have (whether in law, equity, or otherwise) against
the Executive with respect to any matter, event or condition occurring or
arising on or prior to the date of the Executive's execution of this Agreement
having any bearing whatsoever on the terms or conditions of the Executive's
employment with the Company or any of its subsidiaries or the termination
thereof, claims pursuant to common law, or claims arising directly or indirectly
out of the Executive's employment by or separation from employment with the
Company or any of its subsidiaries.
(e) Subject to Section 5(g) hereof, the parties hereto covenant and
agree never to file any suit, action, cause of action, or other claim against
the other party or, in the case of the Executive, any Released Party with
respect to any matter, event or condition occurring or arising on or prior to
the date hereof.
<PAGE>
(f) Subject to Section 5(g) hereof, each of the Company and the
Executive hereby releases and discharges the other party and, in the case of the
Executive, each Released Party not only from any and all claims which such party
could have made on its own behalf but also from those which may or could be
brought by any person, governmental authority or organization on its behalf, and
each of the Company and the Executive specifically waives any right to become,
and promises not to become, a member of any class in any proceeding or case in
which any claim or claims against the other or, in the case of the Executive,
any Released Party may arise, in whole or in part, from any event which occurred
on or before the date of this Agreement.
(g) Each of the Company and the Executive agree that the releases
given pursuant to this Section 5 shall not be applicable to any criminal acts,
knowing violations of law, breaches of fiduciary duty or acts of intentional and
willful misconduct on the part of the other party. Each of the Company and the
Executive acknowledges that nothing in this Section 5 precludes either party
from taking any legal action against the other for the breach by either party of
any provision of this Agreement. In addition to any other remedies available at
law or by agreement, in the event of any such breach by the Executive, the
Company shall be entitled to recover any and all amounts theretofore paid to the
Executive pursuant to Sections 2 and 3 above.
(h) For purposes of this Agreement, the term "Released Party" shall
include the Company, its parents, subsidiaries and affiliates, the officers,
directors, shareholders, agents and employees of any of them and their
respective heirs, successors, assigns and legal representatives.
6. Confidentiality; Cooperation.
(a) The Executive shall not disclose either directly or indirectly to
any person in any manner whatsoever any information of any kind regarding the
terms of this Agreement, except the Executive may disclose the existence and
terms of this Agreement to his attorneys, family members, tax and financial
advisors and prospective employers and to others to the extent required by law;
provided however that each such person receiving such information shall be
required to maintain the confidentiality of such information (other than in the
event of a disclosure as required by law).
(b) The exclusive statements which shall be made to any person
concerning the termination of the Executive's employment are (a) the statements
set forth in the press release annexed hereto as Exhibit B (the "Press Release")
or in any other press release that the Company may issue; provided, however,
that (i) the Executive acknowledges that the Company shall not be required to
issue the Press Release or any other press release relating to the termination
of the Executive's employment, and (ii) in the event that the Company issues a
press release which varies materially from the form of the Press Release
attached hereto, the Executive shall have the right to approve the form of such
press release, which approval shall not be unreasonably withheld or delayed, and
(b) a statement to indicate that the Executive and the Company have come to an
amicable resolution regarding the Executive's resignation; provided, however,
<PAGE>
that this Section 6(b) shall not preclude the Company from making such
disclosures as are necessary on a confidential basis to its Board of Directors,
provided that such directors shall maintain the confidentiality of such
information (other than in the event of a disclosure as required by law), and
such other disclosures as are required by law.
(c) The Executive shall not for any reason whatsoever, directly or
indirectly, either alone or jointly with any person and whether as principal,
servant or agent, in any way comment (in writing or otherwise) negatively about
the Company, any of its subsidiaries or affiliates or their respective officers,
directors, shareholders or employees to any person or entity, disparage its
products, plans or management to any supplier, vendor, contractor, creditor,
shareholder or potential shareholder, media, subcontractor, competitor, customer
or potential customer or any other person or entity, or do anything else to
affect adversely the good will of the Company or any of its subsidiaries and
affiliates. The Company hereby covenants with the Executive that it will not for
any reason whatsoever, directly or indirectly in any way comment (in writing or
otherwise) negatively about the Executive to any person.
(d) The Executive shall cooperate fully with the Company in connection
with any and all existing and future investigations or litigation brought by,
against or involving the Company or any of its subsidiaries, officers or
directors, whether administrative, civil or criminal in nature, in which and to
the extent the Company, in its reasonable discretion, deems necessary. The
Company shall reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in connection with his cooperation provided such
expenses are approved in advance by the Company. The Company shall use
commercially reasonable efforts to limit any disruption to the Executive's
employment caused by the Executive's cooperation in any such investigation or
litigation. In the event that the Executive is required to take time off from
full-time employment in order to fulfill his obligations under this Section
6(d), the Company shall pay the Executive for any lost wages resulting therefrom
subject to an hourly cap equal to the Consulting Fee.
(e) The Executive has disclosed to an appropriate officer of the
Company or to the Board of Directors any information in his possession or
subject to his control concerning any conduct of the Company, any of the
Company's subsidiaries or any employee that he has reason to believe is or may
be unlawful or unethical in any respect.
7. Withholding. The Company shall withhold from payments due to the
Executive such amounts as the Company shall reasonably determine it is required
by law to withhold.
8. Severable Provisions. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provision to the extent enforceable in any jurisdiction,
shall nevertheless be binding and enforceable.
9. Binding Agreement; Assignment. The rights and obligations of the
parties hereto under this Agreement shall inure to the benefit of and shall be
binding upon the parties' respective successors and assigns. This Agreement is
personal to the Executive and may not be assigned by the Executive without the
<PAGE>
Company's prior written consent. Any assignment or purported assignment by the
Executive in violation of this Section 9 shall be null and void
10. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile or
sent by certified, registered or express air mail, postage prepaid, and shall be
deemed given which so delivered personally, or by facsimile, or if mailed, five
days after the date of mailing, as follows:
If to the Company: LogiMetrics, Inc.
50 Orville Drive
Bohemia, New York 11716
Telephone: (516) 784-4110
Facsimile: (516) 784-4130
Attention: Mr. Norman M. Phipps
If to the Executive: Russell J. Reardon II
11 Old Quarry Road
Cedar Grove, New Jersey 07009
Telephone: (973) 239-8557
Facsimile: (973) 239-5550
or at such other addresses as shall be furnished in writing to the other party
hereto.
11. Waiver. Either party's failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver by a party of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to such party under
the circumstances.
12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
choice of law principles thereof.
13. Captions and Paragraph Headings. Captions and paragraph headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in construing this Agreement.
14. Entire Agreement. This Agreement shall constitute the entire
agreement among the parties with respect to the subject matter hereof and shall
supersede all previous written, oral or implied understandings or agreements
among them with respect to such matters. No modification, termination or
attempted waiver of this Agreement shall be valid unless in writing and signed
by the party against whom the same is sought to be enforced.
<PAGE>
15. ATTORNEY REVIEW. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS
BEEN GIVEN AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER THIS AGREEMENT
AND THAT, PRIOR TO THE EXECUTIVE'S EXECUTING THIS AGREEMENT, THE COMPANY HAS
ADVISED THE EXECUTIVE TO AND HAS GIVEN HIM THE OPPORTUNITY TO HAVE HIS OWN
INDEPENDENT ATTORNEY REVIEW THIS AGREEMENT.
16. AGREEMENT EFFECTIVE. THIS AGREEMENT SHALL BE EFFECTIVE AND
ENFORCEABLE ON THE EIGHTH (8TH) DAY AFTER EXECUTION BY THE EXECUTIVE. THE
PARTIES UNDERSTAND AND AGREE THAT THE EXECUTIVE, IN HIS INDIVIDUAL CAPACITY, MAY
REVOKE THIS AGREEMENT AFTER HAVING EXECUTED IT BY SO ADVISING THE COMPANY IN
WRITING, PROVIDED SUCH WRITING IS RECEIVED BY THE COMPANY AT THE ADDRESS SET
FORTH IN SECTION 10 ABOVE NO LATER THAN 11:59 P.M. ON THE SEVENTH (7TH) DAY
AFTER HIS EXECUTION OF THIS AGREEMENT. IF THE EXECUTIVE REVOKES THIS AGREEMENT,
IT SHALL NOT BE EFFECTIVE OR ENFORCEABLE, AND THE EXECUTIVE SHALL NOT BE
ENTITLED TO RECEIVE OR RETAIN THE PAYMENTS AND OTHER BENEFITS OF THE AGREEMENT.
17. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
_____________________________________
Norman M. Phipps, President and Chief
Operating Officer
/s/Russell J. Reardon II
__________________________________
Russell J. Reardon II
<PAGE>
Exhibit A
Form of Stock Option Agreement
<PAGE>
Exhibit B
Press Release
EXHIBIT 10.39
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated March 10, 1998, by and
between LOGIMETRICS, INC., a Delaware corporation (the "Company"), and RUSSELL
J. REARDON II (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has agreed to grant to the Executive an option to
purchase common stock of the Company in recognition of the Executive's
performance of past services;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the
option (the "Option") to purchase One Hundred Three Thousand Three Hundred
Thirty Three (103,333) shares (the "Option Shares") of the common stock, par
value $.01 per share (the "Common Stock"), of the Company at an exercise price
of $0.55 per share (the "Exercise Price").
2. Terms Governing Exercise of Option. The Option becomes exercisable
upon the occurrence of the Effective Date (as such term is defined in the
Agreement, dated March 10, 1998, by and between the Company and the Optionee
(the "Severance Agreement")) and shall expire and cease to be exercisable on
February 27, 1999, or on such earlier date as provided herein. The Option may be
exercised from time to time as to all or part of the Option Shares. In order to
exercise the Option, the Optionee must provide written notice to the Company of
his election, setting forth the number of whole Option Shares with respect to
which the Option is being exercised, and accompanied by payment of the full
Exercise Price for the number of Option Shares being purchased.
3. Termination of Option. In the event that the Company terminates the
Severance Agreement as the result of a material breach of the terms thereof by
the Optionee, the Option shall immediately terminate and be of no further force
and effect.
4. Non-Assignability. No rights granted to the Optionee hereunder are
assignable or transferable (whether by operation of law or otherwise and whether
voluntarily or involuntarily) other than pursuant to the laws of descent and
distribution. During the life of the Optionee, all rights granted to the
Optionee hereunder may be exercised only by the Optionee.
5. Effect on Optionee's Status. Nothing contained herein shall confer
upon the Optionee the right to continue in the service of the Company, its
subsidiaries or their respective affiliates, or affect any right that the
Company, its subsidiaries or their respective affiliates may have to terminate
the Optionee's services.
6. Conditions of Purchase. The Option is granted on the condition that
the purchase of the Option Shares upon the exercise of the Option shall be for
<PAGE>
investment purposes and not with a view to resale or distribution. The foregoing
condition shall be inoperative if the Option Shares are registered for sale
under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws or if in the opinion of counsel for the
Company, the Option Shares may be resold without such registration. At the time
of the exercise of the Option or any part thereof, the Optionee shall execute
such further agreements as the Company may require to implement the foregoing
condition and to acknowledge the Optionee's familiarity with restrictions on the
resale of the Option Shares under then applicable securities laws. Upon the
Optionee's request, the Company shall furnish copies of such publicly available
financial and other information concerning the Company and its business and
prospects as may be reasonably requested by the Optionee in connection with the
exercise of this Option.
7. Withholding. The Optionee agrees that the exercise of the Option in
whole or in part will not be effective, and no Option Shares will become
transferable to the Optionee, until the Optionee makes appropriate arrangements
with the Company for such income and other payroll tax withholding as may be
required of the Company under federal, state, or local law on account of such
exercise.
8. Capital Structure Adjustments. The number of shares and Exercise
Price covered by the unexercised portion of the Option shall be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock. Any such adjustment shall
be made without change in the aggregate purchase price applicable to the
unexercised portion of the Option and shall be made by the board of directors
whose determination in that respect shall be final, binding and conclusive. In
making any adjustment pursuant to this Section 8, fractional shares shall be
disregarded. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class shall effect, and no adjustment by reason thereof shall be made, with
respect to the number or price of shares of Common Stock covered by the Option.
9. Dissolution; Merger; Sale of Assets. In the event of the proposed
dissolution or liquidation of the Company, the Company shall notify the Optionee
at least fifteen days prior to such proposed action. To the extent that it has
not been previously exercised, the Option will terminate immediately prior to
the consummation of such proposed action. In the event of a merger of the
Company with or into another corporation or the sale of all or substantially all
of the assets of the Company, the Option shall be assumed or an equivalent
option shall be substituted by a successor corporation or a parent or a
subsidiary of such successor corporation. In the event that such successor
corporation does not agree to assume the option or to substitute an equivalent
option, the board of directors shall notify the Optionee that the Option shall
be fully exercisable for a period of at least fifteen (15) days from the date of
such notice and the Option will terminate upon the later of the expiration of
such period or the consummation of the merger.
10. No Rights as a Stockholder. The Optionee shall not have any rights
as a stockholder or any claim to dividends with respect to any Option Shares
until the proper exercise of the Option as required hereby, the payment of the
Purchase Price and the issuance by the Company of a stock certificate for the
Option Shares so purchased.
<PAGE>
11. Optionee Acknowledgments. The Optionee agrees and acknowledges
that (i) no member of the board of directors of the Company or any other person
or entity shall be liable for any action or determination made in good faith
with respect to the Option, (ii) the Option granted hereby is not intended to
qualify as an incentive stock option under section 422A of the Internal Revenue
Code of 1986, as amended, and (iii) the Company makes no representation as to
the tax treatment to the Optionee upon receipt or exercise of the option or sale
or other disposition of the shares covered by the Option.
12. Registration Rights. The Optionee shall be entitled to the same
registration rights with respect to the Option Shares as are set forth in
Section 11 of the Option Agreement, dated May 5 1996, between the Optionee and
the Company as if such provisions were set forth herein at length.
13. Notices. Any notice given to the Company hereunder shall be in
writing and shall be addressed to the Secretary of the Company at its principal
executive office, or at such other address as the Company may hereafter
designate to the Optionee by notice as provided herein. Any notice given to the
Optionee hereunder shall be in writing and shall be addressed to the Optionee at
the address set forth in the employee records of the Company, or at such other
address as the Optionee may hereafter designate to the Company by notice as
provided herein. Notices shall be deemed to have been duly given when personally
delivered or three (3) days after being mailed by registered or certified mail
to the party entitled to receive the same.
14. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all other prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. Other than the Severance
Agreement, there are no other agreements between the parties in connection with
the subject matter hereof. In the event that the terms of this Agreement are
inconsistent with the terms of the Severance Agreement regarding the subject
matter hereof, then the terms of this Agreement shall govern.
15. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without
reference to the choice of law principals thereof.
16. Assignment; Successors and Assigns; No Third Party Rights. This
Agreement may not be assigned by the Optionee and any attempt at assignment by
the Optionee shall be null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
permitted assigns and legal representatives. This Agreement shall be for the
sole benefit of the parties hereto and their respective successors, permitted
assigns and legal representatives and is not intended, nor shall it be
construed, to give any person other than the parties hereto and their respective
successors, permitted assigns and legal representatives any legal or equitable
right, remedy or claim.
<PAGE>
17. Amendment and Modification; Waiver. This Agreement may only be
amended or modified in a writing signed by the party against whom enforcement of
such amendment or modification is sought. Any of the terms or conditions of this
Agreement may be waived at any time by the party entitled to the benefit
thereof, but only by a writing signed by the party waiving such terms or
conditions.
18. No Strict Construction. Each of the parties hereto acknowledge
that this Agreement has been prepared jointly by the parties hereto and their
respective counsel, and this Agreement shall not be strictly construed against
either party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LOGIMETRICS, INC.
By:/s/Norman M. Phipps
__________________________________
Norman M. Phipps, President and Chief
Operating Officer
/s/Russell J. Reardon II
__________________________________
Russell J. Reardon II
EXHIBIT 10.41
LOGIMETRICS, INC.
AMENDED AND RESTATED 1997 STOCK COMPENSATION PROGRAM
A. Purposes. This LogiMetrics, Inc. 1997 Stock Compensation Program
(the "Program") is intended to promote the interests of LogiMetrics, Inc. (the
"Company"), its direct and indirect present and future subsidiaries (the
"Subsidiaries"), and its stockholders, by providing eligible persons with the
opportunity to acquire a proprietary interest, or to increase their proprietary
interest, in the Company as an incentive to remain in the service of the
Company.
B. Elements of the Program. In order to maintain flexibility in the
award of benefits, the Program is comprised of six parts -- the Incentive Stock
Option Plan ("Incentive Plan"), the Supplemental Stock Option Plan
("Supplemental Plan"), the Stock Appreciation Rights Plan ("SAR Plan"), the
Performance Share Plan ("Performance Share Plan"), the Stock Bonus Plan ("Stock
Bonus Plan") and the Independent Director Plan (the "Independent Director
Plan"). Copies of the Incentive Plan, Supplemental Plan, SAR Plan, Performance
Share Plan, Stock Bonus Plan and Independent Director Plan are attached hereto
as Parts I, II, III, IV, V, and VI, respectively, and are collectively referred
to herein as the "Plans." The grant of an option, stock appreciation right,
performance share, or stock bonus under one of the Plans shall not be construed
to prohibit the grant of an option, stock appreciation right, performance share,
or stock bonus under any of the other Plans.
C. Applicability of General Provisions. Unless any Plan specifically
indicates to the contrary, all Plans shall be subject to the General Provisions
of the Program set forth below under the heading "General Provisions of Stock
Compensation Program."
<PAGE>
GENERAL PROVISIONS OF STOCK COMPENSATION PROGRAM
Article 1. Administration. The Program shall be administered by the
Board of Directors of the Company (the "Board of Directors") or any duly created
committee appointed by the Board of Directors and charged with administration of
the Program. The Board of Directors, or any duly appointed committee, when
acting to administer the Program, is referred to as the "Program Administrator."
Any action of the Program Administrator shall be taken by majority vote at a
meeting or by unanimous written consent of all members without a meeting. No
Program Administrator or member of the Board of Directors shall be liable for
any action or determination made in good faith with respect to the Program or
with respect to any option, stock appreciation right, performance share, or
stock bonus granted thereunder. Notwithstanding any other provision of the
Program, administration of the Independent Director Plan, set forth as Part VI
of this Program, shall be self-executing in accordance with the terms of the
Independent Director Plan, and no Program Administrator shall exercise any
discretionary functions with respect to option grants made under such
Independent Director Plan.
Article 2. Authority of Program Administrator. Subject to the other
provisions of this Program, and with a view to effecting its purpose, the
Program Administrator shall have the authority: (a) to construe and interpret
the Program; (b) to define the terms used herein; (c) to prescribe, amend, and
rescind rules and regulations relating to the Program; (d) to determine to whom
options, stock appreciation rights, performance shares, and stock bonuses shall
be granted under the Program; (e) to determine the time or times at which
options, stock appreciation rights, performance shares, or stock bonuses shall
be granted under the Program; (f) to determine the number of shares subject to
any discretionary option or stock appreciation right under the Program and the
number of shares to be awarded as performance shares or stock bonuses under the
Program, as well as the option price and the duration of each option, stock
appreciation right, performance share and stock bonus, and any other terms and
conditions of options, stock appreciation rights, performance shares, and stock
bonuses; and (g) to make any other determinations necessary or advisable for the
administration of the Program and to do everything necessary or appropriate to
administer the Program. All decisions, determinations and interpretations made
by the Program Administrator shall be binding and conclusive on all participants
in the Program and on their legal representatives, heirs, and beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program. The
maximum aggregate number of shares of the Company's Common Stock, par value $.01
per share ("Common Stock"), available pursuant to the Program, subject to
adjustment as provided in Article 6 hereof, shall be 7,500,000 shares of Common
Stock. Up to 7,350,000 of such shares may be issued under any Plan that is part
of the Program other than the Independent Director Plan. Up to 150,000 shares
may be issued under the Independent Director Plan. If any of the options or
stock appreciation rights granted under the Program expire or terminate for any
reason before they have been exercised in full, the unissued shares subject to
those expired or terminated options and/or stock appreciation rights shall again
be available for the purposes of the Program. If the performance objectives
associated with the grant of any performance shares are not achieved within the
specified performance objective period, or if the performance share grant
<PAGE>
terminates for any reason before the performance objective date arrives, the
shares of Common Stock associated with such performance shares shall again be
available for the purposes of the Program. If any stock provided to a recipient
as a stock bonus is forfeited, the shares of Common Stock so forfeited shall
again be available for purposes of the Program. Any shares of Common Stock
delivered pursuant to the Program may consist, in whole or in part, of newly
issued shares or treasury shares.
Article 4. Eligibility and Participation. All employees of the Company
and the Subsidiaries, whether or not officers or directors of the Company or the
Subsidiaries, all consultants of the Company and the Subsidiaries, whether or
not directors of the Company or the Subsidiaries, and all non-employee directors
of the Company shall be eligible to participate in the Program; provided,
however, that (i) only employees of the Company or the Subsidiaries may
participate in the Incentive Plan, and (ii) only Independent Directors (as
defined in the Independent Director Plan) may participate in the Independent
Director Plan. The term "employee" shall include any person who has agreed to
become an employee and the term "consultant" shall include any person who has
agreed to become a consultant.
Article 5. Effective Date and Term of Program. The Program shall
become effective upon its adoption by the Board of Directors and the
stockholders of the Company; provided, however, that awards may be granted under
the Program prior to obtaining stockholder approval of the Program so long as
such awards are contingent upon such stockholder approval being obtained and may
not be exercised prior to such approval. The Program shall continue in effect
for a term of ten years from the date the Program is adopted by the Board of
Directors unless sooner terminated by the Board of Directors.
Article 6. Adjustments. Subject to the provisions of Articles 18 and
19, in the event that the outstanding shares of Common Stock of the Company are
hereafter increased, decreased, changed into, or exchanged for a different
number or kind of shares or securities through merger, consolidation,
combination, exchange of shares, other reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made by the Program
Administrator in the maximum number and kind of shares as to which options,
stock appreciation rights, and performance shares may be granted under the
Program. A corresponding adjustment changing the number or kind of shares
allocated to unexercised options, stock appreciation rights, performance shares
and stock bonuses or portions thereof, which shall have been granted prior to
any such change, shall likewise be made. Any such adjustment in outstanding
options and stock appreciation rights shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the option or
stock appreciation right but with a corresponding adjustment in the price for
each share or other unit of any security covered by the option or stock
appreciation right. In making any adjustment pursuant to this Article 6, any
fractional shares shall be disregarded.
Article 7. Termination and Amendment of Program. No options, stock
appreciation rights, performance shares or stock bonuses shall be granted under
the Program after the termination of the Program. The Program Administrator may
at any time amend or revise the terms of the Program or of any outstanding
<PAGE>
option, stock appreciation right, performance share or stock bonus issued under
the Program, provided, however, that any stockholder approval necessary or
desirable in order to comply with Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, or with Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") or other applicable law or regulation shall be obtained
prior to the effectiveness of any such amendment or revision. No amendment,
suspension or termination of the Program or of any outstanding option, stock
appreciation right, performance share or stock bonus shall, without the consent
of the person who has received an option, stock appreciation right, performance
share or stock bonus, impair any of that person's rights or obligations under
any option, stock appreciation right, performance share or stock bonus granted
under the Program prior to such amendment, suspension or termination without
that person's written consent.
Article 8. Privileges of Stock Ownership Notwithstanding the exercise
of any options granted pursuant to the terms of the Program or the achievement
of any performance objective specified in any performance share granted pursuant
to the terms of the Program, no person shall have any of the rights or
privileges of a stockholder of the Company in respect of any shares of stock
issuable upon the exercise of his or her option or achievement of his or her
performance objective until certificates representing the shares have been
issued and delivered. No adjustment shall be made for dividends or any other
distributions for which the record date is prior to the date on which any stock
certificate is issued pursuant to the Program.
Article 9. Reservation of Shares of Common Stock. The Company, during
the term of the Program, will at all times reserve and keep available such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Program.
Article 10. Tax Withholding. The exercise of any option, stock
appreciation right or performance share, and the grant of any stock bonus under
the Program, are subject to the condition that, if at any time the Company shall
determine, in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or desirable
as a condition of, or in any connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then, in such event, the exercise of the
option, stock appreciation right or performance share or the grant of such stock
bonus or the elimination of the risk of forfeiture relating thereto shall not be
effective unless such withholding tax or other withholding liabilities shall
have been satisfied in a manner acceptable to the Company.
Article 11. Employment; Service as Director or Consultant. Nothing in
the Program gives to any person any right to continued employment by or service
as a director of or consultant to the Company or the Subsidiaries or limits in
any way the right of the Company, the Subsidiaries or the Company's stockholders
at any time to terminate or alter the terms of that employment or service.
Article 12. Investment Letter; Restrictions or Obligation of the
Company to Issue Securities; Restrictive Legend. Any person acquiring Common
Stock or other securities of the Company pursuant to the Program, as a condition
precedent to receiving the shares of Common Stock or other securities, may be
required by the Program Administrator to submit a letter to the Company stating
<PAGE>
that the shares of Common Stock or other securities are being acquired for
investment and not with a view to the distribution thereof. The Company shall
not be obligated to sell or issue any shares of Common Stock or other securities
pursuant to the Program unless, on the date of sale and issuance thereof, the
shares of Common Stock or other securities are either registered under the
Securities Act of 1933, as amended, and all applicable state securities laws, or
exempt from registration thereunder. All shares of Common Stock and other
securities issued pursuant to the Program shall bear a restrictive legend
summarizing the restrictions on transferability applicable thereto, including
those imposed by federal and state securities laws.
Article 13. Covenant Against Competition. The Program Administrator
shall have the right to condition the award to an employee of any option, stock
appreciation right, performance share, or stock bonus under the Program upon the
recipient's execution and delivery to the Company of an agreement not to compete
with the Company during the recipient's employment and for such period
thereafter as shall be determined by the Program Administrator. Such covenant
against competition shall be in a form satisfactory to the Program
Administrator.
Article 14. Rights Upon Termination. If a recipient of an award under
the Program ceases to be a director of the Company or to be employed by or to
provide consulting services to the Company or any Subsidiary (or a corporation
or a parent or subsidiary of such corporation issuing or assuming a stock option
in a transaction to which Section 424(a) of the Code applies), as the case may
be, for any reason other than death or disability, then, unless any other
provision of the Program provides for earlier termination:
(a) subject to Article 21, all options or stock appreciation rights
(other than Naked Rights) shall terminate immediately in the event the
recipient's service or employment is terminated for cause and in all other
circumstances may be exercised, to the extent exercisable on the date of
termination, until (i) three months after the date of termination in the
case of grants under the Independent Director Plan, and (ii) 30 days after
the date of termination in all other cases; provided, however, that the
Program Administrator may, in its discretion, allow such options or stock
appreciation rights (other than Naked Rights) to be exercised (to the
extent exercisable on the date of termination) at any time within three
months after the date of termination;
(b) subject to Section 5(b) of the SAR Plan, all Naked Rights not
payable on the date of termination of employment shall terminate
immediately;
(c) all performance share awards shall terminate immediately unless
the performance objectives have been achieved and the performance objective
period has expired; and
(d) all stock bonuses which are subject to forfeiture shall be
forfeited as of the date of termination.
<PAGE>
Article 15. Rights Upon Disability. If a recipient becomes disabled,
within the meaning of Section 22(e)(3) of the Code, while serving as a director
of the Company or while employed by or rendering consulting services to the
Company or any Subsidiary (or a corporation or a parent or subsidiary of such
corporation issuing or assuming a stock option in a transaction to which Section
424(a) of the Code applies), as the case may be, then, unless any other
provision of the Program provides for earlier termination:
(a) subject to Article 21, all options or stock appreciation rights
(other than Naked Rights) may be exercised, to the extent exercisable on
the date of termination, at any time within one year after the date of
termination due to disability;
(b) all Naked Rights shall be fully paid by the Company as of the date
of disability;
(c) all performance share awards for which all performance objectives
have been achieved (other than continued employment or service on the
Vesting Date) shall be paid in full by the Company; all other performance
shares shall terminate immediately; and
(d) all stock bonuses which are subject to forfeiture shall be
forfeited as of the date of disability.
Article 16. Rights Upon Death of Recipient. If a recipient dies while
serving as a director of the Company or while employed by or rendering
consulting services to the Company or any Subsidiary (or a corporation or a
parent or subsidiary of such corporation issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies), as the case may be,
then, unless any other provision of the Program provides for earlier
termination:
(a) subject to Article 21, all options or stock appreciation rights
(other than Naked Rights) may be exercised by the person or persons to whom
the recipient's rights shall pass by will or by the laws of descent and
distribution, to the extent exercisable on the date of death, at any time
within one year after the date of death, unless any other provision of the
Program provides for earlier termination;
(b) all Naked Rights shall be fully paid by the Company as of the date
of death;
(c) all performance share awards for which all performance objectives
have been achieved (other than continued employment or service on the
Vesting Date) shall be paid in full by the Company; all other performance
share awards shall terminate immediately; and
(d) all stock bonuses which are subject to forfeiture shall be
forfeited as of the date of death.
Article 17. Transferability. Options and stock appreciation rights
granted under the Program may not be sold, pledged, assigned or transferred in
<PAGE>
any manner by the recipient otherwise than by will or by the laws of descent and
distribution and shall be exercisable (a) during the recipient's lifetime only
by the recipient and (b) after the recipient's death only by the recipient's
executor, administrator or personal representative, provided, however that (i)
the Program Administrator may permit the recipient of a non-incentive stock
option under the Supplemental Plan to transfer the option to a family member or
a trust created for the benefit of family members and (ii) recipients of options
under the Independent Director Plan may transfer such options to a family member
or a trust created for the benefit of family members. In the case of such a
transfer, the transferee's rights and obligations with respect to the option
shall be determined by reference to the recipient and the recipient's rights and
obligations with respect to the option had no transfer been made. The recipient
shall remain obligated pursuant to Articles 10 and 12 hereunder if required by
applicable law. Common Stock which represents either performance shares prior to
the satisfaction of the stated performance objectives and the expiration of the
stated performance objective periods or stock bonus shares prior to the time
that they are no longer subject to risk of forfeiture may not be sold, pledged,
assigned or transferred in any manner.
Article 18. Change in Control. All options granted pursuant to the
Independent Director Plan shall become immediately exercisable upon the
occurrence of a Change in Control Event. With respect to other awards, the
Program Administrator shall have the authority to provide, either at the time
any option, stock appreciation right, performance share or stock bonus is
granted or thereafter, that an option or stock appreciation right shall become
fully exercisable upon the occurrence of a Change in Control Event or that all
restrictions, performance objectives, performance objective periods and risks of
forfeiture pertaining to a performance share or stock bonus award shall lapse
upon the occurrence of a Change in Control Event. As used in the Program, a
"Change in Control Event" shall be deemed to have occurred if:
(a) any person, firm or corporation (other than Charles S. Brand,
members of his immediate family, or any trust or other entity established
for the benefit of Mr. Brand and/or members of his immediate family)
acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any
voting security of the Company and, immediately after such acquisition, the
acquirer has Beneficial Ownership of voting securities representing 50% or
more of the total voting power of all the then-outstanding voting
securities of the Company;
(b) the individuals who (i) as of the effective date of the Program
constitute the Board of Directors (the "Original Directors"), (ii)
thereafter are elected to the Board of Directors and whose election or
nomination for election to the Board of Directors was approved by a vote of
at least 2/3 of the Original Directors then still in office (such Directors
being called "Additional Original Directors"), or (iii) are elected to the
Board of Directors and whose election or nomination for election to the
Board of Directors was approved by a vote of at least 2/3 of the Original
Directors and Additional Original Directors then still in office, cease for
any reason to constitute a majority of the members of the Board of
Directors;
<PAGE>
(c) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company or the
Company shall consummate any such transaction if stockholder approval is
not sought or obtained, other than any such transaction which would result
in holders of outstanding voting securities of the Company immediately
prior to the transaction having Beneficial Ownership of at least 50% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction, with the voting
power of each such continuing holder relative to such other continuing
holders being not altered substantially in the transaction; or
(d) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or a substantial portion of the Company's assets (i.e.,
50% or more in value of the total assets of the Company).
Article 19. Mandatory Exercise. Upon the occurrence of or in
anticipation of a contemplated Change in Control Event, the Company may give a
holder of an option or stock appreciation right written notice requiring such
person either (a) to exercise within a period of time established by the Company
after receipt of the notice each option and stock appreciation right to the
fullest extent exercisable at the end of that period, or (b) to surrender such
option or stock appreciation right or any unexercised portion thereof. Any
portion of such option or stock appreciation right which shall not have been
exercised in accordance with the provisions of the Program by the end of such
period shall automatically lapse irrevocably and the holder shall have no
further rights thereunder.
Article 20. Method of Exercise. Any holder of an option may exercise
his or her option from time to time by giving written notice thereof to the
Company at its principal office, together with payment in full for the shares of
Common Stock to be purchased. The date of such exercise shall be the date on
which the Company receives such notice. Such notice shall state the number of
shares to be purchased. The purchase price of any shares purchased upon the
exercise of any option granted pursuant to the Program shall be paid in full at
the time of exercise of the option by certified or bank cashier's check payable
to the order of the Company or, if permitted by the Program Administrator, by
shares of Common Stock which have been held by the optionee for at least six
months, or by a combination of checks and such shares of Common Stock. The
Program Administrator may, in its sole discretion, permit an optionee to make
"cashless exercise" arrangements, to the extent permitted by applicable law, and
may require optionees to utilize the services of a single broker selected by the
Program Administrator in connection with any cashless exercise. No option may be
exercised for a fraction of a share of Common Stock. If any portion of the
purchase price is paid in shares of Common Stock, those shares shall be valued
at their then Fair Market Value as determined by the Program Administrator in
accordance with Section 4 of the Incentive Plan.
Article 21. Limitation. Notwithstanding any other provision of the
Program, (a) no option may be granted pursuant to the Program more than ten
years after the date on which the Program was adopted by the Board of Directors,
and (b) any option granted under the Program shall, by its terms, not be
<PAGE>
exercisable more than ten years after the date of grant; provided, however, that
any option granted under the Independent Director Plan shall, by its terms, not
be exercisable more than five years after the date of grant.
Article 22. Sunday or Holiday. In the event that the time for the
performance of any action or the giving of any notice is called for under the
Program within a period of time which ends or falls on a Sunday or legal
holiday, such period shall be deemed to end or fall on the next day following
such Sunday or legal holiday which is not a Sunday or legal holiday.
Article 23. Governing Law. The Program shall be governed by and
construed in accordance with the laws of the State of Delaware.
<PAGE>
PLAN I
LOGIMETRICS, INC.
INCENTIVE STOCK OPTION PLAN
Section 1. General. This LogiMetrics, Inc. Incentive Stock Option Plan
("Incentive Plan") is Part I of the Company's Program. The Company intends that
options granted pursuant to the provisions of the Incentive Plan will qualify
and will be identified as "incentive stock options" within the meaning of
Section 422 of the Code. Unless any provision herein indicates to the contrary,
the Incentive Plan shall be subject to the General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
incentive stock options to any person eligible under Article 4 of the General
Provisions. The terms and conditions of options granted under the Incentive Plan
may differ from one another as the Program Administrator shall, in its
discretion, determine, as long as all options granted under the Incentive Plan
satisfy the requirements of the Incentive Plan.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Incentive Plan shall expire on the date
determined by the Program Administrator, but in no event shall any option
granted under the Incentive Plan expire later than ten years from the date on
which the option is granted. Notwithstanding the foregoing, any option granted
under the Incentive Plan to any person who owns more than 10% of the combined
voting power of all classes of stock of the Company or a Subsidiary shall expire
no later than five years from the date on which the option is granted.
Section 4. Purchase Price. The option price with respect to any option
granted pursuant to the Incentive Plan shall not be less than the Fair Market
Value of the shares on the date of the grant of the option; except that the
option price with respect to any option granted pursuant to the Incentive Plan
to any person who owns more than 10% of the combined voting power of all classes
of stock of the Company shall not be less than 110% of the Fair Market Value of
the shares on the date the option is granted. "Fair Market Value" shall mean the
fair market value of the Common Stock on the date of grant or other relevant
date. If on such date the Common Stock is listed on a stock exchange or is
quoted on the automated quotation system of NASDAQ, the Fair Market Value shall
be the closing sale price (or if such price is unavailable, the average of the
high bid price and the low asked price) on such date. If no such closing sale
price or bid and asked prices are available, the Fair Market Value shall be
determined in good faith by the Program Administrator in accordance with
generally accepted valuation principles and such other factors as the Program
Administrator reasonably deems relevant.
Section 5. Maximum Amount of Options in Any Calendar Year. The
aggregate Fair Market Value of the Common Stock with respect to which incentive
stock options are exercisable for the first time by any employee during any
<PAGE>
calendar year (under the terms of the Incentive Plan and all incentive stock
option plans of the Company and the Subsidiaries) shall not exceed $100,000.
Section 6. Exercise of Options. Unless otherwise provided by the
Program Administrator at the time of grant or unless the installment provisions
set forth herein are subsequently accelerated pursuant to Article 18 of the
General Provisions of the Program or otherwise by the Program Administrator with
respect to any one or more previously granted options, options may only be
exercised to the following extent during the following periods of employment:
Maximum Percentage of
Shares Covered by
Period Following Option Which May be
Date of Grant Purchased
Less than 12 months 0%
12 months or more and less than 24 months 25%
24 months or more and less than 36 months 50%
36 months or more and less than 48 months 75%
48 months or more 100%
<PAGE>
PLAN II
LOGIMETRICS, INC.
SUPPLEMENTAL STOCK OPTION PLAN
Section 1. General. This LogiMetrics, Inc. Supplemental Stock Option
Plan ("Supplemental Plan") is Part II of the Company's Program. Any option
granted pursuant to the Supplemental Plan shall not be an incentive stock option
as defined in Section 422 of the Code. Unless any provision herein indicates to
the contrary, this Supplemental Plan shall be subject to the General Provisions
of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
supplemental stock options to any person eligible under Article 4 of the General
Provisions. The terms and conditions of options granted under the Supplemental
Plan may differ from one another as the Program Administrator shall, in its
discretion, determine, as long as all options granted under the Supplemental
Plan satisfy the requirements of the Supplemental Plan.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Supplemental Plan shall expire on the date
determined by the Program Administrator, but in no event shall any option
granted under the Supplemental Plan expire later than ten years from the date on
which the option is granted.
Section 4. Purchase Price. The option price with respect to any option
granted pursuant to the Supplemental Plan shall be determined by the Program
Administrator at the time of grant.
Section 5. Exercise of Options. Unless otherwise provided by the
Program Administrator at the time of grant, or unless the installment provisions
set forth herein are subsequently accelerated pursuant to Article 18 of the
General Provisions of the Program or otherwise by the Program Administrator,
with respect to any one or more previously granted options, options may only be
exercised to the following extent during the following periods of employment or
service:
Maximum Percentage of
Shares Covered by
Period Following Option Which May be
Date of Grant Purchased
Less than 12 months 0%
12 months or more and less than 24 months 25%
24 months or more and less than 36 months 50%
36 months or more and less than 48 months 75%
48 months or more 100%
<PAGE>
PLAN III
LOGIMETRICS, INC.
STOCK APPRECIATION RIGHTS PLAN
Section 1. General. This LogiMetrics, Inc. Stock Appreciation Rights
Plan ("SAR Plan") is Part III of the Company's Program.
Section 2. Terms and Conditions. The Program Administrator may grant
stock appreciation rights to any person eligible under Article 4 of the General
Provisions. Stock appreciation rights may be granted either in tandem with
incentive stock options or supplemental stock options as described in Section 4
of the SAR Plan, or as naked stock appreciation rights as described in Section 5
of the SAR Plan.
Section 3. Mode of Payment. At the discretion of the Program
Administrator, payments to recipients upon exercise of stock appreciation rights
may be made in (a) cash by bank check, (b) shares of Common Stock having a Fair
Market Value (determined in the manner provided in Section 4 of the Incentive
Plan) equal to the amount of the payment, (c) a note in the amount of the
payment containing such terms as are approved by the Program Administrator, or
(d) any combination of the foregoing in an aggregate amount equal to the amount
of the payment.
Section 4. Stock Appreciation Rights in Tandem with Incentive or
Supplemental Stock Options. A SAR granted in tandem with an incentive stock
option or a supplemental stock option (each, an "Option") shall be on the
following terms and conditions:
(a) Each SAR shall relate to a specific Option or portion of an Option
granted under the Incentive Plan or the Supplemental Plan, as the case may
be, and may be granted by the Program Administrator at the same time that
the Option is granted or at any time thereafter prior to the last day on
which the Option may be exercised.
(b) A SAR shall entitle a recipient, upon surrender of the unexpired
related Option, or a portion thereof, to receive from the Company an amount
equal to the excess of (i) the Fair Market Value (determined in accordance
with Section 4 of the Incentive Plan) of the shares of Common Stock which
the recipient would have been entitled to purchase on that date pursuant to
the portion of the Option surrendered, over (ii) the amount which the
recipient would have been required to pay to purchase such shares upon
exercise of such Option.
(c) A SAR shall be exercisable only for the same number of shares of
Common Stock, and only at the same times, as the Option to which it
relates. SARs shall be subject to such other terms and conditions as the
Program Administrator may specify.
<PAGE>
(d) A SAR shall lapse at such time as the related Option is exercised
or lapses pursuant to the terms of the Program. On exercise of the SAR, the
related Option shall lapse as to the number of shares exercised.
Section 5. Naked Stock Appreciation Rights. SARs granted by the
Program Administrator as naked stock appreciation rights ("Naked Rights") shall
be subject to the following terms and conditions:
(a) The Program Administrator may award Naked Rights to recipients for
periods not exceeding ten years. Each Naked Right shall represent the right
to receive the excess of (i) the Fair Market Value of one share of Common
Stock (determined in accordance with Section 4 of the Incentive Plan) on
the date of exercise of the Naked Right, over (ii) the Fair Market Value of
one share of Common Stock (determined in accordance with Section 4 of the
Incentive Plan) on the date the Naked Right was awarded to the recipient.
(b) Unless otherwise provided by the Program Administrator at the time
of award or unless the installment provisions set forth herein are
subsequently accelerated pursuant to Article 18 of the General Provisions
of the Program or otherwise by the Program Administrator with respect to
any one or more previously granted Naked Rights, Naked Rights may only be
exercised to the following extent during the following periods of
employment or service:
Maximum Percentage of
Naked Rights Which
May be Purchased
Period Following
Date of Grant
Less than 12 months 0%
12 months or more and less than 24 months 25%
24 months or more and less than 36 months 50%
36 months or more and less than 48 months 75%
48 months or more 100%
(c) The Naked Rights solely measure and determine the amounts to be
paid to recipients upon exercise as provided in Section 5(a). Naked Rights
do not represent Common Stock or any right to receive Common Stock. The
Company shall not hold in trust or otherwise segregate amounts which may
become payable to recipients of Naked Rights; such funds shall be part of
the general funds of the Company. Naked Rights shall constitute an unfunded
contingent promise to make future payments to the recipient.
<PAGE>
PLAN IV
LOGIMETRICS, INC.
PERFORMANCE SHARE PLAN
Section 1. General. This LogiMetrics, Inc. Performance Share Plan
("Performance Share Plan") is Part IV of the Company's Program. Unless any
provision herein indicates to the contrary, the Performance Share Plan shall be
subject to the General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
performance shares to any person eligible under Article 4 of the General
Provisions. Each performance share grant shall confer upon the recipient thereof
the right to receive a specified number of shares of Common Stock of the Company
contingent upon the achievement of specified performance objectives within a
specified performance objective period including, but not limited to, the
recipient's continued employment or service as a consultant through the period
set forth in Section 5 of this Performance Share Plan. At the time of an award
of a performance share, the Program Administrator shall specify the performance
objectives, the performance objective period or periods and the period of
duration of the performance share grant. Any performance shares granted under
this Plan shall constitute an unfunded promise to make future payments to the
affected person upon the completion of specified conditions.
Section 3. Mode of Payment. At the discretion of the Program
Administrator, payments of performance shares may be made in (a) shares of
Common Stock, (b) a check in an amount equal to the Fair Market Value
(determined in the manner provided in Section 4 of the Incentive Plan) of the
shares of Common Stock to which the performance share award relates, (c) a note
in the amount specified above in Section 3(b) containing such terms as are
approved by the Program Administrator, or (d) any combination of the foregoing
in the aggregate amount equal to the amount specified above in Section 3(b).
Section 4. Performance Objective Period. The duration of the period
within which to achieve the performance objectives shall be determined by the
Program Administrator. The period may not be less than one year nor more than
ten years from the date that the performance share is granted. The Program
Administrator shall determine whether performance objectives have been met with
respect to each applicable performance objective period. Such determination
shall be made promptly after the end of each applicable performance objective
period, but in no event later than 90 days after the end of each applicable
performance objective period. All determinations by the Program Administrator
with respect to the achievement of performance objectives shall be final,
binding on and conclusive with respect to each recipient.
Section 5. Vesting of Performance Shares. Unless otherwise provided by
the Program Administrator at the time of grant, or unless the installment
provisions set forth herein are subsequently accelerated pursuant to Article 18
of the General Provisions of the Program or otherwise by the Program
Administrator, with respect to any one or more previously granted performance
shares, the Company shall pay to the recipient on the date set forth in Column 1
below ("Vesting Date") the percentage of the recipient's performance share award
set forth in Column 2 below.
Column 1 Column 2
Vesting Date Percentage
1 year from Date of Grant 25%
2 years from Date of Grant 25%
3 years from Date of Grant 25%
4 years from Date of Grant 25%
<PAGE>
PLAN V
LOGIMETRICS, INC.
STOCK BONUS PLAN
Section 1. General. This LogiMetrics, Inc. Stock Bonus Plan ("Stock
Bonus Plan") is Part V of the Company's Program. Unless any provision herein
indicates to the contrary, the Stock Bonus Plan shall be subject to the General
Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
bonuses in the form of shares of Common Stock to any person eligible under
Article 4 of the General Provisions. Each such stock bonus shall be forfeited by
the recipient in the event that the recipient's employment by or service as a
director or consultant to the Company or any Subsidiary terminates within the
time periods specified in Section 3 of the Stock Bonus Plan or within such other
time period as the Program Administrator also may provide at the time of grant.
The Program Administrator also may provide at the time of grant that the Common
Stock subject to the stock bonus shall be forfeited by the recipient upon the
occurrence of other events.
Section 3. Forfeiture of Bonus Shares. Unless otherwise provided by
the Program Administrator at the time of grant, or unless the installment
provisions set forth herein are subsequently accelerated pursuant to Article 18
of the General Provisions of the Program or otherwise by the Program
Administrator with respect to any one or more previously granted bonus shares,
the percentage set forth in Column 2 below of shares of Common Stock issued as a
stock bonus shall be forfeited and transferred back to the Company by the
recipient without payment of any consideration from the Company if the
recipient's employment by or service as a director or consultant to the Company
or any Subsidiary is terminated for any reason during the time periods specified
in Column 1 below:
Column 1 Column 2
Employment or Service Percentage of Bonus
Terminated Within Shares Which are Forfeitable
First 12 months after grant 100%
First 24 months after grant 75%
First 36 months after grant 50%
First 48 months after grant 25%
Beyond 48 months after grant 0%
Section 4. Rights as a Stockholder; Stock Certificates. A recipient
shall have rights as a stockholder with respect to any shares of Common Stock
received as a stock bonus represented by a stock certificate issued in his name
even though all or a portion of such shares remains subject to a risk of
forfeiture hereunder, except that shares subject to forfeiture shall not be
<PAGE>
transferable. Stock certificates representing such shares which remain subject
to forfeiture together with a related stock power shall be held by the Company,
and shall be canceled and returned to the Company's treasury if thereafter
forfeited. Stock certificates representing such shares which are vested and no
longer subject to forfeiture shall be delivered to the recipient.
<PAGE>
PLAN VI
LOGIMETRICS, INC.
INDEPENDENT DIRECTOR PLAN
Section 1. General. This LogiMetrics, Inc. Independent Director Plan
("Independent Director Plan") is Part VI of the Company's Program. Any option
granted pursuant to this Independent Director Plan shall not be an incentive
stock option as defined in Section 422 of the Code. Unless any provision herein
indicates to the contrary, this Independent Director Plan shall be subject to
the General Provisions of the Program.
Section 2. Terms and Conditions. Every year on the earlier of (i) the
date of the Company's annual meeting of stockholders, and (ii) June 1, the
Company shall grant to each Independent Director (as defined below) elected as a
director at such annual meeting (or nominated for election as a director by the
Board of Directors or any nominating committee thereof in the event that such
annual meeting does not occur prior to June 1), or, in the event that the Board
of Directors is divided into two or more classes, continuing or expected to
continue to serve as a director of the Company following such annual meeting, an
option to purchase 5,000 shares of Common Stock. As used in the Independent
Director Plan, the term "Independent Director" means any member of the Board of
Directors who, as of the relevant date of determination, has not been a
full-time employee of the Company or any Subsidiary for at least twelve months
preceding such date.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of the Independent Director Plan shall expire five
years from the date on which the option is granted. In addition, each option
shall be subject to early termination as provided in the Independent Director
Plan.
Section 4. Purchase Price. The option price with respect to any option
granted pursuant to the Independent Director Plan shall be the Fair Market Value
(determined in accordance with Section 4 of the Incentive Plan) of the shares of
Common Stock to which the option relates.
Section 5. Exercise of Options.
(a) Options granted under the Independent Director Plan shall become
fully exercisable as to 100% of the shares of Common Stock covered thereby one
year after the date of grant, subject to acceleration as set forth in Article 18
of the General Provisions of Stock Compensation Program.
(b) Except as provided in the General Provisions of Stock Compensation
Program, no option may be exercised unless the holder thereof is then a director
of the Company.
<PAGE>
(c) Other than as provided in the General Provisions of Stock
Compensation Program, options granted under the Independent Director Plan shall
not be affected by any change of duties or position so long as the holder
continues to be a director of the Company.
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