Exhibit 4.E
THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES (COLLECTIVELY, THE "ACTS"). THE SECURITIES
MAY NOT BE SOLD, DISTRIBUTED, OFFERED, PLEDGED, ENCUMBERED, ASSIGNED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF (1) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACTS COVERING THE
TRANSACTION, (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACTS, OR (3) THE COMPANY OTHERWISE SATISFIES ITSELF THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACTS.
Warrant No.: ______ Number of Shares:________
Date of Issuance: July 28, 2003 (subject to adjustment)
STOCK PURCHASE WARRANT
To Subscribe for and Purchase
Common Stock of
Parlex Corporation
THIS CERTIFIES THAT, for value received, ___________________
("Investor"), or registered assigns, is entitled to subscribe for and
purchase from Parlex Corporation (the "Company"), a corporation organized
and existing under the laws of the Commonwealth of Massachusetts, at the
price specified below (subject to adjustment as noted below) at any time
after the date hereof to and including July 28, 2007 (the "Expiration Date")
____________ (the "Share Number") fully paid and nonassessable shares of
common stock (the "Common Stock") (subject to adjustment as noted below).
This Warrant has been issued pursuant to a Securities Purchase Agreement
dated as of July 28, 2003 by and among the Investor, the other Investors
named on the signature pages thereto and the Company (the "Purchase
Agreement"), pursuant to which, among other things, the Company issued a 7%
Convertible Subordinated Note in the original principal amount of
$_______________, dated as of July 28, 2003 to the Investor (the
"Convertible Note").
The warrant purchase price (subject to adjustment as noted below)
shall be $8.00 per share ("Initial Exercise Price").
This Warrant is subject to the following provisions, terms and
conditions:
1. The rights represented by this Warrant may be exercised by the
holder hereof, in whole or in part, (but in no event shall any exercise in
part consist of (i) less than twenty percent (20%) of the Share Number of
shares (as adjusted) granted to the holder hereby, or (ii) any fractional
share of Common Stock), by written notice of exercise delivered to the
Company and by the surrender of this Warrant (properly endorsed if required)
at the principal office of the Company and upon payment to it by wire
transfer, certified check, bank draft or cash of the purchase price for such
shares or by cashless exercise pursuant to paragraph 10. The Company agrees
that the shares so purchased shall be and are 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 this Warrant shall have been surrendered and payment
made for such shares as aforesaid. Subject to the provisions of the next
succeeding paragraph, certificates for the shares of stock so purchased
shall be delivered to the holder hereof within a reasonable time, not
exceeding 5 business days, after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be delivered to
the holder hereof within such time. The Company may require that any such
new Warrant or any certificate for Shares purchased upon the exercise hereof
bear a legend substantially similar to that which is contained on the face
of this Warrant. This Warrant may not be exercised if the issuance of the
Common Shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or regulations.
2. Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificate for shares of stock upon exercise of
this Warrant except in accordance with the provisions, and subject to the
limitations, of paragraph 6 hereof.
3. The Company represents and warrants that this Warrant has been
duly authorized by all necessary corporate action, has been duly executed
and delivered and is a legal and binding obligation of the Company. The
Company covenants and agrees that all shares which may be issued upon the
exercise of the rights represented by this Warrant according to the terms
hereof will, upon issuance, be duly authorized and issued, fully paid and
nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose
of issue or transfer upon exercise of the subscription rights evidenced by
this Warrant, a sufficient number of shares of its Common Stock to provide
for the exercise of the rights represented by this Warrant. The Company
further covenants and agrees that the Company will not, by amendment of its
Articles of Incorporation or through any 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 of this Warrant, but will at all times in good faith assist
in the carrying out of all such items and in the taking of all such action
as may be necessary or appropriate in order to protect the rights of the
holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of
any shares of stock receivable on the exercise of this Warrant above the
amount payable therefor on such exercise.
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4. The above provisions are, however, subject to the following:
(a) The Initial Exercise Price shall, from and after the date
of issuance of this Warrant, be subject to adjustment from time to
time as hereinafter provided. Upon each adjustment of the Initial
Exercise Price, the holder of this Warrant shall thereafter be
entitled to purchase, at the Initial Exercise Price resulting from
such adjustment, the number of shares obtained by multiplying the
warrant purchase price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the warrant
purchase price resulting from such adjustment. Notwithstanding any
other provision herein contained, no adjustment of the Initial Exercise
Price shall be made until the total amount of the adjustment (based on
any single transaction or a series of aggregated transactions which
trigger the anti-dilution provisions set forth in this paragraph 4)
shall be equal to at least one cent per share.
(b) In case the Company shall (i) declare a dividend upon the
Common Stock payable in Common Stock (other than a dividend declared
to effect a subdivision of the outstanding shares of Common Stock, as
described in subparagraph (c) below) or any obligations or any shares
of stock of the Company which are convertible into or exchangeable for
Common Stock (such obligations or shares of stock being hereinafter
referred to as "Convertible Securities"), or in any rights or options
to purchase any Common Stock or Convertible Securities, or
(ii) declare any other dividend or make any other distribution upon
the Common Stock payable otherwise than out of earnings or earned
surplus, then thereafter the holder of this Warrant upon the exercise
hereof will be entitled to receive the number of shares of Common
Stock to which such holder shall be entitled upon such exercise, and,
in addition and without further payment therefor, such number of
shares of Common Stock, such that upon exercise hereof, such holder
would receive such number of shares of Common Stock as a result of
each dividend described in clause (i) above and each dividend or
distribution described in clause (ii) above which such holder would
have received by way of any such dividend or distribution if
continuously since the record date for any such dividend or
distribution such holder (i) had been the record holder of the number
of shares of Common Stock then received, and (ii) had retained all
dividends or distributions in stock or securities (including Common
Stock or Convertible Securities, or in any rights or options to
purchase any Common Stock or Convertible Securities) payable in
respect of such Common Stock or in respect of any stock or securities
paid as dividends or distributions and originating directly or
indirectly from such Common Stock. For the purposes of the foregoing,
a dividend or distribution other than in cash shall be considered
payable out of earnings or surplus only to the extent that such
earnings or surplus are charged an amount equal to the fair value of
such dividend as determined by the Board of Directors of the Company.
(c) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares,
the warrant purchase price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the warrant purchase price
in effect immediately prior to such combination shall be
proportionately increased.
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(d) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the
Company with another corporation, or the sale of all or substantially
all of its assets to another corporation shall be effected in such a
way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be
made whereby the holder hereof shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions
hereof (including without limitation provisions for adjustments of the
warrant purchase price and of the number of shares purchasable upon
the exercise of this Warrant) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise hereof. The Company
shall not effect any such consolidation, merger or sale, unless prior
to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume, by written instrument
executed and mailed to the registered holder hereof at the last
address of such holder appearing on the books of the Company, the
obligation to deliver to such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder
may be entitled to purchase.
(e) Except for (a) options to purchase shares of Common Stock
and the issuance of awards of Common Stock pursuant to key employee and
consultant benefit plans adopted by the Company and except for shares
of Common Stock issued upon the exercise of such options granted
pursuant to such plans (provided that the aggregate number of shares
thus awarded and covered by unexercised options and thus issued
pursuant to such options shall not be in excess of 1,000,000 shares
(appropriately adjusted to reflect stock splits, stock dividends,
reorganizations, consolidations and similar changes)); (b) shares of
Common Stock and/or options, warrants or other Common Stock purchase
rights, and the Common Stock issued pursuant to such options, warrants
or other rights issued pursuant to a merger, consolidation,
acquisition, strategic alliance, purchase or sale of assets, sale or
exchange of stock, or in connection with any strategic investments,
joint venture, manufacturing, marketing or distribution arrangement,
technology transfer or development arrangement, or other similar
commercial relationship or similar business combination approved by
the Board of Directors, (in each case not for the purpose of capital
raising), and (c) shares of Common Stock issuable pursuant to the
exercise of that certain Warrant dated June 11, 2003 granted to
Silicon Valley Bank, if and whenever the Company shall issue or sell
any shares of its Common Stock or Convertible Securities for a
consideration per share less than the Initial Exercise Price in effect
immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Initial Exercise Price shall be reduced
to:
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(i) in the event such issue or sale occurs at any time
during the first 18 months following the date of closing of the
transactions contemplated by the Purchase Agreement (the
"Initial Period"), the lower price.
(ii) in the event such issue or sale occurs at any time
after the Initial Period, the price (calculated to the nearest
cent) determined by dividing (A) an amount equal to the sum of
(1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (including for this purpose all
shares of Common Stock issuable upon exercise or conversion of
any Convertible Notes or Warrants as said term is defined in the
Purchase Agreement outstanding immediately prior to such issue or
sale) multiplied by the Initial Exercise Price then in effect,
and (2) the consideration, if any, received by the Company upon
such issue or sale, by (B) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding immediately prior to
such issue or sale (including for this purpose all shares of
Common Stock issuable upon exercise or conversion of any
Convertible Notes or Warrants as said term is defined in the
Purchase Agreement outstanding immediately prior to such issue or
sale) and (2) the number of shares of Common Stock thus issued or
sold.
(f) For the purposes of paragraph (e), the following provisions
(i) to (v), inclusive, shall also be applicable:
(i) In case at any time the Company shall grant (whether
directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or Convertible Securities whether or not such rights
or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of
such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (aa) the total
amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration payable
to the Company upon the exercise of such rights or options, plus,
in the case of such rights or options which relate to Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange
thereof, by (bb) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options)
shall be less than the warrant purchase price in effect
immediately prior to the time of the granting of such rights or
options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights or options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such rights
or options shall (as of the date of granting of such rights or
options) be deemed to have been issued for such price per share.
Except as provided in paragraph (g) below, no further
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adjustments of the warrant purchase price shall be made upon the
actual issue of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the
actual issue of such Common Stock upon conversion or exchange of
such Convertible Securities.
(ii) In case the Company shall issue or sell (whether
directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (aa) the total amount received
or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (bb) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall
be less than the warrant purchase price in effect immediately
prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date
of the issue or sale of such Convertible Securities) be deemed to
be outstanding and to have been issued for such price per share,
provided that (x) except as provided in paragraph (g) below, no
further adjustments of the warrant purchase price shall be made
upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (y) if any such
issue or sale of such Convertible Securities is made upon
exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which
adjustments of the warrant purchase price have been or are to be
made pursuant to other provisions of this paragraph (f), no
further adjustment of the warrant purchase price shall be made by
reason of such issue or sale.
(iii) In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for cash,
the consideration received therefor shall be deemed to be the
amount received by the Company therefor, without deduction
therefrom of any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common
Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall
be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the
Company, without deducting therefrom of any expenses incurred or
any underwriting commissions, discounts or concessions paid or
allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or
options to purchase such Common Stock or Convertible Securities
shall be issued in connection with any merger or consolidation in
which the Company is the surviving
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corporation, the amount of consideration therefor shall be deemed
to be the fair value as determined in good faith by the Board of
Directors of the Company of such portion of the assets and
business of the non-surviving corporation or corporations as such
Board shall determine to be attributable to such Common Stock,
Convertible Securities, rights or options, as the case may be. In
the event of any consolidation or merger of the Company in which
the Company is not the surviving corporation or in the event of
any sale of all or substantially all of the assets of the Company
for stock or other securities of any other corporation, the
Company shall be deemed to have issued a number of shares of its
Common Stock for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on which the
transaction was predicated and for a consideration equal to the
fair market value on the date of such transaction of such stock
or securities of the other corporation, and if any such
calculation results in adjustment of the warrant purchase price,
the determination of the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such
merger, conversion or sale, for purposes of paragraph (d) above,
shall be made after giving effect to such adjustment of the
warrant purchase price.
(iv) In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them
(aa) to receive a dividend or other distribution payable in
Common Stock or in Convertible Securities, or in any rights or
options to purchase any Common Stock or Convertible Securities,
or (bb) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the
granting of such rights of subscription or purchase, as the case
may be.
(v) The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock for
the purposes of this paragraph (f).
(g) If (i) the purchase price provided for in any right or
option referred to in clause (i) of paragraph (f), or (ii) the
additional consideration, if any, payable upon the conversion or
exchange of Convertible Securities referred to in clause (i) or
clause (ii) of paragraph (f), or (iii) the rate at which any
Convertible Securities referred to in clause (i) or clause (ii) of
paragraph (f) are convertible into or exchangeable for Common Stock
shall change at any time (other than under or by reason of provisions
designed to protect against dilution), the warrant purchase price then
in effect shall forthwith be increased or decreased to such warrant
purchase price which would have obtained had the adjustments made upon
the issuance of such rights, options or Convertible Securities been
made upon the basis of (i) the issuance of the number of shares of
Common Stock theretofore actually delivered upon the exercise of such
options or rights or upon the conversion or exchange of such
Convertible Securities, and the total consideration received therefor,
and (ii) the issuance at the time of such change of any such options,
rights or
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Convertible Securities then still outstanding for the consideration, if
any, received by the Company therefor and to be received on the basis
of such changed price; and on the expiration of any such option or
right or the termination of any such right to convert or exchange such
Convertible Securities, the warrant purchase price then in effect
hereunder shall forthwith be increased to such warrant purchase price
which would have obtained had the adjustments made upon the issuance of
such rights or options or Convertible Securities been made upon the
basis of the issuance of the shares of Common Stock theretofore
actually delivered (and the total consideration received therefor) upon
the exercise of such rights or options or upon the conversion or
exchange of such Convertible Securities. If the purchase price provided
for in any such right or option referred to in clause (i) of
paragraph (f) or the rate at which any Convertible Securities referred
to in clause (i) or clause (ii) of paragraph (f) are convertible into
or exchangeable for Common Stock shall decrease at any time under or by
reason of provisions with respect thereto designed to protect against
dilution, then in case of the delivery of Common Stock upon the
exercise of any such right or option or upon conversion or exchange of
any such Convertible Security, the warrant purchase price then in
effect hereunder shall forthwith be decreased to such warrant purchase
price as would have obtained had the adjustments made upon the issuance
of such right, option or Convertible Securities been made upon the
basis of the issuance of (and the total consideration received for) the
shares of Common Stock delivered as aforesaid.
(h) Upon any adjustment of the warrant purchase price, then
and in each such case the Company shall give written notice thereof,
by first-class mail, postage prepaid, addressed to the registered
holder of this Warrant at the address of such holder as shown on the
books of the Company, which notice shall state the warrant purchase
price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based.
(i) In case any time:
(1) the Company shall declare any cash dividend on its
capital stock at a rate in excess of the rate of the last cash
dividend theretofore paid;
(2) the Company shall pay any dividend payable in stock
upon its capital stock or make any distribution (other than
regular cash dividends) to the holders of its capital stock;
(3) the Company shall offer for subscription pro rata to
the holders of its capital stock any additional shares of stock
of any class or other rights;
(4) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation; or
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
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then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the
registered holder of this Warrant at the address of such holder as
shown on the books of the Company, of the date on which (aa) the books
of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (bb) such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, or conversion or redemption
shall, or is expected to, take place, as the case may be. Such notice
shall also specify the date as of which the holders of capital stock
of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their capital
stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, or conversion or redemption,
as the case may be. Such written notice shall be given at least 20
days prior to the action in question and not less than 20 days prior
to the record date or the date on which the Company's transfer books
are closed in respect thereto.
(j) No fractional shares of Common Stock shall be issued upon
the exercise of this Warrant, but, instead of any fraction of a share
which would otherwise be issuable, the Company shall pay a cash
adjustment (which may be effected as a reduction of the amount to be
paid by the holder hereof upon such exercise) in respect of such
fraction in an amount equal to the same fraction of the Market Price
per share of Common Stock as of the close of business on the date of
the notice required by paragraph l above. "Market Price" shall mean,
if the Common Stock is traded on a securities exchange or on the
Nasdaq National Market, the average of the closing prices of the
Common Stock on such exchange or the Nasdaq National Market on the 20
trading days ending on the trading day prior to the date of
determination, or, if the Common Stock is otherwise traded in the
over-the-counter market, the average of the closing bid prices on the
20 trading days ending on the trading day prior to the date of
determination. If at any time the Common Stock is not traded on an
exchange or the Nasdaq National Market, or otherwise traded in the
over-the-counter market, the Market Price shall be deemed to be the
higher of (i) the book value thereof as determined by any firm of
independent public accountants of recognized standing selected by the
Board of Directors of the Company as of the last day of any month
ending within 60 days preceding the date as of which the determination
is to be made, or (ii) the fair value thereof determined in good faith
by the Board of Directors of the Company as of a date which is within
15 days of the date as of which the determination is to be made.
(k) Notwithstanding anything to the contrary contained in this
Warrant, the payment of the PIK Interest Shares (as defined in the
Purchase Agreement) by the Company to holders of the Company's
7% convertible subordinated notes issued pursuant to the Purchase
Agreement shall not trigger any of the anti-dilution provisions
specified under this paragraph 4.
5. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company, including without
limitation cash dividends.
6. The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this Warrant or
transferring any Common Stock issuable
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or issued upon the exercise hereof (if and only if there is no effective
Registration Statement) of such holder's intention to do so, describing
briefly the manner of any proposed transfer of this Warrant or such holder's
intention as to the disposition to be made of shares of Common Stock
issuable or issued upon the exercise hereof. If applicable, such holder
shall also provide the Company with an opinion of counsel satisfactory to
the Company to the effect that the proposed transfer of this Warrant or
disposition of shares may be effected without registration or qualification
(under any federal or state law) of this Warrant or the shares of Common
Stock issuable or issued upon the exercise hereof. Upon receipt of such
written notice and opinion (if applicable) by the Company, such holder shall
be entitled to transfer this Warrant, or to exercise this Warrant in
accordance with its terms and dispose of the shares received upon such
exercise or to dispose of shares of Common Stock received upon the previous
exercise of this Warrant, all in accordance with the terms of the notice
delivered by such holder to the Company, provided that an appropriate legend
respecting the aforesaid restrictions on transfer and disposition may be
endorsed on this Warrant or the certificates for such shares.
7. Subject to the provisions of paragraph 6 hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, at the
principal office of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents
and agrees that the bearer of this Warrant, when endorsed, may be treated by
the Company and all other persons dealing with this Warrant as the absolute
owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books
of the Company, any notice to the contrary notwithstanding; but until such
transfer on such books, the Company may treat the registered holder hereof
as the owner for all purposes.
8. This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the principal office of the Company, for new Warrants of
like tenor representing in the aggregate the right to subscribe for and
purchase the number of shares which may be subscribed for and purchased
hereunder, each of such new Warrants to represent the right to subscribe for
and purchase such number of shares as shall be designated by said holder
hereof at the time of such surrender.
9. The Company covenants and agrees that the holder hereof shall
have the rights of an Investor under the Purchase Agreement and Registration
Rights Agreement, each dated July 28, 2003 among the Company and the
Investors named on the signature pages thereto.
10. (a) In addition to and without limiting the rights of the holder
of this Warrant under the terms of this Warrant, the holder of this Warrant
shall have the right (the "Conversion Right") to convert this Warrant or any
portion thereof into shares of Common Stock as provided in this paragraph 10
at any time or from time to time prior to its expiration. Upon exercise of
the Conversion Right with respect to a particular number of shares subject
to this Warrant (the "Converted Warrant Shares"), the Company shall deliver
to the holder of this Warrant, without payment by the holder of any exercise
price or any cash or other consideration, that number of shares of Common
Stock equal to the quotient obtained by dividing the Net Value (as
hereinafter defined) of the Converted Warrant Shares by the fair market
value (as defined in paragraph (c)
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below) of a single share of Common Stock, determined in each case as of the
Conversion Date (as hereinafter defined). The "Net Value" of the Converted
Warrant Shares shall be determined by subtracting the aggregate warrant
purchase price of the Converted Warrant Shares from the aggregate fair
market value of the Converted Warrant Shares. Notwithstanding anything in
this paragraph 10 to the contrary, the Conversion Right cannot be exercised
with respect to a number of Converted Warrant Shares of (i) less than twenty
percent (20%) of the Share Number of shares (as adjusted) granted to the
holder hereby, or (ii) any fractional share of Common Stock). No fractional
shares shall be issuable upon exercise of the Conversion Right, and if the
number of shares to be issued in accordance with the foregoing formula is
other than a whole number, the Company shall pay to the holder of this
Warrant an amount in cash equal to the fair market value of the resulting
fractional share.
(b) The Conversion Right may be exercised by the holder of this
Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in
paragraph (a) above as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or on
such later date as is specified therein (the "Conversion Date"), but not
later than the expiration date of this Warrant. Certificates for the shares
of Common Stock issuable upon exercise of the Conversion Right, together
with a check in payment of any fractional share and, in the case of a
partial exercise, a new warrant evidencing the shares remaining subject to
this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder of this Warrant within 15 days following the
Conversion Date.
(c) For purposes of this paragraph 10, the "fair market value" of a
share of Common Stock as of a particular date shall be its Market Price,
calculated as described in paragraph 4(i) hereof (assuming for this purpose
that references to "date of determination" (or words of similar import) in
paragraph 4(i) shall be deemed references to "Conversion Date").
11. No holder of this Warrant shall have the right to exercise this
Warrant, to the extent that after giving effect to such exercise, such
holder (together with such holder's affiliates) would beneficially own in
excess of 4.99% of the shares of the Common Stock outstanding immediately
after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned
by such holder and its affiliates shall include the number of shares of
Common Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such holder and
its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially
owned by such holder and its affiliates (including, without limitation, any
convertible notes or convertible preferred stock or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. For
purposes of this Warrant, in determining the
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number of outstanding shares of Common Stock a holder may rely on the number
of outstanding shares of Common Stock as reflected in (1) the Company's most
recent Quarterly Report on Form 10-Q, Annual Report on Form 10-K or other
public filing with the SEC, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
Transfer Agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request of
the holder of this Warrant, the Company shall, within three (3) business
days, confirm orally or in writing to the holder of this Warrant the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect
to the conversion or exercise of securities of the Company by the holder of
this Warrant and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The restriction described
in this paragraph 11 may be revoked upon 60 days prior written notice by the
holder hereof to the Company.
12. If the Company has not obtained Shareholder Approval (as defined
below) if required, then the Company may not issue upon exercise of this
Warrant in the aggregate, in excess of 19.999% of the number of shares of
Common Stock outstanding on the trading day immediately preceding the
Closing Date, less any shares of Common Stock issued upon conversion of the
Convertible Notes, upon prior exercise of this or any other Warrant issued
pursuant to the Purchase Agreement, or as payment of interest on the
Convertible Notes (such number of shares, the "Issuable Maximum"). If on any
attempted exercise of this Warrant, the issuance of the shares issuable
hereunder (the "Warrant Shares") would exceed the Issuable Maximum, and the
Company shall not have previously obtained the vote of shareholders (the
"Shareholder Approval"), if any, as may be required by the applicable rules
and regulations of the Nasdaq National Market (or any successor entity)
applicable to approve the issuance of shares of Common Stock in excess of
the Issuable Maximum pursuant to the terms hereof, then the Company shall
issue to the holder requesting a Warrant exercise such number of Warrant
Shares as may be issued below the Issuable Maximum and, with respect to the
remainder of the aggregate number of Warrant Shares, this Warrant shall not
be exercisable until and unless Shareholder Approval has been obtained or is
otherwise no longer required.
13. All questions concerning this Warrant will be governed and
interpreted and enforced in accordance with the internal law, not the law of
conflicts, of the Commonwealth of Massachusetts.
14. If this Warrant is lost, stolen, mutilated or destroyed, the
Company may, upon the making of an affidavit of the fact that the person
claiming the Warrant to be lost, stolen, mutilated or destroyed and on such
terms as to indemnity or otherwise as the Company may reasonably impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant
so lost, stolen, mutilated or destroyed.
15. Receipt of this Warrant by the holder hereof shall constitute
acceptance of and agreement to all of the terms and conditions contained
herein.
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16. The right to exercise this Warrant shall automatically expire at
5:00 p.m., Eastern Daylight Time, on the Expiration Date, July 28, 2007.
[signature page follows]
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IN WITNESS WHEREOF, Parlex Corporation has caused this Warrant to be signed
by its duly authorized officer and this Warrant to be dated as of July
_____, 2003.
PARLEX CORPORATION
By
---------------------------------
Peter J. Murphy
Chief Executive Officer & President
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: Parlex Corporation (the "Company")
The undersigned ___________________________________
Please insert Social Security or other
identifying number of Subscriber:
_______________________________
hereby irrevocably elects to exercise the right of purchase represented by
this Warrant for, and to purchase thereunder, ___________ shares of the
Common Stock (the "Common Stock") provided for therein and [Circle either
(a) or (b)] (a) tenders payment herewith to the order of the Company in the
amount of $___________, such payment being made as provided on the face of
this Warrant; or (b) hereby exercises the Conversion Right as to the number
of shares of Common Stock set forth above in accordance with paragraph 10 of
the Warrant.
By delivering this exercise notice, the undersigned owner represents
and warrants ("X" next to applicable provision):
[__] 1. that it does not now, nor after giving effect to this exercise
will it, beneficially own in excess of 4.99% of the outstanding
shares of Common Stock of the Company, calculated pursuant to
the provisions of Paragraph 11 of the Warrant; or
[__] 2. that it has provided, at least 60 days prior to the date of this
notice of exercise, notice to the Company of its revocation of
the application of Paragraph 11 of the Warrant.
The undersigned requests that certificates for such shares of Common
Stock be issued as follows:
Name: ______________________________________________________________________
Address: ___________________________________________________________________
Deliver to: ________________________________________________________________
Address: ___________________________________________________________________
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and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance
remaining of the shares of Common Stock purchasable under this Warrant be
registered in the name of, and delivered to, the undersigned at the address
stated above.
Dated:
Signature ________________________________
Note: The signature on this Subscription
Form must correspond with the name as
written upon the face of this Warrant in
every particular, without alteration or
enlargement or any change whatever.
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FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto this Warrant, and appoints __________________________________
to transfer this Warrant on the books of the Company with the full power of
substitution in the premises.
Dated: _________________
In the presence of:
________________________
__________________________________________
(Signature must conform in all respects to
the name of the holder as specified on the
face of this Warrant without alteration,
enlargement or any change whatsoever, and
the signature must be guaranteed in the
usual manner)
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