Document:

ex10-3.htm

	  	
Exhibit 10.3

 

Continuing Guaranty

Dated as of June 6, 2013

Guaranty. To induce JPMorgan Chase Bank, N.A., whose address is 395 North Service Rd., 3rd Floor, Melville, NY 11747 (together with its successors and assigns, the “Bank”), at its option, to make financial accommodations, make or acquire loans, extend or continue credit or some other benefit, including letters of credit and foreign exchange contracts, present or future, direct or indirect, and whether several, joint or joint and several, to FREQUENCY ELECTRONICS, INC. (whether one or more, the “Borrower”, individually and collectively, if more than one), and because the undersigned (the “Guarantors”) have determined that executing this Guaranty is in its interest and to its financial benefit, each Guarantor, jointly and severally, absolutely and unconditionally guarantees to the Bank the performance of and full and prompt payment of the Liabilities when due, whether at stated maturity, by acceleration or otherwise. Each Guarantor, jointly and severally, will not only pay the Liabilities, but will also reimburse the Bank for any fees, charges, costs and expenses, including reasonable attorneys’ fees (including fees and expenses of counsel for the Bank that are employees of the Bank or its affiliates) and court costs, that the Bank may pay in collecting from the Borrower or the Guarantor, and for liquidating any Collateral (collectively, “Collection Amounts”). Each Guarantor’s obligations under this Guaranty shall be joint and several and shall be payable in lawful money of the United States of America.

Credit Agreement. “Credit Agreement” means that certain Credit Agreement dated as of the date hereof by and between Borrower and Bank. All terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement. 

 

Liabilities. The term “Liabilities” in this Guaranty means all debts, obligations, indebtedness and liabilities of every kind and character of the Borrower, whether individual, joint and several, contingent or otherwise, now or hereafter existing, in favor of the Bank and its Affiliates, including, without limitation, all liabilities, interest, costs and fees, arising under or from any note, open account, overdraft, credit card, lease, Rate Management Transaction, letter of credit application, endorsement, surety agreement, guaranty, acceptance, foreign exchange contract or depository service contract, whether payable to the Bank or to a third party and subsequently acquired by the Bank, any monetary obligations (including interest) incurred or accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceedings, regardless of whether allowed or allowable in such proceeding, and all renewals, extensions, modifications, consolidations, rearrangements, restatements, replacements or substitutions of any of the foregoing. The Guarantors and the Bank specifically contemplate that Liabilities include indebtedness hereafter incurred by the Borrower to the Bank. The term “Rate Management Transaction” in this Guaranty means (1) any transaction (including an agreement with respect thereto) which is a rate swap, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap, floor, collar, currency swap, cross-currency rate swap, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including an option with respect to any of these transactions), or (2) any type of transaction that is similar to any transaction referred to in clause (1) above that is currently, or in the future becomes, recurrently entered into in the financial markets and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, or any combination of the foregoing transactions.

Limitation. Each Guarantor’s obligation under this Guaranty is UNLIMITED.

Continued Reliance. This Guaranty shall remain in effect for each Guarantor until payment in full of the Remaining Liabilities, as defined below, following termination of this Guaranty by such Guarantor in accordance with this paragraph. This Guaranty will continue to be in effect until final payment and performance in full of all Liabilities and the termination of any commitment of the Bank to make loans or other financial accommodations to the Borrower. Each Guarantor may terminate such Guarantor’s liability for Liabilities not in existence or for which the Bank has no commitment to advance or acquire by delivering written notice to the Bank as set forth in the paragraph below captioned “Notice.” After such Guarantor’s termination of this Guaranty, such Guarantor will continue to be liable, jointly and severally, for the following amounts (the “Remaining Liabilities”): (i) all Liabilities existing on the effective date of termination, (ii) all Liabilities to which the Bank has committed to advance or acquire prior to the effective termination date (whether or not the Bank is contractually obligated to advance or acquire the loans or extensions of credit), (iii) all subsequent renewals, extensions, modifications, consolidations, rearrangements, restatements, replacements and amendments (but not increases) of those Liabilities, (iv) all interest accruing on those Liabilities after the effective termination date and (v) all Collection Amounts incurred with respect to those Liabilities, on or after the effective termination date. The Bank may continue to permit the Borrower to incur Liabilities and to issue commitments to the Borrower to advance or acquire Liabilities in reliance on this Guaranty until the effective date of termination, regardless of whether at any time or from time to time there are neither existing Liabilities nor commitment by the Bank to advance or acquire Liabilities.

 

  

  

  

 

Security. The term “Collateral” in this Guaranty means all Property described in all security agreements, pledge agreements, mortgages, deeds of trust, assignments, or other instruments now or hereafter executed in connection with any of the Liabilities securing or intending to secure any of the Liabilities.

Bank’s Right of Setoff. In addition to the Collateral, if any, each Guarantor grants to the Bank a security interest in the Accounts, and the Bank is authorized to setoff and apply, all Accounts, Securities and Other Property, and Bank Debt against any and all Liabilities of the Borrower and all obligations of such Guarantor under this Guaranty. This right of setoff may be exercised at any time and from time to time, and without prior notice to a Guarantor. This security interest in the Accounts and right of setoff may be enforced or exercised by the Bank regardless of whether or not the Bank has made any demand under this paragraph or whether the Liabilities are contingent, matured, or unmatured. Any delay, neglect or conduct by the Bank in exercising its rights under this paragraph will not be a waiver of the right to exercise this right of setoff or enforce this security interest in the Accounts. The rights of the Bank under this paragraph are in addition to other rights the Bank may have by law. In this paragraph: (a) the term “Accounts” means any and all accounts and deposits of each Guarantor (whether general, special, time, demand, provisional or final) at any time held by the Bank (including all Accounts held jointly with another, but excluding any IRA or Keogh Account, or any trust Account in which a security interest would be prohibited by law); (b) the term “Securities and Other Property” means any securities entitlements, securities accounts, investment property, financial assets and all securities and other property of each Guarantor in the custody, possession or control of the Bank, JPMorgan Chase & Co. and their respective subsidiaries and affiliates (other than property held by the Bank in a fiduciary capacity); and (c) the term “Bank Debt” means all indebtedness at any time owing by the Bank to or for the credit or account of each Guarantor and any claim of each Guarantor (whether individual, joint and several or otherwise) against the Bank now or hereafter existing.

Remedies/Acceleration. If any Guarantor fails to pay any amount owing under this Guaranty, the Bank shall have all of the rights and remedies provided by law or under any other agreement. The Bank is authorized to cause all or any part of the Collateral to be transferred to or registered in its name or in the name of any other person or business entity with or without designation of the capacity of that nominee. Each Guarantor is liable, jointly and severally, for any deficiency in payment of any Liabilities whether of principal, interest, fees, costs or expenses remaining after the disposition of any Collateral. Each Guarantor is liable, jointly and severally, to the Bank for all reasonable costs and expenses of any kind incurred in the making and collection of this Guaranty, including without limitation reasonable attorneys’ fees and court costs. These costs and expenses include without limitation any costs or expenses incurred by the Bank in any bankruptcy, reorganization, insolvency or other similar proceeding. All obligations of each Guarantor to the Bank under this Guaranty, whether or not then due or absolute or contingent, shall, at the option of the Bank, without notice or demand, become due and payable immediately upon the occurrence of any default or event of default under the terms of any of the Liabilities or otherwise with respect to any agreement related to the Liabilities (or any other event that results in acceleration of the maturity of any Liabilities, including without limitation, demand for payment of any Liabilities constituting demand obligations or automatic acceleration in a legal proceeding) or the occurrence of any default under this Guaranty.

Permissible Actions. If any monies become available from any source other than any Guarantor that the Bank can apply to the Liabilities, the Bank may apply them in any manner it chooses, including but not limited to applying them against obligations, indebtedness or liabilities which are not covered by this Guaranty. The Bank may take any action against the Borrower, the Collateral, or any other person liable for any of the Liabilities. The Bank may release the Borrower or anyone else from the Liabilities, either in whole or in part, or release the Collateral, and need not perfect a security interest in the Collateral. The Bank does not have to exercise any rights that it has against the Borrower or anyone else, or make any effort to realize on the Collateral or any other collateral for the Liabilities, or exercise any right of set-off. Each Guarantor authorizes the Bank, without notice or demand and without affecting such Guarantor’s obligations hereunder, from time to time, to: (a) renew, modify, compromise, rearrange, restate, consolidate, extend, accelerate, postpone, grant any indulgence or otherwise change the time for payment of, or otherwise change the terms of the Liabilities or any part thereof, including increasing or decreasing the rate of interest thereon; (b) release, substitute or add any one or more endorsers, sureties, any Guarantor or other guarantors; (c) take and hold Collateral for the payment of this Guaranty or the Liabilities, and enforce, exchange, impair, substitute, subordinate, waive or release any Liabilities or any Collateral for the Liabilities; (d) proceed against such Collateral and direct the order or manner of sale of such Collateral as the Bank in its discretion may determine; (e) apply any and all payments from the Borrower, any Guarantor or any other obligor on the Liabilities, or recoveries from such Collateral, in such order or manner as the Bank in its discretion may determine; and (f) to accept any partial payment of Liabilities or collateral for the Liabilities. Each Guarantor’s obligations under this Guaranty shall not be released, diminished or affected by (i) any act or omission of the Bank, (ii) the voluntary or involuntary liquidation, sale or other disposition of all or substantially all of the assets of the Borrower or any Guarantor, or any receivership, insolvency, bankruptcy, reorganization, or other similar proceedings affecting the Borrower, any Guarantor, any other obligor or any of their respective assets, (iii) any change in the composition or structure of the Borrower, any Guarantor or any other obligor on the Liabilities, including a merger or consolidation with any other person or entity, or (iv) any payments made upon the Liabilities. Each Guarantor hereby expressly consents to any impairment of Collateral, including, but not limited to, failure to perfect a security interest and release Collateral and any such impairment or release shall not affect such Guarantor’s obligations hereunder.

 

  

  

  

 

Nature of Guaranty. This Guaranty is an absolute guaranty of payment and performance and not of collection. Therefore, the Bank may insist that any Guarantor pay immediately, and the Bank is not required to attempt to collect first from the Borrower, any other Guarantor, the Collateral, or any other person liable for the Liabilities. The obligation of each Guarantor shall be joint and several, and unconditional and absolute even if all or any part of any agreement between the Bank and the Borrower or any Guarantor is unenforceable, void, voidable or illegal or uncollectible due to incapacity, lack of power or authority, discharge or for any reason whatsoever, and regardless of the existence of any defense, setoff, discharge or counterclaim (in any case, whether based on contract, tort or any other theory) which the Borrower or any Guarantor may assert. If the Borrower is a corporation, limited liability company, partnership or trust, it is not necessary for the Bank to inquire into the powers of the Borrower or the officers, directors, members, managers, partners, trustees or agents acting or purporting to act on its behalf, and any of the Liabilities made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. Without limiting the foregoing, each Guarantor’s liability is absolute and unconditional irrespective of and shall not be released, diminished or affected by: (a) any present or future law, regulation or order of any jurisdiction (whether of right or in fact) or of any agency thereof purporting to reduce, amend, restructure, render unenforceable or otherwise affect any term of any Liabilities; or (b) any war, riot or revolution impacting multinational companies or any act of expropriation, nationalization or currency inconvertibility or nontransferability arising from governmental, legislative or executive measures affecting any Guarantor, any other obligor or the property of any Guarantor or any other obligor of the Liabilities.

Other Guarantors. If there is more than one Guarantor, the obligations under this Guaranty are joint and several. In addition, each Guarantor under this Guaranty shall be jointly and severally liable with any other guarantor of the Liabilities. If the Bank elects to enforce its rights against fewer than all guarantors of the Liabilities, that election does not release the Guarantor from its obligations under this Guaranty. The compromise or release of any of the obligations of any of the other guarantors or the Borrower shall not serve to impair, waive, alter or release the Guarantor’s obligations.

Rights of Subrogation. Each Guarantor waives and agrees not to enforce any rights of subrogation, contribution, reimbursement, exoneration or indemnification that it may have against the Borrower, any person liable on the Liabilities, or the Collateral, until the Borrower and such Guarantor have fully performed all their obligations to the Bank, even if those obligations are not covered by this Guaranty.

Waivers. To the maximum extent not prohibited by applicable law, each Guarantor waives (a) to the extent not prohibited by applicable law, all rights and benefits under any laws or statutes regarding sureties, as may be amended, and (b) any right such Guarantor may have to receive notice of the following matters before the Bank enforces any of its rights: (i) the Bank’s acceptance of this Guaranty, (ii) incurrence or acquisition of any Liabilities (including, without limitation, any material alteration of the Liabilities), any credit that the Bank extends to the Borrower, Collateral received or delivered, default by any party to any agreement related to the Liabilities or other action taken in reliance on this Guaranty, and all notices and other demands of any description, (iii) diligence and promptness in preserving liability against any obligor on the Liabilities, and in collecting or bringing suit to collect the Liabilities from any obligor on the Liabilities or to pursue any remedy in the Bank’s power to pursue; (iv) notice of extensions, renewals, modifications, rearrangements, restatements and substitutions of the Liabilities or any Collateral for the Liabilities; (v) notice of failure to pay any of the Liabilities as they mature, any other default, adverse facts that would affect such Guarantor’s risk, any adverse change in the financial condition of any obligor on the Liabilities, release or substitution of any Collateral, subordination of the Bank’s rights in any Collateral, and every other notice of every kind that may lawfully be waived; (vi) the Borrower’s default, (vii) any demand, diligence, presentment, dishonor and protest, or (viii) any action that the Bank takes regarding the Borrower, anyone else, the Collateral, or any of the Liabilities, which it might be entitled to by law or under any other agreement, (c) any right it may have to require the Bank to proceed against the Borrower, any Guarantor, any other obligor or guarantor of the Liabilities, or the Collateral for the Liabilities or such Guarantor’s obligations under this Guaranty, or pursue any remedy in the Bank’s power to pursue, (d) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower, (e) the benefit of any statute of limitations affecting such Guarantor’s obligations hereunder or the enforcement hereof, (f) any defense arising by reason of any disability or other defense of the Borrower or by reason of the cessation from any cause whatsoever (other than payment in full) of the obligation of the Borrower for the Liabilities, (g) any defense based on or arising out of the Bank’s negligent administration of the Liabilities, and (h) any defense based on or arising out of any defense that the Borrower may have to the payment or performance of the Liabilities or any portion thereof. The Bank may waive or delay enforcing any of its rights without losing them. Any waiver affects only the specific terms and time period stated in the waiver. No modification or waiver of this Guaranty is effective unless it is in writing and signed by the party against whom it is being enforced.

Cooperation. Each Guarantor agrees to fully cooperate with the Bank and not to delay, impede or otherwise interfere with the efforts of the Bank to secure payment from the assets which secure the Liabilities including actions, proceedings, motions, orders, agreements or other matters relating to relief from automatic stay, abandonment of property, use of cash collateral and sale of the Bank’s collateral free and clear of all liens.

 

  

  

  

 

Reinstatement. Each Guarantor agrees that to the extent any payment or transfer is received by the Bank in connection with the Liabilities, and all or any part of the payment or transfer is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be transferred or repaid by the Bank or transferred or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise (any of those payments or transfers is hereinafter referred to as a “Preferential Payment”), then this Guaranty shall continue to be effective or shall be reinstated, as the case may be, and whether or not the Bank is in possession of this Guaranty, or whether the Guaranty has been marked paid, released or canceled, or returned to such Guarantor and, to the extent of the payment, repayment or other transfer by the Bank, the Liabilities or part intended to be satisfied by the Preferential Payment shall be revived and continued in full force and effect as if the Preferential Payment had not been made.

Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Liabilities and the nature, scope and extent of the risks that such Guarantor assumes and incurs under this Guaranty, and agrees that the Bank does not have any duty to advise such Guarantor of information known to it regarding those circumstances or risks.

Financial Information. Each Guarantor further agrees that such Guarantor shall provide to the Bank the financial statements and other information relating to the financial condition, properties and affairs of such Guarantor as the Bank reasonably requests from time to time.

Severability. The provisions of this Guaranty are severable, and if any one or more of the obligations of any Guarantor under this Guaranty or the provisions of this Guaranty is held to be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining obligations of such Guarantor and the remaining provisions shall not in any way be affected or impaired; and the invalidity, illegality or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of such obligation(s) or provision(s) in any other jurisdiction; provided, however, notwithstanding the foregoing, in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of such Guarantor under this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the amount of such liability shall, without any further action by such Guarantor or the Bank, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding.

Representations and Warranties by Guarantor. Each Guarantor represents and warrants that the following statements are true in all material respects and will remain true in all material respects until termination of this Guaranty and payment in full of all Liabilities: (a) the execution and delivery of this Guaranty and the performance of the obligations it imposes do not violate any law, do not conflict with any agreement by which it is bound, or require the consent or approval of any governmental authority or any third party; (b) this Guaranty is a valid and binding agreement, enforceable according to its terms; (c) all balance sheets, profit and loss statements, and other financial statements furnished to the Bank in connection with the Liabilities are accurate and fairly reflect the financial condition of the organizations and persons to which they apply on their effective dates, including contingent liabilities of every type, which financial condition has not changed materially and adversely since those dates; (d) the Guarantor has filed all federal and state tax returns that are required to be filed, has paid all due and payable taxes and assessments against the property and income of the Guarantor and all payroll, excise and other taxes required to be collected and held in trust by the Guarantor for any governmental authority; (e) the Guarantor has determined that this Guaranty will benefit the Guarantor directly or indirectly; (f) the Guarantor has (i) without reliance on the Bank or any information received from the Bank and based upon the records and information the Guarantor deems appropriate, made an independent investigation of the Borrower, the Borrower’s business, assets, operations, prospects and condition, financial or otherwise, and any circumstances that may bear upon those transactions, the Borrower or the obligations, liabilities and risks undertaken in this Guaranty with respect to the Liabilities; (ii) adequate means to obtain from the Borrower on a continuing basis information concerning the Borrower and the Bank has no duty to provide any information concerning the Borrower or any other obligor to the Guarantor; (iii) full and complete access to the Borrower and any and all records relating to any Liabilities now and in the future owing by the Borrower; (iv) not relied and will not rely upon any representations or warranties of the Bank not embodied in this Guaranty or any acts taken by the Bank prior to and after execution or other authentication and delivery of this Guaranty (including but not limited to any review by the Bank of the business, assets, operations, prospects and condition, financial or otherwise, of the Borrower); and (v) determined that the Guarantor will receive benefit, directly or indirectly, and has or will receive fair and reasonably equivalent value for, the execution and delivery of this Guaranty; (g) by entering into this Guaranty, the Guarantor does not intend to incur or believe that the Guarantor will incur debts that would be beyond the Guarantor’s ability to pay as those debts mature; (h) the execution and delivery of this Guaranty are not intended to hinder, delay or defraud any creditor of the Guarantor; and (i) the Guarantor is neither engaged in nor about to engage in any business or transaction for which the remaining assets of the Guarantor are unreasonably small in relation to the business or transaction, and any property remaining with the Guarantor after the execution or other authentication of this Guaranty is not unreasonably small capital. Each Guarantor, other than a natural person, further represents that: (1) it is duly organized, validly existing and in good standing under the laws of the state where it is organized and in good standing in each state where it is doing business; and (2) the execution and delivery of this Guaranty and the performance of the obligations it imposes (A) are within its powers and have been duly authorized by all necessary action of its governing body, and (B) do not contravene the terms of its articles of incorporation or organization, its by-laws, or any agreement or document governing its affairs.

 

  

  

  

 

Notice. Except as otherwise provided in this Guaranty, any notices and demands under or related to this document shall be in writing and delivered to the intended party at its address stated herein, and if to the Bank, at its main office if no other address of the Bank is specified herein, by one of the following means: (a) by hand, (b) by a nationally recognized overnight courier service, or (c) by certified mail, postage prepaid, with return receipt requested. Notice shall be deemed given: (i) upon receipt if delivered by hand, (ii) on the Delivery Day after the day of deposit with a nationally recognized courier service, or (iii) on the third Delivery Day after the notice is deposited in the mail. “Delivery Day” means a day other than a Saturday, a Sunday, or any other day on which national banking associations are authorized to be closed. Any party may change its address for purposes of the receipt of notices and demands by giving notice of such change in the manner provided in this provision. Notices of termination, as provided above, will not be deemed received until actually received by the Manager of Commercial Loan Documentation Division, KY1-4340, P.O. Box 33035, Louisville, KY 40232-3035, Attn: Manager of Commercial Loan Documentation Division under written receipt and shall be effective at the opening of the Bank for business on the third Delivery Day after receipt of the notice.

Governing Law and Venue. This agreement shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to its laws of conflicts). Each Guarantor agrees that any legal action or proceeding with respect to any of its obligations under this agreement may be brought by the Bank in any state or federal court located in the State of New York, as the Bank in its sole discretion may elect. By the execution and delivery of this agreement, each Guarantor submits to and accepts, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of those courts. Each Guarantor waives any claim that the State of New York is not a convenient forum or the proper venue for any such suit, action or proceeding.

Miscellaneous. Each Guarantor’s liability under this Guaranty is independent of its liability under any other guaranty previously or subsequently executed by such Guarantor or any one of them, singularly or together with others, as to all or any part of the Liabilities, and may be enforced for the full amount of this Guaranty regardless of such Guarantor’s liability under any other guaranty. This Guaranty binds each Guarantor’s heirs, successors and assigns, and benefits the Bank and its successors and assigns. The Bank may assign this Guaranty in whole or in part without notice. The Bank shall use its commercially reasonable efforts to provide each Guarantor with notice of any such assignment.  Each Guarantor agrees that the Bank may provide any information or knowledge the Bank may have about such Guarantor or about any matter relating to this Guaranty to JPMorgan Chase & Co., or any of its subsidiaries or affiliates or their successors, or to one or more purchasers or potential purchasers of this Guaranty or the Liabilities guaranteed hereby. The use of headings does not limit the provisions of this Guaranty. Time is of the essence under this Guaranty and in the performance of every term, covenant and obligation contained herein.

WAIVER OF SPECIAL DAMAGES. EACH GUARANTOR WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SUCH GUARANTOR MAY HAVE TO CLAIM OR RECOVER FROM THE BANK IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

JURY WAIVER. TO THE MAXIMUM EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH GUARANTOR AND THE BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN SUCH GUARANTOR AND THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN.

 

 

[signature pages immediately follows]

 

 

 

 

 

 

 

 

 

  

  

  

 

 

	  	  	  	  	  
	  	
Address:

	
11 Volvo Drive

Rockleigh, NJ 07647

 

 

	  	
Guarantor:

FEI-Elcom Tech, Inc.

 

	  	  	  	
By:

	
/s/ Alan Miller

	  
	  	  	  	  	
Alan Miller

	
Secretary/Treasurer

	  
	  	  	  	  	
Printed Name

	
Title

	  
	  	
Date Signed:

	
June 6, 2013

	  

	  	  	  	  	  
	  	
Address:

	
55 Charles Lindbergh Blvd.

Uniondale, NY 11553

 

 

	  	
Guarantor:

FEI Communications, Inc.

 

	  	  	  	
By:

	
/s/ Alan Miller

	  
	  	  	  	  	
Alan Miller

	
Secretary/Treasurer

	  
	  	  	  	  	
Printed Name

	
Title

	  
	  	
Date Signed:

	
June 6, 2013

	  

	  	  	  	  	  
	  	
Address:

	
55 Charles Lindbergh Blvd.

Uniondale, NY 11553

 

 

	  	
Guarantor:

FEI Government Systems, Inc.

 

	  	  	  	
By:

	
/s/ Alan Miller

	  
	  	  	  	  	
Alan Miller

	
Secretary/Treasurer

	  
	  	  	  	  	
Printed Name

	
Title

	  
	  	
Date Signed:

	
June 6, 2013

	  

	  	  	  	  	  
	  	
Address:

	
7321 Lincoln Way

Garden Grove, CA 92841

 

 

	  	
Guarantor:

FEI-Zyfer, Inc.

 

	  	  	  	
By:

	
/s/ Alan Miller

	  
	  	  	  	  	
Alan Miller

	
Secretary/Treasurer

	  
	  	  	  	  	
Printed Name

	
Title

	  
	  	
Date Signed:

	
June 6, 2013ex10-4.htm

	  	
Exhibit 10.4

 

Continuing Pledge Agreement

Dated as of June 6, 2013

Pledge. FREQUENCY ELECTRONICS, INC., whose address is 55 Charles Lindbergh Boulevard, Uniondale, New York 11553 (the “Borrower”), pledges, assigns, transfers and grants to JPMorgan Chase Bank, N.A., whose address is 395 North Service Rd., 3rd Floor, Melville, NY 11747 (together with its successors and assigns, the “Bank”) a continuing security interest in the property listed below under the heading “Schedule of Collateral” (the “Collateral”) owned by the Borrower, all Collateral in which the Borrower has rights or power to transfer rights and all Collateral in which the Borrower later acquires ownership, other rights or the power to transfer rights to secure the payment and performance of the Liabilities. If the Collateral consists of “investment property” or “financial assets,” as such terms are defined in the Uniform Commercial Code of New York, as in effect from time to time (the “UCC”), the grant includes any stock rights, stock dividends, liquidating dividends, new securities, financial assets and other property to which the Borrower may become entitled because it owns the Collateral and such property delivered to the Bank or to an intermediary designated by the Bank subject to the control of the Bank to satisfy the requirements of the paragraph captioned “Loan Value of Collateral”. The Borrower has transferred the applicable securities to the Bank or to an other intermediary, as directed by the Bank, that has entered or will hereafter enter into one or more control agreements in form and substance satisfactory to the Bank (collectively, “Control Agreement”). In the event the transfer is not complete, the Borrower will complete it within ten (10) days. Collateral shall not include any common trust funds of the Bank in which the Bank is prohibited by applicable law from taking a security interest.

Bank Affiliates Appointed as Agents; Master Control Agreements. Affiliates of the Bank and its parent, J.P.Morgan Chase & Co., now existing or hereafter created or acquired, may now or hereafter provide custody, distribution, trading and/or other services related to the Bank’s Collateral, whether or not the Bank such Affiliates are acting in the capacity of “security intermediary” (such term being used herein is defined in the UCC) or otherwise (“Affiliates”). The Bank hereby appoints such Affiliates as its agent(s) for and on behalf of the Bank as secured party and for purposes of perfecting the Bank’s Collateral held at the Bank or its Affiliates, to hold the Bank’s Collateral and to provide related services for the Bank as secured party. Any master control agreement(s) existing among the Bank and Affiliates is(are) hereby incorporated by reference, including any amendments, supplements and restatements now or hereafter existing. The Borrower consents to such appointment of Affiliates as the Bank’s agents by the Bank and to such master control agreement(s) among the Bank and Affiliates. If any Collateral is held by an Affiliate, the Borrower directs such Affiliate to comply with orders of the Bank without the consent of the Borrower or any other person or entity.

SCHEDULE OF COLLATERAL. Collateral includes all of the Borrower’s “Investment Property” of every type and description, described in the Control Agreement and on the customer statement, if any, attached to the Control Agreement which shall include without limitation, all of the Borrower’s “Securities Accounts”, “Securities Entitlements”, “Securities”, “Investment Property” and “Financial Assets” (such terms being used herein are defined in the UCC), now or hereafter be maintained, held in or credited in any of the accounts with the account numbers described in the Control Agreement (including any subaccounts and any successor account(s) and/or subaccount(s), howsoever numbered, “Account”), and all substitutions, additions, renewals, investments, reinvestments, free credit balances, cash proceeds, general intangibles, insurance, products and supporting obligations including but not limited to all interest, dividends, other proceeds, instruments and other property now or hereafter received, receivable or otherwise distributed in connection with the sale, lease, license, exchange or other disposition of any Collateral.

Credit Agreement.  “Credit Agreement” means that certain Credit Agreement dated as of the date hereof by and between the Borrower and the Bank.  All terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

 

Liabilities. “Liabilities” means all debts, obligations, indebtedness and liabilities of every kind and character of the Borrower, whether individual, joint and several, contingent or otherwise, now or hereafter existing, in favor of the Bank and its Affiliates, including, without limitation, all liabilities, interest, costs and fees, arising under or from any note, open account, overdraft, credit card, lease, Rate Management Transaction, letter of credit application, endorsement, surety agreement, guaranty, acceptance, foreign exchange contract or depository service contract, whether payable to the Bank or to a third party and subsequently acquired by the Bank, any monetary obligations (including interest) incurred or accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceedings, regardless of whether allowed or allowable in such proceeding, and all renewals, extensions, modifications, consolidations, rearrangements, restatements, replacements or substitutions of any of the foregoing.  “Rate Management Transaction” means (1) any transaction (including an agreement with respect thereto) which is a rate swap, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap, floor, collar, currency swap, cross-currency rate swap, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including an option with respect to any of these transactions), or (2) any type of transaction that is similar to any transaction referred to in clause (1) above that is currently, or in the future becomes, recurrently entered into in the financial markets and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, or any combination of the foregoing transactions.

 

  

  

  

 

Representations, Warranties and Covenants. The Borrower represents, warrants and agrees with the Bank that until this Pledge terminates and all Liabilities are paid in full, except as otherwise permitted in the Credit Agreement, it owns and it will own the Collateral free and clear of any liens, security interests, assignments or other encumbrances (other than the Permitted Liens).  Except as otherwise permitted in the Credit Agreement, the Borrower will not attempt to sell or assign the Collateral or create any lien, security interest, assignment or other encumbrance or claim (other than the Permitted Liens) against it. The Borrower agrees to reimburse the Bank, on demand, for any amounts paid or advanced by the Bank for the purpose of preserving all or any part of the Collateral. The Bank shall exercise reasonable care in the custody and preservation of the Collateral to the extent required by applicable law.

The Borrower represents, warrants and covenants with the Bank that until this Pledge terminates and all Liabilities are paid in full no financing statement or similar record covering all or any part of the Collateral is on file in any public office, and no person or entity other than the Bank has control of the Collateral unless the Bank has approved that filing and/or control in writing. From time to time at the Bank’s reasonable request, the Borrower will execute one or more financing statements and control agreements in form and substance satisfactory to the Bank and will pay the cost of filing them in all public offices or recording them with any intermediary where filing or recording is deemed by the Bank to be necessary or desirable. In addition, the Borrower shall execute and deliver, or cause to be executed and delivered, such other documents as the Bank may from time to time reasonably request to create, to perfect, to assure the continuing first priority of or to further evidence, the security interest created in the Collateral by this Pledge, including: (a) a notice of security interest and/or a control agreement with respect to any Collateral from persons or entities considered necessary or desirable by the Bank, all in form and substance satisfactory to the Bank; (b) a notice to and acknowledgement from and control agreement with any bailee or other person who maintains, possesses or controls any of the Collateral, all in form and substance satisfactory to the Bank; and (c) any consent to the assignment of proceeds of any letter of credit, all in form and substance satisfactory to the Bank.

The Bank shall have the right now and at any time in the future, in its sole and absolute discretion and without notice to the Borrower: to (a) prepare, file and sign the Borrower’s name on any proof of claim in bankruptcy or similar document against any owner of the Collateral and (b) to prepare, file and sign the Borrower’s name on any financing statement or similar record, notice of lien, control agreement, assignment or satisfaction of lien or similar document in connection with the Collateral.

Bank Appointed Attorney-in-Fact. The Borrower authorizes and irrevocably appoints the Bank as the Borrower’s attorney-in-fact, to do any of the following without notice to the Borrower or any other person or entity: to take any action and to execute or otherwise authenticate any record or other documentation that the Bank considers necessary or advisable to accomplish the purposes of this Pledge, to exercise any rights under this Pledge and to perform any of the undersigned’s obligations under this Pledge including but not limited to the following: (a) to endorse and collect all checks, drafts, other payment orders and instruments representing or included in, the Collateral or representing any payment, dividend or distribution relating to any Collateral; (b) to direct any securities or commodity intermediary or issuer of any Collateral to comply with instructions originated by the Bank directing distribution of the Collateral without the undersigned’s further consent; (c) to transfer to or restyle any Collateral into the name of the Bank or the Bank’s nominee or any broker-dealer that may be an affiliate of the Bank (including converting physical certificates to book-entry holdings); (d) to transfer to the account of the Bank with any Federal Reserve Bank as Collateral held in book entry form with any Federal Reserve Bank; (e) to execute any control agreement or stock powers or other document of transfer; and (f) to execute any record reasonably believed necessary or appropriate by the Bank for compliance with laws, rules or regulations applicable to any Collateral (including any documentation reasonably believed necessary by the Bank for compliance with Rule 144 or any other restrictions, laws, rules or regulations applicable to any Collateral hereunder that constitutes restricted securities under the applicable securities laws) and to vote any and all securities or exercise any similar right with respect to any Collateral and the Bank is granted an irrevocable proxy to so vote on the undersigned’s behalf. The Borrower’s signature on this Pledge or other authentication of this Pledge shall constitute an irrevocable direction by the Borrower to any bank, custodian, broker-dealer, any other securities intermediary or commodity intermediary or other financial intermediary holding any Collateral or any issuer of any letters of credit to comply with the instructions or entitlement orders, as applicable of the Bank, without the further consent of the Borrower or any other person or entity. This appointment is irrevocable and coupled with an interest and shall survive the death or disability of the Borrower.

Registration Rights. If any of the Collateral consists of securities not registered under the Securities Act of 1933, and the issuer proposes to register any of its securities, the Borrower will give the Bank notice of that fact. In addition, and at no cost to the Bank, the Borrower will use its best efforts to induce the issuer to register the pledged securities so that they may be disposed of by public sale or other public disposition. Upon the completion of registration, the Borrower will deliver certificates without any restrictive legend in exchange for the unregistered securities. The Borrower indemnifies and holds the Bank harmless against any loss, claim, damage or liability arising out of the registration process, and will reimburse the Bank for any legal or other expenses incurred by the Bank as a result.

 

  

  

  

Voting Rights. Until the occurrence of an Event of Default with respect to any Liabilities or any agreement related to the Liabilities, the Borrower may exercise all voting and consensual powers and rights pertaining to any Collateral for all purposes not inconsistent with the terms of this Pledge and may receive and retain all dividends (other than stock or liquidating dividends) on the Collateral prior to any event of default or default. All dividends in stock or property representing stock, and all subscription rights, warrants or other rights or options, all liquidating dividends or distributions, and all securities or other property received as a result of a merger or consolidation, will be Collateral and must be delivered to the Bank or as instructed by the Bank.

Instructions Regarding the Collateral. The Bank may act upon any instructions given by the Borrower whether in writing or not, with regard to additions or substitutions or sale or other disposition of the Collateral and its proceeds. The Borrower agrees that any additions to, substitutions for or proceeds of the Collateral that it receives will be held for the Bank’s benefit and turned over to the Bank. The Borrower also gives the Bank permission to have the Collateral or any part of it transferred to or registered in the Bank’s name or in the name of any other person or business entity with or without designation of the capacity of that nominee, and will hold the Bank harmless from any liability or responsibility that might result. A carbon, photographic or other reproduction of this Pledge is sufficient as, and can be filed as, a financing statement or other similar record. The Bank is irrevocably appointed the Borrower’s attorney-in-fact to execute any financing statement or similar record on the Borrower’s behalf covering the Collateral. The Borrower authorizes the Bank to file one or more financing statements or similar records related to the security interests created by this Pledge, and further authorizes the Bank, instead of the Borrower, to sign such financing statements.

Remedies. The Borrower agrees and acknowledges that because of applicable securities laws, the Bank may not be able to effect a public sale of the Collateral, and sales at a private sale may be on terms and at a price less favorable than if the securities were sold at a public sale. The Borrower agrees that all private sales made under these circumstances shall be construed to have been made in a commercially reasonable manner. The Bank’s compliance with any applicable state or federal law requirements in connection with the disposition of the Collateral will not adversely affect the commercial reasonableness of any sale of the Collateral. These rights and remedies shall be cumulative and not exclusive. If the Borrower is entitled to notice, that requirement will be met if the Bank sends notice at least ten (10) days prior to the date of sale, disposition or other event requiring notice, and such notice shall be deemed commercially reasonable. The proceeds of any sale shall be applied first to costs, then toward payment of the Liabilities in any order of application, whether or not the Liabilities have been declared to be due and owing; provided that, to the extent any Liabilities consist of extensions of credit by the issuance of letters of credit or other like obligations of the Bank to third parties which have not been utilized, such proceeds shall be held by the Bank in a cash collateral account as security for the Liabilities.

Miscellaneous. The Borrower’s obligations to the Bank under this Pledge are not subject to any condition, precedent or subsequent, and shall not be released or affected by any change in the composition or structure of the Borrower, including a merger or consolidation with any other person or entity. If more than one person or entity signs this Pledge as Borrower, their obligations, covenants, representations and warranties are joint and several and the Collateral includes any property that is owned by any one or more of the undersigned, individually or jointly with any other person or entity. If more than one person or entity signs as the Borrower, their obligations are joint and several arising out of or relating to this Pledge or the Collateral and each agreement representation, warranty and covenant shall be individual, joint and several and the “Collateral” includes any property that is owned by any Borrower individually or jointly with any other. This Pledge is binding on the Borrower and its heirs, successors and assigns, and is for the benefit of the Bank and its successors and assigns. The use of section headings does not limit the provisions of this Pledge. The provisions of this Pledge are severable, and if any one or more of the provisions of this Pledge are held to be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired; and the invalidity, illegality or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of such provision(s) in any other jurisdiction. Time is of the essence under this Pledge and in the performance of every term, covenant and obligation contained herein.

 

	  	  	
Borrower:

	  	  	  	
FREQUENCY ELECTRONICS, INC.

	  	  	  	
By:

	
/s/ Alan Miller

	  	  	  	  	
Alan Miller

	
Secretary/Treasuer and CFO

	  	  	  	  	
Printed Name

	
Title

	  	
Date Signed:

	
June 6, 2013

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