EXHIBIT 10.6
LogiMetrics, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
February 16, 0000
Xxxxx Xxxx Bank
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx Senior Vice President
Dear Xxx:
Reference is hereby made to the (i) $1,930,000 Reduced and Extended
Revolving Credit Note, dated as of September 1, 1999 (the "Revolver"), made by
LogiMetrics, Inc. (the "Company") and mmTech, Inc. in favor of North Fork Bank
(the "Bank"), (ii) Modified General Security Agreement, dated April 30, 1998,
made by the Company in favor of the Bank, (iii) General Security Agreement,
dated April 30, 1998, made by mmTech, Inc. in favor of the Bank, (iv) Blocked
Account Agreement, dated April 25, 1997, between the Company and the Bank, and
(v) Recognition and Limited Forbearance Agreement, dated as of September 1, 1999
made by and among the Company, mmTech, Inc. and the Bank (collectively, the
"Bank Documents").
As we have previously discussed, the Company has been negotiating the
terms and conditions of a proposed transaction pursuant to which the Company
intends to enter into a letter of intent (the "Letter of Intent") with Signal
Technology Corporation ("Signal") pursuant to which Signal intends to acquire
the Company in a tax-free merger (the "Merger"). In connection with the
execution of the Letter of Intent, Signal has agreed to loan to the Company up
to $2,000,000 pursuant to the terms of a proposed loan agreement (the "Loan
Agreement") and a Negotiable Secured Senior Subordinated Promissory Note (the
"Note"). Under the terms of the Loan Agreement, certain existing creditors of
the Company would also advance up to $1,000,000 to the Company and mmTech
($610,000 of which has been advanced since December 2, 1999) (the "Legacy
Loans"). The obligations of the Company and mmTech under the Loan Agreement and
the Legacy Loans would be secured by a security interest in all of the assets of
the Company and the subsidiaries that would rank junior to the Bank's security
interests and senior to the other indebtedness of the Company and mmTech. In
addition, the Company proposes to enter into a Management Agreement with Signal
(the "Management Agreement"), pursuant to which Signal would agree to manage the
Company's current business located in Bohemia, New York (the "New York
Business"). Pursuant to the Management Agreement, Signal would relocate all of
the assets of the New York Business, (excluding real estate and fixtures) and
consisting entirely of those assets listed on Exhibit A (the "New York Assets"),
to Signal's existing facility in Florida. Pursuant to the Loan Agreement and the
Management Agreement, Signal also would have the right to acquire the New York
Business on the terms and conditions set forth therein. Under the Management
Agreement, Signal also would pay the Company's ongoing debt service obligations
to the Bank during the period that Signal was operating the New York Business.
The transactions described above are hereinafter referred to as the "Signal
Transactions". In order to consummate the Signal Transactions, the Bank would be
required, among other things, to release its security interest in the New York
Assets upon the written notification by Signal that it is taking legal title to
those assets.
By executing this letter in the space provided below, the Bank hereby
irrevocably consents to the consummation of the Merger and the other Signal
Transactions, including, without limitation, the grant of any subordinate
security interest securing the Legacy Loans and the Note and the relocation of
the assets of the New York Business to Signal's facility in Florida. Further,
the Bank hereby (i) subordinates its security interest in the assets
constituting the New York Assets to the security interest of Signal (ii) upon
written notification by Signal that it is taking legal title to the assets
constituting the New York Assets, shall promptly release without any additional
consideration its security interest in those assets upon confirmation that
Signal has advanced the full $2,000,000 under the Loan Agreement, (iii) agrees
to execute such documents or instruments as Signal may reasonably require to
effect the release of such security interest, (iv) agrees to the priority of
security interests in the New York Assets described above, and (v) irrevocably
waives any defaults under the Bank Documents, whether existing on the date
hereof or arising in connection with the Signal Transactions.
Finally, the Bank would agree to modify and extend the maturity date
of the Revolver from December 31, 1999 to June 30, 2000, all such consents,
agreements, waivers and modifications subject to the satisfaction of the
conditions set forth below:
(i) the Company must have received no less than $1,660,000 in
additional subordinated financing (including amounts
advanced by the Company's existing investors since December
2, 1999);
(ii) the modification and extension will be evidenced in part by
the execution of a further modified and extended note;
(iii)the amount available under the Revolver shall be reduced to
$1,785,576 and no additional advances will be made; and
(iv) all past due interest ($72,793.41 a/o 2/15/00), a waiver fee
in the amount of $10,000, and Bank attorney fees (not to
exceed $10,000) shall be paid in full.
(v) the Company agrees to pay a $10,000 exit fee at maturity;
(vi) the Company extends the expiration date of the warrants to
6/30/00 and prior to the modification and extension the
Company shall provide the Bank with an opinion of counsel
confirming the validity an enforceability of said warrants.
All other terms and conditions of the Revolver shall remain the same, except
that paragraph (h) as set forth in the Affirmative Covenant section and
paragraphs (a), (b) and (c) as set forth in the Financial Statements section
relating to certain financial covenants and reporting requirements,
respectively, required of the Company by the Bank are hereby deleted.
This consent shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to principles of conflicts of
law. It may be executed in one or more counterparts, each of which shall be an
original, but all of which together shall constitute a single agreement.
Very truly yours,
LOGIMETRICS, INC.
By: /s/Xxxxxx X. Xxxxxx
________________________________
Name: Xxxxxx X. Xxxxxx
Title: President and Chief
Operating Officer
CONSENTED AND AGREED TO:
NORTH FORK BANK
By: /s/Xxxxxx Xxxxx
____________________________
Name: Xxxxxx Xxxxx
Title: Senior Vice President
EXHIBIT A
Logimetrics, Inc.
New York Business
Accounts receivable, Net
Inventory
Prepaid and other current assets
Property, plant and equipment
Security deposits
Total Assets
The New York Assets as defined herein do not include or relate to the conduct of
the business of mmTech, Inc.
