EXHIBIT 10.4
MANAGEMENT AGREEMENT
February 17, 2000
Signal Technology Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and Chief Executive Officer
Dear Sirs:
This letter agreement describes the terms and conditions under which
Signal Technology Corporation ("Signal") is herewith taking over the management
and operation of the business of LogiMetrics, Inc. (the "Company") located at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "NY Business").
In connection with a letter of intent between Signal and the Company,
dated as of the date hereof, regarding the potential merger (the "Merger") of a
wholly-owned subsidiary of Signal into the Company (the "Letter of Intent"), and
pursuant to the terms of a Loan Agreement between Signal and the Company (the
"Loan Agreement") and a Promissory Note (the "Note") by the Company in favor of
Signal, Signal is loaning to the Company an aggregate of up to $2,000,000, with
$1,000,000 of the loan to be advanced upon execution of the Letter of Intent,
the Loan Agreement and the Note. Signal and the Company have agreed that on the
date of the funding of such $1,000,000 (the "Funding Date"), as an accommodation
to the Company, Signal will take over the management and operation of the NY
Business. In connection with all of the foregoing, Signal and the Company hereby
agree as follows:
1. As of the Funding Date, Signal shall assume responsibility for the
management and operation of the NY Business. Signal and the Company shall
cooperate with each other to effect the relocation of the NY Business from the
Company's existing New York location to Signal's facility in Florida (the
"Florida Facility"). Such relocation shall include the relocation to the Florida
Facility of all of the assets (other than real property and fixtures) used by
the Company in its operation of the NY Business (the "Assets"). The Assets shall
include, but not be limited to, the Company's inventories, including raw
materials, work in process, supplies, samples, prototypes and finished goods,
held for use in the NY Business, and all machinery, equipment, tools, supplies,
booths, displays, materials, plans and schematics, intellectual property,
customer lists and other tangible and intangible personal property used in the
NY Business. A list of the Assets of the Company to be delivered to Signal under
this Agreement is set forth on the schedule attached hereto as Exhibit A.
2. For the period (the "Operating Period") commencing on the Funding
Date and continuing through and including the Termination Date (as defined in
Section 9 below), Signal shall have exclusive control over the Assets and the
operation of the NY Business. Signal shall integrate, to the extent practicable,
the NY Business into its existing business operations in Florida and shall
invest capital in the NY Business as it may deem appropriate in its sole
discretion. The parties' intent is that, notwithstanding the transfer of the
operation of the NY Business to Signal, to the extent practicable, the NY
Business will continue uninterrupted in all material ways, and that the
activities of the NY Business will continue in accordance with all existing
commitments in effect as of the date hereof. Signal hereby agrees that it will
not, without the prior written consent of the Company, sell any of the Assets
during the Operating Period other than products in the ordinary course of
business.
3. On the Funding Date, Signal shall assume only known current
liabilities in respect of the NY Business incurred by the Company in the
ordinary course of business. Such assumed liabilities are set forth on the
schedule attached hereto as Exhibit B. Signal shall be responsible for all
liabilities relating to the Assets and the NY Business arising out of its
operation of the NY Business. In no event shall Signal be responsible for any
liabilities arising out of the operation of the NY Business (i) prior to the
Funding Date (other than those liabilities set forth on Exhibit B hereto) or
(ii) after Signal ceases operating the NY Business pursuant to Section 6(a) or
Section 7 hereof. Signal shall be entitled to all revenue generated from the
Assets and the NY Business during the Operating Period.
4. Signal and the Company agree that certain employees of the Company
shall be offered continued employment with respect to the NY Business during the
Operating Period and shall be offered an opportunity to relocate to the Florida
Facility. Any employees accepting such continued employment shall be employed
directly by Signal and shall be paid by Signal in accordance with its payroll
practices. Signal shall pay any and all relocation expenses incurred by such
employees in connection with the transition to the Florida Facility.
Notwithstanding anything herein to the contrary, Signal and the Company agree
that the Company shall bear any and all costs and expenses incurred in
connection with the Company's terminating any employees as a result of the
relocation of the NY Business. Without limiting the generality of the foregoing,
the Company shall be responsible for any and all severance payments and like
compensation for terminated employees. In addition, in the event the Company
determines to close its New York facility, the Company shall bear any and all
costs and expenses incurred in connection with such closing.
5. Signal and the Company agree that, during the Operating Period,
Signal shall pay any and all interest that becomes due and owing on a monthly
basis in respect of the Company's existing line of credit with North Fork Bank
(approximately $15,000 per month) evidenced by that certain Reduced and Extended
Revolving Credit Note, dated as of September 1, 1999, in the original principal
amount of $1,930,000. Signal and the Company further agree that Signal shall be
obligated during the Operating Period to pay such interest only and that Signal
is not hereby assuming the indebtedness of the Company under such line of credit
with North Fork Bank. In addition, the parties agree that it is a condition to
Signal's entering into this Agreement that the Company obtain the consent, in
form reasonably satisfactory to Signal, of North Fork Bank to the arrangements
contemplated hereby.
6. (a) In the event that the Company and Signal do not consummate the
Merger, and the Company enters into an Acquisition Transaction (as defined in
the Letter of Intent) with a third party with respect to mmTech, Inc., a New
Jersey corporation and a subsidiary of the Company ("mmTech"), prior to December
31, 2000, in addition to any rights Signal may have under the Letter of Intent
(including the right to a Break-Up Fee, as defined therein, pursuant to Section
10(b) thereof), the Loan Agreement and the Note (including the rights to payment
in full of principal, interest and a prepayment penalty), Signal shall have the
option, in its sole discretion, either to acquire title to the Assets for no
additional consideration or to return the Assets to the Company, including all
accrued and outstanding liabilities relating thereto, pursuant to the provisions
of this Section 6.
(b) If Signal determines to acquire the Assets pursuant to Section
6(a) above, the Company will promptly execute and deliver to Signal a ▇▇▇▇ of
Sale and Conveyance, in the form attached hereto as Exhibit C (the "▇▇▇▇ of
Sale"), conveying the Assets and transferring title thereto to Signal, and the
Company agrees that it will take such reasonable steps and execute such other
and further documents as may be necessary or appropriate to consummate such
conveyance and transfer. Without limiting the generality of any provision
hereof, the parties hereby agree that the Assets to be conveyed to Signal under
this Section 6 shall include all books and records relating to the NY Business
and an exclusive right to use the name "LogiMetrics, Inc." for commercial
purposes. The Company hereby covenants and agrees that, in the event of a
conveyance and transfer of Assets to Signal hereunder, the Company's Board of
Directors will propose and recommend to the Company's stockholders that the name
of the Company be changed and shall present such proposal and recommendation for
approval at the Company's next regularly held stockholders meeting, and, in the
event its stockholders vote to approve such name change at such meeting, the
Company will promptly thereafter transfer title to the name "LogiMetrics, Inc."
to Signal. In connection therewith, the Company agrees that it will take such
reasonable steps and execute such other and further documents as may be
necessary or appropriate to consummate such transfer of title.
(c) If Signal determines to return the Assets pursuant to Section 6(a)
above, (i) Signal will arrange with the Company for the Company's pick up of all
of the Assets originally delivered to Signal, to the extent they exist at the
time of the return, and any assets generated in respect of the Assets during the
Operating Period or purchased by Signal for the NY Business during the Operating
Period (collectively with the Assets, the "Returned Assets"), subject to any and
all accrued and outstanding liabilities relating thereto as of the time of such
pick up (the "Accrued Liabilities"); (ii) the Company will immediately deliver
to the Company in immediately available funds such amount of money (the
"Reimbursement Amount") as equals the aggregate amount expended by Signal in
connection with the operation of the NY Business, including (A) all reasonable
out-of-pocket expenses incurred in connection with the initial transfer of
Assets to the Florida Facility, (B) the aggregate amount of the interest
payments made by Signal to North Fork Bank pursuant to Section 5 above, and (C)
all reasonable out-of-pocket expenses incurred in connection with the delivery
of the Returned Assets to the Company, plus or minus, as the case may be, the
amount by which the value of the net Returned Assets exceeds or is less than the
value of the net Assets originally delivered by the Company to Signal (the
"Adjustment Amount"). Signal and the Company agree that for purposes of this
Agreement, the value of the net Assets deliverable to Signal on the Funding Date
is as set forth on the schedule attached hereto as Exhibit D.
7. In the event that Signal and the Company do not consummate the
Merger, and the Company does not enter into an Acquisition Transaction with a
third party with respect to mmTech prior to December 31, 2000, in addition to
any rights it may have under the Loan Agreement or the Note, Signal shall be
entitled to require the Company to pick up the Returned Assets, subject to the
Accrued Liabilities, on or immediately following December 31, 2000, and Signal
shall be entitled to receive the Reimbursement Amount, as adjusted by the
Adjustment Amount, if any.
8. The parties agree that Signal's management and operation of the NY
Business contemplated hereunder shall be solely for Signal's benefit and that
Signal shall have no obligations to the Company arising out of such management
and operation except as expressly provided herein. In this connection, the
Company hereby waives any and all charges, complaints and claims it may have
against Signal arising out of Signal's management and operation of the NY
Business during the Operating Period, including, without limitation, those
relating to any and all losses, damages, liabilities, obligations, promises,
agreements, debts and expenses of any nature whatsoever, known or unknown,
suspected or unsuspected, relating to the NY Business and arising out Signal's
such management and operation, except for those charges, complaints and claims
arising out of Signal's gross negligence or willful misconduct in connection
with such management and operation. Signal shall be responsible for all charges,
complaints and claims made against Signal by third parties in connection with
Signal's management and operation of the NY Business during the Operating
Period.
9. This Agreement shall terminate upon the earliest to occur of
(i) the closing of the Merger, (ii) the closing of the acquisition of the Assets
in accordance with Section 6(b) hereof, (iii) the closing of the purchase by
Signal of the NY Business pursuant to the terms of the Loan Agreement, or (iv)
the delivery by Signal to the Company of the Returned Assets and the payment by
the Company to Signal of the Reimbursement Amount, as adjusted by the Adjustment
Amount, if any, each pursuant to Section 6 hereof (the date of such earliest
event is herein referred to as the "Termination Date").
10. This Agreement shall be construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts.
If the foregoing accurately reflects our mutual understanding, please
so indicate by executing a counterpart of this letter agreement and returning it
to the undersigned.
Very truly yours,
LOGIMETRICS, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Operating Officer
ACCEPTED AND AGREED:
SIGNAL TECHNOLOGY CORPORATION
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
and Chief Executive Officer
Dated: February 17, 2000
Exhibit A
Exhibit B
Exhibit C
▇▇▇▇ OF SALE AND CONVEYANCE
KNOW ALL MEN BY THESE PRESENTS:
That, pursuant to the terms of a Management Agreement, dated as of
February 17, 2000 (the "Management Agreement"), by and between LogiMetrics,
Inc., a Delaware corporation (the "Seller"), and Signal Technology Corporation,
a Delaware corporation (the "Buyer"), and in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Seller does hereby sell, transfer, assign and convey to the Buyer, effective as
of the date hereof, the Assets (as such term is defined in the Management
Agreement), including, without limitation, those listed on Schedule A attached
hereto, intending to convey all of the Seller's right, title and interest
therein. The Assets are hereby conveyed free and clear of all liens,
encumbrances, licenses and other interests of any nature whatsoever.
This ▇▇▇▇ of Sale and Conveyance shall be subject to the terms and
conditions set forth in the Management Agreement, and nothing contained in this
▇▇▇▇ of Sale and Conveyance shall be construed to limit or terminate the
representations, warranties and covenants set forth in the Management Agreement.
And for consideration aforesaid, the Seller has covenanted and hereby
does covenant with the Buyer, its successors and assigns, that the Seller, its
successors and assigns will do, execute, acknowledge and deliver, or will cause
to be done, executed, acknowledged and delivered, all such further acts,
transfers, assignments and conveyances, powers of attorney and assurances for
the better selling, transferring, assigning, assuring, conveying and confirming
unto the Buyer, its successors and assigns, all and singular, the Assets or for
aiding and assisting in collecting or reducing to possession any or all of the
Assets, as the Buyer and its successors and assigns shall reasonably request.
From and after the execution and delivery of this ▇▇▇▇ of Sale and
Conveyance to the Buyer, the Seller shall have no right, title and interest in
the Assets.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of the Buyer and the Seller.
IN WITNESS WHEREOF, the Seller has caused this ▇▇▇▇ of Sale and
Conveyance to be executed as of the ___ day of ____________ 2000.
LOGIMETRICS, INC.
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Title: President and Chief Operating
Officer
Exhibit D