EXHIBIT 10.4
CONOLOG
CORPORATION
SELLING AGENT
AGREEMENT
Dated as of July 15, 2005
First Montauk Securities Corp.
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey
07701
Gentlemen:
Conolog Corporation (the
“Company”) proposes to offer for sale (the
“Offering”) in a private offering pursuant to
Regulation S promulgated under the Securities Act of 1933, as
amended (the “Act”) up to an aggregate of up to
$1,500,000 of its shares of common stock and common stock warrants
(collectively, the “Securities”). This letter agreement
shall confirm our agreement concerning First Montauk Securities
Corp. acting as exclusive selling or placement agent (the
“Selling Agent” or “FMSC”) in connection
with the sale of the Securities.
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1.
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Appointment of Selling Agent.
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On the basis of the representations
and warranties contained herein, and subject to the terms and
conditions set forth herein, the Company hereby appoints First
Montauk Securities Corp. as exclusive selling agent/placement agent
for a period beginning on the date hereof and terminating on July
29, 2005 (unless terminated sooner pursuant to the terms hereof)
and grants to FMSC the right to offer, as its agent, the Securities
pursuant to the terms of this Agreement. On the basis of such
representations and warranties, and subject to such conditions,
FMSC hereby accepts such appointment and agree to use its
reasonable best efforts to secure subscribers to purchase
subscriptions for the Securities. The Company understands that the
Selling Agent is being retained to obtain subscriptions on a
“best efforts” basis and has not guaranteed the sale of
any Securities.
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2.
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Terms of the Offering.
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(a) The
Offering shall consist of up to 1,200,000 shares of the
Company’s Common stock, par value $.001 per share. The
Company will also issue to the Subscribers one warrant to purchase
a shares of the Company’s Common Stock for each share of
common stock that is sold to the Subscribers. The Offering is being
made on a “best efforts” basis with no minimum offering
amount of subscriptions, which must be received prior to July 22,
2005, unless extended to July 29, 2005. In the event a subscription
is not accepted, such rejected subscription funds will be returned
to the subscriber without interest or deduction.
(b) The
Company has prepared a Securities Purchase Agreement and Form of
Warrant to be delivered to all prospective investors. The
Securities Purchase Agreement, and form of Warrant, including all
supplements, exhibits and appendices thereto and documents
delivered therewith, are referred to herein as the
“Documents” and shall include any supplements or
amendments in accordance with this Agreement. The Offering shall
commence on the date hereof, and shall expire at 5:00 p.m., New
York time, on July 22, 2005, unless extended as provided above.
Such period, as same may be so extended, shall hereinafter be
referred to as the “Offering Period.”
(c) Each
prospective investor (“Prospective Investor”) who
desires to purchase Securities shall deliver to the Selling Agent
the Securities Purchase Agreement and immediately available funds
in the amount necessary to purchase the amount of Securities such
Prospective Investor desires to purchase. The Selling Agent shall
not have any obligation to independently verify the accuracy or
completeness of any information contained in any Purchase Agreement
or the authenticity, sufficiency, or validity of any check
delivered by any Prospective Investor in payment for
Securities.
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3.
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Closing/Release of Funds.
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The closing (“Closing”)
shall be held at such time as the conditions as provided in the
Securities Purchase Agreement have been satisfied. References
herein to the actual closing date thereof shall be referred to as a
“Closing Date.”
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4.
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Representations and Warranties of the Selling
Agent.
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The Selling Agent represents and
warrants to the Company as follows:
(a) The
Selling Agent is duly incorporated and validly existing and in good
standing under the laws of its State of incorporation.
(b) The
Selling Agent is, and at the time of each Closing will be, a member
in good standing of the NASD.
(c) Offers
and sales of Securities by the Selling Agent will be made only in
accordance with this Placement Agreement and in compliance with the
provisions of Regulation S and the Selling Agent will furnish
to each investor a copy of the Documents prior to accepting any
subscription for the Securities.
(a) The
Selling Agent shall be entitled, on the Closing Date, as
compensation for its services as Selling Agent under this
Agreement, to selling Commissions payable in cash equal to 10% of
the gross subscription proceeds received by the Company through
subscriptions made by investors introduced by FMSC.
(b) In
addition to the compensation payable to the Selling Agent set forth
in clause (a) above, the Company shall grant the Selling Agent (or
its assigns, subject to
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compliance with the terms and
conditions of this Section) warrants to purchase a number of shares
of Common Stock equal to 20% of the shares of Common Stock sold in
the Offering, with an exercise price of 103% of the average closing
bid price of the Company’s Common Stock as reported on the
Nasdaq SmallCap Market on the date prior to the Initial Closing (as
defined in the Purchase Agreement) (“Selling Agent
Warrants”). The Selling Agent Warrants shall be exercisable
beginning on January 20, 2006 and continuing for a period of five
(5) years thereafter and the Selling Agent shall be entitled to
registration rights with respect to the shares of Common Stock
underlying the Selling Agent Warrants on the same terms and
conditions as provided to investors in the Offering. The Selling
Agent Warrants may be issued to up to ten employees and/or
affiliates of the Selling Agent in such amounts as the Selling
Agent shall notify in writing the Company prior to the Closing,
provided the Selling Agent provides the Company with evidence
reasonably satisfactory to the Company demonstrating compliance
with applicable security laws, which shall include, without
limitation, a legal opinion from the Selling Agent’s counsel
that such issuance to FMSC’s employees and/or affiliates is
exempt from the registration requirements of applicable securities
laws and that such issuance to FMSC’s employees and
affiliates will not result in a public distribution of the
Warrant.
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6.
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Representations and Warranties of the
Company.
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(a) The
Company represents and warrants to, and agrees with, the Selling
Agent that:
(i) No
Documents or information provided by the Company to the
Subscribers, including, without limitation the SEC Reports (as
defined in the Documents), shall contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in light
of circumstances made therein not misleading.
(ii) The
Company is, and at all times during the period from the date hereof
to and including the Closing Date will be, a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware, with full corporate power and authority, and
has obtained all necessary consents, authorizations, approvals,
orders, licenses, certificates, and permits and declarations of and
from, and has made filings with, all federal, state and local
authorities, to own, lease, license, and use its properties and
assets and to conduct its business as presently conducted as
described in the Documents and/or in any such case where the
failure to have any of the foregoing would not have a material
adverse effect on the Company’s presently conducted business.
As of the date hereof, the Company is, and at all times during the
period from the date hereof to and including the Closing Date, duly
qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing, or use of
property and assets or the conduct of its business makes such
qualification necessary except where the failure to be so qualified
would not have a material adverse effect on the Company’s
business.
(iii) As
of the date hereof, except as disclosed in the Documents or the or
the Reports as this term is defined in the Securities Purchase
Agreement, there is no, and as of the Closing Date there shall not
be any, litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending or to the
Company’s knowledge
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threatened, with respect to the
Company, or its respective operations, businesses, properties, or
assets, except as described in the Documents or such as
individually or in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
business, properties, or assets of the Company.
(iv) The
Company is not in violation or breach of, or in default with
respect to, any material term of its Certificate of Incorporation
or By-Laws.
(v) The
Company has all requisite corporate power and authority to execute,
deliver, and perform this Agreement and to consummate the
transactions contemplated hereby. All necessary corporate
proceedings of the Company have been duly taken to authorize the
execution, delivery, and performance by the Company of this
Agreement and the Purchase Agreement and the consummation of the
transactions contemplated hereby and thereby.
(vi) The
Securities and the Selling Agent’s Warrants, when issued and
delivered pursuant to the terms of the Offering shall be duly
authorized, validly issued, fully paid and non-assessable, without
any personal liability attaching to the ownership thereof solely by
being such holder and shall not have been issued in violation of
any preemptive rights of stockholders.
(vii) Neither
the Company nor any of its officers, directors, or affiliates, has
engaged or will engage, directly or indirectly, in any act or
activity that may jeopardize the status of the offering and sale of
the Securities as an exempt transaction under
Regulation S.
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7.
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Covenants of the Company.
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The Company covenants that it
will:
(a) Deliver
without charge to the Selling Agent such number of copies of the
Documents and any supplement or amendment thereto as may reasonably
be requested by the Selling Agent.
(b) Notify
you promptly of rejection of any subscription. The Company shall
not (i) accept subscriptions from, or make sales of Securities
to, any Subscribers who are not, to the Company’s knowledge,
accredited investors, or (ii) unreasonably reject any
subscription for Securities.
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8.
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Conditions of Closing.
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The obligations of the Selling Agent
pursuant to this Agreement shall be subject, in its discretion, to
the continuing accuracy of the representations and warranties of
the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Selling
Agent, as of the date hereof and as of the Closing Date, with
respect to the performance by the Company of its obligations
hereunder, and to the following conditions:
(a) At
the Closing, the Selling Agent and the Company shall have executed
documents in form and substance reasonably acceptable to
them.
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(b) &nbs
