EXHIBIT 4.A
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT AND LAWS OR, SUBJECT TO SECTION 5.3
HEREOF, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Issuer: Parlex Corporation, a Massachusetts corporation
Number of Shares: 25,000, subject to adjustment
Class of Stock: Common Stock, $0.10 par value per share
Exercise Price: $6.885, subject to adjustment
Issue Date: June 11, 2003
Expiration Date: June 10, 2008
FOR THE AGREED UPON VALUE of $1.00, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, this Warrant is issued to SILICON VALLEY BANK (together with
its successors and permitted assigns, "Holder") by Parlex Corporation, a
Massachusetts corporation (the "Company").
Subject to the terms and conditions hereinafter set forth, the Holder
is entitled upon surrender of this Warrant and the duly executed Notice of
Exercise form annexed hereto as Appendix 1 ("Notice of Exercise"), at the
principal office of the Company, One Parlex Place, Methuen, Massachusetts
01844 or such other office as the Company shall notify the Holder of in
writing, to purchase from the Company up to Twenty-five Thousand (25,000)
fully paid and non-assessable shares (the "Shares") of the Company's common
stock, $0.10 par value per share ("Common Stock") at a purchase price per
Share of $6.885 (the "Exercise Price"). This Warrant may be exercised in
whole or in part at any time and from time to time until 5:00 PM, Eastern
time, on the Expiration Date, and shall be void thereafter. Until such
time as this Warrant is exercised in full or expires, the Exercise Price
and the Shares are subject to adjustment from time to time as hereinafter
provided.
ARTICLE 1. EXERCISE.
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1.1 Method of Exercise. Holder may exercise this Warrant in whole
or in part by delivering this Warrant along with a duly executed Notice of
Exercise to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a certified or cashier's check, or a wire transfer
of immediately available funds, in an amount equal to the aggregate
Exercise Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may from time to time convert this
Warrant, in whole or in part, into a number of Shares determined as
follows:
X = Y (A-B)/A
where:
X = the number of Shares to be issued to the Holder.
Y = the number of Shares with respect to which this
Warrant is being exercised.
A = the Fair Market Value (as determined pursuant to
Section 1.3 below) of one Share.
B = the Exercise Price.
1.3 Fair Market Value.
1.3.1 If shares of Common Stock are traded on a nationally
recognized securities exchange or over the counter market, the fair market
value of one Share shall be the closing price of a share of Common Stock
reported for the business day immediately preceding the date of Holder's
Notice of Exercise to the Company.
1.3.2 If shares of Common Stock are not traded on a
nationally recognized securities exchange or over the counter market, the
Board of Directors of the Company shall determine the fair market value of
a share of Common Stock in its reasonable good faith judgment.
1.4 Delivery of Certificate and New Warrant. Promptly
after Holder exercises or converts this Warrant, the Company or its
transfer agent shall deliver to Holder certificates for the Shares acquired
and, if this Warrant has not been fully exercised or converted and has not
expired, a new Warrant representing the right to purchase the Shares not so
acquired.
1.5 Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction,
on delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company or, in the case of mutilation, on surrender and
cancellation of this Warrant, the Company at its expense shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor.
1.6 Assumption on Sale, Merger, or Consolidation of the Company.
1.6.1. "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, transfer, exclusive license, or other
disposition of all or substantially all of the assets of the Company, or
any acquisition, reorganization, consolidation or merger of the Company
where the
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holders of the Company's outstanding voting equity securities immediately
prior to the transaction beneficially own less than a majority of the
outstanding voting equity securities of the surviving or successor entity
immediately following the transaction.
1.6.2. In connection with, and upon the closing of, any
Acquisition (other than an Acquisition in which the consideration received
by the Company's stockholders consists solely of cash), and as a condition
precedent thereto, the successor or surviving entity shall assume the
obligations of this Warrant, and this Warrant thereafter shall be
exercisable for the same kind and amount of securities and other property
as would be payable for the Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were outstanding on
the record date for the Acquisition and subsequent closing. The Exercise
Price shall be adjusted such that the product of (i) the Exercise Price in
effect immediately prior to the closing of such Acquisition, and (ii) the
number of Shares then issuable upon exercise of this Warrant, equals the
product of (i) the number of shares or other securities or property for
which this Warrant shall be exercisable immediately following the closing
of such Acquisition, and (ii) the Exercise Price in effect immediately
following the closing of such Acquisition, and the Exercise Price and
number and class of Shares shall continue to be subject to adjustment from
time to time in accordance with the provisions hereof.
1.7 Restrictions on Exercise. This Warrant may not be
exercised if the issuance of the Shares upon such exercise would constitute
a violation of any applicable federal or state securities laws or other
applicable laws or regulations. As a condition to any exercise of this
Warrant, Holder shall execute the subscription form annexed hereto. The
Company covenants that it will take all steps within its power at all times
to comply with all applicable federal and state securities laws and other
laws and regulations.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
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2.1 Stock Dividends, Splits, Etc. If the Company declares or pays
a dividend on the outstanding shares of Common Stock, payable in Common
Stock or other securities, or subdivides the outstanding Common Stock into
a greater or lesser amount of Common Stock, then upon exercise of this
Warrant, for each Share acquired, Holder shall receive, without cost to
Holder, the total number and kind of securities to which Holder would have
been entitled had Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant, Holder shall be entitled to receive, upon
exercise or conversion of this Warrant, the number and kind of securities
and property that Holder would have received for the Shares if this Warrant
had been exercised immediately before such reclassification, exchange,
substitution, or other event. The Company or its successor shall promptly
issue to Holder a new Warrant for such new securities or other property.
The new Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article 2 including, without limitation, adjustments to the Exercise
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Price and to the number of securities or property issuable upon exercise of
the new Warrant. The provisions of this Section 2.2 shall similarly apply
to successive reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding shares
of Common Stock are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Exercise Price shall be
proportionately increased and the number of Shares shall be proportionately
decreased.
2.4 No Impairment. The Company shall not, by amendment of its
Articles of Organization or by-laws, or through a reorganization, transfer
of assets, consolidation, merger, dissolution, issue, or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such
action as may be necessary or appropriate to protect Holder's rights under
this Article against impairment.
2.5 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional Share
interest arises upon any exercise or conversion of this Warrant, the
Company shall eliminate such fractional Share interest by paying Holder an
amount computed by multiplying such fractional interest by the Fair Market
Value (determined in accordance with Section 1.3 above) of one Share.
2.6 Certificate as to Adjustments. Upon each adjustment of the
Exercise Price, number of Shares or class of security for which this
Warrant is exercisable, the Company at its expense shall promptly compute
such adjustment, and furnish Holder with a certificate of its chief
financial officer setting forth such adjustment and the facts upon which
such adjustment is based. The Company shall, upon written request, furnish
Holder a certificate setting forth the Exercise Price, number of Shares
and class of security for which this Warrant is exercisable in effect upon
the date thereof and the series of adjustments leading to such Exercise
Price, number of Shares and class of security.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
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3.1 Representations and Warranties. The Company hereby represents
and warrants to the Holder as follows:
(a) All Shares which may be issued upon the due exercise of
this Warrant shall, upon issuance, be duly authorized, validly issued,
fully paid and non-assessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
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(b) The Company covenants that it shall at all times cause to
be reserved and kept available out of its authorized and unissued shares
such number of shares of its Common Stock and other securities as will be
sufficient to permit the exercise in full of this Warrant and the
conversion or exchange of such Common Stock into or for such other
securities.
3.2 Notice of Certain Events. The Company shall provide Holder
with copies of all proxy materials and other notices and communications to
shareholders of the Company, in each case as and when such items are
provided by the Company to its shareholders.
3.3 Registration Under Securities Act of 1933, as amended. The
Shares issued and issuable hereunder shall have certain incidental or
"piggyback" registration rights pursuant to, and as set forth in, that
certain Registration Rights Agreement of even date herewith between Holder
and the Company. The Company represents and warrants to Holder that the
Company's foregoing grant of registration rights and its execution,
delivery and performance of the aforementioned Registration Rights
Agreement (a) have been duly authorized by all necessary corporate action
of the Company's Board of Directors, (b) will not violate the Company's
Articles of Organization or by-laws, each as amended, (c) will not violate
or cause a breach or default (or an event which with the passage of time or
the giving of notice or both, would constitute a breach or default) under
any agreement, instrument, mortgage, deed of trust or other arrangement to
which the Company is a party or by which it or any of its assets is subject
or bound, and (d) do not require the approval, consent or waiver of or by
any shareholder, registration rights holder or other third party which
approval, consent or waiver has not been obtained as of the date of
issuance of this Warrant.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE HOLDER.
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4.1 Purchase for Own Account. This Warrant and the Shares to be
acquired upon exercise hereof will be acquired for investment for Holder's
account, not as nominee or agent, and not with a view to sale or
distribution in violation of applicable federal and state securities laws;
provided that, for regulatory reasons, Silicon Valley Bank will transfer
this Warrant to its parent corporation, Silicon Valley Bancshares, promptly
following issuance hereof.
4.2 Investment Experience. Holder understands that the purchase of
this Warrant and the Shares covered hereby involves substantial risk.
Holder (a) has experience as an investor in unregistered securities, (b)
has sufficient knowledge and experience in financial and business affairs
that it evaluate the risks and merits of its investment in this Warrant and
the Shares, and (c) can bear the economic risk of such Holder's investment
in this Warrant and the Shares.
4.3 Accredited Investor. Holder is an "accredited investor" as
such term is defined in Regulation D promulgated under the Securities Act
of 1933, as amended ("Regulation D").
ARTICLE 5. MISCELLANEOUS.
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5.1 Intentionally Omitted.
5.2 Legends. This Warrant and the Shares shall be imprinted with a
legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT AND LAWS OR, SUBJECT TO SECTION 5.3 OF THAT
CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE CORPORATION TO
SILICON VALLEY BANK DATED AS OF JUNE 11, 2003, AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
5.3 Compliance with Securities Laws on Transfer. This Warrant and
the Shares may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the
transferor and the transferee (including, without limitation, the delivery
of investment representation letters and legal opinions reasonably
satisfactory to the Company, as reasonably requested by the Company). The
Company shall not require Holder to provide an opinion of counsel if the
transfer is to Silicon Valley Bancshares or other affiliate of Holder who
is an "accredited investor" as defined in Regulation D.
5.4 Transfer Procedure. Following its receipt of this executed
Warrant, Silicon Valley Bank will transfer same in whole or in part to its
parent corporation Silicon Valley Bancshares, and thereafter Holder and/or
Silicon Valley Bancshares may, subject to Section 5.3 above, transfer all
or part of this Warrant and/or the Shares at any time and from time to time
by giving the Company notice of the portion of the Warrant and/or Shares
being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to
the Company for reissuance to the transferee(s) (and Holder if applicable);
provided, that any transfer of less than all of this Warrant shall be of an
amount of Shares equal to not less than twenty-five percent (25%) of the
Shares originally issuable hereunder (or all Shares then-issuable
hereunder, if less).
5.5 Notices. All notices and other communications from the Company
to the Holder, or vice versa, shall be deemed delivered and effective when
given personally, or mailed by first-class registered or certified mail,
postage prepaid, or sent via reputable overnight courier service, fee
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from
time to time, but in all cases, unless instructed in writing otherwise, the
Company shall deliver a copy of all notices to Holder to Silicon Valley
Bank, Treasury Department, 3003 Tasman Drive, HA-200, Santa Clara,
California 95054.
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5.6 Waiver. 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.
5.7 Attorneys Fees. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other
party all costs incurred in such dispute, including reasonable attorneys'
fees.
5.8 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of The Commonwealth of Massachusetts, without
giving effect to its principles regarding conflicts of law.
5.9 No Rights as a Shareholder. Except as specifically provided in
this Warrant, Holder shall have no rights as a shareholder of the Company
in respect of the Shares issuable hereunder unless and until Holder
exercises this Warrant as to all or any of such Shares.
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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase
Stock to be executed as an instrument under seal by its duly authorized
representative as of the date first above written.
ATTEST: "COMPANY"
PARLEX CORPORATION
By: /s/ Jonathan R. Kosheff By: /s/ Peter J. Murphy
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Name: Jonathan R. Kosheff Name: Peter J. Murphy
Title: Chief Financial Officer Title: President
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APPENDIX 1
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NOTICE OF EXERCISE
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1. The undersigned hereby elects to purchase shares of the
stock of pursuant to Section 1.1 of the attached Warrant, and
tenders herewith payment of the Exercise Price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant
into Shares in the manner specified in Section 1.2 of the attached Warrant.
This conversion is exercised with respect to of shares of the
Stock of .
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
- -----------------------------------
(Name)
- -----------------------------------
- -----------------------------------
(Address)
3. The undersigned represents it is acquiring the shares solely
for its own account and not as a nominee for any other party and not with a
view toward the resale or distribution thereof except in compliance with
applicable securities laws.
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(Signature)
- -----------------------------------
(Date)