Exhibit 4.9
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 26th day of April, 2004 among Conolog
Corporation, a Delaware corporation (the "Company") and Laurus Master Fund, Ltd.
(the "Purchaser"), and Dechert LLP (the "Escrow Agent"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered into a Securities
Purchase Agreement ("Purchase Agreement") for the sale by the Company to the
Purchaser of a secured convertible term note ("Term Note") and issuance of a
common stock purchase warrants ("Warrants") to the Purchaser, in the aggregate
principal amounts and in the denominations set forth on Schedule A hereto; and
WHEREAS, the parties hereto require the Company to deliver the notes
against payment therefor, with such notes and payment to be delivered to the
Escrow Agent to be held in escrow and released by the Escrow Agent in accordance
with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below. Terms not otherwise defined herein
shall have the meaning set forth in the Purchase Agreement.
(a) "Agreement" means this Agreement and all amendments made
hereto and thereto by written agreement between the parties.
(b) "Company Documents" means the Securities Purchase Agreement,
the Term Note, Term Note Registration Rights Agreement, Term
Note
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Warrant, the Company Security Agreement, the Company
Subsidiary Security Agreement, the Subsidiary Guaranty, Stock
Pledge Agreement, the Legal Opinion and the Closing Payment.
(c) "Closing Payment " means the fees to be paid to Laurus Capital
Management LLC set forth on Schedule A hereto.
(d) "Disbursement Letter" means that certain letter delivered to
the Escrow Agent by each of the Purchaser and the Company
setting forth wire instructions and amounts to be funded at
the Closing.
(e) "Company Security Agreement" means that certain Security
Agreement delivered by the Company pursuant to the Securities
Purchase Agreement.
(f) "Company Subsidiary Security Agreement" means that certain
Subsidiary Security Agreement delivered by the Company
pursuant to the Securities Purchase Agreement.
(g) "Company Subsidiary Guaranty " means that certain Subsidiary
Guaranty delivered by each of the Company's subsidiairies
pursuant to the Securities Purchase Agreement.
(h) "Escrowed Payment" means $1,200,000.
(i) "Legal Opinion" means the original signed legal opinion
of___________.
(j) "Purchaser Documents" means the Escrowed Payment, the
Securities Purchase Agreement, Term Note Registration Rights
Agreement and the Disbursement Letter.
(k) "Term Note" means the convertible term note of the Company
issued to the Purchaser in the amount of $1,200,000 in the
form of Exhibit A annexed to the Securities Purchase
Agreement.
(l) "Term Note Registration Rights Agreement" means that certain
registration rights agreement executed and delivered pursuant
to the Securities Purchase Agreement.
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(m) "Term Note Warrant" means the common stock purchase warrant of
the Company to purchase up to 270,0000 shares of the Company's
common stock, issued to Purchaser in connection with the Term
Note.
(n) "Stock Pledge Agreement" means that certain stock pledge
agreement dated as of the date hereof between the Company and
the Purchaser.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters contained herein and
pertaining to the Company Documents and Purchaser Documents and supersedes all
prior agreements, understandings, negotiations and discussions of the parties,
whether oral or written. There are no warranties, representations and other
agreements made by the parties in connection with the subject matter hereof
except as specifically set forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party entitled to the benefit thereof waiving
compliance. Except as expressly stated herein, no delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by any party against any
other party concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Each of the parties hereto and the individuals executing
this Agreement and other agreements on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that
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any provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of any agreement.
1.7. Consent to Jurisdiction. Subject to Section 1.6 hereof, each of the
Company, the Escrow Agent and the Purchaser hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
1.8. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against any other.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Delivery of Company Documents to Escrow Agent. On or about the date
hereof, the Company shall deliver to the Escrow Agent the Company Documents
executed by the Company to the extent it is a party thereto.
2.2 Delivery of Purchaser Documents to Escrow Agent. On or about the date
hereof, the Purchaser shall deliver to the Escrow Agent the Purchaser Documents
executed by the Purchaser.
2.3. Intention to Create Escrow Over Company Documents and Purchaser
Documents. The Purchaser, the Company intend that the Company Documents and
Purchaser Documents shall be held in escrow by the Escrow Agent pursuant to this
Agreement for their benefit as set forth herein.
2.4. Escrow Agent to Deliver Company Documents and Purchaser Documents.
The Escrow Agent shall hold and release the Company Documents and Purchaser
Documents only in accordance with the terms and conditions of this Agreement.
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ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND PURCHASER DOCUMENTS
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Company Documents and Purchaser Documents
pursuant to (a), (b) or (c) below, as follows:
(a) Upon receipt by the Escrow Agent of the Company Documents and
the corresponding Purchaser Documents, the Escrow Agent will simultaneously
release the Company Documents to the Purchaser and release the corresponding
Purchaser Documents to the Company except that (i) the Closing Payment will be
delivered to the fund managers; and (ii) the reasonable legal fees for counsel
to the Purchaser, which shall be paid pursuant to Section 2(c) of the Securities
Purchase Agreement, will be released to the Purchaser. At the request of the
Escrow Agent, the Company each will provide written facsimile or original
instructions to the Escrow Agent as to the disposition of all funds releasable
to the Company.
(b) Upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Company and the Purchaser, it shall deliver
the Company Documents and Purchaser Documents in accordance with the terms of
the Joint Instructions.
(c) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a "Court
Order"), the Escrow Agent shall deliver the Company Documents and Purchaser
Documents in accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court Order to
the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to
the effect that the court issuing the Court Order has competent jurisdiction and
that the Court Order is final and non-appealable.
3.2. Acknowledgement of Company and Purchaser; Disputes. The Company and
the Purchaser acknowledge that the only terms and conditions upon which the
Company Documents and Purchaser Documents are to be released are set forth in
Articles 3 and 4 of this Agreement. The Company and the Purchaser reaffirm their
agreement to abide by the terms and conditions of this Agreement with respect to
the release of the Company Documents and Purchaser Documents. Any dispute with
respect to the release of the Company Documents and Purchaser Documents shall be
resolved pursuant to Section 4.2 or by agreement among the Company and
Purchaser.
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ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Company acknowledge and agree that the
Escrow Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either the Purchaser or the Company is entitled
to receipt of the Company Documents and Purchaser Documents pursuant to any
other agreement or otherwise; (ii) shall be obligated only for the performance
of such duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness of
any fact stated therein or the propriety or validity or the service thereof;
(iv) may assume that any person purporting to give notice or make any statement
or execute any document in connection with the provisions hereof has been duly
authorized to do so; (v) shall not be responsible for the identity, authority or
rights of any person, firm or corporation executing or delivering or purporting
to execute or deliver this Escrow Agreement or any document deposited hereunder
or any endorsement thereon or assignment thereof; (vi) shall not be under any
duty to give the property held by Escrow Agent hereunder any greater degree of
care than Escrow Agent gives its own similar property; and (vii) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.
(b) The Purchaser and the Company acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and that the Escrow Agent
shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. The Purchaser and the Company,
jointly and severally, agree to indemnify and hold harmless the Escrow Agent and
any of Escrow Agent's partners, employees, agents and representatives for any
action taken or omitted to be taken by Escrow Agent or any of them hereunder,
including the fees of outside counsel and other costs and expenses of defending
itself against any claim or liability under this Agreement, except in the case
of gross negligence or willful misconduct on Escrow Agent's part committed in
its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a
duty only to the Purchaser and Company under this Agreement and to no other
person.
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(c) The Purchaser and the Company jointly and severally agree to
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
counsel fees) incurred in connection with the performance of its duties and
responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Purchaser and the Company. Prior to the effective date of the resignation as
specified in such notice, the Purchaser and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of the Company Documents and
Purchaser Documents to a substitute Escrow Agent selected by the Purchaser and
the Company. If no successor Escrow Agent is named by the Purchaser and Company,
the Escrow Agent may apply to a court of competent jurisdiction in the State of
New York for appointment of a successor Escrow Agent, and to deposit the Company
Documents and Purchaser Documents with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any interest in
the Company Documents and Purchaser Documents, but is serving only as escrow
agent, having only possession thereof.
(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or within the rights or powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, and in accordnace with advice of
counsel (which counsel may be of the Escrow Agent's own choosing), and shall not
be liable for any mistake of fact or error of judgement or for any acts or
omissions of any kind except for its own willful misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for the
Purchaser or the Company, as the case may be, in any dispute as to the
disposition of the Company Documents and Purchaser Documents, in any other
dispute among the Purchaser and the Company, whether or not the Escrow Agent is
then holding the Company Documents and Purchaser Documents and continues to act
as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution: Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
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(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Company Documents and
Purchaser Documents, or if the Escrow Agent shall in good faith be uncertain as
to its duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Company Documents and Purchaser Documents pending receipt
of a Joint Instruction from the Purchaser and Company, or (ii) deposit the
Company Documents and Purchaser Documents with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent shall
give written notice thereof to the Purchaser and the Company and shall thereupon
be relieved and discharged from all further obligations pursuant to this
Agreement. The Escrow Agent may, but shall be under no duty to, institute or
defend any legal proceedings which relate to the Company Documents and Purchaser
Documents. The Escrow Agent shall have the right to retain counsel if it becomes
involved in any disagreement, dispute or litigation on account of this Agreement
or otherwise determines that it is necessary to consult counsel.
(b) The Escrow Agent is hereby expressly authorized to comply with
and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Purchaser and Company
or to any other person, firm, corporation or entity by reason of such
compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon the release of all of
the Company Documents and Purchaser Documents or at any time upon the agreement
in writing of the Purchaser and Company.
5.2. Notices. All notices, request, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
(a) If to the Company, to: Conolog Corporation
0 Xxxxxxxx Xxxx
Xxxxxxxxxx, X.X. 00000
Attn: Chief Financial Officer
Fax:
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With a copy to:
Fax:
(b) If to the Purchaser, to:
LAURUS MASTER FUND, LTD.
c/o Ironshore Corporate Services Ltd.
X.X. Xxx 0000 G.T., Queensgate House, South
Church Street Grand Cayman, Cayman Islands
Fax: 000-000-0000
(c) If to the Escrow Agent, to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right
or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.6 Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate counterparts,
each of which, when so
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executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement may be executed by
facsimile transmission.
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5.7. Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.
CONOLOG CORPORATION
the "Company"
By:___________________________________
Name:
Title:
PURCHASER:
LAURUS MASTER FUND, LTD.
By:___________________________________
Name:
Title:
ESCROW AGENT:
DECHERT LLP
By:___________________________________
Name:
Title:
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
_______________________________________________________________ ______________________________________________________
PURCHASER PRINCIPAL NOTE AMOUNT
_______________________________________________________________ ______________________________________________________
LAURUS MASTER FUND, LTD., $1,200,000 Term Note
x/x Xxxxxxxxx Xxxxxxxxx Xxxxxxxx Xxx., X.X. Xxx 0000 G.T.,
Queensgate House, South Church Street, Grand Cayman, Cayman
Islands
Fax: 000-000-0000
_______________________________________________________________ ______________________________________________________
TOTAL $1,200,000
_______________________________________________________________ ______________________________________________________
_______________________________________________________________ ______________________________________________________
FUND MANAGER CLOSING PAYMENT
_______________________________________________________________ ______________________________________________________
LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection with
000 Xxxxx Xxxxxx, 00xx Floor investment by Laurus Master Fund, Ltd. for which
Xxx Xxxx, Xxx Xxxx 00000 Laurus Capital Management, L.L.C. is the Manager.
Fax: 000-000-0000
_______________________________________________________________ ______________________________________________________
TOTAL $42,000
_______________________________________________________________ ______________________________________________________
WARRANTS
_______________________________________________________________ ______________________________________________________
WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING
_______________________________________________________________ ______________________________________________________
LAURUS MASTER FUND, LTD. 270,000 Term Note Warrants issuable in connection
A Cayman Island corporation with investment by Laurus Master Fund, Ltd.
c/o Ironshore Corporate Services Ltd.
X.X. Xxx 0000 G.T.
Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Fax: 000-000-0000
_______________________________________________________________ ______________________________________________________
TOTAL 270,000 Warrants
_______________________________________________________________ ______________________________________________________
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