Exhibit 4.2
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.
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Right to Purchase ________ shares
of Common Stock of Conolog Corporation (subject to adjustment as
provided herein)
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CLASS A COMMON STOCK PURCHASE
WARRANT
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No. 2009-A-001
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Issue Date: August 3,
2009
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CONOLOG
CORPORATION, a corporation organized under the laws of the State of
Delaware (the “Company”), hereby certifies that, for
value received, _________________________________,
___________________________________________________, 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 January 30, 2010 (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 (5
th ) anniversary of the Issue Date (the
“Expiration Date”), up to _________ fully paid and
nonassessable shares of Common Stock at a per share purchase price
of $1.12. 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 August 3, 2009, 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
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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 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)
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,
then commencing six months after the Closing Date 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
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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 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)
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,
