Exhibit 4.1 


	
 

	
 


	
 

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








	
 

	
 


	
Principal
Amount: $____________ 

	
Issue Date: August 3, 2009  





SECURED CONVERTIBLE NOTE


          FOR
VALUE RECEIVED, CONOLOG CORPORATION, a Delaware corporation (hereinafter called
“Borrower”), hereby promises to pay to ______________________________________,
_________________________________________________________ (the “Holder”) or
its registered assigns or successors in interest or order, without demand, the
sum of ___________________________ Dollars ($__________) (“Principal Amount”),
with simple and unpaid interest thereon, on January 3, 2010, unless the
Approval (as defined in Section 9(q) of the Subscription Agreement) is obtained
upon which the Maturity Date will be extended to January 3, 2011 (the “Maturity
Date”), if not sooner paid. 


          This
Note has been entered into pursuant to the terms of a subscription agreement
between the Borrower, the Holder and certain other holders (the “Other
Holders”) of secured convertible promissory notes (the “Other Notes”), dated of
even date herewith (the “Subscription Agreement”), and shall be governed by the
terms of such Subscription Agreement. Unless otherwise separately defined
herein, all capitalized terms used in this Note shall have the same meaning as
is set forth in the Subscription Agreement. The following terms shall apply to
this Note: 


ARTICLE I


INTEREST; AMORTIZATION


          1.1.
Interest Rate. Subject to Section 6.7 hereof, interest payable on this
Note shall accrue at a rate per annum (the “Interest Rate”) of four percent
(4%). Upon receipt of either the Approval or Rejection as described in Section
9(v) of the Subscription Agreement, interest payable on this Note shall accrue
at a rate per annum of eight percent (8%). Interest on the Principal Amount
shall accrue from the date of this Note and shall be payable quarterly, in
arrears, commencing six months after the Closing Date and on the Maturity Date,
whether by acceleration or otherwise. Interest shall be payable in cash.
However, provided the Company has timely obtained the Approval (as defined in
Section 9(v) of the Subscription Agreement), if the Approval is required by
applicable NASD Market Place Rules and/or Nasdaq’s corporate governance rules
and provided the Shares may be sold pursuant to Rule 144(b)(1) and further
provided no Event of Default is continuing following a five day cure period,
then interest may be payable, at the option of the Holder in cash or Common
Stock at an applied conversion rate equal to the lessor of (i) the Fixed
Conversion Price (as defined in Section 3.1 hereof), or (ii) seventy-five percent
(75%) of the average of the three lowest closing bid prices of the Common stock
as reported by Bloomberg L.P. for the ten (10) trading days preceding such
interest payment date. In the event the closing bid price of the Common Stock
is more than 41% premium over the Fixed Conversion Price for each of the ten
(10) days preceding an interest payment date, then interest for that quarter
shall accrue and be payable on the


1






Maturity Date in cash unless sooner converted into Common Stock at the
election of Holder at the applied conversion rate described above. In the event
the closing bid price is less than 41% premium of the Fixed Conversion Price
for each of the ten (10) days preceding an interest payment date, then the
Holder may elect to either be paid the interest in cash, or at the applied
conversion rate described above or to accrue the interest payable for that
quarter until the Maturity Date. 


          1.2.
Repayment. The Note is repayable in full in cash on the Maturity Date.
The foregoing notwithstanding, in the event the Company fails to obtain the
Approval (as defined in Section 9(v) of the Subscription Agreement), fifty
percent (50%) of the outstanding Principal Amount of the Note will be deemed
satisfied. 


          1.3.
Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, which, if susceptible to cure is not cured
within five (5) days, otherwise then from the first date of such occurrence,
the annual interest rate on this Note shall (subject to Section 6.7)
automatically be increased to fifteen percent (15%). 


ARTICLE II


CONVERSION REPAYMENT


          2.1.
No Effective Registration. Notwithstanding anything to the contrary
herein, no amount payable hereunder may be paid in shares of Common Stock by the
Borrower without the Holder’s consent unless (a) either (i) an effective
current registration statement covering the shares of Common Stock to be issued
in satisfaction of such obligations exists, or (ii) an exemption from
registration of the Common Stock is available pursuant to Rule 144(b)(1) of the
1933 Act or the rules and regulations promulgated thereunder, and (b) no Event
of Default hereunder (or an event that with the passage of time or the giving
of notice could become an Event of Default), exists and is continuing, unless
such event or Event of Default is cured within any applicable cure period or is
otherwise waived in writing by the Holder in whole or in part at the Holder’s
option. 


          2.2.
Mandatory Conversion. Provided an Event of Default has not occurred,
unless such Event of Default has been cured at least twenty (20) days prior to
the delivery of written notice by Borrower as hereinafter described, then,
commencing after the Actual Effective Date, the Borrower will have the option by
written notice to the Holder (“Notice of Mandatory Conversion”) of compelling
the Holder to convert all or a portion of the outstanding and unpaid principal
of the Note and accrued interest, thereon, into Common Stock at the Conversion
Price then in affect (“Mandatory Conversion”). The Notice of Mandatory
Conversion, which notice must be given on the first day following a consecutive
twenty (20) day trading period during which the closing bid price for the
Company’s Common Stock as reported by Bloomberg, LP for the Principal Market
shall be more than 200% of the Conversion Price in effect at such time each day
and provided during the Lookback Period, daily average trading volume is not
less than $100,000. The date the Notice of Mandatory Conversion is given is the
“Mandatory Conversion Date.” The Notice of Mandatory Conversion shall specify
the aggregate principal amount of the Note which is subject to Mandatory
Conversion, which amount may not exceed in the aggregate, for all Holders who
received Notes similar in term and tenure as this Note, the dollar volume of
Common Stock traded on the Principal Market during the seven (7) trading days
immediately preceding the Mandatory Conversion Date. Mandatory Conversion
Notices must be given proportionately to all Holders of Notes who received
Notes similar in term and tenure as this Note. The Borrower shall reduce the
amount of Note principal and interest subject to a Notice of Mandatory
Conversion by the amount of Note Principal and interest for which the Holder had
delivered a Notice of Conversion to the Borrower during the twenty (20) trading


2






days preceding the Mandatory Conversion Date. Each Mandatory
Conversion Date shall be a deemed Conversion Date and the Borrower and the
Holder will be required to comply with Section 2.1 above. 


ARTICLE III


CONVERSION RIGHTS


          3.1.
Holder’s Conversion Rights. Subject to Section 3.2, the Holder shall
have the right, but not the obligation at all times, to convert all or any
portion of the then aggregate outstanding Principal Amount of this Note, into
shares of Common Stock, subject to the terms and conditions set forth in this
Article III at the rate of $0.78, but in no event greater than $1.00 per share
of Common Stock (“Fixed Conversion Price”) as same may be adjusted pursuant to
this Note and the Subscription Agreement. Commencing on the six months
anniversary of the Closing Date, the Conversion Price shall be the lesser of
the Fixed Conversion Price or 75% of the average of the lowest three closing
bid prices for the ten trading days prior to a Conversion Date. 


          3.2.
Conversion Limitation. The Holder shall not be entitled to convert on a
Conversion Date that amount of the Note in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates on a
Conversion Date, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the
determination of this provision is being made on a Conversion Date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Borrower on such
Conversion Date. For the purposes of the provision to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Holder shall not be limited to
aggregate conversions of only 4.99% and aggregate conversion by the Holder may
exceed 4.99%. The Holder shall have the authority and obligation to determine
whether the restriction contained in this Section 3.2 will limit any conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
Notes are convertible shall be the responsibility and obligation of the Holder.
The Holder may allocate decide whether to convert a Note or exercise Warrants
to achieve an actual 4.99% ownership position. 


          3.3.
Mechanics of Holder’s Conversion. 


                    (a)
In the event that the Holder elects to convert any amounts outstanding under
this Note into Common Stock, the Holder shall give notice of such election by
delivering an executed and completed notice of conversion (a “Notice of Conversion”)
to the Borrower, which Notice of Conversion shall provide a breakdown in
reasonable detail of the Principal Amount, accrued interest and amounts being
converted. The original Note is not required to be surrendered to the Borrower
until all sums due under the Note have been paid. On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the
Holder shall make the appropriate reduction to the Principal Amount, accrued
interest and fees as entered in its records. Each date on which a Notice of
Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a “Conversion Date.” A form of Notice of
Conversion to be employed by the Holder is annexed hereto as Exhibit A. 


                    (b)
Pursuant to the terms of a Notice of Conversion, the Borrower will issue
instructions to the transfer agent accompanied by an opinion of counsel, if so
required by the Borrower’s 


3






transfer agent and shall cause the transfer agent to
transmit the certificates representing the Conversion Shares to the Holder by
crediting the account of the Holder’s designated broker with the Depository
Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission
(“DWAC”) system within three (3) business days after receipt by the Borrower of
the Notice of Conversion (the “Delivery Date”). In the case of the exercise of
the conversion rights set forth herein the conversion privilege shall be deemed
to have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such shares of Common Stock, unless the Holder provides the Borrower
written instructions to the contrary. Notwithstanding
the foregoing to the contrary, the Borrower or its transfer agent shall only be
obligated to issue and deliver the shares to the DTC on the Holder’s behalf via
DWAC (or certificates free of restrictive legends) if the registration
statement providing for the resale of the shares of Common Stock issuable upon
the conversion of this Note is effective and the Holder has complied with all
applicable securities laws in connection with the sale of the Common Stock,
including, without limitation, the prospectus delivery requirements. In the
event that Conversion Shares cannot be delivered to the Holder via DWAC, the
Borrower shall deliver physical certificates representing the Conversion Shares
by the Delivery Date. 


          3.4.
Conversion Mechanics. 


                    (a)
The number of shares of Common Stock to be issued upon each conversion of this
Note pursuant to this Article III shall be determined by dividing that portion
of the Principal Amount and interest and fees to be converted, if any, by the
then applicable Conversion Price. 


                    (b)
The Conversion Price and number and kind of shares or other securities to be
issued upon conversion shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains
outstanding, as follows: 


                              A.
Merger, Sale of Assets, etc. If the Borrower at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence
the right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to
such consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or
conveyance. 


                              B.
Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result of
such change with respect to the Common Stock immediately prior to such
reclassification or other change. 


                              C.
Stock Splits, Combinations and Dividends. If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall
be proportionately reduced in case of subdivision of shares or stock dividend
or proportionately increased in


4






the case of combination of shares, in each such
case by the ratio which the total number of shares of Common Stock outstanding
immediately after such event bears to the total number of shares of Common
Stock outstanding immediately prior to such event. 


                              D.
Share Issuance. So long as this Note is outstanding, if the Borrower
shall issue any Common Stock except for the Excepted Issuances (as defined in
the Subscription Agreement), prior to the complete conversion or payment of
this Note, for a consideration less than the Fixed Conversion Price that would
be in effect at the time of such issue, then, and thereafter successively upon
each such issuance, the Conversion Price shall be reduced to such other lower
issue price. For purposes of this adjustment, the issuance of any security or
debt instrument of the Borrower carrying the right to convert such security or
debt instrument into Common Stock or of any warrant, right or option to
purchase Common Stock shall result in an adjustment to the Conversion Price
upon the issuance of the above-described security, debt instrument, warrant,
right, or option and again upon the issuance of shares of Common Stock upon
exercise of such conversion or purchase rights if such issuance is at a price
lower than the then applicable Conversion Price. The reduction of the
Conversion Price described in this paragraph is in addition to the other rights
of the Holder described in the Subscription Agreement. 


                    (c)
Whenever the Conversion Price is adjusted pursuant to Section 3.4(b) above, the
Borrower shall promptly mail to the Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a statement of the
facts requiring such adjustment. 


          3.5.
Reservation. During the period the conversion right exists, Borrower
will reserve from its authorized and unissued Common Stock not less than one
hundred seventy-five percent (175%) of the number of shares to provide for the
issuance of Common Stock upon the full conversion of this Note. Borrower
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. Borrower agrees that its issuance of this Note
shall constitute full authority to its officers, agents, and transfer agents
who are charged with the duty of executing and issuing stock certificates to
execute and issue the necessary certificates for shares of Common Stock upon
the conversion of this Note. 


          3.6
Issuance of Replacement Note. Upon any partial conversion of this Note,
a replacement Note containing the same date and provisions of this Note shall,
at the written request of the Holder, be issued by the Borrower to the Holder
for the outstanding Principal Amount of this Note and accrued interest which
shall not have been converted or paid, provided Holder has surrendered an
original Note to the Company. In the event that the Holder elects not to
surrender a Note for reissuance upon partial payment or conversion, the Holder
hereby indemnifies the Borrower against any and all loss or damage attributable
to a third-party claim in an amount in excess of the actual amount then due
under the Note. 


          3.7
Shareholder Approval. Notwithstanding, if the Approval is required by
applicable NASD Market Place Rules and/or Nasdaq’s corporate governance rules,
then until the Company either obtains shareholder approval of the issuance of
the Securities, or an exemption from NASDAQ’s corporate governance rules as
they may apply to the Shares, and an opinion from counsel reasonably acceptable
to Subscriber that the issuance of the Shares will not violate NASDAQ’s
corporate governance rules nor may result in a delisting of the Company’s
common stock from the SmallCap, the Holder may not receive any Shares under
this Note. 




5







ARTICLE IV


EVENTS OF DEFAULT


          The
occurrence of any of the following events of default (“Event of Default”)
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment, or grace period,
all of which hereby are expressly waived, except as set forth below: 


          4.1
Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of Principal Amount, interest or other sum due under this Note or
any Transaction Document when due and such failure continues for a period of
five (5) business days after the due date. 


          4.2
Breach of Covenant. The Borrower breaches any material covenant or other
term or condition of the Subscription Agreement, this Note or Transaction
Document in any material respect and such breach, if subject to cure, continues
for a period of ten (10) business days after written notice to the Borrower
from the Holder. 


          4.3
Breach of Representations and Warranties. Any material representation or
warranty of the Borrower made herein, in the Subscription Agreement, Transaction
Document or in any agreement, statement or certificate given in writing
pursuant hereto or in connection herewith or therewith shall be false or
misleading in any material respect as of the date made and the Closing Date. 


          4.4
Receiver or Trustee. The Borrower or any Subsidiary of Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for them or for a substantial part of
their property or business; or such a receiver or trustee shall otherwise be
appointed. 


          4.5
Judgments. Any money judgment, writ or similar final process shall be
entered or filed against Borrower or any subsidiary of Borrower or any of their
property or other assets for more than $100,000, and shall remain unvacated,
unbonded or unstayed for a period of forty-five (45) days. 


          4.6
Non-Payment. The Borrower shall have received a notice of default, which
remains uncured for a period of more than twenty (20) business days, on the
payment of any one or more debts or obligations aggregating in excess of One
Hundred Thousand Dollars (US $100,000.00) beyond any applicable grace period; 


          4.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower and if instituted against them are not dismissed within sixty (60)
days of initiation. 


          4.8
Delisting. Failure of the Common Stock to be quoted or listed on the
Principal Market; failure to comply with the requirements for continued listing
on the Bulletin Board for a period of seven consecutive trading days; or
notification from the Bulletin Board or any Principal Market that the Borrower
is not in compliance with the conditions for such continued listing on the
Principal Market. 


          4.9
Stop Trade. An SEC or judicial stop trade order or Principal Market
trading suspension with respect to Borrower’s Common Stock that lasts for five
or more consecutive trading days. 


          4.10
Failure to Deliver Common Stock or Replacement Note. Borrower’s failure to
timely deliver Common Stock to the Holder pursuant to and in the form required
by this Note or the Subscription


6






Agreement, and, if requested by Borrower, a
replacement Note, and such failure continues for a period of five (5) business
days after the due date. 


          4.11
RESERVED. 


          4.12
Reverse Splits. The Borrower effectuates a reverse split of its Common
Stock without twenty days prior written notice to the Holder. 


          4.13
Cross Default. A default by the Borrower of a material term, covenant,
warranty or undertaking of any Transaction Document or other agreement to which
the Borrower and Holder are parties, or the occurrence of a material event of
default under any such other agreement which is not cured after any required
notice and/or cure period. 


ARTICLE V

SECURITY INTEREST


          5.
Security Interest/Waiver of Automatic Stay. This Note is secured by a
security interest granted to the Holder pursuant to a Security Agreement, as
delivered by Borrower to Holder. The Borrower acknowledges and agrees that
should a proceeding under any bankruptcy or insolvency law be commenced by or
against the Borrower, or if any of the Collateral (as defined in the Security
Agreement) should become the subject of any bankruptcy or insolvency
proceeding, then the Holder should be entitled to, among other relief to which
the Holder may be entitled under the Transaction Documents and any other
agreement to which the Borrower and Holder are parties (collectively, “Loan
Documents”) and/or applicable law, an order from the court granting immediate
relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the
Holder to exercise all of its rights and remedies pursuant to the Loan
Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF
THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER
EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY
OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING,
WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION,
REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS
RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The
Borrower hereby consents to any motion for relief from stay that may be filed
by the Holder in any bankruptcy or insolvency proceeding initiated by or
against the Borrower and, further, agrees not to file any opposition to any
motion for relief from stay filed by the Holder. The Borrower represents,
acknowledges and agrees that this provision is a specific and material aspect
of the Loan Documents, and that the Holder would not agree to the terms of the
Loan Documents if this waiver were not a part of this Note. The Borrower
further represents, acknowledges and agrees that this waiver is knowingly,
intelligently and voluntarily made, that neither the Holder nor any person
acting on behalf of the Holder has made any representations to induce this
waiver, that the Borrower has been represented (or has had the opportunity to
he represented) in the signing of this Note and the Loan Documents and in the
making of this waiver by independent legal counsel selected by the Borrower and
that the Borrower has discussed this waiver with counsel. Notwithstanding
anything to the contrary herein, upon receipt of the Approval or an opinion
from the Company’s attorneys that the Approval is not required pursuant to the
NASD Market Place Rules and/or Nasdaq’s corporate governance rules this Note
shall no longer be secured. 




7






ARTICLE VI


MISCELLANEOUS


          6.1
Failure or Indulgence Not Waiver. No failure or delay on the part of
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available. 


          6.2
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 Borrower 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 number: (212) 930-9725, and (ii) if to the
Holder, to the name, address and telecopy number set forth on the front page of
this Note, with a copy by telecopier only to Grushko & Mittman, P.C., 551
Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number: (212)
697-3575. 


          6.3
Amendment Provision. The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented. 


          6.4
Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns. 


          6.5
Cost of Collection. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys’ fees. 


          6.6
Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. 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 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 Note 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 unenforceability of any other
provision of this Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or


8






taking other legal action against the
Borrower in any other jurisdiction to collect on the Borrower’s obligations to
Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other court in favor of the Holder. 


          6.7
Maximum Payments. Nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower. 


          6.8.
Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other. 


          6.9
Redemption. This Note may not be redeemed or called. 


          6.10
Shareholder Status. The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this Note. However, the
Holder will have the rights of a shareholder of the Borrower with respect to
the Shares of Common Stock to be received after delivery by the Holder of a
Conversion Notice to the Borrower. 


[THIS SPACE INTENTIONALLY LEFT BLANK]


9






          IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by an authorized officer as of the ____ day
of July, 2009. 


	
 

	
 

	
 


	
 

	
CONOLOG CORPORATION
 


	
 

	
 


	
 

	
By: 

	
 


	
 

	
 

	



	
 

	
 

	
Name:


	
 

	
 

	
Title:





WITNESS: 


	
 


	






10






NOTICE OF CONVERSION


(To be
executed by the Registered Holder in order to convert the Note) 


          The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by Conolog Corporation on July ___, 2009
into Shares of Common Stock of Conolog Corporation (the “Borrower”) according
to the conditions set forth in such Note, as of the date written below. 


Date of
Conversion:____________________________________________________________________



Conversion
Price:______________________________________________________________________ 


Number of
Shares of Common Stock Beneficially Owned on the Conversion Date: Less than 5%
of the outstanding Common Stock of Conolog Corporation 




 Shares To Be Delivered:________________________________________________________________



Signature:____________________________________________________________________________



Print
Name:__________________________________________________________________________



Address:_____________________________________________________________________________



              ____________________________________________________________________________



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