SUBSCRIPTION AGREEMENT

          THIS SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of October
___, 2007, by and among Conolog Corporation, a Delaware corporation (the
“Company”), and the subscribers identified on the signature page hereto (each a
“Subscriber” and collectively “Subscribers”).

          WHEREAS, the Company and the Subscribers are executing and delivering
this Agreement in reliance upon an exemption from securities registration
afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D
(“Regulation D”) as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under the Securities Act of 1933, as amended (the
“1933 Act”).

          WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers shall purchase, in the
aggregate, up to $1,334,200 (the “Purchase Price”) of the Company’s common
stock, $.01 par value (the “Common Stock”, or “Shares”), and share purchase
warrants in the form attached hereto as Exhibit A (the “Warrants”) to purchase
shares of Common Stock (the “Warrant Shares”). The per Share Purchase Price
shall be $1.40, subject to adjustment as described in this Agreement. The
Purchase Price shall be payable to the Company on the Closing Date (as
hereinafter defined). The Common Stock, the Warrants and the Warrant Shares are
collectively referred to herein as the “Securities”; and

          WHEREAS, the aggregate proceeds of the sale of the Common Stock
contemplated hereby shall be held in escrow pursuant to the terms of a Funds
Escrow Agreement which shall be executed by the parties substantially in the
form attached hereto as Exhibit B (the “Escrow Agreement”).

          NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Subscribers hereby
agree as follows:

                    1.           Purchase and Sale of Shares and Warrants.
Subject to the satisfaction or waiver of the terms and conditions of this
Agreement, on the Closing Date, each Subscriber shall purchase and the Company
shall sell to each Subscriber the Shares and Warrants for the portion of the
Purchase Price designated on the signature page hereto. The entire Purchase
Price shall be allocated to the Shares.

                    2.           Closing Date. The “Closing Date” shall be the
date that subscriber funds representing the net amount due the Company from the
Closing Purchase Price of the Offering is transmitted by wire transfer or
otherwise to or for the benefit of the Company. The consummation of the
transactions contemplated herein for all Closings shall take place at the
offices of Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New
York 10176, upon the satisfaction of all conditions to Closing set forth in this
Agreement.

                    3.           Warrants. On the Closing Date the Company will
issue Warrants to the Subscribers. A total of 476,500 Warrants will be issued,
pro rata to the Subscribers. The per Warrant Share exercise price to acquire a
Warrant Share upon exercise of a Warrant shall be equal to 101% of the closing
bid price as reported on the Principal Market for the trading day preceding the
Closing Date as reported by Bloomberg L.P. The Warrants shall be exercisable
until five (5) years after the Closing Date. The Warrants will be exercisable on
a cashless basis as described in the Warrants.

                    4.           Subscriber’s Representations and Warranties.
Each Subscriber hereby represents and warrants to and agrees with the Company
only as to such Subscriber that:

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                              (a)           Organization and Standing of the
Subscribers. If the Subscriber is an entity, such Subscriber is a corporation,
partnership or other entity duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization.

                              (b)           Authorization and Power. Each
Subscriber has the requisite power and authority to enter into and perform this
Agreement and to purchase the Common Stock and Warrants being sold to it
hereunder. The execution, delivery and performance of this Agreement by such
Subscriber and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate or partnership
action, and no further consent or authorization of such Subscriber or its Board
of Directors, stockholders, partners, members, as the case may be, is required.
This Agreement has been duly authorized, executed and delivered by such
Subscriber and constitutes, or shall constitute when executed and delivered, a
valid and binding obligation of the Subscriber enforceable against the
Subscriber in accordance with the terms thereof.

                              (c)           No Conflicts. The execution,
delivery and performance of this Agreement and the consummation by such
Subscriber of the transactions contemplated hereby or relating hereto do not and
will not (i) result in a violation of such Subscriber’s charter documents or
bylaws or other organizational documents or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument or
obligation to which such Subscriber is a party or by which its properties or
assets are bound, or result in a violation of any law, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to
such Subscriber or its properties (except for such conflicts, defaults and
violations as would not, individually or in the aggregate, have a material
adverse effect on such Subscriber). Such Subscriber is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or to purchase the Common Stock or
acquire the Warrants in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, such Subscriber is
assuming and relying upon the accuracy of the relevant representations and
agreements made by the Company herein.

                              (d)           Information on Company. The
Subscriber has been furnished with or has had access at the EDGAR Website of the
Commission to the Company’s Form 10-KSB for the year ended July 31, 2007 as
filed with the Commission, together with all subsequently filed Forms 10-QSB,
8-K, and filings made with the Commission available at the EDGAR website
(hereinafter referred to collectively as the “Reports”). In addition, the
Subscriber has received in writing from the Company such other information
concerning its operations, financial condition and other matters as the
Subscriber has requested in writing (such other information is collectively, the
“Other Written Information”), and considered all factors the Subscriber deems
material in deciding on the advisability of investing in the Securities.

                              (e)           Information on Subscriber. The
Subscriber is, and will be at the time of the issuance of the Securities and
exercise of any of the Warrants, an “accredited investor”, as such term is
defined in Regulation D promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. The Subscriber has the authority and is duly and legally qualified
to

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purchase and own the Securities. The Subscriber understands that an investment
in the Securities involves a high degree of risk and the Subscriber is able to
bear the risk of such investment for an indefinite period and to afford a
complete loss thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate.

                              (f)           Purchase of Common Stock and
Warrants. On the Closing Date, the Subscriber will purchase the Common Stock and
Warrants as principal for its own account and not with a view to any
distribution thereof. For so long as any of the Shares and/or Warrant Shares are
held by Subscriber or Subscriber’s Affiliates (as defined below), Subscriber or
its Affiliates will not cause any person or entity, directly or indirectly to
engage in “short sales” of the Company’s Common Stock.

                              (g)           Compliance with Securities Act. The
Subscriber understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under the 1933 Act
(based in part on the accuracy of the representations and warranties of
Subscriber contained herein), and that such Securities must be held indefinitely
unless a subsequent disposition is registered under the 1933 Act or any
applicable state securities laws or is exempt from such registration.

                              (h)           Shares Legend. The Shares shall bear
the following or similar legend:

> > “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
> > THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD,
> > OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
> > REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
> > SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO CONOLOG
> > CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

                              (i)           Warrants Legend. The Warrants shall
bear the following or similar legend:

> > “THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
> > HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
> > WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT
> > BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
> > EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY
> > APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
> > SATISFACTORY TO CONOLOG CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

                              (j)           Communication of Offer. The offer to
sell the Securities was directly communicated to the Subscriber by the Company.
At no time was the Subscriber presented with or solicited by any leaflet,
newspaper or magazine article, radio or television advertisement, or any other
form

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of general advertising or solicited or invited to attend a promotional meeting
otherwise than in connection and concurrently with such communicated offer.

                              (k)           Authority; Enforceability. This
Agreement and other agreements delivered together with this Agreement or in
connection herewith have been duly authorized, executed and delivered by the
Subscriber and are valid and binding agreements enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights generally and to general principles of equity;
and Subscriber has full corporate power and authority necessary to enter into
this Agreement and such other agreements and to perform its obligations
hereunder and under all other agreements entered into by the Subscriber relating
hereto.

                              (l)           Restricted Securities. Subscriber
understands that the Securities have not been registered under the 1933 Act and
such Subscriber will not sell, offer to sell, assign, pledge, hypothecate or
otherwise transfer any of the Securities unless pursuant to an effective
registration statement under the 1933 Act. Notwithstanding anything to the
contrary contained in this Agreement, and provided that prior to any transfer,
the Subscriber and the proposed transferee execute and deliver to the Company a
representation letter that is reasonably acceptable to the Company, such
Subscriber may transfer (without restriction and without the need for an opinion
of counsel) the Securities to its Affiliates (as defined below) provided that
each such Affiliate is an “accredited investor” under Regulation D, such
Affiliate agrees to be bound by the terms and conditions of this Agreement. The
Company will be liable for damages arising out of any unreasonable delay in
reissuing Common Stock to an Affiliate of the Subscriber. Subscriber indemnifies
the Company in the event an exemption from such transfer under the 1933 Act is
found not to have been available. For the purposes of this Agreement, an
“Affiliate” of any person or entity means any other person or entity directly or
indirectly controlling, controlled by or under direct or indirect common control
with such person or entity. Affiliate includes each subsidiary of the Company.
For purposes of this definition, “control” means the power to direct the
management and policies of such person or firm, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.

                              (m)          No Governmental Review. Each
Subscriber understands that no United States federal or state agency or any
other governmental or state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.

                              (n)           Correctness of Representations. Each
Subscriber represents as to such Subscriber that the foregoing representations
and warranties are true and correct as of the date hereof and, unless a
Subscriber otherwise notifies the Company prior to the Closing Date (as
hereinafter defined), shall be true and correct as of the Closing Date.

                              (o)           Acquisition for Own Account.
Subscriber is acquiring its Securities for Subscriber’s own account for
investment only, and not as a nominee or agent and not with a view towards or
for resale in connection with distribution.

                              (p)           Survival. The foregoing
representations and warranties shall survive the Closing Date for a period of
two years.

                    5.           Company Representations and Warranties. The
Company represents and warrants to and agrees with each Subscriber that:

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                              (a)           Due Incorporation. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
to own its properties and to carry on its business is disclosed in the Reports.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purpose of this Agreement, a “Material Adverse Effect” shall
mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company taken as a whole. For purposes
of this Agreement, “Subsidiary” means, with respect to any entity at any date,
any corporation, limited or general partnership, limited liability company,
trust, estate, association, joint venture or other business entity) of which
more than 50% of (i) the outstanding capital stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the board of
directors or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such entity. All the Company’s Subsidiaries as of the
Closing Date are set forth on Schedule 5(a) hereto.

                              (b)           Outstanding Stock. All outstanding
shares of capital stock of the Company issued during the two years prior to the
Closing have been duly authorized and validly issued and are fully paid and
nonassessable.

                              (c)           Authority; Enforceability. This
Agreement, the Common Stock, the Warrants, the Escrow Agreement and any other
agreements delivered together with this Agreement or in connection herewith
(collectively “Transaction Documents”) have been duly authorized, executed and
delivered by the Company and are valid and binding agreements enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights generally and to general principles
of equity. The Company has full corporate power and authority necessary to enter
into and deliver the Transaction Documents and to perform its obligations
thereunder.

                              (d)           Additional Issuances. There are no
outstanding agreements or preemptive or similar rights affecting the Company’s
common stock or equity and no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any shares of common
stock or equity of the Company or other equity interest in any of the
Subsidiaries of the Company except as described on Schedule 5(d), or the
Reports. The Common stock of the Company on a fully diluted basis outstanding as
of the last trading day preceding the Closing Date is set forth on Schedule
5(d).

                              (e)           Consents. No consent, approval,
authorization or order of any court, governmental agency or body or arbitrator
having jurisdiction over the Company, or any of its affiliates, the American
Stock Exchange, the National Association of Securities Dealers, Inc., NASDAQ
Capital Market (formerly known as the NASDAQ SmallCap Market) (the “SmallCap”),
the OTC Bulletin Board nor the Company’s shareholders, other than any approval
required by the corporate governance rules of the SmallCap including but not
limited to the requirement to file an Additional Shares Listing Application with
the SmallCap at least fifteen (15) days prior to the issuance of the Shares, is
required for the execution by the Company of the Transaction Documents and
compliance and performance by the Company of its obligations under the
Transaction Documents, including, without limitation, the issuance and sale of
the Securities.

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                              (f)           No Violation or Conflict. Assuming
the representations and warranties of the Subscribers in Section 4 are true and
correct, neither the issuance and sale of the Securities nor the performance of
the Company’s obligations under the Transaction Documents by the Company will:

                                         (i)           violate, conflict with,
result in a breach of, or constitute a default of a material nature (or an event
which with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default of a material nature) under (A) the articles or
certificate of incorporation, charter or bylaws of the Company, (B) to the
Company’s knowledge, any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or any of its
subsidiaries or over the properties or assets of the Company or any of its
affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its affiliates or subsidiaries is a party, by which the Company or any of its
affiliates or subsidiaries is bound, or to which any of the properties of the
Company or any of its affiliates or subsidiaries is subject, or (D) the terms of
any “lockup” or similar provision of any underwriting or similar agreement to
which the Company, or any of its affiliates or subsidiaries is a party except
the violation, conflict, breach, or default of which would not have a material
adverse effect on the Company; or

                                         (ii)          result in the creation or
imposition of any lien, charge or encumbrance upon the Securities or any of the
assets of the Company, its subsidiaries or any of its affiliates; or

                                         (iii)         result in the activation
of any anti-dilution rights or a reset or repricing of any debt or security
instrument of any other creditor or equity holder of the Company, nor result in
the acceleration of the due date of any obligation of the Company;

                                         (iv)        result in the activation of
any piggy-back registration rights of any person or entity holding securities of
the Company or having the right to receive securities of the Company; or

                                         (v)          result in a violation of
Section 5 under the 1933 Act.

                              (g)           The Securities. The Securities upon
issuance:

                                         (i)           are, or will be free and
clear of any security interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the 1933 Act and any applicable state
securities laws;

                                         (ii)           have been, or will be,
duly and validly authorized and on the date of issuance of the Shares and upon
exercise of the Warrants, the Shares and Warrant Shares will be duly and validly
issued, fully paid and nonassessable (and if registered pursuant to the 1933
Act, and resold pursuant to an effective registration statement will be free
trading and unrestricted, provided that each Subscriber complies with the
prospectus delivery requirements of the 1933 Act);

                                         (iii)          will not have been
issued or sold in violation of any preemptive or other similar rights of the
holders of any securities of the Company; and

                                         (iv)          will not subject the
holders thereof to personal liability by reason of being such holders provided
Subscriber’s representations herein are true and accurate and Subscribers

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take no actions or fail to take any actions required for their purchase of the
Securities to be in compliance with all applicable laws and regulations; and

                                         (v)           will not result in a
violation of Section 5 under the 1933 Act.

                              (h)         Litigation. There is no pending or, to
the best knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company, or any of its Affiliates that would affect
the execution by the Company or the performance by the Company of its
obligations under the Transaction Documents. Except as disclosed in the Reports,
there is no pending or, to the best knowledge of the Company, basis for or
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates which litigation if adversely determined would have a
Material Adverse Effect.

                              (i)           Reporting Company. The Company is a
publicly-held company subject to reporting obligations pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the “1934 Act”) and has a class
of common shares registered pursuant to Section 12(g) of the 1934 Act. Pursuant
to the provisions of the 1934 Act, as amended, the Company has timely filed all
10-KSB and 10-QSB reports required to be filed thereunder with the Commission
during the preceding twelve months.

                              (j)           No Market Manipulation. The Company
and its Affiliates have not taken, and will not take, directly or indirectly,
any action designed to, or that might reasonably be expected to, cause or result
in illegal stabilization or manipulation of the price of the Common Stock of the
Company to facilitate the sale or resale of the Securities or affect the price
at which the Securities may be issued or resold.

                              (k)          Information Concerning Company. The
Reports contain all material information relating to the Company and its
operations and financial condition as of their respective dates which
information is required to be disclosed therein. Since the date of the financial
statements included in the Reports (Latest Financial Date), and except as
modified in the Other Written Information or in the Schedules hereto, there has
been no Material Adverse Effect in the Company’s business, financial condition
or affairs not disclosed in the Reports. The Reports do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances when made.

                              (l)           Stop Transfer. The Securities, when
issued, will be restricted securities. The Company will not issue any stop
transfer order or other order impeding the sale, resale or delivery of any of
the Securities, except as may be required by any applicable federal or state
securities laws and unless contemporaneous notice of such instruction is given
to the Subscriber.

                              (m)          Defaults. The Company is not in
violation of its articles of incorporation or bylaws. The Company is (i) not in
default under or in violation of any other material agreement or instrument to
which it is a party or by which it or any of its properties are bound or
affected, which default or violation would have a Material Adverse Effect on the
Company, (ii) not in default with respect to any order of any court, arbitrator
or governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) to the Company’s knowledge not in
violation of any statute, rule or regulation of any governmental authority which
violation would have a Material Adverse Effect.

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                              (n)           No Integrated Offering. Neither the
Company, nor any of its Affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause
the offer of the Securities pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the SmallCap or any Principal Market which would impair
exemptions relied upon in this Offering. Nor will the Company or any of its
Affiliates or subsidiaries take any action or steps that would cause the offer
of the Securities to be integrated with other offerings which if so integrated
would impair the exemptions relied upon in this Offering or negatively impact
the Company’s ability to comply with its obligations hereunder.

                              (o)           No General Solicitation. Neither the
Company, nor any of its Affiliates, nor to its knowledge, any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act) in
connection with the offer or sale of the Securities.

                              (p)           Listing. The Company’s common stock
is quoted on the SmallCap. Other than prior notices, all of which the Company
has complied with and the notice dated June 24, 2004 and any subsequent
notifications related thereto from the Nasdaq Stock Market, the Company has not
received notice that its common stock may not be eligible or will become
ineligible for quotation on the SmallCap and that its common stock does not meet
all requirements for the continuation of such quotation and as such may be
delisted from the SmallCap onto the OTC Bulletin Board and as of the Closing
Date, the Company will satisfy all the requirements for the continued quotation
of its common stock on either the SmallCap or Bulletin Board.

                              (q)           No Undisclosed Liabilities. Other
than the execution of this Subscription Agreement and the transactions
contemplated therein, the Company has no liabilities or obligations which are
material, individually or in the aggregate, which are not disclosed in the
Reports and Other Written Information, other than those incurred in the ordinary
course of the Company’s businesses since the Latest Financial Date and which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, except as disclosed on Schedule 5(q).

                              (r)           No Undisclosed Events or
Circumstances. Other than the execution of this Subscription Agreement and the
transactions contemplated therein, since the Latest Financial Date, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in the Reports.

                              (s)           Capitalization. The authorized and
outstanding capital stock of the Company as of the date of this Agreement and
the Closing Date are set forth on Schedule 5(d). Except as set forth in the
Reports and Other Written Information and Schedule 5(d), there are no
outstanding options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company or any of its
Subsidiaries. All of the outstanding shares of Common Stock of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable.

                              (t)           Dilution. The Company’s executive
officers and directors understand the nature of the Securities being sold hereby
and recognize that the issuance of the Securities will have a potential dilutive
effect on the equity holdings of other holders of the Company’s equity or rights
to receive

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equity of the Company. The board of directors of the Company has concluded, in
its good faith business judgment that the issuance of the Securities is in the
best interests of the Company. The Company specifically acknowledges its
obligation to issue the Shares and the Warrant Shares upon exercise of the
Warrants is binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders of the
Company or parties entitled to receive equity of the Company.

                              (u)           No Disagreements with Accountants
and Lawyers. There are no disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company and the
accountants and lawyers formerly or presently employed by the Company, including
but not limited to disputes or conflicts over payment owed to such accountants
and lawyers.

                              (v)           DTC Status. The Company’s transfer
agent is a participant in and the Common Stock is eligible for transfer pursuant
to the Depository Trust Company Automated Securities Transfer Program. The name,
address, telephone number, fax number, contact person and email address of the
Company transfer agent is set forth on Schedule 5(v) hereto.

                              (w)           Investment Company. Neither the
Company nor any Affiliate is an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

                              (x)            Solvency. Based on the financial
condition of the Company as of the Closing Date after giving effect to the
receipt by the Company of the proceeds from the Offering (i) the Company’s fair
saleable value of its assets exceeds the amount that will be required to be paid
on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).

                              (y)           Correctness of Representations. The
Company represents that the foregoing representations and warranties are true
and correct as of the date hereof in all material respects, and, unless the
Company otherwise notifies the Subscribers prior to the Closing Date, shall be
true and correct in all material respects as of the Closing Date.

                              (z)           Survival. The foregoing
representations and warranties shall survive the Closing Date for a period of
two years.

                    6.           Regulation D Offering. The offer and issuance
of the Securities to the Subscribers is being made pursuant to the exemption
from the registration provisions of the 1933 Act afforded by Section 4(2) or
Section 4(6) of the 1933 Act and/or Rule 506 of Regulation D promulgated
thereunder. On the Closing Date, the Company will provide an opinion reasonably
acceptable to Subscriber from the Company’s legal counsel opining on the
availability of an exemption from registration under the 1933 Act as it relates
to the offer and issuance of the Securities and other matters reasonably
requested by Subscribers. A form of the legal opinion is annexed hereto as
Exhibit C. The Company will provide, at the Company’s expense, such other legal
opinions in the future as are reasonably necessary for

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the resale of the Common Stock and exercise of the Warrants and resale of the
Warrant Shares, provided however, the Subscriber seeking such opinion meets all
applicable legal requirements for such resale and provided such Subscriber
provides the Company and/or its counsel with such information as the Company’s
counsel may need in order to render such opinion. Subscriber agrees that any
legal opinions required hereunder or under any other Transaction Documents may
be supplied by the Company’s in house General Counsel.

                    7.           Broker’s Fee/Legal Fee/Escrow Agent.

                              (a)           Legal Fee. The Company shall pay to
Grushko & Mittman, P.C., a fee of $12,500 (“Legal Fees”) and 10,000 Common Stock
Purchase Warrants identical to the Warrants being issued to the Subscribers in
this Offering (“Legal Fee Warrants”) as payment for services rendered to the
Subscribers in connection with this Agreement and the purchase and sale of the
shares of Common Stock (the “Offering”) and acting as Escrow Agent for the
Offering. The Legal Fees will be payable out of funds held pursuant to the
Escrow Agreement.

                              (b)           Broker. The Company on the one hand,
and each Subscriber (for himself only) on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
persons claiming brokerage commissions or Broker’s Commission other than First
Montauk Securities Corp. (“Broker”) on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby and arising out of such
party’s actions. Anything in this Agreement to the contrary notwithstanding,
each Subscriber is providing indemnification only for such Subscriber’s own
actions and not for any action of any other Subscriber. Each Subscriber’s
liability hereunder is several and not joint. The Company agrees that it will
pay Broker the fees set forth on Schedule 7(b) hereto (“Broker’s Commissions”).
The Company represents that there are no other parties entitled to receive fees,
commissions, or similar payments in connection with the offering described in
this Agreement except the Broker.

                    8.           Covenants of the Company. The Company covenants
and agrees with the Subscribers as follows:

                              (a)           Stop Orders. So long as Subscriber
owns any of its Securities, the Company will advise the Subscribers, within two
hours after it receives notice of issuance by the Commission, any state
securities commission or any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.

                              (b)           Listing. The Company shall promptly
secure the listing of the shares of Common Stock and the Warrant Shares upon
each national securities exchange, or automated quotation system upon which they
are or become eligible for listing (subject to official notice of issuance) and
shall maintain such listing, provided the Company’s Common Stock continues to be
listed on such national securities exchange or automated quotation system. So
long as Subscriber owns any Shares, Warrants or Warrant Shares, the Company will
use its best reasonable efforts to maintain the listing of its Common Stock on
the American Stock Exchange, SmallCap, Nasdaq National Market System, OTC
Bulletin Board, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock (the
“Principal Market”)), and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Principal Market, as applicable. So long as the Subscriber owns the Shares,
Warrants or Warrant Shares, the Company will provide the Subscribers copies of
all notices it receives notifying the Company of the threatened and actual

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delisting of the Common Stock from any Principal Market. As of the date of this
Agreement and the Closing Date, the SmallCap is and will be the Principal
Market.

                              (c)           Market Regulations. The Company
shall notify the Commission, the Principal Market and applicable state
authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the
Subscribers and promptly provide copies thereof to Subscriber.

                              (d)           Reporting Requirements. From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitation, the Company will (v)
cause its Common Stock to continue to be registered under Section 12(b) or 12(g)
of the 1934 Act, (x) comply in all respects with its reporting and filing
obligations under the 1934 Act, (y) comply with all reporting requirements that
are applicable to an issuer with a class of shares registered pursuant to
Section 12(b) or 12(g) of the 1934 Act, as applicable, and (z) comply with all
requirements related to any registration statement filed pursuant to this
Agreement. The Company will use its best efforts not to take any action or file
any document (whether or not permitted by the 1933 Act or the 1934 Act or the
rules thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said acts until two (2) years
after the Closing Date. Until the resale of the Common Stock and the Warrant
Shares by each Subscriber, the Company will use its best reasonable efforts to
continue the listing or quotation of the Common Stock on the Principal Market or
other market with the reasonable consent of Subscribers holding a majority of
the Shares and Warrant Shares, and which consent will not be unreasonably
withheld and will use its best reasonable efforts to comply in all respects with
the Company’s reporting, filing and other obligations under the bylaws or rules
of the Principal Market. The Company agrees to timely file a Form D with respect
to the Securities if required under Regulation D and to provide a copy thereof
to each Subscriber promptly after such filing.

                              (e)           Use of Proceeds. The proceeds of the
Offering will be employed by the Company for the purposes set forth on Schedule
8(e) hereto. Except as set forth on Schedule 8(e), the Purchase Price may not
and will not be used for accrued and unpaid officer and director salaries,
payment of financing related debt, redemption of outstanding notes or equity
instruments of the Company, litigation related expenses or settlements,
brokerage fees, nor non-trade obligations outstanding on a Closing Date.

                              (f)           Taxes. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to Rule
144, without regard to volume limitations, the Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company; provided, however, that any such
tax, assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefore.

                              (g)           Reservation. Prior to the Closing
Date, the Company undertakes to reserve, pro rata, on behalf of each Subscriber
and holder of a Warrant, from its authorized but unissued common stock, a number
of common shares equal to the amount of Warrant Shares issuable upon exercise

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of the Warrants. Failure to have sufficient shares reserved pursuant to this
Section 8(g) for three (3) consecutive business days or ten (10) days in the
aggregate shall be a material default of the Company’s obligations under this
Agreement.

                              (h)           Books and Records. From the date of
this Agreement and until the sooner of (i) two (2) years after the Closing Date,
or (ii) until all the Shares and Warrant Shares have been resold or transferred
by all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitations, the Company will keep true
records and books of account in which full, true and correct entries will be
made of all dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a consistent
basis.

                              (i)           Governmental Authorities. From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the Company shall
duly observe and conform in all material respects to all valid requirements of
governmental authorities relating to the conduct of its business or to its
properties or assets.

                              (j)           Intellectual Property. From the date
of this Agreement and until the sooner of (i) two (2) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been resold or
transferred by all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the Company shall
maintain in full force and effect its corporate existence.

                              (k)           Properties. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to Rule
144, without regard to volume limitation, the Company will keep its properties
in good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases to which it is a party or under
which it occupies property if the breach of such provision could reasonably be
expected to have a material adverse effect.

                              (l)           Confidentiality/Public Announcement.
From the date of this Agreement and until the sooner of (i) two (2) years after
the Closing Date, or (ii) until all the Shares and Warrant Shares have been
resold or transferred by all the Subscribers pursuant to the Registration
Statement or pursuant to Rule 144, without regard to volume limitations, the
Company agrees that except in connection with a Form 8-K or the Registration
Statement or other documents filed by the Company with the Commission or Nasdaq,
it will not disclose publicly or privately the identity of the Subscribers
unless expressly agreed to in writing by a Subscriber or only to the extent
required by law and then only upon ten days prior notice to Subscriber. In any
event and subject to the foregoing, the Company undertakes to file a Form 8-K or
make a public announcement describing the Offering not later than the fourth
trading day following the Closing Date. In the Form 8-K or public announcement,
the Company will specifically disclose the amount of common stock outstanding
immediately after the Closing. A form of the proposed Form 8-K or public
announcement to be employed in connection with the Closing is annexed hereto as
Exhibit D. The Subscribers expressly consent to the filing of such Form 8-K and
the making of the aforementioned public announcement and to being named in
exhibits to such 8-K. .

                               (m)          Further Registration Statements.
Except for a registration statement filed on behalf of the Subscribers pursuant
to Section 10 of this Agreement and a Registration Statement on

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Form S-8 for the registration of up to 800,000 shares of the Company’s common
Stock issuable to employees, directors, officers or consultants of the Company
and a follow-on registration statement for the March 17, 2007 transaction, the
Company will not file any registration statements, including but not limited to
Form S-8, with the Commission or with state regulatory authorities without the
consent of the Subscriber until the earlier of (i) ninety (90) days after the
actual effective date of the registration statement filed pursuant to this
Agreement (“Actual Effective Date”) during which such Registration Statement
shall be current and available for use in connection with the public resale of
the Shares and Warrant Shares (“Exclusion Period”), or (ii) Subscribers no
longer own any of their Shares and Warrant Shares.

                               (n)           Blackout. The Company undertakes
and covenants that until the first to occur of (i) the end of the Exclusion
Period, or (ii) until all the Shares have been resold pursuant to such
registration statement, the Company will not enter into any acquisition, merger,
exchange or sale or other transaction that could have the effect of delaying the
effectiveness of any pending registration statement or causing an already
effective registration statement to no longer be effective or current.

                               (o)           Non-Public Information. The Company
covenants and agrees that neither it nor any other person acting on its behalf
will provide any Subscriber or its agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior
thereto such Subscriber shall have agreed in writing to receive such
information. The Company understands and confirms that each Subscriber shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

                    9.           Covenants of the Company and Subscriber
Regarding Indemnification.

                              (a)           The Company agrees to indemnify,
hold harmless, reimburse and defend the Subscribers, the Subscribers’ officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Subscriber or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Company or breach of any warranty by Company
in any of the Transaction Documents; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by the Company of any
covenant or undertaking to be performed by the Company under any Transaction
Documents other than its obligations under Section 11 of this Agreement.

                              (b)           Each Subscriber agrees to indemnify,
hold harmless, reimburse and defend the Company and each of the Company’s
officers, directors, agents, affiliates, control persons against any claim,
cost, expense, liability, obligation, loss or damage (including reasonable legal
fees) of any nature, incurred by or imposed upon the Company or any such person
which results, arises out of or is based upon (i) any material misrepresentation
by such Subscriber in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
such Subscriber of any covenant or undertaking to be performed by such
Subscriber hereunder, or any other agreement entered into by the Company and
Subscribers, relating hereto.

                              (c)           In no event shall the liability of
any Subscriber or permitted successor hereunder or under any other agreement
delivered in connection herewith be greater in amount than the dollar amount of
the net proceeds actually received by such Subscriber upon the sale of
Registrable Securities (as defined herein).

                              (d)           The procedures set forth in Section
10.6 shall apply to the indemnifications set forth in Sections 9(a) and 9(b)
above.

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                    10.1.      Registration Rights. The Company hereby grants
the following registration rights to holders of the Securities.

                              (i)           On one occasion, for a period
commencing one hundred and twenty-one (121) days after the Closing Date, but not
later than two (2) years after the Closing Date (“Request Date”), upon a written
request therefor from any record holder or holders of more than 50% of the
Shares and Warrant Shares actually issued upon exercise of the Warrants, the
Company shall prepare and file with the Commission a registration statement
under the 1933 Act registering the Shares, Warrant Shares, Broker Warrant Shares
and Legal Fee Warrant Shares (collectively “Registrable Securities”) which are
the subject of such request for unrestricted public resale by the holder
thereof. For purposes of Sections 10.1(i) and 10.1(ii), Registrable Securities
shall not include Securities which are registered for resale in an effective
registration statement or included for registration in a pending registration
statement, or which have been issued without further transfer restrictions after
a sale or transfer pursuant to Rule 144 under the 1933 Act. Upon the receipt of
such request, the Company shall promptly give written notice to all other record
holders of the Registrable Securities that such registration statement is to be
filed and shall include in such registration statement Registrable Securities
for which it has received written requests within ten (10) days after the
Company gives such written notice. Such other requesting record holders shall be
deemed to have exercised their demand registration right under this Section
10.1(i) .

                              (ii)          From the date of Closing but no
later than two (2) years after the Closing Date, if the Company at any time
proposes to register any of its securities under the 1933 Act for sale to the
public, whether for its own account or for the account of other security holders
or both, except with respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Registrable Securities for sale
to the public, provided the Registrable Securities are not otherwise registered
for resale by the Subscribers or Holder pursuant to an effective registration
statement, each such time it will give at least fifteen (15) days’ prior written
notice to the record holder of the Registrable Securities of its intention so to
do. Upon the written request of the holder, received by the Company within ten
(10) days after the giving of any such notice by the Company, to register any of
the Registrable Securities not previously registered, the Company will cause
such Registrable Securities as to which registration shall have been so
requested to be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition of the Registrable Securities so registered
by the holder of such Registrable Securities (the “Seller” or “Sellers”). In the
event that any registration pursuant to this Section 10.1(ii) shall be, in whole
or in part, an underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 10.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 10.1(ii)
without thereby incurring any liability to the Seller.

                              (iii)          If, at the time any written request
for registration is received by the Company pursuant to Section 10.1(i), the
Company has determined to proceed with the actual preparation and filing of a
registration statement under the 1933 Act in connection with the proposed offer
and sale for cash of any of its securities for the Company’s own account and the
Company actually does file such other registration statement, such written
request shall be deemed to have been given pursuant to Section 10.1(ii) rather
than Section 10.1(i), and the rights of the holders of Registrable Securities
covered by such written request shall be governed by Section 10.1(ii) .

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                              (iv)          The Company shall file with the
Commission not later than thirty (30) days after the Closing Date (the “Filing
Date”), and use its best reasonable efforts to cause to be declared effective
within one hundred and fifty (150) days after the Filing Date (the “Effective
Date”), a Form SB-2 registration statement (the “Registration Statement”) (or
such other form that it is eligible to use) in order to register the Registrable
Securities for resale and distribution under the 1933 Act. The Company will
register not less than a number of shares of common stock in the aforedescribed
registration statement that is equal to all of the Shares and Warrant Shares
issuable pursuant to this Agreement. The Registrable Securities shall be
reserved and set aside exclusively for the benefit of each Subscriber and
Warrantholder, pro rata, and not issued, employed or reserved for anyone other
than each such Subscriber and Warrantholder. The Registration Statement will
immediately be amended or additional registration statements will be immediately
filed by the Company as necessary to register additional shares of Common Stock
to allow the public resale of all Common Stock included in and issuable by
virtue of the Registrable Securities. Without the written consent of the
Subscriber, no securities of the Company other than the Registrable Securities
will be included in the Registration Statement, provided, however, and
notwithstanding anything to the contrary herein, the Company may include any
shares issued to the Broker or any designee of the Broker, upon the exercise of
warrants granted to the Broker. It shall be deemed a Non-Registration Event if
at any time after the date the Registration Statement is declared effective by
the Commission (“Actual Effective Date”) the Company has registered for resale
on behalf of the Sellers fewer than 125% of the amount of Common Shares and 100%
of the Warrant Shares issuable upon exercise of the Warrants.

                               (v)          The amount of Registrable Securities
required to be included in the Registration Statement as described in Section
10.1(iv) (“Initial Registrable Securities”) shall be limited to not less than
100% of the maximum amount (“Rule 415 Amount”) of Common Stock which may be
included in a single Registration Statement without exceeding registration
limitations (or guidelines) imposed by the Commission pursuant to Rule 415 of
the 1933 Act but in no event not less than 33% of the shares of Common Stock of
the Company held by non-affiliates of the Company immediately prior to the day
the Company files the Registration Statement with the Commission . In the event
that less than all of the Initial Registrable Securities are included in the
Registration Statement as a result of the limitation described in this Section
10.1(v), then the Company will file one additional Registration Statement
registering the allowable balance pursuant to Rule 415 (such Registration
Statement a “Subsequent Registration Statement”). The Filing Date and Effective
Date of such additional Registration Statement shall be, respectively, fourteen
(14) and forty-five (45) days after the first day such Subsequent Registration
Statement may be filed without objection by the Commission based on Rule 415 of
the 1933 Act.

                               (vi)         Unless otherwise instructed in
writing by a holder of Registrable Securities and only if the initial
Registration Statement does not include all of the Registrable Securities, the
Registrable Securities will be registered on behalf of each such holder in the
Registration Statements based on Common Stock and Common Stock issuable upon
exercise of the Warrants, in the following order and priority:

                                          (A)           Common Stock.

                                          (B)           Warrants.

                                           (C)           Warrants issued to the
Subscribers at any time based on exercise prices, with the lower exercise priced
Warrant Shares being registered first and then the higher exercise priced
Warrant Shares. In the case of Warrants with the same exercise prices but
different Issue Dates, the later issued Warrants will be registered first.

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                    The foregoing notwithstanding, priority shall be given to
Common Stock ahead of Warrant Shares.

                    10.2.      Registration Procedures. If and whenever the
Company is required by the provisions of Section 10.1(i), 10.1(ii), or (iv) to
effect the registration of any Registrable Securities under the 1933 Act, the
Company will, as expeditiously as possible:

                              (a)           subject to the timelines provided in
this Agreement, prepare and file with the Commission a registration statement
required by Section 10, with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (as herein provided), and
promptly provide to the holders of the Registrable Securities copies of all
filings and Commission letters of comment and notify Subscribers and Grushko &
Mittman, P.C. (by telecopier and by email to Counslers@aol.com) within one (1)
business day of (i) notice that the Commission has no comments or no further
comments on the Registration Statement, (ii) request by the Company of
acceleration of effectiveness of any registration statement which includes
Registrable Securities, and (iii) the declaration of effectiveness of the
registration statement, (failure to timely provide notice as required by this
Section 10.2(g) shall be a material breach of the Company’s obligation and an
Event of Default as defined in the Notes);

                              (b)           prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective until such registration statement has been
effective for a period of two (2) years, or all the Common Stock included in the
registration statement has been sold by the Subscribers, and comply with the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Sellers’ intended method of disposition set forth in such registration
statement for such period;

                              (c)           furnish to the Sellers, at the
Company’s expense, such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or their
disposition of the securities covered by such registration statement;

                              (d)           use its best efforts to register or
qualify the Sellers’ Registrable Securities covered by such registration
statement under the securities or “blue sky” laws of such jurisdictions as the
Sellers shall request in writing, provided, however, that the Company shall not
for any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;

                              (e)           if applicable, list the Registrable
Securities covered by such registration statement with any securities exchange
on which the Common Stock of the Company is then listed;

                              (f)            if a prospectus relating thereto is
required to be delivered under the 1933 Act, immediately notify the Sellers of
the happening of any event of which the Company has knowledge as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing; and

                              (g)           provided same would not be in
violation of the provision of Regulation FD under the 1934 Act, make available
for inspection by the Sellers, and any attorney, accountant or other agent
retained by the Seller or underwriter, all publicly available, non-confidential
financial and other

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records, pertinent corporate documents and properties of the Company, and cause
the Company’s officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.

                    10.3.      Provisions of Documents. In connection with each
registration described in this Section, each Subscriber will furnish to the
Company in writing such information and representation letters with respect to
itself and the proposed distribution by it as reasonably shall be necessary in
order to assure compliance with federal and applicable state securities laws.

                    10.4.      Non-Registration Events. The Company and the
Subscribers agree that the Sellers will suffer damages if the Registration
Statement is not filed by the Filing Date and not declared effective by the
Commission by the Effective Date, and any registration statement required under
Sections 10.1(i) or 10.1(ii) is not filed within 60 days after written request
and declared effective by the Commission within 120 days after such filing, and
maintained in the manner and within the time periods contemplated by Section 10
hereof, and it would not be feasible to ascertain the extent of such damages
with precision. Accordingly, if (i) the Registration Statement is not filed on
or before the Filing Date, (ii) if the Registration Statement is not declared
effective on or before the Effective Date, (iii) if the Registration Statement
is not declared effective within three (3) business days of receipt by the
Company of a written or oral communication from the Commission that the
Registration Statement will not be reviewed or that the Commission has no
further comments, (iv) if the Registration Statement described in Sections
10.1(i) or 10.1(ii) is not filed within 60 days after such written request, or
is not declared effective within 90 days after the registration statement
described in Sections 10.1(i) or 10.1(ii) is filed with the Commission, or (v)
any registration statement described in Sections 10.1(i), 10.1(ii) or 10.1(iv)
is filed and declared effective but shall thereafter cease to be effective
(without being succeeded within ten (10) business days by an effective
replacement or amended registration statement) for a period of time which shall
exceed 30 days in the aggregate per year (defined as a period of 365 days
commencing on the date the Registration Statement is declared effective) or more
than 20 consecutive days (each such event referred to in clauses (i), (ii),
(iii) and (iv) of this Section 10.4 is referred to herein as a “Non-Registration
Event”), the Company shall deliver to the holder of Registrable Securities, as
Liquidated Damages an amount equal to one percent for the first thirty (30) days
and thereafter an amount equal to one and one-half percent (1.5%) for each
thirty days or part thereof of the Purchase Price of the Shares and Warrant
Shares owned of record by such holder as of and during the pendency of such
Non-Registration Event which are subject to such Non-Registration Event.
Notwithstanding anything to the contrary in this section, a maximum of four
percent liquidated damages will be payable in connection with the
Non-Registration Event described in this Section and provided however, no
Liquidated Damages shall be payable if the delay of the Registration Statement
being declared effective is due to comments from the Commission related to Rule
415. The Company must pay the Liquidated Damages in cash within ten (10) days
after the end of each thirty (30) day period or shorter part thereof for which
Liquidated Damages are payable. In the event a Registration Statement is filed
by the Filing Date but is withdrawn prior to being declared effective by the
Commission, then such Registration Statement will be deemed to have not been
filed. The Company shall use its best reasonable efforts to respond to all oral
or written comments received from the Commission relating to the Registration
Statement within 20 days in connection with the initial filing of the
Registration Statement and within 10 days in connection with amendments to the
Registration Statement after receipt of such comments from the Commission.
Failure to timely respond to Commission comments is a Non-Registration Event for
which Liquidated Damages shall accrue and be payable by the Company to the
holders of Registrable Securities at the same rate set forth above.
Notwithstanding the foregoing, the Company shall not be liable to the Subscriber
under this Section 10.4 for any events or delays occurring as a consequence of
the acts or omissions of the Subscribers contrary to the obligations undertaken
by Subscribers in this Agreement. Liquidated Damages will not accrue nor be
payable pursuant to this Section 10.4 nor will a Non-Registration Event be
deemed to have occurred for times during which

17

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Registrable Securities are transferable by the holder of Registrable Securities
pursuant to Rule 144(k) under the 1933 Act.

                    10.5.      Expenses. All expenses incurred by the Company in
complying with Section 10, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “blue sky” laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars and costs
of insurance are called “Registration Expenses.” All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities, including
any fees and disbursements of any additional counsel to the Seller, are called
“Selling Expenses.” The Company will pay all Registration Expenses in connection
with the registration statement under Section 10. Selling Expenses in connection
with each registration statement under Section 10 shall be borne by the Seller
and may be apportioned among the Sellers in proportion to the number of shares
sold by the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree. Additionally, the parties
agree that each will be responsible for their respective legal fees in
connection with this transaction.

                    10.6.      Indemnification and Contribution.

                              (a)           In the event of a registration of
any Registrable Securities under the 1933 Act pursuant to Section 10, the
Company will, to the extent permitted by law, indemnify and hold harmless the
Seller, each officer of the Seller, each director of the Seller, each
underwriter of such Registrable Securities thereunder and each other person, if
any, who controls such Seller or underwriter within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Seller, or such underwriter or controlling person may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages 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 registration statement under which such Registrable Securities was
registered under the 1933 Act pursuant to Section 10, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
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 in light of the circumstances when made, and
will subject to the provisions of Section 10.6(c) reimburse the Seller, each
such underwriter and each such controlling person of Seller for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to the Seller or any controlling person of
Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller, or
any such controlling person in writing specifically for use in such registration
statement or prospectus.

                              (b)           In the event of a registration of
any of the Registrable Securities under the 1933 Act pursuant to Section 10,
each Seller severally but not jointly will, to the extent permitted by law,
indemnify and hold harmless the Company, and each person, if any, who controls
the Company within the meaning of the 1933 Act, each officer of the Company who
signs the registration statement, each director of the Company, each underwriter
and each person who controls any underwriter within the meaning of the

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1933 Act, against all losses, claims, damages or liabilities, joint or several,
to which the Company or such officer, director, underwriter or controlling
person may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages 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 the registration statement under which such
Registrable Securities were registered under the 1933 Act pursuant to Section
10, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, 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, and will
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability of
the Seller hereunder shall be limited to the net proceeds actually received by
the Seller from the sale of Registrable Securities covered by such registration
statement.

                              (c)           Promptly after receipt by an
indemnified party hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Section 10.6(c) and shall only relieve it from any liability which it may have
to such indemnified party under this Section 10.6(c), except and only if and to
the extent the indemnifying party is prejudiced by such omission. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake 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 and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 10.6(c) for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified parties, as a group,
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the indemnifying party as incurred.

                              (d)           In order to provide for just and
equitable contribution in the event of joint liability under the 1933 Act in any
case in which either (i) a Seller, or any controlling person of a Seller, makes
a claim for indemnification pursuant to this Section 10.6 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 10.6 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of the Seller or controlling person of the Seller in circumstances for which
indemnification is not provided under this Section 10.6; then, and in each such
case, the Company and the Seller will contribute to the aggregate losses,
claims, damages or

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liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities offered by it
pursuant to such registration statement; and (z) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the 1933
Act) will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.

                    10.7.      Delivery of Unlegended Shares.

                              (a)           Within three (3) business days (such
third business day being the “Unlegended Shares Delivery Date”) after the
business day on which the Company has received (i) a notice that Shares or
Warrant Shares or any other Common Stock held by a Subscriber have been sold
pursuant to the Registration Statement or Rule 144 under the 1933 Act, (ii) a
representation that the prospectus delivery requirements, or the requirements of
Rule 144, as applicable and if required, have been satisfied, and (iii) the
original share certificates representing the shares of Common Stock that have
been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Subscriber and/or Subscriber’s broker regarding
compliance with the requirements of Rule 144, the Company at its expense, (y)
shall deliver, and shall cause legal counsel selected by the Company to deliver
to its transfer agent (with copies to Subscriber) an appropriate instruction and
opinion of such counsel, directing the delivery of shares of Common Stock
without any legends including the legend set forth in Sections 4e) and 4(f)
above, reissuable pursuant to any effective and current Registration Statement
described in Section 10 of this Agreement or pursuant to Rule 144 under the 1933
Act (the “Unlegended Shares”); and (z) cause the transmission of the
certificates representing the Unlegended Shares together with a legended
certificate representing the balance of the submitted Shares certificate, if
any, to the Subscriber at the address specified in the notice of sale, via
express courier, by electronic transfer or otherwise on or before the Unlegended
Shares Delivery Date.

                              (b)           In lieu of delivering physical
certificates representing the Unlegended Shares, if the Company’s transfer agent
is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer program, upon request of a Subscriber, so long as the
certificates therefor do not bear a legend and the Subscriber is not obligated
to return such certificate for the placement of a legend thereon, the Company
shall cause its transfer agent to electronically transmit the Unlegended Shares
by crediting the account of Subscriber’s prime Broker with DTC through its
Deposit Withdrawal Agent Commission system. Such delivery must be made on or
before the Unlegended Shares Delivery Date.

                              (c)           The Company understands that a delay
in the delivery of the Unlegended Shares pursuant to Section 10 hereof later
than two business days after the Unlegended Shares Delivery Date could result in
economic loss to a Subscriber. As compensation to a Subscriber for such loss,
the Company agrees to pay late payment fees (as liquidated damages and not as a
penalty) to the Subscriber for late delivery of Unlegended Shares in the amount
of $100 per business day after the Delivery Date for each $10,000 of purchase
price of the Unlegended Shares subject to the delivery default. If during any
360 day period, the Company fails to deliver Unlegended Shares as required by
this Section 10.7 for an aggregate of thirty (30) days, then each Subscriber or
assignee holding Securities subject to such default may, at its option, require
the Company to redeem all or any portion of the Shares and Warrant Shares
subject to such default at a price per share equal to 120% of the Purchase Price
of such Common Stock and Warrant Shares (“Unlegended Redemption Amount”). The
amount of the aforedescribed liquidated damages that have accrued or been paid
for the twenty day period prior to the receipt by the Subscriber of the
Unlegended Redemption Amount shall be credited against the Unlegended Redemption
Amount. The

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Company shall pay any payments incurred under this Section in immediately
available funds upon demand.

                              (d)           In addition to any other rights
available to a Subscriber, if the Company fails to deliver to a Subscriber
Unlegended Shares as required pursuant to this Agreement, within seven (7)
business days after the Unlegended Shares Delivery Date and the Subscriber
purchases (in an open market transaction or otherwise) shares of common stock to
deliver in satisfaction of a sale by such Subscriber of the shares of Common
Stock which the Subscriber was entitled to receive from the Company (a
“Buy-In”), then the Company shall pay in cash to the Subscriber (in addition to
any remedies available to or elected by the Subscriber) the amount by which (A)
the Subscriber’s total purchase price (including brokerage commissions, if any)
for the shares of common stock so purchased exceeds (B) the aggregate purchase
price of the shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares together with interest thereon at a rate of 15% per annum,
accruing until such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as a penalty). For
example, if a Subscriber purchases shares of Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares, the Company shall be required to pay the Subscriber $1,000,
plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the Buy-In.

                              (e)           In the event a Subscriber shall
request delivery of Unlegended Shares as described in Section 10.7 and the
Company is required to deliver such Unlegended Shares pursuant to Section 10.7,
the Company may not refuse to deliver Unlegended Shares based on any claim that
such Subscriber or any one associated or affiliated with such Subscriber has
been engaged in any violation of law, or for any other reason, unless, an
injunction or temporary restraining order from a court, on notice, restraining
and or enjoining delivery of such Unlegended Shares or exercise of all or part
of said Warrant shall have been sought and obtained and the Company has posted a
surety bond for the benefit of such Subscriber in the amount of 120% of the
amount of the aggregate purchase price of the Common Stock and Warrant Shares
which are subject to the injunction or temporary restraining order, which bond
shall remain in effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such Subscriber to the
extent Subscriber obtains judgment in Subscriber’s favor.

                    10.8      Covenants of Subscriber. The Subscriber covenants
and promises to (i) the timely provision of any Subscriber information required
hereunder or reasonably requested by the Company in connection with the filing
and declaration of effectiveness of the Registration Statement and any
amendments to the Registration Statement; (ii) the timely execution of any and
all documents required hereunder or reasonably requested by the Company in
connection with the filing and declaration of effectiveness of the Registration
Statement and any amendments to the Registration Statement; and (iii) any other
timely action as required hereunder or reasonably requested by the Company in
connection with the filing and declaration of effectiveness of the Registration
Statement and any amendments of the Registration Statement.

                    11.        (a)           Right of Participation. Commencing
on the date of this Agreement and through 180 days after the Closing Date, the
Subscribers shall be given not less than ten (10) business days prior written
notice of any proposed sale by the Company of its common stock or other
securities or debt obligations, except in connection with (i) employee stock
options or compensation plans, (ii) as full or partial consideration in
connection with any merger, consolidation or purchase of substantially all of
the securities or assets of any corporation or other entity, (iii) issuance of
an aggregate of 800,000 Shares of the Company’s Common Stock which may be issued
to officers, directors, consultants and employees to the Company, or (iv) the
issuance of the stock of the company in connection with any outstanding

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warrants, options, convertible preferred stock or any other security of the
company which has been described in the Reports or Other Written Information
filed with the Commission or delivered to the Subscribers prior to the Closing
Date (collectively “Excepted Issuances”). The Subscribers who exercise their
rights pursuant to this Section 11(a) shall have the right during the ten (10)
business days following receipt of the notice to participate in the purchase of
such offered common stock, debt or other securities in accordance with the terms
and conditions set forth in the notice of sale in the same proportion to each
other as their purchase of Shares in the Offering.

                              (b)           Offering Restrictions. Until the
later of the Exclusion Period or twelve months from the Closing Date, except in
connection with the Excepted Issuances or the Offering, the Company will not
enter into any agreement to, nor issue any equity, convertible debt or other
securities convertible into common stock without the prior written consent of
the Subscribers, which consent may be withheld for any reason. Anything to the
contrary herein notwithstanding, the Subscribers do not consent to, nor will the
Company take any action which may result in a violation of Section 5 of the 1933
Act.

                              (c)           Maximum Exercise of Rights. In the
event the exercise of the rights described in Sections 11(a) and 11(c) would
result in the issuance of an amount of common stock of the Company that would
exceed the maximum amount that may be issued to a Subscriber calculated in the
manner described in Section 8 of the Warrants, then the issuance of such
additional shares of common stock of the Company to such Subscriber will be
deferred in whole or in part until such time as such Subscriber is able to
beneficially own such common stock without exceeding the maximum amount. The
determination of when such common stock may be issued shall be made by each
Subscriber as to only such Subscriber.

                    12.         Miscellaneous.

                              (a)           Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: (i) if to the
Company, to: Conolog Corporation, 5 Columbia Road, Somerville, NJ 08876, Attn:
Robert Benou, telecopier: (908) 722-5461, with a copy by telecopier only to:
Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY
10006, Attn: David Manno, Esq., telecopier: (212) 930-9725, (ii) if to the
Subscribers, to: the one or more addresses and telecopier numbers indicated on
the signature pages hereto, with an additional copy by telecopier only to:
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
telecopier number: (212) 697-3575, and (iii) if to the Broker, to: First Montauk
Securities Corp., 328 Newman Springs Road, Red Bank, NJ 07701, Attn: Ernest
Pellegrino, Director of Corporate Finance, telecopier: (732) 842-9047.

                              (b)           Entire Agreement; Assignment. This
Agreement and other documents delivered in connection herewith represent the
entire agreement between the parties hereto with respect to

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the subject matter hereof and may be amended only by a writing executed by both
parties. Neither the Company nor the Subscribers have relied on any
representations not contained or referred to in this Agreement and the documents
delivered herewith. No right or obligation of either party shall be assigned by
that party without prior notice to and the written consent of the other party.

                              (c)           Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.

                              (d)           Law Governing this Agreement. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York. The parties and
the individuals executing this Agreement and other agreements referred to herein
or delivered in connection herewith on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney’s fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.

                              (e)           Specific Enforcement, Consent to
Jurisdiction. The Company and Subscriber acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity. Subject to Section 12(d) hereof, each of the Company, Subscriber
and any signator hereto in his personal capacity hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction in New York of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section shall affect
or limit any right to serve process in any other manner permitted by law.

                              (f)            Damages. In the event the
Subscriber is entitled to receive any liquidated damages pursuant to the
Transactions, the Subscriber may elect to receive the greater of actual damages
or such liquidated damages.

                              (g)           Independent Nature of Subscribers.
The Company acknowledges that the obligations of each Subscriber under the
Transaction Documents are several and not joint with the obligations of any
other Subscriber, and no Subscriber shall be responsible in any way for the
performance of the obligations of any other Subscriber under the Transaction
Documents. The decision of each Subscriber to purchase Securities has been made
by such Subscriber independently of any other Subscriber and independently of
any information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or
given by any other Subscriber or by any agent or

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employee of any other Subscriber, and no Subscriber or any of its agents or
employees shall have any liability to any Subscriber (or any other person)
relating to or arising from any such information, materials, statements or
opinions. Nothing contained in any Transaction Document, and no action taken by
any Subscriber pursuant hereto or thereto (including, but not limited to, the
(i) inclusion of a Subscriber in the SB-2 Registration Statement and (ii) review
by, and consent to, such Registration Statement by a Subscriber) shall be deemed
to constitute the Subscribers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Subscribers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Subscriber shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of the Transaction
Documents, and it shall not be necessary for any other Subscriber to be joined
as an additional party in any proceeding for such purpose. The Company
acknowledges that it has elected to provide all Subscribers with the same terms
and Transaction Documents for the convenience of the Company and not because
Company was required or requested to do so by the Subscribers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

 

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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

            Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.

  CONOLOG CORPORATION                                      a Delaware
corporation                     By:
 
           Name:            Title:         Dated: October _____, 2007

   SUBSCRIBER     PURCHASE   SHARES   WARRANTS     PRICE     Name of Subscriber:
              Address:         Fax No.:         Taxpayer ID# (if applicable):  
                (Signature)       By:
________________________________________________                

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LIST OF EXHIBITS AND SCHEDULES

Exhibit A      Form of Warrant Exhibit B      Escrow Agreement Exhibit C    
 Form of Legal Opinion Exhibit D      Form of Form 8-K or Public Announcement
Schedule 5(a)                         Subsidiaries Schedule 5(d)      Additional
Issuances / Capitalization Schedule 5(q)      Undisclosed Liabilities Schedule
5(v)      Transfer Agent Schedule 7(b)      Broker’s Commissions Schedule 8(e)  
   Use of Proceeds

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SCHEDULE 5 (A)

SUBSIDIARIES

Name of entity            Federal ID#            State of Incorporation Statue  
        NOLOGOC CORPORATION   22-360421   NEW JERSEY Inactive           LONOGOC
CORPORATION   22-3739679   NEW JERSEY Inactive

Both Corporations are inactive and in the process of being dissolved and as a
result they are Not in Good Standing.

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SCHEDULE 5 (d)

ADDITIONAL ISSUANCES / CAPITALIZATION

As of October 15, 2007, the Company has outstanding warrants to purchase an
aggregate of 408,891 shares of its common stock. After the closing of the
transactions contemplated in the Subscription Agreement, the Company will have
outstanding warrants to purchase an aggregate of 983,376 shares of its common
stock.

The Company has a 2002 Stock Option Plan pursuant to which it may grant options
to purchase 190,000 shares of its common stock.

162,000 shares of the Company’s Series A, Preferred Stock, having a par value of
$0.50 per share, have been authorized, of which 155,000 shares are issued and
outstanding.

2,000,000 shares of the Company’s Series B Preferred Stock, having a par value
of $0.50 per share, have been authorized, of which 1,197 shares are issued and
outstanding.

As of October 12, 2007, 30,000,000 shares of the Company’s common stock, having
a par value of $0.01 per share, have been authorized, of which 4,710,812 shares
are issued and outstanding and 220 shares are held in the Company’s treasury,
not including the 942,143 shares of the Company’s common stock that will be
issued to the Subscribers pursuant to the Subscription Agreement dated October
____, 2007.

Including the transaction contemplated by the Subscription Agreement dated
October ____, 2007,

5,652,955 shares will be issued and outstanding and 220 shares will be held in
the Company’s treasury as of October ____, 2007.

Of the 30,000,000 shares of the Company’s common stock which have been
authorized, 408,891 shares have reserved for issuance upon the exercise of
outstanding warrants, not including the shares that are being reserved for the
warrants issued in this transaction, and 190,000 shares of the Company’s common
stock have been reserved for issuance pursuant to its 2002 Stock Option Plan.

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Schedule 5(h)

LITIGATION

Meyers Associates, L.P. v. Conolog Corporation, Supreme Court of the State of
New York, County of New York Index No. 600824/07

On March 13, 2007, Meyers Associates, L.P. commenced an action against Conolog
Corporation, asserting that: (1) Conolog breached a purported contract it had
with Meyers pursuant to which it claims Meyers was to act as lead underwriter in
connection with a Regulation D securities offering for Conolog, and (2) Conolog
misappropriated a purported confidential list of potential investors. Conolog
denies the allegations in the complaint and intends to vigorously defend against
Meyers’s claims. On May 4, 2007, Conolog served its answer to the complaint and
discovery demands. While Conolog believes it has meritorious defenses, at this
early stage in the proceedings, it is not possible to predict the outcome.

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SCHEDULE 5 (v)

TRANSFER AGENT

CONTINENTAL STOCK TRANSFER & TRUST COMPANY
17 BATTERY PLACE, 8TH FLOOR
NEW YORK, NEW YORK 10004

CONTACT: WILLIAM F. SEEGRABER
212 509-4000 EXT. 204
FAX 212 616-7808

DTC Status
The Company’s transfer agent is a participant in and the Common Stock is
eligible for transfer pursuant to
the Depository Trust Company Automated Securities Transfer Program.

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Schedule 7(b)

           BROKER:            FIRST MONTAUK SECURITIES CORP.      
328 Newman Springs Road
      Red Bank, NJ 07701

                    Cash Fee.   The Company agrees that it will pay the Broker,
on the Closing Date a fee of ten percent (10%) of the Purchase Price (“Broker’s
Cash Fee”). The Company represents that there are no other parties entitled to
receive fees, commissions, or similar payments in connection with the Offering
except the Broker.

                    Broker’s Warrants.   On the Closing Date, the Company will
issue to the Broker, two (2) Warrants for each ten (10) Common Shares issuable
on the Closing Date to the Subscribers (“Broker’s Warrants”). The Broker’s
Warrants will be similar to and carrying the same rights as the Warrants
issuable to the Subscribers.

                    All the representations, covenants, warranties,
undertakings, remedies, liquidated damages, indemnification, and other rights
including but not limited to reservation requirements and registration rights
made or granted to or for the benefit of the Subscribers are hereby also made
and granted to and for the benefit of the Broker in respect of the Broker’s
Warrants and the Warrant Shares issuable upon exercise of the Broker’s Warrants.

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SCHEDULE 8 (E)

USE OF PROCEEDS

General Corporate purposes

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