c47316_ex10-4.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing







EX-10.4

CONOLOG CORPORATION

  

  SELLING AGENT AGREEMENT 



    Dated as of February 27, 2007 


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 D promulgated under the Securities Act of 1933, as amended (the “Act”) (i) up to Five Million Dollars ($5,000,000) of principal
amount of promissory notes of the Company (“Note” or “Notes”), convertible into
shares of the Company's common stock, $0.01 par value (the "Common Stock") at a per share conversion price set forth in the Note; and (ii) share purchase warrants (the
“Warrants”), to purchase shares of Common Stock (the “Warrant Shares”). The Notes,
shares of Common Stock issuable upon conversion of the Notes (the “Shares”), the Warrants and the Warrant Shares are collectively referred to herein as 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. 


          1.      Appointment of Selling Agent. 


          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 March 23, 2007 (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. 


          2.      Terms of the Offering. 


                    (a)      The Offering shall consist of the (i) Notes and (ii) Warrants. The Offering is being made on a “best
efforts” basis with no minimum offering amount of subscriptions, and the parties shall use their reasonable efforts to consummate a closing of subscriptions prior to March 23, 2007. 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 (the “Securities Purchase Agreement”), form of Note
and form of Warrant to be delivered to all prospective investors. The Securities Purchase Agreement, form of Note 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 3:00 p.m., New York time, on March 23, 2007,
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. Purchasers in the
Offering shall be “accredited investors” as determined in accordance with Regulation D.


          3.      Closing/Release of Funds. 


          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.” 


          4.      Representations and Warranties of the Selling Agent. 


          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
D and the Selling Agent will furnish to each investor a copy of the Documents
prior to accepting any subscription for the Securities. 


          5.      Compensation. 


                  (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 aggregate amount of the Notes sold in the Offering,
provided the Company has actually received the proceeds of such sales, through
subscriptions made by investors introduced by  FMSC to the Company. 


                  (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 compliance with the terms and conditions of this Section) warrants (“Selling
Agent Warrants”)to purchase a number of shares of Common Stock equal to
20% of the shares of Common Stock which  would be issued if the 













Notes sold in the Offering (based upon the initial conversion price as set forth in the Notes) were converted and the Selling Agent Warrants shall have an exercise price equal to the exercise price of the Warrants being
issued to the investors. The Selling Agent Warrants shall be exercisable beginning on the Closing Date of the Offering and continuing for a period of five (5) years thereafter and the Selling Agent shall not be entitled to registration rights with
respect to the shares of Common Stock. The Selling Agent Warrants shall allow for “cashless exercise”. 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.


          6.      Representations and Warranties of the Company. 


                  (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 Reports (as  defined in the Purchase Agreement), 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 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 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 threatened, with
respect to the Company, or its respective operations, businesses, properties,
or assets, except as described in the Purchase Agreement, the Reports or which
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
(subject to the Approval ( as defined  in the Purchase Agreement) the Purchase
Agreement and the consummation of the transactions contemplated hereby and thereby. 


                            (vi)      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 D of the Securities Act of 1933, as amended. 


          7.      Covenants of the Company. 


          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. 


                  (c)      The
Company shall cause, at its cost and expense, all “blue sky” filings
related to the Offering and  required by applicable law to be made in due and
proper form and substance and in a timely manner as required under the laws of
the states in which Securities are sold (“Blue Sky Filings”). In addition,
the Company shall cause, at its cost  and expense, a Form D related to the Offering
to be filed with the Securities and Exchange Commission (“SEC”) in
due and proper form and substance and in a timely manner. The Company shall deliver
true and correct copies of all Blue Sky  Filings and the Form D, as filed with
the SEC, to the Selling Agent within 20 days of the final closing date.


          8.      Conditions of Closing. 


          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. 


                  (b)      All
proceedings taken in connection with the issuance, sale, and delivery of the
Securities shall be satisfactory in  form and substance to FMSC and the Company. 


          9.      Termination. 


          This Agreement may be terminated by the Selling Agent (i) at anytime in the event the Selling Agent has determined, in good faith, that the Documents fail to contain a material fact required to
be stated therein or necessary to make the statements therein not misleading or (ii) upon three (3) days written notice. The Company may not terminate this Agreement in the absence of a material breach of any covenant, representation or warranty
contained in this Agreement made by the Selling Agent. 


          10.      Indemnification and Contribution. 


                    (a)      The Company agrees to indemnify and hold harmless the Selling Agent, its officers, directors, partners, employees,
agents, and counsel, and each person, if any, who controls the Selling Agent within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 10, but not be limited to, attorneys’ fees and any and all expense whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained in the Documents, or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was
made in reliance upon and in conformity with written information furnished to the Company as stated in Section 10(b) with respect to the Selling Agent expressly for inclusion in the Documents or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The foregoing agreement to indemnify shall be in addition to any liability the Company may otherwise have, including liabilities arising under this Agreement. 


          If any action is brought against the Selling Agent or any of its officers, directors, partners, employees, agent, or counsel, or any controlling persons of the Selling Agent (an
“indemnified party”), in respect of which indemnify may be sought against the Company pursuant to the foregoing paragraph, such indemnified party or parties shall promptly notify the Company (the “indemnifying party”) in writing
of the institution of such action (but the failure so to notify shall not relieve the indemnifying party from any liability it may have other than pursuant to this Section 10(a)) and the indemnifying party shall promptly assume the defense of such
action, including the employment of counsel (reasonably satisfactory to such indemnified party or parties) and payment of expenses. Such indemnified party shall have the right to employ its own counsel in any such case, but the fees and expense of
such counsel shall be at the expense of such indemnified party unless the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action or the indemnifying party shall not
have promptly employed counsel satisfactory to such indemnified party or parties to have charge of the defense of such action or such 













indemnified party or parties shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from or additional to those available to
one or more of the indemnifying parties, in any of which events such reasonable fees and expenses of one such counsel shall be borne by the indemnifying party and the indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties. Anything in this paragraph to the contrary notwithstanding, the indemnifying party shall not be liable for any settlement of any such claim or action effected without its written consent. The Company
agrees to promptly notify the Selling Agent of the commencement of any litigation or proceedings against the Company or any of its officers or directors in connection with the sale of the Securities or the Documents.


                    (b)      The Selling Agent agrees to indemnify and hold harmless the Company, its officers, directors, employees, agents, and
counsel, and each other person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Selling Agent in Section 10(a),
with respect to any and all loss, liability, claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 10, but not be limited to, attorneys’ fees and any and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (i)
statements or omissions, if any, made in the Documents in reliance upon and in conformity with written information furnished to the Company with respect to the Selling Agent expressly for inclusion in the Documents, and (ii) or any breach of any
representation, warranty, covenant or agreement of the Selling Agent contained in this Agreement. If any action shall be brought against the Company or any other person so indemnified based on the Documents and in respect of which indemnity may be
sought against the Selling Agent pursuant to this Section, the Selling Agent shall have the rights and duties given to the indemnifying party, and the Company and each other person so indemnified shall have the rights and duties given to the
indemnified parties, by the provisions of Section 10(a) hereof. 


                    (c)      To provide for just and equitable contribution, if (i) an indemnified party makes a claim for indemnification pursuant
to Section 10(a) or 10(b) hereof but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such case, even though this Agreement expressly provides for indemnification in such
case, or (ii) any indemnified or indemnifying party seeks contribution under the Act, the Exchange Act, or otherwise, then the Company (including for this purpose any contribution made by or on behalf of any officer, director, employee, agent, or
counsel of the Company, or any controlling person of the Company), on the one hand, and the Selling Agent (including for this purpose any contribution by or on behalf of an indemnified party), on the other hand, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may be subject, in such proportions as are appropriate to reflect the relative benefits received by the Company, on the one hand, and the Selling Agent, on the other hand;
provided, however, that if applicable law does not permit such allocation, then other relevant equitable considerations such as the relative fault of the Company and the Selling Agent in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses shall also be considered. The relative benefits received by the Company, on the one hand, and the Selling Agent, on the other hand, shall be deemed to be in the same proportion as (x) the total proceeds
from the Offering (net of compensation payable to the Placement Agent pursuant to Section 5(a) hereof but 













before deducting expenses) received by the Company, and (y) the compensation received by the Selling Agent pursuant to Section 5(a) hereof. 


          The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by the Company or by the Selling Agent, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Selling Agent agree that it would be unjust and inequitable if the respective obligations of the Company and the Selling Agent for contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages, and expenses or by any other method of allocation that does not reflect the equitable considerations referred to in this Section 10(c). In no case shall the Selling Agent by
responsible for a portion of the contribution obligation in excess of the compensation received by it pursuant to Section 5(a) hereof. No person guilty of a fraudulent misrepresentation shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 10(c), each person, if any, who controls the Selling Agent within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
partners, employee, agent, and counsel of the Selling Agent, shall have the same rights to contribution as the Selling Agent, and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, employee, agent, and counsel of the Company, shall have the same rights to contribution as the Company, subject in each case to the provisions of this Section 10(c). Anything in this Section 10(c) to the
contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. 


          11.      Non-Solicitation. 


          The Company agrees that, for a period of 12 months from the date hereof (the “Non-Solicitation Period”), it shall not solicit any offer to buy from or offer to sell to any entity
listed on Exhibit “A” any securities of the Company or of any other entity, with any selling agent, placement agent, broker or dealer other than FMSC. In the event that during the Non-Solicitation Period, the Company or any of its
affiliates, directly or indirectly, solicits, offers to buy from or offers to sell to any entity listed on Exhibit “A” any such securities from any other, placement agent, securities broker or dealer or selling agent other than FMSC, the
Company shall pay to the Selling Agent an amount equal to 10% of the aggregate purchase price of such securities so purchased by the purchasers thereof and the Placement Agent shall be entitled to five year warrants entitling the Placement Agent to
purchase shares of Common Stock equal to 20% of the shares of Common Stock (or shares of Common Stock underlying any convertible securities) at an exercise price equal to the price of the securities sold to investors. The warrants shall provide for
cashless exercise. Notwithstanding the foregoing, during the Non-Solicitation Period, the Company shall not give the names of the subscribers to any other broker dealer or selling or placement agent. Notwithstanding anything to the contrary herein,
it shall not be a violation of this Section if the Company includes the names of the entities listed on Exhibit “A” in any public filing made by the Company including but not limited to filings that the Company makes with Securities and
Exchange Commission. Upon receipt of written request by the Selling Agent, the Company shall promptly deliver to the Selling Agent the names of any investors in any offering that the Company completes within 12 months from the date of the Closing.














          12.      Representations and Agreements to Survive Delivery for a Period of Two (2) Years from the Date Hereof. 


          All representations, warranties, covenants, and agreements contained in this Agreement shall be deemed to be representations, warranties, covenants, and agreements at the Closing Date and, such
representations and warranties shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Selling Agent or any indemnified person, or by or on behalf of the Company or any person or entity which
is entitled to be indemnified under Section 10(b), and shall survive for a period of two years from the date hereof. In addition, notwithstanding the foregoing and any election hereunder or any termination of this Agreement, and whether or not the
terms of this Agreement are otherwise carried out, the provisions of Section 10 shall survive for a period of five years from the date hereof. 


          13.      Notices. 


          All communications hereunder, except as may be otherwise specifically provided herein, shall be in writing and shall be either (i) mailed by first class mail in which case delivery shall be
deemed to be made three days following deposit in the United States mail; or (ii) sent by overnight courier service in case delivery shall be deemed to be made upon receipt, to: First Montauk Securities Corp., Parkway 109 Office Center, 328 Newman
Springs Road, Red Bank, New Jersey 07701, Attention: Ernest Pellegrino, with a copy to Ellenoff, Grossman & Schole LLP, 370 Lexington Avenue, New York, New York 10017, Attention: Brian C. Daughney, Esq.; Conolog Corporation, 5 Columbia Road,
Somerville, New Jersey 07701, Attention: Robert Benou, with a copy to Sichenzia Ross Friedman Ference LLP, 1065 Avenue of Americas, New York, NY 10018, Attn: David Manno, Esq. 


          14.      Parties. 


          This Agreement shall inure solely to the benefit of, and shall be binding upon, the Selling Agent and the Company and the persons and entities referred to in Section 10 who are entitled to
indemnification or contribution, and their respective successors, legal representatives, and assigns (which shall not include any purchaser, as such, of Securities), and no other person shall have or be construed to have any legal or equitable right
remedy, or claim under or in respect of or by virtue of this Agreement or any provision herein contained. 


          15.      Construction. 


          This Agreement shall be construed in accordance with the laws of the State of New York, without giving effect to conflict of laws. 













          17.      Counterparts. 


          This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. This Agreement may be executed
by facsimile signature and delivered by facsimile transmission. 


          If the foregoing correctly sets forth the understanding between us, please so indicate in the space provided below for that purpose, whereupon this agreement shall constitute a binding
agreement between us. 

	 

  	 
  	
Very truly yours,
  
	 

  
	 

  	 
  	
CONOLOG CORPORATION
  
	 

  
	 

  
	 

  	 
  	
By: /s/ Robert S. Benou          
	 

  	 
  	
Name: Robert S. Benou
  
	 

  	 
  	
Title: Chairman and Chief Executive Officer
  
	
Accepted as of the date
  	 
  	 

  
	
first above written:
  	 
  	 

  
	 

  
	
FIRST MONTAUK SECURITIES CORP.
  	 
  	 

  
	 

  
	 

  
	
By: /s/ Victor K. Kurylak     
	 
  	 

  
	
Name: Victor K. Kurylak
  	 
  	 

  
	
Title: President and CEO
  	 
  	 

  














Exhibit A 



NON-SOLICITATION CLIENTS OF FMSC