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).
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
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.
(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
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 00 Xxxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxx 00000. The registered owner of this Debenture shall
become the record holder of the shares of Common Stock issuable upon conversion
as of the date of exercise of the Conversion Right (the "Conversion Date"). The
shares issued in connection with the Conversion Right shall be registered
initially in the name of the Holder, and delivered to the Holder no later than
two (2) business days after receipt of a properly completed conversion notice.
Upon conversion, the Company shall pay to the Holder accrued but unpaid interest
on this Debenture up to, but excluding, the Conversion Date.
(c) In case, at any time or from time to time after the date of
issuance of this Debenture ("Issuance Date"), the Company shall issue or sell
shares of its Common Stock (other than any Common Stock issuable upon the
exercise or conversion of (i) the Debentures (and any replacement Debenture or
Debentures issued upon transfer or exchange of this Debenture), (ii) the
Company's Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures due
1999 (the "Class A Debentures") (and any replacement Class A Debenture or Class
A Debentures issued upon transfer or exchange of the Class A Debentures), (iii)
any additional securities issued in lieu of cash interest otherwise payable on
the Class A Debentures (the "Class A Accrued Interest Debentures") (and any
replacement Class A Accrued Interest Debenture or Class A Accrued Interest
Debentures issued upon transfer or exchange of the Class A Accrued Interest
Debentures), (iv) the Company's Amended and Restated Class B 13% Convertible
Senior Subordinated Pay-in-Kind Debentures due 1999 (the "Class B Debentures")
(and any replacement Class B Debenture or Class B Debentures issued upon
transfer or exchange of the Class B Debentures), (v) any additional securities
issued in lieu of cash interest otherwise payable on the Class B Debentures (the
"Class B Accrued Interest Debentures") (and any replacement Class B Accrued
Interest Debenture or Class B Accrued Interest Debentures issued upon transfer
or exchange of the Class B Accrued Interest Debentures), (vi) securities
outstanding on the date hereof, (vii) awards made from and after the Issuance
Date pursuant to the Company's Stock Compensation Program (the "Plan"), or
(viii) awards made from and after the Issuance Date pursuant to any incentive
compensation plan or arrangement approved by the Company's Board of Directors or
by the Compensation Committee of the Company's Board of Directors subject to an
aggregate limit of 2,000,000 shares of Common Stock for issuances pursuant to
clauses (vii) and (viii) (subject to adjustment in the circumstances set forth
in the Plan or such arrangements) (such securities, collectively, the "Subject
Securities") for a consideration per share less than the Conversion Price (the
"Trigger Price"), or, if a Pro Forma Adjusted Trigger Price (hereinafter
defined) shall be in effect as provided below in this paragraph (c), then less
than such Pro Forma Adjusted Trigger Price per share, then and in each such case
the Holder of this Debenture, upon the conversion hereof as provided in
paragraph (a) hereof, shall be entitled to receive, in lieu of the shares of
Common Stock theretofore receivable upon the conversion of this Debenture, a
number of shares of Common Stock determined by (a) dividing the Trigger Price by
a Pro Forma Adjusted Trigger Price per share to be computed as provided below in
this paragraph (c), and (b) multiplying the resulting quotient by the number of
shares of Common Stock into which this Debenture is then convertible. A Pro
Forma Adjusted Trigger Price per share shall be the price computed (to the
nearest cent, a fraction of half cent or more being considered a full cent):
by dividing (i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or sale by
the Trigger Price (or, if a Pro Forma Adjusted Trigger Price
shall be in effect, by such Price), and (y) the consideration,
if any, received by the Company upon such issue or sale, by
(ii) the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale.
For the purpose of this paragraph (c):
(i) In case the Company splits its Common Stock or shall
declare any dividend, or make any other distribution, upon any stock
of the Company of any class payable in Common Stock, or in any stock
or other securities directly or indirectly convertible into or
exchangeable for Common Stock (any such stock or other securities
being hereinafter called "Convertible Securities"), such split,
declaration or distribution shall be deemed to be an issue or sale (as
of the record date for such split, dividend or other distribution),
without consideration, of such Common Stock or such Convertible
Securities, as the case may be.
(ii) In case the Company shall issue or sell any Convertible
Securities other than the Subject Securities, there shall be
determined the price per share for which Common Stock is issuable upon
the conversion or exchange thereof, such determination to be made by
dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by (b)
the maximum number of shares of Common Stock of the Company issuable
upon the conversion or exchange of all such Convertible Securities.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale for
cash (as of the date of issue or sale of such Convertible Securities)
of such maximum number of shares of Common Stock at the price per
share so determined, provided that, if such Convertible Securities
shall by their terms provide for an increase or increases, with the
passage of time, in the amount of additional consideration, if any,
payable to the Company, or in the rate of exchange, upon the
conversion or exchange thereof, the Pro Forma Adjusted Trigger Price
per share shall, forthwith upon any such increase becoming effective,
be readjusted to reflect the same, and provided, further, that upon
the expiration of such rights of conversion or exchange of such
Convertible Securities, if any thereof shall not have been exercised,
the Pro Forma Adjusted Trigger Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock
so issued or sold were those issued or sold upon the conversion or
exchange of such Convertible Securities, and that they were issued or
sold for the consideration actually received by the Company upon such
conversion or exchange, plus the consideration, if any, actually
received by the Company for the issue or sale of all such Convertible
Securities which shall have been converted or exchanged.
(iii) In case the Company shall grant any rights or options
to subscribe for, purchase or otherwise acquire Common Stock of any
class other than the Subject Securities, there shall be determined the
price per share for which Common Stock is issuable upon the exercise
of such rights or options, such determination to be made by dividing
(a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of such rights or options, by (b) the
maximum number of shares of Common Stock issuable upon the exercise of
such rights or options.
If the price per share so determined shall be less than the
Trigger Price (or, if a Pro Forma Adjusted Trigger Price shall be in
effect, less than such Price) as of the date of such issue or sale,
then the granting of such rights or options shall be deemed to be an
issue or sale for cash (as of the date of the granting of such rights
or options) of such maximum number of shares of Common Stock at the
price per share so determined, provided that, if such rights or
options shall by their terms provide for an increase or increases,
with the passage of time, in the amount of additional consideration,
if any, payable to the Company upon the exercise thereof, the Pro
Forma Adjusted Trigger Price per share shall, forthwith upon any such
increase becoming effective, be readjusted to reflect the same, and
provided, further, that upon the expiration of such rights or options,
if any thereof shall not have been exercised, the Pro Forma Adjusted
Trigger Price per share shall forthwith be readjusted and thereafter
be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(iv) In case the Company shall grant any rights or options
to subscribe for, purchase or otherwise acquire Convertible Securities
other than the Subject Securities, such Convertible Securities shall
be deemed, for the purposes of subparagraph (iii) above, to have been
issued or sold for the total amount received or receivable by the
Company as consideration for the granting of such rights or options
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of such rights or options,
provided that, upon the expiration of such rights or options, if any
thereof shall not have been exercised, the Pro Forma Adjusted Trigger
Price per share shall forthwith be readjusted and thereafter be the
price which it would have been had an adjustment been made upon the
basis that the only Convertible Securities so issued or sold were
those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received
by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised.
(v) In case any shares of stock or other securities, other
than Common Stock of the Company, shall at any time be receivable upon
the conversion of this Debenture, and in case any additional shares of
such stock or any additional such securities (or any stock or other
securities convertible into or exchangeable for any such stock or
securities) shall be issued or sold for a consideration per share such
as to dilute the purchase rights evidenced by this Debenture, then and
in each such case the Pro Forma Adjusted Trigger Price per share shall
forthwith be adjusted, substantially in the manner provided for above
in this paragraph (c), so as to protect the Holder of this Debenture
against the effect of such dilution.
(vi) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor, after
deducting any expenses incurred and any underwriting or similar
commissions, compensation or concessions paid or allowed by the
Company in connection with such issue or sale.
(vii) In case any shares of Common Stock or Convertible
Securities or any rights or options to subscribe for, purchase or
otherwise acquire any Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash (or a consideration
which includes cash and other assets) then, for the purpose of this
paragraph (c), the Board of Directors of the Company shall promptly
determine the fair value of such consideration, and such Common Stock,
Convertible Securities, rights or options shall be deemed to have been
issued or sold on the date of such determination in good faith. Such
value shall not be more than the amount at which such consideration is
recorded in the books of the Company for accounting purposes except in
the case of an acquisition accounted for on a pooling of interest
basis. In case any Common Stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any
Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Company
for a consideration which covers both, the Board of Directors of the
Company shall promptly determine in good faith what part of the
consideration so received is to be deemed to be the consideration for
the issue or sale of such Common Stock or Convertible Securities or
such rights or options.
The Company covenants and agrees that, should any
determination of fair value of consideration or of allocation of
consideration be made by the Board of Directors of the Company,
pursuant to this subparagraph (vii), it will, not less than seven (7)
days after any and each such determination, deliver to the Holder of
this Debenture a certificate signed by the President or a Vice
President and the Treasurer or an Assistant Treasurer of the Company
reciting such value as thus determined and setting forth the nature of
the transaction for which such determination was required to be made,
the nature of any consideration, other than cash, for which Common
Stock, Convertible Securities, rights or options have been or are to
be issued, the basis for its valuation, the number of shares of Common
Stock which have been or are to be issued, and a description of any
Convertible Securities, rights or options which have been or are to be
issued, including their number, amount and terms.
(viii) In case the Company shall take a record of the
holders of shares of its stock of any class for the purpose of
entitling them (a) to receive a dividend or a distribution payable in
Common Stock or in Convertible Securities, or (b) to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities,
then such record date shall be deemed to be the date of the issue or
sale of the Common Stock issued or sold or deemed to have been issued
or sold upon the declaration of such dividend or the making of such
other distribution, or the date of the granting of such rights of
subscription, purchase or other acquisition, as the case may be.
(ix) The number of shares of Common Stock outstanding at any
given time shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock,
but shall exclude shares in the treasury of the Company.
(x) Following each computation or readjustment of a Pro
Forma Adjusted Trigger Price as provided in this paragraph (c), the
newly computed or adjusted Pro Forma Adjusted Trigger Price shall
remain in effect until a further computation or readjustment thereof
is required by this paragraph (c).
(xi) In case at any time or from time to time after the
Issuance Date the holders of the Common Stock of the Company of any
class (or any other shares of stock or other securities at the time
receivable upon the exercise of this Debenture) shall have received,
or, on or after the record date fixed for the determination of
eligible stockholders, shall have become entitled to receive:
(A) other or additional stock or other
securities or property (other than cash) by way of dividend;
(B) any cash paid or payable out of capital
or paid-in surplus or surplus created as a result of a
revaluation of property by way of dividend; or
(C) other or additional (or less) stock or
other securities or property (including cash) by way of
stock-split, spin-off, split-off, split-up, reclassification,
combination of shares or similar corporate rearrangement;
(other than additional shares of Common Stock issued to holders of Common Stock
as a stock dividend or stock-split, adjustments in respect of which shall be
covered by the provisions of this paragraph (c)), then in each case the Holder
of this Debenture, upon the conversion hereof as provided in paragraph (a)
hereof, shall be entitled to receive, in lieu of, or in addition to, as the case
may be, the shares theretofore receivable upon the conversion of this Debenture,
the amount of stock or other securities or property (including cash in the cases
referred to in clauses (B) and (C) above) which such Holder would hold on the
date of such exercise if, on the Issuance Date, he, she or it had been the
holder of record of the number of shares of Common Stock of the Company into
which this Debenture is convertible and had thereafter, during the period from
the Issuance Date to and including the date of such conversion, retained such
shares and/or all other or additional (or less) stock or other securities or
property (including cash in the cases referred to in clauses (B) and (C) above)
receivable by him, her or it as aforesaid during such period, giving effect to
all adjustments called for during such period by paragraph (c) and subparagraph
(xii) hereof.
(xii) In case of any reorganization of the Company (or any
other corporation the stock or other securities of which are at the
time deliverable on the conversion of this Debenture) after the date
hereof, or in case, after such date, the Company (or any such other
corporation) shall consolidate with or merge into another corporation
or convey all or substantially all its assets to another corporation,
then and in each such case the Holder of this Debenture, upon the
conversion hereof as provided in paragraph (a) hereof, at any time
after the consummation of such reorganization, consolidation, merger
or conveyance, shall be entitled to receive the stock or other
securities or property to which such Holder would have been entitled
upon such consummation if such Holder had converted this Debenture
immediately prior thereto, all subject to further adjustments as
provided for herein; in each such case, the terms of this Debenture
shall be applicable to the shares of stock or other securities or
property receivable upon the conversion of this Debenture after such
consummation.
(xiii) The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Debenture, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder hereof
against dilution or other impairment. Without limiting the generality
of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the conversion of this Debenture above
the amount payable therefor upon such exercise, and at all times will
take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and
non-assessable stock upon the conversion of this Debenture.
(xiv) In each case of an adjustment in the number of shares
of Common Stock or other stock, securities or property receivable on
the conversion of this Debenture, at the request of the Holder of this
Debenture the Company at its expense shall promptly cause independent
public accountants of recognized standing, selected by the Company, to
compute such adjustment in accordance with the terms of this Debenture
and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a
statement of (A) the consideration received or to be received by the
Company for any additional shares issued or sold or deemed to have
been issued or sold, (B) the number of shares of Common Stock
outstanding or deemed to be outstanding and (C) the Pro Forma Adjusted
Trigger Price. The Company will forthwith mail a copy of each such
certificate to the Holder of this Debenture.
(xv) In case:
(A) the Company shall take a record of the
holders of its Common Stock (or other stock or securities at
the time deliverable upon the conversion of this Debenture)
for the purpose of entitling or enabling them to receive any
dividend (other than a cash or stock dividend at the same rate
as the rate of the last cash or stock dividend theretofore
paid) or other distribution, or to exercise any preemptive
right pursuant to the Company's charter, or to receive any
right to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right;
or
(B) of any capital reorganization of the
Company, any reclassification of the capital stock of the
Company, any consolidation or merger of the Company with or
into another corporation, or any conveyance of all or
substantially all of the assets of the Company to another
corporation; or
(C) of the voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Debenture a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the times, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Debenture) shall be entitled to exchange
their shares of Common Stock of any class (or such other stock or securities)
for reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up or (iii) the amount and character of the stock or
other securities proposed to be issued or granted, the date of such proposed
issuance or grant and the persons or class of persons to whom such stock or
other securities are to be offered, issued or granted. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
(xvi) The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of
this Debenture and other similar Debentures, such shares of Common
Stock and other stock, securities and property as from time to time
shall be issuable upon the exercise of this Debenture and all other
similar Debentures at the time outstanding.
(xvii) Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Debenture and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new
Debenture of like tenor.
7. Covenants.
(a) Affirmative Covenants: The Company will, and with respect to the
agreements set forth in subsections (i) through (viii) hereof, will cause each
subsidiary to:
(i) with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies
similarly situated and operating like properties, assets or businesses with
responsible insurance companies satisfactory to the Majority Holders;
(ii) duly pay and discharge all taxes or other claims which might
become a lien upon any of its properties except to the extent that such
items are being in good faith appropriately contested;
(iii) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs, replacements,
additions, betterments and improvements thereto;
(iv) conduct its business in substantially the same manner and in
substantially the same fields as such business is now carried on and
conducted;
(v) comply with all statutes, rules and regulations and maintain
its corporate existence;
(vi) provide the Holder with the following financial information:
(A) annually, as soon as available, but in any event within
one hundred twenty (120) days after the last day of each fiscal year,
audited financial statements, including balance sheets as of the last
day of the fiscal year and statements of income and retained earnings
and changes in financial condition for such fiscal year each prepared
in accordance with generally accepted accounting principles,
consistently applied ("GAAP") for the period and prior periods by
independent Certified Public Accountants satisfactory to the Majority
Holders; provided, however, that the Company shall have until January
31, 1999 to deliver the financial statements for the fiscal year ended
June 30, 1998;
(B) as soon as available, but in any event within forty-five
(45) days after the end of each fiscal quarter, internally prepared
financial statements of the Company each prepared in accordance with
GAAP and jobs-in-progress reports for said period and prior periods;
provided, however, that the Company shall have until January 31, 1999
to deliver the financial statements for the fiscal quarter ended
September 30, 1998;
(C) within a reasonable time after a written request
therefor, such other financial data or information as the Holder may
reasonably request from time to time;
(D) at the same time as it delivers the financial statements
required under the provisions of subsections (A) and (B) hereof, a
certificate signed by the president or the chief financial, or
accounting, officer of the Company, to the effect that no Event of
Default hereunder or material default under any other agreement to
which the Company is a party or by which it is bound, or by which any
of its properties or assets may be affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute
such an Event of Default, has occurred;
(E) on a monthly basis, no later than the tenth (10th) day
after each such month, backlog reports and accounts receivable agings
of the Company;
(vii) permit the Holder to make or cause to be made, inspections
and audits of any books, records and papers of the Company and of any
parent or subsidiary thereof and to make extracts therefrom at all such
reasonable times and as often as the Holder may reasonably require;
(viii) immediately give notice to the Holder that an Event of
Default has occurred or that an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, has occurred
and specifying the action which the Company has taken and proposes to take
with respect thereto.
(b) Financial Covenant: At the end of each fiscal quarter, the Company
shall maintain a Tangible Net Worth of (-3,042,322) or greater (as calculated in
accordance with GAAP). For purposes hereof "Tangible Net Worth" shall mean, at
any date, (i) the net book value of assets (other than patents, patent rights,
trademarks, trade names, franchises, copyrights, licenses, permits, goodwill and
other intangible assets classified as such in accordance with GAAP) after all
appropriate adjustments in accordance with GAAP (including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and amortization)
plus (ii) subordinated indebtedness, in each case computed in accordance with
GAAP.
(c) Negative Covenants: The Company will not, and will not permit any
subsidiary to:
(i) create, incur, assume or suffer to exist any liability for
borrowed money, except (A) indebtedness to the Bank or any other financial
institution constituting "Senior Debt" hereunder; (B) indebtedness
outstanding on the date hereof; (C) indebtedness represented by the
Debentures (and any replacement Debenture or Debentures issued upon
transfer or exchange of the Debentures); (D) indebtedness represented by
the Class A Accrued Interest Debentures (and any replacement Class A
Accrued Interest Debenture or Class A Accrued Interest Debentures issued
upon transfer or exchange of the Class A Accrued Interest Debentures); (E)
indebtedness represented by the Class B Accrued Interest Debentures (and
any replacement Class B Accrued Interest Debenture or Class B Accrued
Interest Debentures issued upon transfer or exchange of the Class B Accrued
Interest Debentures); and (F) other indebtedness for borrowed money
(whether or not constituting a refinancing of existing indebtedness) so
long as (x) such indebtedness is not secured by collateral securing
repayment of the Debentures, (y) such indebtedness contains provisions
reasonably satisfactory to the Majority Holders subordinating the payment
of principal and interest thereon to the prior payment of principal and
interest on the Debentures, and (z) the incurrence of which will not cause
an Event of Default, or an event which with notice or the lapse of time or
both would constitute an Event of Default, hereunder (collectively,
"Permitted Indebtedness");
(ii) create, incur, assume or suffer to exist, any mortgage,
pledge, lien or encumbrance of or upon or security interest in, any of its
property or assets now owned or hereafter acquired except (A) mortgages,
liens, pledges and security interests securing Permitted Indebtedness; (B)
other liens, charges and encumbrances incidental to the conduct of its
business or the ownership of its property and assets which are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit and which do not materially impair the use thereof in the operation
of its business; (C) liens for taxes or other governmental charges which
are not delinquent or which are being contested in good faith and for which
a reserve shall have been established in accordance with GAAP; (D) liens
granted to secure purchase money financing of equipment, provided such
liens are limited to the equipment financed; and (E) liens granted to
refinance unencumbered equipment provided such liens are limited to the
equipment refinanced and the incurrence of which will not cause a default
hereunder or in any Senior Debt;
(iii) assume, endorse, be or become liable for or guarantee the
obligations of any other person except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(iv) (A) terminate any pension plan so as to result in any
material liability to The Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (B) engage in or
permit any person to engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended) involving any pension plan which would subject the Company to
any material tax, penalty or other liability, (C) incur or suffer to exist
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, involving any pension plan, or (D) allow or
suffer to exist any event or condition, which presents a material risk of
incurring a material liability to the PBGC by reason of termination of any
pension plan;
(v) amend, supplement or modify the terms of the Subject
Securities or increase the outstanding amount of any Subject Securities
(excluding awards granted under the Plan or under an incentive compensation
plan or arrangement approved by the Company's Board of Directors or by the
Compensation Committee of the Company's Board of Directors) without the
prior consent of the Majority Holders;
(vi) enter into any merger or consolidation unless the Company
shall be the surviving entity in any such merger or consolidation, and
after giving effect to the transaction no Event of Default and no event
which with the giving of notice or passage of time or both would constitute
an Event of Default shall have occurred and be continuing, or liquidate,
wind-up or dissolve itself or sell, transfer or lease or otherwise dispose
of all or any substantial part of its assets;
(vii) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except (A) investments in United States
Government obligations and certificates of deposit of any bank institution
with combined capital and surplus of at least $200,000,000, (B) trade
credit, (C) security deposits, or acquire or otherwise cause any other
entity to become a subsidiary of the Company (as used herein the term
"subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of which the Company or any other
subsidiary of the Company beneficially owns a majority of the voting or
economic interests), and (D) loans outstanding on the date hereof;
(viii) declare or pay any dividends or distributions on account
of its capital stock or purchase, redeem, retire or otherwise acquire any
of its capital stock or any securities convertible into, exchangeable for,
or giving any person the right to acquire or otherwise subscribe for, any
shares of the Company's capital stock; provided, however, that so long as
no Event of Default or event which, with the giving of notice, the lapse of
time, or both would constitute an Event of Default hereunder has occurred
and is continuing, the Company may pay regular quarterly dividends on the
Preferred Stock in accordance with the terms thereof; or
(ix) engage in any transaction with any person or entity who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company (an
"Affiliate"), other than director and compensation arrangements with
Affiliates serving as officers and/or directors of the Company approved by
the Company's Board of Directors and other than transactions with
Affiliates entered into in the ordinary course of business on terms which
are at least as favorable to the Company as those available from unrelated
third parties. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of the Company, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlled"
and "controlling" have meanings correlative thereto.
8. Events of Default.
(a) Definition. For the purposes of this Debenture, an Event of
Default hereunder will be deemed to have occurred if:
(i) the Company fails to pay the principal amount of this
Debenture when due (whether upon the Due Date, upon acceleration or
otherwise), whether or not such payment is prohibited by paragraph 4
hereof;
(ii) the Company fails to pay any interest, premium or
penalty on this Debenture when due and such failure has continued for
a period of ten (10) days;
(iii) the Company fails to perform or observe the provisions
set forth in Paragraphs 7(b) or 7(c) hereof;
(iv) the Company fails to perform or observe any provision
contained in this Debenture (other than those specifically covered by
the other provisions of this paragraph 8(a)) and, if such failure is
capable of being cured, such failure continues for a period of 30 days
after the Company's receipt of written notice thereof;
(v) the Company shall have failed to pay when due any amount
due and owing under any indebtedness of the Company for borrowed money
or any other default or event of default shall have occurred (and
shall have continued beyond the expiration of any applicable grace
period) under any indebtedness of the Company for borrowed money which
would permit the holder thereof to accelerate the maturity thereof or
there shall have been an acceleration of the stated maturity of any
indebtedness of the Company for borrowed money;
(vi) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is
entered adjudicating the Company as bankrupt or insolvent; or any
order for relief with respect to the Company is entered under the
Federal Bankruptcy Code; or the Company petitions or applies to any
tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Company or of any substantial part of the assets of
the Company, or commences any proceeding relating to the Company under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction
("Insolvency Event or Proceeding"); or any such petition or
application is filed, or any such proceeding is commenced, against the
Company and either (y) the Company by any act indicates its approval
thereof, consents thereto or acquiescence therein or (z) such petition
application or proceeding is not dismissed within 60 days;
(vii) a final judgment which in the aggregate with other
outstanding final judgments against the Company exceeds $250,000 shall
be rendered against the Company and within 90 days after entry
thereof, such judgment is not discharged or execution thereof stayed
pending appeal, or within 90 days after the expiration of such stay,
such judgment is not discharged; or
(viii) any representation or warranty made by the Company in
the Purchase Agreement, dated October 21, 1998 between the Company and
the original Holder of this Debenture or any other certificate or
instrument delivered in connection therewith shall have been untrue in
any material respect when made.
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described
in subparagraph 8(a)(vi) above) has occurred, the Holder or Holders of
Debentures representing a majority of the aggregate principal amount
of Debentures then outstanding (the "Majority Holders") may demand (by
written notice delivered to the Company) immediate payment of all or
any portion of the outstanding principal amount of the Debentures owed
by such Holder or Holders. If such Majority Holders demand immediate
payment of all or any portion of such Holder's or Holders' Debentures,
the Company will, to the extent permitted under the provisions of
paragraph 4 hereof, immediately pay to such Holder or Holders the
principal amount of the Debentures requested to be paid (plus accrued
interest hereon). If an Event of Default of the type described in
subparagraph 8(a)(vi) above has occurred, then all of the outstanding
principal amount of the Debentures shall automatically be immediately
due and payable without any action on the part of any Holders of the
Debentures.
(ii) If an Event of Default has occurred, each Holder of the
Debentures will also have any other rights which such Holder may have
pursuant to applicable law, in each case provided such rights are
consistent with the provisions of paragraph 4 hereof.
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, 00 Xxxxxxx Xxxxx, Xxxxxxx,
Xxx Xxxx 00000, or to such other address or to the attention of such other
Person as specified by prior written notice to the Company.
12. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof or of any other Debentures
to exercise any right or remedy hereunder with respect to the Company, whether
before or after the happening of an Event of Default, shall constitute a waiver
of any future Event of Default or of any other Event of Default. No failure to
accelerate the debt of the Company evidenced hereby by reason of an Event of
Default or indulgence granted from time to time shall be construed to be a
waiver of the right to insist upon prompt payment thereafter; or shall be deemed
to be a novation of this Debenture or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right the Holder may have,
whether by the laws of the state governing this Debenture, by agreement or
otherwise; and the Company hereby expressly waives the benefit of any statute or
rule of law or equity that would produce a result contrary to or in conflict
with the foregoing.
13. Usury. The Holder and the Company intend that the obligations
evidenced by this Debenture conform strictly to the applicable usury laws from
time to time in force. All agreements between the Company and the Holder,
whether now existing or hereafter arising and whether oral or written, hereby
are expressly limited so that in no contingency or event whatsoever, whether by
acceleration of maturity hereof or otherwise, shall the amount paid or agreed to
be paid to the Holder, or collected by the Holder, by or on behalf of the
Company for the use, forbearance or detention of the money to be loaned to the
Company hereunder or otherwise, or for the payment or performance of any
covenant or obligation contained herein of the Company to the Holder, or in any
other document evidencing, securing or pertaining to such indebtedness evidenced
hereby, exceed the maximum amount permissible under applicable usury law. If
under any circumstances whatsoever fulfillment of any provision hereof or any
other document, at the time performance of such provisions shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity;
and if under any circumstances the Holder ever shall receive from or on behalf
of the Company an amount deemed interest, by applicable law, which would exceed
the highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the Company's
principal amount owing hereunder and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and such other
indebtedness, the excess shall be deemed to have been a payment made by mistake
and shall be refunded to the Company or to any other person making such payment
on the Company's behalf.
14. Governing Law. The validity, construction and interpretation of
this Debenture will be governed by the internal laws, but not the law of
conflicts and choices of law, of the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered this Class
C 13% Convertible Senior Subordinated Debenture this 21st day of October, 1998.
LOGIMETRICS, INC.
By: __________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Operating Officer
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.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
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__
