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.
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
_________________________________ (_____) ("Principal Amount"), with simple and
unpaid interest thereon, on January 18, 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 five
percent (5%). Interest on the Principal Xxxxxx shall accrue from the date of
this Note and shall be payable quarterly, in arrears, together with Principal
Amount payments as described below and on the Maturity Date, whether by
acceleration or otherwise. 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 in the event the closing bid
price of the Common Stock is more than $1.25 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. Minimum Monthly Principal Payments. Amortizing payments of the
outstanding Principal Amount and interest of this Note shall commence on the
twenty-fourth (24th) month anniversary date of this Note and on the same day of
each month thereafter (each a "Repayment Date") until the Principal Amount and
interest have been repaid in full, whether by the payment of cash or by the
conversion of such Principal amount and interest into Common Stock pursuant to
the terms hereof. Subject to Section 2.1 and Article 3 below, on each Repayment
Date the Borrower shall make payments to the Holder in the amount of 4.167
percent of the initial Principal Amount, all interest accrued on the Note as of
the Repayment Date and any other amounts which are then owing under this Note
that have not been paid (collectively, the "Monthly Amount"). Amounts of
conversions of Principal Xxxxxx and interest
made by the Holder or Borrower pursuant to Section 2.1 or Article III, and
amounts converted pursuant to Section 2.3 of this Note shall be applied first
against outstanding fees and damages, then against accrued interest on the
Principal Amount and then to Monthly Amounts commencing with the Monthly Amount
first payable and then Monthly Amounts thereafter in chronological order. Any
Principal Amount, interest and any other sum arising under the Subscription
Agreement that remains outstanding on the Maturity Date shall be due and payable
on the Maturity Date.
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. Payment of Monthly Amount in Cash or Common Stock. Subject to
Section 3.2 hereof, the Borrower, at the Borrower's election, shall pay the
Monthly Amount (i) in cash in an amount equal to 100% of the Principal Amount
component of the Monthly Amount and 100% of all other components of the Monthly
Amount, within three (3) business days after the applicable Repayment Date, or
(ii) in registered Common Stock at an applied conversion rate equal to the
lesser of (A) the Fixed Conversion Price (as defined in section 3.1 hereof), or
(B) eighty-five percent (85%) of the volume weighted average price of the common
stock as reported by Bloomberg L.P. using the AQR function for the Principal
Market ("VWAP") for the ten trading days preceding such Repayment Date. Unless
waived by the Holder, the Borrower may not elect to pay a Monthly Amount due on
a Repayment Date in Common Stock in an amount of shares of Common Stock which
would exceed in the aggregate for all Holders of Notes similar to this Note,
thirty-five percent (35%) of the aggregate daily trading volume for the seven
trading days preceding the Repayment Date as reported by Bloomberg L.P. for the
Principal Market multiplied by the VWAP for such seven day period. Amounts paid
with shares of Common Stock must be delivered to the Holder not later than three
(3) business days after the applicable Repayment Date. The Borrower must send
notice to the Holder by confirmed telecopier not later than 6:00 P.M., New York
City time on the fifth trading day preceding a Repayment Date notifying Holder
of Borrower's election to pay the Monthly Redemption Amount in cash or Common
Stock. The Notice must state the amount of cash and or stock to be paid and
include supporting calculations. Elections by the Borrower must be made to all
Other Holders in proportion to the relative Note principal held by the Holder
and the Other Holders. If such notice is not timely sent or if the Monthly
Redemption Amount is not timely delivered, then Holder shall have the right,
instead of the Company, to elect within five trading days after the applicable
Repayment whether to be paid in cash or Common Stock. Such Holder's election
shall not be construed to be a waiver of any default by Borrower relating to
non-timely compliance by Borrower with any of its obligations under this Note
2.2. 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.
2.3. 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
percent (120%) 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"). Xxxxxxxx'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 either
two (2) business days or thirty (30) 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 if the Redemption Period is based on
thirty days prior notice. 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 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. 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.
2.4. 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 ten (10) 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 $2.40 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 $1.25 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 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 waive the conversion limitation described in this Section 3.2, in
whole or in part, upon and effective after 61 days prior written notice to the
Borrower. 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 Xxxxxx'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.
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:
X. Xxxxxx, 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 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. Xxxxxxxx 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 Xxxxxx 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.
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 Xxxxxxxx's Common Stock that lasts for
five or more consecutive trading days.
4.10 Failure to Deliver Common Stock or Replacement Note. Xxxxxxxx'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 Xxxxxxxx, 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.
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, 0
Xxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000, Attn: Xxxxxx Xxxxx, telecopier: (908)
722-5461, with a copy by telecopier only to: Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxx
LLP, Xxx Xxxx Xxxxx, Xxx Xxxx, XX 00000 Attn: Xxxxxx X. Xxxxxxxx, Esq.,
telecopier: (000) 000-0000, 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 & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, telecopier number: (000) 000-0000.
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 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.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its
name by an authorized officer as of the 19th day of January, 2006.
CONOLOG CORPORATION
By: ________________________________
Name:
Title:
WITNESS:
________________________________
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
December ____, 2005 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:________________________________________________________________________
____________________________________________________________________
