_________________________, 1997
Xx. Xxxxxx X. Xxxxx
President
Conolog Corporation
0 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Re: Bridge Loan
Dear Xx. Xxxxx:
This letter summarizes our agreement as follows:
1. Bridge Loan. Upon the execution of this letter, the undersigned
("Lender") shall loan (the "Loan") _________________ ($_____________) to Conolog
Corporation, a Delaware corporation (the "Company"), pursuant to the terms of
(i) a certain promissory note in the amount of $______________ payable on the
earlier of December 31, 1997 or the closing of the Company's next public
offering (the "First Note") and (ii) a promissory note in the amount of
$____________ payable on the earlier of December 31, 1997 or the closing of the
Company's next public offering, or convertible, at the option of the holder,
into ________________ (________________) Preferred Stock Purchase Warrants to
purchase ________________ shares of Series D Preferred Stock of the Company
which is contemplated to be issued in the next public offering (the
"Bridgeholder's Warrants") of the Company (the "Second Note"). Each Warrant
entitles the holder thereof to purchase one (1) share of Series D Preferred
Stock, at an exercise price of $5.25, for a period of three (3) years commencing
one (1) year from the effective date of the next public offering. The forms of
the First Note and Second Note are attached hereto as Exhibits A and B,
respectively (collectively, the "Notes"). Concurrently, with the execution of
this letter, the Company shall execute and deliver the Notes to Lender.
2. Issuance of Bridgeholder's Warrants. Upon conversion of the Second
Note, the Company shall issue to Lender the Bridgeholder's Warrants. At any time
following the date on which the next registration statement (the "Registration
Statement") filed by the Company with
Xx. Xxxxxx X. Xxxxx
______________________, 1997
Page 2
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act") is declared effective by the
Commission, Lender may exercise its option to convert the Second Note into the
Bridgeholder's Warrants and the Company will deliver to Lender certificates
representing each of the Bridgeholder's Warrants.
3. Registration Rights. The Company agrees to include the
Bridgeholder's Warrants and the shares of the Preferred Stock issuable upon
exercise of the Bridgeholder's Warrants (collectively, the "Registrable
Securities"), in the Registration Statement at no cost or expense to Lender.
Anything in this Section 3 to the contrary notwithstanding, in the
event that the managing underwriter of the Public Offering informs the Company
in writing that the inclusion of the Registrable Securities in the Public
Offering will result in the inability to effect the Public Offering or qualify
the Public Offering in one or more states which such managing underwriter, in
its sole discretion, deems necessary for the Public Offering to proceed, Lender
shall agree to withhold some or all of the Registrable Securities from
registration in accordance with the instructions of such managing underwriter.
In such event, upon Xxxxxx's request, the Company shall file a registration
statement with the Commission for the purpose of registering the Registrable
Securities as soon as practicable after the closing date of such Public Offering
at no cost or expense to Lender.
4. Security Interest. As security for the performance by the Company of
its obligations under this Agreement, the Company shall file all appropriate
mortgage documents (collectively, the "Security Documents") with the necessary
governmental authorities in the State of New Jersey granting the Lender a
security interest in the Company's real property located at 0 Xxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000 (the "Collateral"), such interest to be subordinate to the
lien held by The Chase Manhattan Bank. Xxxxxx acknowledges that the Company is
currently obtaining additional financing from other lenders which, together with
the Loan, represents indebtedness in the aggregate amount of $200,000 (the
"Indebtedness"). Xxxxxx acknowledges that all the Indebtedness shall rank pari
passu with the Loan, and that the Security Documents will be filed on behalf of
the Lender and such other lenders within ten (10) days from the date the Company
has raised the entire Indebtedness. The Company hereby confirms to file the
Security Documents within such time period. Xxxxxx further acknowledges that it
will execute any and all documents requested by The Chase Manhattan Bank in
connection with the filing of the Security Documents to secure such bank's
priority interest in the Collateral.
Xx. Xxxxxx X. Xxxxx
______________________, 1997
Page 3
5. Representations of Lender. Xxxxxx represents that in the event he
converts the Second Note, he will be acquiring the Bridgeholder's Warrants for
investment purposes only and not with a view to any resale or public
distribution thereof. Xxxxxx has had full access to the books and records of the
Company and has had the opportunity to question the officers, counsel and
independent accountants of the Company. Lender is an "accredited investor" as
defined in section 2(15) of the Securities Act and Regulation D promulgated by
the Commission.
6. Governing Law; Jurisdiction and Venue. Regardless of the place of
execution or performance, this letter and the Notes shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to such State's conflicts of laws provisions. Each of the parties hereto
irrevocably consents to the jurisdiction and venue of the federal and state
courts located in the State of New York, County of New York.
Please acknowledge your consent to the foregoing terms by
countersigning the enclosed duplicate copy of this letter and returning it to us
together with the Notes.
Very truly yours,
---------------------------------
[Name of Investor]
AGREED TO AND ACKNOWLEDGED:
CONOLOG CORPORATION
By:
------------------------------------
Xxxxxx X. Xxxxx, President
PROMISSORY NOTE
$ , 1997
----------- -----------------------------
New York, New York
FOR VALUE RECEIVED, CONOLOG CORPORATION, a Delaware corporation
("Maker"), promises to pay to ______________________________ ("Holder") at such
place as Holder may designate in writing, the entire principal sum of
_______________________________ Dollars ($____________), together with interest
at the rate of eight percent (8%) per annum, (i) on the earlier of December 31,
1997 or (ii) the closing date of the next underwritten public offering of
Maker's securities, at which time all principal and interest shall be due and
owing.
All payments of principal and interest hereunder shall be payable in
lawful money of the United States.
Maker shall be in default hereunder, at the option of Holder, upon the
occurrence of any of the following events: (i) the failure by Maker to make any
payment of principal or interest when due hereunder, and such failure shall have
continued for a period of more than ten (10) days after notice and a reasonable
opportunity to cure; (ii) the entering into of a decree or order by a court of
competent jurisdiction adjudicating Maker a bankrupt or the appointing of a
receiver or trustee of Maker upon the application of any creditor in an
insolvency or bankruptcy proceeding or other creditor's suit; (iii) a court of
competent jurisdiction approving as properly filed, a petition for
reorganization or arrangement filed against Maker under the Federal bankruptcy
laws and such decree or order not being vacated within thirty (30) days; (iv)
the pendency of any bankruptcy proceeding or other creditors' suit against
Maker; (v) a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws with respect to Maker; (vi) an assignment for the
benefit of creditors by Maker; (vii) Maker consents to the appointment of a
receiver or trustee in an insolvency or bankruptcy proceeding or other
creditors' suit; or (viii) the existence of any judgment against, or any
attachment of property of Maker.
Upon the occurrence of any event or condition of default hereunder, or
at any time thereafter, Xxxxxx at his option may accelerate the maturity of this
Note and declare all of the indebtedness or any portions thereof to be
immediately due and payable, together with accrued interest thereon, and payment
thereof may be enforced by suit or other process of law.
If this Note is not paid when due, whether at maturity or by
acceleration, Maker agrees to pay all reasonable costs of collection and such
costs shall include without limitation all costs, attorneys' fees and expenses
incurred by Holder hereof in connection with any insolvency, bankruptcy,
reorganization, arrangement or similar proceedings involving Holder, or
involving
any endorser or guarantor hereof, which in any way affects the exercise by
Holder hereof of its rights and remedies under this Note.
This Note is part of a bridge financing made in favor of Maker in the
aggregate amount of $200,000. This Note, together with such other portion of the
bridge financing will be secured by a mortgage instrument in favor of the
lenders of such bridge financing on a parri passu basis and will be subordinated
to the interest of The Chase Manhattan Bank.
Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind are hereby waived.
The terms "Maker" and "Holder" shall be construed to include their
respective heirs, personal representatives, successors, subsequent holders and
assigns.
Regardless of the place of execution or performance, this letter and
the Note shall be governed by, and construed in accordance with, the laws of the
State of New York without giving effect to such state's conflicts of laws
provisions. Each of the parties hereto irrevocably consents to the jurisdiction
and venue of the federal and state courts located in the State of New York,
County of New York.
CONOLOG CORPORATION
By:
-----------------------------------------
Xxxxxx X. Xxxxx
President
PROMISSORY NOTE
$ , 1997
----------- -----------------------
New York, New York
FOR VALUE RECEIVED, CONOLOG CORPORATION, a Delaware corporation
"Maker"), promises to pay to _________________________________ ("Holder") at
such place as Holder may designate in writing, the entire principal sum of
__________________________ Dollars ($____________), together with interest at
the rate of eight percent (8%) per annum, (i) on the earlier of December 31,
1996 or (ii) the closing date of the next underwritten public offering of
Maker's securities (the "Public Offering"), at which time all principal and
interest shall be due and owing.
At any time after the Effective Date of the Public Offering and before
the closing of the Public Offering, the Holder may, at its option, upon written
notice to Maker, convert this Note into ___________ Preferred Stock Purchase
Warrants, the terms of which are outlined in the Bridge Loan Agreement dated the
date hereof.
All payments of principal and interest hereunder shall be payable in
lawful money of the United States.
Maker shall be in default hereunder, at the option of Holder, upon the
occurrence of any of the following events: (i) the failure by Maker to make any
payment of principal or interest when due hereunder, and such failure shall have
continued for a period of more than ten (10) days after notice and a reasonable
opportunity to cure; (ii) the entering into of a decree or order by a court of
competent jurisdiction adjudicating Maker a bankrupt or the appointing of a
receiver or trustee of Maker upon the application of any creditor in an
insolvency or bankruptcy proceeding or other creditor's suit; (iii) a court of
competent jurisdiction approving as properly filed, a petition for
reorganization or arrangement filed against Maker under the Federal bankruptcy
laws and such decree or order not being vacated within thirty (30) days; (iv)
the pendency of any bankruptcy proceeding or other creditors' suit against
Maker; (v) a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws with respect to Maker; (vi) an assignment for the
benefit of creditors by Maker; (vii) Maker consents to the appointment of a
receiver or trustee in an insolvency or bankruptcy proceeding or other
creditors' suit; or (viii) the existence of any judgment against, or any
attachment of property of Maker.
Upon the occurrence of any event or condition of default hereunder, or
at any time thereafter, Xxxxxx at his option may accelerate the maturity of this
Note and declare all of the indebtedness or any portions thereof to be
immediately due and payable, together with accrued interest thereon, and payment
thereof may be enforced by suit or other process of law.
If this Note is not paid when due, whether at maturity or by
acceleration, Maker agrees to pay all reasonable costs of collection and such
costs shall include without limitation all costs, attorneys' fees and expenses
incurred by Holder hereof in connection with any insolvency, bankruptcy,
reorganization, arrangement or similar proceedings involving Holder, or
involving any endorser or guarantor hereof, which in any way affects the
exercise by Holder hereof of its rights and remedies under this Note.
This Note is part of a bridge financing made in favor of Maker in the
aggregate amount of $200,000. This Note, together with such other portion of the
bridge financing will be secured by a mortgage instrument in favor of the
lenders of such bridge financing on a parri passu basis and will be subordinated
to the interest of The Chase Manhattan Bank.
Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind are hereby waived.
The terms "Maker" and "Holder" shall be construed to include their
respective heirs, personal representatives, successors, subsequent holders and
assigns.
Regardless of the place of execution or performance, this letter and
the Note shall be governed by, and construed in accordance with, the laws of the
State of New York without giving effect to such state's conflicts of laws
provisions. Each of the parties hereto irrevocably consents to the jurisdiction
and venue of the federal and state courts located in the State of New York,
County of New York.
CONOLOG CORPORATION
By:
--------------------------------
Xxxxxx X. Xxxxx
President
