Exhibit 99.1
Form of Agreement
AGREEMENT
AGREEMENT between CONOLOG CORPORATION, a Delaware corporation,
having an address at 0 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx, 00000 (the
"Company"), and ______________________________________________________________,
having an address at
____________________________________________________________ (the "Payee"),
dated as of the ____ day of _______, 200_.
WHEREAS, the Company desires to sell the Payee a convertible
debenture of the Company, and the Payee is willing to purchase such convertible
debenture on the terms and conditions hereinafter set forth;
NOW, THEREFORE, it is hereby agreed as follows:
1. Sale of Debenture. In consideration of $_______, the Company
hereby sells to Payee a convertible debenture of the Company in the form and
having the terms and conditions set forth in Exhibit A attached hereto in the
principal amount of $_______ (the "Convertible Debenture").
2. Registration of Shares Being Acquired. (a) On or before
__________, 2002, the Company will use its best efforts to file a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") covering the _______ shares of common stock into
which the Convertible Debenture is convertible (collectively, the "Conversion
Shares"). The Company will use its best efforts to have the Registration
Statement declared effective as soon as possible after the filing thereof, and
to keep the Registration Statement current and effective for a period of one
year or until such earlier date as all of the Conversion
Shares registered pursuant to the Registration Statement shall have been sold or
otherwise transferred.
(b) The Company shall supply prospectuses and such other
documents as the Payee may request in order to facilitate the public sale or
other disposition of the Conversion Shares, use its best efforts to register and
qualify any of the Conversion Shares for sale in such states as the Payee
designates provided that the Company shall not be required to qualify as a
foreign corporation or a dealer in securities or execute a general consent to
service of process in any jurisdiction in any action and do any and all other
acts and things which may be reasonably necessary or desirable to enable the
Payee to consummate the public sale or other disposition of the Conversion
Shares. The Payee will pay its own legal fees and expenses and any underwriting
discounts and commissions on the Conversion Shares sold by the Payee but shall
not be responsible for any other expenses of such registration.
(c) The Company will notify the Payee immediately, and confirm
the notice in writing: when the Registration Statement or any post-effective
amendment thereto becomes effective, and of the receipt of any comments or
communications from the Commission regarding the Registration Statement (and
shall furnish copies of same to the Payee) or of the receipt of any stop order
or of the initiation, or to the best of the Company's knowledge, the
threatening, of any proceedings for that purpose.
(d) If at any time when a prospectus relating to the
Conversion Shares is required to be delivered under the Securities Act of 1933,
as amended (the "Act"), any event shall have occurred as a result of which, in
the reasonable opinion of counsel for the Company or counsel
-2-
for the Payee, the Registration Statement as then amended or supplemented,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or if,
in the reasonable opinion of either such counsel, it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will notify the Payee
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act and will furnish the Payee
copies thereof.
(3) Indemnification. (a) Whenever pursuant to this Agreement or the
Convertible Debenture a registration statement is filed under the Act, amended
or supplemented, the Company will indemnify and hold harmless the Payee
(hereinafter called the "Distributing Holder"), and each person, if any, who
controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter,
against any and all losses, claims, damages, expenses or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or arise out
of or are based upon any violation or alleged
-3-
violation by the Company of the Act, the Securities and Exchange Act of 1934, as
amended, any other applicable securities law, or any rule or regulation
thereunder relating to the offer or sale of the Conversion Shares; and will
reimburse the Distributing Holder and each such controlling person and
underwriter for any legal or other expenses reasonably incurred by the
Distributing Holder or such controlling person or underwriter in connection with
investigating or defending any such loss, claim, damage, expense, liability or
action, provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, expense or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in said registration statement, said preliminary
prospectus, said final prospectus, or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Distributing
Holder, for use in the preparation thereof.
(b) The Distributing Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, each person,
if any, who controls the Company (within the meaning of the Act) against any
losses, claims, damages, expenses, or liabilities, joint and several, to which
the Company or any such director, officer, or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages,
expenses, or liabilities arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in said registration statement,
said preliminary prospectus, said final prospectus, or said amendment or
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not
-4-
misleading, in each case to the extent, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in said registration statement, said preliminary prospectus, said final
prospectus, or said amendment or supplement in reliance upon and in conformity
with written information furnished by such Distributing Holder for use in the
preparation thereof; and will reimburse the Company or any such director,
officer, or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, expense, liability, or action.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party under this Section except
to the extent that the indemnifying party is actually prejudiced in its ability
to defend such action.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, provided, however,
that any indemnified
-5-
party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless the employment thereof
at the indemnifying party's expense has been specifically authorized by the
indemnifying party in writing, such indemnified party shall have been advised by
such counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
and in the reasonable judgment of such counsel it is advisable for such
indemnified party to employ separate counsel or the indemnifying party has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party, in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (plus separate local
counsel, if retained by the indemnified party) at any time for all such
indemnified parties.
(e) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement is for money damages only and includes an unconditional
-6-
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
4. Shares to be Fully Paid; Reservation of Shares; Etc. The Company
covenants and agrees that the Conversion Shares, Preferred Stock as defined in
the Convertible Debenture and all shares of common stock which may be issued
pursuant to the terms of the Preferred Stock will, upon issuance, be duly and
validly issued, fully paid and nonassessable. The Company further covenants and
agrees that, so long as the Convertible Debenture is outstanding, the Company
will at all times have authorized and reserved a sufficient number of shares of
its Common Stock to provide for the conversion of the Convertible Debenture and
the Preferred Stock and that it will have authorized and reserved a sufficient
number of shares of Common Stock for issuance upon conversion of the Convertible
Debenture and the Preferred Stock. The Company agrees to use its best efforts to
cause all Conversion Shares to be listed on Nasdaq and each securities exchange,
if any, on which similar securities issued by the Company are then listed.
5. Representations and Warranties of the Payee. The Payee hereby
represents and warrants to the Company as follows:
(a) The Payee 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 the Payee.
(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
-7-
the execution and delivery by the Payee of, or the performance or satisfaction
of any agreement of the Payee contained in or contemplated by, this Agreement.
(c) The Payee acknowledges that it and its purchaser
representative, if any, have received and reviewed all publicly filed documents
concerning the Company and has had an opportunity to meet with and ask questions
of the management of the Company.
(d) The Payee and each of its shareholders is an accredited
investor within the meaning of Rule 501 of the Commission under the Securities
Act, provided, however, if Payee is not an accredited investor, Payee has
designated a purchaser representative, within the meaning of Rule 501 of the
Commission under the Securities Act, and he and his purchaser representative
together have such knowledge and experience in financial and business matters
that they are capable of evaluating the merits and risks of an investment in the
Company, provided, however, if Payee is not an accredited investor and has not
designated a purchaser representative, Payee has such knowledge and experience
in financial and business matters that Payee is capable of evaluating the merits
and risks of an investment in the Company. Furthermore, Payee has the financial
ability to bear the economic risk of its or his investment, can afford to
sustain a 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 the Company; and the amount invested in
the Company by the Payee does not constitute a substantial portion of its or his
net worth.
(e) The Payee is acquiring the Convertible Debenture for
investment and not with a view to the sale or distribution thereof, for its own
account and not on behalf of others
-8-
and has not granted any other person any right or option or any participation or
beneficial interest in any of the securities. The Payee acknowledges its
understanding that the Convertible Debenture, the Conversion Shares and any
Preferred Stock issued pursuant to the Convertible Debenture 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. The Payee and/or the Payee's purchaser
representative 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 Convertible Debenture and the Conversion Shares. The Payee is aware that
no Federal or state regulatory agency or authority has passed upon the sale of
the Convertible Debenture or the Conversion Shares or any of the terms of the
Preferred Stock or the terms of the sale or the accuracy or adequacy of any
material provided to the Payee and that the price of the Conversion Shares was
negotiated between the Payee and the Company and does not necessarily bear any
relationship to the underlying assets or value of the Company and that the terms
of the Convertible Debenture was negotiated between the Payee and the Company
and does not necessarily bear any relationship to the underlying assets or value
of the Company. THE PAYEE UNDERSTANDS THAT AN INVESTMENT IN THE SECURITIES BEING
PURCHASED BY IT INVOLVES A HIGH DEGREE OF RISK.
(f) THE PAYEE UNDERSTANDS THAT IN CONNECTION WITH ITS
EVALUATION OF THE COMPANY, THE PAYEE MAY HAVE BEEN PROVIDED WITH ACCESS TO
CERTAIN INFORMATION CONCERNING THE COMPANY WHICH HAS NOT
-9-
BEEN PUBLICLY DISCLOSED. THE PAYEE FURTHER UNDERSTANDS THAT ANY TRADING BY IT IN
SECURITIES OF THE COMPANY USING NON-PUBLIC INFORMATION COULD CONSTITUTE A
VIOLATION OF FEDERAL AND STATE SECURITIES LAWS AND/OR OTHER LAWS AND MAY SUBJECT
IT TO CRIMINAL AND/OR CIVIL PENALTIES AND LIABILITY. In view of the foregoing,
the Payee agrees not to purchase or sell, including a short sale, any of the
Company's securities or rights to purchase or sell such securities as long as
the Payee is in possession of material non-public information or disclose any
non-public information to any other person.
(g) There is no finder's fee or brokerage commission payable
with respect to the purchase by the Payee of the Convertible Debentures or the
consummation of the transactions contemplated by this Agreement and the Payee
agrees to indemnify and hold harmless the Company 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 the
Company.
6. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Payee as follows:
(a) The Company 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 the Company. This Agreement has been duly authorized by all
necessary corporate action, including, without limitation, Board of Directors
-10-
approval, and no other corporate approval, including, without limitation,
approval by the shareholders of the Company, is required in connection
therewith.
(b) The Company 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) The Company is not in violation of, breach of or default
under, and no event (including, without limitation, execution of and
consummation of the transactions provided for in this Agreement) has occurred
which with the passage of time or notice from or action by any party thereto or
otherwise could result in a violation of or default under its certificate of
incorporation or by-laws, any indenture, mortgage, security, loan, lease or
other material agreement to which the Company is a party or by which it is bound
or result in the creation, imposition or acceleration of any material lien of
any nature in favor of any other person. The par value of the shares of Common
Stock of the Company is $.01 per share.
(d) No representation, warranty or statement, written or oral,
made by the Company in this Agreement or in any schedule, exhibit, certificate
or other document furnished or to be furnished to the Payee, 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 closing date a material
-11-
fact required to be stated therein or necessary to make the statements contained
therein not misleading. Without limiting the generality of the foregoing, the
Company is current in all filings required under the Exchange Act.
(e) There is no finder's fee or brokerage commission payable
with respect to the sale by the Company of the Convertible Debenture or the
consummation of the transactions contemplated by this Agreement and the Company
agrees to indemnify and hold harmless the Payee 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 the
Payee.
7. Agreement of the Payee Concerning Voting. While the Payee holds
any Conversion Shares, it agrees to vote such shares in the same manner and
proportion as the other shareholders of the Company (e.g., if a shareholder vote
on a proposal is required and, of the votes cast, 60% vote for, and 40% vote
against the proposal, the Conversion Shares will be voted 60% for, and 40%
against the proposal).
8. Further Assurances. From and after the date of this Agreement and
the date of Closing, each party hereto shall from time to time, at the request
of the other party and without further consideration, do, execute and deliver,
or cause to be done, executed and delivered, all such further acts, things and
instruments as may be reasonably requested or required more effectively to
evidence and give effect to the transactions provided for in this Agreement.
9. 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
-12-
if personally delivered against receipt or if mailed by first class registered
or certified mail return receipt requested, addressed to the parties at their
respective addresses set forth on the first page of this Agreement, with copies
to their respective counsel, Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, Att:
Xxxxxx X. Xxxxxxxx, Esq., Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, in
the case of the Company, and _________________________________________________
in the case of the Payee, or to such other person or address as may be
designated by like notice hereunder.
10. Parties in Interest. This Agreement shall be binding upon, and
shall inure to the benefit of and be enforceable by, the parties hereto and
their respective legal representatives, successors and assigns, but no other
person shall acquire or have any rights under this Agreement.
11. Entire Agreement; Modification; Waiver. This Agreement (as below
defined) contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes all prior
negotiations and understandings, if any, and there are no agreements,
representations or warranties other than those set forth, provided for or
referred to herein. All exhibits and schedules to this Agreement are expressly
made a part of this Agreement as fully as though completely set forth herein,
and all references to this Agreement herein, in any of such writings or
elsewhere shall be deemed to refer to and include all such writings. Neither
this Agreement nor any provisions hereof may be modified, amended, waived,
discharged or terminated, in whole or in part, except in writing signed by the
party to be charged. Any party may extend the time for or waive performance of
any obligation of any other party or waive any inaccuracies in the
representations or warranties of any other party or compliance by any other
party with any of the
-13-
provisions of this Agreement. No waiver of any such provisions or of any breach
of or default under this Agreement shall be deemed or shall constitute a waiver
of any other provisions, breach or default, nor shall any such waiver constitute
a continuing waiver.
12. Interpretation. (a) This Agreement shall be governed and
construed and enforced in accordance with the laws of the State of New Jersey
applicable to contracts made and to be performed exclusively in that State
without giving effect to the principles of conflict of laws.
(b) All pronouns and words used in this Agreement shall be
read in the appropriate number and gender, the masculine, feminine and neuter
shall be interpreted interchangeably and the singular shall include the plural
and vice versa, as the circumstances may require.
13. Headings; Counterparts. The article and section headings in this
Agreement are for reference purposes only and shall not define, limit or affect
the meaning or interpretation of this Agreement. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
CONOLOG CORPORATION
By:____________________________
Xxxx X. Xxxxx
President
PAYEE
_______________________________
-14-
