Exhibit 10.26
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT(this "Standstill Agreement"), dated as of
July 25, 2003, is between DATAMETRICS CORPORATION (the "Company"), a Delaware
corporation, each of its Subsidiaries identified below, and DMTR, LLC, a New
York limited liability company (the "Lender").
W I T N E S S E TH:
WHEREAS, each of the Company and the Lender are party to a certain Loan
Agreement dated as of January 31, 2001 (the "Loan Agreement"), which provides,
in part, for indebtedness by the Company in favor of Lender of the initial
principal amount of $2,900,000 (the Loan Agreement, the Security Agreement (as
hereinafter defined), and each of the other documents executed in connection
with any of the foregoing, as any such documents may have been amended from time
to time shall collectively be called the "Financing Documents"); and
WHEREAS, the obligations of the Company under the Loan Agreement are secured by
all of the Company's assets pursuant to a security agreement (the "Security
Agreement"), and
WHEREAS, the Company has failed to pay the outstanding principal amount when due
on January 31, 2003 under the Loan Agreement and such default is continuing; and
WHEREAS, the Company and the Lender have been negotiating to restructure the
obligations owed by the Company under the Financing Documents and Company has
requested that the Lender forbear from exercising any rights and remedies in
respect of any event of default which arose prior to and during the Standstill
Period as set forth herein; and
WHEREAS, the Company has, in consideration of the accommodations referred to in
the immediately foregoing clause, agreed to comply with the terms and conditions
of this Standstill Agreement; and
WHEREAS, the Company and the Lender are desirous of entering into this
Standstill Agreement on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the matters referred to above, the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Loan Agreement.
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2. STANDSTILL PERIOD.
The Lender agrees, during the Standstill Period (as hereinafter defined), to
forbear from exercising any rights and remedies it may have under the Financing
Documents a result of the existence or occurrence of any default or breach by
the Company under any of the Financing Documents, including any defaults or
breaches that arose prior to the effective date of the Standstill Period. The
Company acknowledges that upon the termination of the period commencing on
January 31, 2003 and ending on the Termination Date (the "Standstill Period"),
such forbearance by the Lender shall terminate and the Lender may immediately
exercise, without further notice, any one or more of such rights and remedies
without notice or demand in respect of any default or breach by the Company
under any of the Financing Documents.
3. NEGOTIATIONS.
The parties each agree to negotiate in good faith to restructure the Company's
obligations under the Financing Documents.
4. TERMINATION DATE.
In the event that the Lender determines, in its sole discretion, at any time
after September 30, 2003, that the Company is no longer negotiating in good
faith to restructure the Company's obligations under the Financing Documents,
the Lender may, by written notice to the Company, terminate the Standstill
Period (the "Termination Date").
5. REPRESENTATIONS AND WARRANTIES.
To induce the Lender to enter into this Standstill Agreement, the Company
represents and warrants, as of the Effective Date, as follows:
(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware;
(b) The execution and delivery of this Standstill Agreement is within the
corporate powers of the Company, has been duly authorized by the Company and
constitute a valid and binding obligation of the Company, enforceable in
accordance with its terms, except that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally and except that such
enforceability is subject to the availability of equitable remedies;
(c ) The execution and delivery of this Standstill Agreement does not conflict
with, result in any breach of any of the provisions of, constitute a default
under, or result in the creation of any lien upon any property of the Company
under the provisions of, any agreement, charter instrument, bylaw or other
instrument to which the Company is a party or by which the Company, or any of
their respective properties may be bound;
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6. NONWAIVER AND NO AMENDMENT.
Except as expressly set forth herein, the terms of this Standstill Agreement
shall not operate as a waiver by either party of, or otherwise prejudice, either
party's rights, remedies or powers under the Security Agreement, the Loan
Agreement, the other Financing Documents or applicable law. With respect to any
default or breach by the Company under any of the Financing Documents, the
Lender may, after termination of the Standstill Period, exercise the rights,
remedies and powers provided in such Loan Agreement and the other Financing
Documents in accordance with the terms of such documents regardless of whether
such event of default shall exist on the date hereof or come into existence
during the Standstill Period. Except to the extent expressly provided for
herein, this Standstill Agreement shall not operate to waive or otherwise
prejudice any rights which either party may have against the other or any other
person arising under the Loan Agreement, the other Financing Documents or
otherwise.
Except as expressly provided herein, no terms or provisions of the Loan
Agreement, the Security Agreement, or the other Financing Documents are modified
or changed by this Standstill Agreement, and all of the terms and provisions of
the Loan Agreement, the Security Agreement and the other Financing Documents
shall continue in full force and effect.
7. EFFECTIVE DATE.
This Agreement shall be deemed effective as of January 31, 2003.
8. HEADINGS.
All headings and captions preceding the text of the several Sections of this
Standstill Agreement are intended solely for the convenience of reference and
shall not constitute a part of this Standstill Agreement nor shall they affect
its meaning, construction or effect.
9. ENTIRE AGREEMENT.
This Standstill Agreement, the Loan Agreement, the Security Agreement and the
other Financing Documents, as amended to the date hereof, embody the entire
agreement and understanding between the Lender and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof and
thereof.
10. GOVERNING LAW.
This Standstill Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York.
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11. DIRECTLY OR INDIRECTLY.
Where any provision in this Standstill Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person, including actions taken by or on behalf of any partnership or limited
liability company in which such Person is a general partner or managing member,
as applicable.
12. COUNTERPARTS.
This Standstill Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. An
executed copy of this Standstill Agreement sent by facsimile shall be effective
as an original.
13. NOTICES.
All communications under this Standstill Agreement shall be in writing to the
Company at 0000 Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxx 00000 and to the Lender at c/x
Xxxxxxx Securities Inc., 1325 Avenue of the Americas, New York, New York by
facsimile (with confirmation of receipt), overnight courier service, by hand or
by registered mail. Notices shall be deemed given upon delivery.
DATAMETRICS CORPORATION DMTR, LLC
By:/S/ DATAMETRICS CORPORATION By:/s/ DMTR, LLC
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