EXHIBIT B
to Securities Purchase Agreement
VOID AFTER 5:00 P.M., CENTRAL STANDARD
TIME ON APRIL 15, 2004
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS,
OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase ____ Shares of
Class A Common Stock, par value $0.01 per share
Date: April 15, 1999
WESTELL TECHNOLOGIES, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, or its registered assigns, is
entitled to purchase from Westell Technologies, Inc., a Delaware
corporation (the "Company"), at any time or from time to time during the
period specified in Section 2 hereof, fully paid and nonassessable shares
of the Company's Class A Common Stock, par value $0.01 per share (the
"Class A Common Stock" and, when taken together with all other classes and
series of the common stock of the Company, the "Common Stock"), at an
exercise price of $8.9208 per share (the "Exercise Price"). This Warrant is
being issued pursuant to that certain Securities Purchase Agreement dated
April 14, 1999 among the Company and the signatories thereto (the
"Securities Purchase Agreement"). The number of shares of Class A Common
Stock purchasable hereunder (the "Warrant Shares") and the Exercise Price
are subject to adjustment as provided in Section 4 hereof. The term
"Warrants" means this Warrant and the other warrants of the Company issued
pursuant to the terms of the Securities Purchase Agreement.
The term "Closing Sale Price" means, for any security as of any date,
the closing sale price of such security on the principal securities
exchange or trading market where such security is listed or traded as
reported by Bloomberg Financial Markets or a comparable reporting service
of national reputation selected by the Company and reasonably acceptable to
the holder hereof (the "Holder") if Bloomberg Financial Markets is not then
reporting closing sale prices of such security (collectively, "Bloomberg"),
or if the foregoing does not apply, the last reported sale price of such
security in the over-the-counter market on the electronic bulletin board of
such security as reported by Bloomberg, or, if no sale price is reported
for such security by Bloomberg, the average of the bid prices of any market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated for
such security on such date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as
reasonably determined by an investment banking firm selected by the Company
and reasonably acceptable to the Holder with the costs of such appraisal to
be borne by the Company.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Mechanics of Exercise. Subject to the provisions hereof, including,
without limitation, the limitations contained in Section 8(f) hereof, this
Warrant may be exercised as follows:
(a) Manner of Exercise. This Warrant may be exercised by the Holder,
in whole or in part, by the surrender of this Warrant (or evidence of loss,
theft, destruction or mutilation thereof in accordance with Section 8(c)
hereof), together with a completed exercise agreement in the Form of
Exercise Agreement attached hereto as Exhibit 1 (the "Exercise Agreement"),
to the Company at the Company's principal executive offices (or such other
office or agency of the Company as it may designate by notice to the
Holder), and upon (i) payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise
Agreement or (ii) if the Holder elects to effect a Cashless Exercise (as
defined in Section 12(c) below), delivery to the Company of a written
notice of an election to effect a Cashless Exercise for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased shall
be deemed to be issued to the Holder or Holder's designees, as the record
owner of such shares, as of the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered,
and payment (or notice of an election to effect a Cashless Exercise) shall
have been made for such shares as set forth above.
(b) Issuance of Certificates. Subject to Section 1(c), certificates
for the Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the
Holder within a reasonable time, not exceeding three (3) business days,
after this Warrant shall have been so exercised (the "Delivery Period").
The certificates so delivered shall be in such denominations as may be
requested by the Holder and shall be registered in the name of Holder or
such other name as shall be designated by such Holder. If this Warrant
shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Holder a new Warrant representing the number
of shares with respect to which this Warrant shall not then have been
exercised.
(c) Exercise Disputes. In the case of any dispute with respect to an
exercise, the Company shall promptly issue such number of shares of Class A
Common Stock as are not disputed in accordance with this Section. If such
dispute involves the calculation of the Exercise Price, the Company shall
submit the disputed calculations to a nationally recognized independent
accounting firm (selected by the Company) via facsimile within three (3)
business days of receipt of the Exercise Agreement. The accounting firm
shall audit the calculations and notify the Company and the converting
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accounting firm's calculation shall
be deemed conclusive, absent manifest error. The Company shall then issue
the appropriate number of shares of Class A Common Stock in accordance with
this Section.
(d) Fractional Shares. No fractional shares of Class A Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall
pay a cash adjustment in respect of any fractional share which would
otherwise be issuable in an amount equal to the same fraction of the
Exercise Price of a share of Class A Common Stock (as determined for
exercise of this Warrant into whole shares of Class A Common Stock);
provided that in the event that sufficient funds are not legally available
for the payment of such cash adjustment any fractional shares of Class A
Common Stock shall be rounded up to the next whole number.
(e) Buy-In. If (i) the Company fails for any reason to deliver during
the Delivery Period shares of Class A Common Stock to Holder upon an
exercise of this Warrant and (ii) after the applicable Delivery Period
with respect to such an exercise, Holder purchases (in an open market
transaction or otherwise) shares of Class A Common Stock to make delivery
upon a sale by Holder of the shares of Class A Common Stock (the "Sold
Shares") which Holder was entitled to receive upon such exercise (a
"Buy-in"), the Company shall pay Holder (in addition to any other remedies
available to Holder) the amount by which (x) Holder's total purchase price
(including brokerage commission, if any) for the shares of Class A Common
Stock so purchased exceeds (y) the lesser of (A) the Exercise Price or (B)
the net proceeds received by Holder from the sale of the Sold Shares.
Holder shall provide the Company written notification indicating any
amounts payable to Holder pursuant to this subsection.
2. Period of Exercise. This Warrant is exercisable at any time or from
time to time on or after the date hereof and before 5:00 P.M., Central
Standard Time on the fifth (5th) anniversary of the date hereof (the
"Exercise Period").
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and non-assessable and free from all taxes, liens, claims and
encumbrances.
(b) Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Class A Common Stock to provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the listing of the
shares of Class A Common Stock issuable upon exercise of this Warrant upon
The Nasdaq National Market, or the New York Stock Exchange, as required by
Section 4.10 of the Securities Purchase Agreement and upon each national
securities exchange or automated quotation system, if any, upon which
shares of Class A Common Stock are then listed or become listed and shall
maintain, so long as any other shares of Class A Common Stock shall be so
listed, such listing of all shares of Class A Common Stock from time to
time issuable upon the exercise of this Warrant; and the Company shall so
list on each such national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of any other
shares of capital stock of the Company issuable upon the exercise of this
Warrant so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter 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 to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such actions
as may reasonably be requested by the Holder of this Warrant in order to
protect the exercise privilege of the Holder of this Warrant, consistent
with the tenor and purpose of this Warrant. Without limiting the generality
of the foregoing, the Company (i) will not increase the par value of any
shares of Class A Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Class A
Common Stock upon the exercise of this Warrant.
4. Antidilution Provisions. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from
time to time as provided in this Section 4. In the event
that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up or down to the
nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon
Issuance of Common Stock. Except as otherwise provided in Section 4(c) and
4(e) hereof, if and whenever after the initial issuance of this Warrant,
the Company issues or sells, or in accordance with Section 4(b) hereof is
deemed to have issued or sold, any shares of Common Stock for no
consideration or for a consideration per share less than the Market Price
(as herein defined) on the date of issuance (a "Dilutive Issuance"), then
effective immediately upon the Dilutive Issuance, the Exercise Price will
be adjusted in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
E' = the adjusted Exercise Price E = the then current Exercise
Price; M = the then current Market Price;
O = the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth
in Section 4(b) hereof, received by the Company upon
such Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as herein defined) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 4(a) hereof, the
following will be applicable:
(i) Issuance of Rights or Options. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common
Stock ("Convertible Securities"), but not to include the grant or exercise
of any stock or options which may hereafter be granted or exercised under
any employee or Director benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or options
is approved by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose (such warrants, rights
and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options"), and the price per share for which
Common Stock is issuable upon the exercise of such Options is less than the
Market Price on the date of issuance ("Below Market Options"), then the
maximum total number of shares of Common Stock issuable upon the exercise
of all such Below Market Options (assuming full exercise, conversion or
exchange of Convertible Securities, if applicable) will, as of the date of
the issuance or grant of such Below Market Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the price per share for
which Common Stock is issuable upon the exercise of such Below Market
Options is determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issuance or granting of
such Below Market Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Below Market Options, plus, in the case of Convertible Securities issuable
upon the exercise of such Below Market Options, the minimum aggregate
amount of additional consideration payable upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Below Market Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment
to the Exercise Price will be made upon the actual issuance of such Common
Stock upon the exercise of such Below Market Options or upon the exercise,
conversion or exchange of Convertible Securities issuable upon exercise of
such Below Market Options.
(ii) Issuance of Convertible Securities.
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options) and the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange (as determined pursuant to Section 4(b)(ii)(B) if applicable) is
less than the Market Price on the date of issuance, then the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of all such Convertible Securities will, as of the date of the
issuance of such Convertible Securities, be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For the
purposes of the preceding sentence, the price per share for which Common
Stock is issuable upon such exercise, conversion or exchange is determined
by dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all such
Convertible Securities. No further adjustment to the Exercise Price will be
made upon the actual issuances of such Common Stock upon exercise,
conversion or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security"), then the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section
4(b)(ii)(A) shall be deemed to be the lowest price per share which would be
applicable assuming that (1) all holding period and other conditions to any
discounts contained in such Convertible Security have been satisfied, and
(2) the Market Price on the date of issuance of such Convertible Security
was 80% of the Market Price on such date (the "Assumed Variable Market
Price").
(iii) Change in Option Price or Conversion Rate. Except for
the grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee or Director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority
of the members of a committee of non-employee directors established for
such purpose, if there is a change at any time in (i) the amount of
additional consideration payable to the Company upon the exercise of any
Options; (ii) the amount of additional consideration, if any, payable to
the Company upon the exercise, conversion or exchange or any Convertible
Securities; or (iii) the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock (other than under or by
reason of provisions designed to protect against dilution), the Exercise
Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. If, in any case, the total number of shares of
Common Stock issuable upon exercise of any Options or upon exercise,
conversion or exchange of any Convertible Securities is not, in fact,
issued and the rights to exercise such option or to exercise, convert or
exchange such Convertible Securities shall have expired or terminated, the
Exercise Price then in effect will be readjusted to the Exercise Price
which would have been in effect at the time of such expiration or
termination had such Options or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination (other than
in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise, conversion
or exchange of all such Options or Convertible Securities at the time such
Options or Convertible Securities first become exercisable, convertible or
exchangeable. In case any Common Stock, Options or Convertible Securities
are issued or sold for a consideration part or all of which shall be other
than cash, the amount of the consideration other than cash received by the
Company will be the fair market value of such consideration except where
such consideration consists of freely-tradeable securities, in which case
the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. In case any Common Stock, Options
or Convertible Securities are issued in connection with any merger or
consolidation in which the Company is the surviving corporation, the amount
of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving
corporation as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair market value of any consideration
other than cash or securities will be determined in the good faith
reasonable business judgment of the Board of Directors.
(vi) Exceptions to Adjustment of Exercise Price. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the
date hereof in accordance with the terms of such securities as of such
date; (ii) upon the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee or Director benefit
plan of the Company now existing or to be implemented in the future, so
long as the issuance of such stock or options is approved by a majority of
the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose; (iii) upon the issuance of the Common Shares
(as defined in the Securities Purchase Agreement) or Warrants in accordance
with terms of the Securities Purchase Agreement; or (iv) upon the exercise
of the Warrants.
(c) Subdivision or Combination of Common Stock. If the Company,
at any time after the initial issuance of this Warrant, subdivides (by any
stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) its shares of Common Stock into a greater
number of shares, then, after the date of record for effecting such
subdivision, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company, at any time
after the initial issuance of this Warrant, combines (by reverse stock
split, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a smaller number of shares, then, after the
date of record for effecting such combination, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(e) Major Transactions. If the Company shall consolidate or merge
with any other corporation or entity (other than a merger in which the
Company is the surviving or continuing entity and its capital stock is
unchanged and unissued in such transaction (except for issuances which do
not exceed twenty percent (20%) of the Class A Common Stock and do not
result in a Change of Control (as defined in the Debenture))) or there
shall occur any share exchange pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property or
any reclassification or change of the outstanding shares of Common Stock or
the Company shall sell all or substantially all of its assets (each of the
foregoing being a "Major Transaction"), then the holder of this Warrant
may, at its option, either (a) in the event that the Common Stock remains
outstanding or holders of Common Stock receive any common stock or
substantially similar equity interest, in each of the foregoing cases which
is publicly traded, retain this Warrant and this Warrant shall continue to
apply to such Common Stock or shall apply, as nearly as practicable, to
such other common stock or equity interest, as the case may be, or (b)
regardless of whether (a) applies, receive consideration, in exchange for
this Warrant (without payment of any exercise price hereunder), equal to
the greater of, as determined in the sole discretion of such holder: (i)
the number of shares of stock or securities or property of the Company, or
of the entity resulting from such Major Transaction (the "Major Transaction
Consideration"), to which a holder of the number of shares of Common Stock
delivered upon the exercise of this Warrant (pursuant to the cashless
exercise feature hereof) would have been entitled upon such Major
Transaction had such holder so exercised this Warrant (without regard to
any limitations on exercise herein or elsewhere contained) on the trading
date immediately preceding the public announcement of the transaction
resulting in such Major Transaction and had such Common Stock been issued
and outstanding and had such Holder been the holder of record of such
Common Stock at the time of the consummation of such Major Transaction, and
(ii) cash paid by the Company in immediately available funds, in an amount
equal to one hundred and twenty five percent (125%) of the Black-Scholes
Amount (as defined herein) times the number of shares of Common Stock for
which this Warrant was exercisable (without regard to any limitations on
exercise herein contained and assuming payment of the exercise payment in
cash hereunder); and the Company shall make lawful provision for the
foregoing as a part of such Major Transaction and shall cause the issuer of
any security in such transaction which constitutes Registrable Securities
under that certain Registration Rights Agreement dated April 14, 1999 among
the Company and the signatories thereto (the "Registration Rights
Agreement") to assume all of the Company's obligations under the
Registration Rights Agreement (provided any cash election pursuant to
clause (ii) above must be made in writing to the Company within ten (10)
business days following consummation of such applicable transaction (or, in
the event that a Company Transaction (as defined below) occurs, within ten
(10) business days following the Measurement Period (as defined below)). In
the event that the Company shall consolidate or merge with any other
corporation in a transaction in which common stock of the surviving
corporation or the parent thereof (the "Exchange Securities") is issued to
the holders of Common Stock in such transaction in exchange for all such
Common Stock, and (a) the Exchange Securities are publicly traded, (b) the
average daily trading volume of the Exchange Securities during the one
hundred eighty
(180) day period ending on the date on which such transaction is publicly
disclosed is greater than two million dollars ($2,000,000) per day, (c) the
historical one hundred (100) day volatility of the Exchange Securities
during the period ending on the date on which such transaction is publicly
disclosed is greater than sixty percent (60%) and (d) the market
capitalization of the issuer of the Exchange Securities is not less than
one hundred fifty million dollars ($150,000,000) based on the last sale
price of the Exchange Securities on the date immediately before the date on
which such transaction is publicly disclose (in each case, with respect to
the foregoing clauses (a) through (d), as reported by Bloomberg), then the
provisions of clause (b) of the preceding sentence shall not apply. In the
event that the Company shall, in a Major Transaction, consolidate or merge
with any other corporation in a transaction in which the Company is the
survivor (a "Company Transaction"), the provisions of clause (ii) of the
second preceding sentence shall not apply to the extent that each of the
following conditions remain true for the thirty (30) business days
commencing as of the date of the consummation of such transaction (the
"Measurement Period"): (a) the Class A Common Stock remains publicly traded
during the period, (b) the average daily trading volume of the Class A
Common Stock is greater than two million dollars ($2,000,000), (c) the
historical thirty (30) day volatility of the Company's Class A Common Stock
is greater than sixty percent (60%), and (d) the market capitalization of
the Company (including Class B Common Stock) is not less than one hundred
fifty million dollars ($150,000,000) on the last day of the period (in each
case, with respect to the foregoing clauses (a) through (d), as reported by
Bloomberg). No sooner than ten (10) business days nor later than five (5)
business days prior to the consummation of the Major Transaction or Common
Stock Major Transaction, as the case may be (each, a "Transaction"), but
not prior to the public announcement of such Transaction, the Company shall
deliver written notice ("Notice of Transaction") to each holder of a
Warrant, which Notice of Transaction shall be deemed to have been delivered
one (1) business day after the Company's sending such notice by telecopy
(provided that the Company sends a confirming copy of such notice on the
same day by overnight courier) of such Notice of Transaction. Such Notice
of Transaction shall indicate the amount and type of the transaction
consideration which such holder of a Warrant would receive under this
Section ("Transaction Consideration"). If the Transaction Consideration is
cash and does not consist entirely of United States currency, such holder
may elect to receive United States currency in an amount equal to the value
of the Transaction Consideration in lieu of the Transaction Consideration
by delivering notice of such election to the Company within five (5)
business days of such holder's receipt of the Notice of Transaction.
The "Black-Scholes Amount" shall be an amount equal to 0.75 times the
amount determined by calculating the "Black-Scholes" value of an option to
purchase one share of Common Stock on the applicable page on the Bloomberg
online page, using the following variable values: (i) the current market
price of the Common Stock equal to the closing trade price on the last
trading day before the date of the Notice of Transaction; (ii) volatility
of the Common Stock equal to the volatility of the common Stock during the
100 trading day period preceding the date of the Notice of Transaction;
(iii) a risk free rate equal to the interest rate on the United States
treasury bill or treasury note with a maturity corresponding to the
remaining term of this Warrant on the date of the Notice of Transaction;
and (iv) an exercise price equal to the Exercise Price on the date of the
Notice of the Transaction. In the event such calculation function is no
longer available utilizing the Bloomberg online page, the Holder shall
calculate such amount in its sole discretion using the closest available
alternative mechanism and variable values to those available utilizing the
Bloomberg online page for such calculation function.
(f) Distribution of Assets. In case the Company shall declare or
make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a partial liquidating dividend, by way of return
of capital or otherwise (including any dividend or distribution to
the Company's shareholders of cash or shares (or rights to acquire shares)
of capital stock of a subsidiary) (a "Distribution"), at any time after the
initial issuance of this Warrant, then the Holder shall be entitled upon
exercise of this Warrant for the purchase of any or all of the shares of
Common Stock subject hereto, to receive the amount of such assets (or
rights) which would have been payable to the Holder had such Holder been
the holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution.
(g) Notices of Adjustment. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case,
the Company shall give notice thereof to the Holder, which notice shall
state the Exercise Price resulting from such adjustment and the increase or
decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. Such calculation shall be
certified by the chief financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be
made, but any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to not less
than 1% of such Exercise Price.
(i) No Fractional Shares. No fractional shares of Class A Common
Stock are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional share which would
otherwise be issuable in an amount equal to the same fraction of the Market
Price of a share of Class A Common Stock; provided that in the event that
sufficient funds are not legally available for the payment of such cash
adjustment any fractional shares of Class A Common Stock shall be rounded
up to the next whole number.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other
distribution to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class
or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all of
its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of
the date on which the books of the Company shall close or a record shall be
taken for determining the holders of Common Stock entitled to receive any
such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for
stock or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are
closed in respect thereto, but in no event earlier than public announcement
of such proposed transaction or event. Failure to give any such notice or
any defect therein shall not affect the validity of the proceedings
referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the number
of shares of Common Stock actually outstanding (not including shares of
Common Stock held in the treasury of the Company), plus (x) in case of any
adjustment required by Section 4(a) resulting from the issuance of any
Options, the maximum total number of shares of Common Stock issuable upon
the exercise of the Options for which the adjustment is required (including
any Common Stock issuable upon the conversion of Convertible Securities
issuable upon the exercise of such Options), and (y) in the case of any
adjustment required by Section 4(a) resulting from the issuance of any
Convertible Securities, the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of the Convertible
Securities for which the adjustment is required, as of the date of issuance
of such Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the average
of the Closing Sale Prices for the shares of Common Stock as reported to
The Nasdaq National Market for the trading day immediately preceding such
date, or (ii) if The Nasdaq National Market is not the principal trading
market for the Common Stock, the average of the last reported bid prices on
the principal trading market for the Common Stock during the same period,
or, if there is no bid price for such period, the last reported sales price
for such period, or (iii) if market value cannot be calculated as of such
date on any of the foregoing bases, the Market Price shall be the average
fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the Holders of a
majority in interest of the Warrants, with the costs of the appraisal to be
borne by the Company. The manner of determining the Market Price of the
Common Stock set forth in the foregoing definition shall apply with respect
to any other security in respect of which a determination as to market
value must be made hereunder.
(iii) "Common Stock," for purposes of this Section 4,
includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation,
provided that the shares purchasable pursuant to this Warrant shall include
only Common Stock in respect of which this Warrant is exercisable, or
shares resulting from any subdivision or combination of such Common Stock,
or in the case of any reorganization, reclassification, consolidation,
merger, or sale of the character referred to in Section 4(e) hereof, the
stock or other securities or property provided for in such Section.
(l) Other Adjustments. If any Key Officers (as defined in the
Securities Purchase Agreement) or any replacement of any Key Officer,
during the six-month period beginning on the date that the registration
statement required pursuant to Section 2.1 of the Registration Rights
Agreement, and while an officer or director, directly or indirectly, offer,
sell, transfer, assign, pledge, or otherwise dispose of any shares of
Common Stock, or any securities directly or indirectly convertible into or
exercisable or exchangeable for, or warrants, options or rights to purchase
or acquire shares of Common Stock (all such securities, "Options") or enter
into any agreement, contract, arrangement or understanding with respect to
any such offer, sale, transfer, assignment,
pledge or other disposition of any Common Stock or Options (an "Executive
Transfer"), then the Exercise Price shall be reduced by twenty percent
(20%). Provided, however that a Key Officer may sell up to ten percent
(10%) of his or her total holdings during such six-month period without
triggering the adjustments of this Section 8.10.
5. [Intentionally omitted]
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided
that the Company shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the Holder.
7. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the Holder to any voting rights or other rights as a shareholder of
the Company. No provision of this Warrant, in the absence of affirmative
action by the Holder to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the Holder, shall give rise to any
liability of the Holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors
of the Company.
8. Transfer, Exchange, Redemption and Replacement of Warrant.
a. Restriction on Transfer. This Warrant and the rights granted
to the Holder are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the Form of
Assignment attached hereto as Exhibit 2, at the office or agency of the
Company referred to in Section 8(e) below, provided, however, that any
transfer or assignment shall be subject to the provisions of Section 5.1
and 5.2 of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 9 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
b. Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the Holder at the office or
agency of the Company referred to in Section 8(e) below, for new Warrants,
in the form hereof, of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which
may be purchased hereunder, each of such new Warrants to represent the
right to purchase such number of shares as shall be designated by the
Holder of at the time of such surrender.
c. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant or, in the case of any such loss, theft, or destruction,
upon delivery, of an indemnity agreement reasonably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrants, in the form
hereof, in such denominations as Holder may request.
d. Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all issuance taxes (other than securities
transfer taxes) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 8.
e. Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
f. Additional Restriction on Exercise or Transfer.
Notwithstanding anything to the contrary contained herein, the Warrants
shall not be exercisable by the Holder to the extent (but only to the
extent) that, if exercisable by Holder, Holder would beneficially own in
excess of 4.9% (the "Applicable Percentage") of the shares of Class A
Common Stock. To the extent the above limitation applies, the determination
of whether the Warrants shall be exercisable (vis-a-vis other securities
owned by Holder which contain similar limitations on conversion) and of
which Warrants shall be exercisable (as among Warrants) shall be made on
the basis of the earliest submission of the Warrants (vis-a-vis other
securities owned by the Holder which contain similar limitations on
conversion and vis a vis other Warrants), in each case subject to such
aggregate percentage limitation. No prior inability to exercise Warrants
pursuant to this paragraph shall have any effect on the applicability of
the provisions of this paragraph with respect to any subsequent
determination of exercisability. For the purposes of this paragraph,
beneficial ownership and all determinations and calculations, including
without limitation, with respect to calculations of percentage ownership,
shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D and G thereunder. The
provisions of this paragraph may be implemented in a manner otherwise than
in strict conformity with the terms of this Section 8(f) with the approval
of the Board of Directors of the Company and the Holder: (i) with respect
to any matter to cure any ambiguity herein, to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the
intended Applicable Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to
properly give effect to such Applicable Percentage limitation; and (ii)
with respect to any other matter, with the further consent of the holders
of a majority of the then outstanding shares of Class A Common Stock. For
clarification, it is expressly a term of this security that the limitations
contained in this Section shall apply to each successor Holder.
9. Registration Rights. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the
Registration Rights Agreement.
10. Notices. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
Westell Technologies, Inc.
750 N. Commons Drive
Aurora, IL 60504
Telecopy: (630) 375-4940
Attention: Stephen J. Hawrysz
with a copy to:
Neal J. White, P.C.
McDermott, Will & Emery
227 West Monroe Street
Chicago, IL 60606
Telecopy: (312) 984-3669
Attention: (312) 984-7579
and if to the Holder, at such address as Holder shall have provided in
writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 10.
11. Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal
courts located in the State of New York and the state courts located in the
County of New York in the State of New York in any suit or proceeding based
on or arising under this Warrant and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. The
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company agrees that a final
nonappealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in
any other lawful manner.
12. Miscellaneous.
a. Amendments. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the
Holder.
b. Descriptive Headings. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions
hereof.
c. Cashless Exercise. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant may be exercised by presentation
and surrender of this Warrant to the Company at its principal executive
offices with a written notice of the Holder's intention to effect a
cashless exercise, including a calculation of the number of shares of Class
A Common Stock to be issued upon such exercise in accordance with the terms
hereof (a "Cashless Exercise"). In the event of a Cashless Exercise, in
lieu of paying the Exercise Price in cash, the Holder shall surrender this
Warrant for the number of shares of Class A Common Stock determined by
multiplying the number of Warrant Shares to which it would otherwise be
entitled by a fraction, the numerator of which shall be the difference
between the then current Market Price per share of the Class A Common Stock
and the Exercise Price, and the denominator of which shall be such then
current Market Price per share of Class A Common Stock.
d. Assignability. This Warrant shall be binding upon the Company
and its successors and assigns and shall inure to the benefit of Holder and
its successors and assigns. The Holder shall notify the Company upon the
assignment of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
Westell Technologies, Inc.
By:
---------------------------------
Name:
Title:
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of common stock of Westell Technologies, Inc., a
Delaware corporation (the "Company"), evidenced by the attached Warrant,
and [herewith makes payment of the Exercise Price with respect to such
shares in full/ elects to effect a Cashless Exercise pursuant to the terms
of the Warrant], all in accordance with the conditions and provisions of
said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except
under circumstances that will not result in a violation of the Securities
Act of 1933, as amended, or any state securities laws.
(ii) The undersigned requests that stock certificates for such shares
be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the Warrant in the name of the Holder (or such other
person or persons indicated below) and delivered to the undersigned (or
designee(s) at the address (or addresses) set forth below:
Date:
Signature of Holder
Name of Holder (Print)
Address:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No. of Shares
, and hereby irrevocably constitutes and appoints
______________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power
of substitution in the premises.
Date:____________, _____,
In the presence of
-------------------------------------
Name:
-------------------------------------
Signature:
Title of Signing Officer or Agent (if
any):
Address:
Note: The above signature should
correspond exactly with the
name on the face of the
within Warrant.