Exhibit 4.7
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement") dated as of April 26, 2004,
between Laurus Master Fund, Ltd. ("Pledgee"), and Conolog Corp. ("Pledgor").
BACKGROUND
Pledgor has entered into a Securities Purchase Agreement dated as of April
26, 2004 (as amended, modified, restated or supplemented from time to time, the
"Purchase Agreement") and a Security Agreement dated as of the date hereof (as
amended, modified, restated or supplemented from time to time, the "Security
Agreement") pursuant to which Pledgee provides or will provide certain financial
accommodations to Pledgor.
In order to induce Pledgee to provide or continue to provide the financial
accommodations described in the Purchase Agreement and the Security Agreement,
Pledgor has agreed to pledge and grant a security interest in the collateral
described herein to Pledgee on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Defined Terms. All capitalized terms used herein which are not defined
shall have the meanings given to them in the Purchase Agreement.
2. Pledge and Grant of Security Interest. To secure the full and punctual
payment and performance of the (a) obligations under the Purchase Agreement and
the Security Agreement and (b) all other indebtedness, obligations and
liabilities of Pledgor to Pledgee whether now existing or hereafter arising,
direct or indirect, liquidated or unliquidated, absolute or contingent, due or
not due and whether under, pursuant to or evidenced by a note, agreement,
guaranty, instrument or otherwise ((a) and (b) collectively, the
"Indebtedness"), Pledgor hereby pledges, assigns, hypothecates, transfers and
grants a security interest to Pledgee in all of the following (the
"Collateral"):
(a) the shares of stock set forth on Schedule A annexed hereto and
expressly made a part hereof (the "Pledged Stock"), the certificates
representing the Pledged Stock and all dividends, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Stock;
(b) all additional shares of stock of any issuer of the Pledged
Stock (the "Issuer") from time to time acquired by the Pledgor in any manner,
including, without limitation, stock dividends or a distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off (which shares shall be deemed to be part of the Collateral), and the
certificates representing such additional shares, and all dividends, cash,
instruments and other property or
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proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares; and
(c) all options and rights, whether as an addition to, in
substitution of or in exchange for any shares of the Pledged Stock and all
dividends, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all such options and rights.
3. Delivery of Collateral. All certificates representing or evidencing the
Pledged Stock shall be delivered to and held by or on behalf of Pledgee pursuant
hereto and shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Pledgee. Pledgor
hereby authorizes the Issuer upon demand by Pledgee to deliver any certificates,
instruments or other distributions issued in connection with the Collateral
directly to Pledgee, in each case to be held by Pledgee, subject to the terms
hereof. Upon an Event of Default under the Note that has occurred and is
continuing beyond any applicable grace period, Pledgee shall have the right,
during such time in its discretion and without notice to the Pledgor, to
transfer to or to register in the name of Pledgee or any of its nominees any or
all of the Pledged Stock. In addition, Pledgee shall have the right at such time
to exchange certificates or instruments representing or evidencing Pledged Stock
for certificates or instruments of smaller or larger denominations.
4. Representations and Warranties of Pledgor. Pledgor represents and
warrants to Pledgee (which representations and warranties shall be deemed to
continue to be made until all of the Indebtedness has been paid in full and the
Purchase Agreement has been irrevocably terminated) that:
(a) The execution, delivery and performance by Pledgor of this
Agreement and the pledge of the Collateral hereunder do not and will not result
in any violation of any agreement, indenture, instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation
applicable to Pledgor.
(b) This Agreement constitutes the legal, valid, and binding
obligation of Pledgor enforceable against Pledgor in accordance with its terms.
(c) Pledgor is the direct and beneficial owner of each share of the
Collateral.
(d) All of the shares of the Pledged Stock have been duly
authorized, validly issued and are fully paid and nonassessable.
(e) No consent or approval of any person, corporation, governmental
body, regulatory authority or other entity, is or will be necessary for (i) the
execution, delivery and performance of this Agreement, (ii) the exercise by
Pledgee of any rights with respect to the Collateral or (iii) the pledge and
assignment of, and the grant of a security interest in, the Collateral
hereunder.
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(f) There are no pending or, to the best of Pledgor's knowledge,
threatened actions or proceedings before any court, judicial body,
administrative agency or arbitrator which may materially adversely affect the
Collateral.
(g) Pledgor has the requisite power and authority to enter into this
Agreement and to pledge and assign the Collateral to Pledgee in accordance with
the terms of this Agreement.
(h) Pledgor owns each item of the Collateral and, except for the
pledge and security interest granted to Pledgee hereunder, the Collateral shall
be, immediately following the closing of the transactions contemplated by the
Purchase Agreement, free and clear of any other security interest, pledge,
claim, lien, charge, hypothecation, assignment, offset or encumbrance whatsoever
(collectively, "Liens").
(i) There are no restrictions on transfer of the Pledged Stock
contained in the certificate of incorporation or by-laws of the Issuer or
otherwise which have not otherwise been enforceably and legally waived by the
necessary parties.
(j) None of the Pledged Stock has been issued or transferred in
violation of the securities registration, securities disclosure or similar laws
of any jurisdiction to which such issuance or transfer may be subject.
(k) The pledge and assignment of the Collateral and the grant of a
security interest under this Agreement vest in Pledgee all rights of Pledgor in
the Collateral as contemplated by this Agreement.
(l) The Pledged Stock constitutes one hundred percent (100%) of the
issued and outstanding shares of capital stock of each respective Issuer.
5. Covenants. Pledgor covenants that, until the Indebtedness shall be
satisfied in full and the Purchase Agreement is irrevocably terminated:
(a) Pledgor will not sell, assign, transfer, convey, or otherwise
dispose of its rights in or to the Collateral or any interest therein; nor will
Pledgor create, incur or permit to exist any Lien whatsoever with respect to any
of the Collateral or the proceeds thereof other than that created hereby.
(b) Pledgor will, at its expense, defend Pledgee's right, title and
security interest in and to the Collateral against the claims of any other
party.
(c) Pledgor shall at any time, and from time to time, upon the
written request of Pledgee, execute and deliver such further documents and do
such further acts and things as Pledgee may reasonably request in order to
effect the purposes of this Agreement including, but without limitation,
delivering to Pledgee upon the occurrence of an Event of Default irrevocable
proxies in respect of the Collateral in form satisfactory to Pledgee. Until
receipt thereof, upon an Event of Default under the Note that has occurred and
is continuing beyond any applicable grace
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period, this Agreement shall constitute Pledgor's proxy to Pledgee or its
nominee to vote all shares of Collateral then registered in Pledgor's name.
(d) Pledgor will not consent to or approve the issuance of (i) any
additional shares of any class of capital stock of the Issuer; (ii) any
securities convertible either voluntarily by the holder thereof or automatically
upon the occurrence or nonoccurrence of any event or condition into, or any
securities exchangeable for, any such shares.
6. Voting Rights and Dividends. In addition to Pledgee's rights and
remedies set forth in Section 8 hereof, in case an Event of Default under the
Note shall have occurred and be continuing, beyond any applicable cure period
Pledgee shall (i) vote the Collateral (ii) be entitled to give consents, waivers
and ratifications in respect of the Collateral (Pledgor hereby irrevocably
constituting and appointing Pledgee, with full power of substitution, the proxy
and attorney-in-fact of Pledgor for such purposes) and (iii) be entitled to
collect and receive for its own use cash dividends paid on the Collateral.
Pledgor shall not be permitted to exercise or refrain from exercising any voting
rights or other powers if, in the reasonable judgment of Pledgee, such action
would have a material adverse effect on the value of the Collateral or any part
thereof; and, provided, further, that Pledgor shall give at least five (5) days'
written notice of the manner in which Pledgor intends to exercise, or the
reasons for refraining from exercising, any voting rights or other powers other
than with respect to any election of directors and voting with respect to any
incidental matters. Following the occurrence of an Event of Default, all
dividends and all other distributions in respect of any of the Collateral, shall
be delivered to Pledgee to hold as Collateral and shall, if received by the
Pledgor, be received in trust for the benefit of Pledgee, be segregated from the
other property or funds of the Pledgor, and be forthwith delivered to Pledgee as
Collateral in the same form as so received (with any necessary endorsement.
7. Event of Default. An Event of Default shall be deemed to have occurred
and may be declared by Pledgee upon the happening of any of the following
events:
(a) An "Event of Default" under any Note shall have occurred and be
continuing beyond any applicable cure period;
(b) Pledgor shall default in the performance of any of its
obligations under any agreement between Pledgor and Pledgee, including, without
limitation, this Agreement, and such default shall not be cured for a period of
twenty (20) business days after the occurrence thereof;
(c) Any material representation or warranty of the Pledgee made
herein, in the Purchase Agreement, or in any agreement, statement or certificate
given in writing pursuant hereto or in connection therewith shall be false or
misleading and shall not be cured for a period of twenty (20) business days
after the occurrence thereof;
(d) The Collateral is subjected to levy of execution, attachment,
distraint or other judicial process; or the Collateral is the subject of a claim
(other than by Pledgee) of a Lien
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or other right or interest in or to the Collateral and such levy or claim shall
not be cured, disputed or stayed within a period of thirty (30) days after the
occurrence thereof; or
(e) Pledgor shall (i) apply for, consent to, or suffer to exist the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or other fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within ninety (90) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing.
8. Remedies. In case an Event of Default shall have occurred and be
declared by Pledgee, Pledgee may:
(a) Transfer any or all of the Collateral into its name, or into the
name of its nominee or nominees;
(b) Exercise all corporate rights with respect to the Collateral
including, without limitation, all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining to any shares of the
Collateral as if it were the absolute owner thereof, including, but without
limitation, the right to exchange, at its discretion, any or all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the Issuer thereof, or upon the exercise by the Issuer of
any right, privilege or option pertaining to any of the Collateral, and, in
connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depository, transfer agent, registrar or other designated agent
upon such terms and conditions as it may determine, all without liability except
to account for property actually received by it; and
(c) Subject to any requirement of applicable law, sell, assign and
deliver the whole or, from time to time, any part of the Collateral at the time
held by Pledgee, at any private sale or at public auction, with or without
demand, advertisement or notice of the time or place of sale or adjournment
thereof or otherwise (all of which are hereby waived, except such notice as is
required by applicable law and cannot be waived), for cash or credit or for
other property for immediate or future delivery, and for such price or prices
and on such terms as Pledgee in its sole discretion may determine, or as may be
required by applicable law.
Pledgor hereby waives and releases any and all right or equity of
redemption, whether before or after sale hereunder. At any such sale, unless
prohibited by applicable law, Pledgee may bid for and purchase the whole or any
part of the Collateral so sold free from any such right or equity of redemption.
All moneys received by Pledgee hereunder whether upon sale of the Collateral or
any part thereof or otherwise shall be held by Pledgee and applied by it as
provided in Section 10 hereof. No failure or delay on the part of Pledgee in
exercising any rights hereunder shall operate as a waiver of any such rights nor
shall any single or partial exercise of any such rights preclude any other or
future exercise thereof or the exercise of any
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other rights hereunder. Pledgee shall have no duty as to the collection or
protection of the Collateral or any income thereon nor any duty as to
preservation of any rights pertaining thereto, except to apply the funds in
accordance with the requirements of Section 10 hereof. Pledgee may exercise its
rights with respect to property held hereunder without resort to other security
for or sources of reimbursement for the Indebtedness. In addition to the
foregoing, Pledgee shall have all of the rights, remedies and privileges of a
secured party under the Uniform Commercial Code of New York regardless of the
jurisdiction in which enforcement hereof is sought.
9. Private Sale. Pledgor recognizes that Pledgee may be unable to effect
(or to do so only after delay which would adversely affect the value that might
be realized from the Collateral) a public sale of all or part of the Collateral
by reason of certain prohibitions contained in the Securities Act, and may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor agrees that any such private sale may be
at prices and on terms less favorable to the seller than if sold at public sales
and that such private sales shall be deemed to have been made in a commercially
reasonable manner. Pledgor agrees that Pledgee has no obligation to delay sale
of any Collateral for the period of time necessary to permit the Issuer to
register the Collateral for public sale under the Securities Act.
10. Proceeds of Sale. The proceeds of any collection, recovery, receipt,
appropriation, realization or sale of the Collateral shall be applied by Pledgee
as follows:
(a) First, to the payment of all costs, reasonable expenses and
charges of Pledgee and to the reimbursement of Pledgee for the prior payment of
such costs, reasonable expenses and charges incurred in connection with the care
and safekeeping of the Collateral (including, without limitation, the reasonable
expenses of any sale or any other disposition of any of the Collateral), the
expenses of any taking, attorneys' fees and reasonable expenses, court costs,
any other fees or expenses incurred or expenditures or advances made by Pledgee
in the protection, enforcement or exercise of its rights, powers or remedies
hereunder;
(b) Second, to the payment of the Indebtedness, in whole or in part,
in such order as Pledgee may elect, whether or not such Indebtedness is then
due;
(c) Third, to such persons, firms, corporations or other entities as
required by applicable law including, without limitation, Section 9-504(1)(c) of
the UCC; and
(d) Fourth, to the extent of any surplus to Pledgor or as a court of
competent jurisdiction may direct.
In the event that the proceeds of any collection, recovery, receipt,
appropriation, realization or sale are insufficient to satisfy the Indebtedness,
Pledgor shall be liable for the deficiency plus the costs and fees of any
attorneys employed by Pledgee to collect such deficiency.
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11. Waiver of Marshaling. Pledgor hereby waives any right to compel any
marshaling of any of the Collateral.
12. No Waiver. Any and all of Pledgee's rights with respect to the Liens
granted under this Agreement shall continue unimpaired, and Pledgor shall be and
remain obligated in accordance with the terms hereof, notwithstanding (a) the
bankruptcy, insolvency or reorganization of Pledgor, (b) the release or
substitution of any item of the Collateral at any time, or of any rights or
interests therein, or (c) any delay, extension of time, renewal, compromise or
other indulgence granted by Pledgee in reference to any of the Indebtedness.
Pledgor hereby waives all notice of any such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consents to be
bound hereby as fully and effectively as if Pledgor had expressly agreed thereto
in advance. No delay or extension of time by Pledgee in exercising any power of
sale, option or other right or remedy hereunder, and no failure by Pledgee to
give notice or make demand, shall constitute a waiver thereof, or limit, impair
or prejudice Pledgee's right to take any action against Pledgor or to exercise
any other power of sale, option or any other right or remedy.
13. Expenses. The Collateral shall secure, and Pledgor shall pay to
Pledgee on demand, from time to time, all reasonable costs and expenses,
(including but not limited to, reasonable attorneys' fees and costs, taxes, and
all transfer, recording, filing and other charges) of, or incidental to, the
custody, care, transfer, administration of the Collateral or any other
collateral, or in any way relating to the enforcement, protection or
preservation of the rights or remedies of Pledgee under this Agreement or with
respect to any of the Indebtedness.
14. Pledgee Appointed Attorney-In-Fact and Performance by Pledgee. Upon
the occurrence of an Event of Default, Pledgor hereby irrevocably constitutes
and appoints Pledgee as Pledgor's true and lawful attorney-in-fact, with full
power of substitution, to execute, acknowledge and deliver any instruments and
to do in Pledgor's name, place and stead, all such acts, things and deeds for
and on behalf of and in the name of Pledgor, which Pledgor could or might do or
which Pledgee may deem necessary, desirable or convenient to accomplish the
purposes of this Agreement, including, without limitation, to execute such
instruments of assignment or transfer or orders and to register, convey or
otherwise transfer title to the Collateral into Pledgee's name. Pledgor hereby
ratifies and confirms all that said attorney-in-fact may so do and hereby
declares this power of attorney to be coupled with an interest and irrevocable.
If Pledgor fails to perform any agreement herein contained, Pledgee may itself
perform or cause performance thereof, and any costs and expenses of Pledgee
incurred in connection therewith shall be paid by Pledgor as provided in Section
10 hereof.
15. Waivers.
(a) EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT
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EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
JURY.
16. Recapture. Notwithstanding anything to the contrary in this Agreement,
if Pledgee receives any payment or payments on account of the Indebtedness,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver, or any other party under the United States
Bankruptcy Code, as amended, or any other federal or state bankruptcy,
reorganization, moratorium or insolvency law relating to or affecting the
enforcement of creditors' rights generally, common law or equitable doctrine,
then to the extent of any sum not finally retained by Pledgee, Pledgor's
obligations to Pledgee shall be reinstated and this Agreement shall remain in
full force and effect (or be reinstated) until payment shall have been made to
Pledgee, which payment shall be due on demand.
17. Captions. All captions in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.
18. Miscellaneous.
(a) This Agreement constitutes the entire and final agreement among
the parties with respect to the subject matter hereof and may not be changed,
terminated or otherwise varied except by a writing duly executed by the parties
hereto.
(b) No waiver of any term or condition of this Agreement, whether by
delay, omission or otherwise, shall be effective unless in writing and signed by
the party sought to be charged, and then such waiver shall be effective only in
the specific instance and for the purpose for which given.
(c) In the event that any provision of this Agreement or the
application thereof to Pledgor or any circumstance in any jurisdiction governing
this Agreement shall, to any extent, be invalid or unenforceable under any
applicable statute, regulation, or rule of law, such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute, regulation or rule of law, and the
remainder of this Agreement and the application of any such invalid or
unenforceable provision to parties, jurisdictions, or circumstances other than
to whom or to which it is held invalid or unenforceable shall not be affected
thereby, nor shall same affect the validity or enforceability of any other
provision of this Agreement.
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(d) This Agreement shall be binding upon Pledgor, and Pledgor's
successors and assigns, and shall inure to the benefit of Pledgee and its
successors and assigns.
(e) Any notice or other communication required or permitted pursuant
to this Agreement shall be given in accordance with the Purchase Agreement.
(f) This Agreement shall be governed by and construed and enforced
in all respects in accordance with the laws of the State of New York applied to
contracts to be performed wholly within the State of New York.
(g) PLEDGOR EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE OF EACH
COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF NEW YORK FOR ALL
PURPOSES IN CONNECTION WITH THIS AGREEMENT. ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO
OR CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A STATE COURT LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. PLEDGOR FURTHER CONSENTS THAT ANY
SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY
NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR
A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY
BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF
NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN
SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. PLEDGOR
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON
AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED
UPON FORUM NON CONVENIENS.
(h) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which when taken together shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed an original signature hereto.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first written above.
CONOLOG CORPORATION
By:__________________________
Name:
Title:
LAURUS MASTER FUND, LTD.
By:__________________________
Name:
Title:
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SCHEDULE A to the Stock Pledge Agreement
Pledged Stock
_____________________________________ ___________________ _______________________ __________________ __________________
Issuer Class of Stock Stock Certificate Par Value Number of Shares
______ ______________ __________________ _________ ________________
Number
______
_____________________________________ ___________________ _______________________ __________________ __________________
Nologoc Corp. Common
_____________________________________ ___________________ _______________________ __________________ __________________
_____________________________________ ___________________ _______________________ __________________ __________________
_____________________________________ ___________________ _______________________ __________________ __________________
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