EXHIBIT 10.4
STOCK PLEDGE AGREEMENT dated as of January 28, 2005 (as amended, modified,
supplemented or restated from time to time, the "Agreement"), executed by each
of XXXXX X. XXXXXXXXX and XXXXXXX XXXXXX (each a "Pledgor" and collectively the
"Pledgors"), in favor of Xxxxxx X. Xxxxxx, in his capacity as collateral agent
for the ratable benefit of the Noteholders, as hereinafter defined (in such
capacity, the "Agent").
RECITALS
WHEREAS, on the terms and subject to the conditions contained in that
certain Securities Purchase Agreement, dated as of January 28, 2005 by and among
Gigabeam Corporation, a Delaware corporation (the "Borrower") and the
Noteholders (as amended, modified, supplemented or restated from time to time,
the "Securities Purchase Agreement"), the Borrower will issue for purchase by
various purchasers (each a "Noteholder" and collectively the "Noteholders") its
8% Senior Convertible Notes Due 2008 in an aggregate principal amount of up to
$2,500,000 (each, a "Note" and collectively the "Notes"), together with warrants
to purchase a specified number of shares of its common stock; and
WHEREAS, concurrently herewith the Borrower and the Agent are entering
into that certain General Security Agreement, dated on or about the date hereof
(as amended, modified supplemented or restated from time to time, the "General
Security Agreement"), pursuant to which the Notes shall be ratably secured by a
perfected lien on and first priority security interest in substantially all of
the Borrower's personal property, subject to certain exclusions and permitted
encumbrances, as described in the General Security Agreement; and
WHEREAS, in order to induce the Noteholders to purchase the Notes, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to assure and secure the payment and performance of the
Borrower's obligations under the Notes, the Pledgors are executing and
delivering this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgors and the Agent hereby agree as follows:
1. The Obligations. Each of the Pledgors agrees, on a joint and several
basis, to be liable for the payment when due of the accrued interest on and
principal of the Notes, provided, however, that the liability of each Pledgor
hereunder shall be on a non-recourse basis to any Pledgor personally or to any
assets or properties of any Pledgor, other than the Pledged Stock, as
hereinafter defined. The non-recourse liability of the Pledgors described in the
previous sentence is hereinafter referred to as the "Obligations".
2. Pledge; Grant of Security Interest. To secure the prompt payment and
performance of the Obligations, each Pledgor hereby grants to the Agent, for the
ratable benefit of the Noteholders, a continuing security interest in all of
such Pledgor's right, title and interest in and to all of the "Pledged Stock",
and all "Proceeds" thereof. As used herein, the term "Pledged Stock" shall mean,
as to each Pledgor, the number of issued and outstanding shares of common stock
issued by the Borrower to, and owned by, such Pledgor and identified on SCHEDULE
A hereto, and the term "Proceeds" shall have the meaning provided in the Uniform
Commercial Code adopted by the state, the laws of which shall govern this
Agreement, and, in any event, shall include, without limitation, (i) all
dividends, interest and all other income derived from, or payable with respect
to, or in exchange for, the Pledged Stock, (ii) all collections on the Pledged
Stock and all distributions with respect to the Pledged Stock, (iii) all other
property from time to time received, receivable or otherwise distributed with
respect to, or in exchange for, the Pledged Stock, and (iv) any consideration
received from any sale, transfer, assignment, conveyance or disposition of any
of the Pledged Stock. The Pledged Stock and the Proceeds shall be referred to
collectively herein as the "Collateral."
3. The Agent. The Collateral will be held by the Agent as the collateral
agent for the ratable benefit of the Noteholders, and will be so held by it in
the registered name of the Pledgors, until such time as the Noteholders, by the
requisite number, authorize the Agent to exercise remedies with respect to the
Collateral after the occurrence of an Acceleration Event, as hereinafter
defined. Any enforcement, action or waiver by the Agent hereunder shall only be
undertaken upon the approval of the holders of at least a majority of the then
outstanding principal of the Notes.
4. Delivery of Pledged Stock; Additional Actions. Within five business
days of the date hereof, each Pledgor shall deliver to the Agent all of the
certificates evidencing the Pledged Stock pledged by such Pledgor to the Agent,
duly endorsed by such Pledgor to the Agent if necessary (and accompanied by any
transfer tax stamps required in connection with the pledge of such Pledged
Stock), together with undated stock powers covering such Pledged Stock, duly
executed in blank by such Pledgor to the Agent. Each Pledgor agrees that at any
reasonable time at the reasonable request of the Agent and at the expense of
such Pledgor, such Pledgor will promptly execute and deliver, or cause to be
executed and delivered, all stock certificates and powers, proxies, assignments,
instruments and documents, and promptly take all further action, that the Agent
reasonably determines is necessary or desirable to (i) perfect and protect any
security interest granted or purported to be granted by this Agreement, (ii)
enable the Agent to exercise and enforce the Noteholders' rights and remedies
under this Pledge, and/or (iii) otherwise carry out the provisions and purposes
of this Agreement.
5. Representations and Warranties. Each Pledgor represents and warrants to
the Agent, as to such Pledgor, that:
(a) The Pledged Stock owned by such Pledgor has been duly authorized
and validly issued and is fully paid and non-assessable.
(b) Such Pledgor is the record and beneficial owner of such Pledged
Stock, free and clear of any security interest, except for the security interest
created under this Agreement, with full right to deliver, pledge, and
collaterally assign such Pledged Stock to the Agent.
(c) This Agreement creates a valid security interest in such Pledged
Stock, securing the payment of the Obligations.
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(d) No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the grant by such Pledgor of the security interest created hereunder or for the
execution, delivery or performance of this Agreement by such Pledgor.
(e) The execution, delivery and performance of this Agreement are
not in contravention of law or, to such Pledgor's knowledge, of any material
agreement to which such Pledgor is a party or by which such Pledgor is bound.
6. Affirmative Covenants. Each Pledgor covenants and agrees with the Agent
that, from and after the effective date of this Agreement, such Pledgor shall
(i) maintain the security interest created in favor of the Agent in the Pledged
Stock owned by such Pledgor pursuant to this Agreement as a valid security
interest free and clear of any competing claims or liens, and (ii) defend such
security interest against claims and demands of all persons whomsoever.
7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default (as defined in Section 14 hereof)
shall have occurred and be continuing (i) each Pledgor shall be entitled to
exercise or refrain from exercising any and all voting and other consensual
rights pertaining to the Pledged Stock or any part thereof for any purpose not
inconsistent with the terms of this Agreement; (ii) each Pledgor shall be
entitled to receive and retain any and all dividends and other distributions
paid in respect of the Pledged Stock; and (iii) the Agent shall execute and
deliver (or cause to be executed and delivered) to each Pledgor, all such
proxies and other instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting and other rights which
such Pledgor is entitled to exercise pursuant to clause (i) above and to receive
the dividends and other distributions which such Pledgor is authorized to
receive pursuant to clause (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default (as defined in Section 14 hereof):
(i) All rights of the Pledgors to exercise or refrain from
exercising the voting and other consensual rights which the Pledgors would
otherwise be entitled to exercise pursuant to Section 7(a)(i) and to receive the
dividends and other distributions which the Pledgors would otherwise be
authorized to receive and retain pursuant to Section 7(a)(ii) shall cease, and
all such rights shall thereupon become vested in the Agent on behalf of the
Noteholders, which shall thereupon have the sole right (as directed by the
holders of at least a majority of the then outstanding principal amount of
Notes) to exercise or refrain from exercising such voting and other consensual
rights and to receive and hold as Pledged Stock such dividends and other
distributions;
(ii) All dividends and other distributions which are received
by any Pledgor contrary to the provisions of this Section 7 shall be received in
trust for the benefit of the Noteholders, shall be segregated from other funds
of such Pledgor and shall be forthwith paid over to the Agent, as Pledged Stock
in the same form as so received (with any necessary indorsements or
assignments); and
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(iii) Each Pledgor shall execute and deliver (or cause to be
executed and delivered) to the Agent, all such proxies and other instruments as
the Agent may reasonably request for the purpose of enabling it to exercise the
voting and other rights which it is entitled to exercise pursuant to clause (i)
above and to receive the dividends and other distributions which it is
authorized to receive pursuant to clause (ii) above.
8. Transfers and Other Liens. Each Pledgor agrees that such Pledgor will
not (i) sell, assign, transfer, convey, exchange, pledge or otherwise dispose
of, or grant any option, warrant, right, contract or commitment with respect to,
any of the Pledged Stock owned by such Pledgor, without the prior written
consent of the Agent, which consent shall not be unreasonably withheld or
delayed, or (ii) create or permit to exist any security interest with respect to
any of the Pledged Stock, except for the security interest created by this
Agreement.
9. Application of Proceeds of Sale of Pledged Stock. All monies received
by the Agent shall be applied ratably against the Obligations in the same order
as set forth in Section 7(b) of the General Security Agreement.
10. The Agent Appointed Attorney-in-Fact. After and during the continuance
of an Event of Default (as defined in Section 14 hereof), each Pledgor hereby
appoints the Agent as such Pledgor's attorney-in-fact, with full authority in
the place and stead of such Pledgor and in the name of such Pledgor or
otherwise, from time to time in the Agent's discretion to take any action and to
execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, indorse and collect all drafts and other instruments made payable to
such Pledgor representing any dividend, interest payment or other distribution
in respect of the Pledged Stock owned by such Pledgor or any part thereof and to
give full discharge for the same.
11. The Agent May Perform. If a Pledgor fails to perform any agreement
contained herein, the Agent may, but without any obligation to do so, itself
perform, or cause performance of, such agreement.
12. Reasonable Care. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Stock in its
possession if the Pledged Stock is accorded treatment substantially equal to
that which the Agent accords its own property, it being understood that the
Agent shall not have any responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Stock, whether or not the Agent has or is deemed
to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged Stock; provided,
however, that upon a Pledgor's instruction, the Agent shall use reasonable
efforts to take such action as such Pledgor directs the Agent to take with
respect to calls, conversions, exchanges, maturities, tenders, rights against
other parties or other similar matters relative to the Pledged Stock owned by
such Pledgor, but failure of the Agent to comply with any such request shall not
of itself be deemed a failure to exercise reasonable care, and no failure of the
Agent to preserve or protect any rights with respect to the Pledged Stock
against prior parties, shall be deemed a failure to exercise reasonable care in
the custody or preservation of the Pledged Stock.
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13. Subsequent Changes Affecting Pledged Stock. Each Pledgor represents to
the Agent that such Pledgor has made his own arrangements for keeping informed
of changes or potential changes affecting the Pledged Stock owned by such
Pledgor (including, but not limited to, rights to convert, rights to subscribe,
payment of dividends, reorganization or other exchanges, tender offers and
voting rights), and such Pledgor agrees that the Agent shall have no
responsibility or liability for informing such Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.
14. Events of Default; Remedies upon an Acceleration Event.
(a) Each of the following events shall constitute an "Event of
Default" under this Agreement: (i) the Borrower shall fail to pay when due and
payable any scheduled installment of interest on or principal of the Notes (and
such failure shall not have been cured within 20 days after written notice
thereof by the Agent to the Borrower), (ii) any material representation or
material warranty made herein by any Pledgor shall be false or incorrect in any
material respect when made or (iii) the breach of any material covenant
contained herein by any Pledgor, and the failure to cure such breach within
thirty (30) days after such Pledgor shall have received written notice thereof
from the Agent.
(b) If any Event of Default shall have occurred and be continuing,
and as a consequence thereof, the Noteholders, by the requisite number provided
in the Securities Purchase Agreement, shall have accelerated the maturity of the
Notes and shall not have rescinded such acceleration (an "Acceleration Event"),
the Agent shall have all of the rights and remedies with respect to the Pledged
Stock of a secured party under the applicable Uniform Commercial Code, and,
subject to the terms contained in paragraph (c) hereof, the Agent may, with
reasonable prior written notice and at its option, transfer or register the
Pledged Stock or any part thereof on the books of the Borrower into the name of
the Agent, or its nominee(s), with or without any indication that such Pledged
Stock is subject to the security interest hereunder. In view of the fact that
federal and state securities laws may impose certain restrictions on the method
by which a sale of the Pledged Stock may be effected after an Acceleration
Event, each Pledgor agrees that upon the occurrence or existence of an
Acceleration Event and during the continuance thereof, the Agent (or a party or
parties designated by the Agent) may, from time to time, attempt to sell all or
any part of the Pledged Stock by means of a private placement, restricting the
prospective purchasers to those who can make the representations and agreements
required of purchasers of securities in private placements. In so doing, the
Agent (or a party or parties designated by the Agent) may solicit offers to buy
the Pledged Stock, or any part of it, for cash, from a limited number of
investors deemed by the Agent (or its designees) in its (or their) judgment, to
be responsible parties who might be interested in purchasing the Pledged Stock,
and if the Agent and/or its designees solicits such offers from not less than
three (3) such investors, then the acceptance by the Agent of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposition of the Pledged Stock. In addition, upon the occurrence of an Event
of Default and during the continuance thereof, all rights of each Pledgor to
exercise the voting and other rights which such Pledgor would otherwise be
entitled to exercise and to receive cash dividends and interest payments, shall
cease, and all such rights shall thereupon become vested in the Agent as
provided in Section 7.
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(c) Notwithstanding anything to the contrary contained in this
Agreement, or in any of the Notes, the Securities Purchase Agreement or the
General Security Agreement, or in any other agreement now or hereafter existing
between or among the Borrower, any of the Noteholders, the Agent or any of the
Pledgors, the Agent may not commence any exercise of remedies with respect to
any of the Collateral unless and until (i) it shall first have exhausted all
commercially reasonable efforts to dispose of the "Collateral", as such term is
defined in the General Security Agreement and (ii) it shall have given each
Pledgor not less than twenty (20) days written notice thereof.
15. Termination. This Agreement shall terminate when all the Obligations
have been fully paid and performed, at which time the Agent shall reassign and
redeliver (or cause to be reassigned and redelivered) to the applicable Pledgor,
or to such person or persons as such Pledgor shall designate, against receipt,
such of the Pledged Stock (if any) as shall not have been sold or otherwise
applied by the Agent pursuant to the terms hereof and shall still be held by it
hereunder, together with appropriate instruments of reassignment and release.
Any such reassignment shall be without recourse upon or warranty by the Agent
and at the expense of such Pledgor. Upon termination of this Agreement, the
Agent shall execute and deliver to the applicable Pledgor such documents as such
Pledgor shall reasonably request to evidence such termination and the discharge
and release of the Agent's security interest in the Pledged Stock owned by such
Pledgor.
16. Amendments, Waivers and Consents. Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
Agent and each Pledgor.
17. Notices. Any notice required or desired to be served, given or
delivered hereunder shall be in writing (including facsimile transmission),
shall be addressed and shall be deemed to have been validly served, given or
delivered if so addressed and sent by overnight mail, as follows:
(a) If to the Agent, then to:
Xxxxxx X. Xxxxxx, as Agent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to:
Xxxxxxxx Xxxxxx
The Chrysler Building
000 Xxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
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(b) If to any Pledgor, then to
Xxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxxxx
Xxx. 0000
Xxxxxxxxx, XX 00000
With a copy to:
Blank Rome LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
18. Continuing Security Interest. This Agreement shall create a continuing
security interest in the Pledged Stock and shall (i) remain in full force and
effect until payment in full of the Obligations; (ii) be binding upon each
Pledgor, and the heirs, successors and assigns of each as applicable; and (iii)
inure to the benefit of the Pledgee and its successors, transferees and assigns.
19. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG
NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK
(the "Choice of Law State"). Unless otherwise defined herein, terms defined in
Articles 8 and 9 of the Uniform Commercial Code, as in effect in the Choice of
Law State, are used herein as therein defined. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but, if any provision of this Agreement shall be
interpreted in such manner as to be ineffective or invalid under applicable law,
such provisions shall be ineffective or invalid only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
20. Consent To Jurisdiction; Service of Process; Jury Trial Waiver. Each
Pledgor and the Agent (1) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, and (2) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding. Each Pledgor waives any objection which
such Pledgor may have now or hereafter to the venue of any such suit, action or
proceeding. Each Pledgor and the Agent further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in the New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York and agrees
that service of process upon such Pledgor mailed by certified mail to his
address set forth below shall be deemed in every respect effective service of
process upon such Pledgor, in any such suit, action or proceeding. THE PARTIES
HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
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21. Definitions. The singular shall include the plural and vice versa and
any gender shall include any other gender as the text shall indicate.
22. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
IN WITNESS WHEREOF, each of the Agent and the Pledgors have each caused
this Stock Pledge Agreement to be duly executed and delivered as of the date
first above written.
PLEDGORS:
/s/ Xxxxx X. Xxxxxxxxx
----------------------------
XXXXX X. XXXXXXXXX
000 Xxxxxx Xxxxxx, Xxx. 0000
Xxxxxxxxx, XX 00000
/s/ Xxxxxxx Xxxxxx
----------------------------
XXXXXXX XXXXXX
00000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
AGENT:
/s/ Xxxxxx X. Xxxxxx
----------------------------
XXXXXX X. XXXXXX
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
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SCHEDULE A
Description of Pledged Stock
NAME OF PLEDGOR CERTIFICATE NO. NUMBER OF SHARES
--------------- --------------- ----------------
Xxxxx X. Xxxxxxxxx ____________ 540,993
Xxxxxxx Xxxxxx ____________ 540,993
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