Exhibit 4.2
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THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND/OR SUCH LAWS OR,
IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.
WARRANT
TO PURCHASE COMMON STOCK
OF
PARLEX CORPORATION
(void after May 7, 2007)
No. W-[_] Number of Shares:
(subject to adjustment)
THIS CERTIFIES THAT, for value received, ___________ or registered
assigns (the "Holder"), from and after the Commencement Date (as defined
below), and subject to the terms and conditions herein set forth, is
entitled to purchase from Parlex Corporation, a Massachusetts corporation
(the "Company"), at any time before 5:00 p.m. Boston time on May 7, 2007
(the "Termination Date"), _____________ (_____) shares (the "Warrant
Shares") of the Company's common stock, $0.10 par value per share (the
"Common Stock"), at a price per share equal to the Warrant Price (as
defined below) upon exercise of this Warrant pursuant to Section 5 hereof.
The number of Warrant Shares is subject to adjustment under Section 2.
1. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Commencement Date" means November 8, 2004.
(b) "Issuance Date" means May 7, 2004.
(c) "Offering Warrants" shall have the meaning ascribed to the term
in Section 8.
(d) "Person" means any individual, corporation, partnership,
limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental authority or
other entity of any kind, and shall include any successor (by merger or
otherwise) of such entity.
(e) "Purchase Agreement" means that certain Stock and Warrant
Purchase Agreement dated as of the Issuance Date between the Company and
the initial Holder of this Warrant.
(f) "Warrant Price" means $8.00 per share, subject to adjustment
under Section 2.
2. Adjustments and Notices. The Warrant Price and/or the Warrant Shares
shall be subject to adjustment from time to time in accordance with this
Section 2. The Warrant Price and/or the Warrant Shares shall be adjusted
to reflect all of the following events that occur on or after the Issuance
Date.
(a) Subdivision, Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of the Common
Stock or shall issue a stock dividend with respect to the Common Stock, the
Warrant Price in effect immediately prior to such subdivision or the
issuance of such dividend shall be proportionately decreased, and the
number of Warrant Shares for which this Warrant may be exercised
immediately prior to such subdivision or the issuance of such dividend
shall be proportionately increased. In case the Company shall at any time
combine the outstanding shares of the Common Stock, the Warrant Price in
effect immediately prior to such combination shall be proportionately
increased, and the number of Warrant Shares for which this Warrant may be
exercised immediately prior to such combination shall be proportionately
decreased. In each of the foregoing cases, the adjustment shall be
effective at the close of business on the date of such subdivision,
dividend or combination, as the case may be.
(b) Reclassification, Exchange, Substitution, In-Kind Distribution.
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 or upon the payment of a
dividend in securities or property other than shares of the Common Stock,
the Holder shall be entitled to receive, upon exercise of this Warrant, the
number and kind of securities and property that Holder would have received
if this Warrant had been exercised immediately before the record date for
such reclassification, exchange, substitution, or other event or
immediately prior to the record date for such dividend. 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 Section 2 including, without
limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new
warrant. The provisions of this Section 2(b) shall similarly apply to
successive reclassifications, exchanges, substitutions, or other events and
successive dividends.
(c) Reorganization, Merger, etc. In case of any merger or
consolidation of the Company into or with another corporation where the
Company is not the surviving corporation, or sale, transfer or lease (but
not including a transfer or lease by pledge or mortgage to a bona fide
lender) of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be,
shall, as a condition to closing any such reorganization, merger or sale,
duly execute and deliver to the Holder hereof a new warrant so that the
Holder shall have the right to receive, at a total purchase price not to
exceed that payable upon the exercise or conversion of the unexercised
portion of this Warrant, and in lieu of the Warrant Shares theretofore
issuable upon exercise or conversion of this Warrant, the kind and amount
of shares of stock, other securities, money and property that would have
been receivable upon such reorganization, merger or sale by the Holder with
respect to the Warrant Shares if this Warrant had been exercised
immediately before the consummation of such transaction. Such new warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 2. The
provisions of this subparagraph (c) shall similarly apply to successive
transactions of the type described in this subparagraph (c).
(d) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Company, at its own expense, shall
cause its Principal Financial Officer to
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compute such adjustment or readjustment in accordance with the provisions
hereof and prepare a certificate showing such adjustment or readjustment,
and shall mail such certificate, by first class mail, postage prepaid, to
the Holder. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall
be carried forward and taken into account in any subsequent adjustment
otherwise required hereunder.
(e) No Impairment. The Company shall not, by amendment of its
charter, by-laws or other organizational documents, 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 all of the provisions of this Section 2
and in taking all such action as may be necessary or appropriate to protect
the Holder's rights under this Section 2 against impairment.
(f) 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 the Warrant, the Company
shall eliminate such fractional share interest by paying the Holder an
amount computed by multiplying the fractional interest by the fair market
value of a full share.
3. No Shareholder Rights. This Warrant, by itself, as distinguished
from any shares purchased hereunder, shall not entitle the Holder to any of
the rights of a shareholder of the Company.
4. Reservation of Stock. The Company will reserve from its authorized
and unissued stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of this Warrant. Issuance
of this Warrant shall constitute full authority to the Company's officers
who are charged with the duty of executing stock certificates to execute
and issue the necessary certificates for the Warrant Shares issuable upon
the exercise of this Warrant.
5. Exercise of Warrant. While this Warrant remains outstanding and
exercisable in accordance with Section 1 hereof, the purchase rights hereby
represented may be exercised in whole or in part at any time, and from time
to time, at the election of the Holder by the tender of the Notice of
Exercise substantially in the form attached hereto as Exhibit A and the
surrender of this Warrant at the principal office of the Company and:
(a) by the payment to the Company in cash, by check, cancellation
of indebtedness or other form of payment acceptable to the Company, of an
amount equal to the aggregate Warrant Price multiplied by the number of
Warrant Shares then being purchased; or
(b) in lieu of paying the Warrant Price in the method set forth in
Section 5(a), the Holder may elect to receive, without the payment by the
Holder of any additional consideration, Warrant Shares equal to the value
of this Warrant (or the portion thereof being exercised) by surrender of
this Warrant at the principal office of the Company together with an
executed Notice of Exercise, in substantially the form attached hereto, in
which event the Company shall issue to the Holder a number of Warrant
Shares computed using the following formula:
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Y (A - B)
X = ---------
A
Where: X = The number of Warrant Shares to be issued to the
Holder pursuant to this net exercise;
Y = The number of Warrant Shares in respect of which
the net exercise election under this Section 5(b)
is made;
A = The fair market value of one Warrant Share at the
time the net issue election is made; and
B = The Warrant Price.
For purposes of this Section 5(b), the fair market value of a Warrant Share
as of a particular date shall be determined by the Company's Board of
Directors in its reasonable discretion.
6. Automatic Exercise. If the Closing Price of the Common Stock of the
Company shall exceed one hundred fifty percent (150%) of the Warrant Price
for twenty (20) consecutive Trading Days then the Warrants shall be deemed
exercised without further action by the Holder pursuant to the net issuance
feature contained in Section 5(b) above.
(a) As used herein, "Trading Day" shall mean each day on which the
primary securities exchange or quotation system or over-the-counter market
on which the Company's Common Stock is listed or otherwise available for
trading is open for trading or quotation; and "Closing Price" of a single
share of Common Stock on any Trading Day shall mean the closing sale price
per share for the Common Stock (or if no closing sale price is reported,
the average of the bid and ask prices) on such Trading Day on the principal
United States national securities exchange on which the Common Stock is
traded or, if the Common Stock is not listed on a United States national
securities exchange, as reported by the Nasdaq, or, if the Common Stock is
not listed on the Nasdaq, the principal United States regional securities
exchange on which the Common Stock is traded or, if the Common Stock is not
listed on a United States regional stock exchange, as reported by the
principal over-the-counter market on which the Common Stock is traded,
including the Over the Counter Bulletin Board or the National Quotation
Service Bureau (commonly knows as the "Pink Sheets") or successor markets.
(b) All Holders will be given written notice within ten (10) days of
the date of automatic exercise of all such Warrants pursuant to this
Section 6. Such notice will be sent by first class or registered mail,
postage prepaid, to each Holder at such Holder's address last shown on the
records of the transfer agent for the Warrant (or the records of the
Company, if it serves as its own transfer agent). Within ten (10) days of
receipt of such notice of automatic exercise, each Holder shall surrender
his or its Warrant to the Company at the place designated in such notice,
and shall thereafter receive certificates for the number of Warrant Shares
to which such Holder is entitled pursuant to this Section 6. On the date
of automatic exercise, all rights with respect to the Warrants so exercised
will terminate, except only the rights of the Holders thereof, upon
surrender of their Warrants therefor, to receive certificates for the
Warrant Shares represented by such Warrant. If so required by the Company,
Warrants surrendered for exercise shall be endorsed or accompanied by a
written instrument or instruments of transfer, in a form satisfactory to
the Company, duly authorized in writing. As soon as practicable after the
date of such automatic exercise and the surrender of the Warrants, the
Company shall cause to be issued and delivered to such Holder, or
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on his or its written order, a certificate or certificates for the number
of full Warrant Shares issuable on such exercise in accordance with the
provisions hereof and cash as provided in Section 2(f) in respect of any
fraction of a Warrant Share otherwise issuable upon such exercise.
(c) All Warrants which are required to be surrendered for exercise in
accordance with the provisions hereof shall, from and after the date such
Warrants are so required to be surrendered, be deemed to have been retired
and cancelled and the Warrant Shares represented thereby issued for all
purposes, notwithstanding the failure of the Holder or Holders thereof to
surrender such Warrants on or prior to such date.
7. Transfer of Warrant. This Warrant may be transferred or assigned by
the Holder hereof as a whole or in part, provided:
(a) that the transferor provides, at the Company's request, an
opinion of counsel satisfactory to the Company that such transfer does not
require registration under the Securities Act;
(b) that the transferor provides the Company with written notice of
such transfer prior to its occurrence; and
(c) that if after such transfer there will be two or more such
Warrants (due to the Warrant having been transferred in part and not in
whole), that all persons holding a Warrant covering shares that were
covered by the original Warrant must agree in writing with each other that
none of them will exercise unless all of them exercise simultaneously.
8. Legends. Upon issuance, the certificate or certificates evidencing
any Warrant Shares shall bear legends as set forth in the Purchase
Agreement.
9. Purchase Agreement. This Warrant is one of a number of warrants (the
"Offering Warrants") issued pursuant to the Purchase Agreement pursuant to
which the Holder and certain of its successors and assigns have been
granted registration rights and other rights. This Warrant and the Warrant
Shares shall be entitled to the rights conferred thereon under the Purchase
Agreement, including without limitation the registration rights provided in
Section 7 thereof.
10. Termination. This Warrant shall terminate at 5:00 p.m. Boston time
on the Termination Date.
11. Miscellaneous. This Warrant shall be governed by the laws of the
State of Massachusetts, as such laws are applied to contracts to be entered
into and performed entirely in Massachusetts by Massachusetts residents.
The headings in this Warrant are for purposes of convenience and reference
only, and shall not be deemed to constitute a part hereof. Neither this
Warrant nor any term hereof may be changed or waived orally, but only by an
instrument in writing signed by the Company and (a) holders of Offering
Warrants exercisable for a majority of the Warrant Shares issuable upon
exercise of the then outstanding Offering Warrants, provided that such
change or waiver does not adversely affect the Holder without adversely
affecting all holders of Offering Warrants in a similar manner or (b) the
Holder. All notices and other communications from the Company to the
Holder of this Warrant shall be delivered personally or by facsimile
transmission or mailed by first class mail, postage prepaid, to the address
or facsimile number furnished to the Company in writing by the last Holder
of this Warrant who shall have furnished an address or facsimile number to
the Company in writing, and if mailed shall be deemed given three days
after deposit in the United States mail. Upon receipt of evidence
satisfactory to the Company of the
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ownership of and the loss, theft, destruction or mutilation of any Warrant
and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, the
Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right
to purchase the same aggregate number of shares of Common Stock.
ISSUED: May 7, 2004
PARLEX CORPORATION
By:
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Name: Jonathan R. Kosheff
Title: Chief Financial Officer
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Attachment 1
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NOTICE OF EXERCISE
TO: PARLEX CORPORATION
The undersigned hereby elects to [check applicable subsection]:
______ (a) Purchase __________ Warrant Shares (as defined in the
attached Warrant) of Parlex Corporation, pursuant to the
terms of the attached Warrant, and payment of the Warrant
Price per Warrant Share required under such Warrant
accompanies this notice;
OR
______ (b) Exercise the attached Warrant for __________ Warrant
Shares purchasable under the Warrant pursuant to the net
exercise provisions of Section 5 of such Warrant.
The undersigned hereby represents and warrants that the undersigned
is acquiring such shares for its own account for investment purposes only,
and not for resale or with a view to distribution of such shares or any
part thereof.
_______________________________________________
(Name in which certificate(s) are to be issued)
_______________________________________________
(Address)
___________________________________
(Name of Warrant Holder)
By: _______________________________
Title: ____________________________
Date signed: ______________________
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