EXHIBIT 10.7
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT ("Agreement"), dated March 7, 1996,
as amended and restated as of July 29, 1997, among LOGIMETRICS, INC., a Delaware
corporation ("Borrower"), and CERBERUS PARTNERS, L.P., a Delaware limited
partnership ("Cerberus"), as Agent (in such capacity, the "Agent") for itself
and any other persons who become Holders (as defined below) of any Debentures
(as defined below).
INTRODUCTION
The Borrower has previously issued a series of 12% Convertible Senior
Subordinated Debentures due 1998 (collectively, the "Old Debentures"). As
required under the Old Debentures, the obligations of the Borrower to the holder
of the Old Debentures were secured by liens against assets of the Borrower
pursuant to this Agreement.
In connection with certain waivers granted by the holder of the Old
Debentures, the Borrower issued to such holder certain interest notes
(collectively, the "Old Interest Notes") which also were secured by liens
against assets of the Borrower pursuant to this Agreement.
The Borrower intends to issue (i) up to $3,583,333 in aggregate principal
amount of its Class A 13% Convertible Senior Subordinated Pay-in-Kind Debentures
due 1999 (the "Class A Debentures"), (ii) $1,500,000 in aggregate principal
amount of its Amended and Restated Class B 13% Convertible Senior Subordinated
Pay-in-Kind Debentures due 1999 (the "Class B Debentures") in exchange for the
surrender of the Old Debentures, and (iii) $45,000 in aggregate principal amount
of its 13% Senior Subordinated Interest Notes (the "Interest Notes") in exchange
for the surrender of the Old Interest Notes.
Pursuant to the terms of the Class A Debentures, in lieu of cash interest
otherwise payable thereon, the Company will issue to the holders of the Class A
Debentures additional Class A Debentures (the "Class A Accrued Interest
Debentures"). Pursuant to the terms of the Class B Debentures, in lieu of cash
interest otherwise payable thereon, the Company will issue to the holders of the
Class B Debentures additional Class B Debentures (the "Class B Accrued Interest
Debentures").
Pursuant to the terms of the Class A Debentures, the Class B Debentures,
the Class A Accrued Interest Debentures, the Class B Accrued Interest Debentures
and the Interest Notes (each, a "Debenture" and, collectively, the
"Debentures"), the obligations of the Company to the Holders of the Debentures
are to be secured by liens on assets of the Company. Accordingly, the Company
and Cerberus hereby agree to amend and restate this Agreement as provided
herein.
NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
1. Definitions.
1.1 Defined Terms. Capitalized terms in this Agreement shall be
defined as follows (and as defined elsewhere in this Agreement):
"Agent" means Cerberus as agent for the Holders pursuant to this
Agreement, or such other Person as shall have been subsequently appointed as a
successor agent pursuant to this Agreement.
"Collateral" means all personal property and fixtures in which the
Borrower has or shall have an interest, now or hereafter existing, created or
acquired, and wherever located, tangible or intangible, including but not
limited to all present and hereafter existing or acquired "accounts", "general
intangibles", "equipment", "goods", "inventory" (including raw materials,
components, work-in process, finished merchandise and packing and shipping
materials), "chattel paper", "documents" and "instruments" (as those terms are
defined in the UCC), and money, documents, securities, deposits, books and
records pertaining to intangible Collateral regardless of the form in which
records are maintained, patents and patent rights, trademarks, copyrights,
credits, claims and demands against the Agent or any Holder, and all proceeds,
products, returns, additions, accessions and substitutions of and to any of the
foregoing.
"Class A Holders" means the Holders of the Class A Debentures.
"Class A Majority Holders" means the Holders of at least a majority in
aggregate principal amount of the Class A Debentures and Class A Accrued
Interest Debentures, taken as a whole, outstanding at the time of determination
of such majority.
"Class B Holders" means the Holders of the Class B Debentures.
"Class B Majority Holders" means the Holders of at least a majority in
aggregate principal amount of the Class B Debentures, Class B Accrued Interest
Debentures and Interest Notes, taken as a whole, outstanding at the time of
determination of such majority.
"Holder" shall mean any registered holder of a Debenture.
"Loan Documents" means the Debentures, this Agreement and any other
agreement, assignment or document executed in connection with the Debentures.
"Obligations" means all indebtedness, obligations, liabilities, and
guarantees of any kind of the Borrower to the Agent or any Holders arising
under, or in connection with, any of the Debentures or any other Loan Document,
now existing or hereafter arising, and whether direct or indirect, acquired
outright, conditionally or as collateral security from another, absolute or
contingent, joint or several, secured or unsecured, due or not due, contractual
or tortious, liquidated or unliquidated, arising by operation of law or
otherwise, whether or not of a nature presently contemplated by the parties or
subsequently agreed to by them including, without
limitation, all principal, interest, expenses, other sums, duties and
obligations owing from time to time under the Debentures.
"Senior Debt" is defined in the Debentures.
"Senior Lender" means North Fork Bank and any successor lender permitted
under the Debentures.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York from time to time.
1.2 Rules of Construction. In this Agreement, unless specified otherwise:
a. "Any" means "any one or more"; "including" means "including without
limitation"; "or" means "and/or".
b. Singular words include plural, and vice versa.
c. Headings are for convenience only, and do not affect the meaning of
any provision;
d. Reference to an agreement includes reference to its permitted
supplements, restatements, amendments and other modifications.
e. Reference to a law includes reference to any amendment or
modification of the law and to any rules or regulations issued thereunder.
f. Reference to a person includes reference to its permitted
successors and assigns in the applicable capacity.
g. Reference to a Section, Exhibit, or Schedule signifies reference to
a Section, Exhibit, or Schedule of this Agreement, unless the context
clearly indicates otherwise.
h. "Hereunder," "hereto," "hereof," "herein," and like words, refer to
the whole of this Agreement rather than to a particular part hereof, unless
the context clearly indicates otherwise.
1.3 No Strict Construction. The parties acknowledge that this Agreement and
the other Loan Documents have been prepared jointly, and shall not be strictly
construed against any party.
2. Grant of Security Interest.
The Borrower hereby grants to the Agent, for its benefit and the equal
and ratable benefit of the Holders, a valid and binding security interest
(subject to that pre-existing first security interest in the Collateral held by
the Senior Lender) in, and assigns and pledges to the Agent, for its benefit and
the benefit of the Holders, the Collateral as security for the full payment,
performance, and observance by the Borrower of the Obligations. The Borrower
hereby agrees to transfer and deliver to the Agent all Collateral which the
Agent is required or entitled to take possession of in order to perfect the
security interests, assignments and pledges therein.
3. Warranties and Agreements. The Borrower warrants and agrees that:
(a) Collateral location and use. The Borrower's chief executive offices
and place of business, its financial books and records relating to the
Collateral, and the Collateral, are located at its address for notices contained
in Section 15 of this Agreement. The Borrower will not relocate any of the
Collateral from said location without the proper written consent of the Class A
Majority Holders and the Class B Majority Holders. The Collateral was or will be
acquired by the Borrower solely for use in its business at said location, and
the Collateral is not and shall not be used for any other use.
(b) Existing liens, security interests, and encumbrances. The Borrower
is the legal owner of all interest in the Collateral and shall keep the
Collateral free and clear of liens, security interests, or encumbrances, and
will not assign, sell, mortgage, lease, transfer, pledge, grant a security
interest in, encumber or otherwise dispose of or abandon any part or all of the
Collateral without the prior written consent of the Agent, except for (i) the
sale from time to time in the ordinary course of business of the Borrower of
such items of Collateral as may constitute all or part of the business inventory
of the Borrower, (ii) the security interests granted herein (iii) that certain
senior security interest granted by the Borrower to the Senior Lender to secure
the Senior Debt in an amount not to exceed $3,000,000 and (iv) any other liens
expressly permitted under section 7(c)(ii) of the Debentures.
(c) Taxes, compliance with laws. The Borrower will make due and timely
payment or deposit of all taxes, assessments, or contributions required by law
which may be lawfully levied or assessed with respect to any of the Collateral
and will execute and deliver to the Agent, on demand, appropriate certificates
attesting to the timely payment or deposit of all such taxes, assessments or
contributions. The Borrower will use the Collateral for lawful purposes only,
and with all reasonable care and caution, and in conformity with all applicable
laws, ordinances and regulations. At its own cost and expense the Borrower will
keep the Collateral in proper order, repair, and condition.
(d) Inspection. The Agent (and its designees) shall at all times have
free access to and the right of inspection of any part or all of the Collateral
and any records of the Borrower (and the right to make extracts from such
records), and the Borrower shall deliver to the Agent the originals or true
copies of such papers and instruments relating to any or all of the Collateral
as the Agent, may request at any time.
(e) Collateral to remain personal property. The Collateral is now and
shall be and remain personal property, notwithstanding the manner in which the
Collateral or any part thereof shall be now or hereafter affixed, attached or
annexed to real property. The Borrower will obtain and deliver to the Agent such
instruments as may be requested by the Agent pursuant to which any person with
an interest in any real estate upon which any part of all of the tangible
Collateral is now or may hereafter be located consents to the security interest
granted herein, disclaims any interest in the tangible Collateral as fixtures,
waives in favor of the Agent (as agent and the Holders) all right to distrain or
levy upon the Collateral for rent due or to become due from the Borrower, and
authorizes the Agent (and its designees) to enter upon any premises of the
Borrower at any time and to remove the Collateral.
(f) Insurance. The Borrower, at its own cost and expense, will insure
the Collateral in the name of the Agent (as agent for the Holders) and, if
required under the documents evidencing the Senior Debt, the Senior Lender, as
their respective interests may appear, against loss or damage by fire and
extended coverage, theft, burglary, pilferage, bodily injury and such other
risks as the Agent may require, with such companies and in such amounts, but not
less than the replacement value of tangible collateral, as may be required by
the Agent at any time in its sole discretion. All such policies shall (a) name
the Agent (as agent for the Holders) and, if required under the documents
evidencing the Senior Debt, the Senior Lender as the sole loss payees as to any
casualty insurance and provide that no claim for loss or damage may be settled,
adjusted or comprised without the prior written consent of the Agent and (b)
name the Agent (as agent for the Holders) as an "additional insured" as to any
liability insurance. All such policies shall further provide for 30 days'
minimum written notice of modification or cancellation to the Agent, together
with duplicate premium notices to the Agent, and the Borrower shall deliver to
the Agent the original or duplicate policies, or certificates or other evidence
satisfactory to the Agent, of compliance with the foregoing insurance
provisions. The Borrower assumes all responsibility and liability arising from
the use of the Collateral, either for negligence or otherwise, by whomsoever
used, employed or operated, and will defend, indemnify and save the Agent and
the Holders (and their respective officers, directors, employees, and agents)
harmless from any and all claim, loss or damage to persons or property caused by
the Collateral or by its use and operation. The Agent may, but shall not be
obligated, to pay any premium with respect to any such insurance which the
Borrower shall fail to timely pay.
(g) Maintain security interests, reports. In addition to all other
provisions hereof, the Borrower will from time to time at the sole expense of
the Borrower, perform any and all steps and/or procedures requested by the Agent
at any time to perfect and maintain the Agent's (and the Holders') security
interest in the Collateral, including but not limited to transferring any part
or all of the Collateral to the Agent or any nominee of the Agent including
delivering the collateral to warehouses, placing and maintaining signs,
appointing custodians, executing and filing financing statements and notices of
lien, delivering to the Agent documents of title representing the Collateral or
evidencing the Agent's security interest in any other manner acceptable to and
requested by the Agent. If requested by the Agent, the Borrower will from time
to time execute and deliver to the Agent assignments of accounts in form
satisfactory to the Agent, but should the Borrower fail in any one or more
instances to execute and deliver any such assignments of accounts, such failure
shall not constitute a waiver or
limitation of the within security interest in all of the Collateral (including
said accounts) which shall remain in full force and effect.
At the request of the Agent, the Borrower shall deliver to the Agent
all original documents evidencing the sale and delivery of merchandise or the
performance of labor or services which created any account, including but not
limited to all original contracts, orders, invoices, bills of lading, warehouse
receipts and shipping receipts, together with all collateral security and/or
guarantees or other contracts of suretyship held by the Borrower in respect of
the accounts, together with assignments of any of the foregoing where requested
by the Agent.
If at any time any part or all of the Collateral shall be in the
possession or control of any of the Borrower's bailees, agents, or processors,
the Borrower will notify such persons of the Agent's and Holders' security
interest therein and upon the Agent's request, the Borrower will instruct such
persons to hold all such Collateral for the Agent's and Holders' account and
subject to the Agent's instructions and the Borrower will obtain and deliver to
the Agent such instruments requested by the Agent pursuant to which such persons
consent to the security interest granted herein, disclaim any interest in the
Collateral, waive in favor of the Agent and the Holders all liens upon and
claims to the Collateral or any part thereof, and authorize the Agent at any
time to enter upon and remove the Collateral from any premises upon which the
same may be located.
(h) Further documentation. The Borrower shall, at its sole cost and
expense, simultaneously herewith and upon the request of the Agent, at any time
and from time to time, execute and deliver to the Agent one or more financing
statements pursuant to the UCC, and any other papers, documents or instruments
required by the Agent in connection herewith. The Borrower hereby authorizes the
Agent to execute and file, at any time and from time to time, on behalf of the
Borrower, one or more financing statements with respect to all or any part of
the Collateral, the filing of which is advisable, in the sole judgment of the
Agent, the Class A Majority Holders or the Class B Majority Holders, pursuant to
the law of the State of New York, although the same may have been executed only
by the Agent as secured party. The Borrower also irrevocably appoints the Agent,
its agents, representatives and designees, as the Borrower's agent and
attorney-in-fact, to execute and file, from time to time, on behalf of the
Borrower, one or more financing statements with respect to all or any part of
the Collateral, and to take such other steps as the Agent, the Class A Majority
Holders or the Class B Majority Holders reasonably determine are necessary or
desirable to perfect its or the Holders' liens in any Collateral and exercise
their rights and remedies under this Agreement and the other Loan Documents,
including any filings deemed necessary or advisable under federal patent,
trademark or copyright laws.
(i) Bona fide accounts. The Borrower warrants to the Agent and the
Holders that each of the account debtors obligated on any account has legal
capacity to contract and is indebted to the Borrower in the full amount
indicated in the books and records of the Borrower and in any assignments
executed and delivered to the Agent; that each account is bona
fide and arises out of the sale and delivery of merchandise and/or the
performance of labor or services.
(j) Collection of accounts. Upon and following the occurrence of an
event of default as hereinafter defined, all bills and statements sent to any
customer or any account shall state that said account has been assigned to the
Agent (as agent for the Holders) and is to be paid directly to the Agent at such
address as the Agent may designate. The Agent may endorse the name of the
Borrower on all notes, checks, drafts, xxxx of exchange, money orders,
commercial paper of any kind whatsoever, and any other document or general
intangible received in payment of or in connection with accounts or otherwise,
and the Agent or any officer or employee thereof, is hereby irrevocably
constituted and appointed the agent and attorney-in-fact for the Borrower for
the foregoing purpose, and to receive, open and dispose of all mail addressed to
the Borrower, and to notify the Post Office authorities to change the address
for the delivery of mail addressed to the Borrower to such address(es) as the
Agent may designate. Any bank or trust company is hereby irrevocably authorized
to permit the Agent to deposit the proceeds of accounts so endorsed and to
withdraw the same without inquiry as to the circumstances of endorsement or as
to the purpose of withdrawal, and without being required to answer for the
application by the Agent of the monies so withdrawn. The proceeds of accounts,
received by the Agent, shall be applied to the Obligations but shall not
constitute payment thereof until so applied, it being agreed that the order and
method of such application shall be in the discretion of the Agent. From and
after the occurrence of an event of default, any proceeds of an account or
general intangible received by the Borrower shall be held in trust and paid over
to the Agent in the exact form received, duly endorsed to the order of the Agent
if payable to the Borrower.
(k) Settlement of accounts. The Agent is authorized and empowered to
compromise or extend the time for payment of any of the Collateral, for such
amounts and upon such terms as the Agent may determine, and to accept the return
of goods represented by any of the Collateral, all without notice to or consent
by the Borrower and without discharging or affecting the obligations of the
Borrower hereunder.
(l) Payment of debtor's obligations, reimbursement. The Agent may in
its discretion or at the direction of either the Class A Majority Holders or the
Class B Majority Holders (but the Agent shall have no obligation to), for the
account and expense of the Borrower (i) pay any amount or do any act which is
required to be paid or done by the Borrower under this Agreement (including but
not limited to the repair and insuring of Collateral and payment of taxes) and
which the Borrower fails to do or pay as herein required, (ii) pay any sums due
and owing by the Borrower to the landlord of any premises where any Collateral
is located, and (iii) pay or discharge any lien, security interest or
encumbrance in favor of anyone other than the Agent (or any Holders) which
covers or affects the Collateral or any part thereof. The Borrower will promptly
reimburse and pay the Agent (or any Holders) for any and all sums, costs, fees,
and expenses which the Agent (or any Holders) may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
priority thereof or in enforcing payment of the Obligations or in discharging
any lien or claim against the Collateral or any part thereof or in the exchange,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof or for the care of the Collateral, by litigation or otherwise,
and with respect to either the Borrower, account debtors, guarantors of the
Borrower and other persons, including but not limited to all court costs,
collection charges, travel, and reasonable attorneys' fees and all reasonable
expenses (including reasonable counsel fees) incident to the enforcement of
payment of any obligations of the Borrower by any action or participation in, or
in connection with, a case or proceeding under chapters 7, 11 or 13 of the
Bankruptcy Code, or any successor statute thereto. All sums paid and all costs,
expenses and liabilities incurred by the Agent (or any Holders) pursuant to the
foregoing provisions, together with interest thereon at any default rate in
effect under the Debentures, shall be added to and become part of the
Obligations secured hereby.
(m) Comply with Debentures. The Borrower shall comply with all terms
and conditions of the Debentures and all other Loan Documents.
4. Transfer of Collateral.
Upon and following the occurrence of an event of default as hereinafter
defined, the Agent may, at the direction of either the Class A Majority Holders
or the Class B Majority Holders, whether or not any of the Obligations be due,
in its name or in the name of the Borrower or otherwise, notify any account
debtor or the obligor on any instrument to make payment to the Agent, demand,
xxx for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for, or make any compromise or
settlement deemed desirable by the Agent with respect to, any of the Collateral,
but shall be under no obligation to do so, and/or the Agent, acting at the
direction of the Class A Majority Holders and the Class B Majority Holders, may
extend the time of payment, arrange for payment in installments, or otherwise
modify the terms of, or release any of the Collateral, without thereby incurring
responsibility to, or discharging or otherwise affecting any liability of, the
Borrower. If at any time any Holder should transfer its interest in any
Debentures, or the Agent should resign and that resignation becomes effective as
permitted under this Agreement, that Holder or the Agent, as the case may be,
shall be fully discharged from all responsibility to the Borrower with respect
to its interest in the Collateral.
5. Defaults.
The occurrence of any one or more of the following events shall
constitute an event of default by the Borrower under this Agreement:
(a) any "Event of Default" shall occur and be continuing under any of
the Debentures or any other Loan Document;
(b) if at any time the Class A Majority Holders or the Class B Majority
Holders consider the Collateral or any part thereof unsatisfactory or
insufficient, and the Borrower shall on demand fail to furnish other Collateral
or make payment on account, satisfactory to both the Class A Majority Holders
and the Class B Majority Holders;
(c) if any warranty, representation or statement of fact made herein or
furnished to the Agent (or any Holders) at any time by or on behalf of the
Borrower proves to have been false in any material respect when made or
furnished;
(d) in the event of loss, theft, substantial damage or destruction of
any of the Collateral or the making of any levy on, seizure or attachment of any
of the Collateral; or
(e) if the Borrower fails to observe or perform any of its covenants
contained herein, and such failure continues for 30 days after receipt by the
Borrower of notice thereof; or
(f) if the Borrower shall execute or file a certificate or other
instrument evidencing the legal change of name of the Borrower or commence using
a tradename or change the address of its chief executive offices or any address
where any Collateral is located or books and records are maintained without
furnishing the Agent at least 15 business days' prior written notice thereof..
6. Remedies on Default.
Upon the occurrence of an event of default relating to the bankruptcy
or insolvency of the Borrower shall occur, all Obligations shall automatically,
without notice or demand, be immediately due and payable; upon the occurrence of
any other event of default or at any time thereafter, the Agent may, at the
direction of either the Class A Majority Holders or the Class B Majority Holders
without notice to or demand upon the Borrower, declare the Obligations owed to
the Class A Holders or the Class B Holders, as applicable, immediately due and
payable and the Agent (for the benefit of the Holders) shall have the following
rights and remedies in addition to all rights and remedies of a secured party
under the Uniform Commercial Code or other applicable statute or rule, in any
jurisdiction in which enforcement is sought and all other rights and remedies
under any other Loan Document or other agreement involving any Agent and the
Borrower, all such rights and remedies being cumulative and not exclusive, and
exercisable in any order and in any combination, at the direction of the Class A
Majority Holders or the Class B Majority Holders:
(a) The Agent may institute proceedings to collect all Obligations
from the Borrower or anyone else who may be responsible for the payment of any
Obligations.
(b) The Agent may, at any time and from time to time, with or
without process of law and with or without the aid and assistance of others,
enter upon any premises in which the Collateral or any part thereof may be
located and, without resistance or interference by the Borrower, take possession
of the Collateral; and/or dispose of all or any part of the Collateral on any
premises of the Borrower; and/or require the Borrower to assemble and make
available to the Agent all or any part of the Collateral at any place and time
designated by the Agent which is reasonably convenient to the Agent and the
Borrower; and/or remove all or any part of the Collateral from any premises on
which any part thereof may be located for the purpose of effecting preservation
or sale or other disposition thereof; and/or sell, resell, lease, assign and
deliver, or otherwise dispose of, the Collateral or any part thereof in its
existing condition or following any commercially reasonable preparation or
processing, at public or private proceedings, in one or more parcels at the same
or different times with or without having the Collateral at the place of sale or
other disposition for cash, upon credit or for future delivery, and in
connection therewith the Agent may grant options, at such place or places and
time or times and to such persons, firms or corporations as the Agent deems
best, and without demand for performance or any notice or advertisement to the
Borrower of the place and time of any public sale or of the place and time after
which any private sale or other disposition may be made, and/or liquidate or
dispose of the Collateral or any part thereof in any other commercially
reasonable manner.
If any of the Collateral is sold by the Agent upon credit or for
future delivery, the Agent shall not be liable for the failure of the purchaser
to purchase or pay for the same and, in the event of any such failure, the Agent
may resell such Collateral. The Borrower hereby waives all equity and right of
redemption. The Agent may buy any part or all of the Collateral at any public
sale and if any part of all of the Collateral is of a type which is the subject
of widely distributed standard price quotations the Agent may buy at private
sale, all free from any equity or right of redemption which is hereby waived and
released by the Borrower, and the Agent may make payment therefor (by
endorsement without recourse) in notes of the Borrower to the order of the Agent
in lieu of cash to the amount then due thereon which the Borrower hereby agrees
to accept.
(c) The Agent (and any Holder acting at the direction of the Class
A Majority Holders or the Class B Majority Holders) may appropriate, set off and
apply for the payment of any or all of the Obligations for the ratable benefit
of the Holders, any and all balances, sums, property, claims, credits, deposits,
accounts, reserves, collections, drafts, notes, or other items or proceeds of
the Collateral in or coming into the possession of the Agent or its agents and
belonging or owing to the Borrower, without notice to the Borrower, and in such
manner as the Agent may in its sole discretion determine.
(d) Collect accounts receivable and any other sums owing to the
Borrower directly, or through an agent or designee, or in the name of the
Borrower.
(e) Any of the proceeds of the Collateral received by the Borrower
shall not be commingled with other property of the Borrower, but shall be
segregated, held by the Borrower in trust for the Agent (as agent for the
Holders) as the exclusive property of the Agent (as agent for the Holders), and
the Borrower will immediately deliver to the Agent the identical checks, moneys
or other proceeds of Collateral received, and the Agent shall have the right to
endorse the name of the Borrower on any and all checks, or other forms of
remittance received, where such endorsement is required to effect collection.
The Borrower hereby designates, constitutes and appoints the Agent and any
designee or agent of the Agent as attorney-in-fact of the Borrower, irrevocably
and with power of substitution, with authority to receive, open and dispose of
all mail addressed to the Borrower, to notify the Post Office authorities to
change the address for delivery of mail addressed to the Borrower, to such
address as the Agent may designate; to endorse the name of the Borrower on any
notes, acceptances, checks, drafts, money
orders or other evidences of payment or proceeds of the Collateral that may come
into the Agent's possession; to sign the name of the Borrower on any invoices,
documents, drafts against account debtors of the Borrower, assignments, requests
for verification of accounts and notices to debtors of the Borrower; to execute
any endorsements, assignments, or other instruments of conveyance or transfer;
and to do all other acts and things necessary and advisable in the sole
discretion of the Agent to carry out and enforce this Agreement. All acts of
said attorney or designee shall not be liable for any acts of commission or
omission nor for any error of judgment or mistake of fact or law. This power of
attorney being coupled with an interest is irrevocable while any of the
Obligations shall remain unpaid.
7. Liability Disclaimer.
Under no circumstances whatsoever shall the Agent or any Holder be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Collateral, of any nature or kind whatsoever, or any
matter or proceedings arising out of or relating thereto. The Agent (and the
Holders) shall not be required to take any action of any kind to collect or
protect any interest in the Collateral, including but not limited to any action
necessary to preserve their, or the Borrower's rights against prior parties to
any of the Collateral. The Agent (and the Holders) shall not be liable or
responsible in any way for the safekeeping, care or custody of any of the
Collateral, or for any loss or damage thereto, or for any diminution in the
value thereof, or for any act or default of any agent or bailee of the Agent or
the Borrower, or of any carrier, forwarding agency or other person whomsoever,
or for the collection of any proceeds, but the same shall be at the Borrower's
sole risk at all times. The Borrower hereby releases the Agent and the Holders
from any claims, causes of action and demands at any time arising out of or with
respect to this Agreement or the Obligations, and any actions taken or omitted
to be taken by the Agent or any Holders with respect thereto, and the Borrower
agrees to defend and hold the Agent and the Holders harmless from and with
respect to any and all such claims, causes of action and demands. The Agent's
and the Holder's prior recourse to any part of all of the Collateral shall not
constitute a condition of any demand for payment of the Obligations or of any
suit or other proceeding for the collection of the Obligations. This provision
is not intended to limit the Agent's responsibility to the Holders as provided
in Section 9.
8. Application of Proceeds. Upon the occurrence and during the
continuance of an event or default (as described above), the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied by the Agent in the following order of priorities, (subject to the prior
right, if any, of the holders of the Senior Debt to those proceeds):
first, to payment of the reasonable out-of-pocket expenses of
such sale or other realization, including reasonable compensation to
agents and counsel for the Agent, and all reasonable out-of-pocket
expenses, liabilities and advances incurred or made by the Agent in
connection therewith, and any other unreimbursed expenses for which
the Agent or any Holder is to be reimbursed pursuant to the
Debentures, this Agreement or any corresponding provision of any of
the other Loan Documents;
second, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Obligations;
third, to the ratable payment of unpaid principal of the
Obligations;
fourth, to the ratable payment of all other Obligations, until
all such Secured Obligations shall have been paid in full; and
finally, to payment to the Borrower or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
9. The Agent.
9.1 Actions. Unless a specific provision of this Agreement provides
that the Agent shall act only upon written directions or instructions from a
specific percentage thereof, the Agent shall be deemed to be authorized on
behalf of each Holder to act on behalf of such Holder under this Agreement and
any other Loan Document and, in the absence of written instructions from both
the Class A Majority Holders and the Class B Majority Holders received from time
to time by the Agent (with respect to which the Agent agrees that it will,
subject to the last two sentences of this section 9.1, comply, except as
otherwise advised by counsel, to exercise such powers hereunder and thereunder
as are specifically delegated to or required of the Agent by the terms hereof
and thereof, together with such powers as may be reasonably incidental thereto.
The Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement or any other Loan Document by
the Borrower. By accepting their Debentures, each Holder shall be deemed to have
agreed to indemnify the Agent (which agreement shall survive any termination of
such Holder's percentage), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of this Agreement, the Debentures or any other Loan Document,
including the reimbursement of the Agent for all out-of-pocket expenses
(including attorneys' fees) incurred by the Agent hereunder or in connection
herewith or in enforcing the Obligations of the Borrower under this Agreement or
any other Loan Document, in all cases as to which the Agent is not reimbursed by
the Borrower; provided that no Holder shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or willful misconduct. The Agent shall not be required
to take any action hereunder or under any other Loan Document, or to prosecute
or defend any suit in respect of this Agreement or any other Loan Document,
unless the Agent is indemnified to its reasonable satisfaction by the Holders
against loss, costs, liability and expense. If any indemnity in favor of the
Agent shall become impaired, it may call for additional indemnity and cease to
do the acts indemnified against until such additional indemnity is given.
In the event that the Agent following the occurrence of an event of
default hereunder receives instructions from either the Class A Majority Holders
or the Class B Majority Holders, as the case may be, to take any action to
foreclose on or otherwise realize on the Collateral, the other Majority Holders
shall not give any contrary instruction to the Agent and, if any such
instruction is given, it shall have no force and effect.
9.2 Exculpation. Neither the Agent nor any of its directors, officers,
partners, employees or agents shall be liable to any Holder for any action taken
or omitted to be taken by it under this Agreement, the Debentures, or any other
Loan Document, or in connection herewith or therewith, except for its own
willful misconduct or gross negligence. The Agent shall not be responsible to
any Holder for any recitals, statements, representations or warranties herein or
in any certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency of any of the Loan Documents, the
financial condition of the Borrower or the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of any of the Loan
Documents, the financial condition of the Borrower or the existence or possible
existence of any default or event of default. The Agent shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which it believes to be genuine and
to have presented by a proper person.
9.3 Resignation of Agent. The Agent may resign as such at any time upon
at least thirty (30) days' prior notice to the Borrower and all Holders, such
resignation not to be effective until a successor Agent is in place. If the
Agent at any time shall resign, the Class A Majority Holders and the Class B
Majority Holders may jointly appoint another Holder as a successor Agent which
shall thereupon become the Agent hereunder. If within 30 days after the retiring
Agent's giving notice of resignation, no successor Agent shall have been so
appointed by the Class A Majority Holders and the Class B Majority Holders, and
shall have accepted such appointment, then the retiring Agent may, on behalf of
the Holders appoint a financial institution organized under the laws of the
United States and having a combined capital and surplus of at least
$500,000,000. Should the successor Agent be a financial institution that, in the
ordinary course of its business, serves as agent for lending facilities, the
Borrower shall pay that successor Agent's reasonable fees for serving as
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor Agent
may reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges, and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents.
9.4 Replacement of Agent. The Class A Majority Holders and the Class B
Majority Holders may at any time and for any reason replace the Agent with a
successor Agent jointly selected by them, upon at least ten days written notice
to the Borrower and the other Holders. Should the successor Agent be a financial
institution that, in the ordinary course of its business, serves as agent for
lending facilities, the Borrower shall pay that successor
Agent's reasonable fees serving as an agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the terminated Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges, and duties of
the retiring Agent, and the terminated Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents.
9.5 Debentures Held by the Agent. The Agent shall have the same rights
and powers with respect to the Debentures held by it or any of its affiliates,
as any Holder and may exercise the same as if it were not the Agent. The
Borrower hereby waives, and each Holder shall be deemed to waive, any right to
disqualify any Holder (including Cerberus) from serving as the Agent or any
claim against that Holder for serving as Agent.
9.6 Copies, etc. The Agent shall give prompt notice to each Holder of
each notice or request required or permitted to be given to the Agent by the
Borrower pursuant to the terms of this Agreement. The Agent will distribute to
each Holder each instrument and other Loan Document received for its account and
copies of all other communications received by the Agent from the Borrower for
distribution to the Holders by the Agent in accordance with the terms of this
Agreement. Notwithstanding anything herein contained to the contrary, all
notices to and communications with the Borrower under this Agreement and the
other Loan Documents shall be effected by the Holders through the Agent.
10. Nonwaiver.
No failure or delay on the part of the Agent in exercising any of its
rights and remedies hereunder or otherwise shall constitute a waiver thereof,
and no single or partial waiver by the Agent of any default or other right or
remedy which it may have shall operate as a waiver of any other default, right
or remedy or of the same default, right or remedy on a future occasion.
11. Waivers by Borrower.
The Borrower hereby waives presentment, notice of dishonor and protest
of all instruments included in or evidencing any of the Obligations or the
Collateral and any and all other notices and demands whatsoever (except as
expressly provided herein) whether or not relating to such instruments. In the
event of any litigation at any time arising with respect to any matter connected
with this Agreement or the Obligations, the Borrower hereby waives any and all
defenses, rights of setoff and rights to interpose counterclaims of any nature.
The Borrower also waives any right to assert that the Agent or any Holder has
the duty to marshal any assets in favor of the Borrower or any other party or
against or in payment of any Obligations.
12. Modification.
No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Agreement and to the provision so
modified or limited, and executed by the party to be charged.
13. Binding Effect.
This Agreement and all Obligations of the Borrower hereunder shall be
binding upon the successors or assigns of the Borrower, and shall, together with
the rights and remedies of the Agent and the Holders hereunder, inure to the
benefit of the Agent and the Holders and their respective successors and
assigns.
14. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by the internal laws of the State of New York, without giving effect to
the choice of law rules thereof. The Borrower irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on the
Borrower hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. The Borrower irrevocably consents to
the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The Borrower irrevocably waives any objection
to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
15. Notices. All notices, consents, requests, and other communications
under this Agreement shall be in writing and shall be effective: (a) upon
delivery by hand; (b) one day after being deposited with a recognized overnight
delivery service; or (c) three days after being deposited in the United States
mail, first-class, postage prepaid, registered or certified, return receipt
requested in each case addressed to such party as follows (or to such other
address as hereafter may be designated in writing by such party to the other
party):
If to Borrower:
Logimetrics, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: President
If to the Agent:
Cerberus Partners, L.P.
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
16. Severability.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.
17. No Jury Trial.
Each of Borrower and the Agent (for itself and the Holders) hereby
waives any right to request a trial by jury in any litigation with respect to
any aspect of this Agreement and represents that it has consulted with counsel
specifically with respect to this waiver.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Borrower and the Agent have executed or caused
this Agreement to be executed as of the date first written above.
LOGIMETRICS, INC.
By: /s/Xxxxxxx X. Brand
_________________________
Name:Xxxxxxx X. Brand
Title:Chairman and Chief
Executive Officer
CERBERUS PARTNERS, L.P., as Agent
By:/s/Xxxx X. Xxxxxxx
___________________________
Name: Xxxx X. Xxxxxxx,
Title: Managing Director
