December 13, 1999
Westell Technologies, Inc.
750 North Commons Drive
Aurora, IL
Gentlemen:
Reference is made to the 6% Subordinated Convertible Debenture
("Debenture") dated April 15, 1999 in the principal amount of $9,000,000 issued
by Westell Technologies, Inc. ("Company ") to Castle Creek Technology Partners
LLC ("Investor") and the Stock Purchase Warrant ("Warrant") issued to Investor
by the Company dated April 15, 1999 for the right to purchase 409,091 shares of
the Company Class A common stock.
Section 4(e) of the Warrant provides that in the event of certain Major
Transactions (as defined therein), the holder of the Warrant shall be entitled
to either (A) retain the warrant pursuant to the clause (a) of the first
sentence of Section 4(e) or (B) receive specified consideration in exchange for
the Warrant pursuant to clause (b)(i) or (b)(ii) of the first sentence of
Section 4(e).
Section 8.3 of the Debenture provides that in the event of certain
Major Transactions (as defined therein), the holder of the Debenture shall be
entitled at its option to receive specified consideration for the Debenture
pursuant to clause (i) or (ii) of the first sentence of Section 8.3.
This Letter Agreement documents the following agreements
between Investor and the Company:
1. In consideration of the reduction in Exercise Price (as defined in
the Warrant) described in paragraph 2 of this Letter Agreement, Investor
irrevocably waives any right to receive any consideration specified in clause
(b)(ii) of the first sentence of Section 4(e) of the Warrant and any
consideration specified in clause (ii) of the first sentence of Section 8.3 of
the Debenture in connection with any Company Transaction (as defined in the
Warrant and the Debenture) which is first announced within sixty days from the
date hereof in which the shares issued in the transaction to shareholders of the
other party do not exceed 41% (on an after issuance basis) of the outstanding
common stock of both classes of the Company.
2. The Warrant is hereby amended to reduce the Exercise Price (as
defined in the Warrant) from $8.9208 to $5.9208, subject to further adjustment
from time to time in accordance with the Warrant. The number of shares of Common
Stock issuable upon exercise of the Warrant shall not be adjusted by reason of
the reduction in Exercise Price
effected by this Paragraph 2; and there shall be no further Exercise Price
adjustment pursuant to Section 4(a) of the Warrant on account of a Company
Transaction which is subject to the waiver of Paragraph 1. There shall be no
adjustment to the Conversion Price of the Debenture by virtue of the Warrant
Exercise Price adjustment herein.
3. The Investor hereby releases and waives any claims against the
Company for Warrant Exercise Price adjustments or Debenture Conversion Price
adjustments which arise or could arise or be assertable by reason of any action
or occurrence under Section 8.10 of the Debenture or Section 4(l) of the Warrant
from April 15, 1999 through the date of this Letter Agreement.
4. Each party represents and warrants to the other that the execution
of this Letter Agreement by it has been authorized by all necessary corporation
action, including, for the Company, by its Board of Directors. This Letter
Agreement shall constitute an amendment to both the Debenture and the Warrant
and shall bind successor holders to the Debenture and the Warrant and successors
to the Company. The Company shall not be required to register any transfer of
the Debenture or Warrant unless the transferee acknowledges the amendment
thereto under this Letter Agreement.
5. The undersigned acknowledge that the Company intends to enter into
agreements ("Other Agreements") with the other holders ("Other Holders") of
warrants and debentures issued on April 15, 1999 which address the matters
covered by this Letter Agreement. There shall be no adjustment to the Warrant
Exercise Price or the Debenture Conversion Price on account of execution of the
Other Agreements. The Company covenants that in the event that the provisions of
this Letter Agreement are not substantially as beneficial to Investor (but
reflecting the relative holdings of warrants and debentures of Investor and the
Other Holders) as the provisions contained in any of the Other Agreements, then
the Investor may upon written notice to the Company given within five days of
receipt of a copy of the Other Agreements elect to be governed by the terms of
such more favorable Other Agreement (adjusted for relative holdings), and the
Company shall enter with Investor into a modification of this Letter Agreement
to reflect all of the terms of such Other Agreement.
Castle Creek Technology Partners LLC
By Castle Creek Partners LLC,
Investment Manager
By /s/John Ziegelman
-----------------
Westell Technologies, Inc.
By /s/Marc Zionts, Executive Vice President
------------------------------------------