CONOLOG CORPORATION5 COLUMBIA ROAD, SOMERVILLE NJ 08876
Whalehaven Capital Fund Limited
Alpha Capital Anstalt
Osher Capital Partners LLC
Harborview Master Fund L.P.
Ladies and Gentlemen:
Reference is made to the Subscription Agreement between and among Conolog Corporation and the (the “Company”) and Whalehaven Capital Fund Limited, Alpha Capital Anstalt, Osher Capital Partners LLC and Harborview Master Fund L.P. (collectively, the “Holders” and each a “Holder”) dated March 12, 2007 (the “Subscription Agreement”). Reference is also made to the Convertible Notes issued to the Holder pursuant to the Subscription Agreement (collectively, the “Notes”). Any term used herein but not otherwise defined shall have the meaning given to it in the Notes.
This is to confirm that notwithstanding anything to the contrary in the Subscription Agreement or the Notes the “Maturity Date” shall mean August 31, 2009. This is also to confirm that notwithstanding anything to the contrary in the Notes or the Subscription Agreement, from the date hereof until immediately after the Maturity Date, the Holders may convert any principal amount, interest and any other amounts that remain outstanding on the Note at an applied conversion rate equal to the lessor of (A) the Fixed Conversion Price, or (B) seventy -five percent (75%) of the average closing bid prices of the Common Stock as reported by Bloomberg L.P. for the five (5) trading days preceding the date the Company receives the Holder’s Notice of Conversion.
The undersigned Holders agree that such Holder will not sell on any one day an amount of shares of the Company’s Common Stock, issuable upon conversion of such Holder’s Note, that is equal to or more than 25% of the daily volume weighted average price of number of shares of the Company’s Common Stock on such date on the Trading Market on which the Company’s Common Stock is then listed or quoted for trading as reported by Bloomberg L.P., provided the limitation of this sentence shall not apply if (i) the shares issuable upon conversion of the Note have been sold, (ii) the Company’s Common Stock is trading at a price equal to or greater than $1.50 per share on the date of such sale, (iii) on or after August 31, 2009, or (iv) if Holders owing at least 80% of the outstanding aggregate principal amount of the Notes agree in writing that this provision shall be null and void.
As used herein, Trading Market means the following markets or exchanges on which the Company’s Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.
The undersigned Holder hereby waives any damages and any claim that may have otherwise been made pursuant to the Subscription Agreement and/or the Notes as a result of the Company’s non-compliance with Section 1.2 of the Notes and for not paying the Note by March 12, 2009.
The Company shall file a Current Report on Form 8-K with the Securities and Exchange Commission within two business days of the execution of this letter agreement by the Company, disclosing the material terms of this letter agreement.
This letter agreement may be executed in any number of counterparts and by different signatories hereto on separate counterparts, each of which when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the instrument.
All other terms of the Notes hall remain the same.
Very truly yours,
CONOLOG CORPORATION
By:_________________________
[THE SIGNATURE PAGE OF THE HOLDERS FOLLOWS]
Agreed and Accepted:
WHALEHAVEN CAPITAL FUND LIMITED
ALPHA CAPITAL ANSTALT
OSHER CAPITAL PARTNERS LLC
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| HARBORVIEW MASTER FUND L.P. |
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