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


10












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. 


15












                    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 


16












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












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 


18












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 


19












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 


20












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 


21












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 


22












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 


23












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]

 

 

24











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: ________________________________________________ 	 

  	 

  	 

  
	 	 	 	 	 














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
  















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. 












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.












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.













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. 












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. 












SCHEDULE 8 (E) 


USE OF PROCEEDS 


General Corporate purposes