Document:

c47316_ex10-2.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

EX-10.2

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 UNDER SAID ACT OR AN OPINION OF
  COUNSEL REASONABLY SATISFACTORY TO CONOLOG CORPORATION THAT SUCH REGISTRATION
  IS NOT  REQUIRED. 

	 	Right to Purchase ________ shares of Common
    Stock of Conolog Corporation (subject to adjustment as provided herein) 

CLASS B COMMON STOCK PURCHASE WARRANT 

	

 No. 2007-B-001
 	 
  	
    Issue Date: March 12, 2007          
    

          CONOLOG CORPORATION, a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received,  __________________,
 ___________________________, Fax:  _______________ or its assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time after the sooner of  _____ 2006 (180 days
from the Issue Date), or the Company obtaining the Approval as defined in Section 9(r) of the Subscription Agreement if the Approval is required by the applicable NASD Market Place Rules and/or Nasdaq’s corporate goverence rules, until 5:00
p.m., E.S.T on the fifth (5th) anniversary of the Issue Date (the “Expiration Date”), up to  ________ fully paid and nonassessable shares of Common Stock
at a per share purchase price [equal to the lessor of $3.00, or 105% of the closing price as reported by Bloomberg L.P. for the
Principal Market for the trading day preceding the Closing Date]. The aforedescribed purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase
Price.” The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The Company may reduce the Purchase Price without the consent of the Holder. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement (the “Subscription Agreement”), dated February ___, 2007, entered
into by the Company and Holders of the Warrant. 

          As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

          (a)      The term “Company” shall include Conolog Corporation and any corporation which shall succeed or assume the obligations of Conolog Corporation hereunder.

          (b)      The term “Common Stock” includes (a) the Company’s Common Stock, $0.01 par value per share, as authorized on the date of the Subscription Agreement, and (b) any other
securities into which or for which any of the securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 

          (c)      The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement
of Common Stock or Other Securities pursuant to Section 5 or otherwise.

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          (d)      The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant. 

          1.        Exercise of Warrant. 

                    1.1.      Number of Shares Issuable upon Exercise. From and after the Issue Date through and including the Expiration Date,
the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4. 

                    1.2.      Full Exercise. This Warrant may be exercised in full by the Holder hereof by delivery of an original or facsimile
copy of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder and delivery within two days thereafter of payment, in cash, wire transfer or by certified or official bank check payable
to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. The original Warrant is not required to be surrendered to the
Company until it has been fully exercised.

                    1.3.      Partial Exercise. This Warrant may be exercised in part (but not for a fractional share) by surrender of this
Warrant in the manner and at the place provided in subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the
Holder in the Subscription Form by (b) the Purchase Price then in effect. On any such partial exercise provided the Holder has surrendered the original Warrant, the Company, at its expense, will forthwith issue and deliver to or upon the order of
the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, the whole number of shares of Common Stock for which such Warrant may still
be exercised for the balance of. 

                    1.4.      Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:

                              (a)      If the Company’s Common Stock is traded on an exchange or is quoted on the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”), National Market
System, the NASDAQ Capital Market or the American Stock Exchange, LLC, then the closing or last sale price, respectively, reported for the last business day immediately preceding the Determination Date; 

                              (b)      If the Company’s Common Stock is not traded on an exchange or on the NASDAQ National Market System, the NASDAQ Capital Market or the American Stock Exchange, Inc., but is traded in the
over-the-counter market, then the average of the closing bid and ask prices reported for the last business day immediately preceding the Determination Date; 

                              (c)      Except as provided in clause (d) below, if the Company’s Common Stock is not publicly traded, then as the Holder and the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided; or 

                              (d)      If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter,
then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation
under the charter, assuming for the 

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purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date. 

                    1.5.      Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the
Holder hereof acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to
make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights. 

                    1.6.      Trustee for Warrant Holders. In the event that a bank or trust company shall have been appointed as trustee for the
Holder of the Warrants pursuant to Subsection 3.2, such bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter described) and shall accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1.

                    1.7      Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which payment shall have been made for such Warrant Shares as aforesaid. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter (“Warrant Share Delivery Date”), the Company at its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the
number of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share of Common Stock, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon
such exercise pursuant to Section 1 or otherwise.

                     1.8      Shareholder Approval.  If
required by the applicable NASD Market Place Rules and/or Nasdaq’s corporate governance rules, and notwithstanding anything to the contrary herein, (i) until the Company either obtains shareholder approval of the issuance of the Securities, or
(ii) an exemption from NASDAQ’s corporate governance rules as they may apply to the Warrant Shares, and an opinion from counsel reasonably acceptable to Subscriber that the issuance of the Warrant 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 Warrant Shares. 

           2.        Cashless Exercise. 

                    (a)      Except as described below, if a Registration Statement (as defined in the Subscription Agreement) (“Registration Statement”) is effective and the Holder may sell its shares of
Common Stock upon exercise hereof pursuant to the Registration Statement, this Warrant may be exercisable in whole or in part for cash only as set forth in Section 1 above. If no such Registration Statement is available during the time that such
Registration Statement is required to be effective pursuant to the terms of the Subscription Agreement, or if after the Maturity Date (accelerated or otherwise) of the Note issued pursuant to the Subscription Agreement any sums due under the Note
remains unpaid after any applicable cure period, then payment upon exercise may be made at the option of the Holder either in (i) cash, by wire transfer or certified or official bank check payable to the order of the Company equal to the applicable
aggregate Purchase Price, (ii) by cashless exercise in accordance with Section (b) below or (iii) by a combination of any of the foregoing methods, for the number of Common Stock specified in such form (as such exercise number shall be adjusted to
reflect any adjustment in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the holder shall 

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thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein. 

                      (b)      If the Notice of Exercise form elects a "cashless" exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (x) the excess of the Current Market Value (as defined below)
over the total cash exercise price of the portion of the Warrant then being exercised, divided by (y) the Market Price of the Common Stock as of the trading day immediately prior to the date of exercise. For the purposes of this Warrant, the term
"Current Market Value" shall be an amount equal to the Market Price of the Common Stock as of the trading day immediately prior to the Exercise Date, multiplied by the number of shares of Common Stock specified in such Notice of Exercise Form, and
"Market Price of the Common Stock" shall be the average of the closing bid price of the Common Stock (as reported by Bloomberg L.P. for the Principal Market) for the 5 Trading days prior to the exercise date. 

                    (c)      The Holder may employ the cashless exercise feature described in Section (b) above only during the pendency of a
Non-Registration Event as described in Section 11 of the Subscription Agreement or after the Maturity Date of the Note (accelerated or otherwise) at a time when any sums due under the Note remains unpaid after any applicable cure period. For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the
Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Subscription Agreement. 

            3.      Adjustment for Reorganization, Consolidation, Merger, etc. 

                    3.1.      Reorganization, Consolidation, Merger, etc. In case at any time or from time to time, the Company shall (a) effect
a reorganization, (b) consolidate with or merge into any other person or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each
such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Section 1, at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective
date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such Holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4. 

                    3.2.      Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of
its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or trust company (a “Trustee”) having its principal office in New York, NY, as trustee for the Holder of the Warrants.

                    3.3.      Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any Other Securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in full force and
effect after the consummation of the transaction 

 4

described in this Section 3, then only in such event will the Company’s securities and property (including cash, where applicable) receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2. 

          4.      Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the
Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then,
in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise. 

          5.      Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each
such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 11 hereof). 

          6.      Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements. The Company will at all times
reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.

          7.      Assignment; Exchange of Warrant. Subject to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”). On the surrender for exchange of this Warrant, with the Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance with applicable securities laws, the Company at its expense, twice only, but with payment
by the Transferor of any applicable transfer taxes, will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. No such transfers shall
result in a public distribution of the Warrant. 

          8.      Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or 

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destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant,
the Company at its expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor. 

          9.      Registration Rights. The Holder of this Warrant has been granted certain registration rights by the Company. These
registration rights are set forth in the Subscription Agreement. 

                    10.      Maximum Exercise. The Holder shall not be entitled to exercise this Warrant on an exercise date, 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 an exercise date, and (ii) the number of shares of Common Stock issuable
upon the exercise of this Warrant with respect to which the determination of this limitation is being made on an exercise 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 on such date. For the purposes of 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 exercises which would result in the issuance of more than 4.99% . The Holder may decide whether to convert a Note or exercise this Warrant to achieve an actual 4.99% ownership
position. 

                    11.      Warrant Agent. The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant
Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

                    12.      Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may
treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

                    13.      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 or (c) three business days after deposited in the mail if
delivered pursuant to subsection (ii) above. 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, 1065 Avenue of Americas, New York, NY 10018, Attn: David Manno, Esq., telecopier: (212) 930-9725, and (ii) if to the Holder, to the addresses and telecopier number set forth in the first
paragraph of this Warrant, 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. 

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                    14.      Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of New York. Any dispute
relating to this Warrant shall be adjudicated in New York County in the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

                    IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first written
above.

	 	 	 CONOLOG CORPORATION 
	 
	By:  
  	 

  
	 

  	 
  	
Name:
  
	 

  	 
  	
Title:
  

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Exhibit A 

FORM OF SUBSCRIPTION 

(to be signed only on exercise of Warrant) 

TO: CONOLOG CORPORATION

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box): 

___       ________ shares of the Common Stock covered by such Warrant; or 

___      the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. 

The undersigned herewith makes payment of the full
purchase price for such shares at the price per share provided for in such Warrant,
which is $ ___________. Such payment takes the form of (check applicable
box  or boxes):

 ___      $ __________ in lawful money of the United States; and/or 

___      the cancellation of the Warrant to the extent necessary, in accordance with the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant
to the cashless exercise procedure set forth in Section 2. 

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to  _____________________________________________________ whose address is
_____________________________________________________________________________________  _____________________________________________________________________________________

Number of Shares of Common Stock Beneficially
    Owned on the date of exercise: Less than five percent (5%) of the outstanding
Common Stock of Conolog Corporation 

The undersigned represents and warrants that the representations and warranties in Section 4 of the Subscription Agreement (as defined in this Warrant) are true and accurate with respect to the undersigned on the date
hereof. 

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption from registration under the Securities Act. 

	
Dated: ___________________
  	 
  	 

  
	 

  	 
  	
(Signature must conform to name of holder as
  
	 

  	 
  	
specified on the face of the Warrant)
  
	 

  
	 	 	  

	 	 	  

	 

  	 
  	
(Address)
  

 8

Exhibit B 

FORM OF TRANSFEROR ENDORSEMENT 

(To be signed only on transfer of Warrant) 

                    For
value received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented
by the within Warrant to  purchase the percentage and number of shares of Common
Stock of CONOLOG CORPORATION to which the within Warrant relates specified under
the headings “Percentage Transferred” and “Number Transferred,” respectively,
opposite the  name(s) of such person(s) and appoints each such person Attorney
to transfer its respective right on the books of CONOLOG CORPORATION with full
power of substitution in the premises. 

	  Transferees
	  Percentage
            Transferred
	  Number
            Transferred

	 

	 

	 

      
	
Dated:  ______________, ___________________
	 
  	 

  
	 

  	 
  	
(Signature must conform to name of holder as specified
  
	 

  	 
  	
on the face of the warrant)
  
	 

  
	
Signed in the presence of:
  	 
  	 

  
	 	 	 
	 
	 	 
	
               (Name)
  	 
  	 

  
	 

  	 
  	
               (address)
  
	 

  
	
ACCEPTED AND AGREED:
  	 
  	 

  
	
[TRANSFEREE]
  	 
  	 

  
	 

  	 
  	
               (address)
  
	 

  
	 
	 
  	 

  
	                (Name)c47316_ex10-3.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

  EX-10.3 

  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: March 12, 2007
    

	 

  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 February ___, 2010 (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 5.7 hereof, interest payable on this Note
shall accrue at a rate per annum (the "Interest Rate") of six percent (6%). Interest on the Principal Amount shall accrue from the date of this Note and shall be payable quarterly, in arrears, 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(q) of the Subscription Agreement), if the Approval is required by applicable NASD Market Place Rules and/or
Nasdaq’s corporate governance rules and provided there is an effective registration statement current and available for the resale of the Shares and Warrant Shares (as defined in the Subscription Agreement), and further provided no Event of
Default is continuing following a ten day cure period, then interest may be payable, at the option of the Company in cash or registered 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) eighty-five percent (85%) of the closing bid price of the Common stock as reported by Bloomberg L.P. for the five (5) trading days preceding such interest payment date. In the event the closing bid price of the Common
Stock is more than $2.00 for each of the ten (10) days preceding an interest payment date, then interest for that quarter shall be waived and shall not accrue. 

           1.2.      Repayment. The Note is repayable in full on the Maturity Date. Provided the Company has timely obtained the Approval (as defined in Section 9(q)
of the Subscription Agreement) if the Approval is required by applicable NASD Marketplace Rules and/or NASDAQ’s corporate governance rules and provided there is an effective registration statement current and available for the resale of the
Shares and Warrant Shares (as defined in the Subscription Agreement), and further provided no Event of Default is continuing following a ten day cure period, then on the Maturity Date, any principal amount, interest and any other amounts arising
under the Subscription Agreement (“Outstanding Amount”) that remains outstanding on the Maturity Date shall be paid at the Company’s option, in either cash or in registered Common Stock at an applied conversion rate equal to the
lessor of (A) the Fixed Conversion Price, or (B) eighty-five percent (85%) of the closing bid price of the Common stock as reported by Bloomberg L.P. for the five (5) trading days preceding the Maturity Date. The Borrower must send notice to the
Holder by confirmed telecopier not later than 6:00 P.M. NYC time on or before the 60th day prior to the Maturity Date of its election to pay the Outstanding Amount in cash
or registered Common Stock. 

          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 twenty (20) days, otherwise then from the first date of such occurrence, the annual interest rate on this Note shall (subject to Section 5.7) 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(k) of the 1933 Act, 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.      Optional Redemption of Principal Amount. Provided an Event of Default or an event which with the passage of time or the giving of notice could
become an Event of Default has not occurred, whether or not such Event of Default has been cured, the Borrower will have the option of prepaying the outstanding Principal amount of this Note ("Optional Redemption"), in whole or in part, by paying to
the Holder a sum of money equal to one hundred and twenty-five percent (125%) of the Principal amount to be redeemed, together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under
this Note or any Transaction Document through the Redemption Payment Date as defined below (the "Redemption Amount"). Borrower’s election to exercise its right to prepay must be by notice in writing (“Notice of Redemption”). The
Notice of Redemption shall specify the date for such Optional Redemption (the "Redemption Payment Date"), which date shall be ten (10) business days after the date of the Notice of Redemption (the "Redemption Period"). A Notice of Redemption shall
not be effective with respect to any portion of the Principal Amount for which the Holder has a pending election to convert, or for conversions initiated or made by the Holder during the Redemption Period. On the Redemption Payment Date, the
Redemption Amount, less any portion of the Redemption Amount against which the Holder has exercised its conversion rights, shall be paid in good funds to the Holder. In the event the Borrower fails to pay the Redemption Amount on the Redemption

2

Payment Date as set forth herein, then (i) such Notice of Redemption will be null and void, (ii) Borrower will have no right to deliver another Notice of Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a non-curable Event of Default. A Redemption Notice may be given only at a time
a Registration Statement is effective for the sale of not less than one million Shares underlying the Convertible Notes. A Notice of Redemption may not be given nor may the Borrower effectuate a Redemption without the consent of the Holder, if at
any time during the Redemption Period an Event of Default or an Event which with the passage of time or giving of notice could become an Event of Default (whether or not such Event of Default has been cured), has occurred or the Registration
Statement registering the Registrable Securities is not effective each day during the Redemption Period. 

           2.3.      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 $3.00 each day and provided during the Lookback Period, daily average trading volume is not less than 100,000 shares. 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 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 $2.00 per share of Common Stock (“Fixed Conversion
Price”) as same may be adjusted pursuant to this Note and the Subscription Agreement. The Holder may exercise such right by delivery to the Borrower of a written Notice of Conversion pursuant to Section 3.3. After the occurrence of an Event of
Default, the Fixed Conversion Price shall be the lesser of the Fixed Conversion Price or 85% of the VWAP for the five 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

3

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 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. 

4

          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 Fixed Conversion Price. 

                    (b)      The Fixed 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 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. Until the sooner of 180 days from the Actual Effective Date of the Registration Statement, and if
the Approval is required by applicable NASD Market Place Rules and/or Nasdaq’s corporate governance rules provided the Approval has been obtained, or the date the Notes have been paid, 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 Fixed 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 Fixed 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

5

reduction of the Fixed 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.  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.

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. 

6

          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 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      Non-Registration
Event. The occurrence of a Non-Registration
Event as described in the Subscription Agreement. 

          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. 

7

ARTICLE V 

MISCELLANEOUS

          5.1      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. 

          5.2      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, 1065 Avenue of Americas, New York, NY 10018,
Attn: David Manno, Esq., telecopier: (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. 

          5.3      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. 

          5.4      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. 

          5.5      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. 

          5.6      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

8

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 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. 

          5.7      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. 

          5.8.      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.

          5.9      Redemption. This Note may not be redeemed or called without the consent of the Holder except as described in this
Note. 

          5.10      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 12th
      day of  March, 2007. 

	 

  	
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 February ___, 2007
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:	 

	 	 	 
	 	 

11

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