AGREEMENT
AGREEMENT dated as of the 12th day of July, 2002, by and between CONOLOG
CORPORATION ("Conolog"), a Delaware corporation, having an office at 0 Xxxxxxxx
Xxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000 and CLOG II, LLC ("Clog II"), a New York
limited liability company, having an address at 00 Xxxxxxx Xxxx, Xxxxxx, Xxx
Xxxx 00000.
WHEREAS, Clog II was granted an option to acquire up to $2,040,000
principal amount of convertible debentures of Conolog (the "Option");
WHEREAS, Clog II has exercised the Option to the extent of acquiring
$100,000 principal amount of convertible debentures of Conolog, of which there
remains outstanding only a certain convertible debenture of Conolog, dated
December 26, 2000, in the principal amount of $25,000 (the "Debenture");
WHEREAS, immediately prior to the execution hereof, the parties have agreed
that the remaining dollar amount of convertible debentures of Conolog subject to
the Option is reduced to $1,200,000;
WHEREAS, Conolog and Clog II agree that the Debenture shall be converted
pursuant to the terms and conditions herein;
NOW THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. Conversion of Debenture. The parties agree that the conversion price for
this Debenture (and not with respect to any other debenture that may be issued
pursuant to an exercise of the Option) is reduced to $.4166 per share (giving
effect to Conolog's one-for-four
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reverse split effectuated on April 10, 2001). Subject to the terms and
conditions of this Agreement, Clog II hereby irrevocably exercises its right to
convert the Debenture into 60,000 shares of the Common Stock of Conolog (the
"Conversion Shares") and Clog II hereby waives any and all accrued but unpaid
interest due on the Debentures.
2. Stock Certificates for Conversion Shares. Each certificate evidencing
the Conversion Shares shall bear the following legend:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold,
transferred or otherwise disposed of except in compliance with such
laws."
3. Issuance of Conversion Shares. In order to exercise the conversion
privilege, Clog II is, concurrently with the execution hereof, surrendering the
Debenture to Conolog and such Debenture will be canceled and will no longer be
an obligation of Conolog. Conolog will instruct the transfer agent to deliver
the Conversion Shares to Clog II promptly.
4. Additional Shares. In the event that the net proceeds received by Clog
II from the sale of all the Conversion Shares during the ninety (90) day period
following its receipt of the certificate representing the Conversion Shares (the
"Guaranteed Period") shall be less than $28,166.69 (equal to $25,000 plus all
accrued interest on the Debenture through the date hereof), then Conolog will
promptly issue to Clog II such number of additional shares of Common Stock of
Conolog (the "Additional Shares") as shall equal the shortfall divided by the
closing price of the shares of Common Stock of Conolog on the last trade date
with respect to the sale of the Conversion Shares provided, however
notwithstanding anything to the contrary herein, the total
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number of Additional Shares issued hereunder will not exceed 439,000. Clog II
shall provide Conolog proof of the net proceeds received from the sale of all of
the Conversion Shares after the sale thereof.
5. Sale of Shares. Clog II agrees to sell no more than an aggregate of
10,000 Conversion and Additional Shares per day at no less than the current bid
price per share.
6. Representations of Clog II. Clog II hereby represents and warrants to
Conolog as follows:
(a) Clog II has the full right, power and authority to enter into this
Agreement and to carry out and consummate the transactions contemplated
herein. This Agreement constitutes the legal, valid and binding obligation
of Clog II.
(b) No authorization or approval of, or filing with, or compliance
with any applicable order, judgment, decree, statute, rule or regulation
of, any court or governmental authority, or approval, consent, release or
action of any third party, is required in connection with the execution and
delivery by Clog II of, or the performance or satisfaction of any agreement
of Clog II contained in or contemplated by, this Agreement.
(c) Clog II acknowledges that it and each of its members has received
and reviewed all publicly filed documents concerning Conolog and has had an
opportunity to meet with and ask questions of the management of Conolog.
(d) Clog II and each of its members is an accredited investor within
the meaning of Rule 501 of the Commission under the Securities Act of 1933,
as amended, (the "Act") has the financial ability to bear the economic risk
of its or his investment, can afford to sustain a
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complete loss of such investment and has adequate means of providing for
its or his current needs and personal contingencies, and has no need for
liquidity in its or his investment in Conolog; and the amount invested in
Conolog by Clog II does not constitute a substantial portion of its or his
net worth.
(e) Clog II is acquiring the Conversion Shares and any Additional
Shares for investment and not with a view to the sale or distribution
thereof (except pursuant to Rule 144) for its own account and not on behalf
of others and has not granted any other person any right or option or any
participation or beneficial interest in any of the securities. Clog II
acknowledges its understanding that the Conversion Shares constitute and
any Additional Shares would constitute restricted securities within the
meaning of Rule 144 of the Commission under the Act, and that none of such
securities may be sold except pursuant to an effective registration
statement under the Act or in a transaction exempt from registration under
the Act, and acknowledges that it understands the meaning and effect of
such restriction. Clog II has sufficient knowledge and experience in
financial and business matters so that it is capable of evaluating the
risks and merits of the purchase of the Conversion Shares. Clog II is aware
that no Federal or state regulatory agency or authority has passed upon the
sale of the Conversion Shares or the Additional Shares or the accuracy or
adequacy of any material provided to Clog II and that the price of the
Conversion Shares was negotiated between Clog II and Conolog and does not
necessarily bear any relationship to the underlying assets or value of
Conolog. CLOG II UNDERSTANDS THAT AN INVESTMENT IN THE SHARES BEING
PURCHASED BY IT INVOLVES A HIGH DEGREE OF RISK.
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(f) There is no finder's fee or brokerage commission payable with
respect to the transactions contemplated by this Agreement and Clog II
agrees to indemnify and hold harmless Conolog from and against any and all
cost, damage, liability or expense (including fees and expenses of counsel)
arising out of or relating to claims for such fees or commissions, except
to the extent that any such fees or commissions have been directly incurred
by Conolog.
7. Representations and Warranties of the Conolog. Conolog hereby represents
and warrants to Clog II as follows:
(a) Conolog has the full right, power and authority to enter into this
Agreement and to carry out and consummate the transactions contemplated
herein. This Agreement constitutes the legal, valid and binding obligation
of Conolog. This Agreement has been duly authorized by all necessary
corporate action, including, without limitation, Board of Directors
approval.
(b) Conolog is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power, legal right and authority to conduct its business and own,
lease and operate its properties as and in the places where such business
is now conducted and such properties are now owned, leased or operated.
(c) No representation, warranty or statement, written or oral, made by
Conolog in this Agreement or in any schedule, exhibit, certificate or other
document furnished or to be furnished to Clog II, including any and all
documents filed with the Securities and Exchange Commission within the past
12 months, pursuant hereto or otherwise, in connection with the
transactions contemplated hereby, has contained, contains or will contain
at the closing date any untrue statement of a material fact or has omitted,
omits or will omit at the date hereof a material fact
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required to be stated therein or necessary to make the statements contained
therein not misleading. Without limiting the generality of the foregoing,
Conolog is current in all filings required under the Exchange Act and will
remain so current during the Guarantee Period.
(d) There is no finder's fee or brokerage commission payable with
respect to the consummation of the transactions contemplated by this
Agreement and Conolog agrees to indemnify and hold harmless Clog II from
and against any and all cost, damage, liability or expense (including fees
and expenses of counsel) arising out of or relating to claims for such fees
or commissions, except to the extent that any such fees or commissions have
been directly incurred by Clog II.
(e) Conolog agrees to direct that its counsel and transfer agent to
recognize and promptly give effect to the opinion of counsel of Certilman
Balin Xxxxx & Xxxxx, LLP, counsel to Clog II, attached hereto as Exhibit A,
with regard to the saleability of the Conversion Shares and Additional
Shares pursuant to Rule 144 (the "Opinion"). Any delay between the issuance
of the certificates representing the Conversion Shares to Clog II and the
acceptance of the Opinion by the transfer agent shall extend the Guarantee
Period.
8. Modifications. This Agreement may not be modified or discharged orally,
but only in writing duly executed by the party to be charged.
9. Successors and Assigns. All the covenants, stipulations, promises and
agreements in this Agreement shall bind the parties' respective successors and
assigns, whether so expressed or not.
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10. Headings. The headings of the various sections of this Agreement are
for convenience of reference only and shall in no way modify any of the terms or
provisions of this Agreement.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, excluding choice of law
principle thereof.
12. Pronouns. All pronouns contained herein, and any variations thereof,
shall be deemed to refer to the masculine, feminine or neutral, singular or
plural, as the identity of the parties hereto may require.
13. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered by overnight delivery service and
telecopier, addressed to the parties at their respective addresses set forth or
referred to on the first page of this Agreement, with copies to their respective
counsel, Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Lerach LLP, Attention: Xxxxxx X.
Xxxxxxxx, Esq., Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax no. (212)
000-0000), in the case of Conolog; and Certilman Balin Xxxxx & Xxxxx LLP,
Attention: Xxxx X. Xxxxxxx, Esq., 00 Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx00000
(fax no. (000) 000-0000), in the case of Clog II, or to such other person or
address as may be designated by like notice hereunder. The current fax numbers
of Conolog and Clog II are (000) 000-0000 and (000) 000-0000, respectively.
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14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
CONOLOG CORPORATION
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Chairman and
Chief Executive Officer
CLOG II, LLC
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
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